UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______ to _______

Commission File Number: 000-53223

MARIZYME, ~~INC~~INC..

(Exact name of registrant as specified in its charter)

Nevada		82-5464863
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification No.)

~~555 Heritage Drive~~, ~~Suite 205~~, ~~Jupiter~~, ~~Florida33458~~

555 Heritage Drive, Suite 205, Jupiter, Florida33458
(Address of principal executive offices) (Zip Code)

~~(925)400-3123~~

~~(Registrant’s telephone number)~~

(925)400-3123

(Registrant’s telephone number)

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 ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

☐	Large accelerated filer	☐	Accelerated filer
☒	Non-accelerated filer	☒	Smaller reporting company
		☒☐	Emerging growth company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Not applicable.

As of November ~~22, 2021,~~14, 2022, the registrant had ~~35,928,188~~40,528,191 shares of common stock ($0.001 par value) outstanding.

MARIZYME, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

ITEM 1.	Unaudited Condensed Consolidated Financial Statements ~~(unaudited)~~	3
	Unaudited Condensed Consolidated Balance Sheets	3
	Unaudited Condensed Consolidated Statements of Operations	4
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity	5
	Unaudited Condensed Consolidated Statements of Cash Flows	76
	Notes to Unaudited Condensed Consolidated Financial Statements	87
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1920
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	2631
ITEM 4.	Controls and Procedures	2631

PART II - OTHER INFORMATION		32

ITEM 1.	Legal Proceedings	2832
ITEM 1A.	Risk Factors	2833
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2833
ITEM 3.	Defaults Upon Senior Securities	2833
ITEM 4.	Mine Safety Disclosures	2833
ITEM 5.	Other Information	2833
ITEM 6.	Exhibits	2934
	Signatures	3135

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARIZYME, INC.

Condensed Consolidated Balance Sheets

	September 30, 2021			December 31, 2020			September 30, 2022			December 31, 2021
	(Unaudited)						(unaudited)
ASSETS:
Current
Cash	$	16,673		$	2,902,762		$	1,182,248		$	4,072,339
Accounts receivable		96,291			40,585			54,225			8,650
Prepaid expense		35,000			106,390
Other receivables								14,134			41,307
Prepaid expenses								839,818			257,169
Inventory		15,390			56,340			251,187			22,353
Total current assets		163,354			3,106,077			2,341,612			4,401,818
Non-current
Property, plant and equipment, net		1,273			7,122			12,613			12,817
Operating lease right-of-use assets, net		1,163,159			1,317,830			1,576,445			1,158,776
Intangible assets, net		46,385,121			42,278,211			52,235,313			52,866,192
Prepaid royalties, non-current		340,969			344,321			339,091			339,091
Deposits		30,000			30,000			30,000			30,000
Goodwill		5,416,000			-			7,190,656			7,190,656
Total non-current assets		53,336,522			43,977,484			61,384,118			61,597,532
Total assets	$	53,499,876		$	47,083,561		$	63,725,730		$	65,999,350

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current
Accounts payable and accrued expenses	$	1,396,945		$	478,103		$	848,345		$	1,596,147
Note payable								213,563			127,798
Due to related parties		638,530			-			123,266			1,132,634
Operating lease obligations		260,106			243,292			420,913			277,142
Total current liabilities		2,295,581			721,395			1,606,087			3,133,721
Non-current
Operating lease obligations, net of current potion		941,732			1,074,538
Convertible notes, net of debt discount		179,457			-
Operating lease obligations, net of current portion								1,155,532			881,634
Note payable, net of current portion								-			469,252
Convertible notes								1,648,795			26,065
Derivative liabilities		391,648			-			4,923,725			2,485,346
Contingent liabilities		9,454,000			-			13,444,000			11,313,000
Total non-current liabilities		10,966,837			1,074,538			21,172,052			15,175,297
Total liabilities		13,262,418			1,795,933			22,778,139			18,309,018

Commitments and contingencies (Note 12)		-			-
Commitments and contingencies (Note 10)								-			-

Stockholders’ equity:
Preferred stock, $0.001 par value, 25,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020		-			-
Common stock, par value $0.001, 75,000,000 shares authorized, 35,928,188 shares issued and outstanding as of September 30, 2021 and December 31, 2020		35,928			35,928
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021								-			-
Common stock, par value $0.001, 75,000,000 shares authorized, issued and outstanding shares - 40,828,188 and 40,528,188 at September 30, 2022 and December 31, 2021, respectively								40,828			40,528
Additional paid-in capital		82,509,957			82,077,334			103,331,833			95,473,367
Accumulated deficit		(42,308,427	)		(36,825,634	)		(62,425,070	)		(47,823,563	)
Total stockholders’ equity		40,237,458			45,287,628			40,947,591			47,690,332
Total liabilities and stockholders’ equity	$	53,499,876		$	47,083,561		$	63,725,730		$	65,999,350

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MARIZYME, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

													2022			2021			2022			2021
	Three Months Ended						Nine Months Ended						Three Months Ended September 30,						Nine Months Ended September 30,
	September 30,						September 30,						2022			2021			2022			2021
	2021			2020			2021			2020
Revenue	$	37,215		$	124,985		$	271,952		$	124,985		$	76,012		$	37,215		$	137,821		$	271,952

Operating expenses:
Direct costs of revenue		18,356			25,714			168,419			25,714
Professional fees (includes related party amounts of $90,000, $90,000, $270,000, and $90,000, respectively)		556,254			170,753			1,808,093			494,295
Direct cost of revenue														15,503			18,356			26,528			168,419
Professional fees (includes related party amounts of $155,000 $90,000, $422,000, and $270,000 respectively)														303,574			460,378			1,721,479			1,445,004
Salary expenses		617,826			433,318			2,478,357			433,318			330,221			517,192			2,147,967			2,084,430
Research and development														708,220			241,748			3,297,986			877,936
Stock-based compensation		64,074			1,107,085			626,449			1,674,200			271,517			64,074			1,664,191			626,449
Depreciation and amortization														210,361			1,425			631,083			5,849
Other general and administrative expenses		536,483			453,158			1,071,017			468,782			469,656			489,820			1,478,726			944,248
Total operating expenses		1,792,993			2,190,028			6,152,335			3,096,309			2,309,052			1,792,993			10,967,960			6,152,335
Total operating loss		(1,755,778	)		(2,065,043	)		(5,880,383	)		(2,971,324	)	$	(2,233,040	)	$	(1,755,778	)	$	(10,830,139	)	$	(5,880,383	)

Other income (expense):
Other income (expense)
Interest and accretion expenses		(70,221	)		-			(74,410	)		-			(810,598	)		(70,221	)		(1,640,368	)		(74,410	)
Change in fair value of contingent liabilities		194,000			-			472,000			-			1,491,000			194,000			(2,131,000	)		472,000
Total other income		123,779			-			397,590			-
Total other income (expense)														680,402			123,779			(3,771,368	)		397,590

Net loss	$	(1,631,999	)	$	(2,065,043	)	$	(5,482,793	)	$	(2,971,324	)	$	(1,552,638	)	$	(1,631,999	)	$	(14,601,507	)	$	(5,482,793	)

Net loss per share – basic and diluted	$	(0.05	)	$	(0.07	)	$	(0.15	)	$	(0.13	)
Loss per share – basic and diluted													$	(0.04	)	$	(0.05	)	$	(0.36	)	$	(0.15	)

Weighted average number of shares of common stock outstanding – basic and diluted		35,928,188			29,288,226			35,928,188			23,161,329			40,828,188			35,928,188			40,762,254			35,928,188

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

MARIZYME, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2022 and 2021

(Unaudited)

