EX-99.1 2 nymx_ex991.htm EX-99.1 nymx_ex991.htm

EXHIBIT 99.1

 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS (in US dollars)

 

This is Management’s discussion and analysis (“MD&A”) comments on the Corporation’s operations, performance and financial condition as at and for the three months ended March 31, 2019 and 2018. This MD&A should be read together with the unaudited condensed interim Consolidated Financial Statements and the related notes. This MD&A is dated May 15, 2019. All amounts in this report are in U.S. dollars, unless otherwise noted.

 

Except as otherwise indicated, all financial information contained in this MD&A and in the unaudited condensed interim Consolidated Financial Statements has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The unaudited condensed interim Consolidated Financial Statements and this MD&A were reviewed by the Corporation’s Audit Committee and were approved by our Board of Directors.

 

Additional information about the Corporation can be obtained on EDGAR at www.sec.gov or on SEDAR at www.sedar.com.

 

Overview

 

Corporate Profile

 

Nymox Pharmaceutical Corporation is a biopharmaceutical company focused on developing its drug candidate, NX1207,for the treatment of BPH and the treatment of low-grade localized prostate cancer. Since 1989, the Corporation’s activities and resources have been directed primarily on developing certain pharmaceutical technologies. Since 2002, Nymox has been developing its novel proprietary drug candidate, NX1207, for the treatment of benign prostatic hyperplasia (“BPH”). NX1207 showed positive results for the treatment of BPH in Phase 1 and 2 clinical trials in the U.S. and in follow-up studies of available subjects from the completed clinical trials. In 2009, Nymox started two pivotal double blind placebo controlled Phase 3 trials for NX1207, NX020017 and NX020018, that were conducted at investigational sites across the U.S. with a total enrollment of approximately 1,000 patients. Nymox also initiated subsequent open-label U.S. reinjection Phase 3 safety studies, NX020020 and NX020022. The NX020017 study completed patient enrollment and participation in December 2013 and the NX020018 study in May 2014. Topline results of the Phase 3 NX020017 and NX020018 U.S. clinical trials of NX1207 for BPH at 12 months posttreatment were not statistically significant compared to placebo.

 

The Corporation is in the process of further data analysis and assessments of the two studies, and expects to continue its efforts to work on the development program. Nymox is also developing NX1207 for the treatment of low-grade localized prostate cancer. A Phase 2 study of NX1207 for low grade localized prostate cancer was started in 2012 with positive results reported in 2014. The Corporation is in the process of working towards definitive studies for this indication. The Corporation also has an extensive patent portfolio covering its marketed products, its investigational drug as well as other therapeutic and diagnostic indications. Nymox developed the AlzheimAlert™ test, which is certified with a CE Mark in Europe. Nymox developed and markets NicAlert™ and TobacAlert™; which are tests that use urine or saliva to detect use of and exposure to tobacco products. NicAlert™ has received clearance from the FDA and is also certified with a CE Markin Europe. TobacAlert™ is the first test of its kind to accurately measure second and third hand smoke exposure in individuals.

 

 
1
 
 

 

In order to achieve its business plan and the realization of its assets and liabilities in the normal course of operations, the Corporation anticipates the need to raise additional debt or capital in the near term and/or achieve sales and other revenuegenerating activities. Management has taken steps to reduce expenditures going forward in the short term by staff reductions, deferral of management salaries, and operational changes.

 

The topline failure of the two Phase 3 studies of NX1207 for BPH materially affects the Corporation’s current ability to fund its operations, meet its cash flow requirements, realize its assets and discharge its obligations. Management believes that current cash balances as of March 31, 2019 will be sufficient to meet the Company’s cash needs for the next 12 months.

 

We have incurred operating losses throughout our history. Management believes that such operating losses will continue for at least the next few years as a result of expenditures relating to research and development of our potential therapeutic products.

 

On July 27, 2015, Nymox announced initial clinical results from its ongoing analysis and assessment of its Phase 3 development program in BPH. The Company announced that the U.S. long-term extension prospective double-blind Phase 3 BPH studies NX020017 and NX020018 of fexapotide triflutate (NX1207) for BPH had successfully met the prespecified primary endpoint of long-term symptomatic statistically significant benefit superior to placebo. Fexapotide showed an excellent safety profile with no evidence of drug-related short-term or long-term toxicity nor any significant related molecular side effects in the 2 studies. As a result of the clinical benefits observed in the long-term extension trial, the Company announced that it intends to meet with regulatory authorities in various jurisdictions around the world and in due course explore the possibility to proceed to file for approval where possible.

