UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO _________ COMMISSION FILE NUMBER: 000-25132 MYMETICS CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE 25-1741849 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) European Executive Office 14, rue de la Colombiere 1260 Nyon (Switzerland) (Address of principal executive offices) 011 41 22 363 13 10 (Registrant's telephone number, including area code) 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 whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [X] Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: Class Outstanding at May 7, 2007 ----- ------------------------------ Common Stock, $0.01 136,627,464 par value PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MYMETICS CORPORATION (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS OF EUROS) March 31, December 31, 2007 2006 -------- -------- ASSETS Current Assets Cash E 5 E 29 Receivables 15 15 Prepaid expenses 13 16 -------- -------- Total current assets 33 60 Patents and licenses 296 300 -------- -------- E 329 E 360 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current Liabilities Accounts payable E 2,101 E 1,933 Taxes and social costs payable 5 5 Current portion of notes payable -- 4,021 Other 184 288 -------- -------- Total current liabilities 2,290 6,247 Payable to Shareholders 242 242 Notes Payable to shareholders 851 351 -------- -------- Total liabilities 3,383 6,840 Shareholders' Equity (Deficit) Common stock, U.S. $.01 par value; 495,000,000 shares authorized; issued and outstanding 135,627,464 at March 31, 2007 and 110,690,464 at December 31, 2006 1,327 1,061 Common stock issuable; 330,000 shares at December 31, 2006 -- 3 Preferred stock, U.S. $.01 par value; 5,000,000 shares authorized; none issued or outstanding -- -- Additional paid-in capital 10,940 7,381 Deficit accumulated during the development stage (16,072) (15,672) Accumulated other comprehensive income 751 747 -------- -------- (3,054) (6,480) -------- -------- E 329 E 360 ======== ======== The accompanying notes are an integral part of these financial statements. MYMETICS CORPORATION (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) (IN THOUSANDS OF EUROS, EXCEPT FOR PER SHARE AMOUNTS) FOR THE THREE FOR THE THREE TOTAL ACCUMULATED MONTHS ENDED MONTHS ENDED DURING THE MARCH 31, 2007 MARCH 31, 2006 DEVELOPMENT STAGE -------------- -------------- ----------------- Revenue Sales E -- E -- E 224 Interest -- -- 34 -------- -------- -------- -- -- 258 -------- -------- -------- Expenses Research and development 148 96 5,777 General and administrative 171 199 7,303 Bank fee -- -- 935 Interest 77 62 1,299 Goodwill impairment -- -- 209 Amortization 4 25 517 Directors' fees -- -- 274 Other -- -- 10 -------- -------- -------- 400 382 16,324 -------- -------- -------- Loss before income tax provision (400) (382) (16,066) Income tax provision -- -- (6) -------- -------- -------- Net loss (400) (382) (16,072) Other comprehensive income Foreign currency translation adjustment 4 10 751 -------- -------- -------- Comprehensive loss E (396) E (372) E(15,321) ======== ======== ======== Basic and diluted loss per share E (0.00) E (0.00) ======== ======== The accompanying notes are an integral part of these financial statements. MYMETICS CORPORATION (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS OF EUROS) FOR THE THREE FOR THE THREE TOTAL ACCUMULATED MONTHS ENDED MONTHS ENDED DURING THE MARCH 31, 2007 MARCH 31, 2006 DEVELOPMENT STAGE ------------- -------------- ----------------- Cash flow from operating activities Net Loss E (400) E (382) E (16,072) Adjustments to reconcile net loss to net cash used in operating activities Amortization 4 25 517 Goodwill impairment -- -- 209 Fees paid in warrants -- -- 223 Services and fee paid in common stock 27 55 2,020 Amortization of debt discount -- -- 210 Changes in current assets and liabilities, net of effects from reverse purchase Decrease(increase) in receivables -- -- 23 Increase(decrease) in accounts payable 168 (153) 1,803 Increase(decrease) in taxes and -- -- 5 social costs payable Increase(decrease)in Other (101) (5) 219 -------- -------- -------- Net cash used in operating activities (302) (460) (10,843) -------- -------- -------- Cash flows from investing activities Patents and other -- (23) (693) Cash acquired in reverse purchase -- -- 13 -------- -------- -------- Net cash used in investing activities -- (23) (680) -------- -------- -------- Cash flows from financing activities Proceeds from issuance of common stock 1,264 356 6,599 Borrowing from shareholders 500 -- 742 Increase in note payable and other short-term advances -- 61 5,056 Decrease in note payable and other short-term advances (1,490) -- (1,490) Loan fees -- -- (130) -------- -------- -------- Net cash provided by financing activities 274 417 10,777 -------- -------- -------- Effect on foreign exchange rate on cash 4 10 751 -------- -------- -------- Net change in cash (24) (56) 5 Cash, beginning of period 29 70 -- -------- -------- -------- Cash, end of period E 5 E 14 E 5 ======== ======== ======== The accompanying notes are an integral part of these financial statements. MYMETICS CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2007 (UNAUDITED) Note 