UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the quarterly period ended |
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from __________ to _________ |
Commission file number:
(Exact name of registrant as specified in its charter) |
| ||
State or Other jurisdiction of Incorporation or Organization |
| I.R.S. Employer Identification No. |
| CH- | |
Address |
| Zip Code |
c/o Mymetics SA Route de la Corniche 4 Epalinges, Switzerland |
| CH-1066 |
Address of Principal Executive Offices |
| Zip Code |
Registrant’s Telephone Number, Including Area Code |
Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
|
| OTC Pink |
Securities registered pursuant to section 12(g) of the act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large-accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
|
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value, was
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MYMETICS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Euros, Except Share and Par Value)
|
| September 30, |
|
| December 31, |
| ||
|
| 2023 |
|
| 2022 |
| ||
|
| (unaudited) |
|
|
| |||
ASSETS |
|
|
|
|
|
| ||
Current Assets |
|
|
|
|
|
| ||
Cash |
| € |
|
| € |
| ||
Accounts receivable |
|
|
|
|
|
| ||
Prepaid expenses |
|
|
|
|
|
| ||
Total current assets |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Rent deposit |
|
|
|
|
|
| ||
Property and equipment, net of accumulated depreciation of € |
|
|
|
|
|
| ||
Right-of-Use Asset |
|
|
|
|
|
| ||
Goodwill |
|
|
|
|
|
| ||
|
| € |
|
| € |
| ||
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
| € |
|
| € |
| ||
Deferred revenue |
|
|
|
|
|
| ||
Operating Lease Liability |
|
|
|
|
|
| ||
Non-convertible notes payable and related accrued interest to related parties |
|
|
|
|
|
| ||
Convertible notes payable and related accrued interest to related parties |
|
|
|
|
|
| ||
Total current liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Long Term Liabilities |
|
|
|
|
|
|
|
|
Debt-Principal Payable to the Federal Financing Bank |
|
|
|
|
|
| ||
Operating lease liability |
|
|
|
|
|
| ||
Total long-term liabilities |
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Commitments and Contingencies (Note 3) |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Shareholders' Deficit |
|
|
|
|
|
|
|
|
Common stock, U.S. $ |
|
|
|
|
|
| ||
Preferred stock, U.S. $ |
|
|
|
|
|
| ||
Additional paid-in capital |
|
|
|
|
|
| ||
Accumulated deficit |
|
| ( | ) |
|
| ( | ) |
Accumulated other comprehensive income |
|
|
|
|
|
| ||
Total shareholders’ deficit |
|
| ( | ) |
|
| ( | ) |
Total liabilities and shareholders’ deficit |
| € |
|
| € |
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
MYMETICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(In Thousands of Euros, Except Per Share Data)
|
| For The Three Months Ended September 30, |
|
| For The Nine Months Ended September 30, |
| ||||||||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2022 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development |
| € |
|
| € |
|
| € |
|
| € |
| ||||
Grants |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
|
|
|
|
|
|
|
|
|
| ||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Goodwill impairment |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other (income) expense |
|
|
|
|
|
|
|
| ( | ) |
|
|
| |||
Loss before income tax provision |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Net Loss |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
|
| ( | ) |
Comprehensive loss |
| € | ( | ) |
| € | ( | ) |
| € | ( | ) |
| € | ( | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and dilutive earnings per share |
| € | ( | ) |
| € | ( | ) |
| € | ( | ) |
| € | ( | ) |
Weighted-average shares outstanding, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
2 |
MYMETICS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
(UNAUDITED)
(In Thousands of Euros)
|
| Three and Nine-month Period Ended September 30, 2022 |
| |||||||||||||||||||||
|
| Common Stock Number of Par |
|
|
|
| Accumulated |
|
| Accumulated Other Comprehensive |
|
|
| |||||||||||
|
| Shares |
|
| Value |
|
| APIC |
|
| deficit |
|
| Income |
|
| Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance at December 31, 2021 |
|
|
|
| E |
|
| E |
|
| E | ( | ) |
| E |
|
| E | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance at March 31, 2022 |
|
|
|
| E |
|
| E | |
|
| E | ( | ) |
| E |
|
| E | ( | ) | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at June 30, 2022 |
|
|
|
| E |
|
| E |
|
| E | ( | ) |
| E |
|
| E | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at September 30, 2022 |
|
|
|
| E |
|
| E |
|
| E | ( | ) |
| E |
|
| E | ( | ) |
|
| Three and nine-month Period Ended September 30, 2023 |
| |||||||||||||||||||||
|
| Common Stock Number of Par |
|
|
|
| Accumulated |
|
| Accumulated Other Comprehensive |
|
|
| |||||||||||
|
| Shares |
|
| Value |
|
| APIC |
|
| deficit |
|
| Income |
|
| Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Balance at December 31, 2022 |
|
|
|
| E |
|
| E |
|
| E | ( | ) |
| E |
|
| E | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Balance at March 31, 2023 |
|
|
|
| E |
|
| E |
|
| E | ( | ) |
| E |
|
| E | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at June 30, 2023 |
|
|
|
| E |
|
| E |
|
| E | ( | ) |
| E |
|
| E | ( | ) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
| - |
|
|
|
|
|
|
|
|
| ( | ) |
|
|
|
|
| ( | ) | |||
Translation adjustment |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| ( | ) |
|
| ( | ) | |||
Balance at September 30, 2023 |
|
|
|
| E |
|
| E |
|
| E | ( | ) |
| E |
|
| E | ( | ) |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3 |
MYMETICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands of Euros)
|
| For The Nine Months Ended |
|
| For The Nine Months Ended |
| ||
|
| September 30, 2023 |
|
| September 30, 2022 |
| ||
Cash Flow from Operating Activities |
|
|
|
|
|
| ||
Net loss |
| € | ( | ) |
| € | ( | ) |
Adjustments to reconcile net loss to net cash used in operating activities |
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
| ||
Goodwill impairment |
|
|
|
|
|
| ||
Gain on sales of equipment |
|
| ( | ) |
|
|
| |
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
Receivables |
|
|
|
|
| ( | ) | |
Accrued interest on convertible notes payable |
|
|
|
|
|
| ||
Accrued interest on non-convertible notes payable |
|
|
|
|
|
| ||
Accounts payable |
|
|
|
|
|
| ||
Other |
|
|
|
|
| ( | ) | |
Net cash used in operating activities |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
|
|
Proceeds from sale of equipment |
|
|
|
|
|
| ||
Purchase of property and equipment |
|
|
|
|
| ( | ) | |
Net cash used in investing activities |
|
|
|
|
| ( | ) | |
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
|
|
Repayments of federal bank loan |
|
| ( | ) |
|
|
| |
Proceeds from issuance of non-convertible notes |
|
|
|
|
|
| ||
Net cash provided by financing activities |
|
|
|
|
|
| ||
|
|
|
|
|
|
|
|
|
Effect on foreign exchange rate on cash |
|
| ( | ) |
|
| ( | ) |
Net change in cash |
|
| ( | ) |
|
| ( | ) |
|
|
|
|
|
|
|
|
|
Cash, beginning of period |
|
|
|
|
|
| ||
Cash, end of period |
| € |
|
| € |
| ||
|
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
|
|
|
|
| ||
Cash paid for taxes |
|
|
|
|
|
|
The accompanying notes are an integral part of these condensed consolidated financial statements.
