As filed with the Securities and Exchange Commission on February 11, 2015

Registration Statement No. 333- 201905

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1 to the

FORM S-1

REGISTRATION STATEMENT

UNDER THE SECURITIES ACT OF 1933

VG Life Sciences Inc.

(Exact name of registrant as specified in its charter)

Delaware

3845

33-0814123

(State or other jurisdiction of incorporation

or organization)

(Primary Standard Industrial Classification

Code Number)

(I.R.S. Employer Identification Number)

VG Life Sciences Inc.		John Tynan
121 Gray Avenue, Suite 200		Chief Executive Officer
Santa Barbara, CA 93101		VG Life Sciences Inc.
(805) 879-9000		121 Gray Avenue, Suite 200
		Santa Barbara, CA 93101
		(805) 879-9000
(Address and telephone number of registrant’s principal executive offices)		(Name, address, and telephone of agent for service)

Copies of communications to:

Amy M. Trombly, Esq.

Trombly Business Law, PC

1434 Spruce Street, Suite 100

Boulder, CO 80302

Phone (617) 243-0060

Fax (617) 243-0066

Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

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

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company x

CALCULATION OF REGISTRATION FEE


Title of Each Class of Securities to be Registered	Amount to be Registered (1)	Proposed Maximum Offering Price Per Share (2)	Proposed Maximum Aggregate Offering Price (2)	Amount of Registration Fee
Common Stock, par value $0.0001, to be sold by existing stockholders	5,000,000	$0.07255	$362,750	$42.15*

* Previously paid.

(1) Pursuant to Rule 416(a) of the Securities Act of 1933, as amended, this registration statement shall be deemed to cover additional securities that may be offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.

(2) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457 of the Securities Act. The price per share and aggregate offering prices for the shares registered hereby are calculated on the basis of $0.07255, which is the average of the high and low prices of the registrant’s common stock as reported on the OTCQB marketplace on February 3, 2015.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

VG LIFE SCIENCES INC.

OFFERING UP TO 5,000,000 COMMON SHARES

This prospectus relates to the offer and resale of up to 5,000,000 shares of our common stock, par value $0.0001 per share, by the selling stockholder, Dutchess Opportunity Fund, II, which Dutchess has agreed to purchase pursuant to the investment agreement we entered into with Dutchess on March 28, 2014, as amended. Subject to the terms and conditions of the investment agreement, which we refer to in this prospectus as the “Investment Agreement,” we have the right to “Put,” or sell, up to $5.0 million in shares of our common stock to Dutchess. This arrangement is sometimes referred to as an “Equity Line.”

We will not receive any proceeds from the resale of these shares of common stock offered by Dutchess. We will, however, receive proceeds from the sale of shares to Dutchess pursuant to the Equity Line. When we Put an amount of shares to Dutchess, the per share purchase price that Dutchess will pay to us in respect of such put will be determined in accordance with a formula set forth in the Investment Agreement. Generally, in respect of each put, Dutchess will pay us a per share purchase price equal to 94% of the lowest volume weighted average price, or “VWAP,” of our common stock during the five consecutive trading day period beginning on the trading day that Dutchess receives our put notice.

Dutchess may sell the shares of common stock from time to time at the prevailing market price on the OTCQB marketplace, or on an exchange if our shares of common stock become listed for trading on such an exchange, or in negotiated transactions. Dutchess is an “underwriter” within the meaning of the Securities Act of 1933, as amended, in connection with the resale of our common stock under the Equity Line.

Our common stock is quoted on the OTCQB marketplace under the symbol “VGLS”. The last reported sale price of our common stock on the OTCQB marketplace on February 9, 2015 was $0.0785 per share.

THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE

SECURITIES ONLY IF YOU CAN AFFORD A COMPLETE LOSS.

SEE “RISK FACTORS” BEGINNING ON PAGE 3.

You should rely only on the information provided in this prospectus or any supplement to this prospectus. We have not authorized anyone else to provide you with different information. Neither the delivery of this prospectus nor any distribution of the shares of common stock pursuant to this prospectus shall, under any circumstances, create any implication that there has been no change in our affairs since the date of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Subject to Completion, the date of this Prospectus is February 11, 2015.

TABLE OF CONTENTS

		Page
Prospectus Summary		1
Risk Factors		3
Use of Proceeds		21
Selling Stockholder		21
Plan of Distribution		22
Description of Securities to be Registered		23
Interests of Named Experts and Counsel		23
Cautionary Statement Regarding Forward Looking Statements		24
Description of Our Business		24
Description of Our Property		45
Legal Proceedings		45
Market Price and Dividends on Common Equity and Related Stockholder Matters		45
Directors, Executive Officers, Promoters and Control Persons		46
Executive Compensation		48
Security Ownership of Certain Beneficial Owners and Management		52
Certain Relationships and Related Transactions		56
Director Independence		60
Legal Matters		60
Experts		60
Financial Statements		F-1
Management’s Discussion and Analysis of Financial Condition and Results of Operations		61
Disclosure of Commission Position On Indemnification For Securities Act Liabilities		73

VG LIFE SCIENCES INC.

PROSPECTUS SUMMARY

The following information is a summary of the prospectus and it does not contain all of the information you should consider before making an investment decision. You should read the entire prospectus carefully, including the financial statements and the notes relating to the financial statements.

ABOUT US

We incorporated under the laws of the state of Delaware on July 11, 1995 under the name Hitech Investment, Inc. On April 22, 1999, we changed our name to 5 Star Living Online, Inc. and commenced operations by pursuing a business to implement an e-commerce luxury auction site. On October 2, 2001, we entered into an Agreement and Plan of Exchange with Viral Genetics, Inc. through which Viral Genetics, Inc. became our wholly-owned subsidiary. Subsequently, on November 5, 2001, we changed our name to Viral Genetics, Inc. On November 26, 2012, we changed our name to VG Life Sciences Inc., which is our current name.

Our principal executive offices are located at 121 Gray Avenue, Suite 200, Santa Barbara, California 93101, and our telephone number is (805) 879-9000. Our fiscal year end is December 31. Our website is www.vglifesciences.com. We do not intend for information on our website to be incorporated into this prospectus.

We are a drug discovery and development company researching two core technologies: Targeted Peptide Technology, or TPT, which is currently our main focus, and Metabolic Disruption Technology, or MDT, which is our secondary focus.

Our research indicates that our TPT therapies may be useful in treating autoimmune diseases, or diseases that trigger the body’s immune system when doing so is not necessary. Certain molecular patterns displayed on the surface of all cells allow the immune system to distinguish the body’s own cells, or self-cells, from foreign cells, or non-self cells, as well as to distinguish between healthy cells and infected cells. When a given cell displays a non-self molecular pattern, that pattern alerts the immune system to the presence of pathogen(s) and provides an identity of the pathogen(s). This recognition of foreign markers initiates an immune response: acute inflammation followed by targeted destruction of invaders and of compromised self-cells. When non-infected, healthy, self-cells are inappropriately targeted by the immune system, the resulting conditions, effects, and symptoms are termed chronic inflammatory and autoimmune diseases. Current therapies that combat these immune disorders generally focus on eliminating pro-inflammatory cells and/or their pro-inflammatory signals. Such therapies may be non-specific and immunosuppressive, weakening a patient’s ability to fight secondary infections. We believe we have produced a peptide, which is a small segment of protein that may selectively eliminate certain pro-inflammatory immune system cells that play a key role in inflammatory and autoimmune conditions. Our TPT therapy, which uses this peptide, requires significant additional work before the commencement of clinical trials, including favorable animal toxicity study results and then regulatory review and approval of protocols. We believe TPT could potentially be a significant discovery for patients who battle the symptoms of these largely untreatable autoimmune diseases.

Additionally, we have one drug research program in clinical stage, which is a MDT therapy that helps, in combination with other drugs, to fight cancers with solid tumors in situations where the cancer is resistant to the initial cancer drug therapy. Our MDT trial was initially for ovarian cancer, but has since expanded to include other solid tumors, including those located in the breast, colon, liver, lung, and pancreas. Currently, we do not have sufficient funding to complete this work and plan to seek additional funding.

Our research and development programs are based on technology, for which we have an exclusive license that was developed by Dr. M. Karen Newell Rogers, while she was working at the University of Colorado, the University of Vermont, and Texas A&M University.

SUMMARY FINANCIAL DATA

Because this is only a summary of our financial information, it does not contain all of the financial information that may be important to you. Therefore, you should carefully read all of the information in this prospectus and any prospectus supplement, including the financial statements and their explanatory notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before making a decision to invest in our common stock. The information contained in the following summary is derived from our financial statements for the quarters ended September 30, 2014 and 2013, and the fiscal years ended December 31, 2013 and 2012.

	Nine Months Ended September 30,						Year Ended December 31,
	2014			2013			2013			2012

REVENUES	$	–		$	–		$	–		$	–

EXPENSES
Research and development		975,864			349,636			808,517			496,245
Management salaries		780,625			489,307			772,432			367,500
Depreciation and amortization		–			–			–			–
Legal and professional		1,077,551			696,586			874,133			551,060
Consulting fees		37,629			152,915			98,421			845,871
General and administrative		730,502			84,649			1,354,127			337,836

Total expenses		1,773,093			1,773,093			3,907,630			2,598,512

LOSS FROM OPERATIONS		(1,773,093	)		(1,773,093	)		(3,907,630	)		(2,598,512	)

OTHER INCOME (EXPENSE)
Asset impairment		–			–			–			–
Sale of distribution rights		–			–			–			–
Interest income		–			–			–			–
Derivative benefit/(expense)		(94,935	)		(2,098,134	)		(2,495,663	)		(582,362	)
Interest expense		(2,093,704	)		(502,875	)		(1,075,905	)		(3,758,840	)

Total other income (expense)		(2,188,639	)		(2,601,009	)		(3,571,568	)		(4,341,202	)

NET LOSS	$	(5,790,810	)	$	(4,374,102	)	$	(7,479,198	)	$	(6,939,714	)

THE OFFERING

This prospectus relates to the resale of up to 5,000,000 shares of our common stock by Dutchess Opportunity Fund, II, LP. Dutchess will acquire our common stock pursuant to the terms and conditions of the Investment Agreement.

The Investment Agreement with Dutchess provides that Dutchess is committed to purchase from us, from time to time, up to $5,000,000 of our common stock over the course of thirty-six months. We may draw on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Investment Agreement. The amount that we are entitled to put in any one notice will be equal to either 1) 200% of the average daily volume of the common stock for the 3 trading days prior to the applicable Put notice date, multiplied by the average of the 3 daily closing prices immediately preceding the Put date or 2) $150,000. When we “Put,” or sell, an amount of shares to Dutchess, the per share purchase price that Dutchess will pay to us in respect of such put will be determined in accordance with a formula set forth in the Investment Agreement. Generally, in respect of each Put, Dutchess will pay us a per share purchase price equal to 94% of the volume weighted average price, or VWAP, of our common stock during the five consecutive trading day period beginning on the trading day our put notice is received. The initial number of shares issuable by us and purchasable by Dutchess under the Investment Agreement is 5,000,000 shares. Dutchess’ obligations under the Investment Agreement are non-transferable.

Common stock outstanding as of December 31, 2014	41,901,119

Securities Offered	Up to 5,000,000 shares of our common stock by Dutchess, the selling stockholder.

Offering Price	To be determined by the prevailing market price for the shares at the time of sale.

Use of Proceeds	We will not receive any proceeds from the sale of the shares by the selling stockholder. We will, however, receive proceeds from the shares of our common stock that we sell to Dutchess under the Equity Line. See “Use of Proceeds” section.

Risk Factors	An investment in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 3 and the other information in this prospectus for a discussion of the factors you should consider before investing in the shares of common stock offered hereby.

Stock Symbol	VGLS

RISK FACTORS

Risks Related to Our Business

We are a development stage company with no commercial products.

We are developing two drug candidates: VG1177, our lead pre-clinical drug candidate, initially for HIV/AIDS application, and MDT, our clinical drug candidate, initially aimed to fight solid tumor cancers in situations where the cancer is resistant to initial cancer drug therapy. Currently, we have no product candidates in our clinical development pipeline other than VG1177 for HIV/AIDS and MDT for a cancer application, and we have no products approved for sale. We plan to file an IND application with the FDA for our VG1177 after completion of the animal toxicity studies. Thereafter, we expect to commence our initial clinical trials for VG1177 for HIV/AIDS. Although we have begun pre-clinical and in vitro studies, we have not yet begun human clinical trials, and therefore, we are still many years from beginning to commercialize and market VG1177 or any other product candidate, if ever. We expect the clinical development of VG1177 will require significant additional effort, resources, time, and expenses prior to seeking FDA approval. VG1177 is not expected to be commercially available in the United States or outside the United States for several years, if ever. If we are unable to make VG1177 commercially available, we may not be able to fund future operations, including developing, testing and obtaining regulatory approval for new product candidates.

We may be unable to continue as a going concern.

As we don’t have enough cash on hand to pay our expenses for the next 12 months of operations, our independent auditors have included a “going concern” qualification in their audit report. We expect to continue incurring losses for the foreseeable future and will need to raise additional capital to pursue our product development initiatives, to penetrate markets for the sale of our products and continue as a going concern. This qualification may also make it more difficult for us to raise capital and could increase the cost of any capital raised. We cannot provide any assurances that we will be able to raise additional capital. Our management believes that we have access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means, if needed; however, we can provide no assurance that new financing will be available on commercially acceptable terms, if needed.

We have a history of operating losses. We expect to incur net losses and we may never achieve or maintain profitability.

We have not been profitable since our inception. We reported net losses of approximately $5.8 million and $4.4 million for the nine months ended September 30, 2014 and 2013, respectively and $7.5 million and $6.9 million for the years ended December 31, 2013 and 2012, respectively. As of September 30, 2014, we had an accumulated deficit of approximately $105.5 million. We have not generated any revenue from product sales or royalties from product sales to date, and it is possible that we will never have significant product sales revenue or royalty revenue. We expect to continue to incur losses for at least the next several years as we and our collaborators pursue clinical trials and research and development efforts. To become profitable, we, either alone, or with our collaborators, must successfully develop, manufacture, and market our current product candidates, particularly VG1177 or our MDT compound, as well as continue to identify, develop, manufacture, and market new product candidates. It is possible that we will never have significant product sales revenue or receive significant royalties on our licensed product candidates.

We will need additional financing, but our access to capital funding is uncertain.

Our current and anticipated operations, particularly our product development and commercialization programs, require substantial capital, which we have not yet obtained in lump sum. We are continually seeking funding for our ongoing operations, and we have funded operations through a series of private placements and support from stockholders. Cash as of September 30, 2014 was $53,842. Those funds have since been utilized and we have entered into agreements with related and unrelated parties to receive additional capital after September 30, 2014 of up to $700,000 to allow us to continue through March 2015. As of September 30, 2014, we have received $400,000 of this amount. Until we are able to secure long-term financial support or financing in a sufficiently large quantity to fund operations for at least 18-24 months, our ability to operate is uncertain and a significant portion of our management’s time is devoted to fund-raising. However, these and future capital needs will depend on many factors, including the extent to which we enter into collaboration agreements with respect to any of our proprietary product candidates and make progress in our internally funded research, development and commercialization activities. Our capital requirements will also depend on the magnitude and scope of these activities, our ability to maintain existing, and establish new, collaborations, the terms of those collaborations, the success of our collaborators in the future to develop and market products under their respective collaborations with us, our success in producing clinical and commercial supplies of our product candidates on a timely basis and in sufficient quantities to meet our requirements, competing technological and market developments, the time and cost of obtaining regulatory approvals, the extent to which we choose to commercialize our future products through our own sales and marketing capabilities, and the cost of preparing, filing, prosecuting, maintaining and enforcing patent and other rights. We do not have committed external sources of funding, and we cannot assure you that we will be able to obtain additional funds on acceptable terms, if at all. If adequate funds are not available, we may be required to:

	·	engage in equity financings that would be dilutive to current stockholders;
	·	delay, reduce the scope of, or eliminate one or more of our development programs;
	·	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
	·	license rights to technologies, product candidates, or products on terms that are less favorable to us than might otherwise be available.

If funding is insufficient at any time in the future, we may not be able to develop or commercialize our products, take advantage of business opportunities or respond to competitive pressures.

We are heavily dependent on the success of our lead drug candidate, and we cannot provide any assurance that our lead drug candidate or other product candidates we may have in the future will be commercialized.

We intend to invest the vast majority of our time and financial resources in the development and commercialization of our lead drug candidate, VG1177, which is currently in pre-clinical development. We plan to file an IND for our HIV/AIDS VG1177 with the FDA in early 2015. We expect to commence patient enrollment for our Phase I-clinical trial thereafter. Our future success depends heavily on our ability to successfully develop, obtain regulatory approval for, and commercialize our lead drug candidate, which may never occur. We currently generate no revenues and incur substantial losses, and we may never be able to develop or commercialize a marketable drug. Our MDT candidate is our secondary candidate, nearing completion of a Phase I-Physician’s IND.

Before we generate any revenues from product sales, we must complete preclinical studies and clinical trials for VG1177, establish manufacturing capabilities that comply with the FDA’s current Good Manufacturing Practices requirements for manufacturing sterile drugs, receive approval from the FDA in the United States and other regulatory agencies in foreign jurisdictions, build a commercial organization, make substantial investments and undertake significant marketing efforts ourselves or in partnership with others. We will not be permitted to market or promote VG1177, MDT, or any other product candidates we may have in the future, before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for VG1177, MDT or any of our other product candidates.

We have not previously submitted a biologics license application, or a new drug application, or NDA, to the FDA, or similar drug approval filings to comparable foreign authorities, for VG1177. We cannot be certain that our lead drug candidate or any other product candidate will be successful in clinical trials or receive regulatory approval. Further, our lead drug candidate or any other product candidate may not receive regulatory approval even if our clinical trials are successful. If we do not receive regulatory approvals for our lead drug candidate or any other product candidate, we may not be able to continue our operations. Even if we successfully obtain regulatory approvals to market our lead drug candidate or any other product candidate, our revenues will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval and have commercial rights. If the markets for patient subsets that we are targeting are not as significant as we estimate, we may not generate significant revenues from sales of such products, if approved.

Clinical trials involve a lengthy and expensive process with an uncertain outcome, and results of earlier studies and trials may not be predictive of future trial results.

VG1177, MDT and any future product candidate that we may pursue will be subject to extensive regulation by the FDA in the United States and by other regulatory agencies in foreign jurisdictions, including activities related to preclinical studies, human clinical trials, manufacturing, labeling, packaging and sterilization, storage, recordkeeping, advertising, promotion, export, import, marketing and distribution and other possible activities.

Our lead drug candidate, VG1177, is a proprietary, computationally designed anti-inflammatory peptide. We expect to pursue FDA drug approval for VG1177 as a new chemical entity. There may be other similar drug candidates in development by other companies and these candidates may gain FDA drug approval prior to VG1177. We are conducting pre-clinical testing to support our IND for VG1177 and we have received feedback from the FDA regarding our proposed trial. Based on the feedback we received from the FDA, we hope to submit the IND to the FDA in 2015 and commence patient enrollment in our Phase I-clinical trial thereafter. As we move through the regulatory process, the FDA may make other suggestions that may impact our ability to complete our clinical trials within the timeframe or budget that we are anticipating, which could impact investors’ interest in our business and our stock price.

Our MDT combination with other cancer drugs to treat late stage cancers is a proprietary use. There may be other similar drug candidates in development by other companies and these candidates may gain FDA drug approval prior to our MDT compound. We are conducting phase I-clinical testing to support our MDT compound in combination with Nexavar® for treatment of late-stage ovarian cancer, and the trial has been expanded to encompass solid tumors, including breast, colon, lung, liver, and pancreatic cancers. Our Physician’s Investigational New Drug, or P-IND, Phase I clinical trial on late-stage patients with solid tumors is entering its fourth cohort with maximum dosing, and we are completing the analysis of the results of those trials. As we move through the regulatory process, the FDA may make other suggestions that may impact our ability to complete our clinical trials within the timeframe or budget that we are anticipating, which could impact investors’ interest in our business and our stock price.

