Quarterly Report — Form 10-Q — Sect. 13 / 15(d) – SEA’34 Filing Table of Contents
Document/ExhibitDescriptionPagesSize 1: 10-Q Quartely Report HTML 248K
2: EX-31.1 Certification Pursuant to Rule 13A-14(A)/15D-14(A) HTML 17K
Certifications Section 302 of the Sarbanes-Oxly
Act of 2002
3: EX-31.2 Certification Pursuant to Rule 13A-14(A)/15D-14(A) HTML 17K
Certifications Section 302 of the Sarbanes-Oxly
Act of 2002
4: EX-32 Certificate Pursuant to Section 18 U.S.C. Pursuant HTML 14K
to Section 906 of the Sarbanes-Oxley Act of 2002
11: R1 Document and Entity Information HTML 45K
23: R2 Consolidated Balance Sheets (Unaudited) HTML 106K
25: R3 Consolidated Balance Sheets (Unaudited) HTML 36K
(Parenthetical)
19: R4 Consolidated Statements of Operations and HTML 77K
Comprehensive Loss (Unaudited)
12: R5 Consolidated Statements of Changes in HTML 33K
Shareholders' Equity (Deficit) (Unaudited)
24: R6 Consolidated Statements of Cash Flows (Unaudited) HTML 71K
26: R7 1. The Company and Summary of Significant HTML 85K
Accounting Policies
18: R8 2. Debt Financing HTML 207K
15: R9 3. Commitments HTML 15K
17: R10 4. Subsequent Events HTML 15K
14: R11 1. The Company and Summary of Significant HTML 127K
Accounting Policies (Policies)
22: R12 1. The Company and Summary of Significant HTML 19K
Accounting Policies (Tables) (Eur ?)
27: R13 2. Debt Financing (Tables) HTML 205K
16: R14 1. The Company and Summary of Significant HTML 22K
Accounting Policies (Eur ?) (Details)
13: R15 1. The Company and Summary of Significant HTML 29K
Accounting Policies (Details Narrative)
21: R16 2. Debt Financing (Details) HTML 162K
28: XML IDEA XML File -- Filing Summary XML 44K
29: EXCEL IDEA Workbook of Financial Reports XLSX 43K
5: EX-101.INS XBRL Instance -- mymx-20200331 XML 1.04M
7: EX-101.CAL XBRL Calculations -- mymx-20200331_cal XML 79K
8: EX-101.DEF XBRL Definitions -- mymx-20200331_def XML 122K
9: EX-101.LAB XBRL Labels -- mymx-20200331_lab XML 365K
10: EX-101.PRE XBRL Presentations -- mymx-20200331_pre XML 266K
6: EX-101.SCH XBRL Schema -- mymx-20200331 XSD 66K
20: ZIP XBRL Zipped Folder -- 0001654954-20-005539-xbrl Zip 65K
(Exact name of registrant as specified in its charter)
DELAWARE
25-1741849
State or Other jurisdiction of Incorporation or
Organization
I.R.S. Employer Identification No.
c/o Mymetics SA
Route de la Corniche 4
Epalinges, Switzerland
CH-1066
Address of Principal Executive Offices
Zip Code
011 41 21 653 4535
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
Common
Stock, Par Value $0.01 per share
MYMX
OTCQB
venture stage marketplace
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.
Large accelerated filer ☐
Accelerated filer ☐
Non-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 ☐
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 15,2020
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, 2019.
The accompanying financial statements of the Company are unaudited.
However, in the opinion of the Company, the unaudited condensed
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, 2020 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, 2020, the Company was engaged in the pre-clinical
testing of some of its vaccine candidates but a commercially viable
product is not expected for several more years. However, the
Company generated some revenue as of the prior quarter through
collaboration and grant agreements. The Company is working on
several research projects with commercial partners for
immunotherapy in the fields of allergy and oncology and for some
infectious diseases with academic partners. 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 with Mymetics for the use of virosomes in the field of
allergies. During the last quarter of 2019, the Company signed
Amendment 3 of the Research and Option to License Agreement and in
October, 2019, Mymetics announced that Stallergenes Greer, a
worldwide leader in Allergen Immunotherapy (“AIT”), and
Anergis, started a new research study to evaluate the effects of
the second generation virosome-based COP allergen immunotherapy in
a therapeutic model of birch allergy in mice.