Common Stock Additional Paid-in Accumulated
Shares Amount Capital Deficit Total
Balance, December 31, 2020 35,928,188 $ 35,928 $ 82,077,334 - $ (36,825,634 ) $ 45,287,628
Sale of common stock
Sale of common stock, shares
Issuance of common stock for acquisition
Issuance of common stock for acquisition, shares
Issuance of warrants for acquisition
Issuance of warrants for services
Common shares issued in lieu of AP
Common shares issued in lieu of AP , shares
Exercise of options
Exercise of options, shares
Common stock issued for services
Common stock issued for services, shares
Stock-based compensation - - 334,385 - 334,385
Issuance of common stock for services
Issuance of common stock for services, shares
Warrants issued
Net loss - - - - (2,211,866 ) (2,211,866 )
Balance, March 31, 2021 35,928,188 35,928 82,411,719 - (39,037,500 ) 43,410,147
Stock-based compensation - - 194,657 - 194,657
Adjustment of warrants value in connection with finalizing the business combination - - (732,300 ) - (732,300 )
Net loss - - - - (1,638,928 ) (1,638,928 )
Balance, June 30, 2021 35,928,188 35,928 81,874,076 - (40,676,428 ) 41,233,576
Stock-based compensation - - 64,074 - 64,074
Warrants issued in connection with convertible notes - - 571,807 - 571,807
Net loss - - - - (1,631,999 ) (1,631,999 )
Balance, September 30, 2021 35,928,188 $ 35,928 $ 82,509,957 - $ (42,308,427 ) $ 40,237,458
Shares Amount Capital Deficit Equity
Common Stock Additional Paid-in Accumulated Total Stockholders’
Shares Amount Capital Deficit Equity

Balance, December 31, 2020 35,928,188 $ 35,928 $ 82,077,334 $ (36,825,634 ) $ 45,287,628
Stock-based compensation expense - - 334,385 - 334,385
Net loss - restated - - - (2,211,866 ) (2,211,866 )
Balance, March 31, 2021 (unaudited) 35,928,188 35,928 82,411,719 (39,037,500 ) 43,410,147
Stock-based compensation expense - - 194,657 - 194,657
Adjustment of warrants value in connection with finalizing the business combination - - (732,300 ) - (732,300 )
Net loss - restated - - - (1,638,928 ) (1,638,928 )
Balance, June 30, 2021 (unaudited) 35,928,188 35,928 81,874,076 (40,676,428 ) 41,233,576
Stock-based compensation expense - - 64,074 - 64,074
Warrants issued in connection with convertible notes - - 571,807 - 571,807
Net loss - - - (1,631,999 ) (1,631,999 )
Balance, September 30, 2021(unaudited) 35,928,188 $ 35,928 $ 82,509,957 $ (42,308,427 ) $ 40,237,458
Common Stock Additional Paid-in Accumulated Total Stockholders’
Shares Amount Capital Deficit Equity

Balance, December 31, 2021 40,528,188 $ 40,528 $ 95,473,367 $ (47,823,563 ) $ 47,690,332
Stock-based compensation expense - - 716,432 - 716,432
Issuance of warrants - - 2,969,916 - 2,969,916
Exercise of warrants 300,000 300 2,700 - 3,000
Net loss - - - (6,124,885 ) (6,124,885 )
Balance, March 31, 2022 (unaudited) 40,828,188 $ 40,828 99,162,415 (53,948,448 ) 45,254,795
Stock-based compensation expense - - 676,242 - 676,242
Issuance of warrants - - 2,341,659 - 2,341,659
Net loss - - - (6,923,984 ) (6,923,984 )
Balance, June 30, 2022 (unaudited) 40,828,188 40,828 102,180,316 (60,872,432 ) 41,348,712
Beginning balance, value 40,828,188 $ 40,828 $ 102,180,316 $ (60,872,432 ) $ 41,348,712
Stock-based compensation expense - - 271,517 - 271,517
Issuance of warrants - - 880,000 - 880,000
Net loss - - - (1,552,638 ) (1,552,638 )
Balance, September 30, 2022 (unaudited) 40,828,188 $ 40,828 $ 103,331,833 $ (62,425,070 ) $ 40,947,591
Ending balance, value 40,828,188 $ 40,828 $ 103,331,833 $ (62,425,070 ) $ 40,947,591

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

MARIZYME, INC.
Condensed Consolidated Statements of ~~Stockholders’ Equity~~Cash Flows
(Unaudited)

Additional
Paid-in Treasury Accumulated
Shares Amount Capital Stock Deficit Total
Balance, December 31, 2019 19,858,939 $ 19,859 $ 59,319,594 $ (16,000 ) $ (30,980,581 ) $ 28,342,872
Common stock issued for services 125,000 125 124,875 - - 125,000
Stock-based compensation - - 221,058 - - 221,058
Net loss - - - - (471,370 ) (471,370 )
Balance, March 31, 2020 19,983,939 19,984 59,665,527 (16,000 ) (31,451,951 ) 28,217,560
Common shares issued in lieu of AP 195,000 195 184,665 - - 184,860
Exercise of options 5,000 5 5,045 - 5,050
Stock-based compensation - - 221,057 - - 221,057
Net loss - - - - (434,911 ) (434,911 )
Balance, June 30, 2020 20,183,939 20,184 60,076,294 (16,000 ) (31,886,862 ) 28,193,616
Sale of common stock 5,600,192 5,600 6,269,464 - - 6,275,064
Issuance of common stock for acquisition 10,000,000 10,000 12,490,000 - - 12,500,000
Issuance of warrants for acquisition - - 1,932,300 - - 1,932,300
Issuance of warrants for services - - 253,749 - - 253,749
Stock-based compensation - - 802,926 - - 802,926
Issuance of common stock for services 50,000 50 62,450 - - 62,500
Exercise of options for common stock 54,057 54 59,399 - - 59,453
Net loss - - - - (2,065,043 ) (2,065,043 )
Balance, September 30, 2020 35,888,188 $ 35,888 $ 81,946,582 $ (16,000 ) $ (33,951,905 ) $ 48,014,565
2022 2021
Nine Months Ended September 30,
2022 2021

Cash flows from operating activities:
Net loss $ (14,601,507 ) $ (5,482,793 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 631,083 (76,013 )
Stock-based compensation 1,664,191 593,116
Stock-based compensation - restricted common stock - 33,333
Interest and accretion on convertible notes and notes payable 1,637,951 74,410
Issuance of warrants for services 1,850,533 -
Change in fair value of contingent liabilities 2,131,000 (472,000 )
Change in operating assets and liabilities:
Accounts and other receivables (18,402 ) (55,706 )
Prepaid expenses (582,649 ) 38,057
Inventory (228,834 ) 40,950
Accounts payable and accrued expenses (740,034 ) 721,078
Due to related parties (1,009,368 ) 272,530
Net cash used in operating activities (9,266,036 ) (4,313,038 )

Cash flows from financing activities:
Proceeds from promissory notes, net of issuance cost 6,500,743 1,060,949
Proceeds from promissory notes, due to related parties - 366,000
Repayment of notes payable (127,798 ) -
Proceeds from exercise of warrants 3,000 -
Net cash provided by financing activities 6,375,945 1,426,949

Net change in cash (2,890,091 ) (2,886,089 )

Cash at beginning of period 4,072,339 2,902,762

Cash at end of period $ 1,182,248 $ 16,673

Supplemental disclosure of cash flow information:
Cash paid for interest $ - $ -
Cash paid for taxes $ - $ -

Non-cash investing and financing activities:
Derivative liabilities and debt discount issued in connection with convertible notes $ 2,438,379 $ 391,648
Warrants and debt discount issued in connection with convertible notes $ 4,341,042 $ 571,807
Settlement of notes payable with convertible notes $ 278,678 $ -
Contingent liabilities $ - $ 9,926,000
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6
~~MARIZYME, INC.~~
~~Condensed Consolidated Statements of Cash Flows~~
~~(Unaudited)~~

Nine Months Ended September 30,
2021 2020

Cash flows from operating activities:
Net loss $ (5,482,793 ) $ (2,971,324 )
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization (76,013 ) 342,583
Stock-based compensation 593,116 1,420,451
Stock-based compensation - restricted common stock 33,333 -
Interest and accretion 74,410 -
Issuance of warrants for services - 253,749
Change in fair value of contingent liabilities (472,000 ) -
Change in operating assets and liabilities:
Accounts receivable (55,706 ) (93,010 )
Prepaid expense 38,057 (62,487 )
Inventory 40,950 21,500
Accounts payable and accrued expenses 721,078 140,233
Due to related parties 272,530 -
Net cash used in operating activities (4,313,038 ) (948,305 )

Cash flows used in investing activities:
Purchase of intangible assets - (130,333 )
Net cash used in investing activities - (130,333 )

Cash flows from financing activities:
Proceeds from promissory notes due to related parties 366,000 -
Proceeds from convertible notes, net of issuance cost 1,060,949 -
Shares issued for cash, net of offering costs - 6,275,064
Net cash provided by financing activities 1,426,949 6,275,064

Net (decrease)/ increase in cash (2,886,089 ) 5,196,426

Cash at beginning of period 2,902,762 90

Cash at end of period $ 16,673 $ 5,196,516

Non-cash investing and financing activities:
Derivative liabilities $ 391,648 $ -
Contingent liabilities $ 9,926,000 $ -
Warrants issued in connection with convertible notes $ 571,807 -
Issuance of common stock in lieu of payables $ - $ 261,453
Issuance of common stock in connection with business combination $ - $ 12,500,000
Issuance of warrants in connection with business combination $ - $ 1,932,300
~~The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.~~
7

MARIZYME, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

NOTE 1 – DESCRIPTION OF BUSINESS

~~Maryzime,~~Marizyme, Inc. (the “Company” or “Marizyme”) is a Nevada corporation originally incorporated on March 20, 2007, under the name SWAV Enterprises, Ltd. On September 6, 2010, the Company name was changed to GBS Enterprises Inc. and from 2010 to September 2018 the Company was in the software products and advisory services business for email and instant messaging applications. The Company divested that business between December 2016 and September 2018 and focused on the acquisition of life science technologies.