The results of preclinical studies and clinical trials of previously published similar products may not necessarily be indicative of the results of our future clinical trials. Preliminary results may not be confirmed upon full analysis of the detailed results of an early clinical trial. Product candidates in later stages of clinical trials may fail to show safety and efficacy sufficient to support intended use claims despite having progressed through initial clinical trials. The data collected from clinical trials of our product candidates may not be sufficient to obtain regulatory approval in the United States or elsewhere. Because of the uncertainties associated with drug development and regulatory approval, we cannot determine if, or when, we may have an approved product for commercialization or whether we will ever achieve sales or profits of VG1177 or other product candidates we may pursue in the future.

If our products do not gain market acceptance, our business will suffer because we might not be able to fund future operations.

A number of factors may affect the market acceptance of our products or any other products we develop or acquire, including, among others:

	·	the price of our products relative to other products for the same or similar treatments;
	·	the perception by patients, physicians and other members of the healthcare community of the effectiveness and safety of our products for their indicated applications and treatments;
	·	our ability to fund our sales and marketing efforts; and
	·	the effectiveness of our sales and marketing efforts.

If our products do not gain market acceptance, we may not be able to fund future operations, including developing, testing and obtaining regulatory approval for new product candidates and expanding our sales and marketing efforts for our approved products, which would cause our business to suffer.

Our research and development program for drug candidates other than VG1177 and MDT is at an early stage, and we cannot be certain our program will result in the commercialization of any drug.

Except for our development program for VG1177 and MDT, our research and development program targeting all other disease applications is at an early stage and, to date, we have not developed any other product candidates generated in our TPT research program. Any product candidates we develop will require significant additional research and development efforts prior to commercial sale, including extensive pre-clinical and clinical testing and regulatory approval. This may require increases in spending on internal projects, the acquisition of third party technologies or products, and other types of investments. We cannot be sure that our approach to drug discovery, acting independently or with partners, will be effective or will result in the development of any drug. We cannot expect that any drug candidates that do result from our research and development efforts will be commercially available for many years.

We have limited experience in conducting pre-clinical testing and clinical trials. Even if we receive initially positive clinical trial results, those results will not guaranty that similar results will be obtained in the later stages of drug development. Our current lead drug candidate and all of our potential drug candidates are prone to the risks of failure inherent in pharmaceutical product development, including the possibility that none of our drug candidates will be:

	·	safe, non-toxic and effective;
	·	approved by regulatory authorities;
	·	developed into a commercially viable drug;
	·	manufactured or produced economically;
	·	successfully marketed; or
	·	accepted widely by customers.

If we cannot commercialize any of our drugs, we may not generate revenues and our Company may fail.

We may be unable to maintain sufficient clinical trial liability insurance.

Our inability to obtain and retain sufficient clinical trial liability insurance at an acceptable cost to protect against potential liability claims could prevent or inhibit our ability to conduct clinical trials for product candidates we develop. We currently do not have clinical trial liability insurance for VG1177 and would need to secure coverage before commencing patient enrollment for our Phase II P-IND clinical trials in the United States. Any claim that may be brought against us could result in a court judgment or settlement in an amount that is not covered, in whole or in part, by our insurance or that is in excess of the limits of our insurance coverage. We expect we will supplement our clinical trial coverage with product liability coverage in connection with the commercial launch of our first product candidate; however, we may be unable to obtain such increased coverage on acceptable terms or at all. If we are found liable in a clinical trial lawsuit or a product liability lawsuit in the future, we will have to pay any amounts awarded by a court or negotiated in a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may not have, or be able to obtain, sufficient capital to pay such amounts.

If product liability claims are brought against us or we are unable to obtain or maintain product liability insurance, we may incur substantial liabilities that could reduce our financial resources.

The clinical testing and commercial use of pharmaceutical products involves significant exposure to product liability claims. We have, in the past, obtained limited product liability insurance coverage for some of our clinical trials on humans; however, our insurance coverage may be insufficient to protect us against all product liability damages. Further, liability insurance coverage is becoming increasingly expensive and we might not be able to obtain or maintain product liability insurance in the future on acceptable terms or in sufficient amounts to protect us against product liability damages. Regardless of merit or eventual outcome, liability claims may result in decreased demand for a future product, injury to reputation, withdrawal of clinical trial volunteers, loss of revenue, costs of litigation, distraction of management and substantial monetary awards to plaintiffs. Additionally, if we are required to pay a product liability claim, we may not have sufficient financial resources to complete development or commercialization of any of our product candidates and our business and results of operations will be adversely affected.

If we are unable to develop satisfactory sales and marketing capabilities, we may not succeed in commercializing VG1177 or any other product candidate.

We have no experience in marketing and selling drug products. We have not entered into arrangements for the sale and marketing of VG1177 or any other product. We are developing VG1177 for large patient populations served by physicians. These patient populations may number in the millions. Typically, pharmaceutical companies would employ groups of sales representatives and associated sales and marketing staff numbering in the hundreds to thousands of individuals to call on this large number of physicians and hospitals. We may seek to collaborate with a third party to market our drugs or may seek to market and sell our drugs by ourselves. If we seek to collaborate with a third party, we cannot be sure that a collaborative agreement can be reached on terms acceptable to us. If we seek to market and sell our drugs directly, we will need to hire additional personnel skilled in marketing and sales. We cannot be sure that we will be able to acquire, or establish third party relationships to provide, any or all of these marketing and sales capabilities. The establishment of a direct sales force or a contract sales force or a combination direct and contract sales force to market our products will be expensive and time-consuming and could delay any product launch.

Further, we can give no assurances that we may be able to maintain a direct and/or contract sales force for any period of time or that our sales efforts will be sufficient to grow our revenues or that our sales efforts will ever lead to profits.

Even if we obtain regulatory approvals to commercialize VG1177 or any other drug, our drug candidates may not be accepted by physicians or the medical community in general.

There can be no assurance that VG1177 or any other product candidate successfully developed by us, independently or with partners, will be accepted by physicians, hospitals and other healthcare facilities. VG1177 and any future product candidates we develop will compete with a number of similar drugs and products manufactured and marketed by major pharmaceutical and medical technology companies. The degree of market acceptance of any drugs we develop depends on a number of factors, including:

	·	our demonstration of the clinical efficacy and safety of VG1177 or any other drug candidate;
	·	timing of market approval and commercial launch of VG1177 or any other drug candidate;
	·	the clinical indication(s) for which VG1177 or any other drug candidate is approved;
	·	product label and package insert requirements;
	·	advantages and disadvantages of our product candidates compared to existing therapies;
	·	continued interest in and growth of the market for auto-immune and/or anti-inflammation drugs;
	·	strength of sales, marketing, and distribution support;
	·	product pricing in absolute terms and relative to alternative treatments;
	·	future changes in healthcare laws, regulations, and medical policies; and
	·	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:

	·	exposure to unknown liabilities;
	·	disruption of our business and diversion of our management’s and technical personnel’s time and attention to develop acquired products or technologies;
	·	incurrence of substantial debt or dilutive issuances of securities to pay for acquisitions;
	·	higher than expected acquisition and integration costs;
	·	increased amortization expenses;
	·	difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;
	·	impairment of relationships with key suppliers or customers of any acquired businesses due to changes in management and ownership; and
	·	inability to retain key employees of any acquired businesses.

Any product candidate that we acquire may require additional development efforts prior to commercial sale, including extensive clinical testing and approval by the FDA and applicable foreign regulatory authorities. All product candidates are prone to risks of failure typical of pharmaceutical product development, including the possibility that a product candidate will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, we cannot provide assurance that any products that we develop or approved products that we acquire will be manufactured profitably or achieve market acceptance.

If we do not have the resources necessary to manage growth effectively, then our business, operating results and financial condition could be materially adversely affected.

We believe that as our business plan is more fully realized, we may experience a period of rapid growth that will result in new and increased responsibilities for management personnel and will place a significant strain upon our management, operating and financial systems and resources. To accommodate any rapid growth and to compete effectively and manage future growth, if any, we will be required to implement and improve our operational, financial and management information systems, procedures and controls on a timely basis and to expand, train, motivate and manage our workforce. Our personnel, systems, procedures and controls might not be adequate to support our existing and future operations. Any failure to implement and improve our operational, financial and management systems or to expand, train, motivate or manage employees could have a materially adverse effect on our business, operating results and financial condition.

We may be unable to obtain patents to protect our technologies from other companies with competitive products, and patents of other companies could prevent us from manufacturing, developing or marketing our products.

The patent positions of pharmaceutical and biotechnology firms are uncertain and involve complex legal and factual questions. The U.S. Patent and Trademark Office has not established a consistent policy regarding the breadth of claims that it will allow in biotechnology patents. If it allows broad claims, the number and cost of patent interference proceedings in the United States and the risk of infringement litigation may increase. If it allows narrow claims, the risk of infringement may decrease, but the value of our rights under our patents, licenses and patent applications may also decrease. In addition, the scope of the claims in a patent application can be significantly modified during prosecution before the patent is issued and/or narrowed in a patent re-examination. Consequently, we cannot know whether our pending applications will result in the issuance of patents or, if any patents are issued, whether they will provide us with significant proprietary protection or will be circumvented, invalidated, or found to be unenforceable. Until recently, patent applications in the United States were maintained in secrecy until the patents issued, and publication of discoveries in scientific or patent literature often lags behind actual discoveries. Patent applications filed in the United States after November 2000 generally will be published 18 months after the filing date unless the applicant certifies that the invention will not be the subject of a foreign patent application. We cannot assure you that, even if published, we will be aware of all such literature. Accordingly, we cannot be certain that the named inventors of our products and processes were the first to invent that product or process or that we were the first to pursue patent coverage for our inventions.

Our commercial success depends in part on our ability to maintain and enforce our proprietary rights.

If third-parties engage in activities that infringe our proprietary rights, our management's focus will be diverted and we may incur significant costs in asserting our rights. We may not be successful in asserting our proprietary rights, which could result in our patents being held invalid or a court holding that a third- party is not infringing, either of which would harm our competitive position. In addition, there can be no assurance that others will not design around our patented technology.

Moreover, we may have to participate in interference proceedings declared by the United States Patent and Trademark Office or other analogous proceedings in other parts of the world to determine priority of invention and the validity of patent rights granted or applied for, which could result in substantial cost and delay, even if the eventual outcome is favorable to us. We cannot assure you that our pending patent applications, if issued, would be held valid or enforceable. Additionally, many of our foreign patent applications have been published as part of the patent prosecution process in such countries. Protection of the rights revealed in published patent applications can be complex, costly and uncertain.

We also rely on trade secrets, know-how and confidentially provisions in our agreements with our collaborators, employees and consultants to protect our intellectual property.

We rely on trade secrets and know how to protect our intellectual property. During the course of our business, our employees, consultants and collaborators may be exposed to trade secrets and know-how, the disclosure of which would adversely affect our business. Such parties have signed non-disclosure agreements with us, however these parties may not comply with the terms of their agreements with us. If such parties violate these confidentiality provisions, we might be unable to adequately enforce our rights against these parties or to obtain adequate compensation for the damages caused by their unauthorized disclosure or use. Furthermore, our trade secrets or those of our collaborators may become known or may be independently discovered by others.

Our success also depends on avoiding infringement of the proprietary technologies of others.

In particular, there may be certain issued patents and patent applications claiming subject matter that we or our collaborators may be required to license in order to research, develop or commercialize our product candidates. In addition, third parties may assert infringement or other intellectual property claims against us based on our patents or other intellectual property rights. An adverse outcome in these proceedings could subject us to significant liabilities to third-parties, require disputed rights to be licensed from third-parties or require us to cease or modify our use of the technology. If we are required to license such technology, we cannot assure you that a license under such patents and patent applications will be available on acceptable terms or at all. Further, we may incur substantial costs defending ourselves in lawsuits against charges of patent infringement or other unlawful use of another's proprietary technology.

We are subject to extensive government regulations that may cause us to cancel or delay the introduction of our products to market.

Our research and development activities and the clinical investigation, manufacture, distribution and marketing of drug products are subject to extensive regulation by governmental authorities in the United States and other countries. Prior to marketing in the United States, federal laws, including the Federal Food, Drug and Cosmetic Act, require that a drug undergo rigorous testing and an extensive regulatory approval process implemented by the FDA. To receive approval, we, or our collaborators must, among other things, demonstrate with substantial evidence from well-controlled clinical trials that the product is both safe and effective for each indication where approval is sought. Depending upon the type, complexity and novelty of the product and the nature of the disease or disorder to be treated, that approval process can take several years and require substantial expenditures. Data obtained from testing is susceptible to varying interpretations that could delay, limit or prevent regulatory approvals of our products. Drug testing is subject to complex FDA rules and regulations, including the requirement to conduct human testing on a large number of test subjects. We, our collaborators, or the FDA may suspend human trials at any time if a party believes that the test subjects are exposed to unacceptable health risks. There can be no assurance that any of our product candidates will be safe for human use. Other countries also have extensive requirements regarding clinical trials, market authorization and pricing. These regulatory schemes vary widely from country to country, but, in general, are subject to all of the risks associated with United States approvals.

Risks Related to Development and Regulatory Approval of VG1177 and MDT

We cannot be certain that VG1177 or MDT will receive regulatory approval, and without regulatory approval we will not be able to market our product candidates.

Our business currently depends on the successful development and commercialization of VG1177 and, to a lesser extent, on the successful development and commercialization of MDT. Our ability to generate revenue related to product sales, if ever, will depend on the successful development and regulatory approval of VG1177 and MDT for the treatment of our disease applications.

We currently have no products approved for sale and we cannot guarantee that we will ever have marketable products. The development of a product candidate and issues relating to its approval and marketing are subject to extensive regulation by the FDA in the United States and similar regulatory authorities in other countries, with regulations differing from country to country. We are not permitted to market our product candidates in the United States until we receive a New Drug Application, or NDA, approval from the FDA. We have not submitted any marketing applications for any of our product candidates.

An NDA must include extensive preclinical and clinical data and supporting information to establish the product candidate’s safety and effectiveness for each desired indication. NDAs must also include significant information regarding the chemistry, manufacturing and controls for the product. Obtaining approval of an NDA is a lengthy, expensive and uncertain process, and we may not be successful in obtaining approval. The FDA review processes can take years to complete and approval is never guaranteed. If we submit an NDA to the FDA, the FDA must decide whether to accept or reject the submission for filing. We cannot be certain that any submissions will be accepted for filing and review by the FDA.

Regulators of other jurisdictions have their own procedures for approval of product candidates. Regulatory authorities in countries outside of the United States also have requirements for approval of drug candidates with which we must comply prior to marketing in those countries. Obtaining regulatory approval for marketing of a product candidate in one country does not ensure that we will be able to obtain regulatory approval in any other country.

Even if a product is approved, the FDA may limit the indications for which the product may be marketed, require extensive warnings on the product labeling or require expensive and time-consuming clinical trials or reporting as conditions of approval. In addition, delays in approvals or rejections of marketing applications in the United States or other countries may be based upon many factors, including regulatory requests for additional analyses, reports, data, preclinical studies and clinical trials, regulatory questions regarding different interpretations of data and results, changes in regulatory policy during the period of product development and the emergence of new information regarding our product candidates or other products. Also, regulatory approval for any of our product candidates may be withdrawn.

We cannot predict whether our future trials and studies will be successful or whether regulators will agree with our conclusions regarding the preclinical studies and clinical trials we have conducted to date. If we are unable to obtain approval from the FDA or other regulatory agencies for VG1177, MDT and our other product candidates, or if, subsequent to approval, we are unable to successfully commercialize VG1177, MDT, or our other product candidates, we will not be able to generate sufficient revenue to become profitable or to continue our operations.

Clinical trials for our product candidates are expensive, time-consuming, uncertain and susceptible to change, delay or termination.

Clinical trials are very expensive, time-consuming and difficult to design and implement. Even if the results of our clinical trials are favorable, clinical trials usually continue for several years and may take significantly longer to complete. In addition, we, the FDA, an Institutional Review Board, or other regulatory authorities, including state and local authorities, may suspend, delay or terminate our clinical trials at any time for various reasons, including:

	·	lack of effectiveness of our lead drug candidate or any other product candidate during clinical trials;
	·	discovery of serious or unexpected toxicities or side effects experienced by study participants or other safety issues;
	·	slower than expected rates of subject recruitment and enrollment rates in clinical trials;
	·	delays or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and manufacturing constraints;
	·	inadequacy of or changes in our manufacturing process or product formulation;
	·	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;
	·	changes in applicable regulatory policies and regulations;
	·	delays or failure in reaching agreement on acceptable terms in clinical trial contracts or protocols with prospective clinical trial sites;
	·	delay or failure to supply product for use in clinical trials that conforms to regulatory specification;
	·	unfavorable results from ongoing clinical trials and pre-clinical studies;
	·	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;
	·	failure to design appropriate clinical trial protocols;
	·	scheduling conflicts with participating clinicians and clinical institutions; and
	·	failure to design appropriate clinical trial protocols.

Any of the foregoing could have a material adverse effect on our business, results of operations and financial condition.

There is a high rate of failure for drug candidates proceeding through clinical trials.

Generally, there is a high rate of failure for drug candidates proceeding through clinical trials. We may suffer significant setbacks in our clinical trials similar to those experienced by a number of other companies in the pharmaceutical and biotechnology industries. Further, even if we view the results of a clinical trial to be positive, the FDA or other regulatory authorities may disagree with our interpretation of the data. In the event that we obtain negative results from the VG1177 or MDT planned clinical trials or receive poor clinical results for other product candidates, or the FDA chooses to block progress of the trials due to potential Chemistry, Manufacturing and Controls, or CMC, issues or other hurdles or does not approve our NDA for VG1177 or MDT, we may not be able to generate sufficient revenue or obtain financing to continue our operations, our ability to execute on our current business plan will be materially impaired, our reputation in the industry and in the investment community would likely be significantly damaged and the price of our stock would likely decrease significantly.

Serious adverse events or other safety risks could require us to abandon development and preclude, delay or limit approval of our product candidates, or limit the scope of any approved label or market acceptance.

If VG1177, MDT, or any of our product candidates, prior to, or after any approval for commercial sale, cause serious or unexpected side effects, a number of potentially significant negative consequences could result, including:

	·	regulatory authorities may interrupt, delay or halt clinical trials;
	·	regulatory authorities may deny regulatory approval of our product candidates;
	·	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;
	·	regulatory authorities may require the addition of labeling statements, such as warnings or contraindications or limitations on the indications for use;
	·	we may be required to change the way the product is administered or conduct additional clinical trials;
	·	we could be sued and held liable for harm caused to patients; or
	·	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:

	·	issue warning letters;
	·	impose civil or criminal penalties;
	·	suspend regulatory approval;
	·	suspend any of our ongoing clinical trials;
	·	refuse to approve pending applications or supplements to approved applications submitted by us;
	·	impose restrictions on our operations, including closing our contract manufacturers’ facilities; or
	·	seize or detain products or require a product recall.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response, and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from VG1177 or MDT. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our Company and our operating results will be adversely affected. Additionally, if we are unable to generate revenue from sales of VG1177 or MDT, our potential for achieving profitability will be diminished and the capital necessary to fund our operations will be increased.

Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and damage our reputation. We expend significant resources on compliance efforts and such expenses are unpredictable and might adversely affect our results. Changing laws, regulations and standards might also create uncertainty, higher expenses and increase insurance costs.

We are substantially dependent on our ability to successfully and timely complete clinical trials and obtain regulatory approval to market our most advanced product candidates, VG1177 and MDT. Our business will be materially harmed and our stock price adversely affected if regulatory approval is not obtained with respect to these product candidates.

We intend to file an IND with the FDA for VG1177. We are conducting laboratory testing and research to support the filing of the IND. Our success will depend, to a great degree, on our ability to obtain the requisite regulatory approval to market VG1177 overseas and in the United States. The process of obtaining regulatory approvals is costly, time consuming, uncertain, and subject to unanticipated delays. In order to obtain the necessary regulatory approval, we must demonstrate with substantial evidence from well-controlled clinical trials and to the satisfaction of the applicable regulatory reviewing agency that VG1177 is both safe and efficacious. There is no assurance that we will be able to do so and, if we do, that the applicable regulatory requirements for approval will have been met. We cannot predict the ability of third party service providers to collect the data from our trials with VG1177, analyze the data, and deliver their final reports to us. There may be significant delays in this process. Regulatory authorities may require additional testing for safety and efficacy, which would result in a substantial delay in the regulatory approval process. If we fail to successfully obtain regulatory approvals for VG1177 or we face significant delays, our business will be materially harmed and our stock price will be adversely affected.