These condensed 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 E90,026 at March 31, 2020. Further, the Company’s
current liabilities exceed its current assets by E59,180 as of
March 31, 2020, 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.
6
CORRECTTION OF PRIOR PERIOD IMMATERIAL ERROR
During the three months ended March 31, 2020, management discovered
that the Company had not increased the right of use asset and
corresponding operating lease liability in October 2019 at the time
the Leiden, The Netherlands, lease was extended.
The Company evaluated the impact of the error on prior periods and
determined that the effect was not material to the financial
statements as of December 31, 2019. The Company corrected the error
in the unaudited condensed consolidated financial statements as of
March 31, 2020. The correction of the error increased the Company's
right of use asset and lease liability by E203.
The Company’s consolidated statements of operations,
comprehensive loss and cash flows for the year ended December 31,2019, were not affected by this correction of the error.
Accordingly, the Company's loss per share for the year ended
December 31, 2019 remains unchanged. As a result, the condensed
consolidated balance sheet has been revised to reflect this change to the applicable
line items as follows:
On January 30, 2020, the World Health Organization
(“WHO”) announced a global health emergency because of
a new strain of coronavirus originating in Wuhan, China (the
“COVID-19 outbreak”) and the risks to the international
community as the virus spreads globally beyond its point of origin.
In March 2020, the WHO classified the COVID-19 outbreak as a
pandemic, based on the rapid increase in exposure
globally.
The full impact of the COVID-19 outbreak continues to evolve as of
the date of this report. As such, it is uncertain as to the full
magnitude that the pandemic will have on the Company’s
financial condition, liquidity, and future results of
operations.
Management is actively monitoring the global situation on its
financial condition, liquidity, operations, scientific
collaborations, suppliers, industry, and workforce. Given the daily
evolution of the COVID-19 outbreak and the global responses to curb
its spread, the Company is not able to estimate the effects of the
COVID-19 outbreak on its results of operations, financial
condition, or liquidity for fiscal year 2020.
The Company’s partner for the oncology immunotherapy project
in the Netherlands has decreased their laboratory experiments due
to reduced operating hours in those facilities. While the Company
considers this disruption to be temporary, continued disruption in
this project will lead to delayed advances by the Company of its
research and could negatively impact future revenue in fiscal year
2020 and the Company’s overall liquidity.
The Company is dependent on its workforce to deliver and advance
its research. Developments such as physical distancing and working
from home directives will impact the Company’s ability to
deploy its workforce effectively. While expected to be temporary,
prolonged workforce disruptions may negatively impact future
revenues in fiscal year 2020 and the Company’s overall
liquidity.
The Company is dependent on its partners in certain projects, such
as the University of Louisiana at Lafayette (“ULL”) for
the NIH funded project to maintain the agreed timelines and execute
their tasks. Developments such as social distancing and
shelter-in-place directives and lock-down directives will impact
the Company’s ability to execute on project plans and
research objectives effectively. While expected to be temporary,
prolonged disruptions in collaboration projects may negatively
impact funding in fiscal year 2020 and the Company’s overall
liquidity.
Although the Company cannot estimate the length or gravity of the
impact of the COVID-19 outbreak at this time, if the pandemic
continues, it may have a material adverse effect on the
Company’s results of future operations, financial position,
and liquidity in fiscal year 2020.
7
CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT
On March 27, 2020, the U.S. government enacted the Coronavirus Aid,
Relief, and Economic Security Act (“CARES Act”) was
signed into law. The CARES Act includes various income and payroll
tax provisions. The Company has analyzed the tax provisions of the
CARES Act and determined they have no significant financial impact
to the condensed financial statements. The Company has no intention
of taking advantage of other benefits provided by the CARES Act but
will continue to evaluate the impact on the Company’s
financial position.
