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Financial Statements
Independent Auditors' Report
For the Years Ended December 31, 2022 and 2021
| Independent Auditors' Report | 1 |
| Balance Sheets | 2 |
| Statements of Comprehensive Loss | 3 |
| Statement of Stockholders' Deficit | 4 |
| Statements of Cash Flows | 5 |
| Notes to Financial Statements | 6 |
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Opinion on the Financial
We have audited the accompanying
balance sheets of Proteomedix AG (the "Company") as of December 31, 2022 and 2021, the related statements of loss and comprehensive
loss, stockholders' deficit, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes
(collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted
in the United States of America.
Going Concern Uncertainty
The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the
Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.
These financial statements are
the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the
standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| Zurich, Switzerland, February 14, 2024 | ||
| BDO AG | ||
| /s/ Christoph Tschumi | /s/ Marc Furlato | |
| We have served as the Company's auditor since 2023. |
As of December 31, 2022 and 2021
| ASSETS | 2022 | 2021 | ||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 470,156 | $ | 2,546,801 | ||||
| Accounts receivable | 236,683 | 96,211 | ||||||
| Inventory | 95,810 | 110,584 | ||||||
| Prepaid expenses and other current assets | 26,280 | 85,632 | ||||||
| Total current assets | 828,929 | 2,839,228 | ||||||
| Property and equipment | 40,130 | 54,003 | ||||||
| Right of use asset | 202,739 | - | ||||||
| Total assets | $ | 1,071,798 | $ | 2,893,231 | ||||
| LIABILITIES AND STOCHOLDERS' DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Convertible notes payable | $ | 4,241,942 | $ | - | ||||
| Accrued expenses | 510,578 | 504,766 | ||||||
| Operating lease liability, current | 67,546 | - | ||||||
| Total current liabilities | 4,820,066 | 504,766 | ||||||
| Non-current liabilities | ||||||||
| Convertible notes payable | 1,406,289 | 5,726,368 | ||||||
| Note payable | 108,176 | 164,509 | ||||||
| Pension benefit obligation | 393,640 | 798,476 | ||||||
| Operating lease liability | 135,193 | - | ||||||
| Total liabilities | 6,863,364 | 7,194,119 | ||||||
| Commitments and contingencies (Note 5) | ||||||||
| Stockholders' deficit | ||||||||
| Common stock par value 1 CHF, authorized 590,951 shares, outstanding 412,572 and 412,572 as of December 31, 2022 and 2021, respectively | 466,555 | 466,555 | ||||||
| Additional paid-in-capital | 20,377,905 | 20,000,916 | ||||||
| Accumulated comprehensive (loss) income | 606,583 | 431,677 | ||||||
| Accumulated deficit | (27,242,609 | ) | (25,200,036 | ) | ||||
| Total stockholders' deficit | (5,791,566 | ) | (4,300,888 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 1,071,798 | $ | 2,893,231 |
The accompanying notes are an integral part of
these financial statements.
Statements of Comprehensive Loss
For the years ended December 31, 2022 and
| 2022 | 2021 | |||||||
| Revenue | $ | 392,460 | $ | 140,600 | ||||
| Cost of goods sold | 48,429 | 31,977 | ||||||
| Gross profit | 344,031 | 108,623 | ||||||
| Operating expenses | ||||||||
| Marketing and business development | 240,298 | 200,096 | ||||||
| Research and development | 393,274 | 312,586 | ||||||
| General and administrative | 1,671,960 | 1,766,843 | ||||||
| Depreciation | 17,492 | 36,866 | ||||||
| Total operating expenses | 2,323,024 | 2,316,391 | ||||||
| Loss from operations | (1,978,993 | ) | (2,207,768 | ) | ||||
| Other income (expense) | ||||||||
| Interest expense | (63,580 | ) | (41,536 | ) | ||||
| Total other income (expenses) | (63,580 | ) | (41,536 | ) | ||||
| Net loss before provision for income taxes | (2,042,573 | ) | (2,249,304 | ) | ||||
| Provision for income taxes | - | - | ||||||
| Net loss | (2,042,573 | ) | (2,249,304 | ) | ||||
| Other comprehensive (loss) income | ||||||||
| Benefit pension obligation changes | 179,892 | 397,709 | ||||||
| Foreign currency translation adjustment | (4,986 | ) | 32,837 | |||||
| Total other comprehensive (loss) income | 174,906 | 430,546 | ||||||
| Comprehensive loss | $ | (1,867,667 | ) | $ | (1,818,758 | ) |
The accompanying notes are an integral
part of these financial statements.
