As filed with the Securities and Exchange
Commission on September 10, 2014
File No. 000-26875
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No.
1 to
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934
VG Life Sciences, Inc.
(Exact name of registrant as specified in its
charter)
Delaware
(State or other jurisdiction of incorporation
or organization) |
|
33-0814123
(I.R.S. Employer Identification No.) |
|
|
|
121 Gray Avenue, Suite 200
Santa Barbara, CA
(Address of principal executive offices) |
|
93101
(Zip Code) |
(805) 879-9000
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g)
of the Act: common stock, par value $0.0001 per share
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions
of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2
of the Exchange Act.
Large accelerated filer o |
|
Accelerated filer o |
Non-accelerated filer o |
|
Smaller reporting company x |
DISCLAIMER REGARDING
FORWARD-LOOKING STATEMENTS
This registration statement contains forward-looking
statements as defined under the federal securities laws. All statements other than statements of historical facts included in this
registration statement 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 this registration statement. 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 registration statement to conform these statements to actual results or to changes in our expectations,
except as required by law.
Table of Contents
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|
Page No . |
|
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|
Item 1. |
Business. |
4 |
Item 1A. |
Risk Factors. |
23 |
Item 2. |
Financial Information. |
39 |
Item 3. |
Properties. |
49 |
Item 4. |
Security Ownership of Certain Beneficial Owners and Management. |
49 |
Item 5. |
Directors and Executive Officers. |
52 |
Item 6. |
Executive Compensation. |
55 |
Item 7. |
Certain Relationships and Related Transactions, and Director Independence. |
58 |
Item 8. |
Legal Proceedings. |
61 |
Item 9. |
Market Price and Dividends on the Registrant’s Common Equity ad Related Stockholder Matters. |
61 |
Item 10. |
Recent Sales of Unrestricted Securities |
62 |
Item 11. |
Description of Securities to be Registered. |
70 |
Item 12. |
Indemnification of Directors and Officers. |
71 |
Item 13. |
Financial Statements and Supplementary Data. |
72 |
Item 14. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. |
73 |
Item 15. |
Financial Statements and Exhibits. |
73 |
Item 1. Business.
Corporate Information
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 registration statement.
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:
| · | Stanford
University on multiple diseases affected by chronic inflammation, such as HIV, from October
2013 to present; |
| · | Harvard
University on HIV from 2008 to present and on brain tumors from November 2013 to present;
and |
| · | 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 conducting 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.
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:
| · | 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; |
| · | The
investigation is not intended to support a significant change in the advertising for
a prescription drug product; |
| · | 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; |
| · | 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 |
| · | The
investigation may not represent that the drug be 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 the 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. As of December 2013, the trial has progressed to include the third cohort
of patients 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 certain genes that are key to traditional cancer treatment, making treatment more difficult. We
believe our Phase I Physician’s IND study utilizing MDT as a combination therapy will be completed in late-2014. 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 late 2014. 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:
|
o |
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. |
|
o |
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. |
|
o |
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. |
|
o |
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:
|
o |
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. |
|
|
|
|
o |
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. |
|
o |
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 believe our Phase I Physician’s
IND study utilizing MDT as a combination therapy will be completed in late-2014. We are actively planning for 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 August
14, 2014, we, along with our subsidiaries, own or co-own 2 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 (3) |
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 |
Patent
Cooperation Treaty (2) |
PCT/US2012/067364 |
11/30/2012 |
11/30/2032
(expiration date for U.S. application claiming priority
to PCT) |
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 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. |
| | |
| (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. |
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, is 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 |
61/875670 |
09/06/2013 |
09/06/2034
Assuming a utility application is filed on 9/06/14 |
Use |
Method
and Products for Treating Type II Diabetes |
United
States |
61/878495 |
09/16/2013 |
09/16/2034
Assuming a utility application is filed on 9/16/14 |
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 14 pending U.S. and foreign patent applications and 13 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 Related to Metabolic Interactions in Disease |
United
States |
13/339415 |
12/29/2011 |
03/27/2019 |
Use |
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 |
Canada |
2776126 |
10/06/2010 |
10/06/2030 |
Use
and Process |
Compositions
and Methods for Promoting Fatty Acid Production in Plants |
European
Patent (1) |
10777124.8 |
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 |
Malaysia |
PI2012001565 |
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 |
Methods
and products for manipulating uncoupling protein |
United
States |
7816319 |
06-22-2000 |
156 |
0 |
11/25/2020 |
Use |
Compositions
and Methods for Regulating Metabolism in plants |
United
States |
7105718 |
03/30/2001 |
155 |
0 |
9/1/2021 |
Use |
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 |
- |
- |
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 1/24/27)
7,510,710
(expires 1/7/25) |
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 in the U.K. only 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 |
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 |
Patent
Cooperation Treaty (1) |
PCT/US2012/064334 |
11/09/2012 |
11/09/2032
|
Process |
Method
and Products for Treating Type II Diabetes |
United
States |
61/878495 |
09/16/2013 |
09/16/2034
Assuming a utility application is filed on 9/16/14 |
Use |
Treating
Neurological Disorders |
United
States |
61/875670 |
09/09/2013 |
09/09/2034
Assuming a utility application is filed on 9/09/14 |
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 a 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.
U.S.—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.
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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. |
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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. |
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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. |
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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 August 14 , 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 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
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$10,000 monthly consultation fee automatically added to a convertible note if not paid which shall mature on December 31, 2015; |
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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; |
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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; and |
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0.75% net sales in developed countries; and 0.125% net sales from undeveloped countries. |
Dr. Brett Mitchell
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$7,500 every three months consultation fee payable in common shares at a price equal to the Volume Weighted Average Price, or VWAP, for twenty trading days ending on the date the payment period ends. |
Dr. Evan Newell
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$2,000 monthly consultation fee automatically added to a convertible note if not paid which shall mature on December 31, 2015; |
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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; |
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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; and |
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0.75% net sales in developed countries; and 0.125% net sales from undeveloped countries. |
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.
Item 1A. 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 update our VG1177 pre-IND application with the FDA 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 $7.4 million and $6.9 million for the years ended December 31, 2013 and 2012, respectively.
As of December 31, 2013, we had an accumulated deficit of approximately $100 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 and cash equivalents as of March 31, 2014 were $148,666. Those funds have
since been utilized and we have entered into agreements with related parties to receive additional capital of up to $500,000 to
allow us to continue through November 2014. As of July 31, 2014, we have received $200,000 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 update our file for our HIV/AIDS, pre-IND for VG1177 with the FDA in late 2014. 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 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 2014 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. As of December 2013, the trial has progressed
to include the third cohort of patients 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.. We believe our Phase I Physician’s IND study utilizing MDT as a combination therapy will be completed in
late-2014. 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:
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the price of our products relative to other products for the same or similar treatments; |
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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; |
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our ability to fund our sales and marketing efforts; and |
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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 I/I- 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 effected.
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, MDT and Our Other Product Candidates
We cannot be certain that VG1177, MDT
or any of our future product candidates 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 and our future product candidates.
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.
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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, MDT and our product candidates. 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 use patent 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. As of December 2013, the trial has progressed to include the third cohort of patients 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... 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.
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 OTC Pink
Current marketplace. We expect our common stock to continue to be quoted on the OTC for the foreseeable future. Broker-dealers
may decline to trade in OTC Pink 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; |
|
· |
changes in our capital structure or dividend policy; |
|
· |
our cash position; |
|
· |
announcements and events surrounding financing efforts, including debt and equity securities; |
|
· |
our inability to enter into new markets or develop new products; |
|
· |
reputational issues; |
|
· |
competition from existing technologies and products or new technologies and products that may emerge; |
|
· |
announcements of acquisitions, partnerships, collaborations, joint ventures, new products, capital commitments, or other events by us or our competitors; |
|
· |
changes in general economic, political and market conditions in or any of the regions in which we conduct our business; |
|
· |
changes in industry conditions or perceptions; |
|
· |
changes in valuations of similar companies or groups of companies; |
|
· |
analyst research reports, recommendation and changes in recommendations, price targets, and withdrawals of coverage; |
|
· |
departures and additions of key personnel; |
|
· |
disputes and litigations related to intellectual properties, proprietary rights, and contractual obligations; |
|
· |
changes in applicable laws, rules, regulations, or accounting practices and other dynamics; and |
|
· |
other events or factors, many of which may be out of our control. |
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 OTC
Pink Current, 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 August 18, 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 August 25, our management owned or had the rights to acquire 80.0% 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.
Item 2. Financial Information.
Selected Financial Data
As a smaller reporting company, as defined
by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting
obligations and therefore are not required to provide the information requested by this Item.
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
This Item includes and is intended
to be read in conjunction with the “Risks Associated with Our Business” that appears at the end of the previous
section and the Consolidated Financial Statements for the twelve months ended December 31, 2013 (audited) and the six months
ended June 30, 2014 (unaudited) included elsewhere herein.
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, which is 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 locate in the breast, colon, liver, lung, and pancreas. Additionally, we have one drug research
program in pre-clinical stages, which is 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 anticipate the analysis of the results of those trials by late-2014. 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 the use patent 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 its patented peptide VG1177. We now expect these studies to conclude in
late 2014. 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 late 2014,
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.
Reclassification 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 our accumulated deficit or the net losses presented.
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 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. 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 Quarters Ended
June 30, 2014 and June 30, 2013
| |
Six
Months Ended June 30, | |
| |
2014 | | |
2013 | |
EXPENSES: | |
| Total | | |
| Non-
Cash | | |
| All
other | | |
| Total | | |
| Non-
Cash | | |
| All
other | |
Research
and development | |
$ | 635,983 | | |
$ | 55,647 | | |
$ | 580,336 | | |
$ | 49,440 | | |
$ | 3,000 | | |
$ | 46,440 | |
Management salaries
and fees | |
| 566,250 | | |
| – | | |
| 566,250 | | |
| 229,882 | | |
| 2,600 | | |
| 227,282 | |
Legal and professional | |
| 897,674 | | |
| 131,031 | | |
| 766,643 | | |
| 505,863 | | |
| – | | |
| 505,863 | |
Consulting fees | |
| 37,629 | | |
| 4,500 | | |
| 33,129 | | |
| 102,500 | | |
| 800 | | |
| 101,700 | |
General and administrative | |
| 665,865 | | |
| 534,833 | | |
| 131,032 | | |
| 31,776 | | |
| – | | |
| 31,776 | |
Total operating
expenses | |
$ | 2,803,401 | | |
$ | 726,011 | | |
$ | 2,077,390 | | |
$ | 919,461 | | |
$ | 6,400 | | |
$ | 913,061 | |
Derivative expense | |
$ | 509,829 | | |
$ | 509,829 | | |
$ | – | | |
$ | 1,465,134 | | |
$ | 1,465,134 | | |
$ | – | |
Interest expense | |
$ | 1,405,904 | | |
$ | 1,405,904 | | |
$ | – | | |
$ | 431,203 | | |
$ | 431,203 | | |
$ | – | |
| |
Three Months Ended June 30, | |
| |
2014 | | |
2013 | |
EXPENSES: | |
| Total | | |
| Non-
Cash | | |
| All
other | | |
| Total | | |
| Non-
Cash | | |
| All
other | |
Research and development | |
$ | 224,377 | | |
| 21,043 | | |
$ | 203,334 | | |
$ | (12,630 | ) | |
| 1,500 | | |
$ | (14,130 | ) |
Management salaries and fees | |
| 283,125 | | |
| – | | |
| 283,125 | | |
| 149,457 | | |
| 1,300 | | |
| 148,157 | |
Legal and professional | |
| 347,114 | | |
| 50,356 | | |
| 296,758 | | |
| 374,663 | | |
| – | | |
| 374,663 | |
Consulting fees | |
| 858 | | |
| 4,500 | | |
| (3,642 | ) | |
| 44,150 | | |
| 400 | | |
| 43,750 | |
General and administrative | |
| 296,245 | | |
| 234,208 | | |
| 62,037 | | |
| (32,764 | ) | |
| – | | |
| (32,764 | ) |
Total operating expenses | |
$ | 1,151,719 | | |
$ | 310,107 | | |
$ | 841,612 | | |
$ | 522,876 | | |
$ | 3,200 | | |
$ | 519,676 | |
Derivative expense (income) | |
$ | 300,812 | | |
$ | 300,812 | | |
$ | – | | |
$ | (124,291 | ) | |
$ | (124,291 | ) | |
$ | – | |
Interest expense | |
$ | 554,092 | | |
$ | 554,092 | | |
$ | – | | |
$ | 74,713 | | |
$ | 74,713 | | |
$ | – | |
The above table shows the cash and non-cash
components of each of the expense categories included in results of operations for the six month periods ended June 30, 2014 and
2013. Certain employee salaries and consulting fees are not paid in cash as incurred under the respective agreements 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.
The following explanations of the fluctuations for the
quarter ended June 30, 2014 as compared to the comparable period of 2013 are generally consistent with those for the
corresponding six month periods, as provided below.
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 1,187% to $635,983 in the six months ended June 30, 2014 as compared to $49,440 in the same period in 2013. We incurred
$366,211 in the six months ended June 30, 2014 as compared to $0 in the same period in 2013 with respect to new testing being
conducted for us by ITR Canada, which was not in process in the preceding year. 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 included $55,647 in 2014 as compared to $3,000 in 2013.
The increase is attributable to options granted and vested in the six months ended June 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 1,995% to $665,865 in the six months ended June 30, 2014 from $31,776 in the same period in 2013. In 2014 we incurred a non-cash
charge of $534,833 in stock based compensation for the fair value of common stock options granted in the six months ended June
30, 2014 pursuant to the 2013 Equity Incentive Plan as compared to $0 in 2013.
Interest Expense and Interest Income
Interest expense increased by 226% to $1,405,904
in the six months ended June 30, 2014 from $431,203 in the same period of 2013 or an increase of $974,701. The current period
includes amortization of 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 65% to $509,829
for the six months ended June 30, 2014 as compared to $1,465,134 for the comparable period of 2013. Derivative expense, 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 2013 and 2014 amounts were principally attributable to amended and restated convertible
promissory notes and modifications with DMBM and with respect to other transactions related to satisfactions in share.
Personnel Expenses
Management salaries, including fees,
increased by 146% to $566,250 in the six months ended June 30, 2014 from $229,882 in the comparable period of 2013. This
increase was largely due to $120,000 in fees for services incurred ($69,000 in 2013) in connection with the MedBridge
Development Company, or MDC arrangement, and $300,000 ($0 in 2013) in executive services funded by the MedBridge Venture Fund
financing both of which originated after the 2013 first quarter. Stock based compensation for 2014 was included in General
and Administrative expenses. Stock based compensation in 2014 consisted of shares issued to an accounting consultant and to
counsel for a portion of these services.
Legal and Professional Fees
Legal and professional fees increased
by 77% to $897,674 in the six months ended June 30, 2014 from $505,863 in the same period of 2013 or an increase of $391,813.
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 with the SEC. 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 3 months ended March 31, 2014, audit fees incurred in connection with audits procedures
related to of earlier years as necessary for the Form 10 were substantially higher than fees incurred in the three month
periods ended June 30, 2014 and March 31, 2013. Non-cash expense in 2014 consists of stock based compensation for certain
legal and accounting services.
Consulting Fees
Consulting fees decreased by 63% to $37,629
in the six months ended June 30, 2014 from $102,500 in the comparable period of 2013 or a decrease of $64,871, principally due
to decreases for services related to investor relations and other expenses.
Net Loss
Our net loss attributable to common shareholders
for the six month period ended June 30, 2014 was $4,701,930 as compared to $2,793,393 for the comparable period of 2013. Operating
expenses increased by 205% to $2,803,401 in the 2014 period as compared to $919,461 for the comparable period of 2013. Aggregate
non-cash expenses incurred in the six months ended June 30, 2014 approximated $2,642,000 as compared to $1,903,000 in the comparable
period of 2013, an increase of $739,000.
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 | | |
| 0 | | |
| 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 accretion 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.
Personnel Expenses
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 approximately $7,420,000 for the year ended December 31, 2013 and approximately $4,702,000 for the six
months ended June 30, 2014. At December 31, 2013 and June 30, 2014, our accumulated deficit amounted to approximately $99,779,000
and approximately $104,481,000, respectively. 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 June 30, 2014, we had cash and cash
equivalents of $32,852. Those funds have since been utilized and we have secured an additional capital commitment of $500,000,
of which $200,000 has been received as of July 31, 2014, to allow us to continue through November 2014. Since our inception, substantially
all of our operations have been financed through sales of equity securities and various loans.
DMBM, Inc.
On January 1, 2013, we entered into an Amended
and Restated Amendment to Convertible Debentures with DMBM. 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 stock 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
stock 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 of our common stock issued and outstanding.
In September, 2013, we entered a convertible
promissory note and warrant purchase agreement with DMBM pursuant to which DMBM will fund up to $220,000 at a rate of 8% interest
per annum, of which $200,000 will be in notes in six equal monthly installments. $66,666 was received as of December 31, 2013,
and the satisfaction of a vendor liability in the amount of $20,000, which obligation was satisfied in December 2013. The remainder
of the funds were received subsequent to 2013. DMBM received or is entitled to receive an aggregate of 880,000 common shares and
warrants, with terms as described above, to purchase 880,000 common shares of our stock.
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 to be paid directly in
satisfaction of a vendor liability of ours, which has been paid, and $170,000 in cash in six equal monthly payments of
$28,333, of which $141,666 was received through July 31, 2014. KED Consulting Group received warrants to purchase 1,080,000
shares of common stock at $0.45 per share, including a cashless exercise feature, on
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.
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.
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 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 Opportunity Fund by us. We have undertaken to file a related registration statement with the Securities
and Exchange Commission by August 31, 2014 in order for this agreement to be effective.
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 for 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. As of August 14, 2014, approximately $329,032 in services have
been provided and $262,500 in cash installment proceeds have been paid to us. In addition $50,000 was advanced as part of the
SCA by a related party. Through August 14, 2014, MDC and the related party converted an aggregate of $250,000 in cash advanced
under the line of credit and accrued services into 3,706,023 shares of common stock and warrants under the terms of the agreement.
MDC has conversion rights within thirty days of the end of each quarter during the term of the agreement. MDC is owned 43.75%
by the Tynan Family Trust, of which our CEO and director, John Tynan is the trustee; 43.75% by our CFO and director, David Odell;
7.5% by EDK, LLC, which is managed by Edward Koke; and 5% by West Beach Investments, LLC, which is managed by Steven Schott. Mr.
Tynan and Mr. Odell have voting and dispositive control over the shares held by MDC.
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 $2,235,000 in notes and warrants to purchase an aggregate of 8,940,000 common shares. The notes will 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 the 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
August 14, 2014, we have received $2,125,000 consisting of cash proceeds of $1,550,000 and management services valued at $575,000
in exchange for which we issued convertible notes and warrants to purchase 7,060,000 and 8,500,000 common shares. Additional notes
for monthly services to be provided by MVF from July 1, 2014 to January 12, 2015 valued by the parties at $160,000 and warrants
to purchase an additional 640,000, 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 August 14, 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 the holder’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 $577,328 at December 31, 2013. In addition, we 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. In the six month period ended June 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 June 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 include 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 P. Tynan, our President & Chief Executive
Officer, 100% owns 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.
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 include 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, 100% owns 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.
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, as defined
by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting
obligations and therefore are not required to provide the information requested by this Item.
Item 3. Properties.
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 first quarter of 2015.
Item 4. 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 August 14, 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 August 14, 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 August 14, 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
27, 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 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 |
36,139,456(2) |
57.2% |
MedBridge Development Company,
LLC
121 Gray Avenue, Suite 200
Santa Barbara, CA 93101 |
3,916,347
(3) |
13.4% |
(1) |
On August 14, 2014, we had 29,090,185 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 ( $1,550,000 )
and the cost of services earned ( $575,000 as of June 30 , 2014) into shares of common stock at any time, subject
to lock-up provisions. As of August 14 , 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 an agreement entered into with MedBridge
Development Company, or MDC, MDC is the beneficial owner of 3,916,347 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 August 14 , 2014, MDC has advanced $262,500 in cash advances and
MDC has provided $329,032 in services. MDC may convert the cash advanced to us ( $262,500 ) and the
value of services earned to ( $329,032 ) into shares of common stock. As of August 14 , 2014, MDC
converted $250,000 in cash advances and $309,032 services owed into 3,706,023 shares of common
stock. MDC has the right to convert an additional $12,500 to shares based on cash advanced to us in July
2014 and $20,000 in services for July 2014 . The number of shares that MDC may acquire for
cash advanced to us has been calculated based on a contractual stock price of $0.1465 or 85,324
shares. In accordance with the agreement, t he 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 June 30, 2014. The July 2014 services price will not be determined until September 30,
2014 but for purposes of the beneficial ownership calculation, the price per share estimate used is $0.16 per share, or
125,000 shares. |
|
|
|
MDC is owned 43.75%
by the Tynan Family Trust, of which our CEO and director, John Tynan is the trustee; 43.75%
by our CFO and director, David Odell; 7.5% by EDK, LLC, which is managed by Edward Koke; and
5% by West Beach Investments, LLC, which is managed by Steven Schott. 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 |
3,711,931 |
21,370,339 |
25,082,270 |
49.7% |
David
Odell (5) |
Chief
Financial Officer; Director |
3,718,165 |
20,290,408 |
24,008,572 |
48.6% |
Haig
Keledjian (6) |
Chairman
of the Board of Directors; Vice President of Research and Development, Secretary |
4,978,518 |
3,712,256 |
8,690,774 |
26.5% |
Brennan
de Raad (7) |
Chief
Operating Officer |
167 |
660,000 |
660,167 |
2.2% |
Arthur
Keledjian (8) |
Director |
0 |
600,000 |
600,000 |
2.2% |
All
directors and executive officers as a group (5 persons) |
12,408,781 |
46,633,002 |
59,041,783 |
80.0% |
(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 August 14, 2014, we had 29,090,185 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 August 14, 2014. |
(4) |
Mr. John Tynan is our Chief Executive Officer and a member
of our Board of Directors. He owns 3,711,931 shares of common stock and 21,370,339 shares of common stock which may be
acquired within 60 days of August 14, 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) 3,706,023 shares held in the
name of MedBridge Development Company, LLC, of which he owns 43.75% and has voting and dispositive control of the
shares, (d) 15,901,360 shares which may be acquired within 60 days of August 14, 2014, through ownership in
MedBridge Venture Fund, LLC, held in the name of MedBridge Development Company, LLC, of which he owns 43.75% and
has voting and dispositive control of the shares, (e) 1,505,102 shares which may be acquired within 60 days of
August 14, 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 August 14, 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) 2,100,000
shares which may be acquired within 60 days of August 14, 2014, through option grants received through August
14, 2014, (h) 210,324 shares which may be acquired within 60 days of August 14, 2014, through ownership in
MedBridge Development Company, LLC., and (i) 803,213 shares which may be acquired within 60 days of August 14, 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 3,718,165 shares of common stock and 20,290,407 shares of common stock which may be
acquired within 60 days of August 14, 2014. His ownership consists of (a) 12,142 shares held in the name of Mr.