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
On January 1, 2020, the Company adopted Accounting Standard Update
("ASU") No. 2018-13, Fair Value Measurement (Topic
820): Disclosure Framework—Changes to the Disclosure
Requirements for Fair Value Measurement, to improve the effectiveness of disclosures. The
amendments remove, modify, and add certain disclosure requirements
in Topic 820, “Fair Value Measurement.” The amendments
on changes in unrealized gains and losses, the range and weighted
average of significant unobservable inputs used to develop Level 3
fair value measurements, and the narrative description of
measurement uncertainty should be applied prospectively for only
the most recent interim or annual period presented in the initial
fiscal year of adoption. All other amendments should be applied
retrospectively to all periods presented upon their effective date.
The adoption had no impact on the
Company's condensed 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
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”. The project started on May 1, 2019 and is planned
for five years. The overall budget related to the project is USD
8,850, with USD 1,940 approved for the first year. The overall
portion of the grant allocated to the Company is USD 5,930, with
USD 1,190 approved for the first year. 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. To date, the Company
has recognized E797 of grant revenue from the NIH, of which E255
has been recognized during the quarter ended March 31, 2020. First
results are expected to be reported in 2020.
The project has the objective to prepare the Company’s
promising 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 March 31, 2020,
Mymetics has successfully produced two sets of virosome based
vaccines and the NHPs have received two intramuscular vaccinations
and three intranasal vaccinations. The vaccinations were well
tolerated and there were no safety issues. The intra-rectal
challenge study has now started. 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.
License Agreement – UPPERTON Ltd.
On July 26, 2019 Mymetics and Upperton Ltd. signed a License
Agreement (the “Agreement”) that sets out the rights
and obligations of the two parties with respect to the development,
manufacturing and exploitation of certain virus-like particles
based vaccines (which includes virosomes) into solid (powder or
tablet) form that are based on each party’s background or
pre-existing intellectual property (“IP”) and the
foreground IP rights or the IP that was developed by either party
or both parties during the Maciviva project and could be developed
during future collaborations.
Under the terms of the Agreement Mymetics receives an exclusive and
royalty-free, worldwide license to use the Upperton background IP
for the development, research, sale or in/out license for
virus-like particle vaccines that use the foreground IP rights. All
title, right and interest in and to all foreground IP rights vests
in Mymetics for such development, research, sale or in/out license,
and Mymetics is free to use and exploit such foreground IP rights.
Mymetics has provided Upperton the non-exclusive license to
manufacture virus-like particle-based vaccines for third parties
for indications other than respiratory viruses, certain allergies,
HIV, malaria and chikungunya. For these foreground IP licenses, the
parties have agreed to pay each other a certain low single digit
percentage of revenues, license fees and royalties that each of the
parties receives from their exploitation. No revenue has been
received nor recognized during the quarter ended March 31,2020.
License Agreement – ANERGIS SA
In December 2018, the Company announced that the success criteria
of the Research and Option to License Agreement with Anergis SA
(“Anergis”) had been met. Under the terms of the
Research Agreement, a pre-clinical study program evaluated the
immunogenicity profile of the Anergis’ peptides designed to
treat birch allergy when presented on Mymetics’ proprietary
virosomes, with or without undisclosed TLR ligands or other
adjuvants, and these results were compared to Anergis’ AllerT
product combination.
Should Anergis and Mymetics execute a License and Collaboration
Agreement (“LCA”), Anergis would make an upfront
payment to Mymetics in an amount that increases as the date of the
LCA is executed. The LCA also includes milestone payments based on
certain regulatory clearances and royalties for net sales. The
contractual material had been delivered during the third quarter of
the year 2018 and 100% of the agreed payments from the Research and
Option to License Agreement has been received and fully recognized
as revenue in Q3 2018. The LCA has not been executed as of the date
this report has been filed. During the last quarter of 2019, the
Company received an amount of E111 related to the Amendment 3 of
the Research and Option to License Agreement dated September 3rd,
2019. This revenue has been fully recognized as the deliverables
for the Stallergenes-Anergis study were met and Anergis paid for an
extension of the option to execute the LCA.
As of December 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.