4 |
MYMETICS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2023
(UNAUDITED)
Note 1. The Company and Summary of Significant Accounting Policies
BASIS OF PRESENTATION AND GOING CONCERN
The amounts in the notes are shown in thousands of EURO, unless otherwise noted, and rounded to the nearest thousand except for share and per share amounts.
The accompanying interim period condensed consolidated financial statements of Mymetics Corporation (the "Company") set forth herein have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such SEC rules and regulations. The interim period condensed consolidated financial statements should be read together with the audited financial statements and the accompanying notes included in the Company's latest annual report on Form 10-K for the fiscal year ended December 31, 2022.
The Company was created for the purpose of engaging in vaccine research and development. Its main research efforts in the beginning have been concentrated in the prevention and treatment of the AIDS virus and malaria. The Company has established a network which enables it to work with education centers, research centers, pharmaceutical laboratories and biotechnology companies. Besides the HIV and malaria vaccine candidates, the Company additionally has generated preclinical data for the following vaccines: Herpes Simplex and Respiratory Syncytial Virus (“RSV”), neither of which is currently being developed. The company also has clinical data for an intranasal influenza vaccine for the elderly which has finished a Phase I clinical trial and is currently on hold. As of September 30, 2023, the Company has generated preclinical data for an intra nasal Covid-19 vaccine and early-stage preclinical data in immunotherapy in the field of oncology, but both programs have been stopped The Company has been collaborating with leading academic institutions, such as Baylor College of Medicine in Texas, the Amsterdam Medical Center (AMC) of the University of Amsterdam in the Netherlands and the University Hospital in Bern, Switzerland until April 2023.
On January 16, 2023, the Board appointed Marcel B. Rüegg to the Board to fill the vacancy created by Mr. Stern’s resignation. Mr. Rüegg was also appointed to the Audit Committee. The Company entered into an independent director agreement with Mr. Rüegg (the “Director Agreement”) setting forth the terms of his compensation. Pursuant to the Director Agreement, Mr. Rüegg is entitled to a fee of CHF 5,000 per quarter, which is payable quarterly, and CHF 350 per hour for each additional hour worked outside of meetings of the Board or attending more than one meeting of the Board per quarter, which is payable quarterly. The Company also agreed to reimburse Mr. Rüegg for pre-approved reasonable business expenses incurred in good faith in connection with the performance of his duties for the Company. The Company also agreed to indemnify, defend and hold harmless Mr. Rüegg, to the fullest extent permitted by law, and as provided by, or granted pursuant to, any charter provision, bylaw provision, agreement, vote of stockholders or disinterested directors or otherwise, subject to certain exceptions based on good faith and reasonableness.
On February 8, 2023, the Company announced that it has been conducting a process to explore strategic alternatives to enhance shareholder value. The Board authorized management and its external advisors to initiate such a process, and it has been considering a broad range of strategic alternatives including a potential sale of part or all of the Company. In connection therewith, the Company, through its external advisors, had requested bids (the “Bid Process”) for any combination of assets (including but not limited to as a going concern), by February 24, 2023, at 5:00 pm ET (the “Bid Deadline”). To the extent the Company determined there were viable bids by or prior to the Bid Deadline, the Company pursued those possible alternatives. To the extent the there were no viable bids provided by or prior to the Bid Deadline, the Company would consider other alternatives, including the winding up of its operations shortly after the Bid Deadline. On February 24, 2023, the Company announced that it was still discussing with counterparties potential bids for any combination of its assets (including but not limited to as a going concern) and had decided to extend the bid process (the “Bid Process”) for an indeterminate period of time. The extension of the Bid Process did not assure the sale of part or all of the Company or other change or outcome. The Company retained McDermott, Will & Emery LLP as legal counsel in connection with the Bid Process.