1. The Company and Summary of Significant Accounting Policies Basis of Presentation The accompanying interim period consolidated financial statements of Mymetics Corporation (the "Company") set forth herein have been prepared by the Company pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such SEC rules and regulations. The interim period consolidated financial statements should be read together with the audited financial statements and the accompanying notes included in the Company's latest annual report on Form 10-K for the fiscal year ended December 31, 2006. The accompanying financial statements of the Company are unaudited. However, in the opinion of the Company, the unaudited consolidated financial statements contained herein contain all adjustments necessary to present a fair statement of the results of the interim periods presented. All adjustments made during the three-month period ended March 31, 2007 were of a normal and recurring nature. The amounts presented for the three-month period ended March 31, 2007, are not necessarily indicative of the results of operations for a full year. The amounts in the notes are rounded to the nearest thousand of Euros except for per share amounts. 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 HIV-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 March 31, 2007, the Company had not performed any human clinical testing and revenues obtained from the sale or licensing of the Company's technology are not expected before 2007 at the earliest. 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 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 E16,072 at March 31, 2007. 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 E2,257 as of March 31, 2007, 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. 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 March 31, 2007 and December 31, 2006 are sufficient. The Company charges off receivables to the allowance when management determines that a receivable is not collectible. Current liabilities In March 2007, the Company entered into a settlement agreement to settle outstanding amounts due under a E3.7 million credit facility due to MFC Merchant Bank S.A. In connection with the settlement, the Company paid E1.49 million and issued 12,500,000 common shares. The payment of cash was applied to the outstanding credit facility balance with the remainder considered as a conversion of debt into equity on the issuance of the Company's shares. No gain or loss resulted from this transaction. 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 116,283,308 and 89,374,353 for the three months ended March 31, 2007 and 2006, respectively. 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. Stock-Based Compensation The Company accounts for stock based compensation using the fair value recognition provisions of FAS No. 123(R), Share-Based Payment, ("FAS 123R"). If the fair value method under FAS 123R had been applied since inception, additional compensation costs of E320 would have been recorded. The expense for stock options and warrants to purchase stock granted is measured using a fair value valuation model at the date of grant multiplied by the number of options granted. The fair value of each option granted was estimated for pro forma purposes on the grant date using the Black-Scholes model (use of this model for pro forma purposes is not intended to indicate the value of the Company as a whole). There were no options issued in 2007 and 2006. The issuance of common shares for services is recorded at the quoted price of the shares on the date the services are rendered. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The following discussion and analysis of the results of operations and financial condition of Mymetics Corporation for the periods ended March 31, 2007 and 2006 should be read in conjunction with the Company's audited consolidated financial statements and related notes and the description of the Company's business and properties included elsewhere herein. This report contains forward-looking statements that involve risks and uncertainties. The statements contained in this report are not purely historical, but are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These forward looking statements concern matters that involve risks and uncertainties that could cause actual results to differ materially from those projected in the forward-looking statements. Words such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue", "probably" or similar words are intended to identify forward looking statements, although not all forward looking statements contain these words. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We are under no duty to update any of the forward-looking statements after the date hereof to conform such statements to actual results or to changes in our expectations. Readers are urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factors which affect our business, including without limitation disclosures made under the captions "Management Discussion and Analysis of Financial Condition and Results of Operations," "Risk Factors," "Consolidated Financial Statements" and "Notes to Consolidated Financial Statements" included in our annual report on Form 10-K for the year ended December 31, 2006 and, to the extent included therein, our quarterly reports on Form 10-Q filed during fiscal year 2006. THREE MONTHS ENDED MARCH 31, 2007 AND 2006 Revenue was nil for the three months ended March 31, 2007 and March 31, 2006. Costs and expenses increased to E400,000 for the three months ended March 31, 2007 from E382,000 (4.7%) for the three months ended March 31, 2006. Research and development expenses increased to E148,000 in the current period from E96,000 (54.0%) in the comparative period of 2006 as we are now preparing the viral challenge tests of our immunized non-human primates. General and administrative expenses decreased to E171,000 in the three months ended March 31, 2007 from E199,000 in the comparative period of 2006 (-11.1%) mostly due to overall cost reduction measures and the fact that the comparative period of 2006 included the cost of 2,500,000 shares issued to MFC Merchant Bank S.A. as fee for the extension of its credit facility. The Company reported a net loss of E400,000, or E0.00 per share, for the three months ended March 31, 2007, compared to a net loss of E382,000, or E0.00 per share, for the three months ended March 31, 2006. LIQUIDITY AND CAPITAL RESOURCES The Company had cash of E5,000 at March 31, 2007 compared to E29,000 at December 31, 2006. 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 from our shareholders provided cash of E500,000 in the current period compared to nil during the three months ended March 31, 2006. Settlement of a non-revolving term facility in the principal amount of up to E3.7 million, under which Mymetics had borrowed an aggregate of E4,021,000, used cash of E1,490,000. The balance of E2,531,000 was settled in exchange for 12.5 million shares of common stock. As of March 31, 2007, we had an accumulated deficit of approximately E16.1 million, and we incurred losses of E400,000 in the three-month period ending on that date. These losses are principally associated with the research and development of our HIV vaccine technologies. We expect to continue to incur expenses in the future for research, development and activities related to the future licensing of our technologies. Accounts payable of E2,101,000 at March 31, 2007, include E363,000 due to our officers as unpaid salaries, fees and out-of-pocket expenses. The E1,093,000 payable to shareholders at March 31, 2007 includes E242,000 which represents various amounts advanced by Dr. Serres, a former director of 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 literally, "return to better times," which means when the Company's financial status improves so that repayment is possible. This ambiguous concept has been contractually defined in November 1998 between the lender 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 the lender, if at all. Consequently, they are classified as long term debts. Because our French subsidiary is in receivership (as disclosed in our Form 8-K dated February 13, 2006), Mymetics SA cannot return to "better times" so long as the collection efforts of Dr. Serres force the Company to remain in receivership. Consequently, this amount may never have to be repaid. Net cash used in operating activities was E302,000 for the period ended March 31, 2007, compared to E460,000 for the period ended March 31, 2006. Investing activities used no cash during the three months ended March 31, 2007, as compared to E23,000 used during the three months ended March 31, 2006, entirely in the application of new patents. Financing activities provided cash of E274,000 for the period ended March 31, 2007 compared to E417,000 in the same period last year. Proceeds from issuance of common stock provided E1,264,000 during the period ended March 31, 2007 compared to E356,000 in the same period in 2006. The increase is essentially due to the settlement of the litigation with MFC Merchant Bank S.A., under which E990,000 was provided by a shareholder to finance the settlement. Salaries and related payroll costs represent 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 salaried executive officers a combined amount of E54,000 per month under Executive Employment Agreements with our CEO, CFO and CSO approved by our Board of Directors on July 1, 2006. Since January 15, 2004, payments of E4,000 per month for Professor Marc Girard's services as our Head of Vaccines Development were due pursuant to a consulting agreement dated June 10, 2004, as disclosed in our filing on Form 10-Q for the period ended March 31, 2004 to the Securities and Exchange Commission. We have not been able to make the payments due under the agreement on a regular basis, and we owed Professor Girard approximately E69,000 at March 31, 2007. Monthly fixed and recurring expenses for "Property leases" of E1,000 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), which can be cancelled on six months notice. We also lease minimal office facilities for Dr. Fleury at a monthly cost of E1,000, which includes full access to medical databases over high speed internet connection. This lease can be cancelled on very short term notice as we are planning to lease in the next few months facilities to conduct quality checks and to verify scientific results. 