The success criteria were met in December 2018. In October 2019
Anergis started a new evaluation study in collaboration with
Stallergenes Greer SA, in which the Mymetics COP virosomes will be
evaluated in a preclinical study. Anergis has a time limited option
to license the virosomes from Mymetics in the field of allergies
that will require Anergis to raise funds from third parties to pay
Mymetics the license fee under the terms of the License and
Collaboration Agreement and the clinical development, and there is
no certainty that Anergis will be able to do so. No revenue has
been received nor recognized during the quarter ended March 31,2020.
9
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, 2020 or December 31, 2019.
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.
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, 2020
or December 31, 2019. 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, 2019. The returns for the
Netherlands subsidiaries, Bestewil B.V. and Mymetics B.V., are open
to audit for the year ended December 31, 2019.
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, 2020 and 2019, 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.
10
For the three months ended March 31, 2020, the basic weighted
average number of shares was 303,757,622. The total potential
number of shares issuable of 703,131,197 at March 31, 2020 includes
676,381,197 potential issuable shares related to convertible loans
and 26,750,000 potential issuable shares related to outstanding not
expired options granted to employees.
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.
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, 2020 or December 31, 2019.
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, 2020 nor in the three months ended
March 31, 2019.
Stock compensation expense amounted to E0 and E2 during the three
months periods ended March 31, 2020 and 2019, respectively, and is
included in the condensed consolidated statements of comprehensive
loss within general and administrative expenses.
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 the fair value of
the notes payable is reflecting the actual value reported for these
instruments.
CONCENTRATIONS
The Company derived 94% of grant revenue for the three-month period
ended March 31, 2020 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 E11 and E8 for the three months ended March 31, 2020 and
2019, respectively.
11
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 E59,004, 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 E59,417
including interest due to date. Interest incurred on these notes
since inception has been added to the principal
amounts.
The details of the convertible notes and loans are as follows at
March 31, 2020:
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
E173
(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
E1,091
(5,6)
10%
pa
$0.034
N/A
Eardley
Holding A.G.
08/04/2011
E273
(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
Eardley
Holding A.G.
06/15/2019
E120
(8)
2.5%
pa
N/A
N/A
Round
Enterprises Ltd.
06/15/2019
E480
(8)
2.5%
pa
N/A
N/A
Eardley
Holding A.G.
12/20/2019
E120
(9)
2.5%
pa
N/A
N/A
Round
Enterprises Ltd.
12/20/2019
E480
(9)
2.5%
pa
N/A
N/A
Total
Short Term Principal Amounts
E32,914
Accrued
Interest
E26,503
TOTAL
LOANS AND NOTES
E59,417
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 at USD 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 at USD 1,200 and USD 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 USD
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.
(8)
On
June 15, 2019, Round Enterprises Ltd. and Eardley Holding AG each
provided a promissory Note of E480 and E120, respectively, 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) December 31, 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.
(9)
On
December 20, 2019, Round Enterprises Ltd. and Eardley Holding AG
each provided a promissory Note of E480 and E120, respectively,
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, 2020, 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. Commitments
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 but was renewed
until March 31, 2022 and can be terminated with a six month notice
as of September 30, 2021. The related rent is paid monthly in the
amount of E9. The Company does not have any other operating lease
for its research and development facilities, corporate headquarter,
offices and equipment.
Note 4. Subsequent Events
On April 2, 2020, the Swiss entity, Mymetics SA, received a Federal
credit line of Chf 168 (E159) in relation with the Covid-19. This
credit line applies for five years and is fully guaranteed by the
Swiss Confederation via guarantee organizations. The interest rate
is currently at 0 percent but can be adjusted as of April 1,2021.
13
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
March 31, 2020 and 2019 should be read in conjunction with the
Company's audited consolidated financial statements for the year
ended December 31, 2019 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, 2019 and, to the extent
included therein, our quarterly reports on Form 10-Q filed during
fiscal year 2019.
