FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
[ ] 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 25-1741849
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
European Executive Office
14, rue de la Colombiere
CH-1260 Nyon (Switzerland)
(Address of principal executive offices)
|
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 011 41 22 363 13 10
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
(Title of Class)
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
The aggregate market value of the voting common stock held by non-affiliates of the Registrant (assuming officers and directors are affiliates) was approximately U.S. $2,371,982.80 as of December 31, 2004, computed on the basis of the average of the bid and ask prices on such date. The Registrant has no non-voting common stock.
As of March 25, 2005, there were 70,647,864 shares of the Registrant's Common Stock outstanding.
USE OF EUROS
The financial information contained in this Form 10-K is provided in Euros (E) (except in "Item 5. Market for Registrant's Common Equity and Related Stockholder Matters" which is provided in United States Dollars, and except as expressly indicated otherwise herein). See Note 1 to the Consolidated Financial Statements contained in this Form 10-K for further explanation. As of March 5, 2005, 1 Euro was convertible into 1.3240 United States Dollars.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements, which are identified by the words "believe," "expect," "anticipate," "intend," "plan" and similar expressions. The statements contained herein which are not based on historical facts are forward-looking statements that involve known and unknown risks and uncertainties that could significantly affect our actual results, performance or achievements in the future and, accordingly, such actual results, performance or achievements may materially differ from those expressed or implied in any forward-looking statements made by or on our behalf. These risks and uncertainties include, but are not limited to, risks associated with our ability to successfully develop and protect our intellectual property, our ability to raise additional capital to fund future operations and compliance with applicable laws and changes in such laws and the administration of such laws. These risks are described below and in "Item 1. Business," "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations," and "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" included in this Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date the statements were made.
RISK FACTORS
You should carefully consider the risks described below together with all of the other information included in this report on Form 10-K. An investment in our common stock is very risky. If any of the following risks materialize, our business, financial condition or results of operations could be adversely affected. In such an event, the trading price of our common stock could decline, and you may lose part or all of your investment.
We are a company engaged exclusively in research and development activities, focusing primarily on human and veterinary biology and medicine. When used in these risk factors, the terms "we" or "our" refer to Mymetics Corporation and its subsidiaries.
Our strategy was crafted in part to minimize the risks usually associated with clinical trials, regulatory approvals and marketing, which we would expect to be borne by our future partner(s).
WE HISTORICALLY HAVE LOST MONEY AND EXPECT LOSSES TO CONTINUE FOR THE FORESEEABLE FUTURE, WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS UNLESS WE OBTAIN ADDITIONAL FUNDING.
We historically have lost money. In the year ended December 31, 2004, we sustained net losses of approximately E 2,220,000. In the years ended December 31, 2003 and December 31, 2002, we sustained net losses of approximately E 2,786,000 and E 3,622,000, respectively. We currently are engaged in research and development activities and do not have any commercially marketable products. The product research and development process requires significant capital expenditures, and we do not have any other sources of revenue to off-set such expenditures. Accordingly, we expect to generate additional operating losses at least until such time as we are able to generate significant revenues. If we are unable to draw down on the Standby Equity Distribution Agreement provided by Cornell Capital or find alternative financing on commercially reasonable terms or generate revenue from the sale of products, we could be forced to curtail or cease our operations.
At December 31, 2004, we had an accumulated deficit of approximately E 12,148. Total cash disbursed since 1990 for operating activities, including Research and Development, is E 8,340,000. In order to become profitable, we will need to generate revenues to off-set our operating costs, including our general and administrative expenses. We may not achieve or sustain our revenue or profit objectives, and our losses may increase in the future, and, ultimately, we may have to cease operations.
Our operating results are impossible to predict, because we have not begun selling any products. As a result, we cannot determine if we will be successful in our proposed plan of operation. Accordingly, we cannot determine what the future holds for our proposed plan of business. As such, an investment in our business is extremely risky and could result in the entire loss of your investment.
OUR LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO EVALUATE OR PREDICT OUR FUTURE BUSINESS PROSPECTS.
We have no operating history. We are in the development stage, and our proposed operations are subject to all of the risks inherent in establishing a new business enterprise. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications, and delays frequently encountered in connection with the formation of a new business, the development of new technology, and the competitive and regulatory environment in which we will operate. We have made no material sales to date and have accumulated a net deficit from inception through December 31, 2004 of approximately $12 million. It is likely that additional losses will be incurred in the future. See "Description of the Business" and "Plan of Operations."
IF WE CANNOT DEVELOP AND INTRODUCE NEW PRODUCTS, WE CANNOT COMPETE SUCCESSFULLY IN THE MARKETPLACE.
Our key products still are in the development stage. See "Business - Where Are We and Where Are We Going?". While we are pleased about the progress made to date on these products, we cannot be sure that these products in development will be completed or, if completed, will be commercially viable.
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY AGAINST CURRENT AND FUTURE COMPETITORS, WHICH COULD HARM OUR FUTURE SALES OF PRODUCTS.
A large number of companies currently compete with us in the market for our
products. Many of these companies have far greater capital, marketing, and other resources than we do. Furthermore, we cannot assure you that these or other firms will not develop new or enhanced products that are more effective than any that we currently have or will develop in the future.
We have no certainty as to the availability and terms of future financing. We believe that we will have sufficient working capital available through lines of credit and the proceeds of future offerings to finance our activities through at least March 2006. We anticipate, however, that such funds will not be sufficient to meet our capital needs for the foreseeable future. Therefore, we expect that we will be required to seek additional financing in the future. We cannot be sure that such financing will be available or available on attractive terms, or that such financing would not result in a substantial dilution of shareholders' interest. If we cannot obtain financing when we need it or on terms that are commercially reasonable to us, we will not be able to pursue our business plan as we currently anticipate. See "Use of Proceeds", "Plan of Operations", "Management's Discussion and Analysis", and "Projections."
ALTHOUGH WE HAVE RESTRUCTURED OUR EXISTING DEBT, WE HAVE NOT ALLEVIATED OUR WORKING CAPITAL NEEDS.
We need to address our working capital needs by the end of April 2005 to allow us to continue devoting our efforts to development of the business instead of raising needed capital.
NEITHER CHRISTIAN ROCHET, OUR CHIEF EXECUTIVE OFFICER, NOR ERNST LUEBKE, OUR CHIEF FINANCIAL OFFICER, ARE PAID FOR THEIR EFFORTS.
Finding people of comparable talent and dedication to our business would be difficult given our inability to pay management for their work.
ALTHOUGH WE DO NOT BELIEVE EITHER SYLVAIN FLEURY, OUR CHIEF SCIENTIFIC OFFICER OR MARC GIRARD, AN IMPORTANT SCIENTIFIC CONSULTANT, ARE PLANNING TO LEAVE US, REPLACING EITHER OF THESE MEMBERS OF OUR SCIENTIFIC TEAM WOULD BE DIFFICULT.
If we are unable to pay Sylvain Fleury's salary, he may soon lose his Swiss residency permit. Dr Fleury has been following, and associated with, our AIDS vaccine project since 1998 and we believe that replacing him as CSO on time for successfully prosecuting our pending patent applications would be next to impossible. We are therefore exposed to the risk of losing our pending patent applications.
OUR BUSINESS MODEL IS PREDICATED ON OUR BELIEF THAT WE WILL BE ABLE TO ENGAGE LARGE PHARMACEUTICAL COMPANIES TO PARTNER WITH US IN THE DEVELOPMENT OF OUR PRODUCTS.
Our failure to succeed in this endeavor will dramatically change our financial needs and ability to successfully sell any products that we develop.
INDUSTRY RISKS.
Like any other bio-technology company, we also face the risk that any results that we achieve in animal tests will not be replicated in human patients. We also work in an extremely competitive industry where patent protection is vital to the long-term success of our company.
OUR PRINCIPAL OFFICES ARE LOCATED IN SWITZERLAND AND IT MAY BE DIFFICULT FOR YOU TO ENFORCE JUDGMENTS AGAINST US OR OUR DIRECTORS AND EXECUTIVE OFFICERS.
Although we are a company incorporated under the laws of Delaware, all but one of our officers and directors are located outside of the United States. A substantial portion of our assets now are, and in the future we expect will be, located outside the U.S. As a result, it may be difficult for investors to effect service of process on those persons in the U.S. or to enforce in the U.S. judgments obtained in U.S. courts against us or those persons based on the civil liability provisions of the U.S. securities laws. It may be difficult and costly for an investor to get a court in Switzerland to enforce a judgment obtained in other jurisdictions, including the U.S., against us or our directors or officers under the securities laws of the United States
WE HAVE ANTI-TAKEOVER PROVISIONS IN OUR BYLAWS THAT MAY DISCOURAGE A CHANGE OF CONTROL.
Our bylaws contain provisions that could discourage, delay or prevent a change in control of our company or changes in our management that the stockholders of our company may deem advantageous. These provisions
- limit the ability of our stockholders to call special meetings of stockholders;
- provide for a staggered board;
- provide that our board of directors is expressly authorized to make, alter or repeal the bylaws; and
- establish advance notice requirements for nominations for election to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS............................................. 13
ITEM 2. PROPERTIES .......................................... 26
ITEM 3. LEGAL PROCEEDINGS ................................... 26
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.. 27
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.................................. 27
ITEM 6. SELECTED FINANCIAL DATA ............................. 31
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................. 31
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.......................................... 33
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ......... 34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.................. 34
ITEM 9A. CONTROLS AND PROCEDURES.............................. 34
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT .. 35
ITEM 11. EXECUTIVE COMPENSATION .............................. 38
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS....... 43
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...... 44
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES............... 50
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K.......................................... 52
SIGNATURES............................................................. 73
|
PART I
ITEM 1. BUSINESS
THE CORPORATION
OVERVIEW
We are a holding company conducting business through our subsidiaries 6543 Luxembourg S.A., a joint stock company organized in 2001 under the laws of Luxembourg ("LuxCo"), and Mymetics S.A. (formerly Hippocampe S.A.), a company organized in 1990 under the laws of France ("Mymetics S.A."). We were incorporated in July 1994 pursuant to the laws of the Commonwealth of Pennsylvania under the name "PDG Remediation, Inc." In November 1996, we reincorporated under the laws of the State of Delaware and changed our name to "ICHOR Corporation." In July 2001, we changed our name to "Mymetics Corporation."
We own all of the outstanding voting stock of LuxCo and of Mymetics S.A., which is a wholly-owned subsidiary of LuxCo. In this document, unless the context otherwise requires, "Mymetics" and the "Corporation" refer to Mymetics Corporation and its subsidiaries.
We currently do not make, market or sell any products or services, and thus, we have no revenues. We believe, however, that our research and development activities will result in strong intellectual property that can generate revenues for us in the future. Our business model is to conduct our research and development far enough to be able to sign a partnership agreement with one (or more) major pharmaceutical company(ies) active in the field(s) of HIV-AIDS preventive vaccines and/or therapies.
DEVELOPMENT OF THE COMPANY
From our inception in 1990 to December 1997, we operated in the environmental services industry, focusing on thermal treatment (in Florida), remediation services (in Florida and Pennsylvania) and waste oil recycling (in Illinois). In February 1995, we completed an initial public offering. In 1998 and 1999, after disposing of our thermal treatment, remediation services and waste oil recycling businesses, we provided consulting services to an industrial customer in Europe. In June 1999, we acquired a majority interest in Nazca Holdings Ltd., whose business involved the exploration for and development of groundwater resources in Chile. Following the disposal of our interest in Nazca in July 2000, we did not have an operating business.
In March 2001, we acquired 99.9% of the outstanding shares of Mymetics S.A. in consideration for shares of our common stock and shares of Class B Exchangeable Preferential Non-Voting Stock of LuxCo, or Preferential Shares, which are convertible into shares of our common stock. In 2002, we acquired the remaining 0.1% of the outstanding common stock of Mymetics S.A. pursuant to share exchanges with the remaining stockholders of Mymetics S.A. The terms of these recent share exchanges were substantially similar to the terms of the share exchange that occurred in March 2001. Mymetics S.A. was, and continues to be, a biotechnology research and development company.
On June 30, 2001, we closed on a private offering of 1,333,333 shares of our common stock, at E1.77 ($1.50) per share, for an aggregate price of E2,355,600 ($2,000,000). This private placement was exempt from registration pursuant to Regulation S of the Securities Act of 1933, and the shares were sold to foreign investors meeting the requirements of Regulation S.
MYMETICS CORPORATION
Mymetics' primary objective is to develop vaccines and therapies to prevent, respectively treat the effect of certain retroviruses, including the human immunodeficiency virus, or HIV, the virus that leads to acquired immunodeficiency syndrome, or AIDS. Additional applications of Mymetics' research include potential treatments and/or vaccines for animal AIDS, human oncoviral leukemias, multiple sclerosis, and organ transplantation.
Prior to 2002, our activities were primarily conducted in Europe. During the second quarter of 2002, through our operations in the United States, we launched programs in the United States in an attempt to reinforce our intellectual property portfolio and to accelerate the commercialization of our technology. This was done, in part, by attempting to target products and business development in the United States. Again, prior to this time, activities such as design of the prototype molecules, synthesis, and in vitro testing had been conducted exclusively in Europe. We believed that expanding our operating activities in the United States offered numerous advantages, including greater access to expertise, grants, subsidies, intellectual property and public and private research teams. Due to financial constraints, we were forced to limit these activities in January 2003. Following the management changes of July 2003, our activities again have been conducted exclusively in Europe, with certain in-vitro tests being performed in the United States.
Under our "best of class" R&D model, the overall research strategy, as well as most original ideas, are defined and contributed by our own scientific team, including Dr. Sylvain Fleury, Ph.D. (Chief Scientific Officer), Professor Marc Girard, DVM, D.Sc. (Head of Vaccine Development), and our founder, Dr. Pierre-Francois Serres (Head of Exploratory Research), assisted from time to time by members of our Scientific Advisory Board or by our outside directors, Professor Stanley A. Plotkin, M.D. and Dr. Robert Zimmer, M.D., Sc.D. Any given project is first subdivided into modules which are then subcontracted to "best of class" teams from academia, public or private laboratories or industry, all chosen for their high standards and specific know how. We can divide our work into "technology modules," and outsource such modules to the best team available to carry out needed work. For example, if we need rabbits to be bred, we will outsource this work on a commercial basis to the best company we can find. Most of the work that we outsource is easily replaced by other vendors. In unique cases, like protein engineering, we are more dependent upon companies like Protein eXpert. That said, we believe that with rare exception, we can replace these providers as well. We believe we benefit from the established relationships with our "partners" and approach our relationship in that manner. Mymetics pays for and coordinates the work, consolidates the results and retains all intellectual property associated with it. In certain limited cases, we will sign partnership agreements with companies offering technologies which can enhance or add value to our own products under development. Our agreement with Pevion AG, a small Swiss company with which we signed a scientific collaboration agreement which includes an option to receive an exclusive license to use their Virosome Vaccine delivery technology in conjunction with our AIDS preventive vaccine under development is an example of such an agreement. Under this model, Mymetics retains all intellectual property rights in the combined research and applies for domestic and international patents whenever justified. As agreed and coordinated by Mymetics, the research teams are authorized to co-publish their results.
We intend to sign a partnership agreement with one of the few major pharmaceutical companies presently active in the preventive vaccine against HIV-AIDS as soon as our
human clinical phase I trials are completed. We hope this could happen as early as 2006. The type of partnership agreement we intend to sign is typical in the world of biotechnology: an initial cash payment, followed by a series of payments associated with specific milestones and finally, royalties on any sales of end products, assuming these will have been approved by the various regulatory authorities involved, such as the Food and Drug Administration. We would not expect this to occur prior to 2009.
LUXEMBOURG 6543 S.A.
Our Luxembourg subsidiary, Luxembourg 6543 S.A., was founded in 1999 within the context of the acquisition of Mymetics S.A. by Mymetics Corporation as a legal vehicle to allow the former French shareholders of Hippocampe S.A. to defer French taxes due on the exchange of their Hippocampe S.A. shares for Mymetics Corporation shares. The company presently is dormant and we intend to liquidate it as soon as the financial resources needed to do so will be available.
MYMETICS S.A.
Our French subsidiary, Mymetics S.A. (formerly Hippocampe S.A.), founded in 1990, is a biotechnology research and development company devoted to fundamental and applied research in the area of human and veterinary biology and medicine. The company is the legal owner of our initial key patents, which were applied for prior to it being acquired by Mymetics Corporation. Mymetics S.A. is presently inactive. Its last salaried employee completed her assignment by, and had her employment contract terminated on January 31, 2005. We do not intend to hire additional staff in France in the foreseeable future, as all R&D will be carried on under Mymetics Corporation's responsibility. We intend however to use this legal entity to apply for European research grants.
TECHNOLOGY
CURRENT APPROACHES
Current drug treatments in HIV focus on slowing or impeding the progress of the virus once it has infected the body's host cells. Recent approaches seek to develop therapies that prevent the virus from fusing with host cells. If the virus cannot fuse, it cannot enter inside the cell and reproduce, thereby facilitating the successful fight of the body's immune system against the invasion.
MYMETICS' APPROACH
Our vaccine strategy is based on the use of the gp41 molecule, which is a key viral membrane protein required for the penetration of HIV into the host cells. This process occurs in two main steps:
First, binding of HIV gp120 glycoprotein to the CD4 molecule present at the cell surface, followed by a second binding to the co-receptor (mainly CCR5 or CXCR4); Gp120, which usually covers gp41, is then released, liberating the gp41 protein, which mediates the fusion between the viral envelope and the target cell membrane.
By carefully modifying parts of the HIV gp41 molecule, we have obtained an engineered molecule that:
o Is trimeric and stable with a folding close to the native protein;
o Is soluble in the absence of detergent or can be incorporated into liposomes, which is more suitable for in vivo work;
o Can be easily produced by recombinant bacteria like E. coli;
o Has been stripped of an immunodominant area that generates numerous non-neutralizing antibodies, which may fool the immune response.
o Has been stripped of its key IL-2-like sequences, minimizing the important potential cross-reaction with host proteins that may contribute to the destruction of the immune system seen in HIV patients;
This type of new engineered trimeric gp41 molecules should be able to elicit antibodies that block virus-cell fusion, thus preventing HIV-1 infection. Based on research results recently presented at the world AIDS Vaccine 2004 conference, held in September 2004 in Lausanne, Switzerland, we believe that our latest neutralizing and transcytosis results and vaccine strategies definitely place us amongst the most advanced teams devoted to AIDS vaccine research worldwide.
Our findings further apply to a range of additional diseases, including certain oncoviruses often associated with leukemia.
BACKGROUND INFORMATION
THE IMMUNE RESPONSE
Normally, the body's immune system responds to the invasion of pathogen. In the
case of HIV, for example, an infected host cell alerts the immune system by
secreting interleukine-2 (IL-2), a special protein (called a cytokine) that acts
as a key messenger for many cells of the immune system.
IL-2 acts as a T cell growth factor, promotes NK proliferation and stimulates B cell growth (cells that produce antibodies). Together, these "soldier cells" attack foreign pathogens like viruses, and help to destroy them. From the first encounter with the invader, the immune system keeps a memory of what happened and specialized "memory" T and B cells are established as guardians in the host's body. The next time the invaders try to enter, they will be swiftly attacked and disarmed.
HIV & AIDS
HIV-1 is a retrovirus that gradually disrupts and attacks the body's immune system, leading to AIDS.
HIV attaches itself to the target host cell using a harpoon-like surface protein called gp160. This protein spears the host cell's membrane, drawing them together so that the virus can fuse with the host cell.
Once attached, the virus penetrates the cell and commandeers the cell's machinery. Then it rapidly replicates itself.
What makes HIV-1 so lethal? It targets the most central cell of the immune system, the CD4+ T cells which produce the IL-2 cytokine, a key messenger for immune cells. These cells usually coordinate the cellular and humoral responses that are directed to thwart the pathogen (HIV). When the number of such CD4+ T cells decreases significantly over time, the amount of IL-2 becomes also too low for an efficient immune attack orchestration. Consequently, HIV as well as other pathogens evade the activity of the immune system, leaving the host vulnerable to disease.
HIV proves itself an elusive target because it:
o reproduces itself at an extraordinary rate (several billion new virus particles are created daily)
o mutates rapidly: as it reproduces itself, it makes mistakes that produce new virus particles that are slightly different; these differences make the virus harder to target by the immune system.
MYMETICS AND HIV/AIDS
Normally, the immune system would respond to this attack: IL-2 would be secreted mostly by activated CD4+ T cells to signal the alarm to the other T-Cells subtypes and B-cells. With HIV, this approach backfires. Why?
Mymetics has discovered a peculiar inter-reactivity between part of the virus's "harpoon" and the host cell's "alarm" (IL-2). We call it "mimicry".
The shaft of the virus' harpoon, called gp41, actually appears to "mimic" the host cell's IL-2. This dynamic enables the virus to attach itself to the host cell membrane at a precise portal. An unusual consequence: when the "soldiers" (antibodies) arrive to battle the virus, they "confuse" the virus's gp41 with the host cell IL-2 - and attack and destroy them both.
As the immune system methodically kills its own soldiers, the HIV continues to replicate swiftly. The equilibrium shifts and the HIV outpace our body's defenses. The result is AIDS, a fatal disease that affects an increasing number of people worldwide.
WHERE ARE WE AND WHERE ARE WE GOING?
Mymetics has documented the existence of an important three-dimensional molecular mimicry between the gp41 glycoprotein of HIV-1 and the human interleukin-2 (IL-2) cytokine, a mimicry also found in lentiviruses causing AIDS in other animal species. Mymetics has already explored this mimicry over the last three years as starting point for developing a safe HIV-1 candidate vaccine capable of eliciting neutralizing antibodies, while preventing potential harmful cross-reactivities toward host proteins such as the human IL-2 (Mymetics US Patent 6,455,265). We believe that this innovative concept may render vaccines from the 21st century as efficacious as those from the 20th century, in addition to be safer.
Together with Protein'eXpert S.A., we have succeeded in engineering and producing in bacteria E. Coli the first gp41 generation in September 2003, which forms soluble and stable gp41 trimers that closely resembles the native gp41 found on HIV-1. This first generation of gp41 immunogen is devoid of the cluster I and 2F5/4E10 epitopes, in addition of being mutated in one important IL-2 mimicry area. The design of the first gp41 generation was intended to identify new important epitopes as well as to focus the immune response on possible neutralizing epitopes different from the 2F5/4E10 previously identified by other teams.
From January to August 2004, the first gp41 generation was tested in rabbits for it's capacity to elicit neutralizing antibodies toward HIV-1. Such antibodies were obtained in large quantities and their neutralizing potential was evaluated by our academic collaborators. Thus, a renowned scientist in the field of transcytosis, Dr.
Morgane Bomsel (Cochin Institute, Paris, France), obtained 60% inhibition of HIV-1 transcytosis with primary strains. Sera were also tested in the laboratory of Dr Christiane Moog (Institut Pasteur, Strasbourg, France), a well acclaimed specialist in neutralizing antibodies in the HIV field. In the performed assay, primary T cells infection by primary HIV-1 strains (Bx-08 and SF-162) were respectively neutralized at 70% and 80% by low sera dilutions. When total rabbit antibodies were purified from the serum, a neutralizing activity of 80% was obtained with an antibody concentration of 20 ?g/ml, using three primary HIV-1 strains. These results are similar to those obtained with the 2F5 antibody (>90% inhibition), one of the most potent neutralizing antibodies so far identified but which sor has never turned out to be effective vaccine candidate. Infection of primary human macrophages by primary HIV-1 strains was also strongly inhibited (>90%) with a low antibody concentration (< 2 ?g/ml). These preliminary results are highly encouraging, considering that the first gp41 generation of immunogen did not include the 2F5/4E10 epitopes.
A second gp41 generation that has included the 2F5 and 4E10 epitopes was obtained in August 2004 and produced on a larger scale in September 2004. These new gp41 immunogens were incorporated into liposomes and were well recognized by the 2F5 and 4E10 monoclonal antibodies kindly provided by Dr Wayne Koff (IAVI), which suggest the presence of functional epitopes. Rabbit immunizations with gp41-liposomes have already started in mid-September and non-human primate (Rhesus macaque) immunizations are scheduled for November 2004. Presence of neutralizing antibodies in animal sera will be screened during winter 2005, involving different neutralizing assays performed by different laboratories in the US and France. Considering the encouraging results obtained with the first generation, we are expecting the second generation of gp41 to display a good cross-clade neutralizing activity toward various HIV-1 primary isolates. Results are expected by April 2005. Other complementary studies are under investigation for evaluating protein structures (MNR, circular dichroism), antigenicity and immunogenicity.
Meanwhile, a third and fourth generation of gp41 immunogens with improved strategies for epitope maintenance and presentation are already in the pipeline. These gp41 immunogens should be available in January-February 2005 for new immunization experiments. We are expecting to initiate mucosa immunizations in 2005 of non-human primates with these two generations of gp41 with newly formulated adjuvants, then challenge primates with viruses to study the immune protection. A pre-clinical lot of gp41 immunogen is planed for late 2005 for toxicology and phamacokinetics evaluation of the best gp41 immunogen. Human tolerance and immunogenicity of the best gp41 immunogen should thereafter take place in a phase I clinical trial in 2006-2007.
Visit our website (www.mymetics.com) for more information on our technology. Visit the IAVI web site (www.iavi.org) for more background information on AIDS.