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 0f E77,000 includes E9,000 interest paid on notes payable to shareholders and E68,000 interest paid to MFC Merchant Bank S.A. for a note payable, repaid on March 19, 2007. This note payable in the maximum principal amount of E3.7 million carried an interest rate of Libor + 4% which was accrued on a quarterly basis. As of March 31, 2007, we had three full-time salaried executives, exclusive of our contracts for the consulting services of Professor Girard, our Head of Vaccines Development, and one part-time temporary assistant to our CFO. Certain secretarial work for our CEO is outsourced to a self-employed secretary who accepts being partially paid in common stock of Mymetics at the current market price. We anticipate hiring an assistant to our CFO as well as a part-time laboratory technician in 2007, and may need to hire additional personnel 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 will arise if we commence a phase I clinical trial, which we expect to occur during 2007. We expect that funding for the cost of any clinical trials would be available either from debt or equity financings, donors and/or 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. We anticipate our operations will require approximately E7.1 million until December 31, 2007. We will seek to raise the required capital from equity or debt financings, donors and/or potential partnerships with major international pharmaceutical and biotechnology firms. However, there can be no assurance that we will be able to raise additional capital on terms satisfactory to us, or at all, to finance our operations. In the event that we are not able to obtain such additional capital, we would be required to further restrict or even halt our operations. RECENT FINANCING ACTIVITIES 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 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. We are presently engaged in raising the equivalent of E8 million from Swiss investors under Regulation S under the Securities Act of 1933 in the form of Convertible Notes at staggered conversion prices between $0.10 and $0.60 (depending on the date committed). This method was preferred to straight sales of shares at current market price as we and our new investors believe that the market price presently does not accurately reflect the value of our common stock but only reflects our past and the difficulty we face in communicating our results to the public due to the complex scientific issues involved and the requirements of secrecy under patent laws, which preclude us from communicating our latest results until the relevant patent applications become public eighteen months after filing. In parallel with the effort to raise additional capital from Swiss investors as described above, we have also initiated a fund raising program of $6 million in the United States under Regulation D under the Securities Act of 1933. 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. Provided we can obtain sufficient financing resources, we expect to begin phase I clinical trials in 2007. In accordance with our past strategy, we intend to subcontract such work to "best of class" research teams unless institutions such as the US National Institutes of Health (NIH) or the French CEA decide to conduct it at their own expenses, which they presently do. We do not anticipate that our existing capital resources will be sufficient to fund our cash requirements through the next three months. 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 additional equity investments such as private placements under Regulation D and Regulation S under the Securities Act of 1933. 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. Our early attempts at attracting grants from humanitarian donors have not been successful because such donors are usually barred from making donations to for-profit and/or publicly traded companies such as Mymetics. In addition, most humanitarian donors demand that grant recipients abandon their intellectual property rights or alternatively, severely limit their commercial margins on the sale of preventive vaccines in the developing world. Based on the discussions we have had so far with major pharmaceutical companies in view of entering into a partnership agreement, it is obvious that these potential partners are not thrilled by the prospect of having to limit their margins in the developing world. Therefore and in order to become both eligible for grants and attractive to potential partners, the Company has decided to create a non-profit entity in Monaco to which our intellectual property related to HIV Clade C will be granted free of charge through a cross-licensing agreement. HIV Clade C is the form of HIV virus prevalent in Africa and other developing countries, mostly in Asia. Mymetics will retain all intellectual property related to Clade B, the form of HIV virus prevalent in Europe and North America. Under this scheme, the Monaco entity will be eligible for humanitarian grants to further R&D specifically aimed at developing countries while the prospect of having to cope with a low margin distribution of vaccine in such countries will not hamper our forthcoming negotiations