Doctors at Scott & White Healthcare in Temple, Texas, and the Cancer Therapy and Research Center at the University of Texas at San Antonio, are conducting a Phase I Physician’s IND trial for patients with late-stage ovarian cancer utilizing an MDT compound, called hydroxychloroquine, for which we hold the pending patent application for combination with an existing cancer drug, called sorafenib, which is marketed as Nexavar ®. Since its inception in July 2012, the trial has been expanded to encompass solid tumors, including breast, colon, lung, liver, and pancreatic cancers. Our Physician’s Investigational New Drug, or P-IND, Phase I clinical trial on late-stage patients with solid tumors is entering its fourth cohort with maximum dosing, and we are completing the analysis of the results of those trials. This trial is designed to assess the safety of a combination treatment using hydroxychloroquine, or HCQ, and sorafenib. The combination treatment is designed to disrupt the metabolism of the cancer cells, making them more prone to the effects of sorafenib. To date, patients in the P-IND Phase I trial have not experienced unacceptable levels of toxicity. Despite these results, we cannot predict that our future clinical trials will be successful or will be approved by the FDA. If we fail to successfully obtain regulatory approval for our MDT compound or if we face significant delays, our business will be materially harmed and our stock price will be adversely affected.

We depend on various suppliers to supply VG1177, our MDT compounds, and our other products.

We believe our current suppliers can produce sufficient material to support ongoing study of VG1177, our MDT cancer study. However, if approved and/or successful in these studies, we will have to source a manufacturer with significantly larger capacity. With regard to our drug programs and in particular the TPT programs, prior to initiation of the studies it is also required that we secure a manufacturer that will be able to meet production requirements that meet Good Manufacturing Practices and Good Laboratory Practices throughout the development process and possibly through marketing and distribution. Our manufacturer is Ambiopharm, Inc. Ambiopharm synthesizes the peptide on a contract basis for specific amounts. We do not currently have a contract or an exclusivity agreement with Ambiopharm. Ambiopharm is capable of procuring Good Manufacturing Practices grade compounds, but we cannot be certain that they will be able to produce our product in the future. Changing manufacturers of a drug product can involve significant regulatory delay while comparing products made at the old manufacturer with products made at the new manufacturer. Consequently, while changing manufacturers is possible, it is highly desirable to avoid doing so. There is no guarantee that we will be able to find a manufacturer that can meet our production and distribution requirements throughout the life of our drug products. If we are required to change manufacturers, there will likely be significant delays in our ability to study or, if approved, sell our drug products, which would materially harm our business and adversely affect our stock price.

With regard to our MDT compounds, which are used in combination with other existing drugs including drugs that are approved or have been deregistered by the FDA, the availability of such third-party drugs cannot be guaranteed on terms that are reasonable or at all. While we do not anticipate manufacturing issues in the foreseeable future, we are dependent on the University of Texas Health Science Center at San Antonio, or UTHSCSA, for procurement of MDT compounds in our ongoing Phase I P-IND cancer trial. Disruption of the supply of these third party compounds would delay or impair our ability to study our compounds in combination with them, and would have a materially harmful effect on our business and adversely affect our stock price.

Clinical trials are long, expensive and uncertain processes and overseas regulators and the FDA may ultimately not approve any of our product candidates.

We cannot assure you that data collected from pre-clinical studies and clinical trials of our product candidates will be sufficient to support approval by overseas regulators or the FDA, the failure of which could delay our profitability and adversely affect our stock price.

All of our research and development programs are at an early stage and clinical trials are long, expensive, and uncertain processes. Clinical trials may not be commenced or completed on schedule, and government regulators may not ultimately approve our product candidates for commercial sale. Further, even if the results of our pre-clinical studies or clinical trials are initially positive, it is possible that we will obtain different results in the later stages of drug development or that results seen in clinical trials will not continue with longer-term treatment. Drugs in late stages of clinical development may fail to show the desired safety and efficacy traits despite having progressed through initial clinical testing. For example, positive results in early Phase I or Phase II clinical trials may not be repeated in larger Phase II or Phase III clinical trials. All of our potential drug candidates are prone to the risks of failure inherent in drug development. The clinical trials of any of our drug candidates, including VG1177, could be unsuccessful, which would prevent us from commercializing the drug. Our failure to develop safe, commercially viable drugs would substantially impair our ability to generate revenues and sustain our operations and would materially harm our business and adversely affect our stock price.

If we fail to maintain our existing or establish new collaborative relationships, or if our collaborators do not devote adequate resources to the development and commercialization of our licensed drug candidates, we may have to reduce our rate of product development and may not see products brought to market or be able to achieve profitability.

We rely heavily upon our current collaborative relationships with Dr. Newell Rogers, Dr. Evan Newell and Dr. Brett Mitchell, Scott & White Healthcare and Dr. Richard Tobin, all of whom are engaged in biomedical research related to our product candidates. Because we currently have no product candidates that are approved for sale and ready for commercialization, our success depends upon our ability to maintain our existing collaborative relationships with our key partners. If we are unable to maintain these relationships, we may not be able to meet the requirements for approval by the FDA or other comparable regulatory agencies and we may not achieve or maintain profitability.

For us to receive any significant revenues from sale of our products, our collaborators must advance drug candidates through clinical trials, establish the safety and efficacy of our drug candidates, obtain regulatory approvals and achieve market acceptance of those products. As a result, if a collaborator elects to terminate its efforts, our ability to commercialize our products may be significantly impaired.

Below is a summary of the compensation that we are obligated to pay to our consultant pursuant to our consulting agreements with them. All options and shares have been adjusted to reflect our 1 for 600 reverse split on November 26, 2012 (“2012 Reverse Split”).

M. Karen Newell Rogers	Fees	$10,000/month (1)
	Bonus Stock Options	16,667 initially 4,167 annually (2)
	Royalty	0.75% of net sales in developed countries 0.125% of net sales in undeveloped countries
	Reimbursement of Expenses	All reasonable expenses incurred in providing services (3)
Evan Newell	Fees	$2,000/month (1)
	Bonus Stock Options	1,667 initially 1,667 annually (2)
	Royalty	0.75% of net sales in developed countries 0.125% of net sales in undeveloped countries
	Reimbursement of Expenses	All reasonable expenses incurred in providing services (4)
Brett Mitchell	Fees	$7,500/3 months (5)
Brett Mitchell	Reimbursement of Expenses	All reasonable expenses incurred in providing services (6)
Scott & White Healthcare	License Fee	$50,000 initially
	Royalty	3.0% of net sales in developed countries 0.5% of net sales in undeveloped countries
	Minimal Compensation (7)	$20,000 January 1, 2014 $40,000 January 1, 2015 $70,000 January 1, 2016 $100,000 January 1, 2017 $150,000 January 1, 2018 $200,000 each year after
	Milestone Payments	$100,00 conclusion of each Phase I clinical trial $500,000 conclusion of each Phase Ill clinical trial $2,000,000 for each regulatory/market approval
Richard Tobin	Fees	$3,500/month (8)

(1)

Earned but unpaid fees due automatically accrue under a convertible note with the consultant.

(2)

The exercise price of each annual option shall be the volume weighted average price, or VWAP, for the twenty trading days up to and including January 1 of such year.

(3)

Prior approval is required for any expenses in excess of $750.

(4)

Prior approval is required for any expenses in excess of $500.

(5)

The fee shall be paid in shares of our common stock at a price equal to the volume-weighted average closing price, or VWAP, of the shares for the twenty trading days ending on the date such payment period ends.

(6)

Prior approval is required for any expenses in excess of $100.

(7)

In the event that payment of royalties for the previous year due do not meet or exceed the required minimum annual consideration, royalty payment for the last quarter of the calendar year must include payment of the balance needed to achieve the required minimum.

(8)

The monthly payments shall consist of $2,000 in cash and $1,500 in shares of our common stock.

We also agreed to indemnify the consultants against third party claims brought as a result of their good faith performances of services pursuant to the agreement.

If we fail to establish new collaborative relationships, or if our new collaborators do not devote adequate resources to the development and commercialization of our licensed drug candidates, we may have to reduce our rate of product development and may not see products brought to market or be able to achieve profitability.

We may need to collaborate with additional parties in order to gain approval of our product candidates. As we progress through the FDA approval stages, we may need to enter into agreements in order to conduct the necessary studies. If we cannot obtain the partnership of such third parties on terms that are acceptable, or at all, then we may never be able to sell any of our product candidates and we may fail.

Furthermore, we anticipate needing to enter into new collaborative relationships in the future to manufacture, market and distribute our products. We have not entered into such partnerships and do not expect to until an IND is approved and/or clinical trials in the United States have progressed. It is likely we will grant exclusive commercialization and marketing rights to our products to third parties, and such parties will have substantial control over the continued efforts in their territories and the resources they commit to the programs. Accordingly, the success of the commercialization of our products in some or all territories may substantially depend on the efforts of third parties and is to a degree beyond our control.

For us to receive any significant revenues from sale of our products, any such collaborators must advance drugs through clinical trials, establish the safety and efficacy of our drug candidates, obtain regulatory approvals and achieve market acceptance of those products. As a result, if a collaborator elects to terminate its efforts, our ability to commercialize our products may be significantly impaired.

Because of the uncertainty of pharmaceutical pricing, reimbursement, and healthcare reform measures, we may be unable to sell our products profitably.

The availability of reimbursement by governmental and other third-party payors affects the market for any pharmaceutical product. These third-party payors continually attempt to contain or reduce the costs of healthcare. There have been legislative and regulatory changes to the healthcare system recently, including, most notably, the Affordable Care Act. Significant uncertainty exists with respect to the reimbursement status of newly approved healthcare products under existing laws including the new Affordable Care Act. It is uncertain whether reimbursement will be available for any of our product candidates if and when they are approved at a rate that is acceptable to most patients, if any reimbursement is available at all. We might not be able to sell our products profitably or recoup the value of our investment in product development if reimbursement is unavailable or limited in scope.

As a result of intense competition and technological change in the pharmaceutical industry, the marketplace may not accept our products, and we may not be able to complete successfully against other companies in our industry and achieve profitability.

Many of our competitors have drug products that have already been approved or are in development, and operate large, well-funded research and development programs in these fields. Many of our competitors have substantially greater financial and management resources, superior intellectual property positions and greater manufacturing, marketing and sales capabilities, areas in which we have limited or no experience. In addition, many of our competitors have significantly greater experience than we do in undertaking preclinical testing and clinical trials of new or improved pharmaceutical products and obtaining required regulatory approvals. Consequently, our competitors may obtain FDA and other regulatory approvals for product candidates sooner and may be more successful in manufacturing and marketing their products than us or our collaborators. Existing and future products, therapies and technological approaches will compete directly with the products we seek to develop. Current and prospective competing products may provide greater therapeutic benefits for a specific problem, may offer easier delivery or may offer comparable performance at a lower cost. Any product candidate that we develop and that obtains regulatory approval must then compete for market acceptance and market share. Our product candidates may not gain market acceptance among physicians, patients, healthcare payors and the medical community. Further, any products we develop may become obsolete before we recover any expenses we incurred in connection with the development of these products. As a result, we may never achieve profitability.

If any of our products receive regulatory approval, the approval will be limited to those disease states and conditions for which the product is safe and effective, as demonstrated through clinical trials.

In addition, results of pre-clinical studies and clinical trials with respect to our products could subject us to adverse product labeling requirements that could harm the sale of such products. Even if regulatory approval is obtained, later discovery of previously unknown problems may result in restrictions of the product, including withdrawal of the product from the market. Further, governmental approval may subject us to ongoing requirements for post-marketing studies. Even if we obtain governmental approval, a marketed product, its respective manufacturer and its manufacturing facilities are subject to unannounced inspections by the FDA and must comply with the FDA’s current Good Manufacturing Practices and other regulations. These regulations govern all areas of production, record keeping, personnel and quality control. If a manufacturer fails to comply with any of the manufacturing regulations, it may be subject to, among other things, product seizures, recalls, fines, injunctions, suspensions or revocations of marketing licenses, operating restrictions and criminal prosecution. Other countries also impose similar manufacturing requirements.

Risks Related to Our Common Stock

Trading in our common stock is limited and the price of our common stock may be subject to substantial volatility.

Our common stock is quoted on the OTCQB marketplace. We expect our common stock to continue to be quoted on the OTCQB for the foreseeable future. Broker-dealers may decline to trade in OTCQB stocks given the market for such securities is often limited, the stocks are more volatile and the risk to investors is greater. These factors may reduce the potential market for our common stock by reducing the number of potential investors. This may make it more difficult for investors in our common stock to sell shares to third parties or to otherwise dispose of their shares. This could cause our stock price to decline.

Additionally, the price of our common stock may be volatile as a result of a number of factors, including, but not limited to, the following:

	·	our ability to successfully conceive and to develop new products;
	·	our ability to obtain customers and demand for our products;
	·	the timing and level of market acceptance of our new products;
	·	our ability to successfully manage any future acquisitions of businesses, solutions or technologies; and
	·	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:

·		sale of our common stock by our stockholders, executives, and directors;
·		volatility and limitations in trading volumes of our shares of common stock;
·		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;
·		our ability to secure resources and the necessary personnel to conduct clinical trials on our desired schedule;
·		commencement, enrollment or results of our clinical trials of VG1177 or any future clinical trials we may conduct;
·		changes in the development status of VG1177;
·		any delays or adverse developments or perceived adverse developments with respect to the FDA’s review of our planned pre-clinical and clinical trials;
·		any delay in our submission for studies or product approvals or adverse regulatory decisions, including failure to receive regulatory approval for VG1177;
·		our announcements or our competitors’ announcements regarding new products or services, enhancements, significant contracts, acquisitions or strategic investments;
·		unanticipated safety concerns related to the use of VG1177;
·		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 the OTCQB marketplace, an active and liquid trading market for our common stock has not yet and may not ever develop or be sustained. You may not be able to sell your shares quickly or at or above the price you paid for our stock if trading in our stock is not active.

We do not intend to pay cash dividends on our shares of common stock so any returns will be limited to the value of our shares.

We currently anticipate that we will retain future earnings for the development, operation and expansion of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future. Any return to stockholders will therefore be limited to the increase, if any, of our share price.

Holders of our Series A Preferred Stock have special voting rights that allow them to out vote all common stock holders on any voting matter.

Our Series A Preferred stock may vote as common stock on all matters requiring shareholder approval. Additionally, the Series A Preferred stock has special voting rights that allow the aggregate Series A Preferred votes to be 1.01 times greater than the aggregate number of votes for the issued and outstanding common stock. This means that the Series A Preferred shareholders may out vote all the common stock shareholders on any and all matters requiring shareholder approval, which may make it difficult to complete some corporate transactions without the support of the Series A Preferred shareholders and may prevent a change in control. As of December 31, 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 December 31, 2014, our management owned or had the rights to acquire 74.9% of our common stock and the Chairman of our Board and Vice President of Research and Development owned 57.4% of the Series A Preferred stock.

Risks Related to This Offering

We are registering the resale of 5,000,000 shares of common stock, which may be issued to Dutchess under the Equity Line. The resale of such shares by Dutchess could depress the market price of our common stock and you may not be able to sell your investment for what you paid for it.

We are registering the resale of 5,000,000 shares of common stock under the registration statement of which this prospectus forms a part. We may issue up to that number of shares to Dutchess pursuant to the Equity Line. The sale of these shares into the public market by Dutchess could depress the market price of our common stock and you may not be able to sell your investment for what you paid for it.

Existing stockholders could experience substantial dilution upon the issuance of common stock pursuant to the Equity Line.

Our Equity Line with Dutchess contemplates our issuance of up to 5,000,000 shares of our common stock to Dutchess, subject to certain restrictions and obligations. If the terms and conditions of the Equity Line are satisfied, and we choose to exercise our Put rights to the fullest extent permitted and sell 5,000,000 shares of our common stock to Dutchess, our existing stockholders’ ownership will be diluted by such sales. Consequently, the value of your investment may decrease.

Dutchess will pay less than the then-prevailing market price for our common stock under the Equity Line.

The common stock to be issued to Dutchess pursuant to the Investment Agreement will be purchased at a 6% discount to the volume weighted average price, VWAP, of our common stock during the five consecutive trading day period beginning on the trading day on the date of delivery of a put notice by us to Dutchess, subject to certain exceptions. Dutchess has a financial incentive to sell our common stock upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Dutchess sells the shares, the price of our common stock could decrease.

We may not be able to access sufficient funds under the Equity Line when needed.

Our ability to put shares to Dutchess and obtain funds under the Equity Line is limited by the terms and conditions in the Investment Agreement, including restrictions on when we may exercise our put rights, restrictions on the amount we may put to Dutchess at any one time, which is determined in part by the trading volume of our common stock, and a limitation on Dutchess’s obligation to purchase if such purchase would result in Dutchess beneficially owning more than 4.99% of our common stock. Accordingly, the Equity Line may not be available to satisfy all of our funding needs.

USE OF PROCEEDS

We will not receive any proceeds from the resale of our common stock offered by Dutchess. We will, however, receive proceeds from the sale of our common stock to Dutchess pursuant to the Investment Agreement. The proceeds from our exercise of the put option pursuant to the Investment Agreement will be used for working capital and general corporate purposes.

SELLING STOCKHOLDER

The information provided in the table and discussions below has been obtained from Dutchess, the selling stockholder. The selling stockholder may have sold, transferred or otherwise disposed of, or may sell, transfer or otherwise dispose of, at any time or from time to time since the date on which it provided the information regarding the shares, all or a portion of the shares of common stock beneficially owned in transactions exempt from the registration requirements of the Securities Act. As used in this prospectus, “selling stockholder” includes the person or persons listed in the table below, and the donees, pledgees, transferees or other successors-in-interest selling shares received from the named selling stockholder as a gift, pledge, distribution or other transfer.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the Commission under the Securities Exchange Act of 1934. Unless otherwise noted, each person or group identified possesses sole voting and investment power with respect to the shares, subject to community property laws where applicable.

Name of Selling

Security Holder

Ownership
Before
Offering

Percentage
Before
Offering

Number of Shares

to be Sold

under this

Prospectus

Number of Shares

Owned After

Offering(1)

Percentage Owned

After Offering(3)

Dutchess Opportunity Fund, II, L.P. (2)

5,000,000 (3)

(1)

These numbers assume the selling stockholder sells all of its shares being offered pursuant to this prospectus.

(2)

Dutchess is a Delaware limited partnership. Michael Novielli and Douglas H. Leighton are directors of Dutchess with voting and investment power over the shares.

(3)

Represents the maximum number of shares issuable by us and purchasable by Dutchess under the Investment Agreement, all of which are being offered by the selling stockholder under this prospectus.

PLAN OF DISTRIBUTION

The purpose of this prospectus is to permit the selling stockholder to offer and resell up to an aggregate of 5,000,000 shares of our common stock at such times and at such places as they choose. In this section of the prospectus, the term “selling stockholder” includes the partners, pledgees, donees, transferees or other successors-in-interest of the selling stockholder, which may sell shares received after the date of this prospectus from the selling stockholder as a pledge, gift, partnership or similar distribution or other non-sale related transfer. To the extent required, we may amend and supplement this prospectus from time to time to describe a specific plan of distribution. The decision to sell any shares offered pursuant to this prospectus is within the sole discretion of the selling stockholder.

The distribution of the common stock by the selling stockholder may be effected from time to time in one or more transactions. Any of the common stock may be offered for sale, from time to time, by the selling stockholder at prices and on terms then obtainable, at fixed prices, at prices then prevailing at the time of sale, at prices related to such prevailing prices, or in negotiated transactions at negotiated prices or otherwise. The common stock may be sold by one or more of the following methods:

on the OTCQB marketplace or any other national common stock exchange or automated quotation system on which our common stock is traded, which may involve transactions solely between a broker-dealer and its customers which are not traded across an open market and block trades;

through one or more dealers or agents (which may include one or more underwriters), including, but not limited to

block trades in which the broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus;

purchases by a broker or dealer as principal and resale by such broker or dealer for its account pursuant to this prospectus;

ordinary brokerage transactions;

transactions in which the broker solicits purchasers;

directly to one or more purchasers;

combination of these methods.