While the Company pursued these strategic alternatives, due to lack of liquidity, cost reductions for 2023 had been put in place, including the termination of employment agreements for all employees, except Ronald Kempers. On July 26, 2023, the Company decided to winddown its wholly owned subsidiary Bestewil Holding BV (“BH”) and Mymetics BV running the laboratory, which is the wholly owned subsidiary of BH. The Company has been working with the appropriate accountants to ensure this winddown process follows the applicable tax and accounting regulations. The execution of the winddown is expected to take several months to complete and is subject to various risks and uncertainties that could impact on the Company's ability to successfully complete the winddown or the costs associated with the winddown. To the extent that none of the remaining strategic alternatives are viable, we are exploring a possible winddown of the Company. The Board of Directors of the Company continues to evaluate the next steps, in connection with a possible winddown of the Company’s operations. As of the date of this filing, there is no certainty or conclusion on the future of the Company.
5 |
During the fiscal year 2023, the Company has been notified twice by the OTC Markets Group, once on May 12, 2023 and the second time on September 14, 2023, that its bid price had closed below $0.01 for more than 30 consecutive calendar days and no longer met the Standards for Continued Eligibility for OTCQB as per the OTCQB Standards, Section 2.3(2), which states that the Company must “maintain proprietary priced quotations published by a Market Maker in OTC Link with a minimum closing bid price of $.01 per share on at least one of the prior thirty consecutive calendar days.” As per Section 4.1 of the OTCQB Standards, the Company will be granted a cure period of 90 calendar days during which the closing bid price for the Company’s Common Stock must be $.01 or greater for ten consecutive trading days in order to continue trading on the OTCQB marketplace. If this requirement is not met by December 13, 2023, the Company will be removed from the OTCQB marketplace.
On October 16, 2023, the Company was informed by the OTC Markets that the Company’s bid price for the stock closed below $.001 on October 13, 2023, and that in the event that the Company’s closing bid price per share falls below $0.001 at any time for five consecutive trading days, the Company will be removed from OTCQB as per Section 4.1(b) of the OTCQB Standards. On October 23, 2023, the Company was informed that it has been moved from the OTCQB to the OTC Pink on October 24, 2023, as its closing bid price per share has fallen below $0.001 for more than 5 consecutive trading days.
The Company filed an 8-K on October 11, 2023, a Form Pre-14C and Schedule 13E-3, on October 16 and October 17, 2023, respectively, followed by a Form Def-14C and Schedule 13E-3/A on October 27, 2023 in which it announced that following (i) the approval on October 5, 2023 of resolutions by the Company’s Board of Directors (the “Board”) proposing an amendment to the Company’s Certificate of Incorporation (the “ Certificate of Incorporation”) to effect a reverse stock split of the Company’s Common Stock (the “Reverse Stock Split”) and (ii) the receipt of written consents dated October 9, 2023 (the “ Written Consents”), approving such amendment by stockholders holding 51.55% of the voting power of all of the Company’s stockholders entitled to vote (the “Consenting Stockholders”) on the matter as of October 9, 2023 (the “ Record Date”). The resolutions adopted by the Board and the written consents of the stockholders give has provided the Company the authority to file a Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Amendment”). The Certificate of Amendment shall be filed with the Secretary of State of the State of Delaware on or after November 20, 2023 (20 calendar days following the date this Information Statement is first mailed to the Company’s stockholders) and will become effective immediately thereafter (the “Effective Date”). As a result of the Reverse Stock Split, as described in the Form Def-14C, Mymetics stockholders owning fewer than 2,000 shares of Mymetics Common Stock will receive cash in the amount of $0.0023 per share of existing Common Stock, and Mymetics stockholders who own 2,000 or more shares of existing Common Stock on the Effective Date will receive (i) one share of new Common Stock for every 2,000 shares of existing Common Stock held on the Effective Date and (ii) cash in lieu of any fractional share of new Common Stock that such holder would otherwise be entitled to receive on the basis of $0.0023 per share of existing Common Stock.
Although the Reverse Stock Split has been approved by the requisite number of stockholders, the Company’s Board reserves the right, in its discretion, to abandon the Reverse Stock Split prior to the proposed Effective Date if it determines that abandoning the Reverse Stock Split is in the best interests of the Company.
The Reverse Stock Split is being undertaken as part of the Company’s plan to suspend its obligations to file periodic and current reports and other information with the U.S. Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As described further in the Information Statement Form Def-14C, the Company’s Board has determined that the costs of being a public reporting company outweigh the benefits thereof. The actions described herein, including effecting the Reverse Stock Split, terminating the registration of our Common Stock under Section 12(g) of the Exchange Act and suspending of our reporting obligations under Section 15(d) of the Exchange Act, are collectively referred to herein as the “Transaction.” After giving effect to the Transaction, the Company will no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the listing standards of any national securities exchange.
Additionally, the Reverse Stock Split is subject to Financial Industry Regulatory Authority (“FINRA”) approval, of which there are no assurances when and if FINRA will provide such approval.
As previously announced, the Board continues to evaluate the next steps in the Company’s business, in connection with a possible winddown of the Company’s operations.
6 |
These consolidated financial statements have been prepared assuming the Company will continue as a going concern, however the significantly reduced human resource and lack of financial resources has triggered the Company to record a complete Goodwill write-off for the period ending September 30, 2023. The Company has experienced negative cash flows from operations and significant losses since inception resulting in an accumulated deficit of €
LEASES
Effective January 1, 2019, the Company adopted ASC 842, which established a right-of-use ("ROU") model requiring lessees to record a right-of-use ("ROU") asset and lease obligations on the balance sheet for all leases with terms longer than 12 months. The Company determines if an arrangement is a lease at inception. Where an arrangement is a lease, the Company determines if it is an operating lease or a finance lease. At lease commencement, the Company records a lease liability and corresponding right-of-use ("ROU") asset. Lease liabilities represent the present value of our future lease payments over the expected lease term, which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of the Company’s lease liability is determined using its incremental collateralized borrowing rate at lease inception. ROU assets represent its right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than 12 months. Over the lease term (operating leases only), the Company uses the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to consolidated statement of operations in a manner that results in straight line expense recognition. The Company does not apply lease recognition requirements for short-term leases. Instead, the Company recognizes payments related to these arrangements in the consolidated statement of operations as lease costs on a straight-line basis over the lease term.
