MYMETICS CORP - Quarter Report: 2019 March (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For
the quarterly period ended March 31, 2019
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: 000-25132
MYMETICS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE
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25-1741849
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State
or Other jurisdiction of Incorporation or
Organization
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I.R.S.
Employer Identification No.
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c/o Mymetics SA
Route de la Corniche 4
Epalinges, Switzerland
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CH-1066
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Address of Principal Executive Offices
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Zip Code
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011 41 21 653 4535
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Registrant’s Telephone Number, Including Area
Code
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Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report
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Securities registered pursuant to Section 12(b) of the
Act:
Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common
Stock, Par Value $0.01 per share
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MYMX
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OTCQB
venture stage marketplace
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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.
Yes ☒ No
☐
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). Yes ☒
No ☐
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.
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☒
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Emerging growth company ☐
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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 ☐
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Act). Yes
☐
No ☒
APPLICABLE
ONLY TO CORPORATE ISSUERS
The
number of shares outstanding of the Registrant’s Common
Stock, $0.01 par value, was 303,757,622 as of May 15,
2019
PART
I. FINANCIAL
INFORMATION
ITEM 1. FINANCIAL
STATEMENTS
MYMETICS CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Thousands of Euros, Except Share and Per Share
Amounts)
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March 31,
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December 31,
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2019
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2018
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|
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ASSETS
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Current
Assets
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Cash
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E475
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E479
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Receivables
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48
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585
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Prepaid
expenses
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44
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37
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Total
current assets
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567
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1,101
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Property
and equipment, net of accumulated depreciation of E439 at March 31,
2019 and E434 at December 31, 2018
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31
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36
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Goodwill
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6,671
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6,671
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E7,269
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E7,808
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LIABILITIES
AND SHAREHOLDERS' EQUITY (DEFICIT)
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Current
Liabilities
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Accounts
payable
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E36
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E75
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Non-convertible
notes payable and related accrued interest to related
parties
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4,026
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4,002
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Convertible
notes payable and related accrued interest to related
parties
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51,453
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50,756
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Total
liabilities
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55,515
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54,833
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Shareholders'
Equity (Deficit)
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Common
stock, U.S. $0.01 par value; 1,000,000,000 shares authorized;
issued and outstanding 303,757,622 at March 31, 2019 and at
December 31, 2018
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2,530
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2,530
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Preferred
stock, U.S. $0.01 par value; 5,000,000 shares authorized; none
issued or outstanding
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--
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--
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Additional
paid-in capital
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34,443
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34,441
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Accumulated
deficit
|
(85,903)
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(84,675)
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Accumulated
other comprehensive income
|
684
|
679
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|
(48,246)
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(47,025)
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E7,269
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E7,808
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The accompanying notes are an integral part of these consolidated
financial statements.
3
MYMETICS
CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
(In Thousands of Euros, Except Per Share Data)
|
For The
Three Months Ended
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For The
Three Months Ended
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March
31,
2019
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March
31,
2018
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Revenue
|
|
|
Research
and Development services
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E--
|
E--
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Grants
revenue
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--
|
297
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|
--
|
297
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Expenses
|
|
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Research
and development
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215
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308
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General
and administrative
|
278
|
277
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Bank
fees
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1
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--
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Depreciation
|
5
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8
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Directors'
fees
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5
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5
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Foreign
exchange (gain) loss
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55
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(65)
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559
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533
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Operating
Loss
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(559)
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(236)
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|
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Interest
expense
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666
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653
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Loss
before income tax provision
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(1,225)
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(889)
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Income
tax provision
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(3)
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(9)
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Net
Loss
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(1,228)
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(898)
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Other
comprehensive income (loss)
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Foreign
currency translation adjustment
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5
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(1)
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Comprehensive
loss
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E(1,223)
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E(899)
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Basic
and diluted earnings per share
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E(0.00)
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E(0.00)
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The accompanying notes are an integral part of these consolidated
financial statements.