IMPACT OF THE NOVEL CORONAVIRUS
On
January 30, 2020, the World Health Organization (“WHO”)
announced a global health emergency because of a new strain of
coronavirus originating in Wuhan, China (the “COVID-19
outbreak”) and the risks to the international community as
the virus spreads globally beyond its point of origin. In March
2020, the WHO classified the COVID-19 outbreak as a pandemic, based
on the rapid increase in exposure globally.
The
full impact of the COVID-19 outbreak continues to evolve as of the
date of this report. As such, it is uncertain as to the full
magnitude that the pandemic will have on the Company’s
financial condition, liquidity, and future results of
operations.
Management
is actively monitoring the global situation on its financial
condition, liquidity, operations, scientific collaborations,
suppliers, industry, and workforce. Given the daily evolution of
the COVID-19 outbreak and the global responses to curb its spread,
the Company is not able to estimate the effects of the COVID-19
outbreak on its results of operations, financial condition, or
liquidity for fiscal year 2020.
The
Company’s partner for the oncology immunotherapy project in
the Netherlands has decreased their laboratory experiments due to
reduced operating hours in those facilities. While the Company
considers this disruption to be temporary, continued disruption in
this project will lead to delayed advances by the Company of its
research and could negatively impact future revenue in fiscal year
2020 and the Company’s overall liquidity.
The
Company is dependent on its workforce to deliver and advance its
research. Developments such as physical distancing and working from
home directives will impact the Company’s ability to deploy
its workforce effectively. While expected to be temporary,
prolonged workforce disruptions may negatively impact future
revenues in fiscal year 2020 and the Company’s overall
liquidity.
The
Company is dependent on its partners in certain projects, such as
the University of Louisiana at Lafayette (“ULL”) for
the NIH funded project to maintain the agreed timelines and execute
their tasks. Developments such as social distancing and
shelter-in-place directives and lock-down directives will impact
the Company’s ability to execute on project plans and
research objectives effectively. While expected to be temporary,
prolonged disruptions in collaboration projects may negatively
impact funding in fiscal year 2020 and the Company’s overall
liquidity.
14
Although
the Company cannot estimate the length or gravity of the impact of
the COVID-19 outbreak at this time, if the pandemic continues, it
may have a material adverse effect on the Company’s results
of future operations, financial position, and liquidity in fiscal
year 2020.
CORONAVIRUS AID, RELIEF AND ECONOMIC SECURITY ACT
On
March 27, 2020, the U.S. government enacted the Coronavirus Aid,
Relief, and Economic Security Act (“CARES Act”) was
signed into law. The CARES Act includes various income and payroll
tax provisions. The Company has analyzed the tax provisions of the
CARES Act and determined they have no significant financial impact
to the condensed financial statements. The Company has no intention
of taking advantage of other benefits but will continue to evaluate
the impact on the Company’s financial position.
For the three months ended March 31, 2020, revenue
was E272, of which E255 was related to the revenue recognized for
the work performed under the NIH
grant / HIV project and the remaining for a small pre-clinical
research project with a US academic institution. No revenue was
earned for the three months ended March 31,2019.
Costs and expenses increased to E753 for the three
months ended March 31, 2020 from E559 (+34.7%) for the three months
ended March 31, 2019. The increase is mainly due to the R&D
costs related to the work performed under the NIH
grant / HIV project and foreign exchange loss from the revaluation
of shareholders’ loans based in USD.
Research
and development expenses increased to E322 in the current period
from E215 (+49.8%) in the comparative period of 2019, mainly due to
E88 of subcontracting services paid during the three-month period
ending March 2020 in relation with the NIH grant / HIV
project.
General
and administrative expenses increased to E325 in the current period
from E278 (+16.9%) in the comparative period of 2019, mainly due to
the D&O liability annual insurance premium expensed during the
three months ended March 2020, and increase of the annual audit
fees.
Other
expenses increased to E95 for the three months ended March 31, 2020
from E55 (+72.7%) for the three months ended March 31, 2019, mainly
due to the foreign exchange revaluation impact of
shareholders’ loans based in US$.
Interest
expense increased to E675 for the three months ended March 31, 2020
from E666 for the three months ended March 31, 2019 related to
existing loans from third party investors.