Statement of Stockholders' Deficit
For the years ended December 31, 2022 and
| Additional | Accumulated | Total | ||||||||||||||||||||||
| Common Stock | Paid In | Comprehensive | Accumulated | Stockholders' | ||||||||||||||||||||
| Shares | Par Value | Capital | (Loss) Income | Deficit | Deficit | |||||||||||||||||||
| Balance at December 31, 2020 | 412,572 | $ | 466,555 | $ | 19,928,271 | $ | 1,131 | $ | (22,950,732 | ) | $ | (2,554,775 | ) | |||||||||||
| Change in pension benefit obligation | - | - | - | 397,709 | - | 397,709 | ||||||||||||||||||
| Stock based compensation | - | - | 72,645 | - | - | 72,645 | ||||||||||||||||||
| FX translation adjustment | - | - | - | 32,837 | - | 32,837 | ||||||||||||||||||
| Net loss | - | - | - | - | (2,249,304 | ) | (2,249,304 | ) | ||||||||||||||||
| Balance at December 31, 2021 | 412,572 | 466,555 | 20,000,916 | 431,677 | (25,200,036 | ) | (4,300,888 | ) | ||||||||||||||||
| Change in pension benefit obligation | - | - | - | 179,892 | - | 179,892 | ||||||||||||||||||
| Stock based compensation | - | - | 376,989 | - | - | 376,989 | ||||||||||||||||||
| FX translation adjustment | - | - | - | (4,986 | ) | - | (4,986 | ) | ||||||||||||||||
| Net loss | - | - | - | - | (2,042,573 | ) | (2,042,573 | ) | ||||||||||||||||
| Balance at December 31, 2022 | 412,572 | $ | 466,555 | $ | 20,377,905 | $ | 606,583 | $ | (27,242,609 | ) | $ | (5,791,566 | ) |
The accompanying notes are an integral part of
these financial statements.
Statements of Cash Flows
For the years ended December 31, 2022 and
| 2022 | 2021 | |||||||
| Operating activities | ||||||||
| Net Loss | $ | (2,042,573 | ) | $ | (2,249,304 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and Amortization | 17,492 | 36,866 | ||||||
| Stock based compensation | 376,989 | 72,645 | ||||||
| Net periodic benefit cost | (224,944 | ) | (40,881 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (140,472 | ) | (32,009 | ) | ||||
| Inventory | 14,774 | 19,522 | ||||||
| Prepaid expenses and other current assets | 59,352 | (16,734 | ) | |||||
| Accrued expenses | 5,812 | (29,661 | ) | |||||
| Cash used in operating activities | (1,933,570 | ) | (2,239,556 | ) | ||||
| Investing activities: | ||||||||
| Cash used in investing activities | - | - | ||||||
| Financing activities: | ||||||||
| Issuance (repayment) of notes payable | (50,000 | ) | - | |||||
| Issuance of convertible notes payable | - | 3,277,170 | ||||||
| Cash (used in) provided by financing activities | (50,000 | ) | 3,277,170 | |||||
| FX effect on cash | (93,075 | ) | (26,488 | ) | ||||
| Net change in cash and cash equivalents | (2,076,645 | ) | 1,011,126 | |||||
| Cash and cash equivalents-Beginning of the year | 2,546,801 | 1,535,675 | ||||||
| Cash and cash equivalents-End of year | $ | 470,156 | $ | 2,546,801 | ||||
| Supplemental cash flow disclosures | ||||||||
| Interest paid | $ | 2,621 | $ | 2,735 | ||||
| Income taxes paid | $ | - | $ | - |
The accompanying notes are an integral
part of these financial statements.
Notes to Financial Statements
Note 1 - Organization and Nature of Business
Proteomedix AG (the "Company") is
a healthcare company whose mission is to transform prostate cancer diagnosis. Proteomedix has identified novel biomarker signatures with
utility in prostate cancer diagnosis, prognosis and therapy management. The lead product Proclarix is a blood-based
prostate cancer test panel and risk score currently available in Europe and expected to be available in the U.S. in the near future. Proteomedix
is located in the Bio-Technopark of Zurich-Schlieren, Switzerland.
On December 15, 2023, the Company was acquired
by Onconetix, Inc. (formerly Blue Water Biotech, Inc) (the "Parent"). The Parent issued stock of its common stock in exchange
for 100% of the outstanding voting equity of the Company. See Note 10.
Note 2 - Going Concern
The accompanying financial statements have been
prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and
satisfaction of liabilities in the normal course of business. For the year ended December 31, 2022, the Company had an accumulated deficit
of approximately $27,200,000, a net loss of approximately $2,042,000, and net cash used in operating activities of approximately $1,934,000,
with approximately $392,000 in revenue recognized, and a lack of profitable operational history. These matters, among others, raise substantial
doubt about the Company's ability to continue as a going concern for the 12 months following the issuance of these financial statements.
While the Company is attempting to generate greater
revenues, the Company's cash position may not be significant enough to support the Company's daily operations. Management
intends to raise additional funds from its Parent to sustain operations until such time as revenues are sufficient to support the Company's
operations. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide
the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate
revenues and the ability of its Parent to provide additional funds, there can be no assurances to that effect. The ability of the Company
to continue as a going concern is dependent upon the Company's ability to further implement its business plan and obtaining additional
funding from its Parent as needed.
Note 3 - Summary of Significant Accounting
Basis of Presentation
The Company's financial statements are prepared
in accordance with U.S. Generally Accepted Accounting Principles ("U.S GAAP"), which require the recognition and disclosure
of foreign currency translation adjustments resulting from the translation of financial statements denominated in currencies other than
The functional currency of the Company is the
Swiss Franc. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing
at the date of the transaction. The resulting translation adjustments are recorded as a separate component of accumulated other comprehensive
of financial statements in conformity with U.S. GAAP 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 expenses during the reporting periods. The most significant estimates in the Company's financial statements
relate to valuation of inventory, stock-based compensation, pension benefit obligations, and the valuation allowance of deferred tax assets
resulting from net operating losses. These estimates and assumptions are based on current facts, historical experience and various other
factors believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ
materially and adversely from these estimates. To the extent there are material differences between the estimates and actual results,
the Company's future results of operations will be affected.
Notes to Financial Statements