4
MYMETICS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DEFICIT)
(UNAUDITED)
(In Thousands of Euros)
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Three-month Period
Ended March 31, 2018
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||||
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Common
Stock
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Additional Paid in
Capital
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Accumulated
Deficit
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Accumulated Other
Comprehensive Income
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Total
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January 1,
2018
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E2,530
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E34,428
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E(80,503)
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E667
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E(42,878)
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Stock compensation
expense
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6
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6
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Net
loss
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(898)
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(898)
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Other comprehensive
loss:
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Translationadjustment
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(1)
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(1)
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March 31,
2018
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E2,530
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E34,434
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E(81,401)
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E666
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E(43,771)
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Three-month Period
Ended March 31, 2019
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||||
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Common
Stock
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Additional Paid in
Capital
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Accumulated
Deficit
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Accumulated Other
Comprehensive Income
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Total
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January 1,
2019
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E2,530
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E34,441
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E(84,675)
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E679
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E(47,025)
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Stock compensation
expense
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2
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|
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2
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Net
loss
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|
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(1,228)
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(1,228)
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Other comprehensive
loss:
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|
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Translationadjustment
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5
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5
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March 31,
2019
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E2,530
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E34,443
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E(85,903)
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E684
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E(48,246)
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The accompanying notes are an integral part of these consolidated
financial statements.
5
MYMETICS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In Thousands of Euros)
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For The
Three Months Ended
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For The
Three Months Ended
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March
31,
2019
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March
31,
2018
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Cash Flow from Operating Activities
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|
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Net
Loss
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E(1,228)
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E(898)
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Adjustments
to reconcile net loss to net cash used in operating
activities
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|
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Depreciation
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5
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8
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Stock
compensation expense – options
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2
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6
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Changes
in operating assets and liabilities
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|
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Receivables
|
537
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33
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Accrued
interests on notes payable
|
721
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586
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Accounts
payable
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(39)
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(166)
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Deferred
revenue from grants
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--
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(189)
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Other
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(7)
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(14)
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Net
cash used in operating activities
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(9)
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(634)
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|
|
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Effect
on foreign exchange rate on cash
|
5
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(1)
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Net
change in cash
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(4)
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(635)
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|
|
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Cash,
beginning of period
|
479
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1,180
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Cash,
end of period
|
E475
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E545
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The accompanying notes are an integral part of these consolidated
financial statements.
6
MYMETICS
CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2019
(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 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 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, 2018.
The
accompanying financial statements of the Company are unaudited.
However, in the opinion of the Company, the unaudited consolidated
financial statements contained herein contain all adjustments
necessary to present a fair statement of the results of the interim
periods presented. All adjustments made during the three-month
period ending March 31, 2019 were of a normal and recurring
nature.
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 under development, the
Company additionally has the following vaccines in its pipeline;
(i) Herpes Simplex which is at the pre-clinical stage and currently
on hold, (ii) influenza for elderly which has finished a clinical
trial Phase I, (iii) Respiratory Syncytial Virus (RSV) which is at
the pre-clinical stage and currently on hold and (iv) Chikungunya
virus at the discovery stage and currently on hold.
As of March 31, 2019, the Company was engaged in the
pre-clinical testing of some of its vaccine candidates and a
commercially viable product is not expected for several more years.
However, the Company generated some revenue as of the prior quarter
through license, collaboration and grant agreements. The Company is
working on several research projects with commercial partners for
immunotherapy in the fields of allergy and oncology. The allergy
project is in collaboration with Anergis SA, for which the Company
prepared virosome based vaccines which include Anergis peptides for
treating birch pollen allergy. These formulations were tested in
preclinical studies and compared to the Anergis earlier
formulations. The success criteria were met and Anergis has now a
time limited exclusive option to enter into a License and
Collaboration Agreement (“LCA”) with Mymetics for the
use of virosomes in the field of allergies that will require it to
raise funds from third parties to pay Mymetics the license fee
under the terms of the LCA and the clinical development, and there
is no certainty that Anergis will be able to do so. The Company
also finished the grant funded project in the field of HIV from the
EU Horizon 2020 and Switzerland SERI which focused on developing
thermostable and cold chain independent virosome based vaccines
(MACIVIVA project). This project ended on November 3, 2018.
Management believes that the Company’s research and
development activities will result in valuable intellectual
property that can generate significant revenues in the future
through licensing. Vaccines are one of the fastest growing markets
in the pharmaceutical industry.