 

On August 2, 2018, the Corporation opened its new office in Irvine, California. The Corporation will maintain all Quality Assurance activities from this office.

 

Forward Looking Statements

 

Certain statements included in this MD&A may constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation and regulations, and are subject to important risks, uncertainties and assumptions. This forward-looking information includes amongst others, information with respect to our objectives and the strategies to achieve these objectives, as well as information with respect to our beliefs, plans, expectations, anticipations, estimates and intentions. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “plan”, “foresee”, “believe” or “continue” or the negatives of these terms or variations of them or similar terminology. We refer you to the Corporation’s filings with the Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission, and of our Form 20-F, for a discussion of the various factors that may affect the Corporation’s future results. The results or events predicted in such forward-looking information may differ materially from actual results or events.

 

Differences between Bahamas and NASDAQ Corporate Governance Practices

 

Nymox Pharmaceutical Corporation is subject to corporate governance requirements imposed by NASDAQ because Nymox Pharmaceutical’s Shares are listed on the Nasdaq Capital Market.

 

Nymox Pharmaceutical Corporation is incorporated in the Bahamas. Under NASDAQ Marketplace Rule 5615(a)(3), NASDAQ listed non-US companies may, in general, follow their home country corporate governance practices in lieu of certain NASDAQ corporate governance requirements. A NASDAQ listed non- U.S. company is required to provide a general summary of the significant differences between its home country corporate governance practices and NASDAQ corporate governance requirements to its shareholders, either in the company’s annual report filed on Form 20-F or on the company’s website. Nymox is committed to a high standard of corporate governance. As such, Nymox endeavors to comply with most of the NASDAQ corporate governance practices, with the following exceptions. Under NASDAQ Marketplace Rule 5635(c), shareholders must be given the opportunity to vote on any material amendment to the terms of a company’s equity compensation plan (i.e., an amendment to the plan to include repricing provisions). There is no requirement under Bahamas law that equity compensation plan, or any material amendment thereto, be subject to shareholder approval. Nymox will continue to follow the Bahamas practice and require any material amendment to the terms of its plan to be subject only to approval by its board of directors.

 

 
2
 
 

 

Also under NASDAQ Marketplace Rule 5635(d), shareholders must be given the opportunity to vote prior to the issuance of securities in connection with a transaction other than a public offering involving: (1) the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable for common stock) at a price less than the greater of book or market value which together with sales by officers, directors or substantial shareholders of the Company equals 20% or more of common stock or 20% or more of the voting power outstanding before the issuance; or (2) the sale, issuance or potential issuance by the Company of common stock (or securities convertible into or exercisable common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock. There is no requirement under Bahamas law that stock issuances pursuant to private placements be subject to shareholder approval. Nymox will continue to follow the Bahamas practice and require private placement transactions to be subject only to approval by its board of directors.

 

Results of Operations

 

Three Months Ended March 31

 

2019

 

 

2018

 

Total revenues

 

$30,342

 

 

$152,165

 

Net loss

 

$(2,869,971)

 

$(2,664,089)

Loss per share (basic & diluted)

 

$(0.04)

 

$(0.05)

 

Results of Operations – Q1 2019 compared to Q1 2018

 

Net loss was $2,869,971, or $0.04 per share, for the quarter ended March 31, 2019, compared to net loss of $2,664,089, or $0.05 per share, for the quarter ended March 31, 2018. The increase in net losses for the three months ended March 31, 2019 compared to the same period in 2018 is primarily due to increase of $429,394 in professional fee and $136,606 in employee salary offset with a decrease of $316,333 in stock and stock option compensation charge. The weighted average number of common shares outstanding for the three months ended March 31, 2019 was 67,045,700 compared to 57,055,742 for the same period in 2018.

  

Revenues

 

Revenues from sales of goods amounted to $30,342 for the quarter ended March 31, 2019, compared with $152,165 for the quarter ended March 31, 2018. The $121,823 decrease mainly due to customer order decrease of $122,240 from two customers comparing first quarter of 2018.

 

Research and Development

 

Research and development expenditures were $1,729,186 for the quarter ended March 31, 2019, compared with $1,956,786 for the quarter ended March 31, 2018. Research and development expenditures mainly include costs incurred in advancing Nymox’s BPH product candidate NX-1207 through clinical trials, as well as costs related to its R&D pipeline. Research and development expenditures also include stock compensation charges of $351,755 in the three months ended March 31, 2019 and $503,403 in the comparative period in 2018.

