SAN MARINO, Calif.--(BUSINESS WIRE)--Viral Genetics, Inc. (Pink Sheets:VRAL) today announced it will change its name to VG Life Sciences, Inc. and implement a 1-for-600 reverse split of its common stock. The name change and the reverse stock split are expected to be become effective on or about November 26, 2012, pending review and acceptance by FINRA. Both the name change and the reverse stock split were approved by a majority of the Company’s shareholders after recommendation by the Board of Directors of the Company. This corporate action and name change followed an earlier increase to authorized common stock of the Company in October 2012 and changes to the terms of the Company’s Series A Preferred Shares in August 2012.
“The Board of Directors took these actions for several important reasons,” said Haig Keledjian, Viral Genetics’ CEO. “The primary reason is the strength of our science and our intellectual property portfolio. We have worked long and hard to build our IP and to begin moving some of the molecules and compounds from our basic science and discovery efforts into clinical trials at prestigious medical institutions. In order to accelerate our movement down this path we are revamping our corporate structure into a more credible format. This new capital structure gives us more credibility with potential business partners, institutional funding sources, and the new executive talent that we are seeking to hire as we move from a basic research-oriented company and develop our capabilities as an operating drug development business.
“The name change reinforces our evolution from a purely R&D focus,” continued Mr. Keledjian. “VG Life Sciences, Inc. more accurately depicts our intellectual property and the business focus which is broader than pharmaceuticals and now reaches into biofuels, agricultural technology and other high-growth industries.
“As a significant shareholder of the Company and someone who has devoted more than 15 years of my life to its success, my intention going forward is to build value on this newly established base,” concluded Mr. Keledjian.
Interim Increase to Authorized Common Share Capital
In October 2012, the Board recommended and a majority of shareholders approved an increase to the authorized common stock of the Company, increasing the authorized common stock from 1,500,000,000 common shares to 3,000,000,000 common shares. At the time of the increase, there were approximately 1,500,000,000 common shares issued and outstanding with additional share issuance obligations due. The Board believed an increase to authorized common shares was required in order to meet these interim obligations during the FINRA review period for the reverse stock split. Without this increase, the Company would have defaulted in meeting those obligations.
Debt Settlements and Payments
In connection with the increase to authorized common stock of the Company, the Company recently settled portions of certain outstanding debts.
On September 14, 2012, the Company agreed to amend the terms of certain outstanding convertible debentures and unsecured advances (the “2012 Debentures”) totaling $848,500, representing cash advanced to the Company by an arms-length private investor over the past 18 months. The 2012 Debentures originally allowed the conversion of outstanding principal into shares of common stock at the investor’s option at varying prices but generally at $0.0025. Because of the decrease in the Company’s common stock price and the pending maturity of several of the 2012 Debentures, the investor was unlikely to exchange their debt for common shares, and would likely demand repayment in cash. The Company was not in a position to repay this debt in cash. The Company and the investor agreed to amend the 2012 Debentures, such that the 2012 Debentures will be settled and paid through the issuance of a total of approximately 920 million shares of common stock issuable over the next 12 months, upon the maturity of each portion of the debt, without any further consent required by the investor. The effective conversion price of the issuances is a weighted average price of $0.00092. Under the terms of the underlying 2012 Debentures, the investor may not engage in any conversions of debt to shares including under the amended terms if upon receipt of such shares they would beneficially own an aggregate number of shares greater than 9.99% of the total issued and outstanding common shares of the Company. To date, the Company has paid a total of $55,000 of the amended 2012 Debentures through the issuance of a total of approximately 222 million shares of common stock, leaving $793,500 due and payable through the issuance of an additional approximately 698 million shares of common stock over the next year.
All share quantities and per-share prices discussed in the preceding section are on a pre-split basis, and will be adjusted proportionately with the reverse stock split (downward for share quantities and upwards for per-share prices).
Series A Preferred Shares Amendment and Issuances
Effective August 16, 2012, the Board and a majority of the holders of the Company’s Series A Preferred Stock approved an amendment to the Certificate of Designation for Series A Preferred Stock of the Company to increase the number of authorized preferred shares to 10,000,000, and to modify the terms of the preferred stock to allow the reissuance of previously cancelled shares.
Immediately thereafter, on August 17, 2012, the Company issued a total of 5,120,030 Series A Preferred Shares to four affiliates of the Company (Haig Keledjian, M. Karen Newell-Rogers, Robert Berliner, and Michael Capizzano or entities controlled by them) in exchange for the repurchase of a total of approximately 98 million outstanding common share purchase warrants and options valued at $155,523 using the Black-Scholes option valuation model, and, in the case of Haig Keledjian, a subscription in the amount of $252,000 via cancellation of outstanding debt. The Series A Preferred shares issued in connection with these transactions are convertible into a total of 51,200,300 common shares (pre-reverse split). The Company issued the Series A Preferred shares at a 300% premium to the then-current market value of the effective number of common shares such Preferred Shares were exchangeable into at that time. Thus, the affiliated purchasers paid a total of 4 times the market value of the underlying common shares into which the Preferred Shares are convertible.