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENT
In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. Specifically, ASU 2020-06 simplifies accounting for the issuance of convertible instruments by removing major separation models required under current GAAP. In addition, the ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share (EPS) calculation in certain areas. ASU 2020-06 will be effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, beginning in fiscal years which begin after December 15, 2020. The FASB has specified that an entity should adopt the guidance as of the beginning of its annual fiscal year. The Company is currently evaluating the impact of the pending adoption of this new standard on its consolidated financial statements.
FOREIGN CURRENCY TRANSLATION
The Company translates non-Euro assets and liabilities of its subsidiaries at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the period. Unrealized gains or losses from these translations are reported as a separate component of comprehensive income. Transaction gains or losses are included in foreign exchange (gain) loss in the consolidated statements of comprehensive loss. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations. The Company's reporting currency is the Euro because substantially all of the Company's activities are conducted in Europe.
CASH
The Company considers all highly liquid investments purchased with maturities of six months or less to be cash equivalents. Cash deposits are occasionally in excess of insured amounts.
7 |
REVENUE RECOGNITION
Effective January 1, 2018, the Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, using the modified retrospective method and there was no impact to financial position and results of operations as a result of the adoption. This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Overall, adoption of the new standard did not result in an adjustment to amounts previously reported in our consolidated financial statements and there were no other significant changes impacting the timing or measurement of our revenue or our business processes and controls.
The Company has concluded that government grants are not within the scope of Topic 606, as they do not meet the definition of a contract with a “customer”. The Company concluded the definition of a contract with a “customer” was not met as the counterparty to the government grants has not contracted to obtain goods or services and thus the contracts are not considered to have commercial substance. Government grants provide the Company with payments for certain types of expenditures related to research and development activities over a contractually defined period. Revenue from government grants is recognized in the period during which the related costs are incurred, provided that the applicable conditions under the government contracts have been met.
NIH
On April 29, 2019, the National Institutes of Health (“NIH”) awarded the Company and Texas Biomedical Research Institute (“Texas Biomed”) a five-year grant for the project called “Cold Chain-independent, Needle-free Mucosal Virosomal Vaccine to Prevent HIV-1 Acquisition at Mucosal Levels” (“NIH Grant”). The project started on May 1, 2019, and has been planned for five years. It was initially co-led by Texas Biomed, but due to the move of Dr. Ruth Ruprecht, the Co-Principal Investigator, to the University of Louisiana at Lafayette (“ULL”) at the end of 2019, ULL has become the co-lead with Mymetics for this project.
The cost granted under the sub-award with Texas Biomed for the period of (May to December 2019) was US$
The sub-award contracts between ULL and the Company for the period of (January 2020 to April 2021) were signed for a total budget of US$
The sub-award contract between ULL and the Company for the period of (May 2021 to April 2022) was signed for a total budget of US$
The sub-award contract, including the amendment, between ULL and the Company for the period of (May 2022 to April 2023) was signed for a total budget of US$
The sub-award contract between ULL and the Company for the period of (May 2023 to April 2024) was signed for a total budget of US$
Since the beginning of the project to date, the Company has incurred a total cost of US$
8 |
The project had the objective to prepare the Company’s HIV-1 vaccine candidate for clinical trials, by first executing a non-human primate (“NHP”) study, where the test subjects will be receiving Mymetics’ virosome based HIV-1 vaccine candidate by several intra-muscular and intra-nasal applications, followed by rectal challenges. As of September 30, 2023, the Company has successfully produced six sets of virosome based vaccines and the NHPs have received two intramuscular vaccinations and three intranasal vaccinations in two different studies. The vaccinations were well tolerated. The final studies are ongoing. The vaccine candidate is created to induce protective mucosal antibodies acting as a frontline defense against sexual HIV transmission. This grant from the NIH has allowed the Company to continue some of the developments that were achieved during the European Horizon 2020 project.
In February 2022, Mymetics announced the publication of results in Frontiers in Immunology title: “Cooperation between Systemic and Mucosal Antibodies Induced by Virosomal Vaccines Targeting HIV1 Env: Protection of Indian Rhesus Macaques against Mucosal SHIV challenges”.
The Project with ULL under the NIH grant for our HIV vaccine is in its final year that will end on April 30, 2024. Mymetics has provided its commitments to this project by delivering the vaccines, which are tested in non-human primates.
RECEIVABLES
Receivables are stated at their outstanding principal balances. Management reviews the collectability of receivables on a periodic basis and determines the appropriate amount of any allowance. There was no allowance necessary at September 30, 2023 or December 31, 2022. The Company writes off receivables to the allowance when management determines that a receivable is not collectible. The Company may retain a security interest in the products sold.
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost and is depreciated over its estimated useful life on straight-line basis from the date placed in service. Estimated useful lives are usually taken as three years.
IMPAIRMENT OF LONG-LIVED ASSETS
Long-lived assets, which include property and equipment, are assessed for impairment whenever events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. The impairment testing involves comparing the carrying amount to the forecasted undiscounted future cash flows generated by that asset. In the event the carrying value of the assets exceeds the undiscounted future cash flows generated by that asset and the carrying value is not considered recoverable, impairment exists. An impairment loss is measured as the excess of the asset’s carrying value over its fair value, calculated using a discounted future cash flow method. An impairment loss would be recognized in net income (loss) in the period that the impairment occurs.
GOODWILL
Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of a business acquired. The Company typically performs its annual goodwill impairment test effective as of April 1 of each year, unless events or circumstances indicate impairment may have occurred before that time. The Company assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than it’s carrying amount. With the significantly reduced human resources and lack of funds the Company has recorded a complete Goodwill write-off for the nine months period ending September 30, 2023.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred.