The
Company reported a net loss of (E1,164), or (E0.00) per share, for
the three months ended March 31, 2020, compared to a net loss of
(E1,228), or (E0.00) per share, for the three months ended March31, 2019.
During 2019, our revenue has mainly been generated
through the NIH grant / HIV project. For 2020, new significant
revenues are not 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, 2020, we had an accumulated deficit of approximately
E90,026, and had net loss of E1,164 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 E454 for the three-month
period ended March 31, 2020. During the three-month period ending
March 31, 2019 net cash used from operating activities was E9
mainly due to the final funding amount received during the
three-month period ending March 31, 2019 related to the Maciviva
project.
Net
cash used from investing activities was E5 during the three months
ended March 31, 2020 and NIL during the same period in
2019.
15
Net
cash provided from financing activities is NIL for the three months
ended March 31, 2020 and 2019.
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, two 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
E1,360 of cash in the year ending December 31, 2020. 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 E26,503 has been accrued on all of the
Company’s outstanding notes and advances (see detailed table
in Note 2 to the financial statements).
Anergis
is investigating the possibility to fund a license agreement with
Mymetics, but for now nothing is confirmed. In May 2019, the
Company started an NIH grant funded project to evaluate the HIV
vaccine in a non-human primate study and prepare for clinical
trials. 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 since the Company believes that vaccines are one
of the fastest growing markets in the pharmaceutical
industry.
RECENT FINANCING ACTIVITIES
During
the three month period ending March 31, 2020, our principal source
of funds has been promissory notes received in a prior quarter from
our two main investors and the revenue generated through the NIH
grant / HIV 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 2020, 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. These conditions raise
substantial doubt about our ability to continue as a going
concern.
16
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.
On
January 30, 2020, the World Health Organization (“WHO”)
announced a global health emergency because of a new strain of
coronavirus originating in Wuhan, China (the “COVID-19
outbreak”) and the risks to the international community as
the virus spreads globally beyond its point of origin. In March
2020, the WHO classified the COVID-19 outbreak as a pandemic, based
on the rapid increase in exposure globally.
The
full impact of the COVID-19 outbreak continues to evolve as of the
date of this report. As such, it is uncertain as to the full
magnitude that the pandemic will have on the Company’s
financial condition, liquidity, and future results of
operations.
Management
is actively monitoring the global situation on its financial
condition, liquidity, operations, scientific collaborations,
suppliers, industry, and workforce. Given the daily evolution of
the COVID-19 outbreak and the global responses to curb its spread,
the Company is not able to estimate the effects of the COVID-19
outbreak on its results of operations, financial condition, or
liquidity for fiscal year 2020.
The
Company’s partner for the oncology immunotherapy project in
the Netherlands has decreased their laboratory experiments due to
reduced operating hours in those facilities. While the Company
considers this disruption to be temporary, continued disruption in
this project will lead to delayed advances by the Company of its
research and could negatively impact future revenue in fiscal year
2020 and the Company’s overall liquidity.
The
Company is dependent on its workforce to deliver and advance its
research. Developments such as physical distancing and working from
home directives will impact the Company’s ability to deploy
its workforce effectively. While expected to be temporary,
prolonged workforce disruptions may negatively impact future
revenues in fiscal year 2020 and the Company’s overall
liquidity.
The
Company is dependent on its partners in certain projects, such as
the University of Louisiana at Lafayette (“ULL”) for
the NIH funded project to maintain the agreed timelines and execute
their tasks. Developments such as social distancing and
shelter-in-place directives and lock-down directives will impact
the Company’s ability to execute on project plans and
research objectives effectively. While expected to be temporary,
prolonged disruptions in collaboration projects may negatively
impact funding in fiscal year 2020 and the Company’s overall
liquidity.
Although
the Company cannot estimate the length or gravity of the impact of
the COVID-19 outbreak at this time, if the pandemic continues, it
may have a material adverse effect on the Company’s results
of future operations, financial position, and liquidity in fiscal
year 2020.
OFF-BALANCE SHEET ARRANGEMENTS
None
17
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, 2020.
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.
18
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
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.