VACCINAL USE OF THE MIMICRY DISCOVERY
Our current research modules focus on the following three fields:
- PREVENTIVE VACCINES. We believe that our discovery of the host-virus IL-2 mimicry opens the door to novel therapeutic and HIV-AIDS preventive vaccine strategies. We believe that properly mutated trimeric gp41 represent excellent candidate vaccines because they are devoid of the "IL-2" like structure and its harmful associated side effects. Furthermore, these engineered gp41 have conserved their antigenic properties and correspond to the most conserved region of the viral envelope glycoprotein, which otherwise exhibits considerable genetic diversity. Our
specific preventive vaccine would be "universal" in that it would train the body's immune system to recognize and defeat a broad array of HIV strains, while preventing the induction of the autoimmune reaction toward IL-2. Our recent advances in protein engineering and production allowed us to obtain very good soluble and stable trimeric gp41, which has accelerated the preliminary vaccine program.
- THERAPEUTIC MOLECULES. Based on insights into mimicry, we have developed a series of synthetic peptides that might inhibit the fusion between HIV or FIV and its target cell in an infected host. For the in vitro work, these synthetic peptides have been effective for blocking both HIV and FIV infections, while in vivo experiments with FIV peptides is under investigation to validate our HIV model. These therapeutic molecules would prevent the virus entry into the target cell, inhibiting its attempts to reproduce. Having demonstrated that the transmission of HIV depends on the viral load, and that no transmission has been observed below 1500 viral copies/ml., treatment with therapeutic agents may provide a strategy to control AIDS epidemicity. This application would complement available antiretroviral drugs, or may even provide a substitute for the available antiretroviral drugs. In a series of independent in vitro experiments, our rationally designed peptide compounds were proven to effectively block viral fusion. These compounds also showed a potency that is equivalent to the gp41 compound recently approved by the United States Food and Drug Administration (FDA). The relative potency of our compounds were presented in a poster presentation given at Interscience Conference on Antimicrobal Agents and Chemotherapy in San Diego CA in September 2002. An additional poster presentation at the International Feline Retrovirus Research Symposium conference in December 2002 showed the potency of a series of our FIV gp36-derived peptides, and in particular highlighted the surprising potency of a short compound (consisting of 8 amino acids only). Results were also recently published in the Journal of Virology (March 2003) in an article entitled "Antiviral Activity and Conformational Features of an Octapeptide Derived from the membrane-Proximal Ectodomain of the Feline Immunodeficiency Virus Transmembrane Glycoprotein." An additional poster presentation at the annual International Conference on Retroviruses and Opportunistic Infection in Boston in February 2003 communicated the results of a series of benchmarking in vitro assays, highlighting the potency of our HIV gp41 "IL-2 like"-derived peptide compounds across a wide array of clades or strains of the virus. These data appear to validate our strategy of creating compounds from well-conserved, IL-2-homologous regions, for the greatest possible application for patients worldwide. Based on the success of in vitro compounds, we launched our first in vivo tests in the feline model, collaborating with well-known research partners at the Retroviral Center at the University of Pisa, Italy. These tests are expected to provide valuable insight into the actual efficacy of the potential peptides, in particular the shorter peptides, which would offer a number of practical advantages in terms of commercialization, including less complexity, lower cost to manufacture, less immunogenicity, and potential greater bio-availability.
We currently have compound prototypes potentially capable of commercialization, including:
- Therapeutic molecules (pharmacological agents) - administered to infected subjects to prevent cell infection by HIV and FIV.
- Preventive vaccines - administered to healthy subjects to prevent infection by HIV or FIV.
For the year ended December 31, 2004, we focused on research and development and, as a result, did not generate any revenues or engage in any licensing activities. For the years ended December 31, 2004, December 31, 2003 and December 31, 2002, we spent E 612,000, E 1,263,000 and E 1,878,000 respectively, on research and development activities.
KEY PERSONS
See ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
RESEARCH AND DEVELOPMENT EXPENSES
INTELLECTUAL PROPERTY
We are the exclusive owner of intellectual property relating to our core business which is focused on the development of novel HIV and FIV therapeutics and vaccines. Particularly, we own two issued French patents FR99 06528 and FR01 15424 and one U.S. issued patent US 6,455,265 and its corresponding national filings and divisional filings in various countries including Europe, the United States, Japan, Canada and Israel. We also filed two Patent Cooperation Treaty, or PCT, applications, WO 03/048187 and WO 03/104262, with national phases in the United States and EP. We have additionally filed four United States provisional applications related to the field.
On July 24, 2004, we applied for a new U.S. patent which covers our mutated, trimeric, stable recombinant gp41 protein.
We rely primarily on a combination of patent, copyright, trademark and trade secret laws, as well as contractual restrictions, to protect our intellectual property. These legal protections afford limited protection. We generally require employees, strategic research partners and consultants with access to our intellectual property to execute confidentiality agreements. Despite our efforts to protect our intellectual property, unauthorized parties may attempt to copy the research and research methods that form the basis of our intellectual property. The laws of many countries do not afford the same level of protection as those provided by United States intellectual property laws. Litigation may be necessary to protect and enforce our rights in our intellectual property.
COMPETITION
We have not yet developed an actual product or generated any revenues. Our
future competitive position depends on our ability to successfully develop our
intellectual property, and to license or sell such intellectual property to
third parties on financially favorable terms. Although we believe that the
results of our research and development activities have been favorable, there
are numerous entities and individuals conducting research and development
activities in the area of human biology and medicine all of which could be
considered competitors.
Preventive Vaccines. We are conducting research aimed at developing a preventive
vaccine for the HIV-1 virus, which vaccine will provide protection against a
broad array of viral strains.
In the field of HIV vaccines, the failure in 2003 of the VAXGEN product in Phase III clinical trials underscores the need for an effective solution to the global
challenge posed by HIV. As this particular candidate was based on technology unrelated to our technology, we do not feel that the cessation of clinical trials with respect to VAXGEN negatively impacts our prospects for developing a viable preventive vaccine.
The worldwide vaccine market is dominated by four large multinational companies: Sanofi Pasteur S.A. (formerly Aventis Pasteur S.A.), Merck & Co., GlaxoSmithKline Plc, and Chiron Inc. Other companies such as Progenics Pharmaceuticals, Inc., are also developing preventive vaccines.
While many of these individuals and entities have greater financial and scientific capabilities, and greater experience in conducting pre-clinical and clinical trials, we believe that our innovative approach to vaccine development, which is based on the observed immunological cross-reactivity (or mimicry) between the well preserved, antigenic and immunodominant domain of GP41 and IL-2, and relies on the observation of expected autoimmune consequences in HIV infected subjects, will provide an advantage over existing and future approaches that have been pursued so far, including:
- Sub-unit vaccine: a technology addressing a piece of the outer surface of HIV, such as GP160 or GP120, produced by genetic engineering.
- Live vector vaccine: a live bacterium or virus such as vaccinia (used in the smallpox vaccine) modified so it cannot cause disease, but can transport into the body one or more genes that makes one or more HIV proteins.
- Vaccine combination: an example includes a "prime-boost strategy", use of a recombinant vector vaccine to induce cellular immune responses followed by booster shots of a sub-unit vaccine to stimulate antibody production.
- Peptide vaccine: chemically synthesized pieces of HIV proteins (peptides) known to stimulate HIV-specific immunity. - Virus-like particle vaccine (pseudovirion vaccine): a non-infectious HIV look-alike that has one or more, but not all, HIV proteins.
- DNA vaccine: direct injection of genes coding for HIV proteins.
- Whole-killed virus vaccine: HIV that has been inactivated by chemicals, irradiation or other means rendering it non-infectious.
- Live-attenuated virus vaccine: live HIV from which one or more apparent disease-promoting genes of the virus have been deleted.
GOVERNMENTAL REGULATION
Our strategy was crafted in part to minimize the risks usually associated with clinical trials, regulatory approvals and marketing, which we would expect to be borne by future partner(s).
We contract with third parties to perform research projects related to our business. These third parties are located in various countries and are subject to the applicable laws and regulations of their respective countries. Accordingly, regulation by government authorities in the United States and foreign countries is a significant factor in the development, manufacture and marketing of our proposed products by our future partners and therefore has an indirect impact on our ongoing research and product development activities. Any products that will be developed by our future partners(s) based on our
technology will require regulatory approval by government agencies prior to commercialization. In particular, human therapeutic products are subject to rigorous pre-clinical studies and clinical trials and other approval procedures of the FDA and similar regulatory authorities in foreign countries. In addition, various federal and state statutes and regulations will also govern or influence testing, manufacturing, safety, labeling, storage and record keeping related to such products and their marketing. The process of obtaining these approvals and the subsequent substantial compliance with appropriate federal and state statutes and regulations require the expenditure of substantial time and financial resources. Obtaining royalties in the future will depend on our future partners' ability to obtain and maintain the necessary regulatory approvals. Pre-clinical studies generally are conducted on laboratory animals to evaluate the potential safety and the efficacy of a product. In the United States, we must submit the results of pre-clinical studies to the FDA as a part of an investigational new drug application, or IND, which application must become effective before we can begin clinical trials in the United States. An IND becomes effective 30 days after receipt by the FDA unless the FDA objects to it. Typically, clinical evaluation involves a time-consuming and costly three-phase process. At this time, neither we nor any of our partners has submitted any of our pre-clinical results to the FDA nor any European or other health regulation agency. The process which is described below is therefore to be considered as generic background information which is relevant to the industry as a whole.
Phase I. Refers typically to closely monitored clinical trials and includes the initial introduction of an investigational new drug into human patients or normal volunteer subjects. Phase I clinical trials are designed to determine the metabolic and pharmacologic actions of a drug in humans, the side effects associated with increasing drug doses and, if possible, to gain early evidence on effectiveness. Phase I trials also include the study of structure-activity relationships and mechanism of action in humans, as well as studies in which investigational drugs are used as research tools to explore biological phenomena or disease processes. During Phase I clinical trials, sufficient information about a drug's pharmacokinetics and pharmacological effects should be obtained to permit the design of well-controlled, scientifically valid, Phase II studies. The total number of subjects and patients included in Phase I clinical trials varies, but is generally in the range of 20 to 80 people.
Phase II. Refers to controlled clinical trials conducted to evaluate the effectiveness of a drug for a particular indication or indications in patients with a disease or condition under study and to determine the common short-term side effects and risks associated with the drug. These clinical trials are typically well-controlled, closely monitored and conducted in a relatively small number of patients, usually involving no more than several hundred subjects.
Phase III. Refers to expanded controlled clinical trials, which many times are
designated as "pivotal trials" designed to reach end points that the FDA has
agreed in advance, if met, would allow approval for marketing. These clinical
trials are performed after preliminary evidence suggesting effectiveness of a
drug has been obtained. They are intended to gather additional information about
the effectiveness and safety that is needed to evaluate the overall benefit-risk
relationship of the drug and to provide an adequate basis for physician
labeling. Phase III trials can include from several hundred to several thousand
subjects depending on the specific indication being treated.
The FDA closely monitors the progress of each of the three phases of clinical
trials that are conducted in the United States and may, at its discretion,
reevaluate, alter, suspend or terminate the testing based upon the data
accumulated to that point and the FDA's assessment of the risk/benefit ratio to
the patient. We have
not yet conducted any clinical trials and are currently focused on research.
Once Phase III trials are completed, drug developers submit the results of pre-clinical studies and clinical trials to the FDA, in the form of an new drug application, or NDA, for approval to commence commercial sales. In response, the FDA may grant marketing approval, request additional information or deny the application if the FDA determines that the application does not meet the predetermined study end points and other regulatory approval criteria. Furthermore, the FDA may prevent a drug developer from marketing a product under a label for its desired indications, which may impair commercialization of the product.
If the FDA approves the new drug application, the drug becomes available for physicians to prescribe in the United States. After approval, the drug developer must submit periodic reports to the FDA, including descriptions of any adverse reactions reported. The FDA may request additional studies, known as Phase IV trials, to evaluate long-term effects. We will be required to comply with similar regulatory procedures in countries other than the United States. In addition to studies requested by the FDA after approval, a drug developer may conduct other trials and studies to explore use of the approved compound for treatment of new indications. The purpose of these trials and studies and related publications is to broaden the application and use of the drug and its acceptance in the medical community.
Our future partner(s) will have to complete an approval process, similar to the one required in the United States, in virtually every foreign target market in order to commercialize product candidates based on our technology in those countries. The approval procedure and the time required for approval vary from country to country and may involve additional testing. Approvals (both foreign and in the United States) may not be granted on a timely basis, or at all. In addition, regulatory approval of prices is required in most countries other than the United States. We face the risk that the resulting prices would be insufficient to generate an acceptable return to our partner(s).
EMPLOYEES
As of December 31, 2004, Our Luxembourg affiliate had no employees, Mymetics S.A. had one full-time employee which had her contract terminated as of January 31, 2005 and Mymetics Corporation had two full-time employees: Mr. Cristian J.-F. Rochet, our Chief Executive Officer, and Mr. Ernst Luebke, our Chief Financial Officer. Both officers were employed under informal agreements based on general terms agreed in 2003 by our Board of Directors. Under said agreements, both officers' salary will only be paid once the Company's financial position would allow it to do so. At December 31, 2004, Mr. Rochet and Mr. Luebke were owed Euro 51,230 and Euro 115,494 respectively as a result of this decision.
WWW.MYMETICS.COM
News and information about Mymetics Corporation and its subsidiaries is available on our web site, www.mymetics.com.
ITEM 2. PROPERTIES
We currently occupy two leased properties, one in Nyon, Switzerland, very near to Geneva, and the other in Saint-Genis Laval, France, very near to Lyon.
Our Nyon facility, at 14, rue de la Colombiere, has approximately 60 square meters of office space that houses our administrative operations.
Our Saint Genis Laval location, at 52, avenue de Chanoine Cartellier has approximately 45 square meters of office space that is used by our head of exploratory research.
We also conduct our research operations at the properties of various third parties, worldwide.
We believe that our current facilities are adequate for our foreseeable needs, and no additional space presently is necessary. The lease in Nyon can be terminated at short notice, and the one in Saint Genis Laval expires in 2006.
ITEM 3. LEGAL PROCEEDINGS
We are a party to routine litigation incident to our business. Our policy is to defend vigorously only the suits with material amounts being sought in damages and after considering the potential legal costs involved. We do not currently maintain any insurance but are planning to conclude one as soon as our financial resources will allow it.
We are subject to a judgment against our subsidiary Mymetics S.A. issued in July 2004 by a court ("Tribunal de Prud'hommes") in Nantes (France). A former employee received a temporary judgment against us for E4,000 for alleged wrongful termination by the former management of Mymetics S.A. We do not intend to appeal the judgment as the legal costs involved would probably be higher than the damage at stake.
We were party to a second case in which a creditor of ours claims that we owe it approximately E30,000. The claim was filed before a court in Lyon ("Tribunal de Grande Instance") on June 29, 2004. We expect to settle the case as soon as our financial resources will allow it.
We are subject to a proceeding brought by Dr. Serres, a current director and former officer for alleged wrongful termination of Dr. Serres by our previous management. Dr. Serres was reinstated as Chief Scientific Officer by the new Board of Directors retroactively from May 5, 2003 until November 3, 2003, when he was promoted as Head of Exploratory Research, his current position with the Company. In exchange for being reinstated retroactively, Dr Serres agreed to forfeit all legal and punitive compensation for having been terminated without cause. The French Industrial Tribunal granted Dr. Serres E45,735 in an emergency injunction of October 14, 2003. The final amount which Dr. Serres has claimed in terms of legal and punitive compensation if the case had been allowed to run its full course is in excess of Euro 175,000. Our French legal counsel believe however that this claim is without merit as under French law, salaried company directors and officers are only eligible for severance pay and other compensation if certain, very stringent, conditions are met which, in our counsels' opinion, is evidently not the case for Dr. Serres. The agreement between Dr. Serres and the Company has yet to be finalized.
While we expect to prevail in all of these cases, our management believes that adverse results in one or more of these cases could have a material adverse effect on our results of operations in future periods.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Information. The Corporation's common stock is quoted on the OTC Bulletin Board under the trading symbol "MYMX". The Corporation's trading symbol changed from ICHR to MYMX in July 2001, pursuant to a corporate name change from ICHOR Corporation to Mymetics Corporation. The following table sets forth the quarterly high and low sale price per share of the Corporation's common stock for the periods indicated. The prices represent inter-dealer quotations, which do not include retail mark-up, mark-down or commission and may not necessarily represent actual transactions.
FISCAL QUARTER ENDED HIGH LOW 2003 March 31......................................... $ 0.22 $ 0.09 June 30.......................................... 0.14 0.09 September 30..................................... 0.12 0.07 December 31...................................... 0.14 0.04 2004 March 31......................................... $ 0.125 $ 0.125 June 30.......................................... 0.118 0.10 September 30..................................... 0.08 0.08 December 31...................................... 0.30 0.27 |
(b) Stockholders. At March 5, 2005, the Corporation had approximately 796 holders of record of its common stock, some of which are securities clearing agencies and intermediaries.
(c) Dividends. The Corporation has not paid any dividends on its common stock and does not anticipate that it will pay any dividends in the foreseeable future.
(d) Securities Authorized for Issuance Under Equity Compensation Plans.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information about the common stock that may be issued upon the exercise of options, warrants and rights under all of our existing equity compensation plans as of December 31, 2004.
-----------------------------------------------------------------------------------------------------------------------------
Number of Securities remaining
available for issuance under
Number of Securities to be Weighted Average Exercise equity compensation plans
issued upon exercise of Price of Outstanding (excluding securities reflected
Options, Warrants and Options, Warrants and in column (a))
Rights Rights
Plan Category (a) (b) (c)
-----------------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans
Approved by Security Holders (1) 556,250 (2) U.S. $0.92 4,557,500
-----------------------------------------------------------------------------------------------------------------------------
Equity Compensation Plans not
Approved by Security Holders 1,500,000 (3) U.S. $0.10 N/A
-----------------------------------------------------------------------------------------------------------------------------
Total 2,186,416 U.S. $0.39 4,557,500
-----------------------------------------------------------------------------------------------------------------------------
|
(1) Equity compensation plans approved by our security holders include (i) our 1994 Amended and Restated Stock Option Plan, (ii) our 1995 Qualified Incentive Stock Option Plan and (iii) our 2001 Stock Option Plan. Our 1994 Amended and Restated Stock Option Plan and our 1995 Qualified Incentive Stock Option Plan were both terminated in March 2001, but some options granted under these plans prior to such termination remain outstanding and are included in this table.
(2) Includes (i) 442,500 shares of common stock underlying options granted under our 2001 Stock Option Plan, (ii) 100,000 shares of common stock underlying options granted under our 1995 Qualified Incentive Stock Option Plan and (iii) 13,750 shares of common stock underlying options granted under our 1994 Amended and Restated Stock Option Plan.
(3) We do not have any formal equity compensation plan that has not been authorized by our stockholders. These grants are made on an individual basis and are approved by our board of directors. Accordingly, there are no shares of common stock reserved for issuance under these arrangements.
ISSUANCES OF UNREGISTERED SECURITIES
Set forth below is information regarding our sales of unregistered securities during the period commencing on January 1, 2004 and ending on March 7, 2005. These issuances were made in reliance on the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as transactions by an issuer not involving any public offering.
The present Board of directors believes that until such time as the Company has fully recovered from its present difficult situation, it should be managed exclusively by major shareholders to ensure that stakeholders' long term interests would prevail over short term mercenary considerations.
The present Board of directors further believes that the Company needs to have rapid access to the inner circle of world opinion leaders in matters of HIV-AIDS if it wants to have its ideas, work and results peer recognized and accepted to qualify for grants and other donations. With this in mind, we have been able to attract world class personalities such as Mr. Jacques-Francois Martin, former CEO of Laboratoires Merieux, member of the Board of the IAVI and CEO of the vaccine Fund chaired by Mr. Nelson Mandela, and Professor Marc Girard, DVM, D. Sc., former Head
of the Laboratory of Molecular Virology at the Pasteur Institute in Paris (France), former Director, European Research Center for Virology and Immunology (CERVI) in Lyon (France), former Head of the HIV Task Force at the French National Agency for AIDS Research (ANRS), Paris, former Director General of the Merieux Foundation in Lyon (France), former Chairman of the European Consortium for an HIV Vaccine (EuroVac), Brussels. But one doesn't attract bees with vinegar, thus:
- - In January 2004, we issued two investors 2,000,000 common shares of Mymetics Corporation for E166,400, or approximately $.10 per share.
- - In January 2004, we issued the same two investors warrants to acquire, before July 31, 2004, an additional 2,000,000 common shares of Mymetics Corporation at $.10 per share.
- - In January 2004, we issued Professor Marc Girard, DVM, D. Sc., 500,000 common shares of Mymetics Corporation in recognition of his support of the Company and in compensation for his modest remuneration as Head of our Vaccines Development.
- - In January 2004, we issued two free-lance secretaries 25,000 shares each for services rendered to our CEO, Mr. Christian Rochet, in lieu of cash compensation.
- - In February 2004, we issued one investor 2,500,000 common shares of Mymetics Corporation for $250,000, or $.10 per share.
- - In February 2004, we issued the same investor a warrant to acquire, before July 31, 2004, an additional 2,500,000 common shares of Mymetics Corporation at $.10 per share.
- - In April 2004, we issued CEDIC, a not-for-profit French foundation headed by Professor Touraine, 120,000 shares in settlement of a dispute which had arisen during the previous management's tenure.
- - In May 2004, we issued MFC Merchant Bank SA 500,000 shares as fee for the 6-month extension of its E3.2 million loan.
- - In June 2004, two investors exercised their options to acquire 2,000,000 common shares of Mymetics Corporation for $200,000, or $.10 per share.
- - In August 2004, we issued two investors 500,000 common shares of Mymetics Corporation for $50,000, or $.10 per share.
- - In August 2004, we issued one investor 766,667 common shares of Mymetics Corporation for $100,000, or $.13 per share.
- - In August 2004, we issued our French accountant and a Swiss consultant 100,000 shares each for services rendered to the Company, in lieu of cash compensation.
- - In August 2004, we issued one investor 200,000 common shares of Mymetics Corporation for $24,000, or $.12 per share.
- - In August 2004, we issued our Luxembourg legal adviser 50,000 common shares of Mymetics Corporation for services rendered in lieu of cash compensation.
- - In September 2004, we issued one investor 50,000 common shares of Mymetics Corporation for $5,000, or $.10 per share.
- - In September 2004, we issued our CEO's free-lance secretary 20,000 shares each for services rendered in lieu of cash compensation.
- - In September 2004, we issued two German market communication consultants 500,000 shares for services rendered to the Company, in lieu of cash compensation.
- - In October 2004, we issued Cornell Capital Partners LLP 2,013,109 shares as commitment fee under the $5 million Standby Equity Funding Agreement.
- - In October 2004, we issued Newbridge Securities Corporation 93,633 shares as fee under the $5 million Standby Equity Funding Agreement.
- - In November 2004, we issued one investor 40,000 common shares of Mymetics Corporation for $5,000, or $.10 per share.
- - In November 2004, we issued one creditor (and former plaintiff) 2,000,000 common shares of Mymetics Corporation as collateral for the CHF 120,000 (approx. $100,000) awarded to him by the courts of Geneva (Switzerland). These shares shall be returned to the Company once the amount due is fully paid.
- - In March 2005, we issued MFC Merchant Bank SA 500,000 shares as fee for the restructuring of its E3.4 million loan.
- - In March 2005, we issued Professor Stanley A. Plotkin 200,000 shares as initial fee for joining our Board of Directors.
- - In March 2005, we issued Northern Light International 1,500,000 shares as fee for consulting services.
All such issues of shares and warrants were made under an informal Equity Compensation Plan not approved by Security holders. These grants were made on an individual basis and were approved by our Board of directors.
ITEM 6. SELECTED FINANCIAL DATA
The following table reflects selected consolidated financial data for the Corporation for the fiscal years ended December 31, 2004, 2002, 2001, 2000, and 1999, respectively.
For THE FOR THE FOR THE FOR THE FOR THE
YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED
DEC 31, DEC 31, DEC 31, DEC 31, DEC 31,
2004 2003 2002 2001 2000
---- ---- ---- ---- ----
(EUROS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA
Operating revenues 0 0 8 26 13
Research & Development
Expenses 612 1,263 1,878 482 101
General & Administrative
Expenses 1,264 1,090 1,293 1,034 351
Loss from continuing
Operations 2,202 2,786 (3,622) (1,848) (1,314)
COMMON SHARE DATA(1)
Loss from continuing
operations per
common share (0.04) (0.05) (0.07) (0.04) (0.04)
Weighted average common
shares outstanding
(in thousands) 62,145 51,285 50,046 42,460 33,311
BALANCE SHEET DATA
Working capital (2,035) (4,294) (2,306) 504 (652)
Total assets 192 367 477 1,692 625
Long-term obligations 3,110 242 242 242 242
Total stockholders'
equity (5,065) (4,400) (2,349) 693 (765)
|
(1) Basic and diluted common share data is the same.
ITEM 7. 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 years ended December 31, 2004, 2003 and 2002 should be read in conjunction with the Corporation's audited consolidated financial statements and related notes and the description of the Company's business and properties included elsewhere herein.
RESULTS OF OPERATIONS - YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002
We did not achieve any revenue for the years ended December 31, 2004 or December 31, 2003. Our lack of revenue is directly attributable to our focus on research and development. The Company predicts that this focus will continue for the foreseeable future, but we are unable to predict future economic conditions at the time that our products are ready to be commercialized by our future partners(s), as described elsewhere in this document. Future revenues could be affected by local and other economic conditions, technology, competitive forces, and/or challenges to the Company's intellectual property.