Dutchess and any broker-dealers who act in connection with the sale of its shares are “underwriters” within the meaning of the Securities Act, and any discounts, concessions or commissions received by them and profit on any resale of the shares as principal may be deemed to be underwriting discounts, concessions and commissions under the Securities Act. Because the selling stockholder is an “underwriter” within the meaning of the Securities Act, it will be subject to the prospectus delivery requirements of the Securities Act, including Rule 172 thereunder.

The selling stockholder or its underwriters, dealers or agents may sell the common stock to or through underwriters, dealers or agents, and such underwriters, dealers or agents may receive compensation in the form of discounts or concessions allowed or reallowed. Underwriters, dealers, brokers or other agents engaged by the selling stockholder may arrange for other such persons to participate. Any fixed public offering price and any discounts and concessions may be changed from time to time. Underwriters, dealers and agents who participate in the distribution of the common stock may be deemed to be underwriters within the meaning of the Securities Act, and any discounts or commissions received by them or any profit on the resale of shares by them may be deemed to be underwriting discounts and commissions thereunder. The proposed amounts of the common stock, if any, to be purchased by underwriters and the compensation, if any, of underwriters, dealers or agents will be set forth in a prospectus supplement.

Unless granted an exemption by the SEC from Regulation M under the Exchange Act, or unless otherwise permitted under Regulation M, the selling stockholder will not engage in any stabilization activity in connection with our common stock, will furnish each broker or dealer engaged by the selling stockholder and each other participating broker or dealer the number of copies of this prospectus required by such broker or dealer, and will not bid for or purchase any common stock or attempt to induce any person to purchase any of the common stock other than as permitted under the Exchange Act.

We will not receive any proceeds from the sale of these shares of common stock offered by the selling stockholder. We shall use our reasonable efforts to prepare and file with the SEC such amendments and supplements to the registration statement and this prospectus as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of the common stock covered by the registration statement for the period required to effect the distribution of such common stock.

We are paying certain expenses incidental to the offering and sale of the common stock to the public, which are estimated to be approximately $30,000. If we are required to update this prospectus during such period, we may incur additional expenses in excess of the amount estimated above.

In order to comply with certain state securities laws, if applicable, the common stock will be sold in such jurisdictions only through registered or licensed brokers or dealers. In certain states the shares of common stock may not be sold unless they have been registered or qualify for sale in such state or an exemption from registration or qualification is available and is complied with.

DESCRIPTION OF SECURITIES TO BE REGISTERED

The following description of our capital stock and provisions of our Certificate of Incorporation, as amended, and Bylaws is only a summary. You should also refer to our Certificate of Incorporation, as amended, a copy of which is incorporated by reference as an exhibit to the registration statement of which this prospectus is a part, and our Bylaws, a copy of which is incorporated by reference as an exhibit to the registration statement of which this prospectus is a part.

Common Stock

We are authorized to issue up to a total of 150,000,000 shares of common stock, par value $0.0001 per share. The shares of common stock are non-assessable, without preemption rights, and do not carry cumulative voting rights. Holders of our common stock are entitled to one vote for each share held on all matters submitted to a vote of our stockholders. Holders of our common stock are entitled to receive dividends if, and when, declared by our Board of Directors.

INTERESTS OF NAMED EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed for such purpose on a contingency basis, or had, or is to receive, in connection with this offering, a substantial interest, direct or indirect, in us or any of our parents or subsidiaries, nor was any such person connected with us or any of our parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

Some of the statements contained or incorporated by reference in this prospectus are “forward-looking statements” and we intend that such forward-looking statements be subject to the safe harbors thereby. These statements are based on the current expectations, forecasts, and assumptions of our management and are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied by the forward-looking statements. Forward-looking statements are sometimes identified by language such as “believe,” “may,” “could,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “appear,” “future,” “likely,” “probably,” “suggest,” “goal,” “potential” and similar expressions and may also include references to plans, strategies, objectives, and anticipated future performance as well as other statements that are not strictly historical in nature. The risks, uncertainties, and other factors that could cause our actual results to differ materially from those expressed or implied in this prospectus include, but are not limited to, those noted under the caption “Risk Factors” beginning on page 3 of this prospectus. Readers should carefully review this information as well as the risks and other uncertainties described in other filings we may make after the date of this prospectus with the Securities and Exchange Commission.

Readers are cautioned not to place undue reliance on forward-looking statements. They reflect opinions, assumptions, and estimates only as of the date they were made, and we undertake no obligation to publicly update or revise any forward-looking statements in this prospectus, whether as a result of new information, future events or circumstances, or otherwise.

DESCRIPTION OF OUR BUSINESS

Overview

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.

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 completing a Phase I Physician’s IND trial, for patients with solid tumors utilizing an MDT compound, called hydroxychloroquine, in combination with an existing cancer drug, called sorafenib, which is marketed as Nexavar®. Our MDT trials initially were only for ovarian cancer, but have since expanded to include other solid tumors, including those located in the breast, colon, liver, lung, and pancreas. We are currently reviewing our options, including an expanded Phase I Physician’s IND with a large 5^th cohort of patients at maximum dosage or a Phase II trial. However, we have not expended any significant funds to explore these applications, nor we do not have funds on hand to explore these applications.

A phase I study may be conducted at a clinical trial location in healthy patients, or it may be administered to patients suffering with the targeted indication by a physician, where the latter becomes a physician investigational new drug trial, or P-IND. An IND refers to the molecular entity or entities not yet approved for a given indication or indications. Any plan to use the specific entity or entities must be approved by the FDA prior to initiation. A clinical protocol may be exempted from IND approval procedures if the following conditions are met:

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 being studied is safe or effective, nor may it be commercially distributed, for the purposes for which it is under investigation.

The current clinical protocol was exempted from IND regulations on May 4, 2012, which means that an IND approval was not needed prior to study commencement, and with the receipt of the notification, the study could commence. We are the sponsor of the trial and Dr. Tyler Curiel is the primary investigator. The subject of the protocol is a hydroxychloroquine and sorafenib combination as a treatment for all solid tumors in patients that have failed first line cancer therapies.

We hold an exclusive license for the patent application for this MDT combination treatment. Since its inception in July 2012, the trial has been expanded to encompass solid tumors, including breast, colon, lung, liver, and pancreatic cancers. We are in the process of completing our Phase I Physician’s IND study utilizing MDT as a combination therapy. The goal with this treatment is to weaken the drug resistant cancer cells so that they may be sensitized to other treatments as well as becoming vulnerable to the body’s immune system.

Product Candidates

Currently, we have one pre-clinical product candidate and one clinical-stage product candidate. Our clinical-stage product candidate is an MDT therapy, which helps, in combination with other drugs, to fight cancers with solid tumors in situations where the cancer is resistant to the initial cancer drug therapy. Our MDT trial was initially for ovarian cancer, but has since expanded to include other solid tumors, including those located in the breast, colon, liver, lung, and pancreas. Our pre-clinical product candidate is a TPT therapy for HIV/AIDS using our computationally designed peptide known as VG1177. The success of our business is primarily dependent upon our ability to discover or acquire rights to products, and to develop and commercialize our product candidates.

TPT for HIV/AIDS

VG1177 is a proprietary, computationally designed anti-inflammatory peptide with a wide range of potential applications. Currently, we are devoting most of our resources to develop VG1177 for the treatment of HIV/AIDS. We believe VG1177 prevents the survival of pro-inflammatory cells under conditions where inflammation is unwanted, thereby allowing the body’s natural containment systems to provide protection from harm, which has implications for chronic inflammatory conditions and autoimmune and infectious diseases. We began animal toxicity studies in November 2013 and we engaged ITR Laboratories in Montreal, Canada to complete the safety studies. These toxicity studies are the prerequisite step before beginning a Phase I clinical trial. We expect these safety results in early 2015. We have engaged an additional team of industry consultants to guide us through this pivotal, pre-FDA planning stage with a specific focus on drug formulation, on-site inspections, clinical creation and other aspects of clinical planning. This group of advisors includes:

Chrysalis Pharma Partners:

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.

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.

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.

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.

Gary Musso, PhD, provides over 25 years of experience with Big Pharma at Salk Institute of Biotechnology, Alkermes Inc., Praecis Pharmaceutics, and Proteolix/Only Pharmaceuticals. He designed a suitable formulation that can be taken into clinical trials and advises us in general capacities. He received his PhD in Bio-Organic Chemistry from the University of Chicago.

MDT Compound for Drug Resistant Cancer called Hydroxychloroquine

Hydroxychloroquine is a MDT compound that can be used, in combination with other cancer drugs, such as sorafenib, which is marketed as Nexavar ®, to treat drug resistant cancer. We hold a license to a pending patent application for the combination treatment. In 2012, doctors at Scott & White Healthcare and the Cancer Therapy Research at Texas A&M University began conducting a Phase I Physician’s IND trial for patients with late stage ovarian cancer using this MDT combination treatment. The trial has progressed to encompass solid tumors, including; breast, colon, lung, liver and pancreatic cancers. Our Physician-IND Phase I Study is testing the tolerability and toxicity of our patented technology in patients with advanced stage solid tumors. The study, which is ongoing in patients with solid tumors that do not respond to treatment or have returned after a period of improvement, examines the safety and efficacy of hydroxychloroquine, or HCQ, in combination with sorafenib, marketed as Nexavar®, which was co-developed by Bayer AG and Onyx Pharmaceuticals.

The study is designed with four cohorts, three cycles of administration in each cohort and four different patients in each cohort. Thus there are 16 total patients targeted to complete the trial. Sorafenib and HCQ are FDA approved and thus the study is testing the drugs in combination for safety and toxicity. The dosing for each cohort is as follows:

Cohort Number	SORAFENIB	HCQ
1	400 mg	200 mg
2	600 mg	200 mg
3	800 mg	200 mg
4	800 mg	400 mg

As a Phase I study, the investigators are primarily testing for safety, but are also testing for efficacy in reducing tumor mass or stunting tumor growth. No patients have been dropped from the study for toxicity. The primary investigator reported two clinical responses in cohort number 3 with four months of disease stabilization in a patient with metastatic ovarian cancer, which has spread throughout portions of the body, and five months of disease stabilization in a patient with triple-negative breast cancer, which is a type of cancer that does not express three genes that are key to traditional cancer treatment, making treatment more difficult. The final patient in cohort number 3 has stage IV, or metastatic, adenocarcinoma of the lung, which is a common form of lung cancer, and has four separate lung lesions. During the course of the study, the four lesions have all regressed about 20% in size. This study is being conducted at the Cancer Therapy and Research Center at the University of Texas Health Sciences Center at San Antonio. The primary investigator is medical oncologist Dr. Tyler Curiel, M.D., MPH and is based on the research of Dr. M. Karen Newell-Rogers, PhD, our Chief Scientific Advisor. In March 2014, the University of Texas Data Safety Monitoring Committee approved an expansion to cohort number 4. In the final cohort, the trial is at maximum sorafenib plus maximum HCQ. Cohort number 4 has enrolled the first 3 patients.

We are completing our Phase I Physician’s IND study utilizing MDT as a combination therapy. We are actively planning for either an expanded Physician’s IND Phase I study or a Phase II study, but we do not have the capital to fund a Phase II study at present.

Intellectual Property

We seek to protect our novel compounds, cloned targets, expressed proteins, assays, organic synthetic processes, screening technology and other technologies by, among other things, filing, or causing to be filed on our behalf, patent applications. Except as specifically noted below, the patent rights described below may be subject to potential patent term extensions and/or supplemental protection certificates extending such term extensions in countries where such extensions may become available. We control over 40 U.S. and foreign patents and/or pending patent applications through licensing agreements with universities, as well as Scott & White Healthcare. As of November 10, 2014, we, along with our subsidiaries, own or co-own 3 pending U.S. patent applications, and 4 pending foreign patent applications.

Patent Applications we own or co-own

Patent Title	Country	Application No.	Earliest Non-provisional priority date	Expiration Date (2)	Type of Patent Protection
Clip Inhibitors and Methods of Modulating Immune Function	United States	13/911680	7/23/2009	7/23/2029	Use
Clip Inhibitors and Methods of Modulating Immune Function	Australia	2009274512	7/23/2009	7/23/2029	Use and composition
Clip Inhibitors and Methods of Modulating Immune Function	Canada	2737146	7/23/2009	7/23/2029	Use and composition
Clip Inhibitors and Methods of Modulating Immune Function	European Patent (1)	20130155864	07/23/2009	07/23/2029	Use
Plant Viral Vaccine and Therapeutics	United States	14/346214	9/21/2012	7/23/2032	Use and composition
Methods and Products for Treating Preeclampsia and Modulating Blood Pressure	Canada	2862491	11/30/2012	11/30/2032	Use
Methods and Products for Treating Preeclampsia and Modulating Blood Pressure	United States	14/362157	06/02/2014	11/30/2032	Use

	(1)	A European patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries.

	(2)	The expiration dates of pending U.S. patent applications do not take into consideration any potential patent term adjustment that may be applied by the U.S. Patent Office upon issuance of the patent or any terminal disclaimers that may be filed in the future.

The rights we consider significant in relation to our business as a whole are covered by two exclusive license agreements we entered into with the University of Colorado, one of which pertains to patents and patent applications concerning TPT, referred to as the CLIP License, and the other concerning MDT, referred to as the Metabolic Distribution License. Through institutional agreements between the University of Colorado and the University of Vermont, patent rights held by the University of Vermont, where an inventor on the University of Vermont patents, Dr. Newell Rogers, was employed, are also included in our exclusive license to the MDT. We also hold licenses from Texas A&M University and Scott & White Healthcare, referenced as the S & W License. These licenses grant us a worldwide exclusive license to the patents and require us to make certain royalty and milestone payments, as specified below.

Clip License

On August 25, 2009, we entered into a worldwide exclusive license agreement with the University of Colorado granting us rights to patents, patent applications, and technologies developed by Dr. Newell Rogers and owned by the University of Colorado. The termination provisions of the agreement allow us to terminate the agreement in its entirety if we:

(1) Pay all amounts due as well as all non-cancelable costs to the University of Colorado through the termination date;

(2) Submit final payments with interest equal to the lesser of one percent per month compounded, or the maximum interest rate allowed by law, and a final report;

(3) Return any confidential materials provided to us by the University of Colorado in connection with the agreement;

(4) Suspend our use and sales of the licensed product(s) and licensed process(es) covered by the agreement; provided however, that subject to making certain payments and furnishing certain reports as specified in the agreement, we may, for a period of ninety (90) days after the effective date of such termination, sell all licensed products which may be in inventory; and

(5) Provide the University of Colorado the right to access any regulatory information filed with any U.S. or foreign government agency with respect to licensed products and licensed processes.

The termination provisions of the agreement also allows us to terminate the agreement in its entirety if the University of Colorado:

(1) Is delinquent on any report or payment that is not in dispute; is in breach of the diligence obligations described in the agreement, including the milestone requirements and such missed milestone, which is not otherwise excused pursuant to the terms of the agreement; provides any false report, as specified in the agreement, breaching any dispute resolution of the agreement, or is in breach of any other material provision of the agreement, and fails to cure any of these circumstances within 30 days of the University of Colorado's written notice to us;

(2) Violates any laws or regulations of applicable governmental entities;

(3) Becomes insolvent, as defined by the voluntary filing of a Chapter 7 proceeding under bankruptcy law, or if we cease to carry on its business or development activities pertaining to the licensed patents; or

(4) Institutes a legal action challenging the validity of any licensed patent.

The exclusive license granted by the agreement will terminate if a non-voluntary Chapter 7 proceeding under bankruptcy law is filed that is not dismissed prior to liquidation. The exclusive license will not pass to a trustee in a Chapter 7 bankruptcy or be held as an asset of said Chapter 7 bankruptcy.

This license gives us rights to 13 pending U.S. and foreign patent applications and one issued U.S. patent, as specified below:

Patent Applications

Patent Title	Country	Application No.	Earliest Non-provisional priority date	Expiration Date (2)	Type of Patent Protection
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding	Canada	2703585	10/23/2008	10/23/2028	Composition and Use
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding	Australia	2008317374	10/23/2008	10/23/2028	Composition and Use
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding	European Patent (1)	20080841310	10/23/2008	10/23/2028	Composition and Use
Competitive Inhibitors of Invariant Chain Expression and/or Ectopic Clip Binding	United States	12/739459	10/23/2008	10/23/2028	Composition
Clip Inhibitors and Methods of Modulating Immune Function	Canada	2737146	07/23/2009	07/23/2029	Composition and Use
Clip Inhibitors and Methods of Modulating Immune Function	Australia	2009274512	7/23/2009	07/23/2029	Composition and Use
Clip Inhibitors and Methods of Modulating Immune Function	European Patent (1)	20130155864	07/23/2009	07/23/2029	Use
Clip Inhibitors and Methods of Modulating Immune Function	United States	13/911680	07/23/2009	07/23/2029	Use
Methods of Modulating Immune Function	Canada	2676129	01/28/2008	01/28/2028	Use
Methods of Modulating Immune Function	European Patent (1)	20080724877	01/28/2008	01/28/2028	Use
Methods of Modulating Immune Function	United States	12/021118	01/28/2008	01/28/2028	Use
Treating Neurological Disorders	United States	62/033088	08/04/2014	08/04/2015	Use
Treating Neurological Disorders	United States	PCT/US2014/054845	09/16/2013	09/09/2034	Use

(1)

A European patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries.

(2)

The expiration dates of pending U.S. patent applications do not take into consideration any potential patent term adjustment that may be applied by the U.S. Patent Office upon issuance of the patent or any terminal disclaimers that may be filed in the future.

Issued Patents

Patent Title	Country	No.	Earliest Non-provisional priority date	Days of Patent Term Adjustment (1)	Terminal Disclaimer (2)	Expiration	Type of Patent Protection
Methods of Modulating Immune Function	United States	8557764	01/28/2008	308	0	12/01/2028	Use

(1)

The U.S. Patent Office can extend the term of a patent in order to accommodate delays caused by the U.S. Patent Office during the application process. This extension is called a patent term adjustment.

(2)

An application that includes a terminal disclaimer may have a reduced patent term.

In exchange for an exclusive license to this patent, we are required to pay the following royalties to the University of Colorado as specified below:

Minimum Annual Royalty

	·	$25,000/year until commercial sales
	·	$75,000/year after commercial sales

Earned Royalty

	·	3% of net sales in developed countries
	·	0.5% of net sales in undeveloped countries

Milestone Events

	·	$35,000 upon acceptance of each Investigational New Drug Application, or INDA, with the FDA or with the European Agency for the Evaluation of Medicinal Products, or EMEA
	·	$100,000 w/in 90 days of each first indication at the initiation of Phase I
	·	$200,000 w/in 90 days of each first indication at the initiation of Phase II
	·	$300,000 w/in 90 days of each first indication at the initiation of Phase III
	·	$500,000 w/in 90 days of FDA approval of a first indication
	·	½ of all aforementioned milestones for each second/subsequent indications

If we are required to enter into a license agreement with a third party in order to make, use or sell a product that is covered under this agreement requiring us to pay a royalty to the third party, then our royalty fee to the University of Colorado shall be reduced by 50% of the royalty paid to the third party, unless such amount would be less than half of what would otherwise be owed to the University of Colorado.

Under the agreement, we may sublicense the technology to third parties. However, if we do, we must pay additional sublicense royalties based on when we enter into the sublicense, as specified below:

	·	In the first 12 months, 50% of sublicense income
	·	If within the 2^nd or 3^rd years after the effective date, 35% of sublicense income
	·	If after the 3^rd year, 20% of sublicense income

This agreement expires on the date that the last patent covered by it expires.