Odell, (b) 3,706,023 shares held in the name of MedBridge Development Company, LLC, of which he owns 43.75% and has
voting and dispositive control of the shares, (c) 15,901,360 shares which may be acquired within 60 days of August 14,
2014, through ownership in MedBridge Venture Fund, LLC, held in the name of MedBridge Development Company, LLC,
of which he owns 43.75% and has voting and dispositive control of the shares, (d) 1,275,510 shares which may be
acquired within 60 days of August 14, 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) 2,100,000
shares which may be acquired within 60 days of May 31, 2014, through option grants received through August 14,
2014 and (f) 210,324 shares which may be acquired within 60 days of August 14, 2014, through ownership in MedBridge
Development Company, LLC., and (g) 803,213 shars which may be acquired within 60 days of August 14, 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 3,712,256 shares of
common stock which may be acquired within 60 days of August 14, 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.
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; and (c) 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 660,000 shares of common stock which may be acquired within 60 days of August 14, 2014. |
(8) |
Mr. Arthur Keledjian is a member of our Board of Directors.
He owns 600,000 shares of common stock which may be acquired within 60 days of August 14, 2014. |
As of August 14, 2014, there are no arrangements
among our beneficial owners known to management which could result in a change in control of our Company.
Item 5. Directors and Executive Officers.
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 June 30, 2014.
Name |
Age |
Position(s) or Office(s) Held |
John Tynan |
58 |
President and Chief Executive Officer; Director |
David Odell |
47 |
Chief Financial Officer; Director |
Haig Keledjian |
52 |
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 $10 million in annual sales with SCI – Hispana in his business development
role. He is based in Los Angeles, CA.
Mr. Keledjian graduated from California State
University, Los Angeles with a Bachelor of Science in Business Administration & Marketing.
Other Involvement in Certain Legal Proceedings
None of our directors or executive officers
has been involved in any bankruptcy or criminal proceedings, nor have there been any judgments or injunctions brought against any
of our directors or executive officers during the last ten years that we consider material to the evaluation of the ability and
integrity of any director or executive officer.
Item 6. Executive Compensation.
Executive Compensation
The following table sets forth all compensation
for our fiscal years ended December 31, 2013 and 2012 awarded to, earned by, or paid to our Principal Executive Officer and our
two most highly compensated executive officers, all of which are referred to herein as the “Named Executive Officers.”
Summary Compensation Table for Fiscal Years
Ended December 31, 2013 and 2012
Name and Principal Position |
Year Ended December 31 |
Salary ($) |
Bonus ($) |
Option awards ($) (1) |
Total ($) |
John Tynan
Chief Executive Officer |
2013 |
(2) 0 |
0 |
303,470 (2), (3) |
303,470 |
David Odell
Chief Financial Officer |
2013 |
(4) 0 |
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 included in this Form 10 .
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 an unsecured convertible note 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 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. As of December 31, 2013, we owe Mr. Keledjian a total of $577,328 pursuant to the terms of the restatement and amendment of the unsecured convertible note. |
|
(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 provides for the award of 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. |
|
(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, and our July 15, 2013 agreement with 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, twenty 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 included in this Form 10.
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 and June 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.
Item 7. Certain Relationships and Related
Transactions, and Director Independence.
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 June 30, 2014, we have accrued $60,000 in management fees related to Q2 2014. As of August 14, 2014, we have
accrued $20,000 in management fees related to Q3 2014. As of August 14, 2014, 1,999,493 shares have been issued to MDC for
all management fees earned through June 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 May 31, 2014, Messrs. Tynan and Odell collectively own 87.5% 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.
The final cash commitment with MDC is for $1,500,000
and the final services commitment was for $735,000.
MDC is owned 43.75% by the Tynan Family Trust, of which
our CEO and director, John Tynan is the trustee; 43.75% by our CFO and director, David Odell; 7.5% by EDK, LLC, which is managed
by Edward Koke; and 5% by West Beach Investments, LLC, which is managed by Steven Schott. 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 and services 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 June 30, 2014, we have received $1,670,000, including $100,000 from an unrelated
party, in cash proceeds and received $575,000 in services. We have accrued approximately $96,000 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 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.
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, or BIT, 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 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 our Chairman, Vice President of Research and Development and Secretary.
With respect to the Unsecured Best Investment
Trust note, at December 31, 2013, we owed Best Investment Trust approximately $577,328 including accrued interest. The highest
balance on this note during the period January 1, 2012 to December 31, 2013 was approximately $993,000 including principal and
interest. The interest rate accrued on the debt is 5%. During the years ended December 31, 2013 and 2012, there were no interest
payments, all interest was accrued.
With respect to the Best Secured Revolving
Line of Credit note, at December 31, 2013, we owed Best Investments $0 including accrued interest. The highest balance on this
note during the period January 1, 2012 to December 31, 2013 was approximately $993,000 including principal and interest. The
interest rate accrued on the debt was 5%. During the years ended December 31, 2013 and 2012, there were no interest payments, all
interest was accrued.
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.
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 P. Tynan, our President & Chief
Executive Officer, is the natural person with voting and investment control over 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.
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 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 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.
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.
Item 8. 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.
Item 9. Market Price of and Dividends on
the Registrant’s Common Equity and Related Stockholder Matters.
Market Information
Our common stock, OTC: VGLS, is quoted on the
OTC Pink® Current marketplace. The following table sets forth the high and low bid prices for our common stock for each quarter
during the last two fiscal years as quoted on the OTC Pink® Current 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 (through 8/15/14) |
$0.18 |
$0.12 |
Holders
As of August 14, 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.
Securities Authorized for Issuance under
Equity Compensation Plans
The following table summarizes information
about our equity compensation plans as of June 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 |
8,950,000 |
$0.2153 |
3,050,000 |
Equity compensation plans not approved by security holders |
0 |
n/a |
0 |
Total |
8,950,000 |
$0.2153 |
3,050,000 |
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.
Item 10. 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 |
|
Robin 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 |
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 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 RCD.
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 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 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 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 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 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.
Item 11. Description of Registrant’s
Securities to be Registered.
General
Our authorized capital stock consists
of 170,000,000 shares of common stock, $0.0001 par value per share, and 20,000,000 shares of preferred stock, $0.0001 par value
per share. 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 this registration statement, and our Bylaws, a copy of which is incorporated by reference as an
exhibit to this registration statement.
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.
Series A Preferred Stock
We are authorized to issue up to a total of
10,000,000 shares of Series A preferred stock, par value $0.0001 per share, without stockholder approval. Our Board of Directors
has the authority, without action by our stockholders, to issue all or any portion of the authorized but unissued preferred stock
in one or more series and to determine the voting rights, preferences as to dividends and liquidation, conversion rights, and
other rights of such series.
Series A Preferred Stock
The Series A preferred shares are not redeemable
by us, and rank on par with our common stock in the event 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 our 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 our then issued and outstanding common shares
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 0.0166, or 10/600, shares of common stock for each share of Series
A Preferred stock. Previously, the Series A preferred shares were convertible into ten shares of common stock, but this conversion
rate was amended to factor in the 600:1 reverse stock split on November 27, 2012. The current issued and outstanding 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 our 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 shares 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
Item 12. Indemnification of Directors and
Officers.
The Delaware General Corporation Laws authorize
corporations to limit or eliminate, subject to specified conditions, the personal liability of directors to corporations and their
stockholders for monetary damages for breach of their fiduciary duties. Our Certificate of Incorporation, as amended, states that
the liability of a director of our Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law.
Section 145 of the Delaware General Corporation
Law permits a corporation to indemnify any director or officer of the corporation against expenses, including attorneys’
fees, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding
brought by reason of the fact that such person is or was a director or officer of the corporation, if such person acted in good
faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and,
with respect to any criminal action or proceeding, if he or she had no reason to believe his or her conduct was unlawful. In a
derivative action, one brought by or on behalf of the corporation, indemnification may be provided only for expenses actually and
reasonably incurred by any director or officer in connection with the defense or settlement of such an action or suit if such person
acted in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the corporation,
except that no indemnification shall be provided if such person shall have been adjudged to be liable to the corporation, unless
and only to the extent that the court in which the action or suit was brought shall determine that the defendant is fairly and
reasonably entitled to indemnity for such expenses despite such adjudication of liability.
Article SIXTH of our Certificate of Incorporation,
as amended, eliminates the liability of a director to us or our stockholders for monetary damages for such a breach of fiduciary
duty as a director, except for liabilities arising:
|
· |
from any breach of the director’s duty of loyalty to us or our stockholders; |
|
· |
from acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; |
|
· |
under Section 174 of the Delaware General Corporation Law; and |
|
· |
from any transaction from which the director derived an improper personal benefit. |
Item 13. Financial
Statements and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
VG Life Sciences, Inc.
CONTENTS
Financial Statements: |
F-1 |
|
|
Consolidated Balance Sheets at June 30, 2014 ( Unaudited) and December 31, 2013 (Audited) |
F-1 |
|
|
Consolidated Statements of Operations for the Three Months
Ended June 30, 2014 and 2013 (Unaudited), the Six Months Ended June 30, 2014 and 2013, and for the period July 11, 1995 (Inception)
to June 30, 2014 (Unaudited) |
F-2 |
|
|
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2014 and 2013 (Unaudited), and for the period July 11, 1995 (Inception) to June 30, 2014 (Unaudited) |
F-3 |
|
|
Notes to Consolidated Financial Statements for the Six Months
Ended June 30, 2014 and 2013 (Unaudited) |
F-4 |
|
|
Report of Independent Registered Public Accounting Firm |
F-6 |
|
|
Consolidated Balance Sheets at December 31, 2013 and 2012
|
F-7 |
|
|
Consolidated Statements of Operations from July 11, 1995 (Inception)
to December 31, 2013 |
F-8 |
|
|
Consolidated Statement of Stockholders’ deficit from
July 11, 1995 (Inception) to December 31, 2013 |
F-9 |
|
|
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-21 |
|
|
Notes to Consolidated Financial Statements for the years ended
December 31, 2013 and 2014 |
F-23 |
|
|
VG LIFE SCIENCES INC. (formerly VIRAL GENETICS,
INC.) AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
| |
June 30, 2014 | | |
December 31, 2013 | |
| |
(Unaudited) | | |
(Audited) | |
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash | |
$ | 32,852 | | |
$ | 713,892 | |
Prepaid expenses and other current assets | |
| 28,378 | | |
| 75,494 | |
Total Current Assets | |
| 61,230 | | |
| 789,386 | |
| |
| | | |
| | |
PROPERTY AND EQUIPMENT, NET | |
| – | | |
| – | |
| |
| | | |
| | |
OTHER ASSETS | |
| | | |
| | |
Intangible assets | |
| 1,076,836 | | |
| 1,076,836 | |
| |
| | | |
| | |
TOTAL ASSETS | |
$ | 1,138,066 | | |
$ | 1,866,222 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS' DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
| |
| | | |
| | |
Accounts payable | |
$ | 863,348 | | |
$ | 405,000 | |
Accrued expenses | |
| 204,461 | | |
| 434,471 | |
Accrued interest | |
| 189,441 | | |
| 69,898 | |
Insurance finance agreement | |
| 4,834 | | |
| 33,836 | |
Convertible debt - related parties | |
| 2,184,460 | | |
| 1,844,732 | |
Convertible debt - other | |
| 1,082,027 | | |
| 1,363,272 | |
Derivative liabilities | |
| 2,211,885 | | |
| 2,183,440 | |
| |
| | | |
| | |
Total Current Liabilities | |
| 6,740,456 | | |
| 6,334,649 | |
| |
| | | |
| | |
COMMITMENTS AND CONTINGENCIES | |
| | | |
| | |
| |
| | | |
| | |
STOCKHOLDERS' DEFICIT | |
| | | |
| | |
Preferred stock, 10,000,000 shares authorized, $0.000 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; 25,816,687
and 17,459,752 issued and outstanding, respectively | |
| 2,582 | | |
| 1,746 | |
Additional paid-in capital | |
| 98,193,582 | | |
| 94,609,247 | |
Noncontrolling interests | |
| 681,717 | | |
| 698,921 | |
Deficit accumulated during the development stage | |
| (104,481,243 | ) | |
| (99,779,313 | ) |
Total Stockholders' Deficit | |
| (5,602,390 | ) | |
| (4,468,427 | ) |
| |
| | | |
| | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | |
$ | 1,138,066 | | |
$ | 1,866,222 | |
VG LIFE SCIENCES, INC. (formerly VIRAL GENETICS,
INC.) AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
| |
Three Months Ended June 30, | | |
Six Months Ended June 30, | | |
July 11, 1995 (Inception) to | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | | |
June 30, 2014 | |
| |
| | |
| | |
| | |
| | |
| |
REVENUES | |
$ | – | | |
$ | – | | |
$ | – | | |
$ | – | | |
$ | 347,750 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 224,377 | | |
| (12,630 | ) | |
| 635,983 | | |
| 49,440 | | |
| 18,624,767 | |
Management salaries | |
| 283,125 | | |
| 149,457 | | |
| 566,250 | | |
| 229,882 | | |
| 6,443,024 | |
Depreciation and amortization | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,645,748 | |
Legal and professional | |
| 347,114 | | |
| 374,663 | | |
| 897,674 | | |
| 505,863 | | |
| 8,222,810 | |
Consulting fees | |
| 858 | | |
| 44,150 | | |
| 37,629 | | |
| 102,500 | | |
| 19,561,051 | |
General and administrative | |
| 296,245 | | |
| (32,764 | ) | |
| 665,865 | | |
| 31,776 | | |
| 10,374,631 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total expenses | |
| 1,151,719 | | |
| 522,876 | | |
| 2,803,401 | | |
| 919,461 | | |
| 64,872,031 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
LOSS FROM OPERATIONS | |
| (1,151,719 | ) | |
| (522,876 | ) | |
| (2,803,401 | ) | |
| (919,461 | ) | |
| (64,872,031 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
OTHER INCOME (EXPENSE) | |
| | | |
| | | |
| | | |
| | | |
| | |
Asset impairment | |
| – | | |
| – | | |
| – | | |
| – | | |
| (475,000 | ) |
Sale of distribution rights | |
| – | | |
| – | | |
| – | | |
| – | | |
| 1,309,966 | |
Interest income | |
| – | | |
| – | | |
| – | | |
| – | | |
| 9,392 | |
Derivative benefit/(expense) | |
| (300,812 | ) | |
| 124,291 | | |
| (509,829 | ) | |
| (1,465,134 | ) | |
| (5,458,660 | ) |
Interest expense | |
| (554,092 | ) | |
| (74,713 | ) | |
| (1,405,904 | ) | |
| (431,203 | ) | |
| (35,582,194 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total other income (expense) | |
| (854,904 | ) | |
| 49,578 | | |
| (1,915,733 | ) | |
| (1,896,337 | ) | |
| (40,196,496 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS | |
| (2,006,623 | ) | |
| (473,298 | ) | |
| (4,719,134 | ) | |
| (2,815,798 | ) | |
| (104,720,777 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS | |
| 8,602 | | |
| 11,998 | | |
| 17,204 | | |
| 22,406 | | |
| 239,533 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | |
$ | (1,998,021 | ) | |
$ | (461,300 | ) | |
$ | (4,701,930 | ) | |
$ | (2,793,392 | ) | |
$ | (104,481,244 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET LOSS PER COMMON SHARE, BASIC AND DILUTED | |
$ | (0.09 | ) | |
$ | (0.09 | ) | |
$ | (0.22 | ) | |
$ | (0.52 | ) | |
| | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES | |
| | | |
| | | |
| | | |
| | | |
| | |
OUTSTANDING, BASIC AND DILUTED | |
| 22,780,739 | | |
| 5,247,507 | | |
| 21,419,102 | | |
| 5,398,912 | | |
| | |
VG LIFE SCIENCES, INC. AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| |
Six Months Ended | | |
Cumulative for the Period July 11, 1995 (Inception) to | |
| |
June 30, | | |
June 30, | |
| |
2014 | | |
2013 | | |
2014 | |
Cash Flows From Operating Activities: | |
| | | |
| | | |
| | |
Net loss attributable to controlling interests | |
$ | (4,701,930 | ) | |
$ | (2,793,392 | ) | |
$ | (104,481,243 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Depreciation | |
| – | | |
| – | | |
| 1,645,748 | |
Accretion of debt discount | |
| 1,360,071 | | |
| 120,918 | | |
| 8,747,898 | |
Debt Issuance costs | |
| – | | |
| – | | |
| 13,339,211 | |
Imputed Interest | |
| – | | |
| – | | |
| 189,826 | |
Non-Controlling Interest | |
| (17,204 | ) | |
| (22,406 | ) | |
| (239,533 | ) |
Services included in accounts payable to be satisfied in shares | |
| – | | |
| – | | |
| 200,000 | |
Issuance of common stock and warrants for services | |
| 34,431 | | |
| – | | |
| 506,681 | |
Stock based compensation | |
| – | | |
| 48,447 | | |
| 1,890,449 | |
Issuance of common stock for services and finders fee | |
| – | | |
| – | | |
| 7,864,423 | |
Issuance of convertible notes for services | |
| 619,500 | | |
| 203,044 | | |
| 2,113,510 | |
Beneficial conversion feature | |
| – | | |
| – | | |
| 71,500 | |
Issuance of preferred stock for interest | |
| – | | |
| – | | |
| 225,000 | |
Settlement-distribution agreement rights | |
| – | | |
| – | | |
| 1,688,953 | |
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 | |
| 590,480 | | |
| 344,400 | | |
| 13,604,404 | |
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 | |
| 47,116 | | |
| – | | |
| (119,698 | ) |
(Increase) decrease in deposits and other assets | |
| – | | |
| – | | |
| 1,972,832 | |
Increase (decrease) in accrued interest | |
| 140,024 | | |
| 50,039 | | |
| 1,431,684 | |
Increase (decrease) in accounts payable | |
| 458,346 | | |
| 193,600 | | |
| 1,776,055 | |
Increase (decrease) in accrued expenses | |
| (74,368 | ) | |
| 238,707 | | |
| 2,582,920 | |
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 | |
| 509,829 | | |
| 1,465,134 | | |
| 5,217,829 | |
| |
| | | |
| | | |
| | |
Net Cash used in operating activities | |
| (1,033,705 | ) | |
| (151,509 | ) | |
| (22,422,830 | ) |
| |
| | | |
| | | |
| | |
Cash Flows From Investing Activities: | |
| | | |
| | | |
| | |
Increase in leasehold improvements | |
| – | | |
| – | | |
| (1,039,306 | ) |
Acquisition of equipment | |
| – | | |
| – | | |
| (361,665 | ) |
Increase in tangible assets | |
| – | | |
| – | | |
| (5,206,051 | ) |
| |
| | | |
| | | |
| | |
Net cash used in investing activities | |
| | | |
| | | |
| (6,607,022 | ) |
| |
| | | |
| | | |
| | |
Cash Flows From Financing Activates: | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Proceeds of MedBridge Debt | |
| – | | |
| – | | |
| 125,000 | |
Proceeds from convertible debt-related party and other | |
| 381,667 | | |
| 348,409 | | |
| 6,988,267 | |
Payment for convertible debt-related party and other | |
| (29,002 | ) | |
| (94,538 | ) | |
| (925,769 | ) |
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 | |
| 352,665 | | |
| 253,871 | | |
| 29,082,704 | |
| |
| | | |
| | | |
| | |
Increase (decrease) in Cash | |
| (681,040 | ) | |
| 102,362 | | |
| 32,852 | |
Cash and cash equivalents, beginning of period | |
| 713,892 | | |
| 6,090 | | |
| – | |
| |
| | | |
| | | |
| | |
Cash and cash equivalents, end of period | |
$ | 32,852 | | |
$ | 108,452 | | |
$ | 32,852 | |
| |
| | | |
| | | |
| | |
SUPPLEMENT 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 | |
$ | 1,269,288 | | |
$ | – | | |
$ | 9,934,238 | |
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 | |
$ | 1,189,107 | | |
$ | 483,500 | | |
$ | 4,976,410 | |
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 | |
$ | 20,481 | | |
$ | – | | |
$ | 9,106,992 | |
Issuance of common stock finders fee | |
$ | – | | |
$ | – | | |
$ | 450,000 | |
Warrants issued with convertible debentures and amendment of arrangement | |
$ | – | | |
$ | – | | |
$ | 516,800 | |
Transfer from derivative liabilities | |
$ | 481,384 | | |
$ | 696,048 | | |
$ | 2,485,807 | |
Issuance of warrant in partial consideration of notes payable | |
$ | – | | |
$ | – | | |
$ | 100,000 | |
Issuance of note in consideration of White Label acquisitions | |
$ | – | | |
$ | – | | |
$ | 100,000 | |
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, the
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’s fiscal year-end is December 31.