On March 21, 2018, the Company’s name was changed to Marizyme, Inc., to reflect the new life sciences focus. Marizyme’s common stock is currently quoted on the OTC Markets’ QB tier under the symbol “MRZM”.

NOTE 2 – GOING CONCERN

The Company’s unaudited condensed consolidated financial statements are prepared using ~~principals~~accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The Company, since its inception, has incurred recurring operating losses and negative cash flows from operations and has an accumulated deficit of $~~42,308,427~~ 62,425,070at September 30, ~~2021.~~2022 (December 31, 2021 - $47,823,563). Additionally, the Company has ~~negative~~ working capital of ~~$2,132,227~~$735,525 (December 31, 2021 - $1,268,097) and ~~$16,673~~$1,182,248 (December 31, 2021 - $4,072,339) of cash on ~~hand.~~hand, which may not be sufficient to fund operations for the next twelve months. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Under the going concern assumption, an entity is ordinarily viewed as continuing its business for the foreseeable future with neither the intention or necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to the laws and regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business.

The ability of the Company to continue as a going concern is dependent upon its ability to continue to successfully develop its intangible assets, receive ~~an approval~~a clearance from the U.S. ~~Federal~~Food and Drug Administration (the “FDA”) to extend the selling of the products into the U.S. market which will allow the Company to attain profitable operations.

During the next twelve months, the Company’s foreseeable cash requirements will relate to continuous operations of its business, maintaining its good standing and making the required filing with the Securities and Exchange Commission (the “SEC”), and the payment of expenses associated with its product development. The Company may experience a cash shortfall and be required to raise additional capital. Management intends to raise additional funds by way of a private or public ~~offering.~~offerings. While the Company believes in the viability of its strategy to continue to develop and expand its products and generate sufficient revenue and in its ability to raise 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 generate sufficient revenue and its ability to raise additional funds by way of a public or private offering.

The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

NOTE 3 -– SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the consolidated accounts of the Company and its wholly owned ~~subsidiaries,~~subsidiaries: My Health Logic Inc (“My Health Logic” or “MHL”), Somahlution, Inc. (“Somahlution”), Somaceutica, Inc. (“Somaceutica”), (collectively – “Somah”), and Marizyme Sciences, Inc. (“Marizyme Sciences”). All intercompany transactions have been eliminated on consolidation.
7

The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted ~~accounting principles~~ in the ~~U.S.~~United States of America (“U.S. GAAP”). The unaudited condensed consolidated financial statements presented in this Quarterly Report should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K filed with the SEC on ~~April 15, 2021~~March 31, 2022 (the ~~“2020~~“2021 Form 10-K”). The condensed consolidated balance sheet as of December 31, ~~2020~~2021 was derived from audited consolidated financial statements included in the ~~2020~~2021 Form 10-K but does not include all disclosures required by U.S. GAAP for complete financial statements. The Company’s significant accounting policies are described in Note 31 to those consolidated financial statements.

Interim results may not be indicative of the results that may be expected for the full ~~year.~~year or any future periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these interim financial statements. The unaudited condensed consolidated financial statements reflect all adjustments which in the opinion of management are necessary ~~for a fair statement of~~to fairly present the results of operations, financial condition, cash flows and stockholders’ equity for the periods ~~presented.~~indicated. Except as otherwise disclosed, all such adjustments are of a normal recurring nature.

8
Deferred Offering Cost
The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process capital stock financings as deferred offering costs until such financings are consummated. After consummation of the financing, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should a planned equity financing be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the statements of operations. The Company had no deferred offering costs as of December 31, 2021. As of September 30, 2022, the Company had recorded deferred offering costs of $271,240 reported as a prepaid expense on the accompanying balance sheets.

Use of Estimates

The preparation of the ~~unaudited~~ condensed consolidated financial statements in accordance with U.S. GAAP requires management to make use of certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Significant estimates are related to the allocation of the purchase price in a business combination to the underlying assets and liabilities, recoverability of long-term assets including intangible assets and goodwill, amortization expense, valuation of warrants, stock-based compensation, derivative liabilities, contingent liabilities and deferred tax valuations.

Fair Value Measurements

The Company uses the fair value hierarchy to measure the value of its financial instruments. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The basis for fair value measurements for each level within the hierarchy is described below:

● ● Level 1 – Quoted prices for identical assets or liabilities in active markets.
● ● Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable.
● ● Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible ~~as well as~~and considers counterparty credit risk in its assessment of fair value.
The carrying amounts of certain ~~cash~~accounts and ~~cash equivalents, accounts receivable,~~other receivables, accounts payable and accrued expenses, notes payable, and amounts due to related parties approximate fair value due to the short-term nature of these instruments.

The fair value of lease obligations is determined using discounted cash flows based on the expected amounts and timing of the cash flows discounted using a market rate of interest adjusted for appropriate credit risk.

The contingent liabilities assumed on the acquisition of Somah ~~(Note 4)~~in 2020 consist of present values of royalty payments, performance warrants and pediatric voucher warrants, future rare pediatric voucher sales, and liquidation preference. Management measured these contingencies in accordance with Level 3 of the fair value hierarchy.

8
i. The performance warrants and pediatric vouchers warrants liabilities were valued using a Monte Carlo simulation model utilizing the following weighted average assumptions: risk free rate of 1.19%, expected volatility of 69.62%, expected dividend of $0, and expected life of ~~6.21 years~~5.96. years. For the three and nine months ended September 30, ~~2021,~~2022, changes in these assumptions resulted in $~~574,000~~1,999,000 decrease and $~~1,870,000~~ 899,000~~decrease~~ increase in fair value of these liabilities, respectively. At September 30, ~~2021~~2022, the fair market value of performance warrants and pediatric vouchers warrants liabilities was $~~2,899,000~~5,251,000 (December 31, 2021 – $4,352,000).

ii. The present value of royalty payments was measured using the scenario-based methodology. In assessing the value attributed to the royalty payments, the estimated future cash flows were discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the revenue from net sales of the product. The cash flows derived from the Company’s fifteen-year strategic plan are based on managements’ expectations of market growth, industry reports and trends, and past performances. These projections are inherently uncertain due to the evolving impact of the COVID-19 pandemic. The discounted cash flow model included projections surrounding revenue, discount rates, and growth rates. The discount rates used to calculate the present value of royalty payments reflect specific risks of the Company and market conditions and the mid-range was estimated at 20.6%. For the three and nine months ended September 30, ~~2021,~~2022, changes in these assumptions resulted in $~~380,000~~516,000 and $~~1,396,000~~ 1,288,000increase in fair value of ~~these liabilities,~~this liability, respectively. At September 30, ~~2021~~2022, the fair market value of royalty payments was $~~3,582,000~~5,276,000 (December 31, 2021 – $3,988,000).

iii. Rare pediatric voucher sales liability was valued based on the scenario-based methodology where the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset – ~~20.6%~~20.6%. For the three and nine months ended September 30, ~~2021,~~2022, changes in these assumptions resulted in $~~Nil~~8,000 and $~~2,000~~ 56,000~~increase~~ decrease in fair value of this liability, respectively. At September 30, ~~2021~~2022, the fair market value of rare pediatric ~~vouchers~~voucher sales liability was $1,094,000 (December 31, 2021 – $1,150,000).

iv. The present value of liquidation preference liability, included in the contingent consideration, was determined using the Black-Scholes option pricing method and represents the fair value of the maximum payment amount according to the ~~Agreement.~~agreement. The following assumptions were used in the Black-Scholes option pricing model: risk free rate of 0.21%, expected volatility of 78.93%, expected dividend of $0, and expected life of 5years. No changes to the fair value of liquidation preference liability were recorded in the three and nine months ended September 30, ~~2021.~~2022. At September 30, ~~2021~~2022, the fair market value of liquidation preference was $1,823,000 (December 31, 2021 – $1,823,000).