TAXES ON INCOME
The Company accounts for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns. In estimating future tax consequences, the Company generally considers all expected future events other than enactments of changes in the tax laws or rates.
9 |
The Company reports a liability, if any, for unrecognized tax benefits resulting from uncertain income tax positions taken or expected to be taken in an income tax return. Estimated interest and penalties, if any, are recorded as a component of interest expense and other expense, respectively.
The Company has not recorded any liabilities for uncertain tax positions or any related interest and penalties at December 31, 2022 or 2021. The Company’s United States tax returns are open to audit for the years ended December 31, 2018 to 2021. The returns for the Swiss subsidiary, Mymetics S.A., are open to audit for the year ended December 31, 2021. The returns for the Netherlands subsidiaries, Bestewil B.V. and Mymetics B.V., are open to audit for the year ended December 31, 2021.
EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income or loss attributable to common shareholders by the weighted average number of common shares outstanding in the period. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive securities. For the periods ended September 30, 2023 and 2022, options and convertible debt were not included in the computation of diluted earnings per share because their effect would be anti-dilutive due to net losses incurred under the treasury stock method.
For the three and nine months ended September 30, 2023, the basic weighted and diluted average number of shares was
For the three and nine months ended September 30, 2022, the basic weighted and diluted average number of shares was
PREFERRED STOCK
The Company has authorized
ESTIMATES
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
FAIR VALUE MEASUREMENTS
Fair value guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include:
| Level 1- | Quoted prices in active markets for identical assets or liabilities. |
| Level 2- | Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| Level 3- | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |
FAIR VALUES OF FINANCIAL INSTRUMENTS
The Company generally has the following financial instruments: cash, receivables, accounts payable, and notes payable. The carrying value of cash, accounts receivable, and accounts payable, approximates their fair value based on the short-term nature of these financial instruments. Management believes the fair value of the note’s payable reflects the actual value reported for these instruments.
CONCENTRATIONS
The Company derived
10 |
RELATED PARTY TRANSACTIONS
Mr. Ernest M. Stern, the Company’s, is a partner in Culhane Meadows PLLC and was outside counsel to the company and a director of the Company until his resignation on December 20, 2022. Culhane Meadows PLLC was the Company’s legal counsel until December 31, 2022. Fees incurred with the law firm was NIL in the nine months ended September 30, 2023, and totaling €10 and €6 for the three months ended September 30, 2022.
On January 16, 2023, the Board appointed Marcel B. Rüegg to the Board to fill the vacancy created by Mr. Stern’s resignation. Mr. Rüegg was also appointed to the Audit Committee. The Company entered into an independent director agreement with Mr. Rüegg (the “Director Agreement”) setting forth the terms of his compensation. Pursuant to the Director Agreement, Mr. Rüegg is entitled to a fee of CHF 5,000 per quarter, which is payable quarterly, and CHF 350 per hour for each additional hour worked outside of meetings of the Board or attending more than one meeting of the Board per quarter, which is payable quarterly. The Company also agreed to reimburse Mr. Rüegg for pre-approved reasonable business expenses incurred in good faith in connection with the performance of his duties for the Company. The Company also agreed to indemnify, defend and hold harmless Mr. Rüegg, to the fullest extent permitted by law, and as provided by, or granted pursuant to, any charter provision, bylaw provision, agreement, vote of stockholders or disinterested directors or otherwise, subject to certain exceptions based on good faith and reasonableness. No fee was paid to Marcel B. Rüegg during the nine months ended September 30, 2023.
Two of the Company’s major shareholders have granted secured convertible notes and short-term convertible notes and promissory notes, which have a total carrying amount of €
Note 2. Debt Financing
Certain principal shareholders have granted the Company secured convertible notes (in accordance with the Uniform Commercial Code in the State of Delaware), short term convertible notes and other short-term notes, which have a total carrying value of €
11 |
The details of the convertible notes and loans are as follows at September 30, 2023:
|
|
|
|
|
| Conversion |
| Fixed Rate |
| |||||||
Lender Price |
| 1st-Issue Date |
|
| Principal Amount |
| Duration (Note) |
| Interest Rate |
| Price (stated) |
| EUR/USD Conversion |
| ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Eardley Holding A.G. (1) |
|
|
| € |
| (2 | ) |
| $ |
| N/A |
| ||||
Anglo Irish Bank S.A.(3) |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2,4 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (2,4 | ) |
| $ |
|
| |||||
Von Meyenburg |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (2 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (5,6 | ) |
| $ |
| N/A |
| ||||
Eardley Holding A.G. |
|
|
| € |
| (5,6 | ) |
| $ |
| N/A |
| ||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Round Enterprises Ltd. |
|
|
| € |
| (6 | ) |
| $ |
|
| |||||
Eardley Holding A.G. |
|
|
| € |
| (7 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (7 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (7 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (7 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (8 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (8 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (8 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (8 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (9 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (9 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (10 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (10 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding AG |
|
|
| € |
| (11 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (11 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding AG |
|
|
| € |
| (12 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (12 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding AG |
|
|
| € |
| (13 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (13 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding AG |
|
|
| € |
| (14 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (14 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (15 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (15 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (16 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (16 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (17 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (17 | ) |
|
| N/A |
| N/A |
| |||
Eardley Holding A.G. |
|
|
| € |
| (18 | ) |
|
| N/A |
| N/A |
| |||
Round Enterprises Ltd. |
|
|
| € |
| (18 | ) |
|
| N/A |
| N/A |
| |||
Total Short Term Principal Amounts |
|
|
|
| € |
|
|
|
|
|
|
|
|
|
| |
Accrued Interest |
|
|
|
| € |
|
|
|
|
|
|
|
|
|
| |
TOTAL LOANS AND NOTES |
|
|
|
| € |
|
|
|
|
|
|
|
|
|
|
12 |
(1) Private investment company of Dr. Thomas Staehelin, member of the Board of Directors and of the Audit Committee of the Company. Face value is stated in U.S. dollars at $
(2) This maturity date is automatically prolonged for periods of three months, unless called for repayment.