As of June 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 June 30, 2014 and December 31, 2013, these subsidiaries were inactive.
NOTE 2 –
BASIS OF PRESENTATION
The accompanying unaudited interim consolidated
financial statements as of June 30, 2014 and for the three and six month periods ended June 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 unaudited annual consolidated financial statements. The unaudited interim consolidated balance sheet as
of June 30, 2014, unaudited interim consolidated statements of operations for the three and six month periods ended June 30, 2014
and 2013, and the unaudited interim consolidated statements of cash flows for the three and six month periods ended June 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 six month periods ended
June 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 unaudited consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated financial
statements; however, the notes to the 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 included in our Annual Report for the year ended December 31, 2013 as filed with the Pink
OTC Markets through the OTC Disclosure and News Service on April 14, 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 June 30, 2014, the Company had a
deficit accumulated during the development stage of approximately $104.5 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. The Company has also recently entered into arrangements under which it has and will continue to receive certain
financial and administrative support and services and has consummated convertible debenture and warrant agreements in
September 2013 from which it will receive cash and executive services. 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 total warrants to purchase 880,000 shares at $.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). Of the proceeds, $100,000
was applied directly to the payment of a Company obligation to third party and $170,000 in cash will be advanced to the Company
in six equal monthly installments beginning in January 2014. As of June 30, 2014, the KED has satisfied the $100,000 Company obligation
and the Company has received $56,666 (two installments). Debt discount of $156,666 was recorded of which $25,150 and $48,477 was
accreted as interest expense in the three and six month ended June 30, 2014.
.
Effective March 1, 2014,
investors in unsecured convertible debentures aggregating $165,000 exchanged these debentures and any associated warrants (waiving
any defaults and accrued interest on the notes) for an equal principal amount under the 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 $13,034 and $19,130 was accreted as interest expense in the three and six month ended June 30,
2014.
NOTE 4 – EQUITY
INCENTIVE PLAN
Effective on June 30,
2014 and March 31, 2014, respectively, the Company granted 1,515,000 and 1,515,000 nonqualified 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 interest of 2.53% and 2.73%; volatility of 228.21% and 273.55%; expected life of
5 years; and no expected dividends. The fair value of these options of $255,251 and $590,480 for the three and six months ended
June 30, 2014, respectively, was included in research and development ($21,043 and $55,647, respectively) and general and administrative
expense ($234,208 and $534,833, respectively) in the three and six months ended June 30, 2014.
NOTE 5 – SUBSEQUENT
EVENTS
a. 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 will remove through an Amendment and Restatement of the Articles of Incorporation on September 4, 2014 and
an Amended and Restated Certificate of Designation of Series A Preferred Stock on September 4, 2014.
b. Effective on July 9, 2014, the Company entered into Convertible Promissory Note (“Notes) and Warrant Purchase Agreements
with two related party entities, Wild Harp Holdings, LLC controlled by John Tynan and DW Odell Company controlled by David Odell
(each an “Investor”). Each individual is an Officer and Director of the Company. Each agreement provides for Notes
of up to $250,000 to be purchased at the option of each Investor, of which $100,000 was received from each Investor. These Notes
bear interest at 8% per annum and are due July 8, 2016. Principal and accrued interest are convertible in four equal quarterly
tranches of principal, plus accrued interest commencing on October 9, 2015, or at any time at each Investor’s option, at
the conversion price. The conversion price is defined as that amount which is 10% lower than the lowest consecutive three-day average
closing prices of the Company’s common stock starting on May 7, 2014 and ending on July 7, 2014 ($0.1245). The Company also
issued warrants to purchase four common shares for each $1 of principal (an aggregate of 800,000 shares as of July 9, 2014) at
$0.93 per share, exercisable on any date from the four-year anniversary to the five-year anniversary from the date of the agreement.
Similar warrants will be issued with future Note proceeds, if any; exercisable at 7.5 times the corresponding conversion price.
These warrants include a cashless exercise provision. On the issuance date, the Notes were convertible into 1,606,426 common shares
of common stock of the Company.
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, P.C.
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.
Item 14. 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.
Item 15. Financial Statements and Exhibits.
Exhibit
No |
Description |
2.1 |
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, incorporated herein by reference). |
3.1 |
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). |
3.2 |
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). |
3.3 |
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). |
3.4 |
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). |
3.5 |
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). |
3.6 |
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). |
3.7 |
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). |
3.8 |
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). |
3.9 |
Certificate of Amendment, filed October 22, 2012 (filed herewith). |
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
herewith). |
3.13 |
Certificate of Restatement and Integration of Articles of Incorporation, dated September
4, 2014 (filed herewith). |
3.14 |
Amended and Restated Certificate of Designation of Series A Preferred Stock, dated September
4, 2014 (filed herewith). |
3.15 |
Bylaws (included as exhibit 3.12 to the Form 10-12G filed
June 20, 2014, and incorporated herein by reference). |
10.1 |
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). |
10.2 |
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). |
10.3 |
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). |
10.4 |
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). |
10.5 |
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). |
10.6 |
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). |
10.7 |
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). |
10.8 |
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). |
10.9 |
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). |
10.10 |
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). |
10.11 |
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). |
10.12 |
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). |
10.13 |
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) |
10.14 |
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). |
10.15 |
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). |
10.16 |
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). |
10.17 |
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). |
10.18 |
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). |
10.19 |
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). |
10.20 |
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). |
10.21 |
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). |
10.22 |
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). |
10.23 |
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). |
10.24 |
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). |
10.25 |
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). |
10.26 |
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). |
10.27 |
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). |
10.28 |
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). |
10.29 |
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). |
10.30 |
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) |
10.31 |
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). |
10.32 |
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). |
10.33 |
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). |
10.34 |
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). |
10.35 |
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). |
10.36 |
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). |
10.37 |
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). |
10.38 |
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). |
10.39 |
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). |
10.40 |
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). |
10.41 |
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). |
10.42 |
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). |
10.43 |
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). |
10.44 |
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). |
10.45 |
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). |
10.46 |
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). |
10.47 |
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). |
10.48 |
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). |
10.49 |
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). |
10.50 |
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). |
10.51 |
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). |
10.52 |
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). |
10.53 |
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). |
10.54 |
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). |
10.55 |
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) |
10.56 |
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). |
10.57 |
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). |
10.58 |
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). |
10.59 |
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). |
10.60 |
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). |
10.61 |
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). |
10.62 |
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). |
10.63 |
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). |
10.64 |
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). |
10.65 |
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). |
10.66 |
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). |
10.67 |
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). |
10.68 |
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). |
10.69 |
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). |
10.70 |
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). |
10.71 |
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). |
10.72 |
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). |
10.73 |
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). |
10.74 |
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). |
10.75 |
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). |
10.76 |
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). |
10.77 |
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) |
10.78 |
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). |
10.79 |
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). |
10.80 |
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). |
10.81 |
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). |
10.82 |
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). |
10.83 |
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). |
10.84 |
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). |
10.85 |
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). |
10.86 |
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). |
10.87 |
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 |
10.88 |
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). |
10.89 |
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). |
10.90 |
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). |
10.91 |
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). |
10.92 |
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). |
10.93 |
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). |
10.94 |
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). |
10.95 |
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). |
10.96 |
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). |
10.97 |
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). |
10.98 |
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). |
10.99 |
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). |
10.100 |
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). |
10.101 |
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). |
10.102 |
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). |
10.103 |
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). |
10.104 |
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). |
10.115 |
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). |
10.106 |
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). |
10.107 |
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). |
10.108 |
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). |
10.109 |
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). |
10.110 |
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). |
10.111 |
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). |
10.112 |
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). |
10.113 |
Note Purchase Agreement between Eric Rosenberg and Stephen
B. Schott, dated September 30, 2013, for the Convertible D Debenture between Viral Genetics, Inc. and Eric Rosenberg, dated
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). |
10.114 |
Note Purchase Agreement between Eric Rosenberg and Stephen
B. Schott, dated September 30, 2013, for the Convertible D Debenture between Viral Genetics, Inc. and Eric Rosenberg, dated
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). |
10.115 |
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). |
10.116 |
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). |
10.117 |
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). |
10.118 |
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). |
10.119 |
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). |
10.120 |
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). |
10.121 |
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). |
10.122 |
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). |
10.123 |
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). |
10.124 |
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). |
10.125 |
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). |
10.126 |
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). |
10.127 |
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). |
10.128 |
Consulting Agreement between VG Life Sciences, Inc. and Richard
Tobin, dated August 1, 2013 (filed herewith). |
10.129 |
Convertible Promissory Note and Warrant Purchase Agreement
between VG Life Sciences. Inc. and Wild Harp Holdings, LLC, dated July 9, 2014 (filed herewith). |
10.130 |
Convertible Promissory Note and Warrant Purchase Agreement
between VG Life Sciences, Inc. and DW Odell Company, LLC, dated July 9, 2014 (filed herewith). |
10.131 |
First Amendment to the Convertible Promissory Note and
Warrant Purchase Agreement between VG Life Sciences and Wild Harp Holdings, LLC, dated July 9, 2014 and made effective
August 14, 2014 (filed herewith). |
10.132 |
First Amendment to the Convertible Promissory Note and
Warrant Purchase Agreement between VG Life Sciences and DW Odell Company, LLC, dated July 9, 2014 and made effective
August 14, 2014 (filed herewith). |
23.1 |
Consent of Independent Registered Public Accounting Firm
(included as exhibit 23.1 to the Form 10-12G filed June 20, 2014, and incorporated herein by reference). |
Financial Statement Schedules
Schedules have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.
SIGNATURES
Pursuant to the requirements
of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
|
VG LIFE SCIENCES, INC. |
|
|
Date: September 10 , 2014 |
By: |
/s/ John Tynan |
|
|
Name: John Tynan
Title: Chief Executive Officer |
Exhibit 3.09
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
OF VIRAL GENETICS, INC.
Viral Genetics, Inc.,
a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”)
does hereby certify that:
FIRST: That at a meeting of the
Board of Directors of the Corporation resolutions were duly adopted setting forth a proposed amendment of the Corporation's Certificate
of Incorporation, declaring said amendment to be advisable and calling a meeting of the stockholders of the Corporation for consideration
thereof. The resolution setting forth the proposed amendment is as follows:
RESOLVED, that the Certificate of
Incorporation of this Corporation be amended by striking the Article thereof numbered "FOURTH" in its entirety and replacing
said Article so that, as amended, it shall be and read as follows:
| FOURTH. | The total number of shares of all classes of capital stock that the Corporation shall have authority
to issue is 3,250,000,000 shares. Stockholders shall not have any preemptive rights, nor shall stockholders have the right to cumulative
voting in the election of directors or for any other purpose. The classes and the aggregate number of shares of stock of each class
that the Corporation shall have authority to issue are as follows: |
| a) | 3,000,000,000 shares of Common Stock, $0.0001 par value ("Common Stock"). |
| b) | 250,000,000 shares of Preferred Stock, $0.0001 par value ("Preferred Stock"). |
The Corporation has previously
established a series of Preferred Stock consisting of 10,000,000 shares of Preferred Stock and designated the "Series A Preferred
Stock." Nothing herein shall modify the rights, powers and privileges relating to said Series A Preferred Stock.
The remaining shares of Preferred
Stock may be issued from time to time in one or more series, with such distinctive serial designations as may be stated or expressed
in the resolution or resolutions providing for the issue of such stock adopted from time to time by the Board of Directors; and
in such resolution or resolutions providing for the issuance of shares of each particular series, the Board of Directors is also
expressly authorized to fix: the right to vote, if any; the consideration for which the shares of such series are to be issued;
the number of shares constituting such series, which number may be increased (except as otherwise fixed by the Board of Directors)
or decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of Directors;
the rate of dividends upon which and the times at which dividends on shares of such series shall be payable and the preference,
if any, which such dividends shall have relative to dividends on shares of any other class or classes or any other series of stock
of the Corporation; whether such dividends shall be cumulative or noncumulative, and if cumulative, the date or dates from which
dividends on shares of such series shall be cumulative; the rights, if any, which the holders of shares of such series shall have
in the event of any voluntary or involuntary liquidation, merger, consolidation, distribution or sale of assets, dissolution or
winding up of the affairs of the Corporation; the rights, if any, which the holders of shares of such series shall have to convert
such shares into or exchange such shares for shares of any other class or classes or any other series of stock of the Corporation
or for any debt securities of the Corporation and the terms and conditions, including price and rate of exchange, of such conversion
or exchange; whether shares of such series shall be subject to redemption, and the redemption price or prices and other terms of
redemption, if any, for shares of such series including, without limitation, a redemption price or prices payable in shares of
Common Stock; the terms and amounts of any sinking fund for the purchase or redemption of shares of such series; and any and all
other designations, preferences, and relative, participating, optional or other special rights, qualifications, limitations or
restrictions thereof pertaining to shares of such series' permitted by law.
SECOND: That thereafter, pursuant
to resolution of its Board of Directors, a special meeting of the stockholders of the Corporation was duly called and held upon
notice in accordance with Section 228 of the General Corporation Law of the State of Delaware at which meeting the necessary number
of shares as required by statute were voted in favor of the amendment.
THIRD: That said amendment was
duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF,
Viral Genetics, Inc., has caused this Certificate to be signed by its duly authorized officer this 22nd day of October,
2012.
VIRAL GENETICS, INC.
By: /s/ Haig Keledjian
Haig Keledjian
President
Exhibit 3.13
CERTIFICATE OF RESTATEMENT
AND INTEGRATION OF
ARTICLES OF INCORPORATION OF
VG LIFE SCIENCES INC.
VG Life
Sciences, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware
(the "Corporation") does hereby certify that this Restatement and Integration of the Corporation's Articles of
Incorporation as set forth below was duly adopted by resolutions approved by the Corporation's Board of Directors in accordance
with the provisions of Section 242 of the General Corporation Law of the State of Delaware. This Certificate only restates and
integrates and does not further amend the provisions of the Corporation's Certificate.
The Corporation was originally incorporated on June 8, 1998
as Hitech Investment, Inc.
FIRST. The name of this corporation shall be VG
Life Sciences, Inc.
SECOND. The Corporation's registered office in
the State of Delaware is to be located at 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808, County of New Castle,
and its registered agent at such address is CORPORATE AGENTS, INC.
THIRD. The purpose or purposes of the corporation
shall be: To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of
Delaware.
FOURTH. The total number of shares of stock which
this Corporation is authorized to issue is 170,000,000 as follows:
| (a) | The total number of Common Stock shares which the Corporation shall have
authority to issue is 150,000,000 with a par value of $0.0001 per share. |
| (b) | The total number of shares of Preferred Stock which the Corporation shall
have authority to issue is 20,000,000 with a par value of $0.0001 per share. |
The Preferred Stock may be issued from time to
time in one or more series, with such distinctive serial designations as may be stated or expressed in the resolution or
resolutions providing for the issue of such stock adopted from time to time by the Board of Directors; and in such resolution
or resolutions providing for the issuance of shares of a particular series, the Board of Directors is also expressly
authorized to fix: the vote, if any; the consideration for which the shares of such series are to be issued; the number of
shares constituting such series, which number may be increased (except as otherwise fixed by the Board of Directors) or
decreased (but not below the number of shares thereof then outstanding) from time to time by action of the Board of
Directors; the rate of dividends upon which and the times at which dividends on shares of such series shall be payable and
the preference, if any, which such dividends shall have relative to dividends on shares of any other class or classes or any
other series of stock of the Corporation; whether such dividends shall be cumulative or noncumulative; the rights, if any,
which the holders of shares of such series shall have in the event of any voluntary or involuntary liquidation, merger,
consolidation, distribution or sale of assets, dissolution or winding up of the affairs of the Corporation; the rights, if
any, which the holders of shares of such series shall have to convert such shares or exchange such shares for shares of any
other class or classes or any other series of stock of the Corporation or for any debt securities of the Corporation and the
terms and conditions, including price and rate of exchange, of such conversion or exchange, whether shares of such series
shall be subject to redemptions, and the redemption price or prices and other terms of redemption, if any, for shares of such
series including, without limitation, a redemption price or prices payable in shares of Common Stock; and any and all other
designations, preferences, and relative, participating, optional or other special rights, qualifications, limitations or
restrictions thereof pertaining to shares of such series permitted by law.
|
(c) |
On November 26, 2012, the Corporation affected a one for 600 reverse split of the Corporation's then issued and outstanding Common
Stock. Immediately prior to the reverse split the Corporation had 3,000,000,000 shares of Common Stock with a par value of $0.0001
authorized for issuance and 250,000,000 shares of Preferred Stock with a par value of $0.0001 authorized for issuance, 10,000,000
of which had been established and designated Series A Preferred Stock. Immediately after the reverse split the Corporation had
60,000,000 shares of Common Stock authorized for issuance and 10,000,000 shares of Preferred Stock authorized for issuance. The
par value of the stock was not changed. The number of shares of Series A Preferred Stock was not changed by the reverse split,
but the number of shares of Common Stock which each share of Series A Preferred Stock may be converted into changed such that every
share of Series A Preferred Stock may now be converted into 0.0167 shares of Common Stock. |
FIFTH The Board of Directors
shall have the power to adopt, amend or repeal the bylaws of the Corporation.
SIXTH. A
director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach
of a fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the corporation
of its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived
any improper personal benefit. If the Delaware General Corporation Law is amended hereafter to authorize corporate action further
eliminating or limiting the personal liability of directors, then the liability of a director of the corporation shall be eliminated
or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended. Any repeal of modification
of this article by the stockholders of the Corporation shall not adversely affect any right of protection of a director or the
Corporation existing at the time or such repeal or modification.
IN WITNESS WHEREOF, VG
LIFE SCIENCES, INC., has caused this restated and integrated certificate to be signed by its duly authorized officer this 4th
day of September, 2014.
|
VG LIFE SCIENCES, INC. |
|
|
|
|
By: |
/s/ John P. Tynan |
|
|
John Tynan |
|
|
CEO & President |
|
|
|
Exhibit 3.14
VG
LIFE SCIENCES, INC.
CERTIFICATE OF DESIGNATION
OF
SERIES A PREFERRED STOCK
(Pursuant to Section 151 of the Delaware
General Corporation Law)
VG Life Sciences, Inc. a Delaware corporation
(the "Corporation"), hereby certifies that, pursuant to authority vested in the Board of Directors of the Corporation
(the "Board") by Article Four of the Corporation's Certificate of Incorporation (the "Certificate of Incorporation")
and pursuant to the provisions of Section 151 of the Delaware General Corporation Law, the following resolution was duly adopted
by the Board on April 28, 2009, subsequently amended on August 22, 2012 and September 4, 2014:
RESOLVED, The Series A Preferred Stock
shall consist of 10,000,000 shares. The powers, preferences, rights, restrictions, and other matters relating to the Series A Preferred
Stock are as follows:
| 1. | Dividends — The holders of the Series A Preferred Stock shall be entitled to receive dividends
as a class with the holders of Common Stock as if the Series A Preferred Stock were converted to Common Stock on the day immediately
prior to the record date of such dividends. Each share of Series A Preferred Stock will rank on a parity with each other share
of Series A Preferred Stock with respect to dividends. |
| (a) | In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary, the holders of the Series A Preferred Stock shall be entitled to receive, prior, and in preference to, any distribution
of assets or surplus funds of the Corporation to the holders of the Common Stock by reason of their ownership thereof, the amount
of $0.20 per share, as adjusted for any stock dividends, combinations or splits with respect to such shares. |
| (b) | In the event of any liquidation, dissolution of winding up of the Corporation, either voluntary
or involuntary, and subject to the payment in full of the liquidation preferences with respect to the Series A Preferred Stock
as provided in subparagraph (a) of this Section 2, the holders of the Common Stock shall be entitled to receive, prior, and in
preference to, any further distribution of any of the assets or surplus funds of the Corporation to the holders of the Series A
Preferred Stock by reason of the ownership thereof, the amount per share determined by dividing $1,000,000 by the aggregate number
of shares of Common stock entitled to receive such distribution and no more. Subject to the payment in full of the liquidation
preferences with respect to the Series A Preferred Stock as provided in subparagraph (a) of this Section 2, if upon the occurrence
of such event, the assets and funds thus distributed among the holders of the Common Stock shall be insufficient to permit the
payment to such holders of the full aforesaid preferential amount, the entire remaining assets of the Corporation legally available
for distribution shall be distributed among the holders of the Common Stock in proportion to the shares of Common Stock then held
by them. |
|
(c) |
After payment to the
holders of the Common Stock and the Series A Preferred Stock of the amounts set forth in Section 2(a) and (b) above, the
entire remaining assets and funds of the Corporation legally available for distribution, if any shall be distributed among
the holders of the Common Stock and Series A Preferred Stock in proportion to the shares of Common Stock then held by them
and the shares of Common Stock which they then have the right to acquire upon conversion of the shares of Series A Preferred
Stock then held by them. |
| 3. | Redemption — The
Series A Preferred Stock may not be redeemed. |
Except as set forth herein or
as required under applicable law, the Series A Preferred Stock shall vote together with all other classes of stock of the Corporation
as a single class on all matters submitted for approval to the stockholders of the Corporation. Except as otherwise provided in
Article 4 the aggregate number of votes to which the Series A Preferred Stock shall be entitled to vote is equal to the number
of shares of Common Stock of the Corporation issued and outstanding at the time of such vote multiplied by 1.01 (the "Total
Series A Vote"). The number of votes with respect to Series A Preferred Stock to which a holder of the Series A Preferred
Stock is entitled to vote is equal to the Total Series A Vote multiplied by the number of shares of Series A Preferred Stock issued
and outstanding at the time of such vote. Except as required under applicable law of the Certificate of Formation, the total votes
of a majority of the shares of all classes of stock of the Corporation entitled to vote on matters submitted for approval to the
stockholders of the Corporation represented, in person or by proxy, at a meeting of shareholders voting together as a single class
shall be required for the approval of any matter submitted to the stockholders of the Corporation including but not limited to,
the election of directors.