 

 
3
 
 

 

Marketing Expenses

 

Marketing expenditures were nil for the quarter ended March 31, 2019, compared with $52 for the quarter ended March 31, 2018. The Corporation expects that marketing expenditures will increase if and when new products are launched on the market.

 

General and Administrative Expenses

 

General and administrative expenses were $1,185,292 for the quarter ended March 31, 2019, compared with $793,861 for the quarter ended March 31, 2018. General and administrative expenditures also include stock compensation charges of $338,717 for the three months ended March 31, 2019 and $503,402 in the comparative period in 2018. The increase of $391,431 for the quarter ended March 31, 2019 is mainly attributable to an increase of $514,8544 in various professional fee offset with an decrease of 164,685 in stock compensation charge compared to 2018. The Corporation expects that general and administrative expenditures will increase as new product development leads to expanded operations.

 

Finance costs

 

Net finance income was $42,669 for the quarter ended March 31, 2019, compared with net finance costs of $5,782 for the quarter ended March 31, 2018. The decrease of $48,451 for the quarter ended March 31, 2019 is mainly attributable to an increase of 53,136 in interest income offset with $6,819 in operation lease liability interest expense.

 

The Corporation incurs expenses in the local currency of the countries in which it operates, which include the United States, Canada and the Bahamas. Foreign exchange fluctuations had no meaningful impact on the Corporation’s results in 2019 or 2018

 

Inflation

 

The Corporation does not believe that inflation has had a significant impact on its results of operations.

 

Contractual Obligations

 

Nymox has no contractual obligations of significance other than its accounts payable, accrued liabilities and operation lease obligation as following:

 

Contractual Obligations

 

Total

 

 

Less than 1 year

 

 

1-3 years

 

 

4-5 years

 

Office operation lease liability

 

$360,795

 

 

$256,749

 

 

$104,046

 

 

$0

 

Equipment operating leases liability

 

$4,067

 

 

$1,627

 

 

$2,440

 

 

$0

 

Insurance premium installment

 

$16,670

 

 

$16,670

 

 

$0

 

 

$0

 

Total Contractual Obligations other than accounts payable and accrued liabilities

 

$381,532

 

 

$275,046

 

 

$106,486

 

 

$0

 

 

Off-Balance Sheet Arrangements

 

The Corporation has no binding commitments for the purchase of property, equipment or intellectual property. Effective for annual reporting periods beginning on January 1, 2019, IFRS 16 introduces a new approach to lessee accounting that requires a lessee to recognize assets and liabilities for the rights and obligations created by lease. IFRS 16 requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months and for which the underlying asset value is not of low value. The Corporation adopted IFRS 16 on January 1, 2019. The corporation has no commitments that are not reflected in the statement of financial position except for insurance premium installments.

 

 
4
 
 

 

Transactions with Related Parties

 

The Corporation had no transactions with related parties in 2019 and 2018 other than those disclosed for key management personnel in note 6 of the unaudited condensed interim Consolidated Financial Statements.

 

Financial Position

 

Liquidity, Capital Resources

 

As of March 31,2019, cash and receivables including tax credits receivable totaled $11,318,000 compared with $7,960,000 at December 31, 2018. The increase is mainly due to proceed from private placement of $5,000,000 during first quarter of 2019.

 

We used cash in our operating activities in the amounts of $1,593,169 and $1,833,127 for the quarter ended March 31, 2019 and 2018, respectively.

 

Investing activities have been insignificant and substantially all cash flows have been provided by financing activities, specifically proceeds from the issuance of common stock.

On January 15, 2019, the Corporation completed one private placement to an accredited investor for an amount of $5,000,000 and 2,500,000 shares were issued at $2.0 per share and 2,500,000 warrants were issued connect with it. The warrant has excise price of $8.0 per share with a term of five years.

 

As of March 31, 2019, the Corporation made principle repayment of operation lease at a total of $60,034.

 

Other than the financing discussed above, the Corporation does not have arranged sources of financing.

 

We have incurred substantial operating losses since our inception due in large part to expenditures for our research and development activities and expense charges related to the issuance of stock options to our key employees. As at March 31, 2019, we had an accumulated deficit of $157,994,927 including $11,667 accumulated effect from new lease accounting adoption as of January 1, 2019, and we have negative cash flows from operations. The Corporation’s working capital is $10,056,373 at March 31, 2019. Our current level of annual expenditures exceeds the anticipated revenues from sales of goods, However, we have totaling over $11 Million at our bank as of March 31, 2019.