Metabolic Distribution License

On November 22, 2009, we entered into a worldwide exclusive license agreement with the University of Colorado granting us rights to patents, patent applications, and technologies developed by Dr. Newell Rogers and owned by the University of Colorado and the University of Vermont. The license gives us rights to 10 pending U.S. and foreign patent applications and 11 issued U.S. and foreign patents, as specified below:

Patent Applications

Patent Title	Country	Application No.	Date Filed	Expiration Date (2)	Type of Patent Protection
Methods and Products for Treating Proliferative Diseases	Australia	2009271579	07/14/2009	07/14/2029	Use
Methods and Products for Treating Proliferative Diseases	Canada	2730773	07/14/2009	07/14/2029	Use
Methods and Products for Treating Proliferative Diseases	United States	13/054147	07/14/2009	07/14/2029	Use
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors	Canada	2534816	06/11/2004	06/11/2024	Use
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors	European Patent (1)	20040755015.7	06/11/2004	6/11/2014	Use
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors	United States	13/302211	6/11/2004	06/11/2024	Use
Compositions and Methods for Promoting Fatty Acid Production in Plants	Australia	2010303935	10/06/2010	10/06/2030	Use and Process
Compositions and Methods for Promoting Fatty Acid Production in Plants	Indonesia	W-00201201717	10/06/2010	10/06/2030	Use and Process
Compositions and Methods for Promoting Fatty Acid Production in Plants	Thailand	1201001582	10/06/2010	10/06/2030	Use and Process
Compositions and Methods for Promoting Fatty Acid Production in Plants	United States	13/500682	06/10/2009	10/06/2030	Use and Process

(1)

(2)

Issued Patents

Patent Title	Country	No.	Earliest Non-provisional priority date	Days of Patent Term Adjustment (2)	Terminal Disclaimer (3)	Expiration	Patent Protection
Composition and Methods for Promoting Wound Healing	United States	6582713	03/30/2001	0	0	03/30/2021	Use and Composition
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors	United States	8071645	06/11/2004	957	0	01/24/2027	Use
Systems and Methods for Treating Human Inflammatory and Proliferative Diseases and Wounds, with Fatty Acid Metabolism Inhibitors and/or Glycolytic Inhibitors	European Patent (1)	2377528	06/11/2004	N/A	N/A	06/11/2024	Use

Composition of UCP Inhibitors, Fas Antibody, a Fatty Acid Metabolism Inhibitor/or a Glucose Inhibitor	United States	7510710	01/07/2005	0	0	01/07/2025	Composition
Method for Treating Drug Resistant Cancer	United States	8293240	01/07/2005	0	2 over 8,071,645 (expires 01/27/27) 7,445,794	02/23/2009	Use
Combination of compounds, or a bifunctional compound, that provides fatty acid metabolism and glycolysis inhibition	United States	8329753	04/20/2006	755	0	05/14/2028	Composition
Methods and Products Related to Metabolic Interactions in Disease	United States	7381413	03/27/1999	0	0	03/27/2019	Use
Methods and Products Related to Metabolic Interactions in Disease	United States	7390782	03/27/1999	299	0	01/20/2020	Use
Methods for Treating Human Proliferative Diseases, with a combination of fatty Acid Metabolism Inhibitors and Glycotic Inhibitors	United States	7445794	04/28/2005	0	2 over 8,071,645 (expires 01/24/27) 7,510,710 (expires 01/07/25)	01/07/2025	Use
Methods for treating cancer using combination therapy	United States	8394377	02/19/2009	0	0	02/19/2029	Use or Method of Treatment
Compositions and Methods for Promoting Fatty Acid Production in Plants	United States	8450090	10/06/2009	178	0	12/05/2029	Process

(1)

A European Patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries. We were awarded protection only in the U.K. for European Patent No. 2377528.

(2)

The United States Patent and Trademark Office can extend the term of a patent in order to accommodate delays caused by the U.S. patent office during the application process. This extension is called a patent term adjustment.

(3)

An application that includes a terminal disclaimer may have a reduced patent term.

In exchange for an exclusive license to these patents, we are required to pay a one-time license fee of $150,000 and the following royalties to the University of Colorado as specified below:

Minimum Annual Royalty

	·	$25,000/year until commercial sales
	·	$75,000/year after commercial sales

Earned Royalty

	·	3% of net sales in developed countries
	·	0.5% of net sales in undeveloped countries

Milestone Events

	·	$35,000 upon acceptance of each Investigational New Drug Application, or INDA, with the FDA or with the European Agency for the Evaluation of Medicinal Products, or EMEA
	·	$100,000 w/in 90 days of each first indication at the initiation of Phase I
	·	$200,000 w/in 90 days of each first indication at the initiation of Phase II
	·	$300,000 w/in 90 days of each first indication at the initiation of Phase III
	·	$500,000 w/in 90 days of FDA approval of a first indication
	·	½ of all aforementioned milestones for each second/subsequent indications

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 2^nd or 3^rd years after the effective date, 35% of sublicense income
	·	If after the 3^rd year, 20% of sublicense income

This agreement expires upon the date that the last patent covered by it expires.

Scott & White Healthcare License

On July 18, 2013, we entered into a worldwide exclusive license agreement with Scott & White Healthcare granting us rights to patents, patent applications, and technologies developed by Dr. Newell Rogers and owned by Texas A&M University and Scott & White Healthcare. The license gives us rights to 9 pending U.S. and foreign patent applications, as specified below:

Patent Title	Country	App. No.	File Date	Expiration Date (3)	Type of Patent Protection
Methods and products for treating preeclampsia and modulating blood pressure	Patent Cooperation Treaty (1)	PCT/US2012/067364	11/30/2012	11/30/2032 (expiration date for U.S. application claiming priority to PCT)	Use
Methods and Products for Treating Preeclampsia and Modulating Blood Pressure	Canada	2862491	11/30/2012	11/30/2032	Use
Methods and Products for Treating Preeclampsia and Modulating Blood Pressure	United States	14/362157	06/02/2014	11/30/2032	Use
Plant viral vaccines and therapeutics	United States	14/346214	09/21/2012	09/21/2032	Use and Composition
Cancer Biomarkers and Therapeutics	Patent Cooperation Treaty (1)	PCT/US2013/052137	07/25/2013	07/25/2033	Use
Mhc engagement and clip modulation for the treatment of disease	European Patent (2)	2012768150	04/04/2012	04/04/2032	Use and composition
Mhc engagement and clip modulation for the treatment of disease	United States	14/009944	04/04/2012	04/04/2032	Use and composition

Clip modulation for the treatment of mucosal diseases	United States	13/977944	05/01/2012	05/01/2032	Use
Methods and Products for Generating Oils	United States	14/357679	05/12/2014	11/09/2032	Process
Treating Neurological Disorders	United States	62/033088	08/04/2014	08/04/2015	Use
Treating Neurological Disorders	Patent Cooperation Treaty	PCT/US2014/054845	09/09/2014	09/16/2034	Use

	(1)	The Patent Cooperation Treaty provides for unified filing of patent applications in order to protect inventions in each of the treaty’s contracting countries. Once a patent has been reviewed by a regional office, the standard application is then granted or rejected according to each country’s law. There are 148 countries that are parties to the treaty.

	(2)	A European Patent refers to patents granted under the European Patent Convention. The European Patent Convention allows for unified filing of a patent application with the European Patent Office. The applicant may designate any of the countries, who are a party to the convention, in which the applicant seeks protection. There are 38 countries that are parties to the European Patent Convention. Each of the designated countries must confirm the patent. Once granted, a European patent comes into existence as a group of national patents in each of the designated countries.

	(3)	The expiration dates of pending U.S. patent applications do not take into consideration any potential patent term adjustment that may be applied by the U.S. Patent Office upon issuance of the patent or any terminal disclaimers that may be filed in the future.

In exchange for an exclusive license to these patents, we are required to pay a one-time license fee of $50,000 and the following annual, earned, and milestone royalties to the Scott & White Healthcare as specified below:

Minimum Annual Royalty

	·	$20,000 in 2014
	·	$40,000 in 2015
	·	$70,000 in 2016
	·	$100,000 in 2017
	·	$150,000 in 2018
	·	$200,000 each year after 2018

Earned Royalty

	·	3% of net sales in developed countries
	·	0.5% net sales in undeveloped countries

Milestone Events

	·	$100,000 upon completion of each Phase I product
	·	$500,000 upon completion of each Phase III clinical trial or any trial followed by Phase II
	·	$2,000,000 upon market approval

	·	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 2^nd or 3^rd years after the effective date, 35% of sublicense income
	·	If after the 3^rd year, 20% of sublicense income

This agreement expires upon the date that the last patent covered by it expires.

Other Royalty Agreements

Under two consulting agreements effective January 1, 2011 and terminating December 31, 2015 with Dr. M. Karen Newell Rogers and Dr. Evan Newell, we are obligated to pay certain royalties upon the commercialization of products developed from their work.

These royalties are the same for both Dr. M. Karen Newell Rogers and Dr. Evan Newell. Each individual is entitled to three fourths of one percent, or 0.75%, of net sales from sales in developed countries, and one half of one percent, or 0.50%, from sales in undeveloped countries.

Under the exclusive license agreements, in general, we are obligated to fund the costs of any patents, even if such work would be outside a field of use for which we currently have exclusive rights. We are continually evaluating whether additional applications may be appropriate to protect extensions and variations of our product candidates, and expect to file additional and new applications related thereto. Under international agreements, in recent years, global protection of intellectual property rights is improving. The General Agreement on Tariffs and Trade requires participant countries to amend their intellectual property laws to provide patent protection for pharmaceutical products by the end of a ten-year transition period. A number of countries are following suit. Patent protection in other countries where we have obtained patents and filed patent applications, including the European Patent Office, the Eurasian Patent Organization, New Zealand, Australia, and Israel, extend for varying periods according to the date of patent filing or grant and the legal term of patents in the various countries where patent protection is obtained. The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the country.

The expiration of a product patent or loss of patent protection resulting from a legal challenge would be expected to result in significant competition from generic products against the covered product and, particularly in the U.S., could result in a significant reduction in sales of the pioneering product. If we were to lose patent protection, we may be able to continue to obtain commercial benefits from product trade secrets, patents on use of our product, and patents on processes and intermediates for the economical manufacture of the active ingredients. The effect of product patent expiration or loss also depends upon the nature of the market and the position of the product in it, the growth of the market, the complexities and economics of manufacture of the product, and the requirements of generic drug laws.

With respect to proprietary know-how and products and processes for which patents are of questionable value or are difficult or impossible to obtain or enforce, we rely on confidentiality agreements and other trade secret protection measures to protect our interests. We take measures to protect our proprietary know-how, technologies, and confidential data, including requiring all employees, consultants and customers to enter into confidentiality agreements. In arrangements with our customers or suppliers that require the sharing of processes and data, our policy is to make available only such data as is relevant to our agreements with such customers and suppliers, subject to appropriate contractual restrictions, including requirements for them to maintain confidentiality and use such processes and data solely for our benefit. However, such measures may not adequately protect our data.

Manufacturing and Supply

TPT compounds used for preclinical studies in our drug research programs are produced by external production facilities. Acquisition of drugs used in concert with our MDT compounds can present challenges given that the manufacturer or drug developer generally must agree to the use of the compounds in a research setting. This can involve more detailed communication and negotiation with the manufacturer rather than simply purchasing product. The production of larger batches of products for commercial sale after FDA approval would require construction of our own facility or a long-term contracting relationship with a manufacturer with sufficient capacity. We have sourced a manufacturer for TPT compounds that we believe will be able to meet long-term production demands throughout the development period and beyond.

At present, we obtain MDT compounds from the University of Texas Health Science Center at San Antonio. We recently sourced a manufacturer for our TPT compounds, including VG1177, and are now capable of procuring Good Manufacturing Practices grade compound, which is required for human clinical trials. The manufacturer is Ambiopharm Inc. Ambiopharm synthesizes the peptide on a contract basis for specific amounts. We do not currently have a contract or an exclusivity agreement with Ambiopharm. We do not expect any significant issues in connection with manufacturing for the foreseeable future.

Sales and Marketing/Commercialization

Our lead drug candidate, VG1177, is intended to address a variety of market segments, some of which are large healthcare markets. We do not currently have a commercialization organization capable of marketing, selling, or distributing VG1177. We have commenced discussions and may establish partnerships with pharmaceutical, biotechnology and other organizations that have the existing organization experience and resources to bring our initial, and potentially future, product candidates to market. In some cases, we may collaborate with third parties during the development stage of a product candidate to further benefit from their financial support as well as clinical development, regulatory, market research, pre-marketing and other expertise. For commercialization outside of the United States, we may enter into joint ventures, license arrangements or distribution agreements, as appropriate, depending on the particular requirements of the market and the potential partner’s core competencies to assist us with such requirements. Pending FDA approval of our products, we may establish or contract with a specialty sales force with expertise in marketing and selling to various healthcare markets. We may also establish or contract for other complementary capabilities related to marketing and selling our potential pharmaceutical products.

Competition

Competition is intense in the pharmaceutical business and includes many large and small competitors. Technological innovations affecting efficacy, safety, patient ease-of-use, and cost-effectiveness by other pharmaceutical companies with greater financial and research resources working on competitive products could result in products that offer the same or similar benefits as our product candidates. We intend to compete with existing products on the basis of product quality and efficacy, product safety, economic benefit, and/or promotion, however our MDT oncology therapies are designed to function as an adjunct or add-on to current treatments and so our therapies do not directly compete with those current treatments.

However, our MDT oncological combination therapies may compete directly with other adjunct therapies. As there are over 200 million possible combinations of approved and development-stage oncological drugs, not including the hundreds of MDT oncological agents patented (Nature Biotechnology, Vol. 30 No 7 July 2012), it is more relevant to discuss the competition that may be faced by the sorafenib/hydroxychloroquine, or HCQ, treatment in an FDA phase I study.

Currently, there are over 350 clinical trials, initiated, ongoing, and completed, involving a sorafenib combination treatment. Not all of these trials are sponsored by industry groups, and not all of these trials will advance further in clinical development. Furthermore, this number does not include other multikinase or angiogenesis inhibitors, and it is possible that our sorafenib/HCQ treatment may face other successful sorafenib or sorafenib-like combination therapies.

The key detail needed to evaluate competition will be the oncological indication chosen for the sorafenib/HCQ therapy, as cancer treatments must be approved for discrete types of cancer.

Government Regulation

Our current and contemplated activities, and the products and processes that will result from such activities, are subject to substantial government regulation.

United States—FDA Drug Approval Process

Pre-Clinical Testing: Before beginning testing of any compounds with potential therapeutic value in human subjects in the United States, stringent government requirements for pre-clinical data must be satisfied. Pre-clinical testing includes both in vitro, or in an artificial environment outside of a living organism, and in vivo, or within a living organism, laboratory evaluation and characterization of the safety and efficacy of a drug and its formulation. We perform pre-clinical testing on all of our drug candidates before initiating human trials.

Investigational New Drug, IND, Applications: Pre-clinical testing results obtained from in vivo studies in several animal species, as well as from in vitro studies, are submitted to the FDA, or an international equivalent, as part of an IND or equivalent, and are reviewed by the FDA prior to the commencement of human clinical trials. The pre-clinical data must provide an adequate basis for evaluating both the safety and the scientific rationale for the initial clinical studies in human volunteers.

Clinical Trials: Clinical trials involve the administration of the drug to healthy human volunteers or to patients under the supervision of a qualified investigator pursuant to an FDA-reviewed protocol. Human clinical trials typically are conducted in three sequential phases, although the phases may overlap with one another. Clinical trials must be conducted under protocols that detail the objectives of the study, the parameters to be used to monitor safety, and the efficacy criteria, if any, to be evaluated. Each protocol must be submitted to the FDA as part of the IND.

	·	Phase 1 clinical trials—test for safety, dose tolerance, absorption, bio-distribution, metabolism, excretion and clinical pharmacology and, if possible, to gain early evidence regarding efficacy.
	·	Phase 2 clinical trials—involve a small sample of the actual intended patient population and seek to assess the efficacy of the drug for specific targeted indications, to determine dose-response and the optimal dose range and to gather additional information relating to safety and potential adverse effects.
	·	Phase 3 clinical trials—consist of expanded, large-scale studies of patients with the target disease or disorder to obtain definitive statistical evidence of the efficacy and safety of the proposed product and dosing regimen.
	·	Phase 4 clinical trials—conducted after a product has been approved. These trials can be conducted for a number of purposes, including to collect long-term safety information or to collect additional data about a specific population. As part of a product approval, the FDA may require that certain Phase 4 studies, which are called post-marketing commitment studies, be conducted post-approval.

Good Clinical Practices: All of the phases of clinical studies must be conducted in conformance with the FDA's bioresearch monitoring regulations and Good Clinical Practices, which are ethical and scientific quality standards for conducting, recording, and reporting clinical trials to assure that the data and reported results are credible and accurate, and that the rights, safety, and well-being of trial participants are protected.

Our Employees

As of January 6, 2015, we have a total of six employees, three of which are full-time. We are not a party to any collective bargaining agreements. We believe our relations with our employees are good.

Key Consultants

We also rely on the services of consultants. We have ongoing arrangements with Dr. Newell Rogers, Dr. Evan Newell, Dr. Richard Tobin, and Dr. Brett Mitchell, all of whom are engaged in biomedical research related to our product candidates. Under these consulting agreements, each consultant has agreed to assist us with the research, analysis and development of our product candidates, including assisting us with obtaining government approvals and securing intellectual property protections for our product candidates. In exchange, we have agreed to compensate each consultant as specified below:

Dr. Newell Rogers

	·	$10,000 monthly consultation fee automatically added to a convertible note if not paid which shall mature on December 31, 2015;
	·	Bonus 16,667 (adjusted for 2012 reverse split) options at an exercise price that is equal to the VWAP, or volume weighted average price, for twenty trading days following the execution of the consulting agreement that terminate on December 31, 2018;
	·	Not less than 4,167 (adjusted for 2012 reverse split) options annually at an exercise price that is equal to the VWAP for twenty days following the first of each year that terminate on December 31, 2018;
	·	0.75% net sales in developed countries; and 0.125% net sales from undeveloped countries, and
	·	Reimbursement of all reasonable expenses incurred in providing services with prior approval of expenses that exceed $750.

Dr. Brett Mitchell

	·	$7,500 every three months consultation fee payable in common shares at a price equal to the VWAP for twenty trading days ending on the date the payment period ends, and
	·	Reimbursement of all reasonable expenses incurred in providing services with prior approval of expenses that exceed $100.

Dr. Evan Newell

	·	$2,000 monthly consultation fee automatically added to a convertible note if not paid which shall mature on December 31, 2015;
	·	Bonus 16,667 (adjusted for 2012 reverse split) options at an exercise price that is equal to the VWAP for twenty trading days following the execution of the consulting agreement that terminate on December 31, 2018;
	·	Not less than 1,667 (adjusted for 2012 reverse split) options annually at an exercise price that is equal to the VWAP for twenty days following the first of each year that terminate on December 31, 2018;
	·	0.75% net sales in developed countries; and 0.125% net sales from undeveloped countries, and
	·	Reimbursement of all reasonable expenses incurred in providing services with prior approval of expenses that exceed $500.

Dr. Richard Tobin

$3,500 monthly consultation fee that consists of $2,000 in cash and $1,500 in shares of our common stock.

We believe our relations with our consultants are good.

Available Information

Our website is located at www.vglifesciences.com.We make available on our website, free of charge, copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports, as applicable and as soon as reasonably practicable after we electronically file or furnish such materials to the Securities and Exchange Commission. Our website and the information contained therein or connected thereto are not intended to be incorporated into this registration statement.

You may also read and copy any materials we file with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

DESCRIPTION OF PROPERTY

Pursuant to the Strategic Collaboration Agreement, MedBridge Development Company, LLC, or MDC, has agreed to and is currently providing us with approximately 3,000 square feet of office space in Santa Barbara, California, which serves as our principal executive offices. Under this agreement the value of this service as well as other services is convertible into shares of common stock. We do not have any lease agreements in place. We believe that our properties will be adequate to meet our needs through the foreseeable future.

LEGAL PROCEEDINGS

We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. We are not aware of any pending or threatened litigation against us or our officers and directors in their capacity as such that could have a material impact on our operations or finances.

MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Our common stock, OTC: VGLS, is quoted on the OTCQB marketplace. The following table sets forth the high and low bid prices for our common stock for each quarter during the last two and the current fiscal years as quoted on the OTCQB marketplace. Such OTC market quotations reflect inter-dealer prices, without retail markup, markdown or commissions and may not necessarily represent actual transactions. All prices have been adjusted to reflect a 1 for 600 reverse stock split, effective November 26, 2012.

