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During these discussions, the following strategic alternatives in addition to the reverse stock split were considered:
1.
Sale of the Company or substantially all of its assets. Under this alternative, Mymetics would attempt to sell (subject to the stockholders’ approval) the Company or substantially all of the assets of the Company. However, even with the engagement of several business brokers to evaluate strategic alternatives for the Company or its assets, sale efforts were ineffective in attracting potential buyers. Between May 2022 and March 2023, the Company approached close to 500 companies globally and attempted, but was unsuccessful, in selling itself or substantially all of its assets. The Board concluded that, under the current conditions, the interest in the market to purchase the shares or assets of the Company is extremely low or absent.
2.
Dissolution of the Company and liquidation of its assets. Under this alternative, Mymetics would (subject to the stockholders’ approval) dissolve the Company in accordance with the DGCL and wind up and liquidate the Company’s assets. However, even after filing a Certificate of Dissolution, the Company may still be deemed to have such number of record stockholders in excess of the Exchange Act Rule 12g-4 thresholds. Accordingly, the Company would likely be required to continue its reporting under the Exchange Act until the time all assets and liabilities of the Company are wound up and sorted out pursuant to state law, which would continue to be costly for the Company.
3.
Other transactions. The Board also considered other possible transactions, such as purchases of shares on the open market or an issuer tender offer. However, the Board concluded that these and similar transactions would be more costly, including due to higher legal costs and other transactional expenses, lack certainty in reducing the number of stockholders of record to fewer than 300 and/or take a longer time to effectuate.
During these discussions, the Board also considered the benefits and disadvantages of:
1.
forming a special committee of the Board to consider and review the Reverse Stock Split and to make a recommendation to the full board as to the approval of the Reverse Stock Split. The Board discussed the fact that the Reverse Stock Split applies equally to all stockholders, including the directors and officers, and that no director, executive officer or affiliate of the Company would receive any benefit not received by any other stockholder. Based on these factors, the Board determined not to appoint a special committee.
2.
requiring the approval of the Reverse Stock Split by the holders of a majority of the shares of Common Stock held by our unaffiliated stockholders. In considering whether to require the approval of our unaffiliated stockholders, the Board discussed the fact that stockholders would have the option to remain stockholders of the Company if they purchase sufficient shares to bring their holdings to at least 2,000 shares immediately prior to the Effective Date, the fact that the Reverse Stock Split applies equally to all stockholders, the fact that the Company’s affiliate stockholders’ percentage ownership would likely not significantly change after the Reverse Stock Split and the likely inability to have a majority of the non-affiliate stockholders participate in such a vote. Based on these factors, the Board determined not to require the approval of the Reverse Stock Split by the holders of a majority of the shares of Common Stock held by unaffiliated stockholders of the Company.
The Board also discussed in detail other aspects of the going private transaction, including the price to be paid to stockholders in lieu of fractional shares. In that regard, the Company noted that historically its volume of trading was low and, as a result, neither might accurately reflect the value of the Company’s Common Stock, which price was higher than the book value per share reflected in the Company’s public filings with the SEC.
The Board also identified and undertook discussions of the disadvantages of the Reverse Stock Split, namely, the fact that stockholders of record owning fewer than 2,000 shares would not be able to participate in any future growth of the Company. The Board noted that this disadvantage is minimized by the fact that any stockholder who so chooses can remain a stockholder by purchasing a sufficient number of shares in order to increase the number of shares in such stockholder’s record account to at least 2,000. Another disadvantage discussed by the Board is the fact that stockholders who remain after the Reverse Stock Split will no longer have access to information concerning the Company’s operations and financial results that is currently available in its SEC filings.
On October 3, 2023, the Board concluded that a valuation of $0.0023 per share would be fair to the stockholders who would receive fractional shares as a result of the Reverse Stock Split, representing a 30% premium on the 25-day volume weighted average price of Mymetics common share during the period August 26, 2023 to September 29, 2023.
Based on these considerations, the Board determined that the results of a Reverse Stock Split are more predictable and automatic, and determined that the Reverse Stock Split is the most expeditious and economical way of reducing the number of holders of record to fewer than 300 and effecting the termination of its registration and periodic reporting obligations. The Board then unanimously approved by written consent a 1-for-2,000 Reverse Stock Split of the Company’s Common Stock on October 5, 2023.
In October, 2023, as the Company and the Board continued to have discussions on a going private transaction through the Reverse Stock Split, management of the Company had informal discussions with the Consenting Stockholders, and the Company asked the Consenting Stockholders if this might be something they would support, in order to determine the feasibility and advisability, as the Company did not wish to devote Company time and resources to such actions unless there was significant shareholder interest. The Consenting Stockholders indicated that they would consider supporting a Reverse Stock Split, and asked that the Company provide them with all available information when they were ready to move forward, in order to fully evaluate whether they would provide consent. Other than engaging in discussions initiated by the Company, the Consenting Stockholders were not involved in the planning or structuring of the Reverse Stock Split.
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