 

Management has implemented steps to reduce expenditures, including deferral of management salaries, and other operational changes. There is no assurance these actions will be successful; however management believes the use of the going concern assumption is appropriate.

 

The unaudited interim consolidated financial statements for the three months ended September 30, 2018, do not include any adjustments or disclosures that may be necessary should the Corporation not be able to continue as a going concern. Should the going concern assumption not be appropriate, then adjustments may be necessary to the carrying value and classification of assets and liabilities and reported results of operations and such adjustments could be material.

 

Capital disclosures

 

The Corporation’s objective in managing capital is to ensure a sufficient liquidity position to finance its research and development activities, general and administrative expenses, working capital and overall capital expenditures, including those associated with patents. The Corporation makes every attempt to manage its liquidity to minimize shareholder dilution when possible.

 

The capital management objectives remain the same as for the previous fiscal year. When possible, the Corporation tries to optimize its liquidity needs by non-dilutive sources, including sales, collaboration agreements, “and interest income. The Corporation’s general policy on dividends is to retain cash to keep funds available to finance its research and development and operating expenses.

 

 
5
 
 

  

The Corporation is not subject to any capital requirements imposed by external parties other than the Nasdaq Capital Market requirements related to the Listing Rules.

 

Disclosure Controls and Procedures

 

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed is accumulated and communicated to senior management on a timely basis so that appropriate decisions can be made regarding public disclosure. The Corporation’s Chief Executive Officer and its Chief Financial Officer are responsible for establishing and maintaining disclosure controls and procedures. They are assisted in this responsibility by the Corporation’s audit committee. Based on an evaluation of the Corporation’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 and National Instrument 52-109), the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures is effective as of March,31 2019 .

 

Thayer O’Neal Company, LLC, our auditors, expressed their opinion that the effectiveness of the Corporation’s internal control over financial reporting as of December 31, 2018, was effective and their opinion was not modified in any way.

 

Changes in Internal Controls over Financial Reporting

 

We have made significant improvements in Internal Controls over Financial Reporting since year 2017.

 

Management believes that proper segregation of duties is critical to a properly designed and operating internal control environment for financial reporting. The Corporation developed a remediation plan, with oversight from the Audit Committee, to remediate the following material weaknesses in internal controls over financial reporting, first identified in 2015:

 

The Corporation did not employ a sufficient complement of finance and accounting personnel to ensure that there was proper segregation of duties related to certain processes, primarily impacting the expenditures/disbursements processes and information technology general controls (“ITGC”) and sufficient compensating controls did not exist in these areas. To improve the weakness in these areas, the Corporation has implemented following remediation plan.

 

 

·

The Corporation hired an external accounting expert, functioning in a controllers role, at the beginning of 2017 to assist in the accounting for non-routine complex accounting matters and to enhance oversight of the financial reporting process. However, the Chief Financial Officer continued to have final say in what would be included or excluded from our financial statements and related disclosures thereto.

 

·

The accounting system was transferred to a new general ledger software system on a secure cloud platform.

 

·

Additionally, we contracted with a Managed Service Provider to maintain our IT infrastructure.

 

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate this risk.

 

 
6
 
 

 

NYMOX PHARMACEUTICAL CORPORATION

Consolidated Financial Statements

(Unaudited)

 

Financial Statements

 

 

Consolidated Statements of Operations (Unaudited)

 

8

 

 

Consolidated Statements of Financial Position (Unaudited)

 

9

 

 

Consolidated Statements of Cash Flow (Unaudited)

 

10

 

 

Consolidated Statements of Changes in Equity (Unaudited)

 

11

 

 

Notes to Condensed Interim Consolidated Financial Statements

 

1.

Basis of preparation

 

12

 

2.

Liquidity, going concern and management’s response

 

12

 

3.

Share capital

 

12

 

4.

Earnings per share

 

14

 

5.

Operation lease and other commitment

 

15

 

6.

Related party transactions

 

16

 

7.