	High	Low
For the Fiscal Year Ended December 31, 2012
First Quarter Ended 3/31/12	$14.97	$6.58
Second Quarter Ended 6/30/12	$11.85	$5.32
Third Quarter Ended 9/30/12	$5.26	$0.95
Fourth Quarter Ended 12/31/12	$1.01	$0.20
For the Fiscal Year Ended December 31, 2013
First Quarter Ended 3/31/13	$0.58	$0.12
Second Quarter Ended 6/30/13	$0.19	$0.05
Third Quarter Ended 9/30/13	$0.50	$0.06
Fourth Quarter Ended 12/31/13	$0.58	$0.20
For the Fiscal Year Ended December 31, 2014
First Quarter Ended 3/31/14	$0.27	$0.17
Second Quarter Ended 6/30/14	$0.25	$0.13
Third Quarter Ended 9/30/14	$0.18	$0.07
Fourth Quarter Ended 12/31/14	$0.12	$0.04

Holders

As of December 31, 2014, we had approximately 1,016 holders of record of our common stock. Holders of record include nominees who may hold shares on behalf of multiple owners.

Dividends

We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our common stock in the foreseeable future. At present, we intend to retain our earnings, if any, to finance research and development and expansion of our business.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Identification of Directors and Executive Officers

Set forth below is certain information with respect to the individuals who are our directors and executive officers as of January 6, 2015.

Name	Age	Position(s) or Office(s) Held
John Tynan	59	President and Chief Executive Officer; Director
David Odell	47	Chief Financial Officer; Director
Haig Keledjian	53	Chairman of the Board of Directors; Vice President of Research and Development; Secretary
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.

Non-Employee Directors

Arthur Keledjian

Arthur Keledjian, brother of Haig Keledjian, has served as a member of our Board of Directors since 2001. Mr. Keledjian has been involved with us since our inception and is a valuable addition to our Board of Directors due to his longevity with us and extensive strategic advising experience. Mr. Keledjian is responsible for procuring and managing over $10 million in annual sales with SCI – Hispana in his business development role. He is based in Los Angeles, CA.

Mr. Keledjian graduated from California State University, Los Angeles with a Bachelor of Science in Business Administration & Marketing.

Other Involvement in Certain Legal Proceedings

None of our directors or executive officers has been involved in any bankruptcy or criminal proceedings, nor have there been any judgments or injunctions brought against any of our directors or executive officers during the last ten years that we consider material to the evaluation of the ability and integrity of any director or executive officer.

EXECUTIVE COMPENSATION

Summary Compensation

The following table sets forth all compensation for our fiscal years ended December 31, 2014, 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, 2014, 2013 and 2012

Name and Principal Position	Year Ended December 31	Salary ($)	Bonus ($)	Option awards ($) (1)	Total ($)
John Tynan Chief Executive Officer	2014	0 (2)	0	158,711 (2), (3)	158,711
	2013	0 (2)	0	303,470 (2), (3)	303,470
David Odell Chief Financial Officer	2014	0 (4)	0	158,711 (4), (5)	158,711
	2013	0 (4)	0	303,470 (4), (5)	303,470
Haig Keledjian Chairman of the Board of Directors;	2014	292,500 (6), (9)	0	158,711 (7), (8)	451,211
Vice President of Research and Development; Secretary	2013	292,500 (6), (9)	0	307,370 (7), (8)	599,870
	2012	292,500 (6), (9)	0	51,000 (8)	343,500

(1)

Represents the aggregate grant date fair value of stock option awards granted in the covered fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. The fair value of each stock option award is estimated for the covered fiscal year on the date of grant using the Black-Scholes option valuation model. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 10 to our audited consolidated financial statements for the year ended December 31, 2013. The amounts in this column do not represent the actual amounts paid to or realized by our Named Executive Officers during the fiscal years ended December 31, 2014, 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 at the end of 2013 and another 1,400,000 during 2014. 2,000,000 of these options were awarded for his services as an executive officer of our Company, and the remaining 800,000 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 at the end of 2013 and another 1,400,000 during 2014. 2,000,000 of these options were awarded for his services as an executive officer of our Company, and the remaining 800,000 options were awarded for his services as a director of our Company. The options vest on the date of the grant, and expire ten years from the date of grant.

(6)

Haig Keledjian is our Vice President of Research and Development. He served as our Chief Executive Officer from 2001 until July 2013. Pursuant to the terms of an employment agreement we entered into with Mr. Keledjian effective January 1, 2011 and executed on March 11, 2011, Mr. Keledjian has elected not to receive cash compensation for his services as an executive officer and director of our Company. In lieu of cash compensation, we have agreed to accrue the full value of Mr. Keledjian’s salary each year under a convertible note secured by all of the assets of our Company we issued to Best Investment, Inc., now Best Investment Trust, controlled and owned by Mr. Keledjian, on March 5, 2008 and restated and amended on October 1, 2013. The amended and restated note is unsecured. The note is non-interest bearing and is due on October 31, 2018. On December 4, 2013, Best Investment, Inc. converted $479,090.75 and received 2,000,000 shares at a price of $0.24 (rounded) and 2,000,000 five-year warrants at an exercise price of $0.36 per share. In the nine month period ended September 30, 2014 an aggregate of $513,376 in principal was converted into 2,441,792 common shares and warrants to purchase an equal number of shares at 1.5 times the conversion prices. If not converted earlier, unpaid principal of $63,952 at September 30, 2014, plus accrued interest, due at maturity shall automatically be exchanged for Units based upon the exchange price upon maturity.

(7)

Mr. Keledjian was granted an aggregate of 1,400,000 options to purchase common stock at the end of 2013 and another 1,400,000 during 2014. The options vest on the date of the grant, and expire ten years from the date of grant. 2,000,000 of these options were awarded for his services as an executive officer of our Company, and the remaining 800,000 options were awarded for his services as a director of our Company.

(8)

The employment agreement we entered into with Mr. Keledjian on January 1, 2011 also provided for the award of 12 million pre-reverse split options in the initial year and 5,000 (3,000,000 pre reverse split) stock option grants annually to Mr. Keledjian. The exercise price for the options is based upon the volume weighted average price, or VWAP, twenty days after the grant date. All option awards are fully vested on grant, expire in December 2018, and allow for cashless exercise. The conversion price for the options Mr. Keledjian received in 2012 was $0.0171 per share and the value of the award is $51,000. The conversion price for the 5,000 options Mr. Keledjian received in 2013 was $230.28 (pre-reverse split price of $0.3838) per share and the value of the award is $3,900. The conversion price for the 5,000 options Mr. Keledjian received in 2014 was $143.25 (pre-reverse split price of $0.2387) per share and the value of the award is $0 (the 2013 valuation was overbooked in error, therefore the total of 2013 and 2014 are represented in 2013’s total valuation).

(9)

Effective January 1, 2011, our majority-owned subsidiary, VG Energy, Inc. entered into an employment agreement with Mr. Keledjian. The agreement provides for a base annual salary of $97,500, as well as for the award of certain stock option grants annually to Mr. Keledjian. In lieu of cash compensation, VG Energy agreed to accrue the full value of Mr. Keledjian’s salary each year under a secured line of credit note issued to Mr. Keledjian on March 8, 2005 through VG Life Sciences Inc. This secured revolving line of credit note refinanced on October 1, 2013 through the Unsecured Best Investment Trust note. The secured revolving line of credit note had a balance of $0 as of October 1, 2013. As of October 1, 2013, Mr. Keledjian’s VG Energy salary accrues quarterly in Employee Notes Payable.

Narrative to Summary Compensation Table

Our Named Executive Officers are compensated pursuant to contractual agreements. As specified in the notes to the summary compensation table above, our Named Executive Officers currently receive equity for their services. Mr. Tynan has designated that equity earned by him for management services should be issued in the name of MedBridge Venture Fund. The full value of Mr. Keledjian’s salary each year is accrued under an unsecured convertible note we issued to Best Investment, Inc., an entity controlled and owned by Mr. Keledjian. Mr. Keledjian’s salary now accrues quarterly in Employee Notes Payable.

Employment Arrangements with John Tynan and David Odell

On March 18, 2013, we entered into a Memorandum of Understanding with MedBridge Development Company, LLC, or MDC, for a two-year strategic collaboration. Under this arrangement, MDC has agreed to provide us with financial support, administrative support and other services to enable us to continue our research and development activities and provide for our operating expenses. John Tynan and David Odell are the managing members of MedBridge Development Company, LLC. Under the terms of the agreement, Messrs. Tynan and Odell were appointed to our Board of Directors, sharing one vote between the two directors, and also agreed to provide certain services to us. In lieu of cash compensation for the services of Mr. Tynan or Mr. Odell, Messrs. Tynan and Odell have directed us to award the respective value of their services in equity-based compensation to their designee, MedBridge Venture Fund, LLC.

VG Life Sciences Inc. Employment Agreement with Haig Keledjian

Effective January 1, 2011, we entered into a five–year employment agreement with Haig Keledjian. At the time, Mr. Keledjian was our Chief Executive Officer. As of July 2013, he serves as our Vice President of Research and Development. The terms of the employment provides for an annual base salary of $195,000 for Mr. Keledjian. In lieu of cash compensation, we accrued the full value of Mr. Keledjian’s salary each year, through October 1, 2013, under an unsecured convertible note we issued to Mr. Keledjian on March 5, 2008. The note is non-interest bearing and was amended October 1, 2013. It is due on October 31, 2018. As of October 1, 2013, Mr. Keledjian’s salary accrues quarterly in Employee Notes Payable. As of December 31, 2013, we owe Mr. Keledjian approximately $577,328 per the non-interest bearing note for unpaid salary and other expenses, and $48,750 in accrued but unpaid salary for October 1 – December 31, 2013.

The employment agreement also provides for the award of 5,000 stock option grants annually to Mr. Keledjian. The exercise price for the options is based upon the volume weighted average price, or VWAP, 20 days after the grant date. All option awards are fully vested on grant, expire in December 2018, and allow for cashless exercise.

The employment agreement provides Mr. Keledjian with certain one-year severance benefits in the event we terminate him without cause, as such term is defined in the employment agreement. Mr. Keledjian shall be compensated by us through a single sum payment due within 30 days after such termination in an amount equal to the annual Salary in effect as of the date of termination and payable in cash or, at Mr. Keledjian election, in stock, and the minimum number of all options that would be due to Employee during the Initial Term had the Agreement not been terminated or, in the case of a subsequent one-year extension, the Annual Option due for that year, provided that the exercise price of all such options shall be determined using the VWAP as of the effective date of termination. In the event Mr. Keledjian is terminated by us in the event of “good reason,” as such term is defined in the employment agreement, or for any other reason, no severance benefits are owed to Mr. Keledjian.

VG Energy Employment Agreement with Haig Keledjian

Also effective January 1, 2011, our majority-owned subsidiary, VG Energy, Inc. entered into an employment agreement with Mr. Keledjian. The agreement provides for a base annual salary of $97,500, as well as for the award of certain stock option grants annually to Mr. Keledjian. In lieu of cash compensation, VG Energy agreed to accrue the full value of Mr. Keledjian’s salary each year under a secured line of credit note issued to Mr. Keledjian on March 8, 2005 through VG Life Sciences Inc. This secured revolving line of credit note refinanced on October 1, 2013 through the Unsecured Best Investment Trust note. The secured revolving line of credit note had a balance of $0 as of October 1, 2013. As of October 1, 2013, Mr. Keledjian’s VG Energy salary accrues quarterly in Employee Notes Payable.

Under Mr. Keledjian’s unsecured Best Investment Trust note, he may exchange the principal amount outstanding under the note for our common stock at a conversion price equal to the volume weighted average price or VWAP, or if not available, then the fair market value, calculated on the date of conversion. Accrued but unpaid salary is recorded on our balance sheet as accrued expenses. As of December 31, 2013, VG Energy owes Mr. Keledjian approximately $24,375.

Outstanding Equity Awards at Fiscal Year-End

The following table shows grants of options outstanding on December 31, 2014, 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 years ended December 31, 2014 and 2013. The compensation of directors who are employees of our Company is reflected in the Summary Compensation Table above.

Director Compensation Table for Fiscal Years Ended December 31, 2014 and 2013

Name of Director	Year Ended December 31	Fees earned or paid in cash ($)	Option awards ($) (1)	Total ($)
Arthur Keledjian	2014	0	45,346	45,346
	2013	0	86,706	86,706

(1)

Represents the aggregate grant date fair value of stock option awards granted in the covered fiscal year as computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. The fair value of each stock option award is estimated for the covered fiscal year on the date of grant using the Black-Scholes option valuation model. A discussion of the assumptions used in calculating the amounts in this column may be found in Note 10 to our audited consolidated financial statements for the year ended December 31, 2013. The amounts in this column do not represent the actual amounts paid to or realized by our director during the fiscal year ended December 31, 2014 and 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 issued identical grants to the directors on March 31, 2014, June 30, 2014, September 30, 2014 and December 31, 2014.

We have not historically paid cash compensation to our directors for services and we have no intention, at this time, to provide cash compensation to directors in the future.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following tables set forth information related to the beneficial ownership, as of the close of business on December 31, 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 December 31, 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 December 31, 2014, we had 9,715,443 shares of Series A Preferred Stock issued and outstanding. Series A stockholders have not changed since we completed a 1 for 600 reverse stock split on November 26, 2012. Prior to the Reverse Stock Split, one Series A share was convertible to 10 common shares. The Reverse Stock Split did not adjust the number of Series A preferred shares outstanding, however, the reverse did adjust the number of common shares that one share of Series A preferred stock is convertible into. Prior to the Reverse Stock Split, one share of Series A Preferred Stock could be converted into ten shares of common stock. The effect of the reverse split is that one share of Series A Preferred Stock may now be converted into 0.0167 shares of common stock, such that the 9,715,443 shares of Series A Preferred Stock issued and outstanding may be converted into 161,924 shares of common stock.

(2)

Mr. Keledjian is Chairman of our Board of Directors and serves as our Vice President of Research and Development. He is also our former Chief Executive Officer. Mr. Keledjian beneficially owns 5,573,725 shares of our Series A Preferred Stock. His ownership consists of (a) 349,928 shares held in the name of Mr. Keledjian; (b) an aggregate of 4,989,621 shares which have been irrevocably transferred to trusts for Mr. Keledjian’s family and children; (c) 177,154 shares held by Best Investment Trust, formerly Best Investments, LLC.; and (d) 57,022 shares held by Bretton Securities UDT 7/20/95, where Mr. Keledjian is Trustee for the trust and therefore has control but not ownership. Mr. Keledjian is the trustee of these trusts, and has sole voting and dispositive control over the shares.

Stockholders Known by Us to Own Over 5% of Our Common Stock

	Amount of beneficial ownership
Name and address	Shares owned	Shares - rights to acquire (1)	Total number	Percentage of shares beneficially owned (2)
MedBridge Venture Fund, LLC 121 Gray Avenue, Suite 200 Santa Barbara, CA 93101 (3)	2,040,816	33,354,592	35,395,408	49.2%
MedBridge Development Company, LLC 121 Gray Avenue, Suite 200 Santa Barbara, CA 93101 (4)	2,614,796	4,918,418	7,533,277	18.0%

(1)	Represents shares subject to outstanding stock options and warrants currently exercisable or exercisable, or currently vested or that will vest, within 60 days of December 31, 2014.

(2)	On December 31, 2014, we had 41,901,119 shares of common stock issued and outstanding.

(3)	Pursuant to an agreement entered into with MedBridge Venture Fund, LLC, or MVF, MVF is the beneficial owner of 35,395,408 shares of common stock. On July 13, 2013, MVF agreed to provide up to $2,500,000 in cash advances and services to us. MVF may convert the cash advanced to us ($1,450,000) and the cost of services earned ($656,250 as of September 30, 2014) into shares of common stock at any time, subject to lock-up provisions. As of December 31, 2014, MVF had converted $120,000 in services rendered into 2,040,816 shares of common stock, and has rights to acquire 33,354,592 shares of common stock. On December 15, 2014, MVF also converted 2,614,796 shares for $153,750 services rendered to us, however these shares were issued directly to MDC (see footnote 4).

	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.

(4)	Pursuant to two agreements entered into with MedBridge Development Company, or MDC, MDC is the beneficial owner of 9,163,104 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 December 31, 2014, MDC has advanced $410,000 in cash advances and MDC has provided $429,032 in services. MDC may convert the cash advanced to us ($410,000) and the value of services earned (429,032) into shares of common stock. As of December 31, 2014, MDC converted $287,500 in cash advances and $369,032 services owed into 4,476,002 shares of common stock. In January 2015 we anticipate MDC to convert $122,500 in cash advances and $180,000 in sevices owed into 1,629,828 shares. In accordance with the agreement, the number of shares that MDC may acquire for services has been calculated based on the quarterly average share price less 10% which has ranged from $0.0756 to $0.2302 in the period through December 31, 2014.

	On August 27, 2014, MDC agreed to provide us $50,000. As of October 15, 2014, MDC has advanced $50,000 through this agreement. MDC may convert the cash advance to us into shares of common stock. As of October 15, 2014, MDC had converted $0 of cash advances into common stock. The number of shares MDC may acquire for cash advanced to us has been calculated based on a contractual stock price of $0.113 or 442,478 shares.

	Per footnote 3 above, on December 15, 2014, MVF converted $153,750 worth of services rendered. This resulted in 2,614,796 shares being issued directly to MDC as a member of MVF.

	MDC is owned 42.66% by the Tynan Family Trust, of which our CEO and director, John Tynan is the trustee; 42.66% by our CFO and director, David Odell; 4.87% by EDK, LLC, which is managed by Edward Koke; 7.31% by West Beach Investments, LLC, which is managed by Steven Schott; and 2.5% by Ruth Loomer, an individual. Mr. Tynan and Mr. Odell have voting and dispositive control over the shares held by MDC.

Common Stock Owned by Officers and Directors

		Amount of beneficial ownership
Name and address of beneficial owner (1)	Nature of beneficial ownership	Shares owned	Shares - rights to acquire (3)	Total number	Percentage of shares beneficially owned (2)
John Tynan (4)	Chief Executive Officer; Director	7,096,706	22,324,524	29,421,230	45.8%
David Odell (5)	Chief Financial Officer; Director	7,102,941	21,244,592	28,347,533	44.9%
Haig Keledjian (6)	Chairman of the Board of Directors; Vice President of Research and Development, Secretary	4,978,518	4,412,256	9,390,774	20.3
Arthur Keledjian (7)	Director	0	800,000	800,000	1.9%
All directors and executive officers as a group (5 persons)		19,178,165	48,781,372	67,959,537	74.9%

(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 December 31, 2014, we had 41,901,119 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 December 31, 2014.

(4)

Mr. John Tynan is our Chief Executive Officer and a member of our Board of Directors. He owns 7,096,706 shares of common stock and rights to 22,324,524 shares of common stock which may be acquired within 60 days of December 31, 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) 7,090,798 held in the name of MedBridge Development Company, LLC, of which he owns 42.66% and has voting and dispositive control of the shares, (d) 12,159,864 which may be acquired within 60 days of December 31, 2014, through ownership in MedBridge Venture Fund, LLC, held in the name of MedBridge Development Company, LLC, of which he owns 42.66% and has voting and dispositive control of the shares, (e) 1,505,102 shares which may be acquired within 60 days of December 31, 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 December 31, 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) 2,800,000 shares which may be acquired within 60 days of December 31, 2014, through option grants received through December 31, 2014, (h) 2,072,306 shares which may be acquired within 60 days of December 31, 2014, through ownership in MedBridge Development Company, LLC, and (i) 2,936,912 shares which may be acquired within 60 days of December 31, 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 7,102,941 shares of common stock and rights to 21,244,592 shares of common stock which may be acquired within 60 days of December 31, 2014. His ownership consists of (a) 12,142 shares held in the name of Mr. Odell, (b) 4,476,002 shares held in the name of MedBridge Development Company, LLC, of which he owns 42.66% and has voting and dispositive control of the shares, (c) 12,159,864 shares which may be acquired within 60 days of December 31, 2014, through ownership in MedBridge Venture Fund, LLC, held in the name of MedBridge Development Company, LLC, of which he owns 42.66% and has voting and dispositive control of the shares, (d) 1,275,510 shares which may be acquired within 60 days of December 31, 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) 2,800,000 shares which may be acquired within 60 days of December 31, 2014, through option grants received through December 31, 2014; and (f) 442,478 shares which may be acquired within 60 days of December 31, 2014, through ownership in MedBridge Development Company, LLC., and (g) 2,936,912 shares which may be acquired within 60 days of December 31, 2014 through ownership in DW Odell Company, of which he owns 100% and has voting and dispositive control of the shares. Mr. Odell shares voting and investment control over the shares owned by MedBridge Venture Fund, LLC and MedBridge Development Company, LLC with Mr. Tynan.