These
consolidated financial statements have been prepared assuming the
Company will continue as a going concern. The Company has
experienced negative cash flows from operations and significant
losses since inception resulting in an accumulated deficit of
E85,903 at March 31, 2019. Further, the Company’s current
liabilities exceed its current assets by E54,948 as of March 31,
2019, and there is no assurance that cash will become available to
pay current liabilities in the near term. Management is seeking
additional financing but there can be no assurance that management
will be successful in any of those efforts. These conditions raise
substantial doubt about our ability to continue as a going concern
within one year from the issuance of the financial
statements.
7
PRINCIPLES OF CONSOLIDATION
The
consolidated financial statements include the accounts of the
Company and its subsidiaries. Significant intercompany accounts and
transactions have been eliminated.
NEW ACCOUNTING PRONOUNCEMENT
In February 2016, the Financial Accounting Standards
Board (FASB) issued Accounting Standards Update No. 2016-02,
Leases: Topic 842 (ASU 2016-02), which replaces existing lease
guidance. The new standard is intended to provide enhanced
transparency and comparability by requiring lessees to record
right-of-use (ROU) assets and corresponding lease liabilities on
the balance sheet. The new standard initially required application
with a modified retrospective approach to each prior reporting
period presented with various optional practical expedients. In
July 2018, this requirement was amended with the issuance of
Accounting Standards Update No. 2018-11, Leases: Topic 842:
Targeted Improvements (ASU 2018-11), which permits an additional
(and optional) transition method to adopt the new leases
standard.
The Company adopted ASU 2016-02 and related ASUs,
collectively ASC 842, on January 1, 2019 using the optional
transition method. Consequently, periods before January 1, 2019
will continue to be reported in accordance with the prior
accounting guidance, ASC 840, Leases.
The Company elected the package of practical
expedients, which permits the Company to retain prior conclusions
about lease identification, lease classification and initial direct
costs for leases that commenced before January 1, 2019. The new
standard also provides practical expedients for an entity’s
ongoing accounting. The Company elected the short-term lease
recognition exemption for all leases that qualify. The Company also
elected the practical expedient to combine lease and non-lease
components for all of its leases. Adoption of ASC 842 did not
affect the Company’s consolidated financial statements’
at January 1, 2019, as one of its leases is considered short-term
and the other is not material to the 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
general and administrative expenses 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
We consider all highly liquid investments purchased with maturities
of three months or less to be cash equivalents. Cash deposits are
occasionally in excess of insured amounts.
REVENUE RECOGNITION
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. We only
apply 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, we assess the goods or services promised within each
contract and determine those that are performance obligations, and
assess whether each promised good or service is distinct. We then
recognize as revenue the amount of the transaction price that is
allocated to the respective performance obligation when (or as) the
performance obligation is satisfied.
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”. We 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.
8
Grant Revenue - HORIZON 2020
In
April 2015, the Company was selected to receive project grants with
a total of E8.4 million. A total of E5.3 million would be funded as
part of Horizon 2020, the European Union research and innovation
framework program and up to E3.1 million of funding would be
provided by the Swiss State “Secretariat for Education,
Research and Innovation” (SERI) for the Swiss based
consortium partners. The grant funded the evaluation, development
and manufacturing scale-up of thermo-stable and cold-chain
independent nano-pharmaceutical virosome-based vaccine candidates.
Of the total amount, E3.8 million was directly attributable to
Mymetics’ activities, with the remaining balance going to the
consortium partners and has not been part of Mymetics financial
statements. The project started on May 4, 2015 and officially ended
on November 3, 2018, after which a final report had been prepared,
presented and submitted to the EU for a total costs declared of
E8,262 for the total project and E3,673 for Mymetics.
The amounts mentioned in the following
statements are purely related to Mymetics and not to the other
partners in the project: The Company received a pre-payment from
the two granting organizations for a total value of E1,554 in May
2015, a second tranche of E917 from the EU was received in December
2016, and E614 from “SERI” was received in April 2017,
which was used to finance the next reporting covering the period of
November 2016 to October 2017. In November 2017, the Company
submitted the second report and a new funding request, which
resulted in another tranche of funding from the EU of E77 received
in February 2018. This brought the total funding received at
December 31, 2018 to E3,162, which represented 82% of the awarded
grant contribution. On December 21, 2018, the final report was
submitted to the EU with a total cost incurred by the Company of
E3,673, which represented 96% of the maximum grant. The report has
been audited and validated by the EU and SERI for a total eligible
cost of E3,368. As a result, the Company received a final amount of
E164 by the EU in February 2019 and E342 by SERI in March
2019. No
revenue has been recognized related to this grant during the period
ended March 31, 2019.