The holders of the Series A
Preferred Stock shall have conversion rights as follows (the "Conversion Rights"):
| (a) | Right to Convert. Each share of Series A Preferred Stock shall be convertible, at the option of
the holder thereof, into the number of shares of Common Stock determined by multiplying 0.0167 by the number of shares of Series
A Preferred Stock submitted for conversion, rounded to the nearest whole number. |
| (b) | The number of shares into which the Series A Preferred Stock shall be converted shall be adjusted
for any dividend on the Common Stock payable in Common Stock or in any right to acquire Common Stock for no consideration of shall
effect a subdivision of the outstanding shares of Commons Stock into a greater number of shares of Commons Stock (by Stock split,
reclassification or otherwise than by payment of a dividend in Common Stock or in any rig to acquire Common Stock), or in the event
that the outstanding shares of Common Stock shall be combined or consolidated, by reclassification or otherwise, into a lesser
number of shares of Common Stock, then the number of shares of Common Stock into which the Series A Preferred Stock shall be adjusted
consistent with such dividend, right, subdivision or amalgamation. |
| (c) | If at any time or from time to time after the issue of the Series A Preferred Stock, there is a
capital reorganization of the Common Stock (other than as defined elsewhere herein or as relating to a recapitalization subdivision,
combination, reclassification, exchange or substitution of shares) as part of such capital reorganization, provision shall be made
so that the holders of the
Series A Preferred Stock shall thereafter be entitled to receive upon conversion of the Series A Preferred Stock the number of
shares of stock or other securities or property of the Corporation to which a holder of the number of shares of Common Stock deliverable
upon conversion would have been entitled in such a capital reorganization subject to adjustment in respect of such stock or securities
by the terms thereof. |
| (d) | Mechanics of Conversion. Before any holder of Series A Preferred Stock shall
be entitled to convert the same into shares of Common Stock, he shall surrender the certificate or certificates therefore, duly
endorsed at the office of the Corporation or of any transfer agent for such stock, and shall give written notice to the Corporation
at such office that the holder elects to convert the same and shall state therein the name or names in which the holder wishes
the certificate or certificates for shares of Common Stock to be issued. The Corporation shall, as soon as practicable thereafter,
issue and deliver at such office to such holder of Series A Preferred Stock a certificate or certificates for the number of shares
of Common Stock to which he shall be entitled as aforesaid. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of surrender of the shares of Series A Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date. |
| (e) | No Impairment. The Corporation will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed
hereunder by the Corporation, but will at all times, in good faith, assist in the carrying out of all the provisions of this Section
5 and in the taking of all such action as may be necessary or appropriate in order to protect the Conversion rights of the holders
of the Series A Preferred Stock against impairment. |
| (f) | Reservation of Stock Issuable Upon Conversion. The Corporation shall at
all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting
the conversion of the shares of the Series A Preferred Stock, such number of its shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all outstanding shares of the Series A Preferred Stock; and if at any time the number
of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred Stock, the Corporation will take such corporate action as may in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose,
including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment
to the Certificate of Incorporation. |
| 6. | Restrictions and Limitations. |
|
(a) |
Transfer of Series A Preferred Stock. No person holding shares of Series A Preferred Stock may transfer, and the Corporation shall
not register the transfer of such shares of Series A Preferred Stock, whether by sale, assignment, exchange, gift, bequest, appointment
or otherwise except to a "Permitted Transferee." The term "Permitted Transferee" shall mean any trust that
is established by the holder to whom the shares were initially issued (the "Original Holder") for estate planning
purposes that provides for distribution to the Original Holder's beneficiaries of shares of Series A Preferred Stock upon the
Original Holder's death, provided that the Original Holder retains voting control with respect to such shares of Series A Preferred
Stock until his death. Any change in the Original Holder's voting control or voting control with respect to such Original Holder
regarding such shares of Series A Preferred Stock so transferred shall automatically convert the Series A Preferred Stock to Common
Stock as set forth in Section 5(a) hereof |
| (i) | If any shares of Series A Preferred Stock are acquired by any person who is not a
Permitted Transferee, all shares of Series A Preferred Stock then held by such person shall be deemed, without further act on
the part of any person, to be converted into shares of Common Stock as set forth in Section 5(a) hereof, and stock
certificates formerly representing such shares of Series A Preferred Stock shall thereupon and thereafter be deemed to
represent the like number of shares of Common Stock. |
| (ii) | Notwithstanding anything to the contrary set forth herein, the Original Holder may
pledge his shares of Series A Preferred Stock to a pledgee pursuant to a bona fide pledge of such shares as
collateral security for indebtedness due to a pledgee; provided, however, that (i) the Original Holder at all times retains
voting control with respect to such pledged shares until an event of foreclosure or similar action, and (ii) such shares
shall not be transferred to or registered in the name of any such pledgee and shall remain subject to the provisions of this
Section. In the event of foreclosure of other similar action by the pledgee, such pledged shares of Series A Preferred Stock
shall be deemed, without further act on the part of any person, to be converted into shares of Common Stock and transferred
to the pledgee. |
| (iii) | Shares of Series A Preferred Stock shall be registered in the names of the beneficial
owners thereof and not in "street" or "nominee" name. For this purpose, a "beneficial owner" of
any shares of Series A Preferred Stock shall mean the Original Holder or a Permitted Transferee. The Corporation shall
note or cause to be noted on the certificates for shares of Series A Preferred Stock, the existence of the restrictions on
transfer and registration of transfer imposed by this Section 6. |
This Certificate shall become effective
upon filing thereof with the Secretary of State of the State of Delaware.
The Corporation has caused this Certificate to be duly executed and acknowledged by its undersigned duly authorized officer this 4th day of September,
2014.
|
VG LIFE SCIENCES, INC. |
|
|
|
|
By: |
/s/ John P. Tynan |
|
|
John Tynan |
|
|
President & CEO |
|
|
|
Exhibit 10.128
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (“the Agreement”) is
made and entered into by and between VG LIFESCIENCES INC., a Delaware corporation (the “Client”), and Richard Tobin
(“Consultant”) effective the ________________.
(the Client and Consultant are jointly referred to herein as the
“Parties”)
WHEREAS, the Client is engaged in the
business of researching, development and distributing products and technology with applications in Life Sciences, including but
not limited to Treading autoimmune disease, cancer, biofuel and agricultural oil production; and
WHEREAS, Consultant
has been engaged in and has experience in the Client’s business; and
WHEREAS, the Client desires to provide
for the engagement of Consultant, to clearly set forth the relationship between the parties, and to restrict Consultant from using
certain confidential information and from competing with the Client in the future.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:
1) Non-Exclusive Engagement Engagement
of Consultant; Term. The Client hereby engages Consultant as its non-exclusive provider of consulting services described in
this Agreement, for a term (the “Term”) which will commence on the date of this Agreement and continue on a month-to-month
basis or terminated as described in Section 12.
2) Consultant Services. On the
terms and conditions set forth in this Agreement, Consultant will provide the following services to the Client as directed by
the Client (the “Services”).
a) | | Consultant will assist in the compilation, organization, gathering, ordering, filing
and archiving of data, lab results, white papers, and other information generated in its research including that conducted, directed
or designed by M. Karen Newel-Rogers, or contracted vendors to aid in the creation of a restricted access “data room”
for Client information concerning its products and test results; and |
b) | | Consultant will assist and advise the Client in other areas in which Consultant has
expertise as reasonably requested from time to time by the Client. |
3) Method of Providing Services.
Consultant shall be available to the management of the Client as reasonably requested during the Term. Consultant will perform
Services, and may communicate with the Client’s management and other parties, through personal meetings, correspondence,
telephone or video conferences, and such other methods, and at such times, as mutually determined, subject to the reasonable convenience
of the parties. Unless requested otherwise by the Client, Consultant shall communicate with the Client’s management through
the Client’s President. Acting in good faith and consistent with ordinary business practices with respect to advisory relationships,
Consultant shall devote a reasonable amount of time per month to the provision of the Services described herein provided that
this does not materially conflict with Consultant’s appointment at Institution
4) Performance. Consultant agrees
to at all times faithfully, industriously, and to the reasonable best of her abilities, experience, and talents,perform all of
the Services that may be required of and from her pursuant to the express and explicit terms hereof.
5) Independence of Parties. Nothing contained in this Agreement shall constitute either party as an
employee, partner, co-venturer or agent of the other, it being intended that each shall act as an independent contractor with
respect to the other. Consultant is not authorized to speak on behalf of the Client or bind it in any manner.
6) Compensation.
a) | | Fee. $ ___ Per Month. Cash Payment __________ Common Stock _______ |
a) | | The Client hereby indemnifies and defends the Consultant and each of her executors,
heirs, assigns, and representatives, as applicable, (each, an “Indemnitee”) against, and holds each Indemnitee harmless
from, any loss, liability, obligation, deficiency, damage or expense including, without limitation, interest, penalties, reasonable
attorneys’ fees and disbursements (collectively, “Damages”), that any Indemnitee may suffer or incur based upon,
arising out of, relating to or in connection with (whether or not in connection with any third party claim): |
i) | | Any breach of any representation or warranty made by the Client contained in this
Agreement; the failure of the Client to perform or to comply with any covenant or condition required to be performed or complied
with in accordance with this Agreement; and the good faith performance of the Services. |
b) | | Indemnification Procedures for Third Party Claims. |
i) | | Promptly after notice to an Indemnitee of any claim or the commencement of any action
or proceeding, including any actions or proceedings by a third party (hereafter referred to as “Proceeding” or “Proceedings”),
involving any Damage referred to in this Section, such Indemnitee shall, if a claim for indemnification in respect thereof is
to be made against an Indemnitee pursuant to this Section, give written notice to the Client, wetting forth in reasonable detail
the nature thereof and the basis upon which such party seeks indemnification hereunder; provided, however, that the failure of
any Indemnitee to give such notice shall not relieve the Client of its obligations hereunder, except to the extent that the Client
is actually prejudiced by the failure to give such notice. |
ii) | | In the case of the Proceeding by a third party against an Indemnitee, the Client shall
upon notice as provided above, assume the defense thereof, with counsel reasonably satisfactory to the Indemnitee, and, after
notice from the Client to the Indemnitee of its assumption of the defense thereof, the Client shall not be liable to such Indemnitee
for any legal or other expenses subsequently incurred by the Indemnitee in connection with the defense thereof (but the Indemnitee
shall have the right, but not the obligation, to participate at its own cost and expense in such defense by counsel of its own
choice) or for any amounts paid or foregoing by the Indemnitee as a result of any settlement or compromise thereof that is effected
by the Indemnitee without the written consent of the Client). |
(iii) | | Anything in this Section 10 notwithstanding, if both the Client and the Indemnitee
are named as parties or subject so such Proceeding and either party determines with advice of counsel that there may be one or
more legal defenses available to it that are different from or additional to those available to the other arty or that a material
conflict of interest between such parties may exist in respect of such Proceeding, then the Client may decline to assume the defense
on behalf of the Indemnitee or the Indemnitee may retain the defense on its own behalf, and, in either such case, after notice
to such effect is duly given hereunder to the other party, the Client shall be relieved of its obligation to assume the defense
on behalf of the Indemnitee, but shall be required to pay any legal or other expenses including, without limitation, reasonable
attorneys’ fees and disbursements, incurred by the Indemnitee in such defense. |
(iv) | | If the Client assumes the defense of any such Proceeding, the Indemnitee shall cooperate
fully with the Client and shall appear and give testimony, produce documents and other tangible evidence, and otherwise assist
the Client in conducting such defense. The Client shall not, without the consent of the Indemnitee, consent to entry of any judgment
or enter into any settlement or compromise which does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such Indemnitee of a release from all liability in respect of such claim or Proceeding. Provided that proper notice
id duly given, if the Client shall fail promptly and diligently to assume the defense thereof, then the Indemnitee may respond
to, contest and defend against such Proceeding and may make in good faith any compromise or settlement with respect thereto, and
recover from the Client the entire cost and expense thereof including, without limitation, reasonable attorneys’ fees and
disbursements and all amounts paid or foregone as a result of such Proceeding, or the settlement or compromise thereof. The indemnification
required hereunder shall be maid by period payments of the amount there of during the course of the investigation or defense,
as and when bills or invoices are received or loss, liability, obligation, damage or expense is actually suffered or incurred. |
c) | | The provisions of this Section 10 shall survive the expiration or earlier termination
of this Agreement. |
11. Termination. Either party may terminate this agreement at any time during
the term hereof without advance notice by providing written communication to the other party.
12. Termination Payment.
Upon termination Consultant shall be entitled to receive only that compensation
due and payable hereunder with respect to periods ended on or before the date of termination, pro-rated if necessary.
13. Cooperation. The parties shall deal with each other in good faith, good
faith meaning honesty in fact and the observance of all commercial standards of fair dealing and usages of trade, which are regularly
observed within the industry.
14. No Strict Construction. The language used in this Agreement shall be deemed
to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall bee applied
against any party.
15. Arbitration. Any controversy or claim arising out of or relating to this
contract, or the breach thereof, shall be settled by arbitration administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules. If the parties agree, there shall be one arbitrator; otherwise there shall be a panel of
three arbitrators. The cost of arbitration shall be borne by the Client. Judgment upon the reward rendered may be entered in any
court having jurisdiction thereof.
16. Governing Law and Disputes. This Agreement shall be governed by the laws
of the State of California, without regard to choice of law provisions.
17. Waiver. Any party hereto may waive compliance by the other with any of the
terms, provisions and conditions set forth herein; provided, however, that any such waiver shall be in writing specifically setting
forth those provisions waived thereby. No such waiver shall be deemed to constitute or imply waiver of any other term provision
or condition of this Agreement.
18. Severability. If and to the extent that any court of competent jurisdiction
holds any provision or any part thereof of this Agreement to be invalid or unenforceable, such holding shall in no way affect the
validity of the remainder of this Agreement.
19. Counterpart and Headings. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
All headings in this Agreement are inserted for convenience of reference and shall not affect its meaning or interpretation.
20. Entire Agreement. This Agreement is and shall be considered to be the only
agreement or understanding between the parties hereto with respect to the engagement of Consultant by the Client. All negotiations,
commitments, and understandings acceptable to both parties have been incorporated herein. No letter, telegram, or communication
passing between the parties hereto shall be deemed a part of this Agreement; nor shall it have the effect of modifying or adding
to this Agreement unless it is distinctly stated in such letter, telegram, or communication passing between the parties hereto
hall be deemed a part of this Agreement; nor shall it have the effect of modifying or adding to this Agreement unless it is distinctly
stated in such letter, telegram, or communication that it is to constitute a part of this Agreement and is to be attached as a
rider to this Agreement and is signed by the parties to this Agreement.
21. Modification of Contract. This Agreement cannot be
modified by tender, acceptance or endorsement of any instrument of payment, including check. Any words contained in an instrument
of payment modifying this contract, including a waiver or release of any claims, or a statement referring to paying is full is
void.
22. Enforcement. Consultant acknowledges that any remedy at law for
breach of Exhibit E would be inadequate, acknowledges that the Client would be irreparably damaged by an actual or threatened
breach thereof, and agrees that the Client shall be entitled to an injunction restraining Consultant from any actual or
threatened breach of Exhibit E as well as any further appropriate equitable relief without any bond or other security being
required. The Client may pursue enforcement of Exhibit E by commencing an action at law or in equity without first
pursuing arbitration pursuant to Section 16 of this Agreement. In addition to the foregoing, each of the parties hereto shall
be entitled to any remedies available in equity or by statute with respect to the breach of the terms of this Agreement by
the other party.
23. Assignment. The provisions of this Agreement shall be in writing and shall
be sent by certified or registered first class mail, return receipt requested, or shall be personally delivered, or sent by an
overnight delivery service such as Federal Express, or shall be transmitted by telefax (provided such telefax message is confirmed
by telephonic acknowledgment of receipt or by sending via other authorized means a confirmation copy of such notice) addressed
to the parties at their respective last know business addresses.
Agreed to effective the 1st day of July, 2014
VG LIFESCIENCES INC. |
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By: /s/ Haig Keledjian |
/s/ Richard Tobin |
President |
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EXHIBIT A
VG LIFESCIENCES INC., Intellectual Property Agreement
(the “VG LIFESCIENCES, INC. IP Agreement”)
In consideration of Consultant entering into that certain Consulting Agreement dated as of the
date hereof (the “Consulting Agreement”) with VG LIFESCIENCES INC., (“VG”), Consultant agrees as
follows. Capitalized terms used herein that are not defined in this VG LIFESCIENCES INC., IP Agreement shall be defined as
in the Consulting Agreement.
1. Non-Solicitation. Consultant acknowledges that, in the course of performing Services (as used throughout
this VG LIFESCIENCES INC., IP Agreement as defined in the Consulting Agreement) for or on behalf of VG, having access to VG’s
technology, reports, processes, materials, knowledge and know-how, data, facilities, books and records, Consultant may from time
to time receive Confidential Information (as defined in Paragraph 2, below) of or with respect to VG and hereby stipulates and
agrees that such Confidential Information is a part of and essential to the operations and goodwill of VG. In connection and in
furtherance of the foregoing, Consultant may not (whether directly or indirectly; as the principal or on such person’s own
account; or solely or jointly with others as an Consultant, agent, independent contractor, consultant, general or limited partner,
member, stockholder or holder of equity securities of any other person, other than through ownership of less than on percent of
a class of publicly-traded securities of a company) engage in any of the conduct or activity described below in this Paragraph
1.
(a) Consultant may not, so long as Consultant is a Consultant of VG pursuant to the Consulting
Agreement and until the third anniversary of the effective date of termination of the Consulting Agreement for any reason,
solicit, induce or influence any person that at such time is (or, during the six (6) month period ending on the effective
date of termination of the Consulting Agreement, was) a vendor, licensor, licensee, distributor, customer, company,
Consultant, or independent contractor of VG. Consultant acknowledges that the restrictions in this subparagraph (a) of this
Paragraph 1 will not impair Consultant’s ability to carry on Consultant’s profession or earn a living.
(b) Consultant may not, so long as Consultant is a Consultant of VG and until the third anniversary
of the effective date of termination of the Consulting Agreement for any reason, without the express prior written consent
of VG, participate either directly or indirectly in any discussion or negotiation with any person that at such time is
(or, during the six month period ending on the effective date of termination of the Consulting Agreement, was) a vendor,
licensor, licensee, distributor, customer, company Consultant, or independent contractor of VG the purpose of which
discussion or negotiation would be materially adverse to the interests of VG and the relationship existing between VG and
such person. Consultant acknowledges that the restrictions in this subparagraph (b) of Paragraph 1 will not impair
Consultant’s ability to carry on Consultant’s profession or earn a living.
2. Non-Disclosure of Information. Consultant understands that the covenants and agreements in this
Paragraph 2 may limit Consultant’s ability to earn a livelihood in a business similar to the business of VG of researching,
developing and distributing biomedical products and technology, but nevertheless believes that the Consultant has received and
will receive sufficient consideration and other benefits from VG so as to clearly justify such restrictions which, in any event
(given Consultant’s education, skills and ability), Consultant does not believe would prevent Consultant from earning a
living:
(a) Consultant acknowledges that, in the course of performing Services for or on behalf of VG, having
access to VG’s technology, reports, processes, knowledge and know-how, data, facilities, books and records,
or otherwise being associated with VG, Consultant will have access to , and become acquainted with, Confidential Information
of or with respect to VG and hereby stipulates and agrees that such Confidential Information is a part of and essential to
the operations and goodwill of VG. Consultant (i) hereby stipulates and acknowledges that the Confidential
Information constitutes important, material, proprietary and confidential trade secrets of VG that affect the successful
conduct of the business and goodwill of, VG; (ii) stipulates and acknowledges that any and all of the Confidential
Information is the sole and exclusive property of VG, regardless of whether Consultant was engaged in the development of any
of such Confidential Information while performing Services for or on behalf of VG; (iii) agrees to keep all such Confidential
Information in strictest confidence, and not to, directly or indirectly, use or divulge, disclose or communicate to any
person (other than a duly-authorized representative of VG) any such Confidential Information other than in the ordinary
course of business of VG for the benefit of VG; and (iv) agrees not to copy or otherwise duplicate any such Confidential
Information or knowingly allow anyone else to copy or otherwise duplicate such Confidential Information, other than in the
ordinary course of business of VG for the benefit of VG. Upon the termination of the Consulting Agreement, and at any time at
the request of VG, shall promptly return to VG all copies of such Confidential Information delivered to or obtained by
Consultant or, at the election of VG, certify that all copies of such Confidential Information in the possession of
Consultant or any person who received such Confidential Information from Consultant have been destroyed or erased, except
that Consultant may keep one (1) copy thereof for the purpose of complying with the terms of the Agreement.
(b) “Confidential Information” means, with respect to VG, any technical, financial or business
information (including, without limitation, manuals, forms, memoranda, reports, journals, data, test results, correspondence,
business plans, customer lists, pricing lists, contracts, plans or specifications, or the like) that may disclose (or may reasonably
be expected to disclose) the customs and practices, marketing methods and data, services and products, methods of doing business,
manner of operation know-how, formulas, technical data or information, clinical study protocols, patient or biologic information,
manufacturing information or know-how methods, processes, compounds, and other confidential information, regardless of whether
in written, oral, graphic, encoded, encrypted tangible, or intangible forms, all of which the Consultant hereby acknowledges constitute
“trade secrets” within the meaning of the Uniform Trade Secrets Act, codified at Sections 3426 et seq. of the
California Civil Code.