Subsequent events

 

 

 

 
7
 
 

 

NYMOX PHARMACEUTICAL CORPORATION

Consolidated Statements of Operations (Unaudited)

Three month periods ended March 31, 2019 and 2018

(In Thousands of US dollars Other Than Per Share Amounts and Thousands of Shares )

 

 

 

Three months ended

March 31,

 

 

 

2019

 

 

2018

 

Revenues

 

 

 

 

 

 

Sales of goods

 

$30

 

 

$152

 

Total revenues

 

 

30

 

 

 

152

 

Operating expenses

 

 

 

 

 

 

 

 

Research and development

 

 

1,729

 

 

 

1,957

 

General and administrative and Marketing

 

 

1,185

 

 

 

794

 

Cost of sales

 

 

29

 

 

 

59

 

Total expenses

 

 

2,943

 

 

 

2,810

 

Loss from operations

 

 

(2,913)

 

 

(2,658)

Other expense

 

 

 

 

 

 

 

 

Operation lease and financial obligations

 

 

(10)

 

 

 -

 

Interest income(cost)

 

 

53

 

 

 

(6)

Loss before income tax

 

 

(2,870)

 

 

(2,664)

Income tax provision(recovery)

 

 

-

 

 

 

-

 

Net Loss

 

$(2,870)

 

$(2,664)

Net loss per share Basic & Diluted

 

$(0.04)

 

$(0.05)

Weighted average number of common shares outstanding Basic & Diluted

 

 

67,046

 

 

 

57,056

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

 
8
 
 

 

NYMOX PHARMACEUTICAL CORPORATION

Consolidated Statements of Financial Position (Unaudited)

March 31, 2019 and December 31, 2018

(In Thousands of US Dollars and Thousands of Shares)

 

 

 

 

 

March 31,

 

 

December 31,

 

Assets

 

Note

 

 

2019

 

 

2018

 

Current assets

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

$11,293

 

 

$7,946

 

Accounts receivable

 

 

 

 

 

10

 

 

 

2

 

Other receivables

 

 

 

 

 

14

 

 

 

12

 

Inventory

 

 

 

 

 

38

 

 

 

41

 

Security deposit

 

 

 

 

 

11

 

 

 

23

 

Prepaid expenses

 

 

 

 

 

57

 

 

 

2

 

Total current assets

 

 

 

 

 

11,486

 

 

 

8,026

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

 

 

 

31

 

 

 

33

 

Operation lease right-of-use asset net

 

5

 

 

 

329

 

 

 

-

 

Security deposit

 

 

 

 

 

17

 

 

 

17

 

Total assets

 

 

 

 

$11,800

 

 

$8,076

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

3

 

 

$1,364

 

 

$1,074

 

Operation lease liability due within one year

 

5

 

 

 

65

 

 

 

-

 

Total current liability

 

 

 

 

 

1,429

 

 

 

1,074

 

Long term operation lease liability

 

5

 

 

 

282

 

 

 

-

 

Total liabilities

 

 

 

 

 

1,711

 

 

 

1,074

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Share capital – unlimited authorized shares at no par value 67,926 and 64,676 shares outstanding at March 31, 2019 and December 31, 2018, respectively

 

3

 

 

 

134,204

 

 

 

126,684

 

Share capital subscription receivable

 

 

 

 

 

(589))

 

 

(868)

Additional paid-in capital

 

3

 

 

 

34,469

 

 

 

36,299

 

Accumulated deficit

 

 

 

 

 

(157,995)

 

 

(155,113)

Total stockholders’ equity

 

 

 

 

 

10,089

 

 

 

7,002

 

Total liabilities and stockholders’ equity

 

 

 

 

$11,800

 

 

$8,076

 

 

See accompanying notes to the unaudited consolidated financial statements.

 

 
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NYMOX PHARMACEUTICAL CORPORATION

Consolidated Statements of Cash Flows (Unaudited)

Three-month periods ended March 31, 2019 and 2018

(In Thousands of US Dollars )

 

 

 

2019

 

 

2018

 

Cash flows used in operating activities

 

 

 

 

 

 

Net loss

 

$(2,870)

 

$(2,664)

Adjustments for:

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

690

 

 

 

1,007

 

Depreciation equipment

 

 

2

 

 

 

-

 

Issued stock for commission

 

 

-

 

 

 

32

 

Amortization and others

 

 

345

 

 

 

0

 

Changes in non-cash operating balances:

 

 

 

 

 

 

 

 

Accounts receivable and other receivables

 

 

(11)

 

 

64

 

Prepaid expenses

 

 

(55)

 

 

(41)

Inventories

 

 

3

 

 

 

1

 

Accounts payable and accrued liabilities

 

 

290

 

 

 

(232)

Security deposit

 

 

13

 

 

 

 

 

Net cash flows used in operating activities

 

 