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 March 31, 2019 or December 31, 2018. 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 its carrying amount. After
assessing qualitative factors, the Company determined that no
further testing was necessary. If further testing was necessary,
the Company would determine the fair value of each reporting unit,
and compare the fair value to the reporting unit’s carrying
amount. The Company has one reporting unit.
RESEARCH AND DEVELOPMENT
Research
and development costs are expensed as incurred.
9
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.
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 March 31, 2019
or December 31, 2018. The Company’s United States tax returns
are open to audit for the years ended December 31, 2015 to 2018.
The returns for the Swiss subsidiary, Mymetics S.A., are open to
audit for the year ended December 31, 2018. The returns for the
Netherlands subsidiaries, Bestewil B.V. and Mymetics B.V., are open
to audit for the year ended December 31, 2018.
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 quarters ended March 31,
2019 and 2018, 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 months ended March 31, 2019, the basic weighted average
number of shares was 303,757,622. The total potential number of
shares issuable of 668,933,362 at March 31, 2019 includes
639,833,362 potential issuable shares related to convertible loans
and 29,100,000 potential issuable shares related to outstanding not
expired options granted to employees.
For
the three months ended March 31, 2018, the basic weighted average
number of shares was 303,757,622. The total potential number of
shares issuable of 632,333,684 at March 31, 2018 includes
603,233,684 potential issuable shares related to convertible loans
and 29,100,000 potential issuable shares related to outstanding not
expired options granted to employees.
PREFERRED STOCK
The
Company has authorized 5,000,000 shares of preferred stock that may
be issued in several series with varying dividend, conversion and
voting rights. No preferred shares are issued or outstanding at
March 31, 2019 or December 31, 2018.
STOCK-BASED COMPENSATION
Compensation cost for all share-based payments is based
on the estimated grant-date fair value. The Company amortizes stock
compensation cost ratably over the requisite service
period.
The
issuance of common shares for services is recorded at the quoted
price of the shares on the date the shares are issued. No shares
were issued to individuals as fee for services rendered in the
three months ended March 31, 2019 nor in the three months ended
March 31, 2018.
Stock
compensation expense amounted to E2 and E6 during the three months
periods ended March 31, 2019 and 2018, respectively, and is
included in the consolidated statements of comprehensive loss
within general and administrative expenses.
10
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, receivables and accounts payable, approximates their
fair value based on the short-term nature of these financial
instruments. Management believes that it is not practicable to
estimate the fair value of the notes payable due to the unique
nature of these instruments.
CONCENTRATIONS
The Company derived 100% of grant revenue for the three
month period ended March 31, 2018 from one partner.
RELATED PARTY TRANSACTIONS
Mr. Ernest M. Stern, the Company’s outside
U.S. counsel, is both a director of the Company and is a partner in
Culhane Meadows PLLC, the firm retained as legal counsel by the
Company. The Company incurred professional fees to the
counsel's law firm totaling E8 and E6 for the three months ended
March 31, 2019 and 2018, respectively.
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 E55,085, including
interest due to date. Conversion prices on the Euro-denominated
convertible debt have been fixed to a fixed Euro/US dollar exchange
rate.
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 E55,479 including
interest due to date. Interest incurred on these notes since
inception has been added to the principal amounts.
11
The details of the convertible notes and loans are as follows at
March 31, 2019:
|
|
|
|
|
|
Fixed
|
|
|
|
|
|
Conversion
|
Rate
|
Lender
|
1st-Issue
|
Principal
|
Duration
|
Interest
|
Price
|
EUR/USD
|
Price
|
Date
|
Amount
|
(Note)
|
Rate
|
(stated)
|
Conversion
|
|
|
|
|
|
|
|
Eardley
Holding A.G. (1)
|
06/23/2006
|
E169
|
(2)
|
10%
pa
|
$0.10
|
N/A
|
Anglo
Irish Bank S.A.(3)
|
10/21/2007
|
E500
|
(2)
|
10%
pa
|
$0.50
|
1.4090
|
Round
Enterprises Ltd.