(c) Consultant shall have no obligations to preserve the confidential or proprietary nature of any
information that (i) was already known to Consultant free of any obligation to keep such information confidential at the time
of disclosure of such information; (ii) is or becomes publicly known through no wrongful act of Consultant; (iii)
is rightfully received from a third person having no direct or indirect secrecy or confidentiality obligation to VG; (iv)
is disclosed to a third person by VG without restrictions on confidentiality similar to those contained in this Paragraph 2;
(v) is approved for disclosure by written authorization of VG; (vi) is developed by Consultant or on Consultant’s
behalf independently of the information disclosed to Consultant by VG as shown by written record; or (vii) Consultant is
obligated to produce pursuant to an order of a court of competent jurisdiction or a valid administrative or Congressional
subpoena, provided that Consultant promptly notifies VG and cooperates reasonably with VG’s efforts to contest or limit
the scope of such order.
(d) Except for the assignment provisions as provided in Section 3 of this VG LIFESCIENCES INC.,
IP Agreement, the provisions of this Paragraph 2 shall apply to Consultant throughout the term of the Consulting Agreement
and continue in perpetuity.
3. Assignment of Inventions. Consultant shall promptly disclose any Consultant Creations (as defined
below) to VG and any such Consultant Creations shall be VG’s sole property. All original works of authorship that are made
by Consultant (in whole or in part, either alone or jointly with others) during and in the performance of the Services and that
are protectable by copyright are “works made for hire” as defined in the United States Copyright Act (17 U.S.C.A.
Section 101). “Consultant Creation(s)” means any idea, concept, discovery, development, device, design, apparatus,
use, machine, practice, process, method, product, composition of matter, improvement, formula, algorithm, literary or graphical
or audiovisual work or sound recording, mask work, or computer program of any kind (whether or not subject to patent, copyright,
trademark, trade secret, mask work right, or similar protection) that relate(s) in any way to any of VG’s biological or
pharmaceutical products under investigation or development from time to time, or any manufacturing or production know-how, scientific
know-how, processes, or procedures pertaining thereto that are made by Consultant, in whole or in part, either solely or jointly
with others, during and in the performance of the Services, provided, however, that Consultant does not have a pre-existing obligation
to assign any such Consultant Creation to the University. Consultant shall promptly notify VG in advance or at the earliest reasonable
time if any work being performed or proposed by VG in advance or at the earliest reasonable time if any work being performed or
proposed by VG to be performed by Consultant under this Agreement may give rise to Consultant Creations that may be assignable
to University under any agreements.
(a) Consultant hereby assigns to VG, and agrees to assign to VG in the future where appropriate, any
and all such Consultant Creations, and agrees to cooperate with VG in the execution of appropriate instruments assigning
and evidencing such assignment and ownership rights of VG, to the maximum extent permitted by Section 2870 of the
California Labor Code. In order that VG may perfect and protect its rights to Consultant Creations as provided hereunder,
Consultant agrees that Consultant’s obligations regarding assignment of such Consultant Creations to VG shall survive
termination of Consultant’s engagement with VG for a term of three years following the date of termination of the
Consulting Agreement for any reason.
4. Enforcement. Consultant acknowledges that the covenants and the restrictions contained in this
Agreement are necessary and required for the adequate protection of VG and are necessary to preserve the goodwill of VG and
the value of its existing Confidential Information, inventions, contracts and relationships; such covenants relate to matters
that are of a special, unique and extraordinary value; and , a breach of any such covenant or restriction will result in loss
of goodwill, invasion of property rights of VG, unfair competition by the breaching party, and other irreparable harm and
damages to VG, which cannot be adequately compensated by a monetary award. It is accordingly agreed that VG or any of its
subsidiaries shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement. Nothing in this Agreement shall be construed as prohibiting
VG from pursuing any other legal or equitable remedies available to VG for such breach or threatened breach of any of the
provisions of this Agreement (including, without limitation, recovery of all damages from Consultant and an equitable
accounting of all earnings, profits and other benefits arising from such violation).
5. Conflict. In the event of any conflict between any provision in this Agreement and any provision
in the Consulting Agreement, the provision(s) in the Consulting Agreement shall govern.
AGREED:
CONSULTANT: |
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/s/ Richard Tobin |
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DATED: 6/27/2013 |
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VG Lifesciences Inc. |
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/s/ Haig Keledjian |
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DATED: 6/28/2013 |
Haig Keledjian, President |
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Exhibit 10.129
CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
THIS CONVERTIBLE PROMISSORY NOTE AND WARRANT
PURCHASE AGREEMENT is made as of July 9, 2014, by and among Wild Harp Holdings, LLC, a California limited liability company (the
“Investor”) and VG Life Sciences Inc. (the "Company" or “VGLS”).
THE PARTIES HEREBY AGREE AS FOLLOWS:
1.
Purchase and Sale of Notes.
1.1
Purchase and Sale of Note. Subject to the terms and conditions of this Agreement and pursuant to promissory notes
in the form attached hereto as Exhibit A (each a "Note" and, collectively, the “Notes), the Investor agrees to
purchase at the Closing and the Company agrees to sell and issue to the Investor at the Closing and thereafter Notes in the principal
amount of at least One Hundred Thousand Dollars ($100,000) and up to a maximum of Two Hundred Fifty Thousand Dollars ($250,000)
at an amount equal to the face value of the Note(s) (the "Investment"). Investor will purchase an initial Note in the
minimum amount of One Hundred Thousand ($100,000) in cash at the Closing, but shall be entitled to purchase any amount in cash
up to an aggregate of $250,000, such additional payments to be made no later than July 9, 2015. A separate Note will be issued
to Investor immediately upon tender of additional amounts as contemplated herein. The Warrant (as defined in Section 1.2 below)
includes a cashless exercise feature enabling conversion into unregistered shares (“Shares”) of common stock of VGLS
based on the spread between the warrant exercise price and the then-trading value of the underlying VGLS Shares. The Note is convertible
into Shares at a conversion rate equal to the lowest consecutive three-day average closing price of the Shares starting on May
7, 2014 and ending on July 7, 2014 (the “Period”), minus a ten percent (10%) discount (the “Price”). The
Note will be convertible into Shares in four equal tranches (25% each) on the following dates on the quarter anniversary of the
date of a given note commencing fifteen months and for each of the three succeeding quarters. With respect to the Note: (a) it
bears interest at the rate of eight percent (8%) per annum, (b) any unconverted principal and interest remaining on the Note on
July 8, 2016 shall be automatically converted into Shares on such date, and (c) it will not be prepayable by VGLS. Notwithstanding
the foregoing, the Investor may convert all or any portion of the Notes, solely at the option of the Investor, except that the
lock up restrictions remain in effect. The maturity date for all notes shall be July 9, 2016. In addition, in consideration of
the execution of this Agreement, upon the advance of $100,000, the Company shall issue to Investor 50,000 shares of the Company’s
Series B Preferred Stock.
1.2
Purchase and Sale of Warrant. Subject to the terms and conditions of this Agreement, the Investor agrees to purchase
and the Company agrees to sell and issue to the Investor at the Closing, a warrant in the form attached hereto as Exhibit B
(the "Warrant") to purchase shares of the Company's Common Stock. In addition to the Notes, Wild Harp Holdings, LLC will
receive warrant coverage (“Warrants”) for four Shares for every one dollar ($1.00) of cash provided to the Company
under Section 1.1 above, with each Warrant to be exercisable by Investor at the Price, as stated in Section 1.1 above, multiplied
by 7.5, which includes a cashless exercise feature. The Warrants will be exercisable on any date after the four-year anniversary
of the date of this Agreement and expire on the five-year anniversary of the date of this Agreement.
1.3
Closing.
(a)
The purchase and sale of the initial Note and Warrants shall take place upon execution of this Agreement, or at such other
time and place as the Company and the Investor may determine (the "Closing").
(b)
At the Closing, the Company shall deliver to the Investor a Note representing the principal amount as is prescribed in Section 1.1
above and the Investor shall cause to be delivered to the Company a wire transfer to the Company's order in the aggregate amount
of the principal amount of the Investment as is prescribed in Section 1.1 above.
(c)
Following the Closing the Company shall deliver additional Notes and Warrants as the cash or Services described in Section
1.1 above are provided to the Company.
1.4
Change of Control. Notwithstanding anything to the contrary set forth in this Agreement, in the event of a “Change
of Control” of VGLS, Investor shall be entitled to receive (prior to the close of any such Change of Control) any remaining
Notes and the Shares to which Investor would have been entitled to under the Notes or the conversion thereof absent such Change
of Control. In addition to the foregoing, in the event of a Change of Control of VGLS, Investor shall be entitled to receive and
exercise (prior to the close of any such Change of Control) any and all corresponding Warrants to which it would have been entitled
under Sections 1.1 and 1.2 above during the full term of this Agreement absent such Change of Control, and the Shares exercisable
under the Warrants. For purposes of this Section 1.4 a “Change in Control” shall mean; (a) the closing of the sale,
transfer or other disposition of all or substantially all of the VGLS’s assets, (b) the consummation of the merger or consolidation
of VGLS with or into another entity (except a merger or consolidation in which the holders of capital stock of VGLS immediately
prior to such merger or consolidation continue to hold at least fifty percent (50%) of the voting power of the capital stock of
VGLS or the surviving or acquiring entity), or any transaction or series of transactions to which VGLS is a party in which in excess
of fifty percent (50%) of VGLS’s voting power is transferred, or (c) the exclusive license of all or substantially all of
the intellectual property of VGLS to a third party.
2. Representations, Warranties, and Covenants of the Company. The Company hereby represents and warrants to the Investor
that:
2.1
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business
as now conducted and proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.
2.2
Authorization. All corporate actions on the part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and
the authorization, issuance and delivery of the Notes and the Warrants have been taken or will be taken prior to the Closing. This
Agreement constitutes, and the Notes and the Warrants when executed and delivered in accordance with their terms will constitute,
valid and legally binding obligations of the Company, enforceable in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement
of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies and (iii) as limited by applicable usury laws.
2.3
Compliance with Other Instruments. The Company is not in violation or default of any provisions of its Articles of
Incorporation, as amended (the "Articles"), or Bylaws (the "Bylaws"), or, except as set forth on Schedule 1
hereof, in any material respect of any provision of a mortgage, indenture, agreement, instrument or contract to which it is a party
or by which it is bound or of any federal or state judgment order, writ or decree, or, to its knowledge, of any statute, rule or
regulation applicable to the Company. The execution, delivery and performance by the Company of this Agreement, and the consummation
of the transactions contemplated hereby, including the issuance and delivery of the Notes and the Warrants, will not result in
any such violation or be in material conflict with or constitute, with or without the passage of time or giving of notice, either
a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance
upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or operations, or any of its assets or properties.
2.4
Governmental Consents. Based in part upon the representations and warranties of the Investor in Section 3, no
consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal,
state or local governmental authority on the part of the, Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except such post-closing filings as may be required under applicable federal and state securities
laws, which will be timely filed within the applicable period therefor.
2.5
Sufficient Authorized Shares. The number of authorized but unissued shares of the Company's Common Stock will be
sufficient to permit conversion of the Notes and the exercise of the Warrants. From the date hereof, the Company shall at all times
maintain a sufficient quantity of authorized but unissued shares of Common Stock sufficient to permit conversion of the Notes and
the exercise of the Warrants. In the event the Company, for any reason, no longer has a sufficient number of authorized but unissued
shares to comply with this Section 2.5, it shall use its best efforts to promptly authorize such shares. Upon the issuance
of shares of Common Stock pursuant to the conversion of the Notes and/or the exercise of the Warrants, such shares of Common Stock
shall be duly and validly issued, fully paid and nonassessable, and issued in compliance with all applicable securities laws, as
then in effect, of the United States and each of the states whose securities laws govern the issuance of the Notes and/or the Warrants
pursuant to this Agreement and shall not be issued in violation of any preemptive or similar right.
2.6
No Brokers. No broker or finder has acted directly or indirectly for the Company in connection with the transactions
contemplated by this Agreement, and no broker or finder is entitled to any brokerage, finder's or other fee or commission in respect
thereof based in any way on agreements, arrangements or understandings made by or on behalf of the Company and the Investor or
the transactions contemplated hereby.
2.7
Minute Books. The Company has made available to the Investor (and will continue to make available up to the Closing)
copies of the minute books of the Company. The minute books contains records of all written actions and meetings of the Board of
Directors and there have been no written actions or meetings of the Board of Directors since the date of the last meeting in the
minute books.
3. Representations and Warranties of the Investor. The Investor represents and warrants severally and not jointly, with
respect to the Investor, that:
3.1
Authorization. The Investor has full capacity, power and authority to enter into and perform this Agreement, and
all actions necessary to authorize the execution, delivery and performance of this Agreement have been taken prior to the Closing.
This Agreement constitutes a valid and legally binding obligation of the Investor, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, moratorium, and other laws of general application affecting the enforcement
of creditors' rights generally.
3.2
Receipt of Information. The Investor believes it, he or she has received all the information necessary or appropriate
for deciding whether to acquire the Securities. The Investor further represents that the Investor has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities.
3.3
Investment Experience. The Investor is an investor in securities of companies in the development stage and acknowledges
that the Investor is able to fend for itself, herself or himself, can bear the economic risk of its, his or her investment and
has such knowledge and experience in financial or business matters that the Investor is capable of evaluating the merits and risks
of the investment in the Securities. If other than an individual, the Investor also represents it has not been organized for the
purpose of acquiring the Securities. The Investor further represents that the information provided on Investor's counterpart signature
page is true and accurate.
3.4
Restricted Securities. The Investor understands that the Securities are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities
Act of 1933, as amended (the "Securities Act") only in certain limited circumstances. In connection therewith, each lender
represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
3.5
Legends. To the extent applicable, each certificate or other document evidencing any of the Securities shall be endorsed
with the legend set forth below, and the Investor covenants that, except to the extent such restrictions are waived by the Company,
the Investor shall not transfer the Securities represented by any such certificate without complying with the restrictions on transfer
described in the legends endorsed on such certificate:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
4. Conditions of Investor's Obligations. The obligations of the Investor hereunder are subject to the fulfillment on
or before the Closing of each of the following conditions:
4.1
Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall
be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of
the date of such Closing.
4.2
Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or before the Closing.
4.3
Board Actions. The Company shall have delivered to the Investor resolutions duly adopted by the Company's Board of
Directors and, to the extent required by applicable law or by the Company's Articles of Incorporation, the Company's Shareholders,
and certified by the Secretary of the Company (i) approving and authorizing the Company's execution and delivery of this Agreement,
the Notes and the Warrants, and the Company's performance thereunder, (ii) authorizing the reservation of a sufficient number
of shares of the Company's Common Stock to permit the conversion of the Notes and to permit the exercise of the Warrants, (iii)
the Company’s Articles of Incorporation shall have been amended authorizing 1,000,000 shares Series B Preferred Stock whose
terms are substantially as set forth in Exhibit C hereto, (iv) current holders of Series A Preferred Stock shall have voted to
convert to Common or to accept one share of Series B Preferred Stock for each forty shares of Series A Preferred Stock then owned
by a holder of Series A Preferred Stock, subject only to an election by a holder of Series A Preferred Stock to receive Common
Stock or Series B Preferred Stock, and (v) the Board shall have authorized the issuance of 50,000 shares of Series B Preferred
to Investor.
5. Conditions of the Company's Obligations. The obligations of the Company with respect to the Investor under this Agreement
are subject to the fulfillment on or before the Closing of each of the following conditions:
5.1
Representations and Warranties. The representations and warranties of the Investor contained in Section 3 and
on the Investor's signature page shall be true on and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2
Delivery of Principal. The Investor shall have delivered the principal amount of the Investor's Investment as is
prescribed in Section 1.1.
6. Post-Closing Covenant of Company. During such times as any Note is outstanding, the Company shall provide the Investor
with a weekly update of the Company's actual and forecasted cash position and of any reasonably significant development related
to the Company or its business. Such weekly updates shall be transmitted to the Investor via facsimile or via e-mail, at a facsimile
number or e-mail address provided by the Investor, no later than noon pacific time each Monday during which such obligation remains
in effect.
7. Events of Default.
Upon the occurrence of any of the following
specified events (each an "Event of Default"), unless such Event of Default shall have been waived or cured prior to
the exercise of the remedies set forth below:
7.1
Payments. Any default by the Company in the payment when due of any principal and unpaid accrued interest under any
Note if such default is not cured by the Company within ten (10) days after the holder of such Note has given the Company
written notice of such default;
7.2
Representations and Warranties. Any representation or warranty made by the Company herein shall prove to have been
incorrect in any material respect on or as of the date made and remains unremedied for a period of thirty (30) days after
any Investor provides the Company with written notice of such breach;
7.3
Post Closing Covenants. The failure of Company to satisfy any of the post-closing covenants set forth in Section 6
hereof within the time-periods set forth therein.
7.4
Institution of Bankruptcy Proceedings. The institution by the Company of proceedings to be adjudicated as bankrupt
or insolvent, or the consent by it to institution of bankruptcy or insolvency proceedings against it or the filing by it of a petition
or answer or consent seeking reorganization or release under the federal Bankruptcy Act, or any other applicable federal or state
law, or the consent by it to the filing of any such petition or the appointment of a receiver, liquidator, assignee, trustee, or
other similar official, of the Company, or of any substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the taking of corporate action by the Company in furtherance of any such action; or
7.5
Continuation of Bankruptcy Proceedings. If, within thirty (30) days after the commencement of an action against
the Company (and service of process in connection therewith on the Company) seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present or future statute, law or regulation, such action shall not have been
resolved in favor of the Company or all orders or proceedings thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall thereafter be set aside, or if, within thirty (30) days after
the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of the Company or of
all or any substantial part of the properties of the Company, such appointment shall not have been vacated;
Then, and in any such event, and at any time thereafter,
if any events shall be continuing, the Investor shall have the option to declare the principal amount of the Notes, and all accrued
but unpaid interest thereon, to be immediately due and payable upon written notice to the Company.
8. Miscellaneous.
8.1
Successors and Assigns. No party may assign any of its rights or delegate any of its obligations under this Agreement
without the prior written consent of the other party. Any purported assignment of rights or delegation of obligations in violation
of this Section 8.1 shall be void. This Agreement will apply to and be binding in all respects upon, and inure to the benefit of
heirs, executors, administrators, legal representatives, and permitted assigns of the parties.
8.2
Governing Law. This Agreement shall be governed by and construed under the laws of the State of California, without
giving effect to principles of conflict of laws.
8.3
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
8.4
Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.
8.5
Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing
and shall be deemed effectively given upon personal delivery to the party to be notified or four (4) days after deposit with
the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other address as such party may designate by advance
written notice to the other parties.
8.6
Finder's Fee. Each party represents that it neither is nor will be obligated for any finders' fee or commission in
connection with this transaction.
8.7
Entire Agreement. This Agreement and the other documents delivered pursuant hereto constitute the entire agreement
among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or
covenants except as specifically set forth herein or therein.
8.8
Amendment and Waiver. Any term of this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent
of the Company and the Investor. This provision shall not affect the amendment and waiver provisions of the Note. Any waiver or
amendment effected in accordance with this section shall be binding upon each holder of any Securities purchased under this Agreement
at the time outstanding, each future holder of all such Securities, and the Company.
8.9
Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms.
8.10
Survival. The representations, warranties, covenants and agreements made herein shall survive the Closing for a period
of 12 months.
[REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK]
IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above written.
VG Life Sciences, Inc.
/s/ Haig Keledjian
By: Haig Keledjian
Title: Chairman
Wild Harp Holdings, LLC
/s/ Jphn P. Tynan
By: John P. Tynan, Manager
EXHIBIT A
CONVERTIBLE PROMISSORY NOTE
SEE ATTACHED.
EXHIBIT A
VG LIFE SCIENCES, INC.
CONVERTIBLE PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY
NOTE (“Note”) is issued as of July 9, 2014 (the “Original Issue Date”), by VG Life Sciences, Inc., a Delaware
corporation (the “Company”), in an aggregate principal amount of $100,000.00.
Terms not otherwise defined
herein shall have the meanings given in Section 6 below.
FOR VALUE RECEIVED, the
Company promises to pay to Wild Harp Holdings, LLC, or registered assigns (the “Holder”), the principal sum of One
Hundred Thousand Dollars ($100,000.00), on or before July 9, 2016 (the “Maturity Date”) and to pay interest to the
Holder on the principal sum, at the rate per annum of eight percent (8%). Interest shall accrue daily commencing on the Original
Issue Date until payment in full of the principal sum, together with all accrued and unpaid interest, has been made or duly provided
for. Interest shall be calculated on the basis of a 360-day year. Interest hereunder will be due and payable at the Maturity Date,
to the person in whose name this Note is registered on the records of the Company (the “Note Register”). The principal
of, and interest on, this Note are payable in such coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, at the address of the Holder last appearing on the Note Register. A transfer
of the right to receive principal and interest under this Note shall be transferable only through an appropriate entry in the Note
Register as provided herein.
This Note is subject to
the following additional provisions:
Section 1. Convertible
Note and Warrant Purchase Agreement. This Note is one of the Notes issued pursuant to that certain Convertible Note and Warrant
Purchase Agreement (the “Agreement”) between the Company and Holder dated as of July 9, 2014. This Note is subject
to, and qualified by, all the terms and conditions set forth in the Agreement.
Section 2. Events of Default.
Section 2.1 Events of Default
Defined; Acceleration of Maturity. If an Event of Default (as defined in the Agreement) has occurred then upon the occurrence
of any such Event of Default, the Holder may, by notice to the Company, declare the unpaid principal amount of the Notes to be,
and the same shall forthwith become, due and payable, without presentment, demand, protest or other notice of any kind, all of
which are hereby waived by the Company, together with the interest accrued thereon and all other amounts payable by the Company
hereunder and pursue all of Holder’s rights and remedies hereunder and under the other Loan Documents and all other remedies
available to Holder under applicable law.
Section 3. Optional Conversion.