We achieved E8,000 in revenue for the year ended December 31, 2002. Costs and expenses decreased to E2,202,000 for the year ended December 31, 2004 from E2,786,000 for the year ended December 31, 2003, a decline in costs and expenses of 20.9%.
Research and development expenses decreased to E612,000 in the current period from E1,263,000, a decline of 51.5% in the comparative period of 2003, mostly due to our decision to adapt our R&D efforts to our present financial capabilities by i) focusing our efforts on the development of a preventive human vaccine against HIV-AIDS, an area in which we believe to have a competitive advantage and which addresses a world crisis of catastrophic proportion, ii) temporarily suspending our development efforts of therapeutic human antiviral peptides which, despite showing very encouraging results, would be facing strong existing competition, iii) suspending the development of a feline preventive vaccine which, despite being an excellent model for our mimicry based technology would have only limited commercial potential and iv) abandoning all development of our feline therapeutic peptides due to our perception of a weak or non existent commercial potential.
General and administrative expenses increased to E1,264,000 in the year ended December 31, 2004 from E1,090,000, an increase of 16.0% in the comparable period of 2003. The net increase in our expenses results from i) a general decrease of E62,000 in operating expenses such as rent, lawyers fees, etc. and ii) E207,000 as cost of shares issued for services, such as the initial grant of 500,000 shares to Professor Girard, our Head of vaccines development (E29,000), or the cost of shares issued in addition to cash, either to "buy time" from critical creditors inherited from the former management or to "buy fidelity" from critical suppliers of services.
Costs and expenses decreased to E2,786,000 for the year ended December 31, 2003 from E3,630,000 for year ended December 31, 2002, a decline of 23.3%, essentially as a result of a decrease in salaries and fees paid to former well paid officers having left the Company in 2003, partially replaced in August 2003 by shareholder officers drawing moderate salaries and incurring limited travel expenses, in particular a marked reduction of transatlantic flights.
Research and development expenses decreased to E1,263,000 in 2003 from E1,878,000 in the comparable period of 2002, a decline of 32.7%. General and administrative
expenses decreased to E1,090,000 in the year ended December 31, 2003 from E1,293,000 in the comparable period of 2002, a decline of 15.7% reflecting the former management's decision to wind up the Company.
CRITICAL ACCOUNTING POLICIES AND MANAGEMENT ESTIMATES
The preparation of consolidated financial statements in accordance with accounting principles generally accepted in the United States of America requires management to use judgment in making estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Certain of the estimates and assumptions required to be made relate to matters that are inherently uncertain as they pertain to future events. While management believes that the estimates and assumptions used were the most appropriate, actual results could differ significantly from those estimates under different assumptions and conditions. The following is a description of those accounting policies believed by management to require subjective and complex judgments which could potentially affect reported results.
REVENUE RECOGNITION AND RECEIVABLES
As we are a development stage company, we have not generated any material revenues since we commenced our current line of business in 2001, and we do not anticipate generating any material revenues on a sustained basis unless and until a licensing agreement or other commercial arrangement is entered into with respect to our technology.
However, should the Company engage in any form of commercial activity, a Revenue Recognition and Receivables policy according to the following principles would be implemented:
Revenue related to the sale of products is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectibility is reasonably assured. Receivables are stated at their outstanding principal balances. Management reviews the collectibility of receivables on a periodic basis and determines the appropriate amount of any allowance. Based on this review procedure, management has determined that the allowances at December 31, 2004 and 2003 are sufficient. The Company charges 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.
The Company makes estimates of the uncollectibility of its accounts receivable. The Company analyzes accounts receivable and historical bad debt levels, customer credit worthiness, and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. In addition, customers in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims. The Company's net income is directly affected by management's estimate of the collectibility of accounts receivable.
Management believes that adequate controls are in place to ensure compliance with contractual product specifications, a substantial history of such performance has been established, and historical returns and allowances have not been significant. If actual sales returns and allowances exceed historical amounts, the Company's sales would be adversely affected.
The Company continuously monitors collections and payments from its customers. While credit losses have historically been within expectations and the provisions established, the Company cannot guarantee that it will continue to experience the same credit loss rates that it has in the past.
RECENT ACCOUNTING PRONOUNCEMENTS
See Note 1 of Notes to Consolidated Financial Statements for a full description of recent accounting pronouncements including the respective dates of adoption and effects on results of operations and financial condition.
BUSINESS PLAN
During the next 12 months we intend to continue development and commercialization activities currently underway and to explore new activities. With respect to our gp41 research activities, we intend to continue the activities currently ongoing. In this regard:
- We completed the testing in rabbits for capacity to elicit neutralizing antibodies from our first generation of recombinant, mutated, trimeric, stable and soluble gp41 proteins at two laboratories in France and received highly encouraging results.
- We expect to complete the screening for the presence of neutralizing antibodies in animal sera with our second and third generations of recombinant, mutated, trimeric, stable and soluble gp41 proteins and to have results by the end of 2005.
- We plan to continue to engage in gp41 testing, including initiating mucosa immunizations of non-human primates and, beginning in 2006, a phase I clinical trial for human tolerance.
The precise timing of the gp41 (and any related) activities over the next 12 months and beyond cannot be predicted with certainty, as they are dependent upon the timing of completion of research and development milestones and the requirements of our testing laboratories. For a description of the activities proposed to be conducted in relation to gp41, see "Description of Business - Where Are We and Where Are We Going?"
Along with our gp41 research, we continue to explore other complementary research studies conducive to the further research and development of an HIV-1 vaccine.
As discussed in the section entitled "Description of Business - Mymetics Corporation," we subcontract our research project modules to best of class research teams. We pay for and coordinate the work, consolidate the results, and retain all associated intellectual property. On rare occasions, we sign partnership agreements with companies offering technologies that can enhance our products.
As discussed in the section entitled "Description of Business - Government Regulation," we will contract with third parties to develop future products based upon our technology, and the process for that product development is highly regulated.
The first phase involves closely monitored clinical trials and the initial introduction of an investigational new drug into human patients. We expect to complete these human clinical phase I trials by the end of 2007 and then to sign a partnership agreement with a major pharmaceutical company. The agreement most likely would involve an initial cash payment, followed by a series of payments associated with specific milestones and, finally, royalties on any sales of end products.
We have initiated discussions under Non Disclosure Agreements with three of the five major pharmaceutical companies targeted as potential development partners. We do not expect to generate any revenues from any of our product development activities or licensing until 2009.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation had no/immaterial cash at December 31, 2004, compared to E125,000 at December 31, 2003 and E183,000 at December 31, 2002.
As we are a development stage company, we have not generated any material revenues since we commenced our current line of business in 2001, and we do not anticipate generating any material revenues on a sustained basis unless and until a licensing agreement or other commercial arrangement is entered into with respect to our technology.
Increases in borrowing pursuant to a non-revolving term facility and other short term advances provided cash of E241,000 in current year, E1,138,000 in the comparative period last year and E2,173,000 in 2002. The non-revolving term facility is in the principal amount of up to E3.7 million and matures on December 31, 2006, with partial repayments of E200,000 on June 30, 2005, E300,000 on December 31, 2005 and E400,000 on June 30, 2006. In addition, any amount repaid under this facility can be converted at the lender's option into "rule 144" restricted common shares of Mymetics Corporation at $0.30 per share. At December 31, 2004, Mymetics had borrowed an aggregate of E3,368,000 pursuant to this non-revolving term facility.
As of December 31, 2004, we had an accumulated deficit of approximately E12 million and we incurred losses of E2,202,000 in the twelve-month period ending December 31, 2004. These losses are principally associated with the research and development of our HIV vaccine technologies, research into potential animal AIDS treatments, and other related research activity. We expect to continue to incur expenses in the future for research, development and activities related to the future licensing of our technologies. These losses also include approximately E1,383,000 of stock based compensation and E274,000 directors' fees. For further information regarding stock-based compensation and other amounts paid to officers, directors, affiliates and their immediate family members, see the section of this report entitled "Executive Compensation."
Accounts payable of E1,491,000 at December 31, 2004, include E326,000 due to our officers as unpaid salaries, fees and out-of-pocket expenses and E1,165,000 representing various monthly bills for operating expenses paid to unrelated third parties, including utility bills, equipment servicing, laboratory expenses, plant and office expenses, and professional fees. Payable to Shareholders of E242,000 at December 31, 2004, represents various amounts advanced by our founder, Dr. P.-F. Serres, to Hippocampe S.A. (now Mymetics S.A., our French affiliate) between 1990 and 1999. These advances are reimbursable subject to the French legal concept of "retour a meilleure fortune" or "return to better times". This ambiguous concept has been contractually defined in november 1998 between Dr. Serres and Aralis Participations S.A., then a major shareholder of Hippocampe S.A., as essentially a positive working capital ratio of 1.2 during four consecutive quarters, said ratio to be computed exclusively on the basis of commercial revenues for Hippocampe S.A., i.e. to the exclusion of subsidies, whether from related or unrelated parties. Considering the present status of Mymetics S.A., it is impossible to predict when such amounts will be reimbursed to Dr. Serres. Consequently, they are classified as long term debts.
Net cash used by operating activities was E1,241,000 for the year ended December 31, 2004, compared to E1,773,000 for the year ended December 31, 2003 and E3,235,000 for the year ended December 31, 2002. The major factor were successive increases in accounts payable, which provided cash of E259,000, E780,000 and E16,000 for the years ended December 31, 2004, 2003 and 2002 respectively.
Investing activities provided immaterial cash for the years ended December 31, 2004 and 2003, and E252,000 for 2002.
Financing activities provided cash of E928,000 for the year ended December 31, 2004 compared to E1,263,000 in the same period last year and E2,181,000 in 2002.
Proceeds from issuance of common stock provided cash of E687,000 for the year ended December 31, 2004 compared to E125,000 in the same period in 2003 and E8,000 during the year 2002.
Our budgeted monthly cash outflow, or cash burn rate, for 2005 is approximately 240,000 per month for fixed and normal recurring expenses, as follows, assuming we will be able to obtain the necessary financing:
Current budget Monthly 12 Months
------- ---------
Management salaries, social costs and fees E 50,000 600,000
Traveling expenses 20,000 240,000
Property leases and operating expenses 2,000 24,000
Administration (accounting and 1 secretary) 13,000 156,000
Professional fees 20,000 240,000
Interest expenses 14,000 168,000
------- ---------
Total General and Administrative expenses E 119,000 1,452,000
------- ---------
Internal R&D (salaries and Laboratory reagents) 18,000 216,000
Pre-clinical trials 35,000 420,000
External collaborators 68,000 816,000
------- ---------
Total Research and Development expenses 121,000 1,452,000
------- ---------
Total E 240,000 2,880,000
======= =========
|
We expect that the monthly cash outflow may increase significantly as the Company increases its research and development activities, and prepares for additional research and compliance duties associated with the signing of a partnership agreement with a major pharmaceutical company.
"Salaries and related payroll costs" represents fees for all of our directors other than our employee directors, gross salaries for two of our executive officers, and payments under consulting contracts with two of our officers. We do not pay our non-employee directors, and we credit our two salaried executive officers a combined amount of E16,000 per month (E20,000 in 2005). Since January 1, 2004, payments of $CHF 9,000 (approx. E6,000) per month for Sylvain Fleury's services as our Chief Scientific Officer have been made pursuant to a three-way consulting agreement with Centre Hospitalier Universitaire Vaudois (CHUV), a Swiss University Hospital located in Lausanne, where Dr. Fleury is employed to allow him to supervise a research project funded by the Swiss FNRS (Swiss National Research Foundation) which he had initiated before joining Mymetics. Since January 1, 2004, payments of $E4,000 per month for Marc Girard's services as our Head of Vaccines Development have been made pursuant to a consulting agreement with the World Health Organization. For further information regarding these consulting agreements, see "Executive Compensation - Employment and Consulting Contracts" appearing elsewhere in this report
Monthly fixed and recurring expenses for "Property leases" of $E2,000 represents the represents the monthly lease and maintenance payments to unaffiliated third parties for our executive offices located at 14, rue de la Colombiere in Nyon (Switzerland) (600 square feet), and at 52, avenue du Chanoine Cartellier in Saint Genis Laval (France) (500 square feet). The lease of our Swiss office can be cancelled on one month notice, while the lease of our French facility expires in January 2006. We do not lease any research facilities, Dr. Fleury's facilities
being provided free of charge by CHUV as part of his FNRS project. We will eventually have to lease our own minimal laboratory facilities to conduct quality checks and to verify scientific results once Dr. Fleury's FNRS project comes to an end, which is not scheduled to occur before the end of 2005. We are planning to lease in due time readily available facilities on the campus of the Swiss Federal Institute of Technology (EPFL) in Lausanne (Switzerland), located 15 miles from our Nyon office.
Included in professional fees are estimated recurring legal fees paid to outside corporate counsel and ongoing litigation expenses, audit and review fees paid to our independent accountants, and fees paid for investor relations.
"Interest expense" represents interest paid to MFC Merchant Bank S.A. for a note payable. This note payable in the maximum amount of E3.7 million carries an interest rate of Libor + 4% which is accrued on a quarterly basis.
As of March 17, 2005, we had two full-time salaried executives, exclusive of our contracts for the consulting services of our Chief Scientific Officer and our Head of Vaccines Development. Certain secretarial work for our CEO is outsourced to self-employed secretaries who accept being partially paid in common restricted shares of Mymetics at the current market price of our common stock.
We anticipate hiring an administrative assistant to our CFO as well as a part-time laboratory technician and a scientific assistant to our CSO in the first half of 2005, and may need to hire additional personnel in order to meet the needs and demands of any future workload.
We intend to continue to incur additional expenditures during the next 12 months for additional research and development of our HIV vaccines. These expenditures will relate to the continued gp41 testing and are included in the monthly cash outflow described above. Additional funding requirements during the next 12 months may arise upon the commencement of a phase I clinical trial. We expect that funding for the cost of any clinical trials would be available either from current cash reserves or from potential pharmaceutical partners before we commence the human trials.
In the past we have financed our research and development activities primarily through debt and equity financings from various parties.
The Corporation anticipates its operations will require approximately E2.8 million in the year ending December 31, 2005. The Corporation will seek to raise the required capital from lenders, equity or debt issuances, donors and/or potential partnerships with major international pharmaceutical and biotechnology firms. However, there can be no assurance that the Corporation will be able to raise additional capital on terms satisfactory to the Corporation, or at all, to finance its operations. In the event that the Corporation is not able to obtain such additional capital, it would be required to further restrict or even halt its operations.
RECENT FINANCING ACTIVITIES
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 research costs associated with our gp41 testing. We expect to begin phase I clinical trials in 2006. We will subcontract this research work to best of class research teams.
We do not anticipate that our existing capital resources will be sufficient to fund our cash requirements through the next month. We do not have enough cash presently on hand, based upon our current levels of expenditures and anticipated needs during this period, and we will need additional proceeds from the exercise of warrants and options and other sources such as private placements under
Regulation D and Regulation S under the Securities Act of 1933. Additional working capital will be required to meet our requirements by July 2005. 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 future clinical trials.
To date we have generated no material revenues from our business operations. We are unable to predict when or if we will be able to generate revenues from licensing our technology or the amounts expected from such activities. These revenue streams may be generated by us or in conjunction with collaborative partners or third party licensing arrangements, and may include provisions for one-time, lump sum payments in addition to ongoing royalty payments or other revenue sharing arrangements. However, we presently have no commitments for any such payments.
Sources of additional capital include the exercise of additional options and warrants currently held by investors and funding through future collaborative arrangements, licensing arrangements, and debt and equity financings. We do not know whether additional financing will be available on commercially acceptable terms when needed. If we 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 we are unable to secure such additional financing when needed, we will have to curtail or suspend all or a portion of our business activities and we could be required to cease operations entirely. Further, if we issue equity securities, our shareholders may experience severe dilution of their ownership percentage.
OFF-BALANCE SHEET ARRANGMENTS
The Corporation does not have any off-balance sheet arrangements.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
PAYMENTS DUE BY PERIOD (THOUSANDS OF EUROS)
CONTRACTUAL OBLIGATION TOTAL LESS 1 - 3 3 - 5 MORE
THAN YEARS YEARS THAN
1 YEAR 5 YEARS
Long-term debt E3,368 E500 E2,868 E0 E0
Capital Lease Obligations E0 E0 E0 E0 E0
Operating Lease Obligations E7 E6 E1 E0 E0
Purchase Obligations E180 E120 E30 E30 E0
Other Long-Term Liabilities Reflected on E242 E0 E242 E0 E0
Mymetics Balance Sheet under GAAP
TOTAL E429 E126 E273 E30 E0
|
(1) Includes E62,000 with our supplier of gp41 proteins and E10,000 for neutralizing antibodies tests currently under way.
(2) Office lease rent in France.
(3) French auditors ("Commissaire aux Comptes") are elected for 6 years and cannot be terminated. Our French auditor has been reelected in 2003. Based on current budget and cost estimates, we posted E20,000 for the 2004 audit and E15,000 per year for the audits 2005 until 2009.
(4) Due to Dr. P.-F. Serres, one of our directors, repayable only after our French subsidiary's financial situation has been stable and its equity reconstituted. We hope to achieve this condition within 3 years.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk from changes in interest rates which could affect our financial condition and results of operations. We have not entered into derivative contracts for our own account to hedge against such 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 debt obligations which are sensitive to interest rate fluctuations. The following tables provide information about our exposure to interest rate fluctuations for the carrying amount of such debt obligations as of December 31, 2004 and 2002 and expected cash flows from these debt obligations.
EXPECTED FUTURE CASH FLOW
YEAR ENDING DECEMBER 31, 2004
(IN THOUSANDS)
--------------
CARRYING FAIR
VALUE VALUE 2005 2006 2007 2008 2009 THEREAFTER
----- ----- ---- ---- ---- ---- ---- ----------
Debt obligations...... E3,368 E3,368 E3,060 E-- E-- E-- E-- E--
|
YEAR ENDING DECEMBER 31, 2003
(IN THOUSANDS)
--------------
CARRYING FAIR
VALUE VALUE 2004 2005 2006 2007 2008 THEREAFTER
----- ----- ---- ---- ---- ---- ---- ----------
Debt obligations...... E3,127 E3,127 E3,221 E-- E-- E-- E-- E--
|
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements and supplementary data required with respect to this Item 8, and as identified in Item 14 of this annual report, are included in this annual report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES.
(a) Disclosure Controls and Procedures. As of the end of the registrant's fiscal year ended December 31, 2004, an evaluation of the effectiveness of the registrant's "disclosure controls and procedures" (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) was carried out by the registrant's principal executive officer and principal financial officer. Based upon that evaluation, the registrant's principal executive officer and principal financial officer have concluded that as of the end of that fiscal year, the registrant's disclosure controls and procedures are effective to ensure that information required to be disclosed by the registrant in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.
It should be noted that while the registrant's principal executive officer and principal financial officer believe that the registrant's disclosure controls and procedures provide a reasonable level of assurance that they are effective, they do not expect that the registrant's disclosure controls and procedures or internal control over financial reporting will prevent all errors and fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
(b) Changes in Internal Control Over Financial Reporting. During the fiscal year ended December 31, 2004, there were no changes in the registrant's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting.
PART III
ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT
The number of directors of the Company is established at six.
Our six person board is divided into three classes, designated as Class I, Class II and Class III. The term of the Class I directors will expire at our 2004 annual meeting of stockholders, the term of the Class II directors will expire at our 2005 annual meeting of stockholders, and the term of the Class III directors will expire at our 2003 annual meeting of stockholders. A plurality of the votes of the shares of our common stock present in person or represented by proxy at the annual meeting and entitled to vote on the election of directors are required to elect the directors.
There currently are two vacancies on the Board caused by the resignation of Peter P. McCann, Ph.D., who was a Class III director whose term would have expired at our 2003 annual meeting of stockholders, and Patrice Pactol, who was a Class II director, whose term would have expired at our 2005 annual meeting of stockholders. We intend to have Dr. Sylvain Fleury, Ph. D., our current Chief Scientific Officer, elected to fill the vacancy caused by the resignation of Mr. Patrice Pactol. The position left vacant by the resignation of Dr. Peter McCann will be reserved for a potential candidate related to the securing of a strategic partner.
The following table sets forth information regarding each of our current directors and executive officers.
EXPIRATION OF TERM
NAME CURRENT POSITION WITH THE COMPANY AGE AS A DIRECTOR
---- --------------------------------- --- ---------------
Christian Rochet Chief Executive Officer, President 56 2005 (Class II)
And Director (appointed July 31, 2003)
Ernst Luebke Chief Financial Officer, Treasurer 59 2004 (Class I)
And Secretary (appointed July 31, 2003)
Stanley A. Plotkin Director (appointed January 24, 2005) 73 2005 (Unclassified)
Robert Zimmer Director (appointed July 31, 2003) 58 2005 (Class II)
Pierre-Francois Serres Head of Exploratory Research, Founder 55 2003 (Class III)
and Director (appointed November 3, 2003)
Sylvain Fleury, Ph. D. Chief Scientific Officer 42 n/a
(appointed November 3, 2003)
Marc Girard, DVM, D. Sc. Head of Vaccine Development 68 n/a
(appointed January 15, 2004)
|
CHRISTIAN ROCHET
Mr. Rochet is the Chief Executive Officer and a Director of Mymetics. Prior to joining Mymetics in July 2003, he had been an independent business consultant on development and diversification strategies for over 21 years. He became a shareholder of Hippocampe S.A. (now our subsidiary Mymetics S.A.) in 1997, on the scientific advice of Dr. Sylvain Fleury, Ph. D., and was a director of that company between 1999 and 2001. Between March 2003 and July 31, 2003, Mr. Rochet, in his capacity as a shareholder of Mymetics, initiated and spearheaded the efforts of a group of nine dissatisfied shareholders representing a majority of shares, which led to the resignation of the former Company directors and officers (with the exception of Dr. Serres) on July 30, 2003. On July 31, 2003, Mr. Rochet was elected as President and Director, and appointed as Chief Executive Officer of the Company.
ERNST LUEBKE
Mr. Luebke was appointed as our Chief Financial Officer and as a Director on July 31, 2003. He was appointed on August 23, 2003. Prior to joining Mymetics, Mr. Luebke spent over 21 years as an independent international business consultant and was the founder of several companies active in the medical and biotech sectors. Along with Christian J.-F. Rochet, he became a major shareholder of Hippocampe S.A. (now our subsidiary Mymetics S.A.) in 1997, and was a director of that company between 1999 and 2001. On July 31, 2003, Mr. Luebke, one of the nine dissatisfied shareholders of Mymetics referred to above, was elected as Director, and appointed as Chief Financial Officer and Treasurer of the Company. Mr. Luebke was further appointed Secretary of the Company on August 29, 2003.
STANLEY A. PLOTKIN, M.D.
Dr. Plotkin was appointed director on January 28, 2005. During the 40-year span of his career in the field of vaccinology, Stanley A. Plotkin, M.D. developed the rubella vaccine now in use and worked extensively on a range of other vaccines, including those addressing polio, rabies, varicella and cytomegalovirus. Dr. Plotkin is Professor Emeritus of virology at The Wistar Institute, an independent nonprofit biomedical research institute located on the campus of the University of Pennsylvania, and Professor Emeritus of Pediatrics at the University of Pennsylvania. Since 1997, he is also medical and scientific advisor to the Chief Executive Officer of Aventis Pasteur, world leader in preventive vaccines, following a seven-year tenure (1990-1997) as medical and scientific director at Pasteur Merieux Connaught (former name of Aventis Pasteur). Dr. Plotkin was a member of Wistar's active research faculty from 1960 to 1991, during which time he developed the current Rubella vaccine, RA27/3 strain. He was also professor of pediatrics and microbiology at the University of Pennsylvania. Dr. Plotkin served concurrently as director of infectious disease and senior physician at the Children's Hospital of Philadelphia. For two years, he was associate chairman of the Department of Pediatrics at the University of Pennsylvania. Over the course of his career, Dr. Plotkin has also served as senior assistant surgeon with the Epidemic Intelligence Service, U.S. Public Health Service, and director of the Division of Infectious Diseases at Children's Hospital of Philadelphia. In 1957, he investigated the last known outbreak of inhalation anthrax in the U.S. prior to the events of 2001, and helped demonstrate the efficacy of the current anthrax vaccine.
PIERRE-FRANCOIS SERRES
Dr. Serres first became our Chief Scientific Officer on February 7, 2002 and has been a Director since March 28, 2001. On May 2, 2003, Dr. Serres' position as Chief Scientific Officer was terminated by the former Board of Directors. As a result of the changes in the Company's Board of July 31, 2003, Dr. Serres was reinstated in his former office of Chief Scientific Officer. He was then
promoted as Head of our Exploratory Research efforts on November 3, 2003, and replaced as Chief Scientific Officer by Dr. Sylvain Fleury, Ph. D. Dr. Serres previously served as the Company's Chief Executive Officer and President and was the founder, Chief Executive Officer and President since 1990 of our subsidiary, Mymetics S.A. (formerly, Hippocampe S.A.), a French human and veterinary research and development company.