|
12/10/2007
|
E1,500
|
(2)
|
10%
pa
|
$0.50
|
1.4429
|
Round
Enterprises Ltd.
|
01/22/2008
|
E1,500
|
(2)
|
10%
pa
|
$0.50
|
1.4629
|
Round
Enterprises Ltd.
|
04/25/2008
|
E2,000
|
(2)
|
10%
pa
|
$0.50
|
1.5889
|
Round
Enterprises Ltd.
|
06/30/2008
|
E1,500
|
(2)
|
10%
pa
|
$0.50
|
1.5380
|
Round
Enterprises Ltd.
|
11/18/2008
|
E1,200
|
(2)
|
10%
pa
|
$0.50
|
1.2650
|
Round
Enterprises Ltd.
|
02/09/2009
|
E1,500
|
(2)
|
10%
pa
|
$0.50
|
1.2940
|
Round
Enterprises Ltd.
|
06/15/2009
|
E5,500
|
(2,4)
|
10%
pa
|
$0.80
|
1.4045
|
Eardley
Holding A.G.
|
06/15/2009
|
E100
|
(2,4)
|
10%
pa
|
$0.80
|
1.4300
|
Von
Meyenburg
|
08/03/2009
|
E200
|
(2)
|
10%
pa
|
$0.80
|
1.4400
|
Round
Enterprises Ltd.
|
10/13/2009
|
E2,000
|
(2)
|
5%
pa
|
$0.25
|
1.4854
|
Round
Enterprises Ltd.
|
12/18/2009
|
E2,200
|
(2)
|
5%
pa
|
$0.25
|
1.4338
|
Round
Enterprises Ltd.
|
08/04/2011
|
E1,070
|
(5,6)
|
10%
pa
|
$0.034
|
N/A
|
Eardley
Holding A.G.
|
08/04/2011
|
E268
|
(5,6)
|
10%
pa
|
$0.034
|
N/A
|
Round
Enterprises Ltd.
|
11/08/2011
|
E400
|
(6)
|
10%
pa
|
$0.034
|
1.3787
|
Eardley
Holding A.G.
|
11/08/2011
|
E100
|
(6)
|
10%
pa
|
$0.034
|
1.3787
|
Round
Enterprises Ltd.
|
02/10/2012
|
E1,000
|
(6)
|
10%
pa
|
$0.034
|
1.3260
|
Eardley
Holding A.G.
|
02/14/2012
|
E200
|
(6)
|
10%
pa
|
$0.034
|
1.3260
|
Round
Enterprises Ltd.
|
04/19/2012
|
E322
|
(6)
|
10%
pa
|
$0.034
|
1.3100
|
Eardley
Holding A.G.
|
04/19/2012
|
E80
|
(6)
|
10%
pa
|
$0.034
|
1.3100
|
Round
Enterprises Ltd.
|
05/04/2012
|
E480
|
(6)
|
10%
pa
|
$0.034
|
1.3152
|
Eardley
Holding A.G.
|
05/04/2012
|
E120
|
(6)
|
10%
pa
|
$0.034
|
1.3152
|
Round
Enterprises Ltd.
|
09/03/2012
|
E200
|
(6)
|
10%
pa
|
$0.034
|
1.2576
|
Eardley
Holding A.G.
|
09/03/2012
|
E50
|
(6)
|
10%
pa
|
$0.034
|
1.2576
|
Round
Enterprises Ltd.
|
11/14/2012
|
E500
|
(6)
|
10%
pa
|
$0.034
|
1.2718
|
Eardley
Holding A.G.
|
12/06/2012
|
E125
|
(6)
|
10%
pa
|
$0.034
|
1.3070
|
Round
Enterprises Ltd.
|
01/16/2013
|
E240
|
(6)
|
10%
pa
|
$0.034
|
1.3318
|
Eardley
Holding A.G.
|
01/16/2013
|
E60
|
(6)
|
10%
pa
|
$0.034
|
1.3318
|
Round
Enterprises Ltd.
|
03/25/2013
|
E400
|
(6)
|
10%
pa
|
$0.037
|
1.2915
|
Eardley
Holding A.G.
|
04/14/2013
|
E150
|
(6)
|
10%
pa
|
$0.034
|
1.3056
|
Round
Enterprises Ltd.