(1,593)

 

 

(1,833)

 

 

 

 

 

 

 

 

 

Cash flows from (used in) financing activities

 

 

 

 

 

 

 

 

Proceeds from issuance of share capital

 

 

5,000

 

 

 

1,832

 

Repayment of operation lease and financing obligation

 

 

(60)

 

 

0

 

 

 

 

 

 

 

 

 

 

Net cash flows provided by financing activities

 

 

4,940

 

 

 

1,832

 

 

 

 

 

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

 

 

 

Net increase (decrease) in cash

 

 

3,347

 

 

 

(1)

Cash, beginning of the period

 

 

7,946

 

 

 

851

 

Cash, end of the period

 

$11,293

 

 

$850

 

Supplemental Disclosure

 

 

 

 

 

 

 

 

Income taxes paid

 

$-

 

 

$-

 

Interest paid

 

$-

 

 

$-

 

Non-cash investing and financing activities

 

 

 

 

 

 

 

 

Operating lease right-of-use asset

 

$329

 

 

$-

 

 

See accompanying notes to the unaudited consolidated financial statements

 

 
10
 
 

 

NYMOX PHARMACEUTICAL CORPORATION

Consolidated Statements of Changes in Equity (Unaudited)

Three-month periods ended March 31, 2019

(In Thousands of US Dollars and Thousands of Shares)

 

 

 

Common

Shares

 

 

Dollars

 

 

Share

capital

Subscription

 

 

Additional

Paid-in

Capital

 

 

Accumulated

Deficit

 

 

Total

 

Balance, December 31, 2018

 

 

64,676

 

 

$126,684

 

 

$(868)

 

$36,299

 

 

$(155,113)

 

$7,002

 

Lease adoption prior year cumulative effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12)

 

 

(12)

Share issuance for cash and share subscription

 

 

2,500

 

 

 

4,800

 

 

 

279

 

 

 

-

 

 

 

 

 

 

5,079

 

Warrant issued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

200

 

 

 

 

 

 

 

200

 

Stock-based compensation

 

 

750

 

 

 

2,720

 

 

 

 

 

 

(2,030)

 

 

 

 

 

690

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,870)

 

 

(2,870)

Balance, March 31, 2019

 

 

67,926

 

 

$134,204

 

 

$(589)

 

$34,469

 

 

$(157,995)

 

$10,089

 

See accompanying notes to the unaudited consolidated financial statements

 

 
11
 
 

 

NYMOX PHARMACEUTICAL CORPORATION

Notes to Unaudited Consolidated Financial Statements

(in US dollars)

 

1.

Basis of preparation:

 

 

(a)

Statement of compliance:

 

 

 

 

 

The consolidated condensed unaudited interim consolidated financial statements of the Corporation have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and its interpretations as issued by the International Accounting Standards Board (“IASB”) and in accordance with IAS 34, Interim Financial Reporting. The condensed unaudited interim consolidated financial statements do not include all of the information required for full annual financial statements and accordingly should be read in conjunction with the previously issued annual financial statements of the Corporation for the fiscal year ended December 31, 2018 and notes thereto contained in the Corporation’s Annual Report on Form 20-F.

 

 

 

 

 

The consolidated condensed interim consolidated financial statements were authorized for issuance by the Board of Directors on May 13, 2019.

 

(b)

Basis of measurement:

 

 

 

 

 

The condensed unaudited interim consolidated financial statements have been prepared on a going concern and on the historical cost basis. The functional currency of the Corporation is the US dollar.

 

Use of estimates and judgments

 

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Information about critical judgments in applying accounting policies and assumption and estimation uncertainties that have the most significant effect on the amounts recognized in the consolidated financial statements is noted below:

 

Significant estimates include, but are not limited to, the estimation of useful lives of equipment for purposes of depreciation, useful life of lease RUA for purpose of amortization and the valuation of common shares and stock option issued for services.

 

2.

Liquidity, Going Concern and Management’s Response

 

Management believes that current cash balances as of March 31, 2019 is sufficient to finance the Company’s operations for at least the next 12 months. However, if necessary, the Company intends to seek additional equity or other financing, should the Company’s liquidity need change.

 

Considering recent developments and the need for additional financing, there exists a material uncertainty that casts substantial doubt about the Corporation’s ability to continue as a going concern. These financial statements do not reflect adjustments that would be necessary. If the going concern assumption is not appropriate, then adjustments may be necessary to the carrying value and classification of assets and liabilities and reported results of operations and such an adjustment could be material.