ROBERT ZIMMER
Dr. Zimmer is a graduate of the Ecole Centrale de Lyon, M.D. and Sc.D., a former: (i) assistant-professor at the Faculty of Medicine of Strasbourg (France), (ii) department head at the Foundation for hormonology research in Paris from 1979 to 1985, (iii) responsible for the coordination of the Clinical Pharmacology at Hoffmann La Roche in Basle (Switzerland) from 1985 to 1990, (iv) Senior Executive President and CSO of Jago Pharma AG, a drug delivery specialist later acquired by Skyepharma plc from 1990 to 1999. Dr. Zimmer is currently Chairman and CEO of Bio Delivery Systems S.A. (BDS), a French company specializing in drug delivery technologies, and Chairman of Zimmer & Associates AG, a Swiss consulting firm specialized in strategic development of pharmaceutical products. On July 30, 2003, Dr. Zimmer was elected as Director, and appointed as Vice President, Head of Business Development of Mymetics Corporation. Owing however to unexpected but positive developments at BDS which interfered with his capacity to effectively discharge his duties as an officer of Mymetics, Dr. Zimmer resigned his officer position on September 1, 2003, while agreeing to remain as an outside director of the Company.
SYLVAIN FLEURY, Ph.D.
Dr. Fleury was appointed as our Chief Scientific Officer in November 2003. In addition to serving as our Chief Scientific Officer, since 1997, Dr. Fleury has been working at the Centre Hospitalier Universitaire Vaudois (CHUV), most recently as a Project Leader at its Department of Experimental Surgery. Dr. Fleury has also served as Assistant to Professor Giuseppe Pantaleo, a leading expert in AIDS and as a Project Leader in the Division of Cardiology working at the CHUV. Dr. Fleury obtained his B. Sc. in microbiology in 1985, his M. Sc. in Virology in 1988 and his Ph. D. in immunology in 1992, from Universite de Montreal, Montreal, Research Center in Virology, Institut Armand-Frappier, Laval and Institut de Recherches Cliniques de Montreal, respectively. Dr. Fleury completed his postgraduate studies on HIV-AIDS at the NIAID, National Institutes of Health (NIH), in Bethesda, Maryland in 1996. Dr. Fleury is the published author of several articles in his field of study and the recipient of several awards and prizes.
MARC GIRARD, DVM, D. SC.
Professor Girard was appointed as our Head of Vaccine Development in January 2004. Prior to joining Mymetics, Professor Girard served as Director General, Fondation Merieux, in Lyon, France between 2001 and 2003. Between 1999 and 2001, Professor Girard served as Director, European Research Center for Virology and Immunology (CERVI), Lyon, France. Professor Girard has also taught as a professor since 1966, most recently between 1984 and 1999 at the Institut Pasteur, Paris, France where he also served as the Head of Laboratory of Molecular Virology, Department of Virology, Institut Pasteur, Paris between 1980 and 1999. During his career, Professor Girard has served the medical community in a variety of capacities, including as Head, HIV Vaccine Task Force, French National Agency for AIDS Research (ANRS), Paris between 1988 and 1998, the Chairman, Department of Virology, Institut Pasteur, Paris between 1997 and 1999 and the Chairman, European Consortium for an HIV Vaccine (EuroVac), Brussels between 1999 and 2002. Professor Girard received his D.V.M. (Alfort Veterinary College) in 1960, his D. Sc. (University of Paris) in 1967 and completed a post doctoral fellow in 1966 through studies with Prof. James Darnell, MIT then Albert
Einstein College of Medicine and Prof. David Baltimore and Renato Dulbecco of the Salk Institute. Professor Girard is also the published author of several articles in his field of study.
AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has appointed three of our directors as members of our Audit Committee, i.e. Mr. Christian Rochet, Mr. Ernst Luebke and Mr. Robert Zimmer (outside director) and determined that Mr. Ernst Luebke, who further serves as Mymetics' CFO, qualifies as our "audit committee financial expert".
CODE OF ETHICS
We have not adopted a formal "code of ethics" that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. Given the very small number of our company's employees and the recent turmoil our company has faced, our directors and management believe that adopting a written code of ethics is not necessary at this time, and that their time and our resources would be better spent focusing on our operations.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership and changes of ownership with the SEC within specified due dates. These persons are required by SEC regulations to furnish us with copies of all such reports they file. Based solely on the review of the copies of such reports furnished to us, we believe that, with respect to our fiscal year ended December 31, 2004, all of our executive officers, directors and 10% stockholders filed all required reports under Section 16(a) in a timely manner, except as follows: Dr. Serres, Dr Fleury, Professor Girard and Ms. Reindle.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for the last three fiscal years information on the annual compensation earned by Dr. Peter P. McCann, who served as our President and Chief Executive Officer from February 7, 2002 until January 31, 2003, and Dr. Pierre-Francois Serres, who served as our President and Chief Executive Officer from March 28, 2001 until February 7, 2002. No named executive officer received an aggregate annual consideration (salary and bonus) from the Company in excess of $100,000 during the fiscal year ended December 31, 2004.
Annual Compensation Long Term Compensation
Awards Payouts
Securities All
Underlying Other
Name and Principal Position Year Salary Bonus Options/SARs Compensation
--------------------------- ---- ------ ----- ------------ ------------
Peter P. McCann, Ph.D. (1) 2004 -- -- -- --
2003 $ 16,164 -- 75,000 --
2002 $ 144,667 -- 11,250 --
Pierre-Francois Serres (2) 2004 -- -- -- --
2003 Euro 82,317 (3) -- -- --
2002 Euro 91,464 (4) -- 1,250 --
Michael K. Allio (5) 2004 -- -- -- --
2003 -- (6) -- -- $ 8,500
(7)
2002 -- (6) -- 101,250 $ 26,000
(7)
Christian J.-F. Rochet (8) 2004 Euro 96,000 (11) -- -- --
2003 Euro 40,000 (11) -- -- --
2002 -- -- -- --
2001 -- -- -- --
Ernst Luebke (9) 2004 Euro 96,000 (10) -- -- --
2003 Euro 40,000 (10) -- -- --
2002 -- -- -- --
Robert Zimmer, M.D. (11) 2004 0 (12) -- -- --
2003 0 (12) -- -- --
2002 -- -- -- --
Sylvain Fleury, Ph. D. (13) 2004 0 (14) -- -- --
2003 0 (14) -- -- --
2002 -- -- -- --
|
(1) Dr. McCann was our President and Chief Executive Officer from February 7, 2002 to January 31, 2003.
(2) Dr. Serres was our President and Chief Executive Officer from March 28, 2001 until February 7, 2002. He was our Chief Scientific Officer from March 28, 2001 until terminated by the former Board of directors on May 5, 2003. Dr. Serres was reinstated as Chief Scientific Officer by the new Board of directors retroactively from May 5, 2003 until November 3, 2003, when he was promoted as Head of Exploratory Research, his current position with the Company. In exchange for being reinstated retroactively, Dr Serres accepted in principle to forfeit all legal and punitive compensation for having been terminated without cause. The French Industrial Tribunal ("Prud'hommes") has granted Dr. Serres Euro 45,735 to that effect in its emergency injunction of October 14, 2003. The final amount which Dr. Serres has claimed in terms of legal and punitive compensation if the case had been allowed to run its full course is in excess of Euro 175,000. Our French legal counsel believe however that this claim is without merit as under French law, salaried company directors and officers are only eligible for severance pay and other compensation if certain, very stringent, conditions are met which, in our counsels' opinion, is evidently not the case for Dr. Serres. The agreement between Dr. Serres and the Company has yet to be finalized.
(3) This amount includes Euro 46,317 credited as compensation to Dr. Serres under his former status from January 1, 2003 until August 15, 2003 and Euro 36,000 (i.e. Euro 8,000 per month) credited to Dr. Serres since August 16, 2003 as compensation for his reinstated positions, as disclosed under (2) above. No payments in relation to this amount have actually been made in 2003 to Dr. Serres who, in accordance with the temporary policy set by the new Board, has accepted that the actual of any compensation due to him be deferred, either totally or partially, until the Company's financial position would allow such payments to be made without jeopardizing the Company's prospects.
(4) These represent amounts paid to Dr. Serres by our subsidiary, Mymetics S.A.
(5) Mr. Allio was our Interim Chief Executive Officer from January 1, 2003 until July 30, 2003.
(6) Mr. Allio received $ 260,302 in 2002 and $ 217,500 in 2003 under a consulting agreement which, in our opinion and on account of the context and the services Mr. Allio was to provide Mymetics under his consulting agreement, made him a de facto executive of the Company.
(7) Mr. Allio received $ 26,000 in 2002 and $ 8,500 in 2003 for his participation on the Board of Directors of Mymetics Corporation.
(8) Mr. Rochet has been our President and Chief Executive Officer since July 31, 2003.
(9) Mr. Luebke has been our Chief Financial Officer and Treasurer since July 31, 2003 and our Secretary since August 29, 2003.
(10) As explained under (3) above, the temporary policy set by the new Board, states that the actual payment of any compensation due to directors and officers of Mymetics be deferred, either totally or partially, until the Company's financial position would allow such payments to be made without jeopardizing the Company's prospects. As a result, the Company owed Mr. Rochet and Mr. Luebke at year end respectively Euro 51,230 and Euro 115,494 as salary and reimbursement of actual travel and other expenses disbursed by them on account of Mymetics.
(11) Dr. Zimmer has been our VP, Business Development from July 31, 2003 until September 1, 2003.
(12) Dr. Zimmer has given up any direct compensation for his short tenure as VP, Business Development. As outside director since September 1, 2003, Dr Zimmer receives no compensation other than the 400,000 common shares of Mymetics the Board has decided to issue him in 2003, as disclosed elsewhere in our Form 10-K for that year.
(13) Dr. Fleury has been appointed as our Chief Scientific Officer on November 3, 2003.
(14) Dr. Fleury has given up any direct compensation for the interim period between his formal appointment as our Chief Scientific Officer on November 3, 2003 and January 1, 2004, the reference date of the Consulting Agreement signed by Dr. Fleury, Mymetics and the Centre Hospitalier Universitaire Vaudois (CHUV), with which Dr. Fleury shares his time. The Board has decided to issue Dr. Fleury 500,000 common shares of Mymetics in appreciation of his past services and as partial compensation for the sacrifices Dr. Fleury has accepted in terms of compensation and career when he accepted to join the Company.
OPTION GRANTS IN LAST FISCAL YEAR
None.
COMPENSATION OF DIRECTORS
Employee directors are not compensated for their role as directors.
Pursuant to our 2001 Stock Option Plan, all directors are entitled to receive stock options pursuant to the terms and provisions of such plan. Until July 30, 2003, the Company practice had been to grant each director (i) 10,000 stock options upon initial election as a director and (ii) 1,250 additional stock options for each subsequent year of service after the initial year. During the fiscal year ended December 31, 2004, no options were granted to our directors under our 2001 Stock Option Plan, nor do we expect to grant any such options in the near future.
CONSULTING AGREEMENT WITH Dr. SYLVAIN FLEURY
Before joining Mymetics as Chief Scientific Officer, Dr. Sylvain Fleury was pursuing his own research project at the Centre Hospitalier Universitaire Vaudois (CHUV) in Lausanne (Switzerland) funded by a research grant to him awarded by the Fond National pour la Recherche Scientifique (FNRS), the Swiss equivalent of the NIH (National Institutes of Health) in the United States. A legal condition for this grant to continue was that Dr. Fleury retained his status as an employee of the CHUV. In order to accommodate Mymetics, the CHUV accepted to "share" Dr. Fleury's time with Mymetics for the duration of the research project under an ad-hoc 3-way Consulting Agreement signed by CHUV, Mymetics and Dr. Fleury which is included as Exhibit 10.40.
CONSULTING AGREEMENT WITH Professor MARC GIRARD
Professor Marc Girard, DVM, D.Sc., our Head of Vaccines Development, equally shared his time in 2004 between Mymetics and a previously acquired consulting engagement for the World Health Organization in Geneva (Switzerland). Professor Girard's Consulting Agreement is included as Exhibit 10.41.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND OPTION VALUES AT DECEMBER
31, 2004
None of our named former executive officers exercised any stock options during 2004. The following table provides information concerning the number and value of unexercised options held by our named executive officer(s) at December 31, 2004.
Name Shares Value Number of Securities Value of
Acquired Realized Underlying Unexercised Options Unexercised
on Exercise at December 31, 2004 In-the-Money Options at
December 31, 2004(3)
Exercisable Unexercisable Exercisable Unexercisable
Dr. Pierre- - - - - 10,000(1) - - - -(4) - -(4)
Francois
Serres
- - - - 1,250(2) - - - -(4) - -(4)
|
(2) These options are fully vested and exercisable at $3.50 per share.
(3) The value of unexercised in-the-money options held at December 31, 2004 represents the total gain which an option holder would realize if he or she exercised all of the in-the-money options held at December 31, 2004, and is determined by multiplying the number of shares of common stock underlying the options by the difference between an assumed fair market value per share and the per share option exercise price. An option is in-the-money if the exercise price per share of the option is below the assumed fair market value per share.
(4) The fair market value of the stock underlying these options was $0.05 per share on December 31, 2004, based on the closing market price of our common stock on such date. The exercise price of these options exceeds the fair market value on December 31, 2004. Accordingly, these options were not in-the-money on December 31, 2004.
EMPLOYMENT AGREEMENTS
On May 3, 2001, Mymetics entered into an employment agreement with Dr. Serres pursuant to which he received a monthly salary of Euro 7,622 (paid by our subsidiary Mymetics S.A.) and normal benefits. In addition, Dr. Serres was permitted to participate in our 2001 Stock Option Plan, as well as receive discretionary bonuses as approved by the Board. On May 5, 2003, Dr. Serres' employment agreement was terminated by the former Board. On July 31, 2003, Dr. Serres was reinstated by the new Board, however on different terms as explained below.
On March 18, 2002, Mymetics entered into an employment agreement with Dr. McCann, pursuant to which he received an annual salary of one hundred seventy thousand U.S. Dollars ($170,000) and normal benefits. In addition, Dr. McCann was permitted to participate in our 2001 Stock Option Plan, as well as receive discretionary bonuses as approved by the Board. Effective January 31, 2003, Dr. McCann resigned from our Board and as our Chief Executive Officer and President. In connection with Dr. McCann's resignation, the former Board granted him options to purchase 75,000 shares of our common stock at an exercise price of $0.14 per share.
The new directors and officers elected and/or appointed since July 31, 2003 have agreed to work without the benefit of a written agreement, relying only on general terms agreed by the Board of directors in the matter of compensation, which was set at nil for directors, and at E8,000 per month on a full time basis for officers, plus reimbursement of reasonable travel and other expenses. The actual payment of such amounts shall be deferred until the Company's financial position has been stabilized. The directors and officers have further agreed to work without the benefit of D&O insurance coverage, no insurance company having accepted so far to cover such risks.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
All executive officer compensation decisions are made by the Compensation Committee of the Board. The Compensation Committee reviews and recommends the compensation arrangements for officers and other senior level employees, and takes such other action as may be required in connection with the Company's compensation and incentive plans. From January 1, 2003 until July 30, 2003, the members of the Compensation Committee were Mr. Allio, Mr. Demers and Dr.
McCann. For part of 2002 and 2003, Dr. McCann served as our chief executive officer. From July 31, 2003, the members of the Compensation Committee were Mr. Rochet, Mr. Luebke, Dr. Serres and Dr. Zimmer.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information about the beneficial ownership of our
common stock as of March 18, 2004, by: (a) each of our named executive officers;
(b) each of our directors; (c) each person known to us to be the beneficial
owner of more than 5% of our outstanding voting securities; and (d) all of our
current executive officers and directors as a group. The following is based
solely on statements and reports filed with the Securities and Exchange
Commission or other information we believe to be reliable.
There were 70,647,864 shares of our common stock outstanding on March 26, 2005. We have determined beneficial ownership in accordance with the rules of the Securities and Exchange Commission. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the tables below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
In computing the number of shares of common stock beneficially owned by a person and the percentage ownership of that person, shares of common stock subject to options or warrants held by that person that are currently exercisable or exercisable within 60 days of March 31, 2005, are deemed outstanding. These shares of common stock, however, are not deemed outstanding for the purposes of computing the percentage ownership of any other person.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER TITLE OF CLASS BENEFICIAL OWNERSHIP CLASS
---------------- -------------- -------------------- ----------
Martine Reindle Common 9,022,653 12.77%
CP 18
CH - 1295 Mies, Switzerland
Dr. Pierre-Francois Serres (1) Common 6,585,618 (2) 9.32%
Head of Exploratory Research and Director
Ernst Luebke (1) Common 4,079,417 (4) 5.77%
Chief Financial Officer, Secretary and Director
Dr. Sylvain Fleury (1) Common 500,000 (3) 0.71%
Chief Scientific Officer
Prof. Marc Girard (1) Common 400,000 (3) 0.57%
Head of Vaccine Development and member of the SAB
Dr. Robert Zimmer (1) Common 400,000 (3) 0.57%
Christian Rochet (1) Common 377,138 (4) 0.53%
Chief Executive Officer, President and Director
Professor Stanley A. Plotkin (1) Common 200,000 (3) 0.28%
All current executive officers and Common 12,542,173 17.75%
directors as a group (7 persons)
|
(1) Address is Mymetics Corporation, European Executive Office, 14, rue de la Colombiere, CH-1260 Nyon (Switzerland).
(2) Includes 11,250 shares of common stock which Dr. Serres presently has the right to acquire pursuant to vested stock options granted under our 2001 Stock Option Plan.
(3) Granted for services.
(4) Acquired prior to being elected as director and appointed as officer.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During 2003, there were no transactions (or series of similar transactions), and there are currently no proposed transactions (or series of similar transactions), to which we were, are or will be a party in which the amount involved exceeds $60,000 and in which any of our directors, executive officers or holders of more than 5% of our common stock, or an immediate family member of any of the foregoing, had or will have a direct or indirect interest.
Furthermore, it is our intention to ensure that all future transactions, including loans, between us and our officers, directors and principal stockholders and their affiliates are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.
CREDIT FACILITY WITH MFC MERCHANT BANK S.A.
MFC Merchant Bank S.A. ("MFC Bank") is a wholly-owned Swiss banking subsidiary of MFC Bancorp Ltd., a Canadian company currently listed on the NASDAQ. MFC Bank has been instrumental in arranging in December 2000: (i) the acquisition of a French biotech company, Hippocampe S.A. (later renamed Mymetics S.A.), and (ii) a credit facility in the amount of Euro 1.3 million. Between 2001 and 2003, the credit facility was amended and restated a number of times, last on July 30, 2003, when a second amendment was executed to: (i) increase the principal amount to E3,15 million, (ii) convert the credit facility from "Term Credit" to "On Demand Credit" and (iii) reaffirm and strengthen the bank's lien on substantially all of the Company's Intellectual Property. The Lender later agreed twice to postpone the repayment date of the loan, first to June 30, 2004, then to December 31, 2004. On that date, the Company, MFC Merchant Bank SA (the Lender) and MFC Bancorp Ltd. (Guarantor) executed a third Amendment to the Loan Agreement which i) increased the amount to Euro 3.7 million, ii) set a new repayment date to December 31, 2005 and iii) provided for partial repayments of Euro 200,000 on March 31, 2005, Euro 300,000 on June 30, 2005 and Euro 400,000 on September 30, 2005. Finally, the Loan Agreement was amended a fourth time on February 16, 2005 to i) set a new repayment date to December 31, 2006, ii) provide for partial repayments of Euro 200,000 on June 30, 2005, Euro 300,000 on December 31, 2005 and Euro 400,000 on June 30, 2006, and iii) allow the Lender, at its sole discretion, to convert all or part of any repayment made under the Loan Agreement to be converted into Mymetics common shares ("rule 144 restricted") at $0.30 per share. The third and fourth Amendments were duly reported on Form 8-K dated February 19, 2005 to the Securities and Exchange Commission.
COMPENSATION AGREEMENTS
We have entered into compensation arrangements with certain of our directors. The terms of these arrangements are described in more detail under "Compensation of Directors"
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table provides information about the fees billed to the registrant for professional services rendered by Peterson Sullivan PLLC during fiscal 2003 and 2002:
2004 2003
-------- --------
Audit Fees $ 38,256 $ 30,461
Audit-Related Fees - -
Tax Fees $ 8,829 20,547
All Other Fees - -
-------- --------
Total $ 47,085 $ 51,008
======== ========
|
Audit Fees. Audit fees consist of fees for the audit of the registrant's annual financial statements or services that are normally provided in connection with statutory and regulatory filings or engagements.
Audit-Related Fees. Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of the registrant's financial statements and are not reported as Audit Fees. During fiscal 2004 and 2003, the services provided in this category included due diligence reviews, audits of employee benefit funds, and consulting on accounting standards and transactions.
Tax Fees. Tax fees consist of fees for tax compliance services, tax advice and tax planning. During fiscal 2004 and 2003, the services provided in this category included assistance and advice in relation to the preparation of corporate income tax returns.
All Other Fees. Any other fees not included in Audit Fees, Audit-Related Fees or Tax Fees.
Pre-Approval Policies and Procedures.
Prior to March 11, 2005, Our Board of Directors pre-approved all services to be provided by Peterson Sullivan PLLC.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1) Index to Financial Statements
Independent Auditors' Report Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss Consolidated Statements of Changes in Shareholders' Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements
(a)(2) ALL OTHER SCHEDULES HAVE BEEN OMITTED BECAUSE THEY ARE NOT APPLICABLE OR THE REQUIRED INFORMATION IS SHOWN IN THE FINANCIAL STATEMENTS OR NOTES THERETO.
(3) List of Exhibits
2.1 Share Exchange Agreement dated December 13, 2001 between the Corporation and the stockholders of Mymetics S.A. listed on the signature page thereto (1)
2.2 Share Exchange Agreement dated December 13, 2001 between the Corporation and the stockholders of Mymetics S.A. listed on the signature page thereto (1)
2.3 Purchase Agreement dated October 17, 1998 between the Corporation and the majority stockholders of Nazca Holdings Ltd.
2.4 Amendment to the Purchase Agreement dated October 17, 1998 between the Corporation and the majority stockholders of Nazca Holdings Ltd. (3)
2.5 Revised Purchase Agreement dated July 28, 1999 between the Corporation and the majority stockholders of Nazca Holdings Ltd.
2.6 Share Exchange Agreement dated July 30, 2002 between the
Corporation and the stockholders of Mymetics S.A. listed on the
signature page thereto (5)
3(i) Articles of Incorporation of the Corporation (as amended through
May 10, 2002) (6)
3(ii) Bylaws (7)
4.1 Form of Specimen Stock Certificate (8)
4.2 Form of letter regarding Warrant
4.3 Form of Share Exchange Agreement
|
9.1 Voting and Exchange Trust Agreement dated March 28, 2001,
Among the Corporation, 6543 Luxembourg S.A. and MFC Merchant
Bank S.A. (8)
10.1 Services Agreement dated May 31, 2001, between the Corporation
and MFC Merchant Bank, S.A.(7)
10.2 Employment Agreement dated May 3, 2001, between Pierre-Francois
Serres and the Corporation (7)
10.3 Indemnification Agreement dated March 28, 2001, between the
Corporation and MFC Bancorp Ltd. (7)
10.4 Agreement dated for reference May 15, 2000, between the
Corporation and Maarten Reidel (7)
10.5 Preferred Stock Redemption and Conversion Agreement dated for
reference December 21, 2000, between the Corporation and Sutton
Park International Ltd. (10)
10.6 Preferred Stock Conversion Agreement dated for reference
December 21, 2000, between the Corporation and Med Net
International Ltd. (11)
10.7 Preferred Stock Conversion Agreement dated December 21, 2000,
between the Corporation and Dresden Papier GmbH (11)
10.8 Assignment Agreement dated December 29, 2000, among the
Corporation, Mymetics S.A. and MFC Merchant Bank S.A. (1)
10.9 Credit Facility Agreement dated July 27, 2000, between MFC
Merchant Bank, S.A. and the Corporation (1)
10.10 Amended Credit Facility Agreement dated for reference August 13,
2001, between MFC Merchant Bank, S.A. and the Corporation (16)
10.11 Second Amended Credit Facility Agreement dated for reference
February 27, 2002, between MFC Merchant Bank, S.A. and the
Corporation (16)
10.12 Amended and Restated Credit Facility Agreement dated for
reference February 28, 2003, among MFC Merchant Bank, S.A., MFC
Bancorp Ltd., and the Corporation (16)
10.13 Guarantee dated for reference February 28, 2003, by MFC Bancorp
Ltd. to MFC Merchant Bank S.A. (16)
10.14 Shareholder Agreement dated March 28, 2001, among the
Corporation, the Holders of Class B Exchangeable Preferential
Non-Voting Shares of 6543 Luxembourg S.A. signatory thereto and
6543 Luxembourg S.A.(8)
10.15 Support Agreement dated March 28, 2001, between the Corporation
|
and 6543 Luxembourg S.A. (8)
10.16 1995 Qualified Incentive Stock Option Plan (12)
10.17 Amended 1994 Stock Option Plan (13)
10.18 2001 ICHOR Corporation Stock Option Plan (7)
10.19 Employment Agreement dated March 18, 2002, between the
Corporation and Peter P. McCann (14)
10.20 Consulting Agreement dated August 31, 2001, between the
Corporation and Michael K. Allio (8)
10.21 Amendment to Consulting Agreement dated August 21, 2002, between
the Corporation and Michael K. Allio (16)
10.22 Employment Agreement dated March 18, 2002, between the
Corporation and Dr. Joseph D. Mosca (15)
10.23 Separation Agreement and Release dated January 31, 2003, between
the Corporation and Peter P. McCann (16)
10.24 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Robert Demers (8)
10.25 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Michael K. Allio (8)
10.26 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and John M. Musacchio (8)
10.27 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Patrice Pactol (8)
10.28 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Pierre-Francois Serres (8)
10.29 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Pierre-Francois Serres (16)
10.30 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Patrice Pactol (16)
10.31 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Robert Demers (16)
10.32 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and John M. Musacchio (16)
10.33 Director and Non-Employee Stock Option Agreement dated July
|
23, 2002, between the Corporation and Michael K. Allio (16)
10.34 Director and Non-Employee Stock Option Agreement dated August
21, 2002, between the Corporation and Michael K. Allio (16)
10.35 Director and Non-Employee Stock Option Agreement dated June 20,
2002, between the Corporation and Peter P. McCann (16)
10.36 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Peter P. McCann (16)
10.37 Director and Non-Employee Stock Option Agreement dated February
6, 2003, between the Corporation and Peter P. McCann (16)
10.38 Patent Pledge Agreement dated November __, 2002 among Mymetics
S.A., Mymetics Deutschland GmbH, the Corporation and MFC
Merchant Bank S.A. (16)
11.1 Statement Regarding Calculation of Per Share Earnings.
21.1 List of Subsidiaries
24.1 Powers of Attorney (included on the signature page hereto)
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a) or 15d-14 of the Securities Exchange Act of 1934
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a) or 15d-14 of the Securities Exchange Act of 1934
32.1 Section 1350 Certification of Chief Executive Officer and Chief
Financial Officer
----------------
|
(1) Incorporated by reference to the Corporation's Schedule 14C filed with the Securities and Exchange Commission on April 26, 2001.