|
04/14/2013
|
E600
|
(6)
|
10%
pa
|
$0.034
|
1.3056
|
Eardley
Holding A.G.
|
05/15/2013
|
E170
|
(6)
|
10%
pa
|
$0.037
|
1.2938
|
Round
Enterprises Ltd.
|
05/15/2013
|
E680
|
(6)
|
10%
pa
|
$0.037
|
1.2938
|
Eardley
Holding A.G.
|
06/24/2013
|
E60
|
(6)
|
10%
pa
|
$0.025
|
1.3340
|
Round
Enterprises Ltd.
|
06/24/2013
|
E240
|
(6)
|
10%
pa
|
$0.025
|
1.3340
|
Eardley
Holding A.G.
|
08/05/2013
|
E80
|
(6)
|
10%
pa
|
$0.018
|
1.3283
|
Round
Enterprises Ltd.
|
08/05/2013
|
E320
|
(6)
|
10%
pa
|
$0.018
|
1.3283
|
Eardley
Holding A.G.
|
03/01/2017
|
E230
|
(2)
|
2.5%
pa
|
N/A
|
N/A
|
Round
Enterprises Ltd.
|
03/01/2017
|
E920
|
(2)
|
2.5%
pa
|
N/A
|
N/A
|
Eardley
Holding A.G.
|
10/18/2017
|
E230
|
(2)
|
2.5%
pa
|
N/A
|
N/A
|
Round
Enterprises Ltd.
|
10/18/2017
|
E920
|
(2)
|
2.5%
pa
|
N/A
|
N/A
|
Eardley
Holding A.G.
|
06/01/2018
|
E160
|
(7)
|
2.5%
pa
|
N/A
|
N/A
|
Round
Enterprises Ltd.
|
06/01/2018
|
E640
|
(7)
|
2.5%
pa
|
N/A
|
N/A
|
Eardley
Holding A.G.
|
11/10/2018
|
E160
|
(7)
|
2.5%
pa
|
N/A
|
N/A
|
Round
Enterprises Ltd.
|
11/10/2018
|
E640
|
(7)
|
2.5%
pa
|
N/A
|
N/A
|
Total
Short Term Principal Amounts
|
|
E31,684
|
|
|
|
|
Accrued
Interest
|
|
E23,795
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LOANS AND NOTES
|
|
E55,479
|
|
|
|
|
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 $190.
(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
$1,200 and $300, respectively.
(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 (i) reducing
by 10% the price per share of the Company’s common stock paid
by the investors
in connection with an investment in the Company
of not less than US$20,000, or (ii) at the stated conversion price
using a fixed
exchange rate which are noted in the table
above.
(7)
On June 1, 2018, Round Enterprises Ltd. and Eardley Holding AG each
provided two promissory Notes for a total of E1,280 and E320 in two
tranches, respectively, with a 2.5% interest per annum. The first
tranche of the promissory Notes of E640 and E160, respectively,
were provided immediately. The second tranche of the promissory
notes of E640 and E160, respectively, were provided on November 10,
2018 with a 2.5% interest per annum. The maturity date of these
promissory notes to follow the same principle of other convertible
loans and is the later of (i) June 30, 2019, or (ii) the end of a
subsequent calendar quarter in which the Company receives a written
request from the lender for repayment of the unpaid principal and
accrued interest due under the Notes.
Note 3. Subsequent Events
On April 29, 2019, Mymetics announced that the National Institutes
of Health (NIH) has awarded Mymetics 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”.
The project starts on May 1, 2019 and is planned for five years.
The overall budget related to the project is USD 8.67 million, with
USD 1.9 million approved for the first year. The overall portion of
the grant allocated to the Company is USD 6.76 million, with USD
1.2 million approved for the first year. It is co-led by Dr.
Ruprecht of the Texas Biomedical Research Institute and Dr. Fleury,
Mymetics CSO, and includes sub-awards to Dr. François
Villinger of the University of Louisiana at Lafayette, and Dr.
Sarah Ratcliffe of the University of Virginia. First results are
expected to be reported in 2020.
The project has the objective to prepare Mymetics’ promising
HIV-1 vaccine candidate for clinical trials. The vaccine is created
to induce protective mucosal antibodies acting as a frontline
defense against sexual HIV transmission. This newly awarded grant
from the NIH can continue some of the developments that were
achieved during the European Horizon 2020 project.