Reverse Stock Split
Effective upon the record date of November 26, 2012, or such other date as may be necessary to complete the standard FINRA review process, all shares of common stock issued and outstanding on the record date will be cancelled and exchanged for shares of new common stock at the ratio of 1 new common share for each 600 old common shares. The number of issued and outstanding shares of Series A Preferred Stock will remain unchanged at 9,715,443; however, as a result of the reverse stock split, the number of common shares they are convertible into will be decreased by the 1-for-600 ratio.
In connection with the implementation of the reverse stock split, the Board recommended, and the shareholders approved, a decrease to the authorized capital stock of the Company. The new authorized capital stock of the Company will be 70,000,000 total shares, consisting of 60,000,000 shares of common stock and 10,000,000 shares of Series A Preferred shares. Currently, the authorized capital stock of the Company is 3,250,000,000, consisting of 3,000,000,000 shares of common stock and 250,000,000 shares of Series A Preferred Stock. As of today’s date, there are approximately 2 billion shares of common stock issued and outstanding. Upon the reverse stock split this will be equal to approximately 3.3 million shares.
Information for Viral Genetics Shareholders
Upon the record date, shareholders with Viral Genetics, Inc. shares in brokerage accounts will not need to take any action to receive their new shares, which will be automatically adjusted for the reverse split. Shareholders who hold physical stock certificates can submit them to the Company’s transfer agent for reissuance of new certificates bearing the split-adjusted amount and new name.
Registrar and Transfer Company
About Viral Genetics, Inc. (to be renamed VG Life Sciences, Inc.)
San Marino, California-based Viral Genetics, Inc. discovers and develops drug therapies from two exclusively licensed platform technologies based on over 60 patents: Metabolic Disruption (MDT) and Targeted Peptides (TPT). A physician-initiated Phase I clinical trial of an MDT compound in combination with Nexavar™ on Stage III and IV ovarian cancer patients is ongoing at the Cancer Therapy and Research Center of The University of Texas Health Science Center at San Antonio. A majority-owned subsidiary, VG Energy (www.vgenergy.net), is dedicated to exploring biofuel and agricultural applications for the MDT platform. Founded in 1994, the biotech company is researching treatments for drug-resistant cancer, Lyme disease, Strep, Staph and Sepsis, and HIV/AIDS. For more information, visit www.viralgenetics.com.
About VG Energy
VG Energy, Inc. is an alternative energy and agricultural biotech company that is a majority-owned subsidiary of Viral Genetics, Inc. VG Energy holds the exclusive worldwide license to the Metabolic Disruption Technology (MDT) patent rights for use in the increase of production of various oils from algae, plants and seeds. VG Energy’s pivotal discoveries are expected to facilitate the biofuel industry in overcoming its major obstacle in the area of production efficiency, thereby leading to an increase in production yields that generate economically viable returns on investment, allowing renewable biodiesel to be competitive with fossil fuels. For more information, please visit http://www.vgenergy.net.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS:
This news release contains forward-looking statements that involve risks and uncertainties associated with financial projections, budgets, milestone timelines, clinical development, regulatory approvals and other risks described by Viral Genetics, Inc. from time to time in its periodic reports, including statements about its VG Energy, Inc. subsidiary. None of Viral Genetics’ drug compounds are approved by the US Food and Drug Administration or by any comparable regulatory agencies elsewhere in the world, nor are any non-pharmaceutical products of VG Energy, Inc. commercialized. While Viral Genetics believes that the forward-looking statements and underlying assumptions are reasonable, any of the assumptions could be inaccurate, including, but not limited to, the ability of Viral Genetics to establish the efficacy of any of its drug therapies in the treatment of any disease or health condition, the development of studies and strategies leading to commercialization of those drug compounds in the United States, the obtaining of funding required to carry out the development plan, the completion of studies and tests on time or at all, the successful outcome of such studies or tests, or the successful commercialization of VG Energy, Inc.’s non-pharmaceutical products. Therefore, there can be no assurance that the forward-looking statements included in this release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the forward-looking statements should not be regarded as a representation by Viral Genetics or any other person that the objectives and plans of Viral Genetics will be achieved. Viral Genetics, Inc. disclaims any obligation to update these forward-looking statements, except as required by law.