(3) Renamed Hyposwiss Private Bank Genève S.A. and acting on behalf of Round Enterprises Ltd. which is a major shareholder.
(4) The loan is secured against 2/3rds of the IP assets of Bestewil Holding BV and against all property of the Company.
(5) The face values of the loans are stated in U.S. dollars at $
(6) This maturity date is automatically prolonged for periods of three months, unless called for repayment. The conversion price per share is determined by the lower of
(7) On March 1, 2017, Round Enterprises Ltd. and Eardley Holding AG each provided two promissory Notes for a total of €
(8) On June 1, 2018, Round Enterprises Ltd. and Eardley Holding AG each provided two promissory Notes for a total of €
(9) On June 15, 2019, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
(10) On December 20, 2019, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
(11) On June 15, 2020, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
(12) On December 15, 2020, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
(13) On August 15, 2021, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
(14) On April 30, 2022, Round Enterprises Ltd. and Eardley Holding AG each provided two promissory Notes for a total of €
(15) On August 15, 2022, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
(16) On December 31, 2022, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
13 |
(17) On February 28, 2023, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
(18) On May 30, 2023, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
On April 2, 2020, the Swiss entity, Mymetics SA, received a federal credit line of Chf
Certain of the secured convertible notes have conversion features that should be bifurcated from the debt and recorded at fair value; however, as of September 30, 2023, and 2022, the probability of the conversion features being exercised was zero. For this reason, the conversion features is not required to be bifurcated from the debt as the fair value is zero at September 30, 2023 and December 31, 2022.
Note 3. Commitments
The facility lease agreement for Epalinges, Switzerland, was terminated with a three-month notice on July 1, 2023, with an effective date negotiated to August 31, 2023. The related rent was paid monthly in the amount of €
The facility lease agreement for Leiden, The Netherlands, was terminated with a six-month notice on March 14, 2023, with an effective date negotiated to September 30, 2023 instead of March 31, 2024. The related rent was paid monthly in the amount of €
ASU 201602 and ASU 201811— Accounting Standards Update (“ASU”) 201602, Leases (“ASU 201602”) required the recognition of right-of-use lease assets relate primarily to the Company’s leases of office and laboratory space. Right-of-use lease assets initially equal the lease liability. The lease liability equals the present value of the minimum rental payments due under the lease discounted at the rate implicit in the lease or the Company’s incremental borrowing rate for similar collateral. For operating leases, lease liabilities were discounted at the Company’s weighted average incremental borrowing rate for similar collateral estimated to be
The Company entered into exclusive negotiations with a third party to sell its assets, although an exclusivity fee had been received and was not refundable, the third party did not enter continue further negotiations for definitive agreements and the Company has no further commitment. The Company received an exclusive fee of €
The net balance of severance payment and related fringe benefit of €
The facility lease agreement for Leiden, The Netherlands, was terminated with a six-month notice on March 14, 2023, with an effective date negotiated to September 30, 2023 instead of
Note 4. Subsequent Events
On October 16, 2023, the Company was informed by the OTC Markets that the Company’s bid price for the stock closed below $
14 |
The Company filed an 8-K on October 11, 2023, a Form Pre-14C and Schedule 13E-3 on October 16 and October 17, 2023, respectively, followed by a Form Def-14C and Schedule 13E-3/A on October 27, 2023 in which it announced (i) the approval on October 5, 2023 of resolutions by the Company’s Board of Directors (the “Board”) proposing an amendment to the Company’s Certificate of Incorporation (the “ Certificate of Incorporation”) to effect a reverse stock split of the Company’s Common Stock (the “Reverse Stock Split”) and (ii) the receipt of written consents dated October 9, 2023 (the “ Written Consents”), approving such amendment by stockholders holding 51.55% of the voting power of all of the Company’s stockholders entitled to vote (the “Consenting Stockholders”) on the matter as of October 9, 2023 (the “ Record Date”). The resolutions adopted by the Board and the written consents of the stockholders give has provided the Company the authority to file a Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Amendment”). The Certificate of Amendment shall be filed with the Secretary of State of the State of Delaware on or after November 20, 2023 (20 calendar days following the date this Information Statement is first mailed to the Company’s stockholders) and will become effective immediately thereafter (the “Effective Date”). As a result of the Reverse Stock Split, as described in the Form Def-14C, Mymetics
Although the Reverse Stock Split has been approved by the requisite number of stockholders, the Company’s Board reserves the right, in its discretion, to abandon the Reverse Stock Split prior to the proposed Effective Date if it determines that abandoning the Reverse Stock Split is in the best interests of the Company.
The Reverse Stock Split is being undertaken as part of the Company’s plan to suspend its obligations to file periodic and current reports and other information with the U.S. Securities and Exchange Commission (the “Commission”) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As described further in the Information Statement Form Def-14C, the Company’s Board has determined that the costs of being a public reporting company outweigh the benefits thereof. The actions described herein, including effecting the Reverse Stock Split, terminating the registration of our Common Stock under Section 12(g) of the Exchange Act and suspending of our reporting obligations under Section 15(d) of the Exchange Act, are collectively referred to herein as the “Transaction.” After giving effect to the Transaction, the Company will no longer be subject to the reporting requirements under the Exchange Act or other requirements applicable to a public company, including requirements under the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the listing standards of any national securities exchange.