Note 4. Leases
The facility lease agreement for Epalinges, Switzerland, is
automatically renewed month by month with a notice period of three
months. The related rent is paid monthly in the amount of E4 and is
considered a short-term lease. The facility lease agreement for
Leiden, The Netherlands, runs until March 31, 2020 and can be
terminated with a six months' notice period. The related rent is
paid monthly in the amount of E9. This lease is not considered
short-term, however, the effect of recording the right to use asset
and related liability are not material to the consolidated
financial statements. The Company doesn't have any other operating
lease for its research and development facilities, corporate
headquarter, offices and equipment.
13
GENERAL
The
following discussion and analysis of the results of operations and
financial condition of Mymetics Corporation for the periods ended
March 31, 2019 and 2018 should be read in conjunction with the
Company's audited consolidated financial statements for the year
ended December 31, 2018 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, 2018 and, to the extent
included therein, our quarterly reports on Form 10-Q filed during
fiscal year 2018.
THREE MONTHS ENDED MARCH 31, 2019 AND 2018
For
the three months ended March 31, 2019, no revenue was earned.
Revenue was E297 for the three months ended March 31, 2018, mainly
related to the revenue recognized for the work performed under the
Horizon 2020 grants.
Costs
and expenses increased to E559 for the three months ended March 31,
2019 from E533 (+4.8%) for the three months ended March 31, 2018.
While R&D expenses were lower as the Maciviva project ended,
there was an increase mainly due to the foreign exchange loss from
the revaluation of shareholders’ loans based in
US$.
Research
and development expenses decreased to E215 in the current period
from E308 (-30.2%) in the comparative period of 2018, mainly due to
E85 of subcontracting services paid during the three month period
ending March 2018 in relation with the Horizon 2020 Maciviva
project. During the three months ended March 31, 2019, no R&D
expenses have been incurred related to the Horizon 2020 Maciviva
project as the projected ended in November 2018.
General
and administrative expenses of E278 in the three months ended March
31, 2019 are comparable with E277 incurred in the comparative
period of 2018.
Foreign
exchange (gain) loss increased to E55 for the three months ended
March 31, 2019 from (E65) (+184.6%) for the three months ended
March 31, 2018, mainly due to the foreign exchange revaluation
impact of shareholders’ loans based in US$.
Interest
expense increased to E666 for the three months ended March 31, 2019
from E653 for the three months ended March 31, 2018 related to
existing loans from third party investors.
The
Company reported a net loss of (E1,228), or (E0.00) per share, for
the three months ended March 31, 2019, compared to a net loss of
(E898), or (E0.00) per share, for the three months ended March 31,
2018.
14
LIQUIDITY AND CAPITAL RESOURCES
We
had cash of E475 at March 31, 2019 compared to E479 at December 31,
2018.
During 2018 our revenue has been generated through the
Horizon 2020 project, which has now come to an end. For 2019, new
significant revenues will not be expected, unless and until a major
licensing agreement or other commercial arrangement is entered into
with respect to our technology or new grant financings are
awarded.
As
of March 31, 2019, we had an accumulated deficit of approximately
E86 million, and had net loss of E1,228 in the three month period
ending on that date. We expect to continue to incur net losses
in the future for research, development and activities related to
the future licensing of our technologies, and because of the
accrual of interest payable on existing loans.
Net
cash used from operating activities was E9 for the three month
period ended March 31, 2019. During the three month period ending
March 31, 2018 net cash used from operating activities was E634
mainly due to the subcontracting services paid during the three
month period ending March 31, 2018 and final funding amount
received during the three month period ending March 31, 2019, both
related to the Maciviva project.
Net
cash used from investing activities was NIL during the three months
ended March 31, 2019 and 2018.
Net
cash provided from financing activities is NIL for the three months
ended March 31, 2019 and 2018.
Salaries and related payroll costs represent gross
salaries for two executives, our CSO of Mymetics BV and seven
employees. Under Executive Employment Agreements with our
CEO and two CSOs, we pay our executive officers a combined amount
of E65 per month.