The derivative liabilities ~~consisted~~consist of optional and automatic conversion features and the share redemption feature attached to the convertible notes, issued pursuant to the Unit Purchase Agreement (Note 9)7).

9
The Company has no financial assets measured at fair value on a recurring basis. None of the Company’s non-financial assets or liabilities are recorded at fair value on a non-recurring basis. No transfers between levels have occurred during the periods presented.

Marizyme measures the following financial instruments at fair value on a recurring basis. As atof September 30, 2022, and December 31, 2021, the fair values of these financial instruments were as follows:

SCHEDULE OF FAIR VALUES OF FINANCIAL INSTRUMENTS
Fair Value Hierarchy Fair Value Hierarchy
September 30, 2021 Level 1 Level 2 Level 3 December 31, 2020
September 30, 2022 Level 1 Level 2 Level 3
Liabilities
Derivative liabilities $ - $ - $ 391,648 $ - $ - $ - $ 4,923,725
Contingent liabilities - - 9,454,000 - - - 13,444,000
Total $ - $ - $ 9,845,648 $ - $ - $ - $ 18,367,725
Fair Value Hierarchy
December 31, 2021 Level 1 Level 2 Level 3
Liabilities
Derivative liabilities $ - $ - $ 2,485,346
Contingent liabilities - - 11,313,000
Total $ - $ - $ 13,798,346
9

The following table provides a ~~rollforward~~roll forward of all liabilities measured at fair value using Level 3 significant unobservable inputs:

RECONCILIATION OF LIABILITIES AT FAIR VALUE
September 30, 2021 Contingent Liabilities
Balance at December 31, 2020 -
Derivative liabilities $ 391,648
Initial valuation of contingent liabilities in connection with the Somah acquisition¹ 9,926,000
Change in fair value of contingent liabilities (472,000 )
Balance at September 30, 2021 $ 9,845,648
Derivative and Contingent Liabilities
Balance at December 31, 2021 $ 13,798,346
Change in fair value of contingent liabilities 2,131,000
Derivative liabilities issued pursuant to Unit Purchase Agreement 2,438,379
Balance at September 30, 2022 $ 18,367,725
Research and Development Expenses and Accruals
¹ ~~Measured as at Somah acquisition date of July 31, 2020, see Note 4.~~
All research and development costs are expensed in the period incurred and consist primarily of salaries, payroll taxes, and employee benefits, for individuals involved in research and development efforts, external research and development costs incurred under agreements with contract research organizations and consultants to conduct and support the Company’s ongoing clinical trials of Duragraft, and costs related to manufacturing Duragraft for clinical trials. The Company has entered into various research and development contracts with various organizations. Payments of these activities are based on the terms of the individual agreements which matches to the pattern of costs incurred. Payments made in advance are reflected in the accompanying balance sheets as prepaid expenses. The Company records accruals for estimated costs incurred for ongoing research and development activities. When evaluating the adequacy of the accrued liabilities, the Company analyzes progress of the services, including the phase or completion of events, invoices received and contracted costs. Significant judgments and estimates may be required in determining the prepaid or accrued balances at the end of any reporting period. Actual results could differ from the Company’s estimates.

~~Intangible Assets~~Stock-Based Compensation
Stock-based compensation expense for employees and ~~Goodwill~~directors is recognized in the Condensed Consolidated Statements of Operations based on estimated amounts, including the grant date fair value and the expected service period. For stock options, the Company estimates the grant date fair value using a Black-Scholes valuation model, which requires the use of multiple subjective inputs including estimated future volatility, expected forfeitures and the expected term of the awards. The Company estimate the expected future volatility based on the stock’s historical price volatility. The stock’s future volatility may differ from the estimated volatility at the grant date. For restricted stock unit (“RSU”) equity awards, the Company estimates the grant date fair value using it’s closing stock price on the date of grant. The Company recognizes the effect of forfeitures in compensation expense when the forfeitures occur. The estimated forfeiture rates may differ from actual forfeiture rates which would affect the amount of expense recognized during the period. The Company recognizes the value of the awards over the awards’ requisite service or performance periods. The requisite service period is generally the time over which share-based awards vest.
Comparative Information

~~Intangible assets are recorded at cost less accumulated amortization~~To conform with the current period’s financial statement presentation, the Company reclassified certain professional fees, salaries, rent and ~~accumulated impairment losses. Intangible assets acquired as a result~~repairs and maintenance expenses related to research and development activities for the three and nine months ended September 30, 2021, into the research and development expenses line item on the Condensed Consolidated Statements of ~~an acquisition or in a business combination are measured at fair value at~~Operations. Such reclassifications were not considered material and did not have any effect on the ~~acquisition date.~~Company’s net loss for the three- and nine- month periods ended September 30, 2021.

The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the estimated useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimates being accounted for on a prospective basis.NOTE 4 – ACQUISITION
Goodwill represents the excess of the purchase price paid for the acquisition of subsidiaries over the fair value of the net assets acquired. Following the initial recognition, goodwill is measured at cost less any accumulated impairment losses.

~~In-Process Research and Development~~
The Company evaluates whether acquired intangible assets are a business under applicable accounting standards. Additionally, the Company evaluates whether the acquired assets have a future alternative use. Intangible assets that do not have future alternative use are considered acquired in-process research and development. When the acquired in-process research and development assets are not part of a business combination, the value of the consideration paid is expensed on the acquisition date. Future costs to develop these assets are recorded to research and development expense as they are incurred.
~~Impairment of Long-Lived Assets~~
The Company reviews long-lived assets, including property, plant and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying value of the impaired asset over its respective fair value. ~~NaN~~ ~~impairment losses have been recorded through September 30, 2021.~~
~~Segment Reporting~~
Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions on how to allocate resources and assess performance. The Company views its operations and manages its business as 1 ~~operating segment.~~
~~Net Loss Per Share~~
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods. Dilutive common stock equivalents are comprised of unvested common stock, options and warrants. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities (warrants, stock options, and common shares subject to repurchase) would be antidilutive.
~~Recently Adopted Accounting Standards~~My Health Logic Inc.

~~There are no recently adopted accounting standards and recent accounting standards not yet adopted that~~On November 1, 2021, Marizyme entered into a definitive arrangement agreement with Health Logic Interactive Inc. (“HLII”) pursuant to which the Company ~~believes will have~~would acquire all of the issued and outstanding common shares of My Health Logic, a ~~material impact on~~wholly owned subsidiary of HLII, in exchange for common shares of Marizyme (the “Marizyme Shares”).
Marizyme is dedicated to the ~~Company’s unaudited condensed consolidated financial statements.~~acceleration, development and commercialization of medical technologies that promote patient health, therefore a strategic decision was made to acquire My Health Logic, which has provided Marizyme with access to MHL’s lab-on-chip technology platform and its patient-centric, digital point-of-care diagnostic device, MATLOC 1; and allowed for further growth and development of Marizyme’s portfolio of medical products.