Additionally, the Reverse Stock Split is subject to Financial Industry Regulatory Authority (“FINRA”) approval, of which there are no assurances when and if FINRA will provide such approval.
On October 15, 2023, Round Enterprises Ltd. and Eardley Holding AG each provided promissory Notes for a total of €
15 |
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis of the results of operations and financial condition of Mymetics Corporation for the periods ended September 30, 2023 and 2022 should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2022 and related notes and the description of the Company's business and properties included elsewhere herein.
This report contains forward-looking statements that involve risks and uncertainties. The statements contained in this report are not purely historical but are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward-looking statements concern matters that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Words such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue", "probably" or similar words are intended to identify forward looking statements, although not all forward-looking statements contain these words.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date hereof to conform such statements to actual results or to changes in our expectations.
Readers are urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation disclosures made under the captions "Management Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors," "Consolidated Financial Statements" and "Notes to Consolidated Financial Statements" included in our annual report on Form 10-K for the year ended December 31, 2022 and, to the extent included therein, our quarterly reports on Form 10-Q filed during fiscal year 2023.
THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
For the three months ended September 30, 2023 and 2022, revenue was €34 and €130, respectively, which is related to the revenue recognized for the work performed under the NIH grant / HIV project.
Costs and expenses decreased to €415 for the three months ended September 30, 2023 from €529 (-21.6%) for the three months ended September 30, 2022, of which:
| o | Research and development expenses decreased to €60 in the current period from €209 (-71.3%) in the comparative period of 2022, mainly due to significant reduced subcontracting services in relation with the NIH grant / HIV project and reduced scientific staff compared to the expenses incurred during the three-month period ending September 2022. |
|
|
|
| o | General and administrative expenses increased to €355 in the three months ended September 30, 2022 from €320 (10.9%) in the comparative period of 2022, mainly due to legal services incurred during three months ended September 30, 2023, in relation with the restructuring and possible wind down of the Company. |
Interest expense increased to €710 for the three months ended September 30, 2023 from €703 for the three months ended September 30, 2022 related to an increase in existing loans from related parties.
Other (income) expense generated an expense of €23 for the three months ended September 30, 2023, compared to an expense of €243 (-90.5%) for the three months ended September 30, 2022, of which:
| o | Foreign exchange revaluation generated a net loss of €102 and €230 during the three months ended September 30, 2023 and 2022, respectively, which was due to the revaluation of existing US$ based loans from related parties and US$ cash position reflecting the a stronger US$ with respect to the Euro during this three months period in 2023. |
|
|
|
| o | An exclusivity fee of €104 was received in the three months ended September 30, 2023 during negotiations of strategic alternatives. |
16 |
The Company reported a net loss of (€1,114), or (€0.00) per share, for the three months ended September 30, 2023, compared to a net loss of (€1,345), or (€0.00) per share, for the three months ended September 30, 2022.
NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
For the nine months ended September 30, 2023 and 2022, revenue was €414 and €909, respectively, which is related to the revenue recognized for the work performed under the NIH grant / HIV project.
Costs and expenses increased to €2,369 for the nine months ended September 30, 2023 from €2,170 (9.2%) for the nine months ended September 30, 2022, of which:
| o | Research and development expenses decreased to €854 in the current period from €1,191 (-28.3%) in the comparative period of 2022, mainly due to the purchase of “influenza inactivated virus” during the first quarter in 2022 in relation with the NIH grant / HIV project, and €347 severance payments incurred during the nine months ended September 30, 2023, of which, €178 has been paid in June 2023. |
|
|
|
| o | General and administrative expenses increased to €1,515 in the nine months ended September 30, 2023 from €979 (54.7%) in the comparative period of 2022, mainly due the accrual of €329 for severance, and €165 additional legal service incurred during the nine months ended September 30, 2023. |
The Goodwill impairment of €6,671 was recorded for the nine months ended September 30, 2023 compared to €0 for the nine months ended September 30, 2022.
Other (income) expense generated an income of €84 for the nine months ended September 30, 2023 compared to an expense of €541 (-115.5%) for the nine months ended September 30, 2022, of which:
| o | Foreign exchange revaluation generated a net loss of €48 and €496 during the nine months ended September 30, 2023 and 2022, respectively, which is due to the revaluation of existing US$ based loans from related parties and US$ cash position, reflecting the stronger US$ in relation to the Euro. |
|
|
|
| o | An exclusivity fee of €104 was received in the nine months ended September 30, 2023 during negotiations of strategic alternatives. |
|
|
|
| o | An income of €84 on sales of laboratory equipment in Leiden and the office furniture in Epalinges was received during the nine months ended September 2023. The laboratory assets sold for a total of €99 had a residual book value of €17, which generated a net income of €82. The office furniture sold in Epalinges were fully amortized and generated a net income of €2. |
The Company reported a net loss of (€10,660), or (€0.01) per share, for the nine months ended September 30, 2023, compared to a net loss of (€3,898), or (€0.01) per share, for the nine months ended September 30, 2022.
LIQUIDITY AND CAPITAL RESOURCES
We had cash of €62 at September 30, 2023 compared to €313 at December 31, 2022.
During 2022, our revenue has mainly been generated through the NIH grant / HIV project. For 2023, new significant revenues are not expected.
As of September 30, 2023, we had an accumulated deficit of approximately €113 million, and had net loss of €10,660 in the nine-month period ending on that date. We expect to continue to incur net losses in the future.
Net cash used from operating activities increased to €1,417 for the nine-month period ended September 30, 2023, compared to €1,366 for the same period in 2022, mainly due to the receivable related to the NIH grant / HIV project incurred during the nine-month period ended September 30, 2022, and the severance due as of September 30, 2023 of €646.