Our
Swiss subsidiary, Mymetics S.A., has, besides the CEO and CSO, two
additional employees on its payroll: Director of Finance and Head
of Manufacturing and Quality. Mymetics BV has, besides the full
time Chief Scientific Officer, three full-time technicians and one
part-time assistant.
We
intend to continue to incur additional expenditures during the next
nine months for additional research and development of our HIV,
Influenza vaccines and immunotherapy projects, which we will try to
seek through collaborations with pharmaceutical companies or with
not-for-profit organizations. These expenditures will relate to the
continued research and testing of these prototype vaccines and are
included in the monthly cash outflow described above.
In
the past, we have financed our research and development activities
primarily through debt and equity financings from various parties
and through license and collaboration agreements and grant
agreements.
We
anticipate that our normal operations will require approximately
E1,200 of cash in the year ending December 31, 2019. We will seek
to raise the required capital from equity or debt financings, and
grants through donors and potential partnerships with major
international pharmaceutical and biotechnology firms. However,
there can be no assurance that we will be able to raise additional
capital on satisfactory terms, or at all, to finance our
operations. 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.
Monthly
fixed and recurring expenses for "Property leases" of E13 represent
the monthly lease and maintenance payments to unaffiliated third
parties for our offices, of which E4 is related to our executive
office located at Route de la Corniche 4, 1066 Epalinges in
Switzerland (100 square meters), and E9 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.
Included
in 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 E23,795 has been accrued on all of the
Company’s outstanding notes and advances (see detailed table
in Note 2 to the financial statements).
15
RECENT FINANCING ACTIVITIES
During the three month period ending March 31, 2019,
our principal source of funds has been promissory notes received in
a prior quarter from our two main investors and the final payment
for the Maciviva project.
We have filed or are in the process of filing several
new grant applications with U.S. and European institutions in
relation to our virosome based vaccines.
We anticipate using our current funds and those we
receive in the future both to meet our working capital needs and
for funding the ongoing vaccines pre-clinical research costs for
new virosome vaccine.
Management anticipates that our existing capital
resources will be sufficient to fund our cash requirements through
the next five months. We have cash presently on hand in conjunction
with the collection of receivables, based upon our current levels
of expenditures and anticipated needs during this period. For 2019,
we will need additional funding through future collaborative
arrangements, licensing arrangements, and debt and equity
financings under Regulation D and Regulation S under the Securities
Act of 1933. We do not know whether additional financing will be
available on commercially acceptable terms when
needed.
If management cannot raise funds on acceptable terms
when needed, we may not be able to successfully commercialize our
technologies, take advantage of future opportunities, or respond to
unanticipated requirements. If unable to secure such additional
financing when needed, we will have to curtail or suspend all or a
portion of our business activities and could be required to cease
operations entirely. Further, if new equity securities are issued,
our shareholders may experience severe dilution of their ownership
percentage.
The extent and timing of our future capital
requirements will depend primarily upon the rate of our progress in
the research and development of our technologies, our ability to
enter into a partnership agreement with a major pharmaceutical
company, and the results of our present projects and future
clinical trials.
OFF-BALANCE SHEET ARRANGEMENTS
None
16
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
We
maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our reports
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules
and forms, and that such information is accumulated and
communicated to management, as appropriate, to allow timely
decisions regarding required disclosure. Our management, with the
participation and supervision of our Chief Executive Officer and
Chief Financial Officer, evaluated the effectiveness of our
disclosure controls and procedures as of the end of the period
covered by this report and determined that our disclosure controls
and procedures were effective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No
changes of internal control over financial reporting were made in
the three months ended March 31, 2019.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Our
management, Ronald Kempers, who is both CEO and CFO, does not
expect that our disclosure controls or our internal control over
financial reporting will prevent or detect all error 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 the 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 or deterioration in the degree of compliance
with policies or procedures.
17
PART II.
OTHER INFORMATION
ITEM
1.
LEGAL PROCEEDINGS
Neither
we, nor our wholly owned subsidiaries Mymetics S.A., 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.
ITEM
6.
EXHIBITS
EXHIBIT NUMBER
DESCRIPTION
Rule
13a-14(a)/15d-14(a) Certification of Chief
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
18
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.
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MYMETICS
CORPORATION
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Dated: May 15 2019
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By:
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/s/ Ronald Kempers
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Chief Executive Officer / Chief Financial Officer
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19