(a) The outstanding principal and all
accrued and unpaid interest of this Note shall be convertible, at the option of the Holder, into shares of common stock of the
Company (“Common Stock”) at the Conversion Ratio, at the option of the Holder, in four equal tranches (25% each) on
the following dates: October 9, 2015, January 9, 2016, April 9, 2016, and July 9, 2016. Any conversion under this Section 3(a)
shall be of a minimum amount of US $5,000 of Notes. The Holder shall effect conversions by surrendering the Notes (or such portions
thereof) to be converted to the Company, together with the form of conversion notice attached hereto as Exhibit A (the “Conversion
Notice”) in the manner set forth in Section 3(h). Each Conversion Notice shall specify the principal amount of Notes
to be converted and the date on which such conversion is to be effected (the “Conversion Date”). Subject to Section
3(b), each Conversion Notice, once given, shall be irrevocable. If the Holder is converting less than all of the principal
amount represented by the Note(s) tendered by the Holder with the Conversion Notice, the Company shall promptly deliver to the
Holder a new Note for such principal amount as has not been converted.
(b) Not later than fifteen (10) Business
Days after the Conversion Date, the Company will deliver to the Holder (i) a certificate or certificates containing the restrictive
legends and trading restrictions required by law, if any, representing the number of shares of Common Stock being acquired upon
the conversion of Notes and (ii) Notes in principal amount equal to the principal amount of Notes not converted; provided, however
that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of
any Notes, until Notes are either delivered for conversion to the Company or any transfer Holder for the Notes or Common Stock,
or the Holder notifies the Company that such Notes have been lost, stolen or destroyed and provides a lost instrument indemnity
to the Company to indemnify the Company from any loss incurred by it in connection therewith. If such certificate or certificates
are not delivered by the date required under this Section 3(b), the Holder shall be entitled by written notice to the Company
at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event
the Company shall immediately return the Notes tendered for conversion.
(c) (i) The conversion price (“Conversion
Price”) for each Note in effect on any Conversion Date shall be 10% less than the lowest 3 day average during the period
beginning May 7, 2014 and ending July 7, 2014, subject to adjustment as otherwise contemplated by this Section 3(c).
(ii) In case of any Acquisition (as
defined below) of the Company, then Holder shall have the right thereafter to convert any principal and interest remaining owing
under this Note prior to the closing of any such Acquisition. At the election of Holder, Holder may convert this Note into the
shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock following such
Acquisition, and the Holder shall be entitled upon such event to receive such amount of securities or property as the shares of
the Common Stock, into which the Note could have been converted immediately prior to such Acquisition, would have been entitled.
The terms of any such Acquisition shall include such terms so as to continue to give to the Holder the right to receive the securities
or property set forth in this Section 3(c) upon any conversion following such Acquisition. This provision shall similarly
apply to successive Acquisitions. “Acquisition” means (a) the closing of the sale, transfer or other disposition of
all or substantially all of the VGLS’s assets, (b) the consummation of the merger or consolidation of VGLS with or into another
entity (except a merger or consolidation in which the holders of capital stock of VGLS immediately prior to such merger or consolidation
continue to hold at least fifty percent (50%) of the voting power of the capital stock of VGLS or the surviving or acquiring entity),
or any transaction or series of transactions to which VGLS is a party in which in excess of fifty percent (50%) of VGLS’s
voting power is transferred, or (c) the exclusive license of all or substantially all of the intellectual property of VGLS to a
third party.
(iii) The Conversion Price shall be
subject to adjustment as follows:
(A) In
case the Company shall (i) pay a dividend in shares of its capital stock, (ii) subdivide its outstanding shares of Common Stock,
(iii) combine its outstanding shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its
shares of Common Stock any shares of the Company, the Conversion Price in effect immediately prior thereto shall be adjusted so
that the Holder of this Note thereafter surrendered for conversion shall be entitled to received the number of shares of Common
Stock which he would have owned or have been entitled to receive after the happening of any of the events described above, had
this Note been converted immediately prior to the happening of such event. Such adjustment shall be made whenever any of the events
listed above shall occur. An adjustment made pursuant to this subdivision (A) shall become effective retroactively immediately
after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of
a subdivision, combination or reclassification.
(B) If, at any time while this Note is outstanding, the Company takes any voluntary
action or any event occurs as to which the foregoing subdivisions are not strictly applicable, but the failure to make an adjustment
in the Conversion Price hereunder would not fairly protect the rights, without dilution, represented by this Note, then the Conversion
Price in effect immediately prior thereto shall be adjusted so that the Holder of this Note shall be entitled to receive the number
of shares of Common Stock which he would have owned or been entitled to receive after the happening of any such action or event,
had this Note been converted immediately prior to the happening of any such action or event.
(d) The Company covenants that it will
at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon
conversion of Notes as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other
than the holders of Notes, such number of shares of Common Stock as shall be issuable upon the conversion of the aggregate principal
amount of all outstanding Notes. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue,
be duly and validly authorized, issued and fully paid and nonassessable.
(e) Upon a conversion hereunder the
Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may, if otherwise
permitted, make a cash payment in respect of any final fraction of a share based on the Conversion Price at such time.
(f) The issuance of certificates for
shares of Common Stock on conversion of Notes shall be made without charge to the Holder for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion
in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
(g) Notes converted into Common Stock
shall be canceled.
(h) Each Conversion Notice shall be
given by email or mail, postage prepaid, addressed to the Controller of the Company of VG Life Sciences, Inc. located 121 Gray
Avenue, Suite 200, Santa Barbara, CA 93101. Any such notice shall be deemed given and effective upon the earliest to occur of (i)
receipt of such email at the email address specified in this Section 3(h), (ii) five days after deposit in the United States
mails or (iii) upon actual receipt by the party to whom such notice is required to be given.
Section 4. Mandatory
Conversion.
(a) In the event Holder has not elected
to convert all of the principal and interest remaining owing under this Note on or prior to two years after the date of this note,
the then outstanding principal and accrued and unpaid interest amount of this Note shall, without further action by the Holder
or the Company, be automatically converted in whole into that number of shares of Common Stock of the Company at the Conversion
Ratio on the Maturity Date (the “Mandatory Conversion Date”).
(b) Not later than ten (10) Business
Days after the Mandatory Conversion Date, the Company will deliver to the Holder a certificate or certificates containing the restrictive
legends and trading restrictions required by law, if any, representing the number of shares of Common Stock being acquired upon
the mandatory conversion of this Note; provided, however that the Company shall not be obligated to issue certificates evidencing
the equity securities issuable upon conversion of this Note, until the Note is either delivered for conversion to the Company or
any transfer Holder of the Note or Common Stock, or the Holder notifies the Company that the Note have been lost, stolen or destroyed
and provides a lost instrument indemnity or bond to the Company to indemnify the Company from any loss incurred by it in connection
therewith. The Company covenants and agrees that it shall comply with Sections 3(d) through (g) with respect to any
mandatory conversion and such sections are incorporated by reference herein.
Section 5. Payment
of Principal and Redemption.
(a) In the event of an
occurrence of an Event of Default, then the outstanding principal balance of this Note shall be due and payable in full on the
Maturity Date. Prior to the Mandatory Conversion Date this Note may not be prepaid.
(b) Nothing in this Section
5 shall impair the Holder’s right to convert this Note pursuant to Section 3 prior to the Mandatory Conversion Date.
Section 6. Definitions.
For the purposes hereof, the following terms shall have the following meanings:
“Business Day”
shall mean any day, except a Saturday, Sunday or other day on which commercial banks in the State of California are authorized
or required by law to close.
“Conversion Ratio”
means, at any time, a fraction, of which the numerator is the outstanding principal amount represented by any Note plus accrued
but unpaid interest, and of which the denominator is the Conversion Price at such time.
“Original Issue Date”
means the date of the first issuance of this Note regardless of the number transfers hereof.
Section 7. Stockholder Rights.
This Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation, the
right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the
terms hereof.
Section 8. Lost Note.
If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed debenture, a new
Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss,
theft or destruction of such Note, and of the ownership hereof, and indemnity or bond, if requested, all reasonably satisfactory
to the Company.
Section 9. Governing Law.
This Note shall be governed by and construed in accordance with the laws of the State of California, without giving effect to conflicts
of laws thereof.
Section 10. Notices. All
notices or other communications hereunder shall be given, and shall be deemed duly given and received, if given, in the manner
set forth in Section 5(h).
Section 11. Waiver. Any
waiver by the Company or the Holder a breach of any provision of this Note shall not operate as or be construed to be a waiver
of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company or the Holder
to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that
party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in
writing.
Section 12. Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and circumstances.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed by an officer thereunto duly authorized as of the date first above indicated.
VG LIFE SCIENCES, INC.,
a Delaware corporation
By: /s/ Haig
Keledjian_
Name:
Haig Keledjian
Title:
Chairman
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder
in order to Convert the Note)
The undersigned hereby irrevocably elects to
convert the above Note into shares of Common Stock, no par value per share (the “Common Stock”), of VG Life Sciences,
Inc. (the “Company”) according to the conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged
to the Holder for any conversion, except for such transfer taxes, if any.
Conversion calculations:
_____________________________________
Date to Effect Conversion
_____________________________________
Principal Amount of Notes
to be Converted
_____________________________________
Applicable Conversion Price
_____________________________________
Signature
_____________________________________
Name:
_____________________________________
Address:
Schedule of Cash Proceeds from Wild Harp
Holdings, LLC
and Received by VG Life Sciences, Inc.
July 9, 2014 |
$100,000.00 |
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_______________________________ |
$___________ |
Date: ______________ |
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_______________________________ |
$___________ |
Date: ______________ |
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_______________________________ |
$___________ |
Date: ______________ |
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_______________________________ |
$___________ |
Date: ______________ |
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EXHIBIT B
WARRANT TO PURCHASE COMMON STOCK
SEE ATTACHED.
EXHIBIT B
WARRANT TO PURCHASE STOCK
Company: VG Life Sciences, Inc.
Number of Shares: 400,000
Class of Stock: Common
Initial Exercise Price Per Share: $0.93
Issue Date: July 9, 2014
THIS WARRANT CERTIFIES
THAT, for the agreed upon value of $1.00 and for other good and valuable consideration, Wild Harp Holdings, LLC, a California limited
liability company (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares of the class
of securities (the “Shares”) of VG Life Sciences, Inc. (the “Company” or “VGLS”) at the initial
exercise price per Share (the “Warrant Price”) all as set forth above and as adjusted pursuant to Article 2 of this
Warrant, subject to the provisions and upon the terms and conditions set forth of this Warrant.
ARTICLE 1. EXERCISE
1.1 Method of Exercise. Holder may exercise
this Warrant by delivering a duly executed Notice of Exercise in substantially the form attached as Appendix 1 to the principal
office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holders shall also deliver to
the Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu
of exercising this Warrant as specified in Section 1.1, Holder may from time to time convert this Warrant, in whole or in part,
into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise
issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share.
The fair market value of the Shares shall be determined pursuant Section 1.4.
1.3 No Rights Shareholder. This
Warrant does not entitle Holder to any voting rights as a shareholder of the company prior to the exercise hereof.
1.4 Fair Market Value. For purposes
of Section 1.2, if the Shares are traded in a public market, the fair market value of the Shares shall be the closing price of
the Shares (or the closing price of the Company’s stock into which the Shares are convertible) reported for the business
day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not traded in a public market,
the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment. The foregoing notwithstanding,
if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then the Company and Holder
shall promptly agree upon a reputable investment banking or public accounting firm to undertake such valuation. If the valuation
of such investment banking firm is greater than that determined by the Board of Directors, then all fees and expenses of such investment
banking firm shall be paid by the company. In all other circumstances, such fees and expenses shall be paid by Holder.
1.5 Delivery of Certificate and New
Warrant. Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the
Shares acquired and, if this Warrant has not been fully exercised or converted and has not been fully exercised or converted and
has not expired, a new Warrant representing the Shares not so acquired.
1.6 Replacement of Warrants.
On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute
and deliver, in lieu of this Warrant, a new warrant of like tenor.
1.7 Repurchase on Sale, Merger, or
Consolidation of the Company
1.7.1 “Acquisition”
For the purpose of this Warrant, “Acquisition” means (a) the closing of the sale, transfer or other disposition of
all or substantially all of the VGLS’s assets, (b) the consummation of the merger or consolidation of VGLS with or into another
entity (except a merger or consolidation in which the holders of capital stock of VGLS immediately prior to such merger or consolidation
continue to hold at least fifty percent (50%) of the voting power of the capital stock of VGLS or the surviving or acquiring entity),
or any transaction or series of transactions to which VGLS is a party in which in excess of fifty percent (50%) of VGLS’s
voting power is transferred, or (c) the exclusive license of all or substantially all of the intellectual property of VGLS to a
third party.
1.7.2 Assumption of Warrant.
Upon the closing of any Acquisition the successor entity shall assume the obligations of this Warrant, and this Warrant shall be
exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. The Warrant
Price shall be adjusted accordingly.
1.7.3 Purchase Right. Notwithstanding
the foregoing, at the election of Holder, the Company shall purchase the unexercised portion of this Warrant for cash upon the
closing of any Acquisition for an amount equal to (a) the fair market value of any consideration that would have been received
by Holder in consideration of the Shares had Holder exercised the unexercised portion of this Warrant immediately before the record
date for determining the shareholders entitled to participate in the proceeds of the Acquisition, less (b) the aggregate Warrant
Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends, Splits, Etc.
If the Company declares or pays a dividend on its common stock ( or the Shares if the Shares are securities other than common stock
) payable in common stock, or other securities, subdivides the outstanding common stock into a greater amount of common stock,
or, if the Shares are securities other than common stock, subdivides the Shares in a transaction that increases the amount of common
stock into which the Shares are convertible, then upon exercise of this Warrant, for each Share acquired, Holder shall receive,
without cost to Holder, the total number and kind of securities to which Holder would have been entitled had Holder owned the Shares
of record as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or
Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or
class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the shares if
this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. Such an event
shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company’s Certificate of Incorporation upon the closing of a registered
public offering of the Company’s common stock. The Company or its successor shall promptly issue to Holder a new Warrant
for such new securities or other property. The new adjustments provided for in this Article 2 including, without limitation, adjustments
to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this
Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Combinations,
Etc. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances.
The number of shares of common stock issuable upon conversion of the Shares, shall be subject to adjustment, from time to time
in the manner set forth in the Company’s Certificate of Incorporation with respect to issuance of securities for a price
lower than certain prices specified in the Certificate of Incorporation.
2.5 No Impairment. The Company
shall not, by amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect
Holder’s rights under this Article against impairment. If the Company takes any action affecting the Shares or its common
stock other than as described above that adversely affects Holder’s rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that
the aggregate Warrant price of this Warrant is unchanged.
2.6 Fractional Shares. No fractional
Shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares to be issued shall be rounded down
to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by multiplying the fractional interest by the fair market
value of a full Share.
2.7 Certificate as to Adjustments.
Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment, and furnish Holder
with a certificate of its Chief Financial officer setting forth such adjustment and the facts upon which such adjustment is based.
The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant price in effect upon the date thereof
and the series of adjustments leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS
OF THE COMPANY.
3.1 Representations and Warranties.
The Company hereby represents and warrants to the Holder that all Shares which may be issued upon the exercise of the purchase
right represented by this Warrant and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on
transfer provided for herein or under applicable federal and state securities laws.
3.2 Notice of Certain Events.
If the company proposes at any time (a) to declare any dividend or distribution upon its common stock, whether in cash, property,
stock or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of
any class or series or other rights; (c) to effect any reclassification or recapitalization of common stock; (d) to merge or consolidate
with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity to participate in an underwritten public offering
of the company’s securities for cash, then, in connection with each such event, the Company shall give Holder (1) at least
20 days prior written notice of the date on which a record will be taken for such dividend, distribution or subscription rights
(and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any,
in respect of the matters referred to in (c) and (d) above; 2 in the case of the matters referred to in (c) and (d) above at least
20 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such
event); and (3) in the case of the matter referred to in (e) above, the same notice as is given to the holders of such registration
rights.
3.3 Information Rights. So long
as the Holder holds this Warrant and /or any of the Shares, the Company shall deliver to the Holder (a) promptly after mailing,
copies of all notices or other written communications to the shareholders of the Company, (b) within ninety (90) days after the
end of each fiscal year of the Company, the annual financial statements of the Company.
3.4 Registration Under Securities
Act of 1933, as amended. The Company agrees that the Shares shall be subject to the registration rights granted to any other
holders of the Company’s common stock.
ARTICLE 4. MISCELLANEOUS.
4.1 Term. This Warrant is exercisable,
in whole or in part, at any time and from time to time on or after the fourth anniversary of the Issue Date hereof and up to and
including the fifth anniversary of the Issue Date.
4.2 Legends. This Warrant and
the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with
a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws
on Transfer. This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable , directly or indirectly,
upon conversion of the shares, if any) may not be transferred or assigned in whole or in part without compliance with limitation,
the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonable requested
by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder
or if there is no material question as to the availability of current information as referenced in rule 144(c), Holder represents
that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder’s notice of proposed sale.
4.4 Transfer Procedure. Subject
to the provisions of Section 4.2, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this
Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company notice
of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee
and surrendering this Warrant to the company for reissuance to the transferee(s) (and Holder if applicable).
4.5 Notices. All notices and
other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally
or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company
or the Holder, as the case my be, in writing by the Company or such holder from time to time.
4.6 Waiver. This Warrant and
any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
4.7 Attorneys Fees. In the event
of any dispute between the parties concerning the terms and provisions of this Warrant , the party prevailing in such dispute shall
be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorney’s fees.
4.8 Governing Law. This Warrant
shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles
regarding conflicts of law.
/s/ Haig Keledjian
By: Haig Keledjian
Title: Chairman
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned hereby elects to
convert the attached Warrant into in the manner specified in the Warrant. This conversion is exercised with respect to _______________________
of the Shares covered by the Warrant.
2. Please issue a certificate or
certificates representing said shares in the name of the undersigned or in such other name as is specified below:
______________________________________
(Name)
_______________________________________
_______________________________________
(Address)
3. The undersigned represents it is
acquiring the shares solely for its own account and not as a nominee for any other party and not with a view toward the
resale or distribution thereof except in compliance with applicable securities laws.
____________________ |
__________________________________________ |
|
|
(Date) |
(Signature) |
Exhibit 10.130
CONVERTIBLE PROMISSORY NOTE
AND WARRANT PURCHASE AGREEMENT
THIS CONVERTIBLE PROMISSORY NOTE AND WARRANT
PURCHASE AGREEMENT is made as of July 9, 2014, by and among DW Odell Company, LLC, a California limited liability company (the
“Investor”) and VG Life Sciences Inc. (the "Company" or “VGLS”).
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase
and Sale of Notes.
1.1
Purchase and Sale of Note. Subject to the terms and conditions of this Agreement and pursuant to promissory notes
in the form attached hereto as Exhibit A (each a "Note" and, collectively, the “Notes), the Investor agrees to
purchase at the Closing and the Company agrees to sell and issue to the Investor at the Closing and thereafter Notes in the principal
amount of at least One Hundred Thousand Dollars ($100,000) and up to a maximum of Two Hundred Fifty Thousand Dollars ($250,000)
at an amount equal to the face value of the Note(s) (the "Investment"). Investor will purchase an initial Note in the
minimum amount of One Hundred Thousand ($100,000) in cash at the Closing, but shall be entitled to purchase any amount in cash
up to an aggregate of $250,000, such additional payments to be made no later than July 9, 2015. A separate Note will be issued
to Investor immediately upon tender of additional amounts as contemplated herein. The Warrant (as defined in Section 1.2 below)
includes a cashless exercise feature enabling conversion into unregistered shares (“Shares”) of common stock of VGLS
based on the spread between the warrant exercise price and the then-trading value of the underlying VGLS Shares. The Note is convertible
into Shares at a conversion rate equal to the lowest consecutive three-day average closing price of the Shares starting on May
7, 2014 and ending on July 7, 2014 (the “Period”), minus a ten percent (10%) discount (the “Price”). The
Note will be convertible into Shares in four equal tranches (25% each) on the following dates on the quarter anniversary of the
date of a given note commencing fifteen months and for each of the three succeeding quarters. With respect to the Note: (a) it
bears interest at the rate of eight percent (8%) per annum, (b) any unconverted principal and interest remaining on the Note on
July 8, 2016 shall be automatically converted into Shares on such date, and (c) it will not be prepayable by VGLS. Notwithstanding
the foregoing, the Investor may convert all or any portion of the Notes, solely at the option of the Investor, except that the
lock up restrictions remain in effect. The maturity date for all notes shall be July 9, 2016. In addition, in consideration of
the execution of this Agreement, upon the advance of $100,000, the Company shall issue to Investor 50,000 shares of the Company’s
Series B Preferred Stock.
1.2
Purchase and Sale of Warrant. Subject to the terms and conditions of this Agreement, the Investor agrees to purchase
and the Company agrees to sell and issue to the Investor at the Closing, a warrant in the form attached hereto as Exhibit B
(the "Warrant") to purchase shares of the Company's Common Stock. In addition to the Notes, DW Odell Company, LLC will
receive warrant coverage (“Warrants”) for four Shares for every one dollar ($1.00) of cash provided to the Company
under Section 1.1 above, with each Warrant to be exercisable by Investor at the Price, as stated in Section 1.1 above, multiplied
by 7.5, which includes a cashless exercise feature. The Warrants will be exercisable on any date after the four-year anniversary
of the date of this Agreement and expire on the five-year anniversary of the date of this Agreement.
1.3
Closing.
(a)
The purchase and sale of the initial Note and Warrants shall take place upon execution of this Agreement, or at such other
time and place as the Company and the Investor may determine (the "Closing").