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~~Recently Issued Accounting Pronouncements~~
The Company assesses the adoption impacts of recently issued accounting standards by the Financial Accounting Standards Board or other standard setting bodies on the Company’s financial statements as well as material updates to previous assessments, if any, from the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. There were no new material accounting standards issued in the nine months ended September 30, 2021, that impacted the Company.
~~COVID-19~~
Since December 31, 2019, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and physical distancing, have caused material disruptions to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.
Marizyme continues to maintain business continuity during the COVID-19 pandemic and takes its cues from the U.S. government and public health officials to keep employees and business partners safe and healthy. Although the financial results for three and nine months ended September 30, 2021 were not significantly impacted by COVID-19, Marizyme experienced decrease in sales due to a slow-down in the product manufacturing. During 2021, Marizyme’s business partners were focused on addressing specific manufacturing needs of the U.S. government in battling COVID-19 pandemic. Additionally, during 2021, demand for elective surgeries have decreased due to overloaded medical systems and potential risks related to patients’ recovery during the pandemic.
The Company cannot predict the impact of the progression of COVID-19 on future results or the Company’s ability to raise capital due to a variety of factors, including but not limited to the continued good health of Company employees, the ability of suppliers to continue to operate and deliver, the ability of the Company to maintain operations, any further government and/or public actions taken in response to the pandemic and ultimately the length of the pandemic.
~~NOTE 4 –~~ ~~ACQUISITIONS~~
~~DuraGraft®~~

On December ~~15, 2019,~~22, 2021, Marizyme received the ~~Company entered into a contingent asset purchase agreement (the “Agreement”), as amended on March 31, 2020~~necessary regulatory, court and ~~May 29, 2020, with Somahlution, LLC, Somahlution, Inc., and Somaceutica, LLC, companies duly organized under the laws of Delaware (collectively, “Somah” or “Seller”)~~stock exchange approval to acquire all of the assets and none of the liabilities of Somah (the “Acquisition”), including DuraGraft®, a one-time intraoperative vascular graft treatment for use in vascular and bypass surgeries that maintains endothelial function and structure, and other related properties.
On July 31, 2020, the Company and Somah entered into Amendment No. 3 to the Agreement and the Agreement was finalized. Pursuant to the terms of this amendment, it was agreed that, as part of the Acquisition, the Company would acquire the outstanding capital stock of Somahlution, Inc., held by Somahlution, LLC, rather than the assets of Somahlution, Inc. This change to the Agreement was made to accommodate the European Union (“EU”) requirements with respect to the future manufacturing under Somahlution, Inc. of CE marked products for sale in the EU. In Amendment No. 3, the Company agreed to assume certain payables of Somah related to clinical and medical expenses. It was agreed that the payments on the assumed debts would be recorded as a prepaid royalty against future royalties. As of September 30, 2021 and December 31, 2020, prepaid royalties were $~~340,969~~ ~~and $344,321, respectively, and were recorded as a non-current asset.~~
~~Pursuant to the Agreement and in consideration of the outstanding capital stock of Somahlution, Inc., the Company agreed to issue to Somah:~~
● ~~10 ,000,000~~ ~~restricted shares of common stock of the Company;~~
● ~~Warrants to purchase~~ ~~3,000,000~~ ~~restricted common shares of the Company with a strike price of $5.00~~ ~~per common share and a term of~~ ~~five years~~;
● ~~The Company, on a pro rata basis, shall grant the Seller the following contingent consideration upon receiving the FDA final approval and insurance reimbursement approval on the product:~~
○ ~~Grant of performance warrants for~~ ~~4,000,000~~ restricted common shares of the Company, with a strike price determined based on the average of the closing prices of the common shares for the 30 calendar days following the date of the public announcement of FDA approval;
○ ~~Royalties to be paid on all net sales of the product acquired from Somah of~~ 6~~% on the first $~~50 ~~million of international net sales (and~~ 5~~% on the first $~~50 ~~million of U.S. net sales),~~ 4~~% for greater than $~~50 ~~million up to $200~~ ~~million, and~~ 2~~% for greater than $200~~ ~~million;~~
○ Payment of 10% of cash value of the rare pediatric voucher sales following the FDA approval and subsequent sale to an unaffiliated third party of a rare pediatric voucher based on Somah’s DuraGraft product;
○ ~~Grant of rare pediatric voucher warrants to purchase an aggregate of~~ ~~250,000~~ commons shares with a term of five years and a strike price determined based on the average of the closing prices of the common shares for the 30 calendar days following the date of the public announcement of FDA approval, and
○ ~~Liquidation preference, up to a maximum of $~~20 million upon the sale by the Company of all or substantially all of the assets relating to the Somah products. Upon the sale of either or both of the DuraGraft or Somah derived solid organ transplant products, the Company will pay 15% of the net sale proceeds towards the liquidation preference maximum amount.
11
~~On July 30, 2020, the Company completed~~complete the acquisition of ~~Somah (the “Somah Transaction”). The~~MHL resulting in a total of 4,600,000 Common Shares issued to HLII; 230,000 of these shares are being held and administered by Marizyme to be released to HLII, less any amounts claimed by Marizyme or its affiliates for any losses arising out of certain breaches as set out in the acquisition agreement. This resulted in HLII holding approximately 11.35% of ~~Somah provides~~ the ~~Company with access to DuraGraft~~total number of issued and ~~other related intangible assets, which upon approval by FDA, will further the Company’s continued growth~~outstanding Marizyme Shares (based on 40,528,188 Marizyme Shares issued and ~~international-wide product rollout.~~outstanding immediately after closing).

In accordance with ~~ASC~~Accounting Standards Codification (“ASC”) 805-10 the substance of a transaction constitutes a business combination as the business of ~~Somah~~My Health Logic Inc. meets the definition of a business under the standard. Accordingly, the transaction was accounted for in accordance with the acquisition method of accounting, and the assets acquired, and the liabilities assumed have been recorded at their respective estimated fair values as of the acquisition date. The purchase price iswas based on management’s estimate of fair value of the common shares issued.
According to ASC 805 the acquirer has a year from the date of acquisition to recognize measurement period adjustments. While Marizyme does not expect the carrying amount, the fair value, and ~~warrants issued as well as contingent consideration and liquidation preference given up. The final allocation~~the estimated useful life of ~~the purchase price consideration to the~~identifiable assets ~~acquired~~ and liabilities ~~assumed has been completed~~acquired, provided below, to change, the tax basis related to these intangible assets is not final and ~~finalized.~~remains preliminary at September 30, 2022.

Details of the carrying amount and the fair value of identifiable assets and liabilities acquired and purchase consideration paid ~~are~~were as follows:

SCHEDULE OF PRELIMINARY ALLOCATION OF CONSIDERATION
Consideration
Consideration given up
Common shares $ 12,500,000 $ 7,774,000
Warrants 1,200,000
Contingent consideration¹ 9,926,000
Total consideration $ 23,626,000
Total consideration given up $ 7,774,000

Fair value of identifiable assets acquired, and liabilities assumed
Net working capital $ 30,908
Net working deficit $ (613,156 )
Property, plant, and equipment 9,092 12,500
Intangible assets 18,170,000 6,600,000
Goodwill 5,416,000 1,774,656
Total identifiable assets $ 23,626,000 $ 7,774,000

1 Contingent consideration, for the purposes of the final allocation of the purchase price consideration, was measured as at the date of Somah acquisition – July 31, 2020. During the nine months ended September 30, 2021, the fair market value of the contingent liabilities, measured in accordance with Level 3 of the fair value hierarchy, has decreased by $~~472,000~~ ~~(Note 3).~~
As a result of the My Health Logic acquisition, the Company acquired its lab-on-chip technology platform, its patient-centric, digital point-of-care diagnostic device - MATLOC 1 as well as patents rights and trademarks relating to it. In addition, the Company acquired ownership rights to MATLOC patents issued in the European Union, Canada, and the United States.

The intangible assets acquired include:

● ~~DuraGraft patent,~~Trade name, with estimated remaining economic life of 1314 years,
● ~~“Distribution relationships”~~Software, which enables customers to track and update their test results, with economic life of 15 years, and
● Biotechnology intangible ~~asset~~assets related to ~~DuraGraft products,~~lab-on-chip technology, with estimated remaining economic life of ~~10 years, and~~17
● ~~In-process research and development intangible asset – “Cyto Protectant Life Sciences” with indefinite economic life.~~ years.
As part of the acquisition, Marizyme assumed an aggregate of $468,137 in notes payable, the notes were unsecured, bore interest at a rate of 9% per annum with no maturity date. For the three and nine months ended September 30, 2022, Marizyme recognized $4,538 and $15,124 of interest expense on the notes payable, respectively (September 30, 2021 - $Nil and $Nil, respectively). The Company settled an aggregate of $278,678 of these notes payable as part of Unit Purchase Agreement issuances during the nine months ended September 30, 2022 (Note 7). As of September 30, 2022, balance of the remaining note payable was $213,563 (December 31, 2021 - $469,252).

Goodwill is attributed to the workforce and profitability of the acquired business and is not deductible for tax purposes. A residual method methodology was used to estimate the fair market value goodwill. A pre-tax discount rate based on weighted average cost of capital of ~~33.8~~37.5% was used in the fair value assumptions for the assembled workforce acquired.

Pro-forma revenue, net ~~income,~~income/(loss), and earnings per share are not presented for this acquisition as they are not material.