(2) Incorporated by reference to the Corporation's report on Form 8-K filed with the Securities and Exchange Commission on October 22, 1998.
(3) Incorporated by reference to the Corporation's report on Form 8-K/A filed with the Securities and Exchange Commission on April 15, 1999.
(4) Incorporated by reference to the Corporation's report on Form 8-K/A filed with the Securities and Exchange Commission on August 13, 1999.
(5) Incorporated by reference to the Corporation's Amendment No. 1 to Form S-1 filed with the Securities and Exchange Commission on August 8, 2002.
(6) Incorporated by reference to the Corporation's report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002.
(7) Incorporated by reference to the Corporation's report on Form 10-Q for the quarter ended June 30, 2001, filed with the Securities and Exchange Commission on August 14, 2001.
(8) Incorporated by reference to the Corporations Registration Statement on Form S-1, File No. 333-88782, filed with the Securities and Exchange Commission on May 22, 2002.
(9) Incorporated by reference to the Corporation's report on Form 8-K/A filed with the Securities and Exchange Commission on August 9, 2000.
(10) Incorporated by reference to Schedule 13D/A filed by MFC Bancorp Ltd.
with the Securities and Exchange Commission on dated January 2, 2001.
(11) Incorporated by reference to the Corporation's report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on March 14, 2001.
(12) Incorporate by reference to the Corporation's Registration Statement on Form S-8, File No. 333-15831, filed with the Securities and Exchange Commission on November 8, 1996.
(13) Incorporated by reference to the Corporation's Registration Statement on Form S-8, File No. 333-15829, filed with the Securities and Exchange Commission on November 8, 1996.
(14) Incorporated by reference to the Corporation's report on Form 10-K for the fiscal year ended December 31, 2002, and filed with the Securities and Exchange Commission on March 29, 2002.
(15) Incorporated by reference to the Corporation's report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002.
(16) Incorporated by reference to the Corporation's report on Form 10-K for the fiscal year ended December 31, 2003, and filed with the Securities and Exchange Commission on March 27, 2003.
(b) Reports on Form 8-K
During our fourth quarter ended December 31, 2004, we filed with the Securities and Exchange Commission the following reports on Form 8-K:
On October 25, 2004, we filed a Current Report on Form 8-K pursuant to Item 8.01 to report that, under the terms of funding agreements with Cornell Capital Partners, Mymetics obtained a firm commitment of $5 million under a Standby Equity Distribution Agreement.
On December 21, 2004, we filed a Current Report on Form 8-K pursuant to Items 8.01 and 9.01 to report that, on December 17, 2004, we announced an agreement with the National Institute of Allergy and Infectious Diseases, National Institutes of Health to perform and fund our first non-human macaque trials.
PETERSON SULLIVAN PLLC
601 UNION STREET SUITE 2300
SEATTLE WA 98101
(206) 382-7777 FAX 382-7700 CERTIFIED PUBLIC ACCOUNTANTS
REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
To the Shareholders
Mymetics Corporation and Subsidiaries
We have audited the accompanying consolidated balance sheets of Mymetics Corporation (a development stage company) and Subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity (deficit), and cash flows for the years ended December 31, 2004, 2003, and 2002, and for the period from May 2, 1990 (inception) to December 31, 2004. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mymetics Corporation (a development stage company) and Subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for the years ended December 31, 2004, 2003 and 2002, and for the period from May 2, 1990 (inception) to December 31, 2004, in conformity with accounting principles generally accepted in the United States. As discussed in Note 2, the financial statements for 2001 have been restated.
The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has not developed a commercially viable product and, therefore, has not been able to generate revenues, which has resulted in significant losses being incurred. Further, the Company's current liabilities exceed its current assets by E2,035 as of December 31, 2004, and there is no assurance that cash will become available to pay current liabilities in the near term. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are also described in Note 1. These consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.
/s/ Peterson Sullivan PLLC Peterson Sullivan PLLC Seattle, Washington March 26, 2005 |
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
December 31, 2004 and 2003
(In Thousands of Euros)
2003
ASSETS 2004 (Restated)
--------- ----------
Current Assets
Cash E - E 125
Receivables 110 100
Prepaid expenses 2 6
--------- ---------
Total current assets 112 231
Patents 80 136
--------- ---------
E 192 E 367
========= =========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current Liabilities
Accounts payable E 1,491 E 1,232
Taxes and social costs payable 40 53
Current portion of note payable 500 3,127
Other 116 113
--------- ---------
Total current liabilities 2,147 4,525
Payable to Shareholders 242 242
Note Payable, less current portion 2,868 -
--------- ---------
Total liabilities 5,257 4,767
Shareholders' Equity (Deficit)
Common stock, U.S. $.01 par value;
495,000,000 shares authorized; issued and outstanding 68,447,864
at December 31, 2004 and 54,344,454 at
December 31, 2003 720 607
Preferred stock, U.S. $.01 par value;
5,000,000 shares authorized; none issued or outstanding - -
Additional paid-in capital 5,522 4,289
Deficit accumulated during the development stage (12,148) (9,946)
Accumulated other comprehensive income 841 650
--------- ---------
(5,065) (4,400)
--------- ---------
E 192 E 367
========= =========
|
The accompanying notes are an integral part of these financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the Years Ended December 31, 2004, 2003 and 2002, and the Period from May 2, 1990 (Inception) to December 31, 2004
(In Thousands of Euros, Except Per Share Data)
Accumulated
During
Development
Stage
(May 2, 1990 to
December 31,
2004 2003 2002 2004) (Restated)
---- ---- ---- ----------------
Revenues
Sales E - E - E - E 224
Interest - - 8 34
--------- -------- --------- --------
- - 8 258
Expenses
Research and development 612 1,263 1,878 4,597
General and administrative 1,264 1,090 1,293 5,262
Bank fee 66 - 63 935
Interest 201 176 60 742
Goodwill impairment - - 209 209
Amortization 59 64 64 381
Directors' fees - 193 63 274
--------- -------- --------- --------
2,202 2,786 3,630 12,400
--------- -------- --------- --------
Loss before income tax provision (2,202) (2,786) (3,622) (12,142)
Income tax provision - - - 6
--------- -------- --------- --------
Net loss (2,202) (2,786) (3,622) (12,148)
Other comprehensive income
Foreign currency translation
adjustment 191 453 97 841
--------- -------- --------- --------
Comprehensive loss E (2,011) E (2,333) E (3,525) E(11,307)
========= ======== ========= ========
Basic and diluted loss per share E (0.04) E (0.05) E (0.07)
========= ======== =========
|
The accompanying notes are an integral part of these financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Period from May 2, 1990 (Inception) to December 31, 2004
(In Thousands of Euros)
Accumulated
Other
Deficit Comprehensive
Income -
Additional Accumulated Foreign
Paid-in During the Currency
Date of Number of Capital Development Translation
Par Stage
Transaction Shares Value (Restated) (Restated) Adjustment Total
-------------------------- ------ ---------- ----------- -------------- ---------
Balance at May 2, 1990
Shares issued for cash June 1990 33,311,361 E 119 E - E - E - E 119
Net losses to December 31, 1999 - - - (376) - (376)
---------- ------ --------- ------------ -------------------------
Balance at December 31, 1999 33,311,361 119 - (376) - (257)
Bank fee - - 806 - - 806
Net loss for the year - - - (1,314) - (1,314)
---------- ------ --------- ------------ -------------------------
Balance at December 31, 2000 33,311,361 119 806 (1,690) - (765)
Effect on capital structure
resulting from a business
combination March 2001 8,165,830 354 (354) - - -
Issuance of stock purchase warrants
in connection with credit
facility (restated) March 2001 - - 210 - - 210
Issuance of shares for bank fee March 2001 1,800,000 21 (21) - - -
Issuance of shares for bank fee June 2001 225,144 3 (3) - - -
Issuance of shares for cash June 2001 1,333,333 15 2,109 - - 2,124
Exercise of stock purchase warrants
in repayment of debt June 2001 1,176,294 13 259 - - 272
Exercise of stock purchase
warrants for cash December 2001 3,250,000 37 563 - - 600
Net loss for the year (restated) - - - (1,848) - (1,848)
Translation adjustment - - - - 100 100
---------- ------ --------- ------------ -------------------------
Balance at December 31, 2001 49,261,962 562 3,569 (3,538) 100 693
Exercise of stock options March 2002 10,000 - 8 - - 8
Issuance of stock purchase warrants
for bank fee June 2002 - - 63 - - 63
Exercise of stock purchase warrants
in repayment of debt July 2002 1,625,567 16 396 - - 412
Issuance of remaining shares from
2001 business combination August 2002 46,976 1 (1) - - -
Net loss for the year - - - (3,622) - (3,622)
Translation adjustment - - - - 97 97
---------- ------ --------- ------------ -------------------------
Balance at December 31, 2002 50,944,505 579 4,035 (7,160) 197 (2,349)
Issuance of shares for services September 2003 400,000 4 29 - - 33
Shares retired October 2003 (51) - - - - -
Issuance of shares for services November 2003 1,500,000 12 100 - - 112
Issuance of shares for cash December 2003 1,500,000 12 113 - - 125
Issuance of stock purchase warrants
for financing fee December 2003 - - 12 - - 12
Net loss for the year - - - (2,786) - (2,786)
Translation adjustment - - - - 453 453
---------- ------ --------- ------------ -------------------------
Balance at December 31, 2003 54,344,454 607 4,289 (9,946) 650 (4,400)
Issuance of shares for services January 2004 550,000 5 27 - - 32
Issuance of shares for cash January 2004 2,000,000 17 150 - - 167
Issuance of stock purchase warrants
for financing fee January 2004 - - 40 - - 40
Issuance of shares for cash February 2004 2,500,000 21 187 - - 208
Issuance of stock purchase warrants
for financing fee February 2004 - - 62 - - 62
Issuance of shares for services April 2004 120,000 1 11 - - 12
Issuance of shares for bank fee May 2004 500,000 4 62 - - 66
Issuance of shares for cash May 2004 2,000,000 16 148 - - 164
Issuance of shares for services August 2004 250,000 2 26 - - 28
Issuance of shares for cash August 2004 1,466,667 12 128 - - 140
Issuance of stock purchase warrants
for financing fee August 2004 - - 46 - - 46
Issuance of shares for services September 2004 520,000 4 29 - - 33
Issuance of shares for cash September 2004 50,000 - 4 - - 4
Issuance of shares for services October 2004 2,106,743 16 132 - - 148
Issuance of shares for services November 2004 2,000,000 15 177 - - 192
Issuance of shares for cash November 2004 40,000 - 4 - - 4
Net loss for the year - - - (2,202) - (2,202)
Translation adjustment - - - - 191 191
---------- ------ --------- ------------ -------------------------
Balance at December 31, 2004 68,447,864 E 720 E 5,522 E (12,148) E 841 E (5,065)
========== ====== ========= ============ =========================
|
The accompanying notes are an integral part of these financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2004, 2003 and 2002 and the Period from May 2, 1990 (Inception) to December 31, 2004
(In Thousands of Euros)
Total
Accumulated
During
Development
Stage
(May 2,
1990 to
December
31,
2004)
2004 2003 2002 (Restated)
----------------------------------------------------------
Cash Flows from Operating Activities
Net loss E (2,202) E (2,786) E (3,622) E (12,148)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization 59 64 64 381
Goodwill impairment - - 209 209
Fees paid in warrants 148 12 63 223
Services and fees paid in common stock 511 145 - 1,462
Amortization of debt discount - - - 210
Changes in current assets and liabilities
net of effects from reverse purchase
Receivables (10) (41) (10) (72)
Accounts payable 259 780 16 1,193
Taxes and social costs payable (13) (66) 36 40
Other 7 119 9 162
----------------------------------------------------------
Net cash used in operating activities (1,241) (1,773) (3,235) (8,340)
Cash Flows from Investing Activities
Patents and other (3) (1) (102) (341)
Short-term investments - - 354 -
Cash acquired in reverse purchase - - - 13
----------------------------------------------------------
Net cash provided by (used in)
investing activities (3) (1) 252 (328)
Cash Flows from Financing Activities
Proceeds from the issuance of common stock
and warrants 687 125 8 3,663
Borrowings from shareholders - - - 242
Increase in note payable and other
short-term advances 241 1,138 2,173 4,052
Loan fees - - - (130)
----------------------------------------------------------
Net cash provided by financing
activities 928 1,263 2,181 7,827
Effect of exchange rate changes on cash 191 453 97 841
----------------------------------------------------------
Net increase (decrease) in cash (125) (58) (705) -
Cash, beginning of period 125 183 888 -
----------------------------------------------------------
Cash, end of period E - E 125 E 183 E -
==========================================================
|
The accompanying notes are an integral part of these financial statements.
MYMETICS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company and Summary of Significant Accounting Policies
Basis of Presentation
The amounts in the notes are rounded to the nearest thousand except for per share amounts.
Mymetics Corporation ("the Company") was created for the purpose of engaging in research and development of human health products. Its main research efforts have been concentrated in the prevention and treatment of the AIDS virus. The Company has established a network which enables it to work with education centers, research centers, pharmaceutical laboratories and biotechnology companies.
These financial statements have been prepared treating the Company as a development stage company. As of December 31, 2004, the Company had not performed any clinical testing and a commercially viable product is not expected for several more years. As such, the Company has not generated significant revenues. Revenues reported by the Company consist of incidental serum by-products of the Company's research and development activities and interest income. For the purpose of these financial statements, the development stage started May 2, 1990.
These financial statements have also been prepared assuming the Company will continue as a going concern. The Company has experienced significant losses since inception resulting in a deficit in shareholders' equity (deficit) of E5,065 at December 31, 2004. Deficits in operating cash flows since inception have been financed through debt and equity funding sources. In order to remain a going concern and continue the Company's research and development activities, management intends to seek additional funding. Further, the Company's current liabilities exceed its current assets by E2,035 as of December 31, 2004, 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.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. Significant intercompany accounts and transactions have been eliminated.
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 year. 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 operations. 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
Cash deposits are occasionally in excess of insured amounts. Interest paid was
E201 in 2004, E176 in 2003, and E60 in 2002. The Company has paid no income tax since its inception.
Revenue Recognition
Revenue related to the sale of products is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collectibility is reasonably assured.
Receivables
Receivables are stated at their outstanding principal balances. Management reviews the collectibility of receivables on a periodic basis and determines the appropriate amount of any allowance. Based on this review procedure, management has determined that the allowances at December 31, 2004 and 2003, are sufficient. The Company charges 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.
Goodwill and Other Intangibles
As required, the Company adopted Statement of Financial Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets," beginning January 1, 2002. Under this standard, goodwill of a reporting unit and intangible assets that have indefinite useful lives are not amortized but are tested annually for impairment. Intangible assets with a finite life are amortized over their estimated useful lives.
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.
Earnings per Share
Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding in the period. The weighted average number of shares was 62,177,629 for the year ended December 31, 2004, 51,285,044 for the year ended December 31, 2003, and 50,045,658 for the year ended December 31, 2002. Diluted earnings per share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive securities. Warrants and options were not included in the computation of diluted earnings per share because their effect would be anti-dilutive due to net losses incurred.
Preferred Stock
The Company has authorized 5,000,000 shares of preferred stock. No shares are issued or outstanding at December 31, 2004. The preferred stock is issuable in several series with varying dividend, conversion and voting rights. The specific series and rights will be determined upon any issuance of preferred stock.
Stock-Based Compensation
The Company has a stock-based employee compensation plan, which is described more fully in Note 7. The Company accounts for options and other stock-based compensation under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under the plan had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant. The expense for stock options and warrants to purchase stock granted to non-employees is measured using a fair value valuation model at the date of grant multiplied by the number of options granted. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," to stock-based employee compensation.
Total Accumulated
During Development
Stage (May 2, 1990
to December 31, 2004)
2004 2003 2002 (Restated)
---------- ---------- ---------- ---------------------
Net Income (Loss)
- -----------------
As reported E (2,202) E (2,786) E (3,622) E (12,148)
Deduct: Total stock-based employee
compensation expense determined under
fair value based methods for all
awards, net of any related tax effects - (27) (72) (320)
---------- ---------- ---------- -------------
Pro forma E (2,202) (2,813) E (3,694) E (12,468)
========== ========== ========== =============
Basic and Diluted Earnings (Loss) Per Share
- -------------------------------------------
As reported E (.04) E (.05) E (.07)
Pro forma E (.04) E (.05) E (.07)
|
For purposes of proforma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period.
The fair value of each option granted was estimated for proforma purposes on the grant date using the Black-Scholes model (use of this model for proforma purposes is not intended to indicate the value of the Company as a whole). There were no options issued in 2004. The assumptions used in calculating fair value for 2003 and 2002 are as follows:
2003 2002
-------------------- --------------------
Risk-free interest rate 4.00% 4.75%
Expected life of the options 7 years 7 years
Expected volatility 164.02% - 206.16% 71.10% - 243.12%
Expected dividend yield 0% 0%
|
The issuance of common shares for services is recorded at the quoted price of the shares on the date the services are rendered.
The Company has offered 2,000,000 common shares to an individual upon acceptance of an offer as board chairman. The fair value of these shares was approximately E400 at December 31, 2004. These shares have not been considered issued for purposes of these financial statements.
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.
New Accounting Standards
Statement of Financial Accounting Standards ("SFAS") No. 123 (revised 2004), Share-Based Payments ("SFAS 123R") eliminates the option to apply the intrinsic value measurement provisions of Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, to stock compensation awards issued to employees. Management is analyzing the requirements of this statement.
SFAS No. 151, Inventory Costs an amendment of ARB No. 43, Chapter 4 deals with inventory pricing with respect to abnormal amounts of idle facility expenses, freight, handling costs, and spoilage. Management is analyzing the requirements of this new standard and believes that its adoption will not have any significant impact on the Company's financial statements.
SFAS No. 153, Exchanges of Nonmonetary Assets amends Opinion 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. Management is analyzing the requirements of this new standard and believes that its adoption will not have any significant impact on the Company's financial statements.
FIN No. 46(R) revised FIN No. 46, "Consolidation of Variable Interest Entities", requiring the consolidation by a business of variable interest entities in which it is the primary beneficiary. Management is analyzing the requirements of this new standard and believes that its adoption will not have any significant impact on the Company's financial statements.
The Emerging Issues Task Force ("EITF") reached consensus on Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments" ("EITF 03 1") which provides guidance on determining when an investment is considered impaired, whether that impairment is other than
temporary and the measurement of an impairment loss. The FASB issued FSP EITF 03-1-1, "Effective Date of Paragraphs 10-20 of EITF Issue No. 03 1, 'The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments", which delays the effective date for the measurement and recognition criteria contained in EITF 03-1 until final application guidance is issued. The Company does not expect the adoption of this consensus or FSP to have a material impact on its consolidated financial statements.
The EITF reached a consensus on Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share" ("EITF 04-8"), which addresses when the dilutive effect of contingently convertible debt instruments should be included in diluted earnings (loss) per share. Upon ratification by the Financial Accounting Standards Board, EITF 04-8 will become effective for reporting periods ending after December 15, 2004. The adoption of EITF 04-8 did not have an impact on diluted earnings (loss) per share.
Note 2. Restatement of 2001 Financial Statements
In 2004, the Company determined that it had made an error in its accounting for warrants issued in March 2001 to MFC Merchant Bank SA ("MFC Bank") in connection with a credit facility provided to the Company by MFC Bank. The fair value of the warrants, which entitled MFC Bank to purchase 6,001,693 of the Company's common shares, had been determined to be E14,063 based on the Black Scholes valuation model. This amount was recorded in 2001 as bank fee expense.
The financial statements for 2001 have been restated to account for the issuance of the warrants as a debt discount against the carrying amount of the credit facility to which the warrants related. The debt discount amounted to E210 and was amortized as interest expense using the effective interest method over the original term of the loan through its maturity on August 31, 2001. The debt discount was determined by an allocation of the credit facility proceeds of E228 based on the relative fair values of the warrants and the maximum credit facility limit of E1,300. The effect of the restatement was to reduce the net loss for 2001 and for the development stage period by E13,853. This restatement reduced net loss per share by E0.33 for 2001.
Note 3. Receivables
2004 2003
------------ ------------
Trade receivables (including E239 from a
shareholder in 2004 and 2003) E 31 E 37
Value added tax refund 101 72
Other 7 20
----------- ------------
139 129
Allowance for doubtful accounts (including
E23 from a shareholder in 2004 and 2003) (29) (29)
----------- ------------
E 110 E 100
=========== ============
|
Note 4. Goodwill and Other Intangible Assets
Prior to January 1, 2002, the Company was amortizing goodwill over a five-year period. In accordance with current accounting standards, goodwill is not to be amortized beginning January 1, 2002. Based on a review of the fair value of the Company's only reporting unit at December 31, 2002, management determined that the recorded goodwill was fully impaired. Accordingly, an impairment loss of E209 was recorded in the 2002 statement of operations.
Other intangible assets consist of patents which are stated at cost of the fees paid to the French patent office. At December 31, 2004 and 2003, the carrying amount of patents was E80 and E136 net of accumulated amortization of E248 and E189, respectively. Amortization expense relating to patents was E59, E64, and E64 for 2004, 2003 and 2002, respectively. Amortization expense is expected to amount to E60 during 2005 and E20 during 2006, which will completely amortize this asset.
Note 5. Transactions With Affiliates
During 2000, the Company agreed to pay a fee in common stock to MFC Bank for services provided in a business combination transaction. The parent of MFC Bank is a shareholder of the Company. The common shares were not issued in 2000. The fair value of the shares at the measurement date, amounting to E806 (which may not be indicative of the value of the Company as a whole), was included in additional paid-in capital at December 31, 2000. In 2001, a total of 2,025,144 common shares were issued to MFC Bank which resulted in E24 being reclassified to common stock based on the par value of the shares.
The Company has a non-revolving term credit facility with MFC Bank which allowed the Company to borrow up to E3,700 at LIBOR plus 4% (approximately 6.16% at December 31, 2004), repayable in installments of E200, E300, and E400 on June 30, 2005, December 31, 2005, and June 30, 2006, with the balance due December 31, 2006, collateralized by all of the Company's assets plus any future patents. The Company owed E3,368 and E3,127 under this facility as of December 31, 2004 and 2003, respectively. The fair value of this note approximates carrying value because the note is short-term and has a market rate of interest.
The agreement allows MFC Bank to convert the loan balance into common stock at U.S.$0.30 per share. Accordingly, 15,202,000 shares have been reserved at December 31, 2004, for potential issuance.
The Company incurred fees of E66 (paid with shares of the Company) and E37 to MFC Bank in 2004 and 2003, respectively, related to management and financing services.
In March 2001, the Company granted warrants under the agreements with MFC Bank which entitled MFC Bank to purchase 6,001,693 of the Company's common shares. The warrants allowed MFC Bank to convert to shares an amount equal to the maximum of the credit facility including unpaid interest plus the arrangement and retainer fees. The warrants were exercisable within a three-year period beginning August 2000 at approximately E0.2319 per common share. Proceeds from the credit facility were allocated pro-rata based on the relative fair values of the credit facility and related warrants as the proceeds were received up to the maximum proceeds available under the credit facility. The maximum limit of the credit facility was E1,300 and the balance outstanding representing proceeds received under the credit facility was E228. The amount attributable to the warrants of E210 was recorded as a discount against the carrying amount of the credit facility and a credit to additional paid-in-capital. The discount was amortized using the effective interest method over the original term of the credit facility, which was due August 31, 2001 (see Note 2).
During 2001, MFC Bank exercised warrants to acquire 1,176,294 common shares in exchange for the arrangement fee and the retainer fee plus E52 in accrued
interest. MFC also exercised warrants to acquire 3,250,000 common shares for cash in 2001. In 2002, the Company granted 26,775 additional warrants under the original agreements with MFC Bank. The fair value of the beneficial conversion feature on these warrants was calculated using the Black-Scholes model which amounted to E63. This amount was recorded as paid-in capital of E63 and allocated to bank fee expense in 2002. During 2002, MFC Bank exercised the remaining warrants to acquire 1,602,174 common shares. This resulted in a decrease of E372 due on the revolving term credit facility with MFC Bank. This is a non-cash transaction for purposes of the statement of cash flows.