(b)
At the Closing, the Company shall deliver to the Investor a Note representing the principal amount as is prescribed in Section 1.1
above and the Investor shall cause to be delivered to the Company a wire transfer to the Company's order in the aggregate amount
of the principal amount of the Investment as is prescribed in Section 1.1 above.
(c)
Following the Closing the Company shall deliver additional Notes and Warrants as the cash or Services described in Section
1.1 above are provided to the Company.
1.4
Change of Control. Notwithstanding anything to the contrary set forth in this Agreement, in the event of a “Change
of Control” of VGLS, Investor shall be entitled to receive (prior to the close of any such Change of Control) any remaining
Notes and the Shares to which Investor would have been entitled to under the Notes or the conversion thereof absent such Change
of Control. In addition to the foregoing, in the event of a Change of Control of VGLS, Investor shall be entitled to receive and
exercise (prior to the close of any such Change of Control) any and all corresponding Warrants to which it would have been entitled
under Sections 1.1 and 1.2 above during the full term of this Agreement absent such Change of Control, and the Shares exercisable
under the Warrants. For purposes of this Section 1.4 a “Change in Control” shall mean; (a) the closing of the sale,
transfer or other disposition of all or substantially all of the VGLS’s assets, (b) the consummation of the merger or consolidation
of VGLS with or into another entity (except a merger or consolidation in which the holders of capital stock of VGLS immediately
prior to such merger or consolidation continue to hold at least fifty percent (50%) of the voting power of the capital stock of
VGLS or the surviving or acquiring entity), or any transaction or series of transactions to which VGLS is a party in which in excess
of fifty percent (50%) of VGLS’s voting power is transferred, or (c) the exclusive license of all or substantially all of
the intellectual property of VGLS to a third party.
2. Representations, Warranties, and Covenants of the Company. The Company hereby represents and warrants to the Investor
that:
2.1
Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business
as now conducted and proposed to be conducted. The Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure to so qualify would have a material adverse effect on its business or properties.
2.2
Authorization. All corporate actions on the part of the Company, its officers, directors and stockholders necessary
for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder and
the authorization, issuance and delivery of the Notes and the Warrants have been taken or will be taken prior to the Closing. This
Agreement constitutes, and the Notes and the Warrants when executed and delivered in accordance with their terms will constitute,
valid and legally binding obligations of the Company, enforceable in accordance with their respective terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement
of creditors' rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief,
or other equitable remedies and (iii) as limited by applicable usury laws.
2.3
Compliance with Other Instruments. The Company is not in violation or default of any provisions of its Articles of
Incorporation, as amended (the "Articles"), or Bylaws (the "Bylaws"), or, except as set forth on Schedule 1
hereof, in any material respect of any provision of a mortgage, indenture, agreement, instrument or contract to which it is a party
or by which it is bound or of any federal or state judgment order, writ or decree, or, to its knowledge, of any statute, rule or
regulation applicable to the Company. The execution, delivery and performance by the Company of this Agreement, and the consummation
of the transactions contemplated hereby, including the issuance and delivery of the Notes and the Warrants, will not result in
any such violation or be in material conflict with or constitute, with or without the passage of time or giving of notice, either
a material default under any such provision or an event that results in the creation of any material lien, charge or encumbrance
upon any assets of the Company or the suspension, revocation, impairment, forfeiture, or nonrenewal of any material permit, license,
authorization, or approval applicable to the Company, its business or operations, or any of its assets or properties.
2.4
Governmental Consents. Based in part upon the representations and warranties of the Investor in Section 3, no
consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal,
state or local governmental authority on the part of the, Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except such post-closing filings as may be required under applicable federal and state securities
laws, which will be timely filed within the applicable period therefor.
2.5
Sufficient Authorized Shares. The number of authorized but unissued shares of the Company's Common Stock will be
sufficient to permit conversion of the Notes and the exercise of the Warrants. From the date hereof, the Company shall at all times
maintain a sufficient quantity of authorized but unissued shares of Common Stock sufficient to permit conversion of the Notes and
the exercise of the Warrants. In the event the Company, for any reason, no longer has a sufficient number of authorized but unissued
shares to comply with this Section 2.5, it shall use its best efforts to promptly authorize such shares. Upon the issuance
of shares of Common Stock pursuant to the conversion of the Notes and/or the exercise of the Warrants, such shares of Common Stock
shall be duly and validly issued, fully paid and nonassessable, and issued in compliance with all applicable securities laws, as
then in effect, of the United States and each of the states whose securities laws govern the issuance of the Notes and/or the Warrants
pursuant to this Agreement and shall not be issued in violation of any preemptive or similar right.
2.6
No Brokers. No broker or finder has acted directly or indirectly for the Company in connection with the transactions
contemplated by this Agreement, and no broker or finder is entitled to any brokerage, finder's or other fee or commission in respect
thereof based in any way on agreements, arrangements or understandings made by or on behalf of the Company and the Investor or
the transactions contemplated hereby.
2.7
Minute Books. The Company has made available to the Investor (and will continue to make available up to the Closing)
copies of the minute books of the Company. The minute books contains records of all written actions and meetings of the Board of
Directors and there have been no written actions or meetings of the Board of Directors since the date of the last meeting in the
minute books.
3. Representations and Warranties of the Investor. The Investor represents and warrants severally and not jointly, with
respect to the Investor, that:
3.1
Authorization. The Investor has full capacity, power and authority to enter into and perform this Agreement, and
all actions necessary to authorize the execution, delivery and performance of this Agreement have been taken prior to the Closing.
This Agreement constitutes a valid and legally binding obligation of the Investor, enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, moratorium, and other laws of general application affecting the enforcement
of creditors' rights generally.
3.2
Receipt of Information. The Investor believes it, he or she has received all the information necessary or appropriate
for deciding whether to acquire the Securities. The Investor further represents that the Investor has had an opportunity to ask
questions and receive answers from the Company regarding the terms and conditions of the offering of the Securities.
3.3
Investment Experience. The Investor is an investor in securities of companies in the development stage and acknowledges
that the Investor is able to fend for itself, herself or himself, can bear the economic risk of its, his or her investment and
has such knowledge and experience in financial or business matters that the Investor is capable of evaluating the merits and risks
of the investment in the Securities. If other than an individual, the Investor also represents it has not been organized for the
purpose of acquiring the Securities. The Investor further represents that the information provided on Investor's counterpart signature
page is true and accurate.
3.4
Restricted Securities. The Investor understands that the Securities are characterized as "restricted securities"
under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities
Act of 1933, as amended (the "Securities Act") only in certain limited circumstances. In connection therewith, each lender
represents that it is familiar with Rule 144 under the Securities Act, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
3.5
Legends. To the extent applicable, each certificate or other document evidencing any of the Securities shall be endorsed
with the legend set forth below, and the Investor covenants that, except to the extent such restrictions are waived by the Company,
the Investor shall not transfer the Securities represented by any such certificate without complying with the restrictions on transfer
described in the legends endorsed on such certificate:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
4. Conditions of Investor's Obligations. The obligations of the Investor hereunder are subject to the fulfillment on
or before the Closing of each of the following conditions:
4.1
Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall
be true on and as of the Closing with the same effect as though such representations and warranties had been made on and as of
the date of such Closing.
4.2
Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained
in this Agreement that are required to be performed or complied with by it on or before the Closing.
4.3
Board Actions. The Company shall have delivered to the Investor resolutions duly adopted by the Company's Board of
Directors and, to the extent required by applicable law or by the Company's Articles of Incorporation, the Company's Shareholders,
and certified by the Secretary of the Company (i) approving and authorizing the Company's execution and delivery of this Agreement,
the Notes and the Warrants, and the Company's performance thereunder, (ii) authorizing the reservation of a sufficient number
of shares of the Company's Common Stock to permit the conversion of the Notes and to permit the exercise of the Warrants, (iii)
the Company’s Articles of Incorporation shall have been amended authorizing 1,000,000 shares Series B Preferred Stock whose
terms are substantially as set forth in Exhibit C hereto, (iv) current holders of Series A Preferred Stock shall have voted to
convert to Common or to accept one share of Series B Preferred Stock for each forty shares of Series A Preferred Stock then owned
by a holder of Series A Preferred Stock, subject only to an election by a holder of Series A Preferred Stock to receive Common
Stock or Series B Preferred Stock, and (v) the Board shall have authorized the issuance of 50,000 shares of Series B Preferred
to Investor.
5. Conditions of the Company's Obligations. The obligations of the Company with respect to the Investor under this Agreement
are subject to the fulfillment on or before the Closing of each of the following conditions:
5.1
Representations and Warranties. The representations and warranties of the Investor contained in Section 3 and
on the Investor's signature page shall be true on and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing.
5.2
Delivery of Principal. The Investor shall have delivered the principal amount of the Investor's Investment as is
prescribed in Section 1.1.
6. Post-Closing Covenant of Company. During such times as any Note is outstanding, the Company shall provide the Investor
with a weekly update of the Company's actual and forecasted cash position and of any reasonably significant development related
to the Company or its business. Such weekly updates shall be transmitted to the Investor via facsimile or via e-mail, at a facsimile
number or e-mail address provided by the Investor, no later than noon pacific time each Monday during which such obligation remains
in effect.
7. Events of Default.
Upon the occurrence of any of the following
specified events (each an "Event of Default"), unless such Event of Default shall have been waived or cured prior to
the exercise of the remedies set forth below:
7.1
Payments. Any default by the Company in the payment when due of any principal and unpaid accrued interest under any
Note if such default is not cured by the Company within ten (10) days after the holder of such Note has given the Company
written notice of such default;
7.2
Representations and Warranties. Any representation or warranty made by the Company herein shall prove to have been
incorrect in any material respect on or as of the date made and remains unremedied for a period of thirty (30) days after
any Investor provides the Company with written notice of such breach;
7.3
Post Closing Covenants. The failure of Company to satisfy any of the post-closing covenants set forth in Section 6
hereof within the time-periods set forth therein.
7.4
Institution of Bankruptcy Proceedings. The institution by the Company of proceedings to be adjudicated as bankrupt
or insolvent, or the consent by it to institution of bankruptcy or insolvency proceedings against it or the filing by it of a petition
or answer or consent seeking reorganization or release under the federal Bankruptcy Act, or any other applicable federal or state
law, or the consent by it to the filing of any such petition or the appointment of a receiver, liquidator, assignee, trustee, or
other similar official, of the Company, or of any substantial part of its property, or the making by it of an assignment for the
benefit of creditors, or the taking of corporate action by the Company in furtherance of any such action; or
7.5
Continuation of Bankruptcy Proceedings. If, within thirty (30) days after the commencement of an action against
the Company (and service of process in connection therewith on the Company) seeking any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar relief under any present or future statute, law or regulation, such action shall not have been
resolved in favor of the Company or all orders or proceedings thereunder affecting the operations or the business of the Company
stayed, or if the stay of any such order or proceeding shall thereafter be set aside, or if, within thirty (30) days after
the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of the Company or of
all or any substantial part of the properties of the Company, such appointment shall not have been vacated;
Then, and in any such event, and at any time thereafter,
if any events shall be continuing, the Investor shall have the option to declare the principal amount of the Notes, and all accrued
but unpaid interest thereon, to be immediately due and payable upon written notice to the Company.
8. Miscellaneous.
8.1
Successors and Assigns. No party may assign any of its rights or delegate any of its obligations under this Agreement
without the prior written consent of the other party. Any purported assignment of rights or delegation of obligations in violation
of this Section 8.1 shall be void. This Agreement will apply to and be binding in all respects upon, and inure to the benefit of
heirs, executors, administrators, legal representatives, and permitted assigns of the parties.
8.2
Governing Law. This Agreement shall be governed by and construed under the laws of the State of California, without
giving effect to principles of conflict of laws.
8.3
Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
8.4
Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.
8.5
Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing
and shall be deemed effectively given upon personal delivery to the party to be notified or four (4) days after deposit with
the United States Post Office, by registered or certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other address as such party may designate by advance
written notice to the other parties.
8.6
Finder's Fee. Each party represents that it neither is nor will be obligated for any finders' fee or commission in
connection with this transaction.
8.7
Entire Agreement. This Agreement and the other documents delivered pursuant hereto constitute the entire agreement
among the parties and no party shall be liable or bound to any other party in any manner by any warranties, representations, or
covenants except as specifically set forth herein or therein.
8.8
Amendment and Waiver. Any term of this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent
of the Company and the Investor. This provision shall not affect the amendment and waiver provisions of the Note. Any waiver or
amendment effected in accordance with this section shall be binding upon each holder of any Securities purchased under this Agreement
at the time outstanding, each future holder of all such Securities, and the Company.
8.9
Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms.
8.10
Survival. The representations, warranties, covenants and agreements made herein shall survive the Closing for a period
of 12 months.
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IN WITNESS WHEREOF, the parties have executed
this Agreement as of the date first above written.
VG Life Sciences, Inc.
/s/ Haig Keledjian
By: Haig Keledjian
Title: Chairman
DW Odell Company, LLC
/s/ David Odell
By: David Odell, Manager
EXHIBIT A
CONVERTIBLE PROMISSORY NOTE
SEE ATTACHED.
EXHIBIT A
VG LIFE SCIENCES, INC.
CONVERTIBLE PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY
NOTE (“Note”) is issued as of July 9, 2014 (the “Original Issue Date”), by VG Life Sciences, Inc., a Delaware
corporation (the “Company”), in an aggregate principal amount of $100,000.00.
Terms not otherwise defined
herein shall have the meanings given in Section 6 below.
FOR VALUE RECEIVED, the
Company promises to pay to DW Odell Company, LLC, or registered assigns (the “Holder”), the principal sum of One Hundred
Thousand Dollars ($100,000.00), on or before July 9, 2016 (the “Maturity Date”) and to pay interest to the Holder on
the principal sum, at the rate per annum of eight percent (8%). Interest shall accrue daily commencing on the Original Issue Date
until payment in full of the principal sum, together with all accrued and unpaid interest, has been made or duly provided for.
Interest shall be calculated on the basis of a 360-day year. Interest hereunder will be due and payable at the Maturity Date, to
the person in whose name this Note is registered on the records of the Company (the “Note Register”). The principal
of, and interest on, this Note are payable in such coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts, at the address of the Holder last appearing on the Note Register. A transfer
of the right to receive principal and interest under this Note shall be transferable only through an appropriate entry in the Note
Register as provided herein.
This Note is subject to
the following additional provisions:
Section 1. Convertible Note
and Warrant Purchase Agreement. This Note is one of the Notes issued pursuant to that certain Convertible Note and Warrant
Purchase Agreement (the “Agreement”) between the Company and Holder dated as of July 9, 2014. This Note is subject
to, and qualified by, all the terms and conditions set forth in the Agreement.
Section 2. Events
of Default.
Section 2.1 Events
of Default Defined; Acceleration of Maturity. If an Event of Default (as defined in the Agreement) has occurred then upon
the occurrence of any such Event of Default, the Holder may, by notice to the Company, declare the unpaid principal amount of
the Notes to be, and the same shall forthwith become, due and payable, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by the Company, together with the interest accrued thereon and all other amounts payable
by the Company hereunder and pursue all of Holder’s rights and remedies hereunder and under the other Loan Documents and
all other remedies available to Holder under applicable law.
Section 3. Optional
Conversion.
(a) The outstanding principal and all
accrued and unpaid interest of this Note shall be convertible, at the option of the Holder, into shares of common stock of the
Company (“Common Stock”) at the Conversion Ratio, at the option of the Holder, in four equal tranches (25% each) on
the following dates: October 9, 2015, January 9, 2016, April 9, 2016, and July 9, 2016. Any conversion under this Section 3(a)
shall be of a minimum amount of US $5,000 of Notes. The Holder shall effect conversions by surrendering the Notes (or such portions
thereof) to be converted to the Company, together with the form of conversion notice attached hereto as Exhibit A (the “Conversion
Notice”) in the manner set forth in Section 3(h). Each Conversion Notice shall specify the principal amount of Notes
to be converted and the date on which such conversion is to be effected (the “Conversion Date”). Subject to Section
3(b), each Conversion Notice, once given, shall be irrevocable. If the Holder is converting less than all of the principal
amount represented by the Note(s) tendered by the Holder with the Conversion Notice, the Company shall promptly deliver to the
Holder a new Note for such principal amount as has not been converted.
(b) Not later than fifteen (10) Business
Days after the Conversion Date, the Company will deliver to the Holder (i) a certificate or certificates containing the restrictive
legends and trading restrictions required by law, if any, representing the number of shares of Common Stock being acquired upon
the conversion of Notes and (ii) Notes in principal amount equal to the principal amount of Notes not converted; provided, however
that the Company shall not be obligated to issue certificates evidencing the shares of Common Stock issuable upon conversion of
any Notes, until Notes are either delivered for conversion to the Company or any transfer Holder for the Notes or Common Stock,
or the Holder notifies the Company that such Notes have been lost, stolen or destroyed and provides a lost instrument indemnity
to the Company to indemnify the Company from any loss incurred by it in connection therewith. If such certificate or certificates
are not delivered by the date required under this Section 3(b), the Holder shall be entitled by written notice to the Company
at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event
the Company shall immediately return the Notes tendered for conversion.
(c) (i) The conversion price (“Conversion
Price”) for each Note in effect on any Conversion Date shall be 10% less than the lowest 3 day average during the period
beginning May 7, 2014 and ending July 7, 2014, subject to adjustment as otherwise contemplated by this Section 3(c).
(ii) In case of any
Acquisition (as defined below) of the Company, then Holder shall have the right thereafter to convert any principal and interest
remaining owing under this Note prior to the closing of any such Acquisition. At the election of Holder, Holder may convert this
Note into the shares of stock and other securities and property receivable upon or deemed to be held by holders of Common Stock
following such Acquisition, and the Holder shall be entitled upon such event to receive such amount of securities or property
as the shares of the Common Stock, into which the Note could have been converted immediately prior to such Acquisition, would
have been entitled. The terms of any such Acquisition shall include such terms so as to continue to give to the Holder the right
to receive the securities or property set forth in this Section 3(c) upon any conversion following such Acquisition. This
provision shall similarly apply to successive Acquisitions. “Acquisition” means (a) the closing of the sale, transfer
or other disposition of all or substantially all of the VGLS’s assets, (b) the consummation of the merger or consolidation
of VGLS with or into another entity (except a merger or consolidation in which the holders of capital stock of VGLS immediately
prior to such merger or consolidation continue to hold at least fifty percent (50%) of the voting power of the capital stock of
VGLS or the surviving or acquiring entity), or any transaction or series of transactions to which VGLS is a party in which in
excess of fifty percent (50%) of VGLS’s voting power is transferred, or (c) the exclusive license of all or substantially
all of the intellectual property of VGLS to a third party.
(iii) The Conversion Price shall be subject to adjustment as follows:
(A) In case the Company shall (i) pay
a dividend in shares of its capital stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding
shares of Common Stock into a smaller number of shares, or (iv) issue by reclassification of its shares of Common Stock any shares
of the Company, the Conversion Price in effect immediately prior thereto shall be adjusted so that the Holder of this Note thereafter
surrendered for conversion shall be entitled to received the number of shares of Common Stock which he would have owned or have
been entitled to receive after the happening of any of the events described above, had this Note been converted immediately prior
to the happening of such event. Such adjustment shall be made whenever any of the events listed above shall occur. An adjustment
made pursuant to this subdivision (A) shall become effective retroactively immediately after the record date in the case of a dividend
and shall become effective immediately after the effective date in the case of a subdivision, combination or reclassification.
(B) If, at any time while
this Note is outstanding, the Company takes any voluntary action or any event occurs as to which the foregoing subdivisions are
not strictly applicable, but the failure to make an adjustment in the Conversion Price hereunder would not fairly protect the rights,
without dilution, represented by this Note, then the Conversion Price in effect immediately prior thereto shall be adjusted so
that the Holder of this Note shall be entitled to receive the number of shares of Common Stock which he would have owned or been
entitled to receive after the happening of any such action or event, had this Note been converted immediately prior to the happening
of any such action or event.
(d) The Company covenants that it will
at all times reserve and keep available out of its authorized and unissued Common Stock solely for the purpose of issuance upon
conversion of Notes as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other
than the holders of Notes, such number of shares of Common Stock as shall be issuable upon the conversion of the aggregate principal
amount of all outstanding Notes. The Company covenants that all shares of Common Stock that shall be so issuable shall, upon issue,
be duly and validly authorized, issued and fully paid and nonassessable.
(e) Upon a conversion hereunder the
Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may, if otherwise
permitted, make a cash payment in respect of any final fraction of a share based on the Conversion Price at such time.
(f) The issuance of certificates for
shares of Common Stock on conversion of Notes shall be made without charge to the Holder for any documentary stamp or similar taxes
that may be payable in respect of the issue or delivery of such certificate, provided that the Company shall not be required to
pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion
in a name other than that of the Holder and the Company shall not be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have paid to the Company the amount of such tax or shall have established
to the satisfaction of the Company that such tax has been paid.
(g) Notes converted into Common Stock
shall be canceled.
(h) Each Conversion Notice shall be
given by email or mail, postage prepaid, addressed to the Controller of the Company of VG Life Sciences, Inc. located 121 Gray
Avenue, Suite 200, Santa Barbara, CA 93101. Any such notice shall be deemed given and effective upon the earliest to occur of (i)
receipt of such email at the email address specified in this Section 3(h), (ii) five days after deposit in the United States
mails or (iii) upon actual receipt by the party to whom such notice is required to be given.
Section 4. Mandatory
Conversion.
(a) In the event Holder has not elected
to convert all of the principal and interest remaining owing under this Note on or prior to two years after the date of this note,
the then outstanding principal and accrued and unpaid interest amount of this Note shall, without further action by the Holder
or the Company, be automatically converted in whole into that number of shares of Common Stock of the Company at the Conversion
Ratio on the Maturity Date (the “Mandatory Conversion Date”).