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NOTE 5 – LEASES

On December 11, 2020, the Company entered into a 5.5 - year lease agreement for approximately 10,300 square feet of administrative office and laboratories space, which commenced in December 2020 at a monthly rent of approximately $~~10,817~~10,800, increasing by 2.5% annually beginning in the second year of the lease until the end of the term. Additionally, pursuant to the agreement, the Company ~~will~~would pay approximately $12,000 per month in operating expenses.
Effective April 1, 2022, the Company amended its lease agreement for administrative office and laboratories to add additional 3,053 square feet of space. The monthly cost of total expended lease space is approximately $15,260 increasing to $15,641 in 2023 and will continue to increase by 2.5% annually thereafter until the end of the term. The monthly operating expenses for total expanded premises have increased from approximately $12,000 to $17,500 per month. The term of the lease remains unchanged. As atof September 30, ~~2021,~~2022, the remaining lease term was ~~4.67~~3.83 ~~years~~.years. The lease had been classified as an operating lease.

The assets and liabilities from the lease were recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the discount rate of 3.95%, which is the average commercial interest available at the time.

The total rent expense for the three and nine months ended September 30, 2022 was $103,291 and $324,544, respectively (September 30, 2021 ~~and 2020 was approximately~~- $77,357 and $~~Nil~~168,769, ~~respectively. The total rent expense for the nine months ended September 30, 2021 and 2020 was approximately $168,769~~ ~~and $Nil, respectively.~~respectively).

The following table summarizes supplemental balance sheet information related to the operating lease as of September 30, ~~2021~~2022, and December 31, ~~2020.~~2021:

SCHEDULE OF RIGHT-OF-USE ASSET AND RELATED LEASE ~~LIABILITY~~LIABILITIES
September 30, 2021 December 31, 2020 September 30, 2022 December 31, 2021
Right-of-use asset $ 1,163,159 $ 1,317,830
Right-of-use assets $ 1,576,445 $ 1,158,776

Operating lease liabilities, current $ 260,106 $ 243,292 $ 420,913 $ 277,142
Operating lease liabilities, non-current 941,732 1,074,538 1,155,532 881,634
Total operating lease liabilities $ 1,201,838 $ 1,317,830 $ 1,576,445 $ 1,158,776

As atof September 30, ~~2021,~~2022, the maturities of the lease liabilities for the periods ~~ended~~ending December 31 ~~were~~are as follows:

SCHEDULE OF MATURITIES OF THE LEASE LIABILITIES

2021 $ 52,249
2022 277,142
2023 277,142
2024 277,142
2025 277,142
Thereafter 130,950
Total lease payments 1,291,767
Total lease payments 1,291,767
Less: present value discount (89,929 )
Total $ 1,201,838
~~NOTE 6 –~~ ~~PROPERTY, PLANT AND EQUIPMENT, NET~~
~~Property, plant and equipment, summarized by major category, stated at cost, less accumulated depreciation at September 30, 2021 and December 31, 2020 consisted of the following:~~
~~SCHEDULE OF PROPERTY PLANT & EQUIPMENT~~
September 30, 2021 December 31, 2020
Furniture and equipment $ 701 $ 701
Computer related 7,220 7,220
Machinery and equipment 1,171 1,171
Total $ 9,092 $ 9,092
Less: accumulated amortization (7,819 ) (1,970 )
Property, plant and equipment, net $ 1,273 $ 7,122
~~Depreciation expense for the three months ended September 30, 2021 and 2020 was $1,425~~ ~~and $1,313, respectively, and for the nine months ended September 30, 2021 and 2020 was $5,849~~ ~~and $1,313, respectively.~~

2022 $ 103,291
2023 423,495
2024 434,082
2025 444,934
2026 266,034
Total lease payments 1,671,836
Less: Present value discount (95,391 )
Total $ 1,576,445

NOTE 76 – INTANGIBLE ASSETS

Krillase

As part of the asset acquisition of ACB Holding AB, Reg. No. 559119-5762, completed on September 12, 2018, Marizyme acquired all rights, titles, and interest in the Krillase technology, a group of intangible assets worth $28,600,000. Krillase is a naturally occurring enzyme that acts to break protein bonds and has applications in wound debridement, ~~would~~wound healing, dental care and thrombosis. The useful lives of the intangible assets are based on the life of the patent and related technology. The patents and related technology for Krillase have not been amortized since the acquisition, as they have not yet been put into operations. The Company expects to put Krillase into operations and establish the first stream of revenue from the sale of the product in 2023.
The Company anticipates Krillase being placed into service in 2023. The Company has evaluated this asset for impairment and has determined that due to COVID-19 delaying the next steps for roll out of this technology, along with the associated value of the research and development, the status of the clinical trials, and other pertinent proprietary technology, there is no impairment required.
13
DuraGraft

As part of Somah acquisition ~~(Note 4),~~in 2020, Marizyme purchased $18,170,000 of intangible assets related to the DuraGraft® technology.

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~~SUMMARY~~
My Health Logic
As part of My Health Logic acquisition (see Note 4), Marizyme purchased MHL’s lab-on-chip technology platform and its patient-centric, digital point-of-care diagnostic device, MATLOC, fair valued at an aggregate amount of $6,600,000.
SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE
September 30, 2021 December 31, 2020 September 30, 2022 December 31, 2021
Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Krillase intangible assets $ 28,600,000 $ - $ 28,600,000 $ 28,600,000 $ - $ 28,600,000 $ 28,600,000 $ - $ 28,600,000 $ 28,600,000 $ - $ 28,600,000
Patents in process 122,745 - 122,745 122,745 - 122,745
DuraGraft patent 5,256,000 (471,691 ) 4,784,309 14,147,729 (589,489 ) 13,558,240 5,256,000 (875,999 ) 4,380,001 5,256,000 (572,768 ) 4,683,232
Distributor relationship 308,000 (35,933 ) 272,067 - - -
IPR&D - Cyto Protectant Life Sciences 12,606,000 - 12,606,000 - - -
Patents in process 122,745 - 122,745 119,971 - 119,971
Duragraft - Distributor relationship 308,000 (66,733 ) 241,267 308,000 (43,633 ) 264,367
Duragraft IPR&D - Cyto Protectant Life Sciences 12,606,000 - 12,606,000 12,606,000 - 12,606,000
My Health Logic - Trade name 450,000 (24,911 ) 425,089 450,000 (804 ) 449,196
My Health Logic - Biotechnology 4,600,000 (209,706 ) 4,390,294 4,600,000 (6,765 ) 4,593,235
My Health Logic - Software 1,550,000 (80,083 ) 1,469,917 1,550,000 (2,583 ) 1,547,417
Total intangibles $ 46,892,745 $ (507,624 ) $ 46,385,121 $ 42,867,700 $ (589,489 ) $ 42,278,211 $ 53,492,745 $ (1,257,432 ) $ 52,235,313 $ 53,492,745 $ (626,553 ) $ 52,866,192
SCHEDULE OF GOODWILL

Goodwill DuraGraft My Health Logic Total
Balance, December 31, 2020 $ - $ - $ -
Additions on acquisitions 5,416,000 1,774,656 7,190,656
Impairment - -
Balance, December 31, 2021 and September 30, 2022 $ 5,416,000 $ 1,774,656 $ 7,190,656
The following changes to the Company’s intangible assets had taken place in the periods indicated:
SCHEDULE OF INTANGIBLE ASSETS
Balance, December 31, 2019 $ 28,613,000
Acquired in asset purchase agreement 14,147,729
Additions 106,971
Amortization expense (589,489 )
Balance, December 31, 2020 42,278,211
Acquired in Somah Transaction¹ 4,022,271
Additions 2,775
Amortization expense¹ 81,864
Balance, September 30, 2021 $ 46,385,121
1 To account for Somah Transaction measurement period adjustments, the Company restated the Quarterly Report on Form 10-Q for the three and six month ended June 30, 2021, originally filed on August 23, 2021. As a result of the restatement, the value of DuraGraft intangibles purchased with the Somah Transaction increased by $~~4,022,271~~ ~~and related overestimated amortization of the intangibles decreased by $898,026~~.
~~The Company has recorded amortization expense of $108,777~~ ~~and $326,331~~ ~~for the three and nine months ended September 30, 2021, respectively and $341,270~~ ~~for the three and nine months ended September 30, 2020.~~
Balance, December 31, 2020 $ 42,278,211
Acquired in Somah Transaction 4,022,271
Acquired in My Health Logic Transaction 6,600,000
Additions 2,775
Amortization expense (37,065 )
Balance, December 31, 2021 $ 52,866,192
Amortization expense (630,879 )
Balance, September 30, 2022 $ 52,235,313