In June 2001, the Company issued additional warrants to MFC Bank to purchase 103,559 common shares at U.S. $1.725 per share exercisable during a three-year period. These warrants were issued in connection with MFC Bank's placement of 1,333,333 of the Company's common shares. The warrants were valued at E118 based on the fair value of the placement fees rendered and was a cost of the placement. In 2002, MFC Bank exercised warrants to acquire 23,393 common shares. This resulted in a decrease of E40 due on the revolving term credit facility with MFC Bank. This is a non-cash transaction for purposes of the statement of cash flows.
In July 2003, the Company sold a nonoperating subsidiary to an affiliate of MFC Bank for cash of E25, resulting in no gain or loss.
In May 2004, the Company issued 500,000 shares of common stock to MFC Bank as consideration for the bank's extension of the due date of the note payable to the bank. The Company recorded a bank fee for E66 as a result of this issuance.
The amounts payable to shareholders bear no interest, have no collateral, and are repayable upon the Company becoming profitable. Since the timing of the Company becoming profitable cannot be determined, the fair value of the amounts payable to shareholders cannot be determined. The Company is not expected to become profitable in the near-term, therefore, the amounts payable to shareholders have been classified as long-term.
During 2003, the Company incurred fees to its Chairman of E239 for consulting from a company owned by him, and E27 in 2001 from a company owned by the former Chief Financial Officer of the Company. Accounts payable at December 31, 2002, includes E23 of these fees.
The Company owes officers and directors approximately E326 at December 31, 2004, for salaries and fees and also for expenses paid on behalf of the Company. These amounts are unsecured, do not bear interest and are included in accounts payable.
Note 6. Income Taxes
The reconciliation of income tax on income computed at the federal statutory rates to income tax expense is as follows:
2004 2003 2002
--------------- --------------- ---------------
U.S. Federal statutory rates on loss from
operations E (749) E (947) E (1,231)
Nondeductible fee paid in warrants and common
stock 224 50 21
Effect of exchange rate changes on
U.S. net operating loss carryforward 103 242 101
Change in valuation allowance 423 582 1,114
Other (1) 73 (5)
--------------- --------------- ---------------
Income tax provision E - E - E -
=============== =============== ===============
|
Deferred tax asset is composed of the following:
2004 2003
--------------- ---------------
Difference in book and tax basis of amounts payable to shareholder E 82 E 82
Net operating loss carryforwards
United States 1,357 1,373
France 1,226 787
--------------- ---------------
2,665 2,242
Less valuation allowance for deferred tax asset (2,665) (2,242)
--------------- ---------------
Net deferred tax asset E - E -
=============== ===============
|
The Company's provision for income taxes was derived from U.S. and French operations. At December 31, 2004, the Company had estimated net operating loss carryforwards which expire as follows:
United States France
------------- ------------
2005 E - E 94
2006 - 381
2007 - 1,039
2008 - 801
2009 - 1,290
2021-2023 3,992 -
-------------- -------------
E 3,992 E 3,605
============== =============
|
Note 7. Stock Option Plans
1994 Amended Stock Option Plan
The Company's 1994 stock option plan provided for the issuance of up to 350,000 shares of the Company's common stock to employees and non-employee directors. The plan was terminated during 2002. The following table summarizes information with respect to this plan:
Weighted
Average
Number of Shares Exercise Price
---------------- --------------
Outstanding and exercisable
at December 31, 2002 and 2003 63,750 U.S. $ .83
Expired in 2004 (50,000) .75
----------------
Outstanding and exercisable
at December 31, 2004 13,750 U.S. $ 1.11
================ ==============
Reserved for future grants at
December 31, 2004 -
================
|
At December 31, 2004, exercise prices ranged from $0.75 to $1.1875.
1995 Qualified Incentive Stock Option Plan
The Company's board of directors approved a stock option plan on August 15, 1996, which provided for the issuance of up to 150,000 shares of the Company's common stock to key employees. The plan was terminated during 2002. The following table summarizes information with respect to this plan:
Weighted
Average
Number of Shares Exercise Price
---------------- --------------
Outstanding and exercisable
at December 31, 2004, 2003 and 2002 100,000 U.S. $ .75
================ ==============
Reserved for future grants
at December 31, 2004 -
================
|
The exercise price on these options is $0.75.
2001 Qualified Incentive Stock Option Plan
The Company's board of directors approved a stock option plan on June 15, 2001, which provides for the issuance of up to 5,000,000 shares of the Company's common stock to employees and non-employee directors. No options were issued in 2004. The weighted average fair value of these options at the grant dates were E0.12 and E0.62 per option in 2003 and 2002, respectively. The following table summarizes information with respect to this plan:
Weighted
Average
Number of Shares Exercise Price
---------------- --------------
Outstanding and exercisable
at December 31, 2001 100,000 U.S. $ 2.86
==============
Granted in 2002 117,500 U.S. $ .99
----------------
Outstanding and exercisable
at December 31, 2002 217,500 U.S. $ 1.83
==============
Granted in 2003 225,000 U.S. $ .14
---------------
Outstanding and exercisable
at December 31, 2003 and 2004 442,500 U.S. $ .97
=============== ==============
Reserved for future grants
at December 31, 2004 4,557,500
===============
|
Almost all options have an expiration date ten and a half years after issuance.
At December 31, 2004, exercise prices range from $0.12 to $3.50.
Note 8. Commitments and Contingencies
The Company leases property under noncancelable operating leases through January 2006. Future minimum lease payments under noncancelable operating leases are as follows:
2005 E 6
2006 1
------------
E 7
============
|
Total rent expense per year was E32 for 2004, E24 for 2003, and E30 for 2002.
The Company is subject to a judgment against a subsidiary Mymetics S.A. issued in July 2004 by a court ("Tribunal de Prud'hommes") in Nantes (France). A former employee received a temporary judgment against the Company for E4 for alleged wrongful termination by the former management of Mymetics S.A. The Company intends to appeal the judgment.
The Company was party to a second case in which a creditor claims that the Company owes it approximately E30. The claim was filed before a court in Lyon ("Tribunal de Grande Instance") on June 29, 2004.
The Company is subject to a proceeding brought by Dr. Serres, a current director and former officer, for alleged wrongful termination of Dr. Serres by the Company's previous management. Dr. Serres was reinstated as Chief Scientific Officer by the new Board of Directors retroactively from May 5, 2003 until November 3, 2003, when he was promoted as Head of Exploratory Research, his current position with the Company. In exchange for being reinstated retroactively, Dr. Serres agreed to forfeit all legal and punitive compensation for having been terminated without cause. The French Industrial Tribunal granted
Dr. Serres E46 in an emergency injunction on October 14, 2003. The final amount which Dr. Serres has claimed in terms of legal and punitive compensation if the case had been allowed to run its full course is in excess of E175. The Company's French legal counsel believes however that this claim is without merit as under French law, salaried company directors and officers are only eligible for severance pay and other compensation if certain, very stringent, conditions are met which, in the Company's counsel's opinion, is evidently not the case for Dr. Serres. The agreement between Dr. Serres and the Company has yet to be finalized.
Other Financing
The Company has entered into an agreement to issue shares to an investor at 98% of the current market price over 24 months. Total issuance cannot exceed U.S.$5,000 or 9.9% of the Company's outstanding stock. No shares can be issued under this agreement until the shares are registered which is expected to be completed in 2005.
Note 9. Subsequent Events
In January 2005, the Company received a loan for E37 from a shareholder. The loan bears interest at 15% and is due in January 2006.
In March 2005, the Company issued a total of 500,000 common shares to MFC Merchant Bank S.A. and 1,500,000 to another company for consulting services. Also in March 2005, 200,000 shares were issued to an individual as a fee for becoming a member of the Company's Board of Directors.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on April 15, 2005.
Mymetics Corporation
By: /s/ Christian Rochet
---------------------------
Name: Christian J.F. Rochet
Title: Chief Executive Officer
|
POWERS OF ATTORNEY
Each person whose signature appears below constitutes and appoints Ernst Luebke as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Annual Report on From 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or their substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on March 31, 2005.
Signature Title
--------- -----
/s/Christian J.F. Rochet
--------------------------- Chief Executive Officer and
Christian J.F. Rochet Director (Principal Executive
Officer)
/s/ Ernst Luebke
--------------------------- Chief Financial Officer and
Ernst Luebke Director (Principal Financial and
Accounting Officer)
/s/ Pierre-Francois Serres
--------------------------- Director
Pierre-Francois Serres
|
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Share Exchange Agreement dated December 13, 2001 between the
Corporation and the stockholders of Mymetics S.A. listed on the
signature page thereto (1)
2.2 Share Exchange Agreement dated December 13, 2001 between the
Corporation and the stockholders of Mymetics S.A. listed on the
signature page thereto (1)
2.3 Purchase Agreement dated October 17, 1998 between the Corporation and
the majority stockholders of Nazca Holdings Ltd. (2)
2.4 Amendment to the Agreement dated October 17, 1998 between the
Corporation and the majority stockholders of Nazca Holdings Ltd. (3)
2.5 Revised Purchase Agreement dated July 28, 1999 between the Corporation
and the majority stockholders of Nazca Holdings Ltd. (4)
2.6 Share Exchange Agreement dated July 30, 2002 between the Corporation
and the stockholders of Mymetics S.A. listed on the signature page
thereto (5)
3(i) Articles of Incorporation of the Corporation (as amended through May
10, 2002) (6)
3(ii) Bylaws (7)
4.1 Form of Specimen Stock Certificate (8)
4.2 Form of letter regarding Warrant
4.3 Form of Share Exchange Agreement
9.1 Voting and Exchange Trust Agreement dated March 28, 2001, among the
Corporation, 6543 Luxembourg S.A. and MFC Merchant Bank S.A. (8)
10.1 Services Agreement dated May 31, 2001, between the Corporation and MFC
Merchant Bank, S.A.(7)
10.2 Employment Agreement dated May 3, 2001, between Pierre-Francois Serres
and the Corporation (7)
10.3 Indemnification Agreement dated March 28, 2001, between the
Corporation and MFC Bancorp Ltd. (7)
10.4 Agreement dated for reference May 15, 2000, between the Corporation
and Maarten Reidel (7)
10.5 Preferred Stock Redemption and Conversion Agreement dated for
reference December 21, 2000, between the Corporation and Sutton Park
International Ltd. (10)
|
10.6 Preferred Stock Conversion Agreement dated for reference December 21,
2000, between the Corporation and Med Net International Ltd. (11)
10.7 Preferred Stock Conversion Agreement dated December 21, 2000, between
the Corporation and Dresden Papier GmbH (11)
10.8 Assignment Agreement dated December 29, 2000, among the Corporation,
Mymetics S.A. and MFC Merchant Bank S.A. (1)
10.9 Credit Facility Agreement dated July 27, 2000, between MFC Merchant
Bank, S.A. and the Corporation (1)
10.10 Amended Credit Facility Agreement dated for reference August 13, 2001,
between MFC Merchant Bank, S.A. and the Corporation (16)
10.11 Second Amended Credit Facility Agreement dated for reference February
27, 2002, between MFC Merchant Bank, S.A. and the Corporation (16)
10.12 Amended and Restated Credit Facility Agreement dated for reference
February 28, 2003, among MFC Merchant Bank, S.A., MFC Bancorp Ltd.,
and the Corporation (16)
10.13 Guarantee dated for reference February 28, 2003, by MFC Bancorp Ltd.
to MFC Merchant Bank S.A. (16)
10.14 Shareholder Agreement dated March 28, 2001, among the Corporation, the
Holders of Class B Exchangeable Preferential Non-Voting Shares of 6543
Luxembourg S.A. signatory thereto and 6543 Luxembourg S.A.(8)
10.15 Support Agreement dated March 28, 2001, between the Corporation and
6543 Luxembourg S.A. (8)
10.16 1995 Qualified Incentive Stock Option Plan (12)
10.17 Amended 1994 Stock Option Plan (13)
10.18 2001 ICHOR Corporation Stock Option Plan (7)
10.19 Employment Agreement dated March 18, 2002, between the Corporation and
Peter P. McCann (14)
10.20 Consulting Agreement dated August 31, 2001, between the Corporation
and Michael K. Allio (8)
10.21 Amendment to Consulting Agreement dated August 21, 2002, between the
Corporation and Michael K. Allio (16)
10.22 Employment Agreement dated March 18, 2002, between the Corporation and
Dr. Joseph D. Mosca (15)
10.23 Separation Agreement and Release dated January 31, 2003, between the
Corporation and Peter P. McCann (16)
10.24 Director and Non-Employee Stock Option Agreement dated July 19, 2001,
between the Corporation and Robert Demers (8)
10.25 Director and Non-Employee Stock Option Agreement dated July 19, 2001,
between the Corporation and Michael K. Allio (8)
|
2001, between the Corporation and John M. Musacchio (8)
10.27 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Patrice Pactol (8)
10.28 Director and Non-Employee Stock Option Agreement dated July 19,
2001, between the Corporation and Pierre-Francois Serres (8)
10.29 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Pierre-Francois Serres (16)
10.30 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Patrice Pactol (16)
10.31 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Robert Demers (16)
10.32 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and John M. Musacchio (16)
10.33 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Michael K. Allio (16)
10.34 Director and Non-Employee Stock Option Agreement dated August
21, 2002, between the Corporation and Michael K. Allio (16)
10.35 Director and Non-Employee Stock Option Agreement dated June 20,
2002, between the Corporation and Peter P. McCann (16)
10.36 Director and Non-Employee Stock Option Agreement dated July 23,
2002, between the Corporation and Peter P. McCann (16)
10.37 Director and Non-Employee Stock Option Agreement dated February
6, 2003, between the Corporation and Peter P. McCann (16)
10.38 Patent Pledge Agreement dated November __, 2002 among Mymetics
S.A., Mymetics Deutschland GmbH, the Corporation and MFC
Merchant Bank S.A. (16)
10.39 Third Amendment to the Credit Facility Agreement dated for
reference December 31, 2004, between MFC Merchant Bank, S.A. and
the Corporation (17)
10.40 Fourth Amendment to the Credit Facility Agreement dated for
reference February 16, 2005, between MFC Merchant Bank, S.A. and
the Corporation (17)
10.41 Consulting Agreement dated for reference January 1, 2004,
between the Centre Hospitalier Universitaire Vaudois (CHUV),
the Corporation and Dr. Sylvain Fleury, Ph.D.
10.42 Consulting Agreement dated for reference January 1, 2004,
between the Corporation and Professor Marc Girard, DVM, D.Sc.
10.43 Cooperation and Option Agreement dated March 10, 2005, between
the Corporation and Pevion A.G.
10.44 Consulting Agreement dated March 23, 2005, between the
|
Corporation and Northern Light International.
11.1 Statement Regarding Calculation of Per Share Earnings.
21.1 List of Subsidiaries
24.1 Powers of Attorney (included on the signature page hereto)
31.1 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14 of the Securities Exchange Act of 1934
31.2 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14 of the Securities Exchange Act of 1934
32.1 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
(1) Incorporated by reference to the Corporation's Schedule 14C filed with the Securities and Exchange Commission on April 26, 2001.
(2) Incorporated by reference to the Corporation's report on Form 8-K filed with the Securities and Exchange Commission on October 22, 1998.
(3) Incorporated by reference to the Corporation's report on Form 8-K/A filed with the Securities and Exchange Commission on April 15, 1999.
(4) Incorporated by reference to the Corporation's report on Form 8-K/A filed with the Securities and Exchange Commission on August 13, 1999.
(5) Incorporated by reference to the Corporation's Amendment No. 1 to Form S-1 filed with the Securities and Exchange Commission on August 8, 2002.
(6) Incorporated by reference to the Corporation's report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002.
(7) Incorporated by reference to the Corporation's report on Form 10-Q for the quarter ended June 30, 2001, filed with the Securities and Exchange Commission on August 14, 2001.
(8) Incorporated by reference to the Corporations Registration Statement on Form S-1, File No. 333-88782, filed with the Securities and Exchange Commission on May 22, 2002.
(9) Incorporated by reference to the Corporation's report on Form 8-K/A filed with the Securities and Exchange Commission on August 9, 2000.
(10) Incorporated by reference to Schedule 13D/A filed by MFC Bancorp Ltd.
with the Securities and Exchange Commission on dated January 2, 2001.
(11) Incorporated by reference to the Corporation's report on Form 10-K for the fiscal year ended December 31, 2000, filed with the Securities and Exchange Commission on March 14, 2001.
(12) Incorporate by reference to the Corporation's Registration Statement on Form S-8, File No. 333-15831, filed with the Securities and Exchange Commission on November 8, 1996.
(13) Incorporated by reference to the Corporation's Registration Statement
on Form S-8, File No. 333-15829, filed with the Securities and Exchange Commission on November 8, 1996.
(14) Incorporated by reference to the Corporation's report on Form 10-K for the fiscal year ended December 31, 2002, and filed with the Securities and Exchange Commission on March 29, 2002.
(15) Incorporated by reference to the Corporation's report on Form 10-Q for the quarter ended March 31, 2002, filed with the Securities and Exchange Commission on May 15, 2002.
(16) Incorporated by reference to the Corporation's report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Securities and Exchange Commission on March 27, 2003.
(17) Incorporated by reference to the Corporation's report on Form 8-K filed With the Securities and Exchange Commission on February 18, 2005.
(18) Incorporated by reference to the Corporation's report on Form 10-K for the fiscal year ended December 31, 2003, filed with the Securities and Exchange Commission on March 30, 2004.
Exhibit 10.41
CONSULTING AGREEMENT
This Agreement (the Agreement) is dated for reference January 1st, 2004 between:
Mymetics Corporation, a company duly registered in the state of Delaware (USA), having its seat at 11 Stanwix Street, 15222-1319 Pittsburg, PA (USA) and its European Executive Office at 65, route du Boiron, 1260 Nyon (Switzerland), represented by its duly authorised officers, Mr. Christian Rochet, President and Chief Executive Officer, and Mr. Ernst Lubke, Chief Financial Officer (the "Company")
And
CHUV - Centre Hospitalier Universitaire Vaudois, a public university hospital organised under the laws of the Canton of Vaud (Switzerland), having its seat at Bugnon 21, 1005 Lausanne, represented by its duly authorised Prof. Yann Barrandon (the "Institution")
And
Dr. Sylvain Fleury, Ph.D., a Project Leader at the Institution's Experimental Surgery Department (the "Consultant").
Hereafter collectively designated as the Parties.
WHEREAS
The Company is engaged in scientific research in view of developing vaccines, therapeutic compounds and specific therapies for certain retroviral diseases or diseases with a viral autoimmune content, and in particular AIDS (the "Field"). The Consultant has extensive experience in the Field, and the Company seeks to benefit from the Consultant's expertise by retaining the Consultant as a consultant. The Consultant wishes to perform consulting services in the Field for the Company. The Institution acknowledges this wish and agrees to act as executor of the Agreement, and in particular, to perform certain services in connection with the collection of the fees charged by the Consultant to the Company and the transfer of such to the Consultant net of various social charges under Swiss Law.
Accordingly, the Parties agree as follows:
1. SERVICES
(a) Consultant shall provide consulting services which include (i) serving as the Company's Chief Scientific Officer; (ii) attending scientific advisory board meetings; (iii) providing scientific advice regarding the Company's product lines, the general direction of its research program, recruitment of scientific personnel, and techniques used in research in the Field; and (iv) generally advising the Company in its efforts to produce, develop, and market products in the Field, to the Company with respect to matters related to the Field.
(b) The Institution agrees that such services be rendered by the Consultant to the Company. In addition, the Institution agrees to (i) invoice the Company on a regular basis (as defined under section 2 below) for said services,
(ii) to credit such amounts to its internal departmental funds CGRA CHX/CGRB 26595, (iii) to manage all required Swiss social charges (employer's and employee's contribution) from such sums and transfer such deductions to the relevant social security institutions (AVS, LPP, etc.) and (iv) to transfer the net balance remaining to the Consultant.
(b) Upon request by the Company, and at times mutually agreed upon by the Company and the Consultant, the Consultant shall devote up to 30% of his time (computed as an annual average) to providing consulting services to the Company pursuant to this Agreement.
(c) The Company acknowledges that the Consultant is an employee of the Institution and is subject to the Institution's policies, including policies concerning consulting, conflicts of interest, and intellectual property, and that Consultant's obligations under the Institution's policies take priority over any obligations the Consultant may have to the Company by reason of this agreement.
2. COMPENSATION
As full consideration for the consulting services provided by the Consultant, the Company shall pay to the Consultant the amount of CHF 96'000 annually, payable in monthly instalments of CHF 8'000, except for an initial amount of CHF 48'000, representing six months of operations, to be made on or before January 15, 2004. In addition to the foregoing amounts, the Company shall promptly reimburse the Consultant for all reasonable expenses incurred by the Consultant in providing consulting services under this Agreement. The Company agrees to pay approved expense reports within 30 days of receipt.
3. CONFIDENTIALITY
(a) The Consultant may disclose to the Company any information that the Consultant would normally freely disclose to other members of the scientific community at large, whether by publication, by presentation at seminars, or in informal scientific discussions. However, the Consultant shall not disclose to the Company information that is proprietary to the Institution and is not generally available to the public other than through formal technology transfer procedures.
(b) In providing consulting services to the Company pursuant to
this Agreement, the Consultant may acquire information that pertains to the
Company's products, processes, equipment, programs, developments, or plans and
that is both (i) disclosed or made known by the Company to the Consultant and
(ii) identified as "proprietary" by the Company at any time ("Proprietary
Information"). The Consultant agrees not to disclose any Proprietary Information
to third parties or to use any Proprietary Information for any purpose other
than performance of consulting services pursuant to this Agreement, without
prior written consent of the Company.
(c) Proprietary Information subject to paragraph 3(b) does not include information that: (i) is or later becomes available to the public through no breach of this Agreement by the Consultant; (ii) is obtained by the Consultant from a third party who had the legal right to disclose the information to the Consultant; (iii) is already in the possession of the Consultant on the date this Agreement becomes effective; or (iv) is required to be disclosed by law, government regulation, or court order. In addition, Proprietary Information subject to paragraph 3(b) does not include information generated by the Consultant unless the information (i) is generated as a direct result of the performance of consulting services under this Agreement and (ii) is not generated
in the course of the Consultant's activities as an Institution employee.
4. RETURN OF MATERIALS
The Consultant agrees to promptly return, following the termination of this Agreement or upon earlier request by the Company, all drawings, tracings, and written materials in the Consultant's possession and (i) supplied by the Company in conjunction with the Consultant's consulting services under this Agreement or (ii) generated by the Consultant in the performance of consulting services under this Agreement and not generated in the course of the Consultant's activities as an Institution employee.
5. INTELLECTUAL PROPERTY
(a) Subject to the terms of paragraph 5(b), below, the Consultant hereby assigns to the Company any right, title, and interest he may have in any invention, discovery, improvement, or other intellectual property which (i) the Consultant develops solely as a direct result of performing consulting services for the Company under this Agreement and (ii) is not generated in the course of Consultant's activities as an Institution employee and is not owned by the Institution. Any intellectual property assignable to the Company pursuant to the preceding sentence is hereinafter referred to as ("Company Intellectual Property"). Upon the request of the Company, the Consultant shall execute such further assignments, documents, and other instruments as may be necessary to assign Company Intellectual Property to the Company and to assist the Company in applying for, obtaining and enforcing patents or other rights in Switzerland and in any foreign country with respect to any Company Intellectual Property. The Company will bear the cost of preparation of all patent or other applications and assignments, and the cost of obtaining and enforcing all patents and other rights to Company Intellectual Property.
(b) The Company shall have no rights by reason of this Agreement in any publication, invention, discovery, improvement, or other intellectual property whatsoever, whether or not publishable, patentable, or copyrightable, which is developed as a result of a program of research financed, in whole or in part, by funds provided by or under the control of the Institution.
6. DEFENSE AND INDEMNIFICATION
The Company agrees, at its sole expense, to defend the Consultant and the Institution against, and to indemnify and hold the Consultant and Institution harmless from, any claims or suits by a third party against the Consultant or the Institution or any liabilities or judgments based thereon, either arising from the Consultant's performance of services for the Company under this Agreement or arising from any Company products which result from the Consultant's performance of services under this Agreement.
7. TERM AND TERMINATION
(a) Unless terminated earlier under paragraph 7(b), below, this
Agreement shall be for a term of 3 years from the date it becomes effective,
i.e. until December 31, 2006.
(b) Without limiting any rights which either party to this Agreement may have by reason of any default by the other party, each party reserves the right to terminate this Agreement at its convenience by written notice given to the other party. Such termination shall be effective upon the date not earlier than
30 days following the date of such notice as shall be specified in said notice.
(c) Termination of this Agreement under paragraph 7(a) or 7(b), above, shall not affect (a) the Company's obligation to pay for services previously performed by the Consultant or expenses reasonably incurred by the Consultant for which the Consultant is entitled to reimbursement under paragraph 2 above, (b) the Company's obligations to recognize the priority of Institution intellectual property rights under paragraph 5(b) above, (c) the Company's obligations to defend and indemnify the Consultant and the Institution under paragraph 6 above, or (d) the Consultant's continuing obligations to the Company under paragraphs 3(b) and 5(a) above.
8. MISCELLANEOUS
(a) This Agreement shall inure to the benefit of and be binding upon the respective heirs, executors, successors, representatives, and assigns of the parties, as the case may be; provided, however, the obligations hereunder of each party to the other are personal and may not be assigned without the express written consent of such other party.
(b) The relationship created by this Agreement shall be that of independent contractor, and the Consultant shall have no authority to bind or act as agent for the Company or its employees for any purpose.
