VG Life Sciences Inc. (VGLS)

[jurisper]

Thanks again - that is interesting.

Digging into Viking a bit, it doesn't seem like a scam or an example of gross mismanagement; and it does seem like a Dutchess deal these days isn't necessarily the mark of a total POS, as it used to be.

On the other hand, this is surely still something you only do when there's nothing much else available. These deals aren't "investments" - Dutchess essentially just acts as an agent to immediately sell stock to punters, with profits locked in & not dependent on the share price. The mechanism is totally dependent on liquidity. The higher the trading volumes, the more stock the company can sell to Dutchess.

A POS company taking this kind of deal will pump things up to keep trading volume high, so it can get more $$$ from Dutchess - leading to more dilution & more pressure on the share price; and if punters are dumb enough to keep buying, you're in a classic death-spiral.

A company with reasonable management will use it sparingly in the hope of being able to achieve enough to get profitable, attract a real investor or whatever; which is what Viking did.

Assuming VG does get a registration statement approved and its Dutchess deal does go ahead, will be interesting to see which way it handles things.

It's interesting to look at Viking's documentation for the eventual CONMED deal: http://www.sec.gov/Archives/edgar/data/1065754/000101968712002960/viking_14d9-082412.htm

Think it's pretty clear from this that Viking had reasonable governance but also that it wasn't going anywhere, biz-wise. Falling sales, no sign of profitability. Cantor Fitzgerald did a good job scaring up the CONMED deal, but it was the only one on the table, apart from a dead-end deal with "Party A" which looks like an opportunistic attempt to get control of the IP etc for a small up-front; and another equity credit line with "Party B", I would guess Dutchess again.

The board's reasons for not going with "Party B" are worth looking at:

(i) an equity line of credit would have taken several months to become fully operational such that the Company could access financing; (ii) it was understood that the Company’s ability to raise capital under such arrangement would be directly tied to the liquidity of the Company’s stock and the recent trend of the stock had been one of low trading volumes and decreasing price; and (iii) the Company would need to incur an estimated $30,000 - $40,000 of expenses to register any shares to be sold under an equity line with no guarantee that any significant amount of capital could be raised in a timely way. In addition, there were concerns by the Board that an announcement of an equity line of credit could negatively impact discussions with strategic partners/buyers at this critical time.