Future amortizations for ~~DuraGraft related~~Duragraft and My Health Logic intangible assets for the next five years will be $~~435,108~~ 841,172for each year from ~~2021~~2023 through ~~2026~~2027 and $~~2,880,836~~ 6,700,706for ~~2027~~2028 and thereafter. Amortization related to the Krillase product and in process research and development will be determined upon the Company achieving commercialization.
~~NOTE 8 –~~ ~~ACCOUNTS PAYABLE AND ACCRUED EXPENSES~~
~~Accounts payable and accrued expenses, summarized by major category, as of September 30, 2021 and December 31, 2020 consists of the following:~~
~~SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES~~
September 30, 2021 December 31, 2020
Trade accounts payable $ 1,117,517 $ 325,830
Accrued expenses 180,846 21,555
Accrued compensation expenses 98,582 130,718
Total accounts payable and accrued expenses $ 1,396,945 $ 478,103

NOTE 97 - CONVERTIBLE PROMISSORY NOTES AND WARRANTS

May 2021 Unit Purchase Agreement
On May 27, 2021, ~~the Company~~Marizyme entered into a Unit Purchase Agreement ~~(“Unit Purchase Agreement”)~~ to sell up to 4,000,000 units (the ‘Units’) at a price per Unit of $2.50. Each Unit is comprised of (i) a convertible promissory note ~~(the “Convertible Note”)~~ convertible into common stock of the Company, ~~at a price per share of $2.50,~~ (ii) a warrant to purchase one share of common stock of the Company (the ‘Class A Warrant’); and (iii) a second warrant to purchase common stock of the Company (the “Class B Warrant”).

In May 2021, the Company issued and sold 29,978 Units at a price of $2.50 per Unit for gross proceeds of $74,945, consisting of ~~Convertible~~ Notes of $74,945, Class A Warrants for the purchase of 29,978 shares of common stock and Class B Warrants for the purchase of 29,978 shares of common stock. The Company incurred related issuance costs of $6,745. which will be amortized over the term of the Notes.
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In July 2021, the Company issued and sold 440,000 Units under the Unit Purchase Program for gross proceeds of $1,100,000. The Units included ~~the Convertible~~ Notes for $1,100,000, Class A Warrants for 440,000 shares of common stock and Class B Warrants for 440,000 shares of common stock. ~~The Company incurred related issuance costs of $99,000~~.

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September 2021 Amended Unit Purchase Agreement
On September 29, 2021, due to a lower common stock price, the Company, with the consent of all Unit holders, amended the May 2021 Unit Agreements. By rescinding their investment, the Unit holders agreed to amend the Unit Purchase Agreement resulted in the following significant changes to the offering:
(i) Decreased the offering price under the Unit Purchase Agreement from $2.50 per Unit to $2.25 per Unit for all future sales under the Unit Purchase Agreement. No proceeds from the initial investment were ~~returned,~~returned.
(ii) Decreased the conversion price from $2.50 per share to $2.25 per share for all current Unit holders and all future investors ~~and~~
(iii) Cancelled all Class A Warrants and Class B Warrants and replaced them with Class C Warrants.
December 2021 Unit Purchase Agreement
On December 21, 2021, the Company entered into a Unit Purchase Agreement (the “December UPA”) to sell up to 9,714,286 Units at a price per unit of $1.75. Each Unit is comprised of (i) a convertible promissory note convertible into common stock of the Company at an initial conversion price of $1.75 and, (ii) a warrant to purchase two shares of Common Stock at an initial purchase price of $2.25 per share (the new Class C Warrant). Under this December UPA, the Company issued and sold 3,438,572 Units at a per unit purchase price of $1.75, for gross proceeds of $6,000,000. Coinciding with this December UPA, the Company also entered into an Exchange Agreement with the existing Unit holders (the December 2021 Exchange Agreements, as further described below).
December 2021 Exchange Agreements
On December 21, 2021, in conjunction with a $6.0 million investment, the Company and the existing Unit holders agreed to exchange the original securities (“Old Securities”) held by the current investors/unit holders for New Securities, consisting of (i) a New Note in the principal amount equal to the original principal amount of the Original Note, plus all accrued interest through the day prior to December 21, 2021, and (ii) a New Warrant (new Class C Warrants) in exchange for the original Class C Warrants. The Exchange of the Original Securities for the New Securities included the following significant changes:
(i) Decreased the offering price under the Unit Purchase Agreement from $2.25 per Unit to $1.75 per Unit. Outstanding principal and accrued interest were used to purchase Units at the new per unit price.
(ii) Extended the maturity date of the notes to December 21, 2023 for all existing notes.
(iii) Decreased the conversion price from $2.25 per share to $1.75 per share for the New Units.
(iv) Original Class C Warrants were exchanged for New Class C warrants with an exercise price of $2.25 per share (unchanged) and a five-year life measured from the date of the Exchange Agreement. The decrease in the Unit price also resulted in additional number of New Class C Warrants being issued in exchange for the Original Class C Warrants due to the 200% warrant coverage provided for in the Unit Purchase Agreement.
The Company determined that the ~~modifications~~terms of ~~Unit Purchase Agreement~~the New Securities were ~~not significant enough to be considered substantial, therefore~~substantially different from the ~~values~~Original Securities, and, as such the exchange of ~~original instruments issued were not adjusted.~~ the Original Securities for the New Securities was accounted for as an extinguishment of debt on December 21, 2021, and the New Securities accounted for as a new debt issuance.
As a result of this substantial modification, the total of ~~469,978~~621,087 Units previously issued were replaced with an aggregate of ~~522,198~~832,022 pro-rata Units.
During the nine months ended September 30, 2022, the Company issued additional 4,180,071 units under the New Securities agreement for the gross proceeds of $7,315,138. Of the total 4,180,071 Units issued: (i) 159,245 Units were issued to settle notes payable assumed on acquisition of My Health Logic (see Note 4), (ii) 22,857 Units were issued to settle accounts payable, and (iii) 171,428 Units were issued in exchange for services rendered to the Company in the nine months ended September 30, 2022.

The Company determined that the optional and automatic conversion feature and the share redemption feature attached to the convertible notes meet the definition of derivative liabilities and that the detachable warrants issued do not meet the definition of a liability and therefore will be accounted for as an equity instrument.

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The ~~initial $571,807~~fair value of the warrants issued in the nine months ended September 30, 2022, of $4,341,042 (December 31, 2021 - $4,299,649) and $~~391,648~~the fair value of derivative liabilities of $2,438,379issued (December 31, 2021 - $2,485,346) have been recorded as debt discount and are being amortized to interest and accretion expense using the effective interest method over the term of the Convertible Notes.
~~SCHEDULE OF CONVERTIBLE NOTES~~
September 30, 2021 December 31, 2020
Convertible notes issued $ 1,174,945 $ -
Issuance costs
(105,745
) -
Debt discount (964,153 ) -
Debt accretion 74,410 -
Convertible notes, net of debt discount $ 179,457 $ -
During the three and nine months ended September 30, ~~2021,~~2022, the Company recognized interest and accretion expense of $~~70,221~~ 805,849and $~~74,410~~1,622,730, respectively (September 30, ~~2020~~2021 - $~~Nil~~ 70,221and $~~Nil~~74,410), respectively) in the condensed consolidated statements of operations.
For the months ended September 30, 2022 and December 31, 2021, the Company had the following convertible notes, net of debt discount outstanding:
SCHEDULE OF CONVERTIBLE NOTES

Convertible Notes, Net of Debt Discount
Balance, December 31, 2021 $ 26,065
Convertible notes issued - new securities 7,315,138
Issuance costs (535,717 )
Debt discount (6,779,421 )
Debt accretion 1,622,730
Balance, September 30, 2022 $ 1,648,795
SCHEDULE OF CONVERTIBLE NOTES NET OF DEBT DISCOUNT
September 30, 2022 December 31, 2021
Convertible notes - total principal $ 14,771,177 $ 7,482,104
Unamortized issuance costs and discount (13,122,382 ) (7,456,039 )
Convertible notes, net of debt discount $ 1,648,795 $ 26,065
Convertible Notes Terms

The Convertible Notes mature in 24 months from the initial closing date and accrue 10%10% of simple interest per annum on the outstanding principal ~~amount.~~amount. The Convertible Notes principal and accrued interest can be converted at any time at the option of the holder at a conversion price of $1.75 per share (previously $2.25 per ~~share (before~~ the ~~modification -~~September 2021 Amendment and originally $2.50 per ~~share)~~the May Unit Purchase Agreement). In the event the Company consummates, while the Convertible Note is outstanding, an equity financing with a gross aggregate amount of securities sold of not less than $10,000,000 (“Qualified Financing”), then all outstanding principal, together with all unpaid accrued interest under the Convertible Notes, shall automatically convert into shares of the equity financing at the lesser of (i) 75% of the cash price per share paid in the financing and the conversion price of $~~2.25~~1.75 per unit. The Convertible Notes are secured by a first priority security interest in all assets of the Company.

