Report of Foreign Issuer Pursuant to Rule 13a-16 or 15d-16 (6-k)
July 07 2022 - 4:35PM
Edgar (US Regulatory)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
July 1, 2022
Commission File Number: 001-36686
Forward Pharma A/S
Østergade 24A, 1st Floor
1100 Copenhagen K, Denmark
Indicate by check mark whether the registrant files or will file annual reports under cover
of Form 20-F or Form 40-F.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): ☐
Item 1. Receipt of Tax Audit Report
On July 1, 2022, Forward Pharma GmbH (“FP GmbH”), a subsidiary of Forward Pharma
A/S (the “Company” and, collectively with FP GmbH, the “Group”), received a tax audit report from the German tax
authorities in connection with FP GmbH’s 2017 German income tax filing (the “Report”) after the conclusion of the tax
audit covering the years 2013 through 2017. The Report supersedes the preliminary audit assessment received on May 21, 2021 and asserts
that FP GmbH’s taxable income in 2017 was 271.6 million EUR ($283.1 million based on the July 1, 2022 exchange rate), which is an
increase of taxable income of 252.9 million EUR ($263.6 million based on the July 1, 2022 exchange rate) compared to FP GmbH’s 2017
tax filing position. FP GmbH’s effective tax rate in Germany is approximately 32%.
The Group continues to disagree with the positions taken by the German tax authorities. Additional
taxes will not become due until one month after the tax levy (based on the Report) is received. Management anticipates that the tax levy
will be issued by the German tax authorities imminently. Based on the Report, it is estimated that the ultimate net impact of any tax
levy by the German tax authorities on the Group’s liquidity could be up to 21.3 million EUR ($22.2 million based on the July 1,
2022 exchange rate) before applicable interest and/or penalties. This estimate is subject to several assumptions, including the Group’s
ability to obtain relief from double taxation.
Based on recent discussions with the Group’s tax advisors, the Company’s management
continues to believe that it is probable (i.e., more likely than not) that FP GmbH will not be required to pay additional taxes to the
German tax authorities upon the conclusion of a Mutual Agreement Procedure (“MAP”) and/or litigation against the German tax
authorities. Even in a case where FP GmbH would have to pay additional taxes in Germany, the Company expects that the overall net cash
tax impact to the Group would in whole or in part be mitigated by a reduction in taxes in Denmark after conclusion of a MAP between Denmark
and Germany. Such determination is inherently subjective and, if it is incorrect, then FP GmbH may be subject to significant additional
tax levies that could have a material negative effect on the Group’s consolidated financial position, operating results and cash
holdings. FP GmbH does not have sufficient liquidity or any other assets enabling it to pay a material tax levy upon issuance by the German
tax authorities.
In order to put the Group in the best position to defend the disputed tax filing position and
in anticipation of the receipt of the tax levy from the German tax authorities, FP GmbH submitted an application to request that the German
courts allow FP GmbH to enter into debtor-in-possession (“DIP”) proceedings on April 28, 2022. DIP proceedings have been opened
in a German insolvency court (the “Court”) and are in the preliminary stage (“Preliminary DIP Proceedings”) until
the Court approves FP GmbH’s application to enter into DIP proceedings. While in Preliminary DIP Proceedings, FP GmbH’s management
continues to oversee the day-to-day operations of FP GmbH and retains the ability to initiate and manage a MAP and/or litigation against
the German tax authorities, while a Court-appointed supervisor monitors the activities of FP GmbH.
Management is unable to predict when or if the Court will approve FP GmbH’s application
to enter DIP proceedings. If FP GmbH is unable to remain in Preliminary DIP Proceedings and enters into (ordinary) DIP proceedings, FP
GmbH’s management – under the supervision of a Court-appointed administrator – continues to oversee the day-to-day operations
of FP GmbH; if DIP proceedings are rejected, FP GmbH would likely enter into ordinary insolvency proceedings, at which time a Court-appointed
insolvency administrator would take over the day-to-day operations of FP GmbH and management would no longer control FP GmbH. The loss
of control of FP GmbH could negatively impact management’s ability to defend FP GmbH’s 2017 tax filing position and dispute
the allegations made by the German tax authorities in the Report. Subject to the Court’s determination regarding entry into DIP
proceedings, management of FP GmbH intends to take all available steps to avoid entering into ordinary insolvency proceedings.
In the event FP GmbH is required to pay a material tax levy upon the conclusion of the tax dispute
in Germany, FP GmbH would likely be deemed insolvent under German insolvency law, which would force FP GmbH into insolvency proceedings.
Insolvency proceedings would have a material negative effect on FP GmbH and the Company’s consolidated financial position, operating
results, and cash holdings. The time period to ultimately resolve the tax dispute with the German tax authorities, including the completion
of a MAP and/or litigation against the German tax authorities, is currently unknown; however, management does not believe the dispute
will conclude within the next twelve months and reaching a conclusion could require three years or more.
For more information regarding the tax audit in Germany, DIP and MAP proceedings, please see
the Company’s Annual Report on Form 20-F for the year ended December 31, 2021 and the consolidated financial statements included
therein.
Certain statements in
this Report on Form 6-K may constitute “forward-looking statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include, but are not limited to, statements which contain language such as “believe,”
“expect,” “anticipate,” “estimate,” “would,” “may,” “plan,” and
“potential.” Forward-looking statements are predictions only, which involve known and unknown risks, uncertainties and other
factors that may cause actual results to be materially different from those expressed in such statements. Many such risks, uncertainties
and other factors are taken into account as part of the Company’s assumptions underlying these forward-looking statements and include,
among others, risks related to the following: the Group’s ability to defend its tax filing positions; the timing for receipt of
the final tax levy; the timing for ultimate resolution of the tax dispute; the impact of bankruptcy proceedings on the Company and FP
GmbH; the ability of FP GmbH to avoid insolvency; the outcome of the DIP proceedings; the sufficiency of the Company’s cash resources;
the estimated impact of the final tax assessment on the Company’s liquidity; the availability of relief to avoid double taxation;
and the likelihood that FP GmbH will be required to pay additional taxes. Certain of these and other risk factors are identified and described
in detail in certain of the Company’s filings with the United States Securities and Exchange Commission, including its Annual
Report on Form 20-F for the year ended December 31, 2021.
SIGNATURE
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.
|
FORWARD PHARMA A/S |
|
|
|
|
|
|
Date: July 7, 2022 |
By: |
/s/ Claus Bo Svendsen |
|
|
Name: Claus Bo Svendsen |
|
|
Title: Chief Executive Officer |
Forward Pharma AS (NASDAQ:FWP)
Historical Stock Chart
From Jun 2024 to Jul 2024
Forward Pharma AS (NASDAQ:FWP)
Historical Stock Chart
From Jul 2023 to Jul 2024