(c) The Company will not use the Consultant's or the Institution's name in any commercial advertisement or similar material that is used to promote or sell products, unless the Company obtains in advance the written consent of both the Consultant and the Institution to such use.
(d) Notice or payments given by one party to the other hereunder shall be in writing and deemed to have been properly given or paid if deposited with the Swiss Postal Service, registered or certified mail, addressed as follows:
Company:
Mymetics Corporation
European Executive Office
65, route du Boiron
1260 Nyon
Institution:
CHUV
M. Jean-Marc Chavanne
Directeur Administratif
Mont-Paisible 16
Bugnon 46
Lausanne 1011-CH
Consultant:
Dr. Sylvain Fleury, Ph.D.
Chemin de Verdonnet 9
1010 Lausanne
(e) This Agreement replaces all previous agreements and the discussions relating to the subject matters hereof and constitutes the entire agreement between the Company, the Institution and the Consultant with respect to the subject matters
of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation, or agreement made by any employee, officer, or representative of the Company or the Institution, or by any written documents unless it is signed by an officer of the Company, an officer of the Institution and by the Consultant. The Parties acknowledge that any amendment of this Agreement (including, without limitation, any extension of this Agreement or any change from the terms of paragraph 2 in the consideration to be provided to Consultant with respect to services to be provided hereunder) or any departure from the terms or conditions hereof with respect to Consultant's consulting services for the Company is subject to the Institution's prior written approval.
(f) The parties hereby represent, warrant, acknowledge and agree that: (i) they have agreed that this Agreement be drawn up in the English language; and (ii) the English version of this Agreement shall govern for all purposes.
(g) Should a provision of this Agreement be or become invalid, the validity of the remaining provisions of this Agreement shall not be affected. The parties hereto undertake to replace any such invalid provision without delay with a valid provision which as nearly as possible duplicates the economic intent of the invalid provision.
(h) This Agreement shall be construed and enforced in accordance with, and the rights and obligations of the parties shall be governed by, the laws of Switzerland.
(i) Each of the parties irrevocably attorns to the exclusive jurisdiction of the Canton of Vaud (Switzerland).
IN WITNESS WHEREOF, the parties have executed this Agreement effective the reference date first stated above.
/Rochet/
Mymetics Corporation
By: Christian Rochet, president and Chief Executive Officer
/Luebke/
Mymetics Corporation
By: Ernst Luebke, Chief Financial Officer
/Barrandon/
CHUV - Centre Hospitalier Universitaire Vaudois By : Prof. Yann Barrandon
EXHIBIT 10.42
CONSULTING AGREEMENT
This Agreement is made as of June 10, 2004, to be (partially retroactively) effective January 15, 2004 between MYMETICS CORPORATION, a Delaware Corporation (the "COMPANY"), and Professor MARC GIRARD, an individual resident of Lyon, France (the "CONSULTANT").
PREAMBLE
The Company requires certain scientific assistance and advice in matters of vaccines research and development, and the Consultant has valuable experience and contacts and wishes to assist the Company in this regard. The parties have been actively cooperating since January 15, 2004 on the basis of a Gentlemen's agreement and a Company Board Resolution dated January 9, 2004. Now therefore, the parties, intending to be legally bound, agree as follows.
AGREEMENT
1. ENGAGEMENT. The Company hereby engages the Consultant to render the following services, and other services as reasonably requested by the Company:
(1) In close consultation with the Company's Chief Scientific Officer, direct the Company's vaccine development efforts;
(2) Assist the Company's Chief Scientific Officer in all matters of scientific importance;
(3) Advise the Board of directors in matters of scientific and strategic importance;
(4) Address issues relating to the Company's patents and patent applications;
(5) Assist the Company's Chief Executive Officer in identifying and developing strategic joint venture opportunities for the Company world-wide.
The Consultant hereby accepts such engagement and covenants that he will devote his best efforts and skill to the performance of these services and such additional services as may be mutually agreed upon by the Company and the Consultant. The Company and the Consultant agree that the engagement shall comprise approximately 11 days of full time work per month.
2. FEES & EXPENSES.
(a) RETAINER FEE AND EXPENSES. The Company agrees to pay the Consultant for his services (E)4'000.00 per month. The Company is obligated to pay the Consultant only for such time that the Consultant is available to and works for the Company. The Company shall reimburse the Consultant for his ordinary, necessary, and reasonable business expenses incurred on Company business upon presentation of properly documented expense reports to the Company's Chief Operating Officer. It is agreed that the Consultant shall be entitled to air-travel in business class for flights lasting more than 3 hours only.
(b) STOCK ISSUE. In addition to the compensation set forth in (a) above, the Consultant shall receive free of charge 500'000 common shares of the Company.
3. TERM.
(a) This Agreement shall commence as of its effective date and shall continue indefinitely unless terminated by either party at any time and for any reason upon 15 days' prior written notice given to the other party. Notwithstanding any other provisions of this Agreement, this Agreement shall terminate automatically without notice at any time upon the occurrence of any of the following events:
(i) The Consultant's death or Total and Permanent Disability (as defined below);
(ii) A material breach of this Agreement by the Consultant;
(iii) The Consultant's engaging in conduct materially injurious to the Company or to himself, including but not limited to acts of dishonesty or fraud, commission of a felony or a crime of moral turpitude, or substance abuse; or
(iv) The Consultant's continuing and unreasonable refusal to substantially perform his duties for the Company as specifically directed by the Company.
(b) TOTAL AND PERMANENT DISABILITY. "TOTAL AND PERMANENT DISABILITY" shall mean a mental or physical condition of the Consultant which, in the reasonable opinion of the Company's Board of Directors, renders the Consultant unable or incompetent, with or without reasonable accommodation, to perform the essential functions of his job or devote his best efforts (measured against prior performance) to the Company, or any of its successors, for more than 60 days.
4. PROPRIETARY AND/OR CONFIDENTIAL INFORMATION. The Consultant agrees that he will not reveal (or permit to be revealed) to a third party or use for his own benefit, either during or for five years after the term of this Agreement, without the prior written consent of the Company, any proprietary and/or confidential information pertaining to the business of the Company, its shareholders, subsidiaries or other affiliates (collectively, "AFFILIATES") including but not limited to information about strategy, customers, suppliers, employees, financial condition, operations, procedures, know-how, formulas production, distribution, experiments, patents, or other trade secrets obtained while working with the Company or its Affiliates except for information clearly established to be in the public record. Consultant will communicate findings, conclusions, recommendations, and supporting data and analyses to the Company, and any such reports shall become the property of the Company. It is agreed and Consultant agrees that any and all inventions and discoveries, whether or not patentable, which he conceives and/or makes within the consulting period and which are a direct result of his consulting with the Company under this agreement and/or a direct result of proprietary and/or confidential information received from the Company shall be the property of the Company. Consultant further agrees that he will, upon request by the Company, promptly execute all applications, assignments, or other instruments which the Company shall deem necessary or useful in order to apply for and obtain Letters Patent in the United States and any foreign countries for such inventions and discoveries. It is understood that the Company will bear the cost of any such patent filing and prosecution.
5. NON COMPETE. The Consultant agrees that he will not engage in any
lucrative or voluntary activity during the term of this Agreement which may contribute to, aid or abet actual or potential competition for the Company.
6. ARBITRATION. Any disagreement or claim (other than a claim for injunctive relief for violation of Sections 4 or 5 hereof) arising out of or relating to this Agreement, or the breach thereof, or its termination shall be submitted to arbitration pursuant to the provisions of the Uniform Arbitration Act in New York, NY in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof. The disputants shall promptly endeavor by mutual agreement to designate one person to serve as the Impartial Arbitrator within 30 days after written request for arbitration by any party hereto. If the disputants cannot agree on a single arbitrator, then each of the disputants shall promptly designate one person to serve as an arbitrator, and the arbitrators so designated shall within 10 days select another person (or two persons where necessary to ensure that the total number of arbitrators is an odd number) as Impartial Chairman of the Board of Arbitration (and where necessary, Impartial Vice Chairman) by agreement, or if they are unable to agree, then the Impartial Arbitrator shall be selected through the facilities of the New York Regional Office of the American Arbitration Association and in accordance with the rules thereof. The Award of the Impartial Arbitrator or the Board of Arbitration (as the case may be) shall be final and binding upon the disputants, subject only to such rights of appeal as are provided by the said Act. The costs of the arbitration proceeding, including the fees of the Impartial Arbitrator or the Board of Arbitration (as the case may be) shall be borne equally by the disputants.
7. INDEPENDENT CONTRACTOR. The Consultant, in entering into this Agreement and carrying out his obligations hereunder, is an independent contractor and not an employee of the Company. The Consultant hereby agrees and understands that he is not entitled to any benefits or overtime payments that are available to employees of the Company. The Consultant is not and shall not be deemed to be an agent or Consultant of the Company, and shall have no power to bind the Company to any contract or warranty or in any respect whatever, whether by written or oral statements, by any course of conduct, or in any other manner, without the express written consent of the Company, which consent may not be general but must specifically refer to each particular instance as to which the Company consents to be so bound. The Consultant shall indemnify the Company against and hold it harmless from all damages, costs, and expenses (including attorneys' fees) which the Company may suffer or incur should it be held bound by any writing, speech, action or inaction of the Consultant other than those consented to by the Company.
8. TAXES. To the extent any taxes may be due on the payments to Consultant provided in this Agreement, Consultant agrees to pay them himself and to indemnify and hold Company harmless for any tax claims or penalties resulting from such payments. Consultant further agrees to provide any and all information pertaining to Consultant upon request as reasonably necessary for Company to comply with applicable tax laws.
9. MISCELLANEOUS. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision. This Agreement embodies the entire Agreement between the parties hereto and supersedes any and all prior or contemporaneous, oral or written understandings, negotiations, or communications on behalf of such parties. This Agreement may be executed in several counterparts, each of which shall be deemed original, but all of which together shall constitute one and the same instrument. The waiver by either party of any breach or violation of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach or violation hereof. This Agreement is executed in and shall be governed by and
construed in accordance with the laws of the State of New York. Any action or proceedings instituted to enforce rights hereunder shall be instituted in the State courts of New York and/or the federal courts of the Southern district of New York, New York. This Agreement shall be changed, waived, discharged, or terminated only by written agreement of both parties hereto. This Agreement shall inure to the benefit of the Company, its successors and assigns.
MYMETICS CORPORATION THE CONSULTANT
By: /Rochet/ /Girard/ ------------------------- --------------------- Name: Christian Rochet Professor MARC GIRARD Title: President and CEO |
By: /Luebke/ ------------------------- Name: Ernst Luebke Title: CFO |
EXHIBIT 10.43
CONFIDENTIAL TREATMENT REQUESTED
COLLABORATION AND OPTION AGREEMENT
THIS COLLABORATION AND OPTION AGREEMENT ("Agreement"), is made and entered into as of March 10, 2005 (the "Effective Date") by and between
MYMETICS CORPORATION ("MYMETICS"), a company organized under the laws of the state of Delaware in the United States, with a principal place of business at 230 Park Avenue, New York, NY 10169, and with its European Executive Office located at 14, rue de la Colombiere, 1260 Nyon, Switzerland and
PEVION BIOTECH LTD., a company organized under the laws of Switzerland with a principal place of business at Rehhagstrasse 79, 3018 Berne Switzerland, ("PEVION").
WHEREAS, PEVION is a company active in the development, manufacturing and commercialization of Virosomes
WHEREAS, MYMETICS is a company active in the development of vaccines and treatments for AIDS and other retroviruses
WHEREAS, PEVION and MYMETICS wish to engage in discussions relating to, and exploring the possibilities of a possible research and/or business relationship relating to their technologies
NOW, THEREFORE, the Parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 "Affiliate" means, with respect to either Party, any entity controlling, controlled by or under common control with, such Party. For purposes of this definition, "control" of another corporation or entity shall mean when a person or entity (i) owns or directly controls fifty percent (50%) or more of the outstanding voting stock or other ownership interest of the other corporation or entity, (ii) possesses, directly or indirectly the power to manage, direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity, or (iii) has actual control over the management, business and affairs of the corporation or other entity.
1.2 "PEVION Materials" means [*] as described in exhibit 1.
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
1.3 "PEVION Patent Rights" means the patents and patent applications with respect to PEVION Materials listed on Exhibit 2, and any divisional, continuation, or continuation-in-part of such patent applications to the extent the claims are directed to subject matter specifically described therein, as well as any patent issued thereon and any reissue or reexamination of such patent, and any foreign counterparts to such patents and patent applications.
1.4 "PEVION Technology" means PEVION proprietary technology, PEVION Materials and PEVION Patent Rights.
1.5 "Confidential Information" means information or material related to a Party's (the "Discloser") information, technology or business, including, without limitation, a formula, pattern, compilation, program, method, technique, process, biological material, gene sequence, data test, model, result or analysis which is disclosed to the other Party (the "Recipient") in connection with this Agreement. PEVION Confidential Information includes, but is not limited to, PEVION's Technology (as defined herein). Project Information (as hereinafter defined) and the existence of this agreement shall be deemed Confidential Information of both Parties. Notwithstanding the foregoing, Confidential Information does not include information that: (1) is now or subsequently becomes generally available to the public through no wrongful act or omission of the Recipient; (2) Recipient can demonstrate it was rightfully in its possession prior to disclosure to Recipient by the Discloser; (3) is independently developed by Recipient without use, directly or indirectly, of any Confidential Information of Discloser, as evidenced by written records; or (4) Recipient rightfully obtains from a third party who has the right to transfer or disclose it.
1.6 "Effective Date" shall mean the date first written above.
1.7 "MYMETICS Field" means the prevention of AIDS trough HIV peptide vaccines.
1.8 "MYMETICS Materials" means the tangible biological materials described in Exhibit 1, as may be amended from time to time by mutual agreement of the Parties.
1.9 "MYMETICS Patent Rights" means the patent and patent applications with respect to MYMETICS's proprietary technology, and any divisional, continuation, or continuation-in-part of such patent applications to the extent the claims are directed to subject matter specifically described therein, as well as any patent issued thereon and any reissue or reexamination of such patent, and any foreign counterparts to such patents and patent applications. Patents and patent applications related to vaccines are listed in Exhibit 2.
1.10 "MYMETICS Technology" means MYMETICS's proprietary technology, MYMETICS Materials and MYMETICS Patent Rights.
1.11 "Project" means the research and development projects described in Exhibit 3. The project is intended to last [*] from delivery of both the PEVION and MYMETICS Materials.
1.12 "Project Information" means all intellectual property, inventions, conceptions, compositions, materials (in particular PEVION Material combined with MYMETICS Material), methods, processes, know-how, data, information, records, results, studies and analyses generated during the performance of the Project.
1.13 "Project Patent Rights" means any patent applications which may be filed with respect to Project Information, and any divisional, continuation, or continuation-in-part of such patent applications to the extent the claims are directed to subject matter specifically described therein, as well as any patent issued thereon and any reissue or reexamination of such patent.
1.14 "Workplan" means the workplan described in Exhibit 3 for the performance of the Project.
ARTICLE 2
PROJECT
2.1 Delivery of Materials. PEVION shall deliver MYMETICS the combined material (PEVION Material combined with MYMETICS Material) as soon as possible.
2.2 Limitation of Use. Except as set forth in Section 6,
(a) the PEVION Materials may be used by MYMETICS solely for the purpose of performing the Project, and shall be used for no other purpose whatsoever without PEVION's prior written consent.
(b) the MYMETICS Materials may be used by PEVION solely for the purpose of performing the Project, and shall be used for no other purpose whatsoever without MYMETICS's prior written consent.
(c) the Project Information may be used by MYMETICS and/or PEVION solely for the purpose of performing the Project, and shall be used for no other purpose whatsoever without PEVION's and MYMETICS's prior written consent
2.3 Performance of Project. The Parties will perform the Project in accordance with the workplan.
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
2.4 Reporting.
2.4.1 Both Parties shall maintain accurate laboratory data
books and notebooks for all Project Information and
shall promptly disclose to the other Party any
inventions created under the Project.
2.4.2 Both Parties shall prepare an interim report covering
both PEVION's and MYMETICS's results. Such report
shall be communicated to the other party. MYMETICS
shall be in charge of the final report as detailed
below.
2.4.3 Upon completion of the Project, MYMETICS will provide
to the Parties a report, setting forth the Project
Information. Such report shall include a summary of
the research performed under the Project as well as
the detailed experimental protocols of such research.
2.4.4 MYMETICS shall not be required to disclose any such
data that is subject to any confidentiality
obligation that MYMETICS has vis-a-vis third parties.
In case MYMETICS should be bound by such
confidentiality obligation and wants to invoke the
right hereabove, PEVION can demand to obtain a copy
of the respective confidentiality agreement with the
relevant third party.
|
ARTICLE 3
INTELLECTUAL PROPERTY RIGHTS
3.1 PEVION Technology. The entire rights, title and interest in and to all PEVION Technology is and shall be owned solely and exclusively by PEVION.
3.2 MYMETICS Technology. The entire rights, title and interest in and to all MYMETICS Technology is and shall be owned solely and exclusively by MYMETICS.
3.3 Patent Filing and Maintenance. Each Party shall be responsible for filing, prosecuting and maintaining all issued, pending and future applications and registrations for its own intellectual property as far as it is relevant for this Project. Each Party shall bear its own costs for the preparation, prosecution, issuance and maintenance of all applications and registrations for its own intellectual property.
3.4 Joint Patent Rights Ownership. The entire rights, title and interest in and to PEVION Material combined with MYMETICS Material arising from the Project shall be owned by both parties and filed for patent protection ( whenever appropriate) in the name of MYMETICS and PEVION.
3.5 Joint Patent Filing and prosecution. MYMETICS shall control the filing and prosecution of any patent within the Project Patent Rights, provided that MYMETICS provides copies of all documents received from any patent office and drafts of all patent prosecution documents relating to the Project Patent Rights to PEVION and allow PEVION patent counsel sufficient time to provide input into such patent prosecution. Neither Party shall be entitled to make any use of the Project Patent Rights for any purpose other than the Project itself (including without limitation any commercial uses or any publication, sale, transfer, assignment or sublicensing of Project Information to a third party).
3.6 Cooperation. PEVION and MYMETICS shall cooperate fully in the preparation, filing, prosecution, and maintenance of all Project Patent Rights. Such cooperation includes, without limitation, (i) promptly executing all papers and instruments or requiring employees of PEVION or MYMETICS to execute such papers and instruments as reasonable and appropriate so as to enable MYMETICS to file, prosecute, and maintain such Project Patent Rights in any country in the name of MYMETICS; and (ii) promptly informing the other Party of matters that may affect the preparation, filing, prosecution, or maintenance of any such Project Patent Rights (such as becoming aware of an additional inventor who is not listed as an inventor in a patent application). Costs for such Project Patent Rights and prosecutions are covered by MYMETICS.
3.7 Assignment of joint Patent Rights. Joint Patent Rights will be assigned after filing to MYMETICS.
3.8 Abandonment of Patent Rights. In the event that MYMETICS desires to abandon any patent or patent application within the Project Patent Rights, it shall provide PEVION with reasonable prior written notice of such intended abandonment or decline of responsibility, and the latter shall have the right, at its expense, to prepare, file, prosecute, and maintain the relevant Project Patent Rights in its sole name. In such event, the abandoning Party shall lose all rights under this Agreement and with respect to such Project Patent Rights in such countries and assign for free such right to the other Party.
3.9 Term. Sections 3.4, 3.5, 3.6, 3.7 pursuant to this Agreement expire on a patent by patent basis after expiration or termination of this Agreement.
3.10 Royalties/Milestones for assigment of joint Patent Rights. In return for the assignment and during the filing- and granting procedure of the joint Patent Rights, MYMETICS will pay to PEVION;
a) Milestone payments E [*] for the filing of the priority application;
b) Milestone payments E [*] for the filing of international/national applications;
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
c) [*]% on all upfront fees, milestone payments and other monetary considerations (excluding royalties) received by MYMETICS or an Affiliate from a third party; provided that such monetary consideration is attributed to the joint Patent Rights.
d) [*]% on all royalties payments received by MYMETICS or an Affiliate from a third party; provided that such monetary consideration is attributed to the joint Patent Rights.
ARTICLE 4
OPTION
4.1 Option
4.1.1 PEVION hereby grants MYMETICS an irrevocable option
(the "Option"), exercisable at any time until [*]
after MYMETICS has received the results of the [*] as
defined by the Workplan (the "Option Expiration
Date"), but the latest by [*], to obtain an exclusive
world wide license on PEVION Material allowing
MYMETICS to use, make, develop and commercialize,
directly or through third parties, HIV vaccines using
PEVION Material combined with MYMETICS Material.
4.1.2 PEVION will be granted exclusive supply rights on
PEVION Material combined with MYMETICS material for
clinical batches.
4.1.3 Until the Option Expiration Date PEVION will not
enter into any exclusive supply agreement or transfer
any exclusive rights covering the PEVION Technology
in MYMETICS Field.
|
4.2 Royalties/Milestones Option phase. In return for the Option granted MYMETICS will pay to PEVION;
a) Up front payment of E [*] and 100'000 Mymetics Corporation common shares ("Rule 144 restricted");
b) [*]% on all upfront fees, milestone payments and other monetary considerations (excluding royalties) received by MYMETICS or an Affiliate from a third party; provided that such monetary consideration is attributed to the use of PEVION's Technology;
c) [*]% on all royalties payments received by MYMETICS or an Affiliate from a third party; provided that such monetary consideration is attributed to the use of PEVION's Technology.
4.3 Exercise of Option. In the event that MYMETICS wishes to exercise the Option, it shall deliver to PEVION prior to the Option Expiration Date a letter notifying PEVION of MYMETICS's decision to exercise such Option. Upon delivery of such notice to PEVION, a License Agreement will go into effect immediately and without further action on the part of either Party.
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
4.4 No Exercise of Option. In the event MYMETICS does not exercise the Option prior to the Option Expiration Date or notifies PEVION in writing earlier of its intention not to exercise the Option or the Parties didn't succeed in concluding a supply agreement, the Option shall terminate. In the event of termination of the Option pursuant to Section 4.4, both Parties shall be entitled to use the Project Information and or Project Patent Rights on their own from this point in time onwards. In this case any third party involvement based upon the Project Information and or Project Patent Rights shall require the Parties' written agreement.
ARTICLE 5
LICENSE
5.1 License.
5.1.1 PEVION hereby grants MYMETICS, after exercising the
Option, an exclusive worldwide License on PEVION
Material in MYMETICS Field, allowing MYMETICS to use,
make, develop and commercialize directly or through
third-parties HIV vaccines using PEVION Material
combined with MYMETICS Material.
5.1.2 PEVION will be granted exclusive supply rights on
PEVION Material combined with MYMETICS material for
clinical batches.
5.1.3 In case PEVION can not guarantee the further supply
of MYMETICS with PEVION Material combined with
MYMETICS Material, based on the Supply Agreement, it
will grant MYMETICS a exclusive license to use, make
and sell PEVION Material in the MYMETICS Field.
5.1.4 The terms and conditions of said supply agreement are
to be negotiated in good faith by MYMETICS and PEVION
during the [*] following the Option Expiration Date.
|
5.2 Royalties/Milestones License. In return for the License granted MYMETICS will pay to PEVION;
a) Up front payment of E [*] and [*] of Mymetics Corporation common shares ("Rule 144 restricted")
b) [*]% on all upfront fees, milestone payments and other monetary considerations (excluding royalties) received by MYMETICS or an Affiliate from a third party; provided that such monetary consideration is attributed to the use of PEVION's Technology.
c) [*]% on all royalties payments received by MYMETICS or an Affiliate from a third party; provided that such monetary consideration is attributed to the use of PEVION's Technology.
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
d) The terms of the license are subject to re-negotiations, in the event that MYMETICS will develope HIV vaccines using PEVION Material combined with MYMETICS Material by itself beyond clinical Phase I .
5.3 License Agreement. The license agreement has to be signed [*] following the Date of exercising the Option.
ARTICLE 6
CONFIDENTIALITY
6.1 Nondisclosure. Except as specifically authorized in this Agreement or as has been specifically authorized by Disclosing Party in writing, Recipient shall not reproduce, exploit, use, distribute, disclose or otherwise disseminate the disclosed Confidential Information and shall not take any action causing, or fail to take any reasonable action necessary to prevent any, Confidential Information disclosed to Recipient to lose its character of Confidential Information. Upon expiration or termination of this Agreement, or upon request by Discloser, Recipient shall promptly deliver to Discloser all Confidential Information of Discloser and all embodiments and/or copies thereof then in its custody, control or possession and shall deliver within four weeks after such expiration or termination or destroy such Discloser's Confidential Information, and deliver to Discloser within six weeks of such notice a written statement signed by an officer of Recipient certifying that all unused or remaining Discloser's Confidential Information have been or destroyed.
6.2 Ownership. All Confidential Information disclosed by Disclosing Party shall remain the property of Discloser and no license or other right to such information is granted or implied hereby, other than such rights as are expressly set out in this Agreement.
6.3 Disclosure to Employees. Recipient agrees that access to Confidential Information will be limited to those employees or other authorized representatives of Recipient who: (1) need to know such Confidential Information in order to conduct their work in connection with the Project and (2) have signed agreements with Recipient obligating them to maintain the confidentiality of Confidential Information disclosed to them on terms no less onerous than those provided for herein. Recipient further agrees to inform such employees or authorized representatives of the confidential nature of Disclosing Party's Confidential Information and agrees to take all reasonably necessary steps to ensure that the terms of this Agreement are not violated by them.