 

3.

Share capital:

 

 

The holders of common shares are entitled to receive dividends as declared, which is at the discretion of the Corporation, and are entitled to one vote per share at the annual general meeting of the Corporation. The Corporation has never paid any dividends.

(a)

Private placements:

 

 

 

 

 

In the first quarter of 2019, the Corporation completed one private placement to an accredited investor for a total of $5,000,000. A total of 2,500,000 common shares were issued at $2.00 per share and 2,500,000 warrants were issued connecting with the share issuance.

 

 
12
 
 

 

NYMOX PHARMACEUTICAL CORPORATION

Notes to Unaudited Consolidated Financial Statements

(in US dollars)

 

(b)

Stock options:

 

 

 

 

 

The Corporation has established a stock option plan (the “Plan”) for its key employees, its officers and directors, and certain consultants. The Plan is administered by the Board of Directors of the Corporation. The Board may from time to time designate individuals to whom options to purchase common shares of the Corporation may be granted, the number of shares to be optioned to each, and the option price per share. The option price per share cannot involve a discount to the market price at the time the option is granted. The maximum number of shares which may be optioned under the stock option plan is 7,500,000. The maximum number of shares which may be optioned to any one individual is 15% of the total issued and outstanding common shares. Options under the Plan expire ten years after the grant date and vest either immediately or over periods up to six years, and are equity-settled. As of March 31, 2019, 1,760,000 options could still be granted by the Corporation.

 

The following table provides the activity of stock option awards during the three-month period ended March 31, 2019 and for options outstanding and exercisable at the end of the three-month period ended March 31, 2019, the weighted average exercise price and the weighted average years to expiration.

 

 

 

 

 

 

Options

 

 

 

 

 

 

 

 

 

outstanding

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

average

 

 

 

 

 

 

average

 

 

remaining

 

 

 

 

 

 

exercise

 

 

contractual

 

 

 

Number

 

 

Price

 

 

life (in years)

 

Outstanding, December 31, 2018

 

 

5,740,000

 

 

$1.76

 

 

 

6.37

 

Expired

 

 

 

 

 

 

 

 

 

 

Cancelled

 

 

 

 

 

 

 

 

 

Granted

 

 

 

 

 

 

 

 

 

 

Outstanding, March 31, 2019

 

 

5,740,000

 

 

$1.76

 

 

 

6.13

 

Options exercisable

 

 

5,740,000

 

 

$1.76

 

 

 

6.13

 

 

 
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NYMOX PHARMACEUTICAL CORPORATION

Notes to Unaudited Consolidated Financial Statements

(in US dollars)

 

(c) Stock-based compensation:

 

Stock -based compensation includes stock and stock option granted to employees

 

 

 

Three months

 

 

ended March 31,

 

Employee expense

 

2019

 

 

2018

 

Stock and stock option compensation granted in

 

 

 

 

 

 

2015

 

 

677,434

 

 

 

1,006,805

 

2018

 

 

13,038

 

 

 

 

Total stock-based compensation expense recognized

 

$690,472

 

 

$1,006,805

 

 

(c) Stock based compensation continued:

 

The stock-based compensation expense is disaggregated in the statements of operations and comprehensive loss as follows:

 

 

 

Three months

 

 

 

ended March 31,

 

 

 

2019

 

 

2018

 

Stock-based compensation pertaining to general and administrative expenses

 

$338,717

 

 

$503,402

 

Stock-based compensation pertaining to research and development expenses

 

 

351,755

 

 

 

503,403

 

Total

 

$690,472

 

 

$1,006,805

 

 

No options were granted during the three-month period ended March 31, 2019 and 2018.

 

(d)

Warrants :

 

In the first quarter of 2019, the Corporation issued 2,500,000 warrants in connection with one private placement referred to in note 3 (b). Each warrant entitles the holder to acquire one common share of the Corporation at an exercise price of $8.00 with a five years term. The warrant was valued at $200,000 and recorded as part of Additional paid in capital.

 

4.

Earnings per share:

 

Weighted average number of common shares outstanding:

 

 

 

Three months

 

 

 

ended March 31,

 

 

 

2019

 

 

2018

 

Issued common shares at beginning of period

 

 

64,676,256

 

 

 

56,378,306

 

Effect of shares issued

 

 

2,369,444

 

 

 

677,436

 

Weighted average number of common shares outstanding - basic

 

 

67,045,700

 

 

 

57,055,742

 

Weighted average number of shares outstanding – diluted

 

 

67,045,700

 

 

 

57,055,742

 

 

 
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NYMOX PHARMACEUTICAL CORPORATION

Notes to Unaudited Consolidated Financial Statements

(in US dollars)

  

There is no difference in diluted as compared to basic earnings per share as the impact would be antidilutive as a result of the net loss.