Net cash provided in investing activities was €94 during the nine -months ended September 30, 2023, due to sales of office equipment in Leiden, and €2 used during the same period in 2022, related to new IT equipment in Epalinges.
17 |
Net cash provided from financing activities €1,086 for the nine -months ended September 30, 2023 and €1,200 for the nine -months ended September 30, 2022, mainly related to new promissory notes from our main investors.
Salaries and related payroll costs represent gross salaries for two executives, our CSO of Mymetics BV and five employees. Under Executive Employment Agreements with our CEO and two CSOs, we paid our executive officers a combined amount of €65 per month.
Our Swiss subsidiary, Mymetics S.A., has, besides the CEO, two additional employees on its payroll: Director of Finance and Head of Manufacturing and Quality, the CSO is terminated as of May 31, 2023. All employees at Mymetics BV are terminated as of June 30, 2023 (the full time Chief Scientific Officer and one full-time technician on June 30, 2023; one full-time technician on May 31, 2023 and one part-time assistant on April 30, 2023).
On February 8, 2023, and subsequently on February 23, 2023, we announced that we initiated a process to explore a range of strategic alternatives to maximize shareholder value and engaged professional advisors, including an investment bank, to support this process. Strategic alternatives include the sale of all or part of the Company, through a merger or reverse merger. As we have been pursuing these strategic alternatives, we put into place cost reductions for 2023, including the termination of employment agreements with 7 of our 8 employees. On July 26, we announced the winddown of the Company’s subsidiary in the Netherlands and are exploring a possible winddown of the Company to the extent that none of the strategic alternatives are viable.
Additional funding requirements during the next 3 to 6 months will be needed. In the past, we have financed our research and development activities primarily through debt and equity financings from various parties, complemented by the grant agreements for our HIV vaccine candidate.
As announced to the extent that none of the remaining strategic alternatives are viable, we are exploring a possible winddown of the Company, and the Board of Directors of the Company continues to evaluate the next steps, in connection with a possible winddown of the Company’s operations. As of the date of this filing, there is no certainty or conclusion on the future of the Company. However, there can be no assurance that the Company will be able to raise additional capital on satisfactory terms, or at all, to finance its remaining operations or sell the Company. In the event that we are not able to obtain such additional capital, we will be required to further restrict or even cease our operations. As discussed in Note 1 to the consolidated financial statements, the Company has experienced recurring losses from operations and negative cash flows from operating activities. These conditions raise substantial doubt about the Company's ability to continue as a going concern.
Monthly fixed and recurring expenses for "Property leases" of €13 represent the monthly lease and maintenance payments to unaffiliated third parties for our offices, of which €4 is related to our executive office located at Route de la Corniche 4, 1066 Epalinges in Switzerland (100 square meters), which have been terminated at the end of August 2023 and €9 related to Bestewil Holding B.V. and its subsidiary Mymetics B.V operating from a similar biotechnology campus near Leiden in the Netherlands, where they occupy 204 square meters, which has been terminated at the of September 2023.
Included in the professional fees are legal fees paid to outside corporate counsel and audit and review fees paid to our independent accountants, and fees paid for investor relations.
Cumulative interest expense of €36,290 has been accrued on all of the Company’s outstanding notes and advances (see detailed table in Note 2 to the financial statements).
RECENT FINANCING ACTIVITIES
During the nine-month period ending September 30, 2023, our principal source of funds has been promissory notes received from our two main investors and the revenue generated through the NIH grant / HIV project.
Management anticipates that our existing capital resources will not be sufficient to fund our cash requirements through the next two months. We have cash presently on hand in conjunction with the collection of receivables, based upon our current levels of expenditure and anticipated needs during this period. For the fourth quarter of 2023, we will need additional funding. We do not know whether additional financing will be available.
OFF-BALANCE SHEET ARRANGEMENTS
None
18 |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
INTEREST RATE RISK
Fluctuations in interest rates may affect the fair value of financial instruments. An increase in market interest rates may increase interest payments and a decrease in market interest rates may decrease interest payments of such financial instruments. We have no debt obligations, which are sensitive to interest rate fluctuations as all our notes payable have fixed interest rates, as specified on the individual loan notes.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer the Company conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures, as defined in Rule 13a−15(e) and 15d15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this report. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer (currently the same person to allow timely decisions regarding required disclosure) concluded as of September 30, 2023, that the Company’s disclosure controls and procedures were not effective because of the material weakness described below.
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting includes policies and procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.
Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of September 30, 2023, based on the criteria established in Internal Control -- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Our management, including the CEO/CFO, does not expect that the Disclosure Controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected.
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions of deterioration in the degree of compliance with policies or procedures.
19 |
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither we, nor our wholly owned subsidiaries, Mymetics S.A. and Bestewil Holding B.V., nor its subsidiary Mymetics B.V., are presently involved in any litigation incident to our business.
ITEM 1A. RISK FACTORS
Not Applicable
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
None.
20 |
ITEM 6. EXHIBITS
EXHIBIT NUMBER |
| DESCRIPTION |
|
|
|
| ||
|
|
|
| Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | |
|
|
|
| Section 1350 Certification of Chief Executive Officer and Chief Financial Officer | |
|
|
|
101.INS |
| Instance Document |
|
|
|
101.SCH |
| XBRL Taxonomy Extension Schema Document |
|
|
|
101.CAL |
| XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
101.LAB |
| XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
101.PRE |
| XBRL Taxonomy Extension Presentation Linkbase Document |
21 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| MYMETICS CORPORATION |
| |
|
|
|
|
Dated: November 20, 2023 | By: | /s/ Ronald Kempers |
|
|
| Chief Executive Officer / Chief Financial Officer |
|
|
| (Principal Executive, Financial and Accounting Officer) |
|
22 |
.