(b) Not later than ten (10) Business
Days after the Mandatory Conversion Date, the Company will deliver to the Holder a certificate or certificates containing the restrictive
legends and trading restrictions required by law, if any, representing the number of shares of Common Stock being acquired upon
the mandatory conversion of this Note; provided, however that the Company shall not be obligated to issue certificates evidencing
the equity securities issuable upon conversion of this Note, until the Note is either delivered for conversion to the Company or
any transfer Holder of the Note or Common Stock, or the Holder notifies the Company that the Note have been lost, stolen or destroyed
and provides a lost instrument indemnity or bond to the Company to indemnify the Company from any loss incurred by it in connection
therewith. The Company covenants and agrees that it shall comply with Sections 3(d) through (g) with respect to any
mandatory conversion and such sections are incorporated by reference herein.
Section 5. Payment
of Principal and Redemption.
(a) In the event of an
occurrence of an Event of Default, then the outstanding principal balance of this Note shall be due and payable in full on the
Maturity Date. Prior to the Mandatory Conversion Date this Note may not be prepaid.
(b) Nothing in this Section
5 shall impair the Holder’s right to convert this Note pursuant to Section 3 prior to the Mandatory Conversion Date.
Section 6. Definitions.
For the purposes hereof, the following terms shall have the following meanings:
“Business Day”
shall mean any day, except a Saturday, Sunday or other day on which commercial banks in the State of California are authorized
or required by law to close.
“Conversion Ratio”
means, at any time, a fraction, of which the numerator is the outstanding principal amount represented by any Note plus accrued
but unpaid interest, and of which the denominator is the Conversion Price at such time.
“Original Issue Date”
means the date of the first issuance of this Note regardless of the number transfers hereof.
Section 7. Stockholder
Rights. This Note shall not entitle the Holder to any of the rights of a stockholder of the Company, including without limitation,
the right to vote, to receive dividends and other distributions, or to receive any notice of, or to attend, meetings of stockholders
or any other proceedings of the Company, unless and to the extent converted into shares of Common Stock in accordance with the
terms hereof.
Section 8. Lost
Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution
for and upon cancellation of a mutilated Note, or in lieu of or in substitution for a lost, stolen or destroyed debenture, a new
Note for the principal amount of this Note so mutilated, lost, stolen or destroyed but only upon receipt of evidence of such loss,
theft or destruction of such Note, and of the ownership hereof, and indemnity or bond, if requested, all reasonably satisfactory
to the Company.
Section 9. Governing
Law. This Note shall be governed by and construed in accordance with the laws of the State of California, without giving effect
to conflicts of laws thereof.
Section 10. Notices.
All notices or other communications hereunder shall be given, and shall be deemed duly given and received, if given, in the manner
set forth in Section 5(h).
Section 11. Waiver.
Any waiver by the Company or the Holder a breach of any provision of this Note shall not operate as or be construed to be
a waiver of any other breach of such provision or of any breach of any other provision of this Note. The failure of the Company
or the Holder to insist upon strict adherence to any term of this Note on one or more occasions shall not be considered a waiver
or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Note. Any
waiver must be in writing.
Section 12. Severability.
If any provision of this Note is invalid, illegal or unenforceable, the balance of this Note shall remain in effect, and if
any provision is inapplicable to any person or circumstance, it shall nevertheless remain applicable to all other persons and
circumstances.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed by an officer thereunto duly authorized as of the date first above indicated.
VG LIFE SCIENCES, INC.,
a Delaware corporation
By: /s/ Haig
Keledjian
Name:
Haig Keledjian
Title:
Chairman
EXHIBIT A
NOTICE OF CONVERSION
AT THE ELECTION OF HOLDER
(To be Executed by the Registered Holder
in order to Convert the Note)
The undersigned hereby irrevocably elects to
convert the above Note into shares of Common Stock, no par value per share (the “Common Stock”), of VG Life Sciences,
Inc. (the “Company”) according to the conditions hereof, as of the date written below. If shares are to be issued in
the name of a person other than undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering
herewith such certificates and opinions as reasonably requested by the Company in accordance therewith. No fee will be charged
to the Holder for any conversion, except for such transfer taxes, if any.
Conversion calculations:
_____________________________________
Date to Effect Conversion
_____________________________________
Principal Amount of Notes
to be Converted
_____________________________________
Applicable Conversion Price
_____________________________________
Signature
_____________________________________
Name:
_____________________________________
Address:
Schedule of Cash Proceeds from DW Odell Company,
LLC
and Received by VG Life Sciences, Inc.
July 9, 2014 |
$100,000.00 |
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$___________ |
Date: ______________ |
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_______________________________ |
$___________ |
Date: ______________ |
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_______________________________ |
$___________ |
Date: ______________ |
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_______________________________ |
$___________ |
Date: ______________ |
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EXHIBIT B
WARRANT TO PURCHASE COMMON STOCK
SEE ATTACHED.
EXHIBIT B
WARRANT TO PURCHASE STOCK
Company: VG Life Sciences, Inc.
Number of Shares: 400,000
Class of Stock: Common
Initial Exercise Price Per Share: $0.93
Issue Date: July 9, 2014
THIS WARRANT CERTIFIES
THAT, for the agreed upon value of $1.00 and for other good and valuable consideration, DW Odell Company, LLC, a California limited
liability company (“Holder”) is entitled to purchase the number of fully paid and nonassessable shares of the class
of securities (the “Shares”) of VG Life Sciences, Inc. (the “Company” or “VGLS”) at the initial
exercise price per Share (the “Warrant Price”) all as set forth above and as adjusted pursuant to Article 2 of this
Warrant, subject to the provisions and upon the terms and conditions set forth of this Warrant.
ARTICLE 1. EXERCISE
1.1 Method of Exercise.
Holder may exercise this Warrant by delivering a duly executed Notice of Exercise in substantially the form attached as Appendix
1 to the principal office of the Company. Unless Holder is exercising the conversion right set forth in Section 1.2, Holders shall
also deliver to the Company a check for the aggregate Warrant Price for the Shares being purchased.
1.2 Conversion Right. In lieu
of exercising this Warrant as specified in Section 1.1, Holder may from time to time convert this Warrant, in whole or in part,
into a number of Shares determined by dividing (a) the aggregate fair market value of the Shares or other securities otherwise
issuable upon exercise of this Warrant minus the aggregate Warrant Price of such Shares by (b) the fair market value of one Share.
The fair market value of the Shares shall be determined pursuant Section 1.4.
1.3 No Rights Shareholder. This
Warrant does not entitle Holder to any voting rights as a shareholder of the company prior to the exercise hereof.
1.4 Fair Market Value. For purposes
of Section 1.2, if the Shares are traded in a public market, the fair market value of the Shares shall be the closing price of
the Shares (or the closing price of the Company’s stock into which the Shares are convertible) reported for the business
day immediately before Holder delivers its Notice of Exercise to the Company. If the Shares are not traded in a public market,
the Board of Directors of the Company shall determine fair market value in its reasonable good faith judgment. The foregoing notwithstanding,
if Holder advises the Board of Directors in writing that Holder disagrees with such determination, then the Company and Holder
shall promptly agree upon a reputable investment banking or public accounting firm to undertake such valuation. If the valuation
of such investment banking firm is greater than that determined by the Board of Directors, then all fees and expenses of such investment
banking firm shall be paid by the company. In all other circumstances, such fees and expenses shall be paid by Holder.
1.5 Delivery of Certificate and New
Warrant. Promptly after Holder exercises or converts this Warrant, the Company shall deliver to Holder certificates for the
Shares acquired and, if this Warrant has not been fully exercised or converted and has not been fully exercised or converted and
has not expired, a new Warrant representing the Shares not so acquired.
1.6 Replacement of Warrants.
On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and,
in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company or, in the case of mutilation, or surrender and cancellation of this Warrant, the Company at its expense shall execute
and deliver, in lieu of this Warrant, a new warrant of like tenor.
1.7 Repurchase on Sale, Merger, or
Consolidation of the Company
1.7.1 “Acquisition”
For the purpose of this Warrant, “Acquisition” means (a) the closing of the sale, transfer or other disposition of
all or substantially all of the VGLS’s assets, (b) the consummation of the merger or consolidation of VGLS with or into another
entity (except a merger or consolidation in which the holders of capital stock of VGLS immediately prior to such merger or consolidation
continue to hold at least fifty percent (50%) of the voting power of the capital stock of VGLS or the surviving or acquiring entity),
or any transaction or series of transactions to which VGLS is a party in which in excess of fifty percent (50%) of VGLS’s
voting power is transferred, or (c) the exclusive license of all or substantially all of the intellectual property of VGLS to a
third party.
1.7.2 Assumption of Warrant.
Upon the closing of any Acquisition the successor entity shall assume the obligations of this Warrant, and this Warrant shall be
exercisable for the same securities, cash, and property as would be payable for the Shares issuable upon exercise of the unexercised
portion of this Warrant as if such Shares were outstanding on the record date for the Acquisition and subsequent closing. The Warrant
Price shall be adjusted accordingly.
1.7.3 Purchase Right. Notwithstanding
the foregoing, at the election of Holder, the Company shall purchase the unexercised portion of this Warrant for cash upon the
closing of any Acquisition for an amount equal to (a) the fair market value of any consideration that would have been received
by Holder in consideration of the Shares had Holder exercised the unexercised portion of this Warrant immediately before the record
date for determining the shareholders entitled to participate in the proceeds of the Acquisition, less (b) the aggregate Warrant
Price of the Shares, but in no event less than zero.
ARTICLE 2. ADJUSTMENTS TO THE SHARES.
2.1 Stock Dividends,
Splits, Etc. If the Company declares or pays a dividend on its common stock ( or the Shares if the Shares are securities other
than common stock ) payable in common stock, or other securities, subdivides the outstanding common stock into a greater amount
of common stock, or, if the Shares are securities other than common stock, subdivides the Shares in a transaction that increases
the amount of common stock into which the Shares are convertible, then upon exercise of this Warrant, for each Share acquired,
Holder shall receive, without cost to Holder, the total number and kind of securities to which Holder would have been entitled
had Holder owned the Shares of record as of the date the dividend or subdivision occurred.
2.2 Reclassification, Exchange or
Substitution. Upon any reclassification, exchange, substitution, or other event that results in a change of the number and/or
class of the securities issuable upon exercise or conversion of this Warrant, Holder shall be entitled to receive, upon exercise
or conversion of this Warrant, the number and kind of securities and property that Holder would have received for the shares if
this Warrant had been exercised immediately before such reclassification, exchange, substitution, or other event. Such an event
shall include any automatic conversion of the outstanding or issuable securities of the Company of the same class or series as
the Shares to common stock pursuant to the terms of the Company’s Certificate of Incorporation upon the closing of a registered
public offering of the Company’s common stock. The Company or its successor shall promptly issue to Holder a new Warrant
for such new securities or other property. The new adjustments provided for in this Article 2 including, without limitation, adjustments
to the Warrant Price and to the number of securities or property issuable upon exercise of the new Warrant. The provisions of this
Section 2.2 shall similarly apply to successive reclassifications, exchanges, substitutions, or other events.
2.3 Adjustments for Combinations,
Etc. If the outstanding Shares are combined or consolidated, by reclassification or otherwise, into a lesser number of shares,
the Warrant price shall be proportionately increased.
2.4 Adjustments for Diluting Issuances.
The number of shares of common stock issuable upon conversion of the Shares, shall be subject to adjustment, from time to time
in the manner set forth in the Company’s Certificate of Incorporation with respect to issuance of securities for a price
lower than certain prices specified in the Certificate of Incorporation.
2.5 No Impairment. The Company
shall not, by amendment of its Certificate of Incorporation or through a reorganization, transfer of assets, consolidation, merger,
dissolution, issue, or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed under this Warrant by the Company, but shall at all times in good faith assist in
carrying out of all the provisions of this Article 2 and in taking all such action as may be necessary or appropriate to protect
Holder’s rights under this Article against impairment. If the Company takes any action affecting the Shares or its common
stock other than as described above that adversely affects Holder’s rights under this Warrant, the Warrant Price shall be
adjusted downward and the number of Shares issuable upon exercise of this Warrant shall be adjusted upward in such a manner that
the aggregate Warrant price of this Warrant is unchanged.
2.6 Fractional Shares. No fractional
Shares shall be issuable upon exercise or conversion of the Warrant and the number of Shares to be issued shall be rounded down
to the nearest whole Share. If a fractional share interest arises upon any exercise or conversion of the Warrant, the Company shall
eliminate such fractional share interest by paying Holder amount computed by multiplying the fractional interest by the fair market
value of a full Share.
2.7 Certificate as to
Adjustments. Upon each adjustment of the Warrant Price, the Company at its expense shall promptly compute such adjustment,
and furnish Holder with a certificate of its Chief Financial officer setting forth such adjustment and the facts upon which such
adjustment is based. The Company shall, upon written request, furnish Holder a certificate setting forth the Warrant price in
effect upon the date thereof and the series of adjustments leading to such Warrant Price.
ARTICLE 3. REPRESENTATIONS AND COVENANTS
OF THE COMPANY.
3.1 Representations and Warranties.
The Company hereby represents and warrants to the Holder that all Shares which may be issued upon the exercise of the purchase
right represented by this Warrant and all securities, if any, issuable upon conversion of the Shares, shall, upon issuance, be
duly authorized, validly issued, fully paid and nonassessable, and free of any liens and encumbrances except for restrictions on
transfer provided for herein or under applicable federal and state securities laws.
3.2 Notice of Certain Events.
If the company proposes at any time (a) to declare any dividend or distribution upon its common stock, whether in cash, property,
stock or other securities and whether or not a regular cash dividend; (b) to offer for subscription pro rata to the holders of
any class or series or other rights; (c) to effect any reclassification or recapitalization of common stock; (d) to merge or consolidate
with or into any other corporation, or sell, lease, license, or convey all or substantially all of its assets, or to liquidate,
dissolve or wind up; or (e) offer holders of registration rights the opportunity to participate in an underwritten public offering
of the company’s securities for cash, then, in connection with each such event, the Company shall give Holder (1) at least
20 days prior written notice of the date on which a record will be taken for such dividend, distribution or subscription rights
(and specifying the date on which the holders of common stock will be entitled thereto) or for determining rights to vote, if any,
in respect of the matters referred to in (c) and (d) above; 2 in the case of the matters referred to in (c) and (d) above at least
20 days prior written notice of the date when the same will take place (and specifying the date on which the holders of common
stock will be entitled to exchange their common stock for securities or other property deliverable upon the occurrence of such
event); and (3) in the case of the matter referred to in (e) above, the same notice as is given to the holders of such registration
rights.
3.3 Information Rights. So long
as the Holder holds this Warrant and /or any of the Shares, the Company shall deliver to the Holder (a) promptly after mailing,
copies of all notices or other written communications to the shareholders of the Company, (b) within ninety (90) days after the
end of each fiscal year of the Company, the annual financial statements of the Company.
3.4 Registration Under Securities
Act of 1933, as amended. The Company agrees that the Shares shall be subject to the registration rights granted to any other
holders of the Company’s common stock.
ARTICLE 4. MISCELLANEOUS.
4.1 Term. This Warrant
is exercisable, in whole or in part, at any time and from time to time on or after the fourth anniversary of the Issue Date hereof
and up to and including the fifth anniversary of the Issue Date.
4.2 Legends. This Warrant and
the Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with
a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR PURSUANT TO RULE 144 OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
CORPORATION AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
4.3 Compliance with Securities Laws
on Transfer. This Warrant and the Shares issuable upon exercise this Warrant (and the securities issuable , directly or indirectly,
upon conversion of the shares, if any) may not be transferred or assigned in whole or in part without compliance with limitation,
the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonable requested
by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to an affiliate of Holder
or if there is no material question as to the availability of current information as referenced in rule 144(c), Holder represents
that it has complied with Rule 144(d) and (e) in reasonable detail, the selling broker represents that it has complied with Rule
144(f), and the Company is provided with a copy of Holder’s notice of proposed sale.
4.4 Transfer Procedure. Subject
to the provisions of Section 4.2, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this
Warrant (or the securities issuable, directly or indirectly, upon conversion of the Shares, if any) by giving the Company notice
of the portion of the Warrant being transferred setting forth the name, address and taxpayer identification number of the transferee
and surrendering this Warrant to the company for reissuance to the transferee(s) (and Holder if applicable).
4.5 Notices. All notices and
other communications from the Company to the Holder, or vice versa, shall be deemed delivered and effective when given personally
or mailed by first-class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company
or the Holder, as the case my be, in writing by the Company or such holder from time to time.
4.6 Waiver. This Warrant and
any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
4.7 Attorneys Fees. In the event
of any dispute between the parties concerning the terms and provisions of this Warrant , the party prevailing in such dispute shall
be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorney’s fees.
4.8 Governing Law. This Warrant
shall be governed by and construed in accordance with the laws of the State of California, without giving effect to its principles
regarding conflicts of law.
/s/ Haig Keledjian
By: Haig Keledjian
Title: Chairman
APPENDIX 1
NOTICE OF EXERCISE
1. The undersigned
hereby elects to convert the attached Warrant into in the manner specified in the Warrant. This conversion is exercised with
respect to _______________________ of the Shares covered by the Warrant.
2. Please issue a
certificate or certificates representing said shares in the name of the undersigned or in such other name as is specified
below:
______________________________________
(Name)
______________________________________
______________________________________
(Address)
3. The
undersigned represents it is acquiring the shares solely for its own account and not as a nominee for any other party and not
with a view toward the resale or distribution thereof except in compliance with applicable securities laws.
____________________ |
__________________________________________ |
|
|
(Date) |
(Signature) |
Exhibit 10.131
FIRST AMENDMENT TO THE
CONVERTIBLE PROMISSORY NOTE AND
WARRANT PURCHASE AGREEMENT
This First Amendment to the Convertible
Promissory Note and Warrant Purchase Agreement (“Agreement”), dated as of July 9, 2014, between VG Life Sciences Inc.
(the “Company”) and Wild Harp Holdings, LLC (“Investor”) is made and entered effective as of the August
14, 2014.
WITNESSETH:
WHEREAS, the Company and Investor
deem it necessary to remove reference to 50,000 shares of Series B Preferred Shares and a related section; and
WHEREAS, the parties hereto
deem it necessary and desirable to amend the Agreement pursuant to the terms of Section 1.1(c) and Section 4.3(iii-v) of the Agreement;
and
WHEREAS, the Company and Investor
have decided to amend the Agreement in certain respects as set forth below.
NOW, THEREFORE, in consideration of
the agreements contained herein and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto do hereby agree to amend the Agreement as follows:
1. The last sentence of Section 1.1(c)
is to be removed in its entirety to read:
(c) it will not be prepayable by
VGLS. Notwithstanding the foregoing, the Investor may convert all or any portion of the Notes, solely at the option of the Investor,
except that the lock up restrictions remain in effect. The maturity date for all notes shall be July 9, 2016.
2. Subsections 4.3 (iii), 4.3 (iv), and 4.3
(v) are to be removed in their entirety to read:
4.3 Board Actions. The Company
shall have delivered to the Investor resolutions duly adopted by the Company's Board of Directors and, to the extent required by
applicable law or by the Company's Articles of Incorporation, the Company's Shareholders, and certified by the Secretary of the
Company (i) approving and authorizing the Company's execution and delivery of this Agreement, the Notes and the Warrants,
and the Company's performance thereunder, and (ii) authorizing the reservation of a sufficient number of shares of the Company's
Common Stock to permit the conversion of the Notes and to permit the exercise of the Warrants.
Acknowledged and agreed:
VG Life Sciences Inc.
/s/ Haig Keledjian
By: Haig Keledjian
Title: Chairman
Wild Harp Holdings, LLC
/s/ John Tynan
By: John Tynan
Title: Managing Member
Exhibit 10.132
FIRST AMENDMENT TO THE
CONVERTIBLE PROMISSORY NOTE AND
WARRANT PURCHASE AGREEMENT
This First Amendment to the Convertible
Promissory Note and Warrant Purchase Agreement (“Agreement”), dated as of July 9, 2014, between VG Life Sciences Inc.
(the “Company”) and DW Odell Company, LLC (“Investor”) is made and entered effective as of the August 14,
2014.
WITNESSETH:
WHEREAS, the Company and Investor
deem it necessary to remove reference to 50,000 shares of Series B Preferred Shares and a related section; and
WHEREAS, the parties hereto
deem it necessary and desirable to amend the Agreement pursuant to the terms of Section 1.1(c) and Section 4.3(iii-v) of the Agreement;
and
WHEREAS, the Company and Investor
have decided to amend the Agreement in certain respects as set forth below.
NOW, THEREFORE, in consideration of
the agreements contained herein and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto do hereby agree to amend the Agreement as follows:
1. The last sentence of Section 1.1(c)
is to be removed in its entirety to read:
(c) it will not be prepayable by
VGLS. Notwithstanding the foregoing, the Investor may convert all or any portion of the Notes, solely at the option of the Investor,
except that the lock up restrictions remain in effect. The maturity date for all notes shall be July 9, 2016.
2. Subsections 4.3 (iii), 4.3 (iv), and 4.3
(v) are to be removed in their entirety to read:
4.3 Board Actions. The Company
shall have delivered to the Investor resolutions duly adopted by the Company's Board of Directors and, to the extent required by
applicable law or by the Company's Articles of Incorporation, the Company's Shareholders, and certified by the Secretary of the
Company (i) approving and authorizing the Company's execution and delivery of this Agreement, the Notes and the Warrants,
and the Company's performance thereunder, and (ii) authorizing the reservation of a sufficient number of shares of the Company's
Common Stock to permit the conversion of the Notes and to permit the exercise of the Warrants.
Acknowledged and agreed:
VG Life Sciences Inc.
/s/ Haig Keledjian
By: Haig Keledjian
Title: Chairman
DW Odell Company, LLC
/s/ David Odell
By: David Odell
Title: Managing Member
VG Life Sciences (PK) (USOTC:VGLS)
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