 

5. Operation lease and other commitment

 

Effective for annual reporting periods beginning on or after January 1, 2019, IFRS 16 introduced a new approach to lessee accounting that requires a lessee to recognize assets and liabilities for the rights and obligations created by leases. IFRS 16 requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months. The IASB concluded that such an approach will result in a more faithful representation of a lessee’s assets and liabilities and, together with enhanced disclosures, greater transparency of a lessee’s financial leverage and capital employed.

 

We adopted this standard on January 1, 2019, with an immaterial cumulative adjustment of $11,667 to accumulated deficit rather than retrospectively adjusting prior periods. This adoption approach resulted in a balance sheet presentation that is not comparable to the prior period. We used an incremental borrowing rate as a discount rate for our operating leases. The discount rate ranges from 6.89% to 7.10%. The adoption of this standard resulted in the recognition of operating lease assets of approximately $393,000 and liabilities of approximately $405,000 as of January 1,2019. The average remaining years for our lease are 1.56 years as of March 31, 2019.

 

The following table provides the changes in the Corporation’s operating lease right-of-use assets for the three months ended March 31, 2019:

 

 

(amounts in dollars)

 

Operation

lease

right-of-use

asset

 

Balances as of January 1, 2019

 

$393,110

 

Accumulated amortization

 

 

(64,081)

 

 

 

 

 

Balances as of March 31, 2019

 

$329,029

 

 

The following table provides the changes in the Corporation’s operating lease liability for the three months ended March 31, 2019:

 

(amounts in dollars)

 

Lease liability

due within

one year

 

 

Lease liability

long-term

 

 

Total

 

Balances as of January 1, 2019

 

$86,061

 

 

$318,716

 

 

$404,777

 

Repayments of lease liability

 

 

(20,626)

 

 

(39,408)

 

 

(60,034)

Other

 

 

 

 

 

 

1,760

 

 

 

1760

 

Balances as of March 31, 2019

 

$65,435

 

 

$281,068

 

 

$346,503

 

 

 
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NYMOX PHARMACEUTICAL CORPORATION

Notes to Unaudited Consolidated Financial Statements

(in US dollars)

  

The total future commitment payment amount for above lease is $364,862 comparing an outstanding lease liability of $346,503 as of March 31, 2019. The difference is due to interest expense.

 

In addition to the lease commitment, the corporation has a future insurance premium payment of $16,670 as of March, 31,2019.

 

6. Related Party Transactions:

 

The only transactions we have with related parties are compensation arrangements for current compensation, share based compensation and compensation under options for our officers and directors

 

Executive officers and directors participate in the Corporation’s stock option plan. Certain Executive officers are covered under the Corporation’s health plan.

 

Key management personnel compensation is comprised of:

 

 

 

Three months

 

 

 

ended March 31,

 

 

 

2019

 

 

2018

 

Salaries

 

$-

 

 

$-

 

Short-term employee benefits

 

 

556

 

 

 

486

 

Stock-based compensation

 

 

677,434

 

 

 

1,006,805

 

 

 

$677,990

 

 

$1,007,291

 

 

Total honorariums to the independent directors of the Corporation for participating in Board and Committee meetings were nil for the period ended March 31, 2019 and 2018, respectively.

 

Our Chief Financial Officer receives no compensation as an individual and receives no deferred or incentive compensation. We do make payments based on contract for services rendered to a corporation controlled by him. Amounts paid under this arrangement were $120,000 for the period ended March 31, 2019 and $nil for the period ended March 31, 2018, respectively.

 

Our Corporate Legal Counsel receives no compensation as an individual and receives no deferred or incentive compensation. We do make payments based on contract for services rendered to a corporation controlled by him. Amounts paid under this arrangement were $72,498 for the period ended March 31, 2019 and $48,376 for the period ended March 31, 2018, respectively.

 

6.

Subsequent events:

 

The corporation has determined there are no subsequent events except below:

 

On April 2, 2019, the corporation granted three of independent directors and two senior officers total 360,000 stock option as compensation to their service. The stock option exercise price is $2.08 with a ten year term, and total valued at $680,290.

 

 

16