(6)

Mr. Haig Keledjian is Chairman of our Board of Directors, Vice President of Research and Development and Secretary. He owns 4,978,518 shares of common stock and rights to 4,062,256 shares of common stock which may be acquired within 60 days of December 31, 2014, which includes 92,524 shares that he may acquire by converting his Series A preferred stock at a rate of 0.0016 shares of common stock for each share of Series A preferred stock and 350,000 shares the may be acquired upon the exercise of options. His ownership consists of (a) 22,803 shares held in the name of Mr. Keledjian; (b) an aggregate of 4,952,438 shares which have been irrevocably transferred to trusts for Mr. Keledjian’s family and children, where Mr. Keledjian is the trustee for a client’s trust; (c) 2,800,000 shares which may be acquired within 60 days of December 31, 2014, through option grants received through October 15, 2014; and (d) 3,277 shares held by Valerian Financial Services, LLC, a corporation controlled and owned by Mr. Keledjian. The aggregate of 4,952,438 shares of common stock, which have been irrevocably transferred to trusts for Mr. Keledjian’s family and children, where Mr. Keledjian is the trustee for a client’s trust, were transferred as follows: (i) 9,888 shares of common stock held in the Geko Trust, (ii) 4,462,833 shares of common stock held in the Best Investment Trust, (iii) 6,677 shares of common stock held in the Bretton Securities UDT 7/20/95 Trust, (iv) 4,089 shares of common stock held in the GK Trust, (v) 2,763 shares of common stock held in the Tomson Voting Trust, (vi) 36 shares of common stock held in the Foundation for Advancement of Health Sciences, and (vii) 466,152 shares of common stock held in NISCA Irrevocable Trust. Mr. Keledjian is the trustee of these trusts, and has sole voting and dispositive control over the shares.

(7)	Mr. Arthur Keledjian is a member of our Board of Directors. He owns rights to 800,000 shares of common stock which may be acquired within 60 days of December 31, 2014.

As of December 31, 2014, there are no arrangements among our beneficial owners known to management which could result in a change in control of our Company.

Securities Authorized for Issuance under Equity Compensation Plans

The following table summarizes information about our equity compensation plans as of September 30, 2014.

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by security holders	10,465,000	$0.19499	1,535,000
Equity compensation plans not approved by security holders	0	n/a	0
Total	10,465,000	$0.19499	1,535,000

Equity Incentive Plan

On December 20, 2013, our Board of Directors approved an equity incentive plan which provides for up to 12,000,000 shares of common stock to be issued under the terms and conditions of such plan. This plan was subsequently approved by a majority vote of the stockholders on December 30, 2013. The purpose of the plan is to provide a means by which eligible recipients of stock awards may be given an opportunity to benefit from increases in value of the common stock through the granting of the following stock awards: (i) incentive stock options, (ii) nonstatutory stock options, (iii) restricted stock awards and (iv) stock appreciation rights. We, by means of the plan, seek to retain the services of the group of persons eligible to receive stock awards, to secure and retain the services of new members of this group and to provide incentives for such persons to exert maximum efforts for the success of our Company and our affiliates.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MedBridge Development Company and MedBridge Venture Fund, LLC

MedBridge Development Company, LLC

On March 18, 2013, we entered into a Memorandum of Understanding with MedBridge Development Company, LLC, or MDC, for a two-year strategic collaboration. At the time of the transaction, the Chief Executive Officer of MDC, David Odell, was a current stockholder of our Company but was not employed by us in a director or officer capacity. John Tynan, the other managing member of MDC, had also purchased certain of our securities in the past.

Under this arrangement, MDC has agreed to provide us with financial support up to $550,000 cash, administrative support valued at $20,000 per month and other services to enable us to continue our research and development activities and provide for our operating expenses. Excluding the first $50,000 of cash, all other payments and fees shall accrue under a convertible note we issued to MDC on March 18, 2013. As of September 30, 2014, we have accrued $60,000 in management fees related to Q3 2014. As of December 31, 2014, we have accrued $0 in management fees related to Q4 2014. As of December 31, 2014, 2,513,365 shares have been issued or are authorized to be issued to MDC for all management fees earned through September 30, 2014.

The agreement provides an option to convert the amount owed under the convertible note into shares of our common stock. Any amounts advanced by MDC are convertible at the 20 day average of our stock price prior to the conversion date, and any costs thereafter shall be paid in shares of our common stock valued at the average stock price per quarter, discounted by 10%. Such share payments will be made on a quarterly basis. For each share issued, MDC shall also receive warrants to purchase one additional share exercisable at the undiscounted average stock price for the corresponding quarter. Each warrant expires 18 months after the two-year lock up period. We also agreed to a two-year lock-up provision from March 18, 2013, and MDC is unable to sell the shares it holds in our Company until that restriction has lifted. Each warrant’s 18 month term starts from the date the restriction is lifted.

Under the terms of the agreement, John Tynan and David Odell were appointed to our Board of Directors, sharing one vote between the two directors, and also agreed to provide certain services to us. Mr. Tynan was appointed our Chief Executive Officer in July 2013, and Mr. Odell was appointed our Chief Financial Officer in December 2013. As of October 15, 2014, Messrs. Tynan and Odell collectively own 85.32% of MDC. Mr. Odell continues to serve as Chief Executive Officer of MDC, in addition to his service as our Chief Financial Officer. In lieu of cash compensation for the management services of Mr. Tynan or Mr. Odell, Messrs. Tynan and Odell have directed us to award the respective value of their services in equity-based compensation to their designee, MedBridge Venture Fund.

On August 27, 2014, we entered into a convertible promissory note and warrant purchase agreement with MDC, pursuant to which MDC provided us $50,000 in cash. In exchange, we issued MDC a convertible promissory note with a principal amount of $50,000 and a warrant to purchase 200,000 shares of our common stock. The note has an annual interest rate of 8% and is convertible at the option of the holder in four equal tranches on November 27, 2015, February 27, 2016, May 27, 2016 and August 27, 2016. The conversion price is $0.113 per share. The warrant has an exercise price of $0.85 per share and shall be exercisable from August 27, 2018 until August 27, 2019. The warrant has a cashless exercise feature.

MDC is owned 42.66% by the Tynan Family Trust, of which our Chief Executive Officer and director, John Tynan is the trustee; 42.66% by our Chief Financial Officer and director, David Odell; 7.5% by EDK, LLC, which is managed by Edward Koke; 7.31% by West Beach Investments, LLC, which is managed by Steven Schott; and 2.5% by Ruth Loomer, an individual. Mr. Tynan and Mr. Odell have voting and dispositive control over the shares held by MDC.

MedBridge Venture Fund, LLC

On July 13, 2013, we entered into an agreement with MedBridge Venture Fund, LLC, or MVF. MVF agreed to provide us with a minimum investment of $250,000 cash and up to $2,500,000 in cash ($1,765,000) and services ($735,000) in the form of a convertible note. The amount accrued under the note is convertible at an exercise price equal to 10% lower than the lowest three-day average closing price starting on July 16, 2013 and ending on September 15, 2013 ($0.0588). As of September 30, 2014, we have received $1,650,000, including $100,000 from an unrelated party, in cash proceeds and received $656,250 in services. We have accrued approximately $135,000 in interest related to this aggregate obligation. The parties also agreed to a staggered lock up provision, with free-trading shares available in four equal parts, 25% each, on the following dates: December 15, 2014, March 15, 2015, June 15, 2015, and September 15, 2015.

We also issued warrants to MVF to purchase four shares for each $1.00 invested in our Company. These warrants are not exercisable before 48 months from the date of issuance and not after 60 months from the date of issuance, unless our Board resolves to allow exercise of shares prior to the fourth year. MVF is co-managed by Wild Harp Holdings, LLC, which is 100% owned by our Chief Executive Officer and director, John Tynan, and DW Odell Company, LLC, which is 100% owned by our Chief Financial Officer and director, David Odell.

Haig Keledjian

Best Investments, Inc. and Best Investment Trust

On March 5, 2008, we entered into a debt restructuring agreement with Best Investments, Inc. Best Investments is a corporation controlled and owned by Haig Keledjian. Mr. Keledjian is our Chairman, Vice President of Research and Development and Secretary. He served as our Chief Executive Officer from 2001 until July 2013 and was our Chief Executive Officer at the time of the transaction.

As of the date of the agreement, we owed certain debts to entities controlled by Mr. Keledjian for cash and services provided by Mr. Keledjian since our inception in 1995. The nature of Mr. Keledjian’s services include strategic planning, research and development management, legal management, fundraising, regulatory management, and day-to-day operational oversight. Best Investments was created by Mr. Keledjian to restructure and consolidate those debts owed by us. The amount Best Investments agreed to lend us under the revolving line of credit was not limited and was secured by substantially all of our assets. Further, the obligations owed by us under the revolving line of credit were guaranteed by our subsidiary, VG Energy, Inc.

Pursuant to the terms of the agreement, the parties agreed to restructure the indebtedness owed by us to Best Investments in addition to accrued interest and for us to issue Best Investments a convertible note. The original indebtedness matured on March 29, 2008 and the revolving line of credit matured on June 30, 2013 with an interest rate of 5% per annum, payable at the maturity date.

Under the terms of the debt restructuring agreement, Best Investments agreed to allow us to prepay our obligations due under the line of credit at any time and that portions of the debt may be exchanged for shares of our common stock and warrants. The conversion price is equal to the volume-weighted closing price of our common stock for the 20 trading days preceding the notice of conversion by Best Investments. For each share of stock issued for conversion of our debt owed under the line of credit, we agreed to issue Best Investments a warrant to purchase a share of common stock for 150% of the price at which the debt under the revolving line of credit were converted. Such warrants will expire five years from the date of issuance.

On October 1, 2013, we entered into an unsecured note with Best Investment Trust, in the amount of $993,023 ($577,328 at December 31, 2013) with interest at 5% per annum, due December 31, 2018. This note was issued as a replacement and amendment of the secured revolving line of credit dated March 5, 2008 and subsequently assigned to Best Investment Trust. During the years ended December 31, 2013 and 2012, there were no interest payments, all interest was accrued. In the six month period ended September 30, 2014 an aggregate of $513,376 in principal was converted into 2,441,792 common shares and warrants to purchase an equal number of shares at 1.5 times the conversion prices. If not converted earlier, unpaid principal of $63,952 at September 30, 2014, plus accrued interest, due at maturity shall automatically be exchanged for Units based upon the exchange price upon maturity. In addition, we issued an identical note in the amount of $63,375 to another individual who participated in the arrangement with Best Investment Trust, which amount was converted into 292,808 common shares by the holder on March 3, 2014. This BIT note was issued as a replacement and amendment of the secured revolving line of credit dated March 5, 2008 and subsequently assigned to Best Investment Trust. Best Investment Trust is controlled by Haig Keledjian, our Chairman of the Board, Vice President of Research and Development and Secretary.

Mr. Keledjian’s balance on September 30, 2014 of $2,460 consisted of the following:

Accrued Salaries (1)	$2,460
Revolving Line of Credit Advances and Accrued Interest (2)	$0
Balance	$2,460

Mr. Keledjian is our founder and has served in various roles since 2001. He currently serves as Our Chairman, Vice President of Research and Development and as our Corporate Secretary, a position he has held since July 2013. Immediately prior to July 2013, Mr. Keledjian served as our Chief Executive Officer and Chief Executive Officer of VG Energy. He has also served as our Chief Operating Officer and Chief Financial Officer.

This includes $162,002 of interest which was calculated at 5% per annum from the inception of the Revolving Line of Credit arrangement in March 2008. Interest was only calculated with respect to the Revolving Line of Credit and not the accrued salaries.

Mr. Keledjian can be deemed to have full economic interest in the revolving line of credit. All transactions by Best Investments relating to our line of credit and the convertible note are reflected in our accompanying financial statements.

John Tynan

Wild Harp Holdings, LLC

On July 9, 2014, we entered into a convertible promissory note and warrant purchase agreement with Wild Harp Holdings, LLC, pursuant to which Wild Harp Holdings is obligated to provide us with a minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014, we received the minimum $100,000 and, in exchange, issued Wild Harp Holdings a convertible promissory note in the amount of $100,000 with an 8% interest rate per annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share that may be exercised at any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note shall be convertible at the option of Wild Harp Holdings in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016 and July 9, 2016. The defined conversion price is $0.1245 per share. If the remaining principal and interest due under the note is not paid by July 9, 2016, the maturity date, then the remaining amount shall automatically be converted into shares of common stock using the same conversion ratio above. In addition, we agreed to issue 50,000 shares of our Series B Preferred Stock to Wild Harp Holdings. John Tynan, our Chief Executive Officer, owns 100% of Wild Harp Holdings.

On July 19, 2014, we entered into the First Amendment to the Convertible Promissory Note and Warrant Purchase Agreement with Wild Harp Holdings in order to remove all references to Series B Preferred Shares and removing the agreement to issue 50,000 shares of our Series B Preferred Stock. All other terms and conditions of the Convertible Promissory Note and Warrant Purchase Agreement remain unmodified and in full force and effect.

On September 16, 2014, we received an additional $50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a Convertible Promissory Note in the amount of $50,000 with an 8% interest rate per annum and a Warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per share that may be exercised from September 16, 2018 to September 18, 2019. The note and warrant have the same terms and conditions as the ones we issued in July 2014 except that the defined conversion price of the note shall be $0.084.

On October 27, 2014, we received an additional $50,000 from Wild Harp Holdings, LLC and issued Wild Harp Holdings a convertible promissory note in the amount of $50,000 with an 8% interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share that may be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the ones we issued in July 2014, except that the defined conversion price of the note shall be $0.065.

David Odell

DW Odell Company, LLC

On July 9, 2014, we entered into a convertible promissory note and warrant purchase agreement with DW Odell, LLC, pursuant to which DW Odell is obligated to provide us with a minimum of $100,000 and a maximum of $250,000 to be received no later than July 9, 2015. On July 9, 2014, we received the minimum $100,000 and, in exchange, issued DW Odell a convertible promissory note in the amount of $100,000 with an 8% interest rate per annum and a warrant to purchase 400,000 shares of common stock at an exercise price of $0.93 per share that may be exercised at any time from July 9, 2018 to July 9, 2019. The warrants have a cashless exercise provision. The note shall be convertible at the option of DW Odell in four equal tranches on October 9, 2015, January 9, 2016, April 9, 2016 and July 9, 2016. The defined conversion price is $0.1245 per share. If the remaining principal and interest due under the note is not paid by July 9, 2016, the maturity date, then the remaining amount shall automatically be converted into shares of common stock using the same conversion ratio above. In addition, we agreed to issue 50,000 Shares of our Series B Preferred Stock to DW Odell. David Odell, our Chief Financial Officer, owns 100% of DW Odell.

On July 19, 2014, we entered into the First Amendment to the Convertible Promissory Note and Warrant Purchase Agreement with DW Odell Company in order to remove all references to Series B Preferred Shares and removing the agreement to issue 50,000 shares of our Series B Preferred Stock. All other terms and conditions of the Convertible Promissory Note and Warrant Purchase Agreement remain unmodified and in full force and effect.

On September 16, 2014, we received an additional $50,000 from DW Odell Company, LLC and issued DW Odell Company a Convertible Promissory Note in the amount of $50,000 with an 8% interest rate per annum and a Warrant to purchase 200,000 shares of common stock at an exercise price of $0.63 per share that may be exercised from September 16, 2018 to September 18, 2019. The note and warrant have the same terms and conditions as the ones we issued in July 2014 except that the defined conversion price of the note shall be $0.084.

On October 27, 2014, we received an additional $50,000 from DW Odell Company, LLC and issued DW Odell Company a convertible promissory note in the amount of $50,000 with an 8% interest rate per annum and a warrant to purchase 200,000 shares of common stock at an exercise price of $0.49 per share that may be exercised from October 27, 2018 to October 26, 2019. The note and warrant have the same terms and conditions as the ones we issued in July 2014, except that the defined conversion price of the note shall be $0.065.

Director Independence

We are not currently listed on any national securities exchange that has a requirement that our Board of Directors consist of independent directors. At this time, we do not have an “independent director” as that term is defined under the rules of The NASDAQ Capital Market.

LEGAL MATTERS

Certain legal matters in connection with the securities will be passed upon for us by the law firm of Trombly Business Law, P.C., Boulder, Colorado. Ms. Trombly will not receive a direct or indirect interest in the small business issuer and has never been a promoter, underwriter, voting trustee, director, officer, or employee of our company. Nor does Ms. Trombly have any contingent based agreement with us or any other interest in or connection to us.

EXPERTS

The December 31, 2013 and 2012 financial statements included in this prospectus have been audited by KWCO, PC, independent auditors, and have been included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. KWCO, PC, has no direct or indirect interest in us, nor were they a promoter or underwriter.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

VG Life Sciences Inc.

CONTENTS

Financial Statements:

Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and December 31, 2013	F-2

Consolidated Statements of Operations, Three and Nine Months Ended September 30, 2014 and 2013 (Unaudited)	F-3

Consolidated Statements of Cash Flows, Nine Months Ended September 30, 2014 and 2013 (Unaudited)	F-4

Notes to Consolidated Financial Statements, Nine Months Ended September 30, 2014 and 2013 (Unaudited)	F-6

Report of Independent Registered Public Accounting Firm	F-10

Consolidated Balance Sheets at December 31, 2013 and 2012	F-11

Consolidated Statements of Operations for the years ended December 31, 2013 and 2012, and for the period July 11, 1995 (Inception) to December 31, 2013	F-12

Consolidated Statement of Stockholders’ deficit for the period July 11, 1995 (Inception) to December 31, 2013	F-13

Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012, and for the period July 11, 1995 (Inception) to December 31, 2013	F-25

Notes to Consolidated Financial Statements for the years ended December 31, 2013 and 2014	F-27

F-1

VG LIFE SCIENCES INC. AND SUBSIDIARIES

(A Development Stage Company)

CONSOLIDATED BALANCE SHEETS

	September 30, 2014			December 31, 2013
	(Unaudited)			(Audited)
ASSETS

CURRENT ASSETS
Cash	$	53,842		$	713,892
Prepaid expenses and other current assets		6,621			75,494
Total Current Assets		60,463			789,386

PROPERTY AND EQUIPMENT, NET		–			–

OTHER ASSETS
Intangible assets		1,076,836			1,076,836

TOTAL ASSETS	$	1,137,299		$	1,866,222

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES

Accounts payable	$	866,146		$	405,000
Accrued expenses		182,730			434,471
Accrued interest		265,001			69,898
Insurance finance agreement		–			33,836
Convertible debt - related parties		2,599,689			1,844,732
Convertible debt - other		1,098,360			1,363,272
Derivative liabilities		1,295,487			2,183,440

Total Current Liabilities		6,307,413			6,334,649

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
Preferred stock, 20,000,000 shares authorized, $0.0001 par value; 9,715,443 and 9,715,443 issued and outstanding, respectively		972			972
Common stock, 150,000,000 shares authorized, $0.0001 par value; 31,230,318 and 17,459,752 issued and outstanding, respectively		3,123			1,746
Additional paid-in capital		99,696,993			94,609,247
Noncontrolling interests		673,115			698,921
Deficit accumulated during the development stage		(105,544,317	)		(99,779,313	)
Total Stockholders' Deficit		(5,170,114	)		(4,468,427	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	1,137,299		$	1,866,222

See accompanying notes to unaudited interim consolidated financial statements.