with major pharmaceutical companies to which will only be able to offer Clade B based technology for distribution in high-yield markets such as Europe and North America. OFF-BALANCE SHEET ARRANGEMENTS The Company does not have any off-balance sheet arrangements. TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS PAYMENTS DUE BY PERIOD (THOUSANDS OF EUROS) ------------------------------------------- LESS MORE THAN 1 - 3 3 - 5 THAN CONTRACTUAL OBLIGATION TOTAL 1 YEAR YEARS YEARS 5 YEARS ---------------------- ----- ------ ----- ----- ------- Long-term debt 851 E0 851 E0 E0 Capital Lease Obligations E0 E0 E0 E0 E0 Operating Lease Obligations E0 E0 E0 E0 E0 Purchase Obligations 575 575 E0 E0 E0 Other Long-Term Liabilities Reflected on Mymetics Balance Sheet under GAAP E0 E0 E0 E0 E0 ---- --- --- -- -- TOTAL 1426 575 851 E0 E0 ==== === === == == ITEM 3. 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 no debt obligations which are sensitive to interest rate fluctuations as all our notes payable have fixed interest rates in the range from 5 to 10% p.a. ITEM 4. CONTROLS AND PROCEDURES Disclosure Controls and Procedures. As of the end of the registrant's fiscal year ended December 31, 2006, 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. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Our present 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 allow it. Neither Mymetics Corporation nor our wholly owned subsidiary 6543 Luxembourg SA are presently involved in any litigation incident to our business. Our French subsidiary, Mymetics S.A., is engaged in litigation brought by Dr. Pierre-Francois Serres, one of our former officers and directors, concerning his claims of unlawful termination of his employment by former management of our company. Dr. Serres obtained a judgment from the Lyon Industrial Tribunal for the full E173,000 in damages that he claimed. On October 26, 2006, the Court of Appeals of Lyon (France) invalidated the judgment rendered by the Lyon Industrial Tribunal. Dr. Serres has appealed the decision of the Court of Appeals of Lyon. Should Dr. Serres be unsuccessful in his appeal, which we expect based upon advice of our French counsel, he will have to reimburse approximately E33,000 that he had previously been able to garnish from our bank account following the judgment of the Lyon Industrial Tribunal. We intend to vigorously pursue this matter until fully resolved. As disclosed in our Form 8-K dated February 13, 2006, Mymetics S.A. was placed under receivership ("Redressement Judiciaire") on February 7, 2006 by the Tribunal de Commerce in Lyon, France, as a result of an ongoing dispute between Mymetics Corporation and Dr. Serres, discussed above. The court appointed two judges to oversee the case, a lawyer to represent the creditors and a judicial administrator to manage Mymetics S.A., all of whom are considered agents of the court. The court further imposed a "two-month observation period" during which management and the administrator should strive to find a solution to the crisis, which we are attempting to do. On April 4, 2006, the court extended the observation period until July 18, 2006, based on a favorable report about the future of Mymetics delivered by the judicial administrator, which date has been extended to May 7, 2007. We are actively working on a plan which we expect will allow our French subsidiary to emerge from "Redressement Judiciaire" on or about that date. ITEM 1A. RISK FACTORS Not applicable. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS During the period ended March 31, 2007, we issued 23,607,000 shares for a total of E1,264 and elimination of E2,351 of debt. Of these, 12.5 million were issued to MFC Merchant Bank S.A. as part of our settlement, 10.1 million were issued to a shareholder (of which 8.7 million to finance the MFC settlement), 0.65 million were issued to another shareholder and 0.325 to a new shareholder to finance our activities. During that same first quarter, an aggregate of one million shares were issued to four individuals for services rendered. All of the foregoing issuances were made in reliance upon the exemption from registration provided by Section 4(2) under the Securities Act in reliance, among other things, upon the fact that there was a limited number of recipients, there was no general solicitation of offers and all of the recipients were accredited investors. ITEM 5. OTHER INFORMATION On April 27, 2007, one million shares were issued to a new investor at $0.20 per share for a total of $200,000. The foregoing sale was made in reliance upon the exemption from registration provided by Section 4(2) and Regulation S under the Securities Act in reliance, among other things, upon the fact that the investor is not a resident of the United States. ITEM 6. EXHIBITS EXHIBIT NUMBER DESCRIPTION ------- ----------- 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer 31.2 Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer 32 Section 1350 Certification of Chief Executive Officer and Chief Financial Officer SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: May 11, 2007 MYMETICS CORPORATION By: /s/ Christian Rochet ------------------------------------- President and Chief Executive Officer