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
6.4 Disclosure to Collaborators. Notwithstanding the foregoing provisions of this Section 5 the Recipient may disclose Project Information to third party collaborators, who have a need to know such information to further Recipient's rights under this Agreement; provided however, that any such disclosure by Recipient of Project Information that is Confidential Information shall require that Recipient shall have obtained from such third parties a written agreement regarding obligations of confidentiality and appropriate use restrictions comparable to and consistent with those set forth herein, and provided that such Parties shall agree not to further disclose such Confidential Information. Nothing herein will be interpreted to permit Recipient to grant such third party collaborators any rights granted to Recipient under this Agreement.
6.5 Publication of Project Information. Unless agreed to in writing by the other Party, neither Party shall publish or present any Project Information prior to the filing of a patent application relating to the Project Information pursuant to section 3.3. Subject to the foregoing and the restrictions provided below, either Party may publish or present Project Information, subject to the prior review by the other Party for patentability and protection of such Project Information. Each Party shall provide to the other Party the opportunity to review any proposed abstracts, manuscripts or summaries of presentations which cover Project Information and give comments in writing promptly and in no event later than thirty (30) days after receipt of the proposed material with either approval of the proposed material or a specific statement of concern, based upon either the need to seek patent protection or concern regarding competitive disadvantage arising from the proposal. In the event of concern, the submitting Party agrees not to submit such publication or to make such presentation that contains such information until the other Party is given a reasonable period of time (not to exceed ninety (90) days from first receipt of publication or presentation) to seek patent protection for any material in such publication or presentation which it believes is patentable or to resolve any other issues. Publication relating to the Project Information are expected to be joint publications. If this is not intended, the Party intending the publication will acknowledge the other Party as the source of technology and information relating to Project Information, subject to section 10.1.
6.6 Term. Recipient's duty to protect Discloser's Confidential Information pursuant to this Agreement expires ten (10) years from the date of disclosure of the Confidential Information.
ARTICLE 7
CONTROL OF MATERIALS
7.1 Control of PEVION Materials. MYMETICS shall not transfer the PEVION Materials or PEVION Materials combined with MYMETICS Material to, or permit access to the PEVION Materials or PEVION Materials combined with MYMETICS Material by, any third party without prior written approval of PEVION. MYMETICS shall not use and/or exploit the PEVION Materials or PEVION Materials combined with MYMETICS Material for any purpose other than as set forth in the Workplan. For the purposes hereof, "third parties" shall not include those Affiliate, corporate partners, employees and consultants of MYMETICS who will be involved in the handling, testing and/or evaluation of PEVION Materials or PEVION Materials combined with MYMETICS Material as part of the Project. The PEVION Materials shall remain the property of PEVION. Upon termination of this Agreement, MYMETICS shall discontinue its use of all PEVION Materials, with respect to which it has not exercised its option pursuant to Article 4, and shall, upon the written request of PEVION, either return any such unused or remaining PEVION Materials to PEVION or destroy such PEVION Materials, and deliver to PEVION within 14 days of such notice a written statement signed by an officer of MYMETICS certifying that all unused or remaining PEVION Materials have been returned to PEVION or destroyed.
7.2 Control of MYMETICS Materials. PEVION shall not transfer the MYMETICS Materials to, or permit access to the MYMETICS Materials by, any third party without prior written approval of MYMETICS. PEVION shall not use and/or exploit the MYMETICS Materials for any purpose other than as set forth in the Workplan. For the purposes hereof, "third parties" shall not include those Affiliate, corporate partners, employees and consultants of PEVION who will be involved in the handling, testing and/or evaluation of MYMETICS Materials as part of the Project. The MYMETICS Materials shall remain the property of MYMETICS. Upon termination of this Agreement, PEVION shall discontinue its use of all MYMETICS Materials, with respect to which it has not exercised its option pursuant to Article 4, and shall, upon the written request of MYMETICS, either return any such unused or remaining MYMETICS Materials to MYMETICS or destroy such MYMETICS Materials, and deliver to MYMETICS within 14 days of such notice a written statement signed by an officer of PEVION certifying that all unused or remaining MYMETICS Materials have been returned to MYMETICS or destroyed.
7.3 Costs of R&D. PEVION will be compensated for the salaries and wages of all research and development personnel and their consumable items, together with overheads attributable to the research and development program involved in the Project.
Up-front payments for the products needed in the rabbits program [*] E [*],- Milestone payments at the end of the rabbit program [*] E [*],- Up-front payments for the products needed in the macaques program [*] E [*],- Milestone payments at the end of the macaque program [*] E [*],- Peptide Antigen (non GMP) [*] [*] |
ARTICLE 8
WARRANTY, REPRESENTATIONS AND LIABILITY
8.1 No Warranty. BOTH PARTIES ACKNOWLEDGE AND AGREE THAT THE
PEVION MATERIALS ARE BEING SUPPLIED WITH NO WARRANTIES,
EXPRESS OR IMPLIED, AND PEVION EXPRESSLY DISCLAIMS ANY
WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR NON INFRINGEMENT. PEVION MAKES NO REPRESENTATION THAT THE
USE OF THE PEVION MATERIALS WILL NOT INFRINGE THE PATENT OR
PROPRIETARY RIGHTS OF ANY THIRD PARTY. However to the best of
PEVION's knowledge, the use of the PEVION's Technology in
connection with the business of MYMETICS as contemplated
herein does not conflict with, misappropriate, or infringe the
intellectual property rights of any third party.
8.2 Representations. Each Party hereby represents and warrants to the other Party as follows:
8.2.1 It is a corporation duly organized and validly
existing under the laws of its state or other
jurisdiction of incorporation or formation;
8.2.2 It has the legal power and authority to execute and
deliver this Agreement, and to perform its
obligations hereunder; its activities related to the
Project are subject to insurance coverage;
8.2.3 No authorization, consent or approval of any
governmental authority or third Party is required for
the execution, delivery or performance by it of this
Agreement, and the execution, delivery or performance
of this Agreement will not violate any law, rule or
regulation applicable to such Party; and
8.2.4 It shall comply with all applicable local, state,
national, regional and governmental laws and
regulations relating to its activities under this
Agreement.
|
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
8.3 Care in Use of PEVION Materials. MYMETICS acknowledges that the PEVION Materials are experimental in nature and may have unknown characteristics and therefore agrees to use prudence and reasonable care in the use, handling, storage, transportation and disposition and containment of such PEVION Materials.
8.4 Hold Harmless. In no event shall PEVION be liable for any use by MYMETICS of the PEVION Materials. MYMETICS shall defend, indemnify and hold PEVION harmless from and against any third-party claims, demands or actions and liabilities, cost and expenses arising therefrom which result from MYMETICS's use, handling, storage, transportation, disposition and containment of the PEVION Materials (a "Claim") except to the extent such Claim result from the negligence or willful misconduct of PEVION. If PEVION receives notice of any Claim, PEVION shall, as promptly as is reasonably possible, give MYMETICS notice of such Claim; provided, however, that failure to give such notice promptly shall only relieve MYMETICS of any indemnification obligation it may have hereunder to the extent such failure diminishes the ability of MYMETICS to respond to or to defend PEVION against such Claim. PEVION and MYMETICS shall consult and cooperate with each other regarding the response to and the defense of any such Claim and MYMETICS shall, upon its acknowledgment in writing of its obligation to indemnify PEVION, be entitled to and shall assume the defense or represent the interests of PEVION in respect of such Claim, that shall include the right to select and direct legal counsel and other consultants to appear in proceedings on behalf of PEVION and to propose, accept or reject offers of settlement, all at its sole cost; provided, however, that no such settlement shall be made without the written consent of PEVION, such consent not to be unreasonably withheld. Nothing herein shall prevent PEVION from retaining its own counsel and participating in its own defense at its own cost and expense.
8.5 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT
WHETHER OR NOT THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY
OF OR IS OTHERWISE ON NOTICE OF SUCH POSSIBILITY.
8.6 Handling of PEVION Materials. MYMETICS shall use, handle, store, transport, dispose of and contain the PEVION Materials in compliance with all applicable laws and regulations. MYMETICS agrees not to use the PEVION Materials in research or clinical testing on humans, such research or clinical testing on human being carried out only with the Project Information.
8.7 MYMETICS Material. PEVION hereby undertakes to apply sections 8.3, 8.4 and 8.6 to MYMETICS Material mutatis mutandis.
ARTICLE 9
TERM OF AGREEMENT
9.1 Term. Unless earlier terminated or extended by the mutual written agreement of the Parties, this Agreement shall be effective as of the Effective Date and shall continue in effect until the Option Expiration Date. Sections 2.2, 3, 4, 5, 6, 7, 9, 10.5 and 10.6 of this Agreement shall survive the expiration or termination of this Agreement and remain in full force and effect. Each Party shall have the right to terminate this Agreement in the event of a breach by the other Party of any material obligation hereunder, unless the breaching Party shall have cured the breach within thirty (30) days following notice thereof from the non-breaching Party.
9.2 Bankruptcy. In the event any Party becomes the subject of a voluntary or involuntary petition in bankruptcy, such Party shall immediately notify the other Party in writing. If such petition is not dismissed with prejudice within one hundred twenty (120) days after filing, the other Party shall have the right to terminate this Agreement by giving the bankrupting Party written notice. Termination of this Agreement pursuant to this Section 9 shall be effective upon the bankrupting Party' receipt of such written notice.
ARTICLE 10
GENERAL PROVISIONS
10.1 Publicity. Except as may otherwise be required by law or regulation, neither Party shall make any public announcement, directly or indirectly, concerning the existence or terms of this Agreement or the subject matter hereof without first submitting a copy of the proposed announcement to the other Party for review and obtaining the approval of the other Party. The other Party shall have seven (7) business days or such other time as mutually agreed upon to consent to the publication of such announcement, such consent not to be unreasonably withheld. If either Party is required by law or regulation to make a public announcement concerning the existence or terms of this Agreement, such Party shall give reasonable prior advance notice of the proposed text of such announcement to the other Party for its prior review and comment.
10.2 Entire Agreement. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes any prior agreements, negotiations or representations between the Parties with respect to the subject matter hereof, whether written or oral. This Agreement may be modified only by a subsequent written agreement signed by the Parties. If any provision of this Agreement is held to be unenforceable, the remaining provisions shall continue unaffected.
10.3 Agency. The Parties do not intend that any agency or
partnership relationship be created between them by this
Agreement.
10.4 Assignment. Neither Party shall assign this Agreement without
the prior written consent of the other Party in particular
neither Party may assign this Agreement to a successor in
connection with the merger, consolidation, or sale of all or
substantially all of its assets or that portion of its
business to which this Agreement relates.
10.5 Governing Law. This Agreement shall be construed, performed
and enforced in accordance with, and governed by, the internal
laws of Switzerland, without giving effect to the principles
of conflict of law thereof.
10.6 Consent to Jurisdiction. The parties hereto hereby irrevocably
attorn to the exclusive jurisdiction of the Courts of Bern
(Switzerland) in any action or proceeding arising to this
Agreement.
10.7 English Version. The parties hereby represent, warrant,
acknowledge and agree that: (i) they have agreed that this
Agreement be drawn up in the English language; and (ii) the
English version of this Agreement shall govern for all
purposes.
10.8 Severability. If one or more provisions of this Agreement is
or becomes invalid or unenforceable in whole or in part in any
jurisdiction, the validity of the remaining provisions of this
Agreement shall not be affected. The parties hereto undertake
to replace any such invalid provision without delay with a
valid provision which as nearly as possible duplicates the
economic intent of the invalid provision.
10.9 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors, heirs, executors, administrators, legal
representatives and assigns.
10.10 Notices. Any notice required or permitted hereunder shall be
in writing and shall be deemed effectively given upon personal
delivery, three (3) days after deposit if sent by certified
mail, postage prepaid, return receipt requested, or the day
after delivery to a recognized overnight courier, to the
following addresses:
If to MYMETICS: If to PEVION:
MYMETICS Corporation, PEVION Ltd.
14, rue de la Colombiere, Rehhagstrasse 79
1260 Nyon, Switzerland 3018 Bern, Switzerland
Att: CEO Att: COO
10.11 Waiver. A Party's failure to exercise or enforce any right or
provision of the Agreement shall not constitute a waiver of
such right or provision.
|
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed below.
MYMETICS PEVION LTD.
By: By:
-------------------------- -----------------------
(Signature) (Signature)
Christian Rochet Peter Klein
President and CEO CEO
(Date) (Date)
By: By:
-------------------------- -----------------------
(Signature) (Signature)
Ernst Lubke Thomas Stauffer
CFO COO
(Date) (Date)
|
EXHIBIT 1
PEVION MATERIALS
[*]
MYMETICS MATERIALS
[*]
PEVION's and MYMETICS's Representatives will agree on the amounts of MATERIALS necessary to perform the Project under this agreement.
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
EXHIBIT 2
PEVION'S PATENT RIGHTS
[*]
PEVION's Patent Rights are subject to MYMETICS's due diligence. PEVION hereby agrees to cooperate as seems reasonably practical to MYMETICS' due diligence by providing information.
MYMETICS' PATENT RIGHTS
[*]
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
EXHIBIT 3
TIME TABLE/WORKPLAN PEVION/MYMETICS
[*]
DC\ 7010194.1
* Confidential treatment has been requested for certain portions of this document pursuant to an application for confidential treatment sent to the Securities and Exchange Commission. Such portions are omitted from this filing and filed separately with the Securities and Exchange Commission.
EXHIBIT 10.44
MYMETICS CORPORATION
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement") dated February 23, 2005, is entered into by and between Mymetics Corporation, a Delaware corporation, with its principal place of business at 14, Rue de la Colombiere, CH-1260 Nyon, Switzerland (the "Company"), and Northern Lights International, a Bahamian company, with its principal office at Sea Horse Ranch, Cabarete Sosua, Dominican Republic ("Consultant").
1. Consulting Relationship. During the term of this Agreement, Consultant will provide consulting services (the "Services") to the Company as described on Exhibit A attached to this Agreement. Consultant represents that Consultant has the qualifications, the experience and the ability to properly perform the Services. Consultant shall use Consultant's best efforts to perform the Services such that the results are satisfactory to the Company. Consultant shall devote at least 100 hours per month to performance of the Services.
2. Fees and Expenses. As consideration for the Services to be provided by Consultant and other obligations, the Company shall pay to Consultant the amounts specified in Exhibit B attached to this Agreement at the times specified therein, and the Company shall reimburse Consultant for all reasonable travel, entertainment and other expenses incurred or paid by Consultant in connection with, or related to, the performance of Consultant's responsibilities or services under this Agreement, upon presentation by Consultant of documentation, expense statements, vouchers, and such other supporting information as the Company may request, or as may be consistent with standard company practices.
3. Term and Termination. Consultant shall serve as a consultant to the Company effective on January 24, 2005. Notwithstanding the above, either party may terminate this Agreement at any time upon thirty days written notice.
4. Independent Contractor. Consultant's relationship with the Company will be that of an independent contractor and not that of an employee.
(a) Method of Provision of Services: Consultant shall be solely responsible for determining the method, details and means of performing the Services. Consultant may, at Consultant's own expense, employ or engage the service of such employees or subcontractors as Consultant deems necessary to perform the Services required by this Agreement (the "Assistants"). Such Assistants are not the employees of the Company and Consultant shall be wholly responsible for the professional performance of the Services by his Assistants such that the results are satisfactory to the Company. Consultant shall expressly advise the Assistants of the terms of this Agreement, and ensure that any Assistants who have access to the Confidential Information (defined below) are bound by a non-disclosure agreement in content substantially equivalent to the provisions hereof prior to any disclosure of the Confidential Information to such persons.
(b) No Authority to Bind Company. Neither Consultant, nor any partner, agent or employee of Consultant, has authority to enter into contracts that bind the Company or create obligations on the part of the Company without the prior written authorization of the Company.
(c) No Benefits. Consultant acknowledges and agrees that Consultant (or Consultant's employees, if Consultant is an entity) will not be eligible for any Company employee benefits and, to the extent Consultant (or Consultant's employees, if Consultant is an entity) otherwise would be eligible for any Company employee benefits but for the express terms of this Agreement,
Consultant (on behalf of itself and its employees) hereby expressly declines to participate in such Company employee benefits.
(d) Withholding; Indemnification. Consultant shall have full responsibility for applicable withholding taxes for all compensation paid to Consultant, its partners, agents or its employees under this Agreement, and for compliance with all applicable labor and employment requirements with respect to Consultant's self-employment, sole proprietorship or other form of business organization, and Consultant's partners, agents and employees, including state worker's compensation insurance coverage requirements and any US immigration visa requirements. Consultant agrees to indemnify, defend and hold the Company harmless from any liability for, or assessment of, any claims or penalties with respect to such withholding taxes, labor or employment requirements, including any liability for, or assessment of, withholding taxes imposed on the Company by the relevant taxing authorities with respect to any compensation paid to Consultant or Consultant's partners, agents or its employees.
5. Supervision of Consultant's Services. All of the Services to be performed by Consultant, including but not limited to the Services, will be as agreed between Consultant and the Company's President. Consultant will be required to report to the President concerning the Services performed under this Agreement. The nature and frequency of these reports (oral or written) will be left to the discretion of the President.
6. Consulting or Other Services for Competitors. Consultant represents and warrants that Consultant does not presently perform or intend to perform, during the term of the Agreement, consulting or other services for, or engage in or intend to engage in an employment relationship with, companies whose businesses in any way involve products or services which are competitive with the Company's products or services, or those products or services currently proposed or in development by the Company however, Consultant decides to do so, Consultant agrees that, in advance of accepting such work, Consultant will promptly notify the Company in writing, specifying the organization with which Consultant proposes to consult, provide services, or become employed by and to provide information sufficient to allow the Company to determine if such work would conflict with the terms of this Agreement, including the terms of the Confidentiality Agreement, the interests of the Company or further services which the Company might request of Consultant. If the Company determines that such work conflicts with the terms of this Agreement, the Company reserves the right to terminate this Agreement immediately.
7. Confidentiality Agreement. The Consultant may be afforded access to information regarding the business and affairs of the Company and its products during the course of the assignment ("Confidential Information"), except such information which (i) is already in the party's possession, without an obligation of confidentiality with respect thereto, prior to disclosure under this Agreement, (ii) is or subsequently becomes part of the public domain through no act or omission of the other party, (iii) is disclosed to the party by a third party having no obligation of confidentiality thereto, provided the party did not have actual or constructive notice that such information was wrongfully disclosed by such third party; or (iv) is independently developed by the party without access to or use of the Confidential Information. Notwithstanding the foregoing, each party shall be entitled to disclose such information: (a) to its agents, employees and representatives who have a need to know such information, for the purpose of performance under this Agreement and exercising the rights granted under this Agreement, or (b) to the extent required by applicable law, or (c) during the course of or in connection with any litigation, arbitration or other judicial proceeding based upon or in connection with the subject matter of this Agreement. The Consultant agrees to guard this Confidential Information, to hold it in strict confidence, and not to disclose it to others without the written permission of the Company or until such information is otherwise publicly
released by the Company. The Consultant agrees that upon termination or completion of this Agreement, any notebook, data or information acquired or developed by the Consultant in carrying out the terms of this Agreement will be turned over to the Company. Except as otherwise specifically authorized by the Company in writing, information, data and reports developed or acquired by Consultant in performance of this Agreement and furnished to the Company (the "Deliverables") shall be the exclusive property of the Company. The Deliverables shall not be disclosed to any third party without the written consent of the Company. The Consultant acknowledges that the breach of any of the covenants contained in this Section 7 will result in irreparable harm and continuing damages to the Company and the Company's business, and that the Company's remedy at law for any such breach or threatened breach would be inadequate. Accordingly, in addition to such remedies as may be available to the Company at law or in equity in the event of any such breach, any court of competent jurisdiction may issue an injunction (both preliminary and permanent), without bond, enjoining and restricting the breach or threatened breach of any such covenant, including, but not limited to, an injunction restraining the Consultant from disclosing, in whole or in part, any Confidential Information. The Consultant shall pay all of the Company's costs and expenses, including reasonable attorneys' fees and accountants' fees, incurred in enforcing such covenants.
8. Conflicts with this Agreement. Consultant represents and warrants that neither Consultant nor any of Consultant's partners, employees or agents is under any pre-existing obligation in conflict or in any way inconsistent with the provisions of this Agreement. Consultant represents and warrants that Consultant's performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by Consultant in confidence or in trust prior to commencement of this Agreement. Consultant warrants that Consultant has the right to disclose and/or or use all ideas, processes, techniques and other information, if any, which Consultant has gained from third parties, and which Consultant has disclosed to the Company or which is necessary for the performance of the Services under this Agreement, without liability to such third parties. Notwithstanding the foregoing, Consultant agrees that Consultant shall not bundle with or incorporate into any deliveries provided to the Company herewith any third party products, ideas, processes, or other techniques, without the express, written prior approval of the Company. Consultant represents and warrants that Consultant has not granted and will not grant any rights or licenses to any intellectual property or technology that would conflict with Consultant's obligations under this Agreement. Consultant will not knowingly infringe upon any copyright, patent, trade secret or other property right of any former client, employer or third party in the performance of the Services required by this Agreement.
9. Miscellaneous.
(a) Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the parties.
(b) Sole Agreement. This Agreement, including the Exhibits hereto, constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings with respect to the subject matter hereof.
(c) Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon receipt, when delivered personally or by courier, overnight delivery service or confirmed facsimile, 48 hours after being deposited in the regular mail as certified or registered mail (airmail if sent internationally) with postage prepaid, if such notice is addressed to the party to be notified at such party's address or facsimile number as set forth below, or as subsequently modified by written notice.
(d) Choice of Law. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws.
(e) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
(f) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together will constitute one and the same instrument.
(g) Arbitration. Any dispute or claim arising out of or in connection with any provision of this Agreement will be finally settled by binding arbitration in New York, New York, USA, in accordance with the rules of the American Arbitration Association by one arbitrator appointed in accordance with said rules. The arbitrator shall apply New York law, without reference to rules of conflicts of law or rules of statutory arbitration, to the resolution of any dispute. Judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Notwithstanding the foregoing, the parties may apply to any court of competent jurisdiction for preliminary or interim equitable relief, or to compel arbitration in accordance with this paragraph, without breach of this arbitration provision. This Section 10(g) shall not apply to the Confidentiality Agreement set forth in Section 7.
(h) Advice of Counsel. EACH PARTY ACKNOWLEDGES THAT, IN
EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE
OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND
PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY
PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF. [Signature Page Follows]
The parties have executed this Agreement on the respective dates set forth below.
MYMETICS CORPORATION
By: /Christian Rochet/
Title: President & CEO
Date: March 23, 2005
CONSULTANT
By: /Anthony Jessop/
Title: President
Date: March 23, 2005
EXHIBIT A
DESCRIPTION OF CONSULTING SERVICES
The Company wishes to employ the Consultant for the development of a business plan, introduction to strategic partners in the United States, Europe and Canada and advice regarding growth strategies.
EXHIBIT B
COMPENSATION
1. 1,500,000 shares of the Company's common stock, $.01 par value per share, upon execution of this Agreement; and
2. 1,500,000 shares of the Company's common stock, $.01 par value per share, upon successful completion of the Consulting Services, such decision to be solely within the discretion of the Company.
EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
COMPUTATION OF PER SHARE EARNINGS
For the Years Ended December 31, 2003, 2002, and 2001
(In Thousands of Euros, Except for Per Share Amounts)
BASIC EPS
2003 2002 2001
------------- ------------- -------------
Net loss per
financial statements E (2,786) E (3,622) E (1,848)
============= ============= =============
Weighted average
shares outstanding 51,285,044 50,045,658 42,459,784
Basic earnings (loss)
per share E (.05) E (.07) E (.37)
============= ============= =============
DILUTED EPS
2003 2002 2001
------------- ------------- -------------
Net loss per
financial statements E (2,786) E (3,622) E (1,848)
============= ============= =============
Weighted average
shares outstanding 51,285,044 50,045,658 42,459,784
Diluted earnings (loss)
per share* E E (.05) E (.07) E (.04)
============= ============= =============
|
* - Anti-dilutive
Exhibit 21.1
SUBSIDIARIES
Mymetics Corporation has three subsidiaries:
1. 6543 Luxembourg S.A. (a majority-owned subsidiary of Mymetics Corporation) is a joint stock company organized under the laws of Luxembourg and does business under the name "6543 Luxembourg S.A."
2. Mymetics S.A. (a wholly-owned subsidiary of 6543 Luxembourg S.A.) is a company organized under the laws of France and does business under the name "Mymetics S.A."
EXHIBIT 31.1
Certification Pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934
I, Christian J.F. Rochet, certify that:
1. I have reviewed this annual report on Form 10-K of Mymetics Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: April 15, 2004 /s/ Christian J.F. Rochet
--------------------------------
Christian J.F. Rochet
Chief Executive Officer
|
EXHIBIT 31.2
Certification Pursuant to Rule 13a-14 or 15d-14 of the Securities Exchange Act of 1934
I, Ernst Luebke, certify that:
1. I have reviewed this annual report on Form 10-K of Mymetics Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: April 15, 2004
/s/ Ernst Luebke
-------------------------------
Ernst Luebke
Chief Financial Officer
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Mymetics Corporation (the "Company") on Form 10-K for the year ended December 31, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), we, Christian J.F. Rochet, Chief Executive Officer of the Company, and Ernst Luebke, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
By: /s/ Christian J.F. Rochet ------------------------------ Christian J.F. Rochet Chief Executive Officer By: /s/ Ernst Luebke ------------------------------ Ernst Luebke Chief Financial Officer April 15, 2004 |