F-2

VG LIFE SCIENCES, INC. AND SUBSIDIARIES

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,						July 11, 1995 (Inception) to September 30,
	2014			2013			2014			2013			2014

REVENUES	$	–		$	–		$	–		$	–		$	347,750

EXPENSES
Research and development		339,881			300,196			975,864			349,636			18,964,648
Management salaries		214,376			259,425			780,625			489,307			6,657,399
Depreciation and amortization		–			–			–			–			1,645,748
Legal and professional		179,878			190,723			1,077,551			696,586			8,402,688
Consulting fees		–			50,415			37,629			152,915			19,561,051
General and administrative		64,637			52,873			730,502			84,649			10,439,268

Total expenses		798,772			853,632			3,602,171			1,773,093			65,670,802

LOSS FROM OPERATIONS		(798,772	)		(853,632	)		(3,602,171	)		(1,773,093	)		(65,323,052	)

OTHER INCOME (EXPENSE)
Asset impairment		–			–			–			–			(475,000	)
Sale of distribution rights		–			–			–			–			1,309,966
Interest income		–			–			–			–			9,392
Derivative benefit/(expense)		414,895			(633,000	)		(94,935	)		(2,098,134	)		(5,043,766	)
Interest expense		(687,800	)		(71,672	)		(2,093,704	)		(502,875	)		(36,269,992	)

Total other income (expense)		(272,905	)		(704,672	)		(2,188,639	)		(2,601,009	)		(40,469,400	)

NET LOSS		(1,071,677	)		(1,558,304	)		(5,790,810	)		(4,374,102	)		(105,792,452	)

NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS		8,602			9,297			25,806			31,703			248,135

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(1,063,075	)	$	(1,549,007	)	$	(5,765,004	)	$	(4,342,399	)	$	(105,544,317	)

NET LOSS PER COMMON SHARE, BASIC AND DILUTED	$	(0.04	)	$	(0.18	)	$	(0.24	)	$	(0.68	)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, BASIC AND DILUTED		28,935,882			8,403,425			23,986,056			6,354,005

See accompanying notes to unaudited interim consolidated financial statements.

F-3

VG LIFE SCIENCES, INC. AND SUBSIDIARIES

(A Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended						Cumulative for the Period July 11, 1995 (Inception) to
	September 30,						September 30,
	2014			2013			2014
Cash Flows From Operating Activities:
Net loss attributable to controlling interests	$	(5,765,004	)	$	(4,342,399	)	$	(105,544,317	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		–			–			1,645,748
Amortization of debt discount		1,878,116			74,472			9,265,943
Debt Issuance costs		–			–			13,339,211
Imputed Interest		–			63,300			189,826
Non-Controlling Interest		(25,806	)		(31,703	)		(248,135	)
Services included in accounts payable to be satisfied in shares		–			–			200,000
Issuance of common stock and warrants for services		54,756			–			677,006
Stock based compensation		–			–			1,890,449
Issuance of common stock for services and finders fee		–			–			7,864,423
Issuance of convertible notes for services		1,001,565			627,277			2,495,575
Beneficial conversion feature		–			–			71,500
Issuance of preferred stock for interest		–			–			225,000
Settlement-distribution agreement rights		–			–			1,668,953
Debt Settlement liabilities and common shares in excess of recorded liabilities		–			–			399,530
Issuance of stock and warrants for interest and financing costs		–			–			7,730,776
Non-cash operating expenses and other charges		–			–			5,387,663
Non-cash income-gain on settlements		–			–			(384,966	)
Options and warrants issued for services and wages		597,269			347,600			13,243,795
Options exercised for services		–			–			116,317
Contingently issued stock issued for services		–			–			792,499
Warrants exercised for services		–			–			12,500
Issuance of common stock for expenses paid by third party		–			–			593,947
Issuance of common stock for settlement agreement		–			–			1,060,000
Notes payable issued for expenses		–			–			897,306
Notes payable converted to accrued wages		–			–			(25,000	)
Satisfaction of Syexia-in excess of accrual		–			–			104,577
Change in variable common stock purchase options		–			–			(22,418	)
(Increase) decrease in prepaid expenses and other current assets		68,873			–			(97,941	)
(Increase) decrease in deposits and other assets		–			–			1,972,832
Increase (decrease) in accrued interest		195,102			49,103			1,486,762
Increase (decrease) in accounts payable		461,144			199,838			1,778,853
Increase (decrease) in accrued expenses		(62,997	)		416,206			2,594,291
Increase (decrease) in accrued wages payable		–			–			771,744
Increase (decrease) in advances-related parties		–			–			74,283
Increase (decrease) in advances		–			–			136,000
Increase (decrease) in insurance finance agreement		–			–			33,836
Increase (decrease) in convertible debt-related parties and other		–			–			(112,475	)
Increase (decrease) in derivative liability		94,935			2,098,134			4,802,935

Net cash used in operating activities		(1,502,047	)		(498,172	)		(22,911,172	)

Cash Flows From Investing Activities:
Increase in leasehold improvements		–			–			(1,039,306	)
Acquisition of equipment		–			–			(361,665	)
Increase in intangible assets		–			–			(5,206,051	)

Net cash used in investing activities		–			–			(6,607,022	)

(continued)

F-4

		Nine Months Ended						Cumulative for the Period July 11, 1995 (Inception) to
		September 30,						September 30,
		2014			2013			2014
Cash Flows From Financing Activates:
Proceeds of MedBridge Debt		–			–			125,000
Proceeds from convertible debt-related party and other		875,833			628,002			7,482,433
Payment for convertible debt-related party and other		(33,836	)		(121,038	)		(930,603	)
Proceeds from sale of common stock and warrants, net		–			–			11,082,204
Proceeds from Revolving line of credit-related party		–			–			3,087,432
Repayments of Revolving line of credit-related party		–			–			(1,694,162	)
Proceeds of sale of VGE securities to third parties, net		–			–			600,000
Proceeds from notes payable		–			–			267,000
Proceeds from exercise of options and warrants		–						173,061
Proceeds from notes payable--related parties		–			–			9,379,671

Net cash provided by financing activities		841,997			506,964			29,572,036

Increase (decrease) in Cash		(660,050	)		8,792			53,842
Cash and cash equivalents, beginning of period		713,892			6,090			–

Cash and cash equivalents, end of period	$	53,842		$	14,882		$	53,842

SUPPLEMENT DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest	$	–		$	–		$	–
Income taxes	$	–		$	–		$	–

NON-CASH TRANSACTIONS
Issuance of common stock and warrants for convertible notes and interest	$	–		$	–		$	6,072,377
Discount on indebtedness	$	1,807,205		$	330,472		$	10,472,155
Reclassification of derivative liability to additional paid-in-capital	$	–		$	–		$	1,264,800
Conversion of various accruals to convertible notes	$	–		$	–		$	1,953,954
Issuance of common stock in satisfaction of accounts payable/notes/accruals	$	1,645,439		$	532,500		$	5,432,742
Refinancing of convertible debt -related party Revolving line of credit	$	–		$	–		$	3,180,393
Issuance of common shares in various debt settlements and partial satisfactions	$	–		$	–		$	629,451
Issuance of unsecured convertible debentures for accounts payable	$	–		$	–		$	476,866
Issuance of common stock for debt repayment-DMBM/Wonderland, net	$	–		$	–		$	35,214
Noncontrolling interest, net	$	–		$	–		$	2,447
Issuance of common stock for T & T legal and accrued interest	$	–		$	–		$	1,035,000
Issuance of convertible note to acquire interest in unconsolidated subsidiary	$	–		$	–		$	782,814
Issuance of common shares, options and warrants- V Clip acquisition	$	–		$	–		$	1,502,479
Issuance of common shares - repurchase product royalty rights, China Market	$	–		$	–		$	231,000
Issuance of common shares and warrants - Carcinotek acquisition	$	–		$	–		$	1,000,000
Restructuring of convertible debentures	$	–		$	–		$	1,198,167
Issuance (settlement) of unsecured convertible debentures - patents	$	–		$	–		$	248,000
Issuance of common stock for debt paid by third party	$	–		$	–		$	593,947
Issuance of common stock for debt and interest	$	–		$	–		$	9,086,511
Issuance of common stock finders fee	$	–		$	–		$	450,000
Warrants issued with convertible debentures and amendment of arrangement	$	–		$	–		$	516,800
Transfer from derivative liabilities	$	984,455		$	798,048		$	2,988,878
Issuance of warrant in partial consideration of notes payable	$	–		$	–		$	100,000
Issuance of note in consideration of White Label acquisitions	$	–		$	–		$	100,000
Issue Series A Preferred Stock for secured revolving credit note	$	–		$	–		$	252,000

See accompanying notes to unaudited interim consolidated financial statements.

F-5

VG LIFE SCIENCES INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

Notes to Consolidated Financial Statements

Nine Months Ended September 30, 2014 and 2013

(Unaudited)

NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS

VG Life Sciences Inc. (the “Company” or “VGLS”) was incorporated in California on July 11, 1995 and is in the development stage. The Company is engaged in research and development of therapeutic and diagnostic pharmaceutical and medical products. The Company was acquired by a publicly traded Delaware Corporation and became a reporting issuer on October 1, 2001. On November 5, 2001, this publicly traded company changed its name to Viral Genetics, Inc. On November 26, 2012, the Company’s name was changed to VG Life Sciences Inc. from Viral Genetics, Inc. The Company terminated registration with the SEC on March 24, 2009. The Company became a reporting issuer again on August 22, 2014. The Company’s fiscal year-end is December 31.

As of September 30, 2014, the Company has the following subsidiaries:

Subsidiary Name	Origination/ Acquisition Date	Ownership Percentage
V-Clip Pharmaceuticals	2008	100%
Carcinotek, Inc.	2008	100%
White Label Generics, Inc.	2008	49%
MetaCytolytics, Inc.	2009	100%
Viral Genetics Beijing, Ltd.	2009	100%
VG Energy, Inc. (“VGE”)	2010	81.65%

The various subsidiaries were organized or acquired to facilitate the use of the Company’s Targeted Peptide Technology (“TPT”) and Metabolic Disruption Technology (“MDT”). As of September 30, 2014 and December 31, 2013, all subsidiaries were inactive.

NOTE 2 - BASIS OF PRESENTATION

The accompanying unaudited interim consolidated financial statements as of September 30, 2014 and for the three and nine month periods ended September 30, 2014 and 2013 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and on the same basis as the audited annual consolidated financial statements. The unaudited interim consolidated balance sheet as of September 30, 2014, unaudited interim consolidated statements of operations for the three and nine month periods ended September 30, 2014 and 2013, and the unaudited interim consolidated statements of cash flows for the nine month periods ended September 30, 2014 and 2013 include all material adjustments, consisting only of normal recurring adjustments (unless otherwise discussed below), which management considered necessary for a fair presentation of the financial position and operating results for the periods presented. These unaudited financial statements are the representations of management. The results for the three and nine month periods ended September 30, 2014 are not necessarily indicative of results to be expected for the year ending December 31, 2014 or for any future interim period. The audited consolidated balance sheet at December 31, 2013 has been derived from the audited consolidated financial statements; however, the notes to the accompanying unaudited consolidated financial statements do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete consolidated financial statements. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2013 included in Amendment # 2 of the Company’s Form 10 filed with the Securities and Exchange Commission on October 1, 2014. These accompanying notes are generally limited to the information necessary to update the information included in the aforementioned financial statements for the year ended December 31, 2013.

F-6

Going Concern

As of September 30, 2014, the Company had a deficit accumulated during the development stage of approximately $105.5 million and requires substantial additional funds to continue its research and development, to support its operations and to achieve its business development goals, the attainment of which are not assured. The Company has been able to satisfy certain liabilities with convertible indebtedness and common shares and enter into debt settlement arrangements, facilitated by third party financing, with vendors and creditors for substantial amounts of its various financial obligations. Convertible instruments have also been converted into equity. In September 2013, the Company also entered into arrangements with related parties under which it has and will continue to receive certain financial and administrative support and services through March 18, 2015 and has consummated related party and unrelated convertible debenture and warrant agreements from which it will receive cash and executive services (from related parties only). However, substantial indebtedness remains and substantial recurring losses from operations and additional liabilities continue to be incurred.

These factors and uncertainties raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might incur in the event the Company cannot continue in existence. Management has designed plans for sales of the Company’s future pharmaceutical related products. Management intends to seek additional capital from new equity securities offerings, from debt financing and debt restructuring to provide funds needed to increase liquidity, fund internal growth and fully implement its business plan. However, management can give no assurance that these funds will be available in adequate amounts, or if available, on terms that would be satisfactory to the Company.

The timing and amount of the Company’s capital requirements will depend on a number of factors, including the need for funds to support research and development and payment requirements to sustain licensing rights, demand for products and services and the availability of opportunities for international expansion through affiliations, to maintain its status as a public company, shareholder and investor relations, to establish and maintain current and new business relationships and for other general corporate business purposes.

NOTE 3 – CONVERTIBLE DEBT – OTHER

On January 24, 2014, KED Consulting Group LLC, (“KED”) entered into a Convertible Promissory Note and Warrant Purchase Agreement with the Company in the amount of $270,000. The notes are unsecured, bear interest at 8% per annum, and are convertible into common shares at $0.0588 per share. KED also received warrants to purchase 1,080,000 shares at $0.45 per share on execution of this agreement, exercisable at any time from the four year anniversary to the fifth year anniversary of this arrangement. Shares will be issuable on conversion of these notes in total in four equal tranches (25% each) on the following dates: December 15, 2014, March 15, 2015, June 15, 2015 and September 15, 2015, to the extent not earlier converted, at the conversion price per share ($0.0588). All proceeds were received by September 30, 2014. Of the $270,000: $100,000 was to be paid directly in satisfaction of a vendor liability of ours, which has been paid, and $170,000 was to be paid in cash in six equal monthly payments of $28,333. The final payment was received on September 30, 2014. Debt discount of $270,000 was recorded of which $58,704 and $130,508 was amortized as interest expense in the three and nine month periods ended September 30, 2014, respectively.

Effective March 1, 2014, investors in unsecured convertible debentures aggregating a total of $165,000 exchanged these debentures and any associated warrants (waiving any defaults and accrued interest on the notes) for an equal principal amount under a Convertible Promissory Notes and Warrants Purchase Agreement with the same terms and conditions as described in the preceding paragraph. These investors received warrants to purchase an aggregate of 660,000 common shares, with the same terms and conditions as described preceding paragraph. Debt discount of $165,000 was recorded of which $70,620 and $92,740 was amortized as interest expense in the three and nine month periods ended September 30, 2014, respectively.

Effective August 27, 2014, the Company received proceeds of $50,000 from an unrelated investor, pursuant to a Convertible Promissory Note and Warrant Purchase Agreement under terms and conditions that are the same as those described in Note 4, except that this note is due on August 22, 2016 and this investor has the right to purchase notes totaling $150,000 through August 21, 2015. Principal and accrued interest are convertible in four equal quarterly tranches of principal, plus accrued interest commencing on November 22, 2015, or at any time at the investor’s option, at the conversion price. Debt discount of $50,000 was recorded of which $3,064 was amortized as interest expense in the nine month period ended September 30, 2014.

F-7

NOTE 4 – CONVERTIBLE DEBT – RELATED PARTIES

In the nine month period ended September 30, 2014, the Company entered into Convertible Promissory Notes (“Notes”) and Warrant Purchase Agreements with three related party entities: on July 9, 2014 with Wild Harp Holdings, LLC (“Wild Harp”) controlled by John Tynan, our CEO, and DW Odell Company (“DW Odell”) controlled by David Odell, our CFO, and on August 27, 2014, with Medbridge Development Company, LLC (“MDC”), an entity controlled by Mr. Tynan and Mr. Odell. John Tynan and David Odell are officers and directors of the Company. The Wild Harp and DW Odell agreements provide for Notes of up to $250,000 each to be purchased at the option of each party through July 9, 2015, of which $150,000 has been received from each of Wild Harp and DW Odell through September 30, 2014. The MDC agreement provides for a Note of $50,000, proceeds of which were received from MDC on August 27, 2014. All three Notes bear interest at 8% per annum and have a two year term. Principal and accrued interest are convertible in four equal quarterly tranches of principal, plus accrued interest commencing 15 months after the issuance date of each Note, or at any time at each party’s option, at the conversion price. The Wild Harp and DW Odell balances are each comprised of two Notes having identical conversion provisions; (i) a Note with $100,000 in principal with a conversion rate of $0.1245 and warrant exercise price of $0.93 per share and (ii) a Note with $50,000 in principal with a conversion rate of $0.084 and warrant exercise price of $0.63 per share. The MDC Note of $50,000 has a conversion price of $0.1134 and a warrant exercise price of $0.85 per share. The warrants received by the parties are to purchase four common shares for each $1 of principal, an aggregate of 1,400,000 shares as of September 30, 2014, exercisable on any date from the four-year anniversary to the five-year anniversary of the agreement. Similar warrants will be issued with future Wild Harp and DW Odell note proceeds of up to $200,000, if any; exercisable at 7.5 times the corresponding conversion price. All warrants include a cashless exercise provision. These Notes issued through September 30, 2014, are convertible into 3,237,819 shares of common stock of the Company.

NOTE 5 – EQUITY INCENTIVE PLAN

In the three and nine month periods ended September 30, 2014, the Company granted 1,515,000, and 4,545,000, respectively, non-qualified stock options under its 2013 Equity Incentive Plan to management and consultants. The fair value of these options was estimated using the Black-Scholes Option Pricing Model with the following assumptions: risk free annual interest ranging from 2.52% to 2.73%; volatility approximating 127%; expected life of 5 years; and no expected dividends. The aggregate fair value of these options granted for the nine months ended September 30, 2014 of $597,269 was included in research and development in the amount of $59,136 and general and administrative expense in the amount of $538,133.

NOTE 6 – COMMON AND PREFERRED STOCK

Effective on July 9, 2014, the Company filed a certificate of amendment to its Delaware Certificate of Incorporation increasing the total number of authorized shares of capital stock to 170,000,000 from 160,000,000. The total number of authorized Preferred Shares was increased to 20,000,000 from 10,000,000 and authorized Common Shares remained at 150,000,000; each having a par value of $0.0001 per share. Also on July 9, 2014, the Company established a Series B Preferred Stock ("Series B"), which the Company removed through an Amendment and Restatement of the Articles of Incorporation on September 4, 2014 and an Amended and Restated Certificate of Designation on September 4, 2014.

F-8

NOTE 7 – SUBSEQUENT EVENTS

On March 28, 2014, the Company entered into an Investment Agreement (“the Agreement”) with Dutchess Opportunity Fund II L.P. (“Dutchess”) whereby Dutchess may purchase up to that number of common shares having an aggregate purchase price of $5,000,000. Under terms of the Agreement, the Company may, at its sole discretion, deliver a Put Notice to Dutchess stating the dollar amount of common shares, which the Company intends to sell to Dutchess on a closing date. The maximum amount that Dutchess can be required to purchase at any one time shall be equal to (1) 200% of the average daily volume for the three trading days immediately preceding the formal date of the notice to Dutchess or (2) $150,000, determined at the sole discretion of the Company. The share purchase price is 94% of the lowest daily volume-weighted average price of Company stock for the 5 consecutive trading days beginning with the notice date and the ensuing four trading days. The Agreement is for a term of three years from the date of execution, or, if earlier, the sale of $5,000,000 or written notice to Dutchess by the Company. On September 4, 2014, the Company and Dutchess amended the agreement to require the Company to file a Registration Statement on Form S-1 (or other appropriate form) with the SEC covering any registrable securities that may be issued under the Investment Agreement within 30 days of the completion of the review of the Form 10 by the SEC. The Company was notified by the SEC of the completion of the SEC’s review on October 14, 2014. The Company initially agreed to register for resale up to 10,000,000 shares of common stock, except to the extent that the SEC requires the share amount to be reduced as a condition of effectiveness. On February 4, 2015, the Company amended the Investment Agreement and agreed to register for resale up to 5,000,000 shares of common stock, except to the extent that the SEC requires the share amount to be reduced as a condition of effectiveness

On October 27, 2014, the Company received an additional $100,000 in proceeds from Wild Harp and DW Odell pursuant to the arrangements described in Note 4.

F-9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

of VG Life Sciences Inc. (Formerly Viral Genetics, Inc.)

Santa Barbara, California 93101

We have audited the accompanying consolidated balance sheets of VG Life Sciences Inc. (a development stage company) as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the years in the two-year period ended December 31, 2013 and for the cumulative development stage period from July 11, 1995 (inception) to December 31, 2013. Our report on the cumulative statements of operations, stockholders’ deficit and cash flows from July 11, 1995 to December 31, 2013, in so far as it relates to amounts for periods on or prior to December 31, 2004, is based solely on the reports of other auditors. VG Life Sciences Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of VG Life Sciences Inc. as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2013, and for the cumulative development stage period from July 11, 1995 (inception) to December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that VG Life Sciences Inc. will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, VG Life Sciences Inc. has suffered recurring losses from operations and its limited capital resources raise substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ KWCO, PC

Odessa, Texas

April 30, 2014

F-10

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.

F-11

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.

F-12

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)

F-13

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)

F-14

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)

F-15

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)

F-16

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)

F-17

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)

F-18

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)

F-19

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)

F-20

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)

F-21

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

VG Life Sciences Inc. S-1/A