New Class C Warrants Terms
~~Class A~~
● ~~Exercise price is the lower of (i) $3.13~~ ~~per share, or (ii) the Automatic Conversion Price (the lesser of (i)~~ 75~~% of the cash price per share paid by the other purchasers of next round securities in the Qualified Financing and (ii) the Conversion Price ($2.50, subject to Customary Antidilution Adjustments).~~
● ~~Exercisable for a period of~~ 5 ~~years from issuance.~~
● ~~Warrant Coverage:~~ ~~100~~%.
~~Class B~~
● ~~Exercise price is $5.00~~ ~~per share,~~
● ~~Exercisable for a period of~~ 5 ~~years from issuance.~~
● ~~Warrant Coverage:~~ ~~100~~%.
~~Class C~~
● Exercise price is the lower of (i) $2.25 per share, or (ii) the Automatic Conversion Price (the lesser of (i) 75% of the cash price per share paid by the other purchasers of next round securities in the Qualified Financing and (ii) the Conversion Price ($2.25, subject to Customary Antidilution Adjustments).
● Exercisable for a period of 5 years from issuance.
● Warrant Coverage: 200%.
NOTE 108 – STOCKHOLDERS’ EQUITY

a) Preferred stock

The Company is authorized to issue a total number of 25,000,000 shares of “blank check” preferred stock with a par value of $0.001. As of September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, there were 0no shares of preferred stock issued or outstanding.
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b) Common stock

The Company is authorized to issue a total number of 75,000,000 shares of common stock with a par value of $0.001.
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On August 1, 2022, the Board of Directors (the “Board”) of Marizyme approved a reverse stock split of the Company’s authorized and outstanding common stock at a ratio of 1-for-4. On August 3, 2022, the Company effected the reverse stock split by filing a Certificate of Change with the Secretary of State of the State of Nevada. As a result, the total number of shares of common stock held by each stockholder was converted automatically into the number of whole shares of common stock equal to the number of issued and outstanding shares of common stock held by such stockholder immediately prior to the reverse stock split, divided by four, subject to rounding of fractional shares. The Company expects that the reverse stock split will be reflected in the trading price of the common stock after the Financial Industry Regulatory Authority, Inc. (“FINRA”) completes its processing of the reverse stock split, which is expected to be the date on which the common stock is listed on the Nasdaq Capital Market tier operated by Nasdaq in the event that the Company’s listing application to Nasdaq is approved.
As a result of the reverse stock split, there are approximately 10,207,212 shares of common stock outstanding, not including the shares of common stock included in the units that the Company expects to issue in this public offering or upon any exercise of the Over-Allotment Option or of any warrants included in the units issued to investors or of the representative’s warrant. No fractional shares have been or will be issued, and no cash or other consideration has been or will be paid. Instead, the Company issued one whole share of the post-reverse stock split common stock to any stockholder who otherwise would have received a fractional share as a result of the reverse stock split. The Company’s existing shareholders’ percentage ownership interests in the Company remains the same following the reverse stock split (subject to rounding of fractional shares).

As of September 30, ~~2021~~2022, and December 31, ~~2020,~~2021, there were 40,828,188 and ~~35,928,188~~40,528,188 shares of common stock issued and ~~outstanding. The company did not issue any common stock during~~outstanding, respectively. During the ~~three and~~ nine months ended September 30, ~~2021.~~2022, the Company issued 300,000 shares of common stock for exercise of warrants.

c) Options

On ~~January 13,~~May 18, 2021, the Company’s Board of Directors approved the ~~Marizyme’s~~Marizyme, Inc. Amended and Restated 2021 Stock Incentive Plan (“SIP”). The SIP incorporates stock options issued prior to ~~January 13,~~May 18, 2021. The SIP authorized 5,300,000 options for issuance. As of September 30, ~~2021,~~2022, there remains ~~1,527,183~~1,024,057 options available for issuance.

During the nine months ended September 30, ~~2021,~~2022, the ~~company~~Company granted ~~732,500~~400,000 (December 31, ~~2020~~2021 – ~~1,340,000~~1,532,500) share purchase options to directors ~~officers, employees, and consultants~~ of the Company. ~~The weighted-average assumptions used to estimate the fair value of stock options using the Black-Scholes option valuation model were as follows:~~
~~SCHEDULE OF SHARE BASED STOCK OPTION VALUATION ASSUMPTIONS~~
2021 2020
Risk-free interest rate 0.69 % 0.93 %
Volatility 232.69 % 241.88 %
Exercise price $ 1.25 $ 1.37
Dividend yield 0 % 0 %
Forfeiture rate 0 % 0 %
Expected life (years) 3 10
~~The Company recognizes forfeitures as they occur.~~

The summary of option activity for the ~~nine~~six months ended September 30, ~~2021~~2022, is as follows:
SCHEDULE OF STOCK OPTION ACTIVITY
Number of
Options Weighted
Average
Exercise Price Weighted
Average
Contractual Life Total Intrinsic
Value Number of Options Weighted Average Exercise Price Weighted Average Contractual Life Total Intrinsic Value
Outstanding at December 31, 2019 2,715,000 $ 1.50 9.48 $ N/A ¹
Granted 1,340,000 1.25
Exercised (254,057 ) 1.02
Outstanding at December 31, 2020 3,800,943 $ 1.36 8.82 $ 123,600 3,800,943 $ 1.36 8.82
Granted 732,500 1.25 1,532,500 1.51
Forfeited (760,626 ) 1.25 (1,682,500 ) 1.36
Outstanding at September 30, 2021 3,772,817 $ 1.37 8.13 $ 97,850
Exercisable at September 30, 2021 3,074,476 $ 1.39 3.77 $ 97,850
Outstanding at December 31, 2021 3,650,943 $ 1.24 8.34 $ 1,951,117
Granted 400,000 2.20 9.69 -
Expired (62,502 ) 1.25 8.08 -
Forfeited (62,498 ) 1.25 8.08 -
Outstanding at September 30, 2022 3,925,943 1.33 7.79 2,344,489
Exercisable at September 30, 2022 3,050,664 $ 1.17 7.35 $ 2,256,558

As of September 30, 2022, the Company had the following options outstanding:
1 ~~Total intrinsic value for stock options outstanding as at December 31, 2019 is not available as it was not disclosed in the previous years filings.~~
SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE
Exercise Price
Number of
Options Outstanding

Number of
Options
Exercisable

Weighted Average
Remaining
Contractual Years
Intrinsic Value
$ 1.01 1,985,943 1,985,943 6.68 $ 1,767,489
1.25 540,000 524,721 8.41 351,000
1.37 200,000 200,000 7.88 106,000
1.75 800,000 280,000 9.16 120,000
2.20 400,000 60,000 9.69 -
$ 1.33 3,925,943 3,050,664 7.79 $ 2,344,489

d) Restricted Share Units
As of September 30, 2022, the Company determined that the following performance condition attached to the restricted share awards granted in the fiscal 2021 were more likely than not to have been achieved:
● The Company will raise financing for the gross proceeds that equal or exceed $5,000,000, and
● The Company will complete valuation reports for acquisition of Somah and My Health Logic.
Therefore, compensation cost of $295,750 for the restricted share awards was recognized in stock-based compensation for the nine months ended September 30, 2022 (September 30, 2021 - $Nil).
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e) Warrants

~~The warrant activity for the periods presented is as follows:~~As of September 30, 2022 and December 31, 2021, there were 20,969,751 and 12,144,838 warrants outstanding, respectively.
~~Schedule of Options Outstanding and Issued~~SCHEDULE OF WARRANTS OUTSTANDING
Number Weighted Average
Exercise Price
December 30, 2019 113,637 $ 3.00
Issued on Somah acquisition (Note 4) 3,000,000 5.00
Issued 280,014 1.38
December 30, 2020 3,393,651 $ 2.13
Issued 1,044,396 2.25
September 30, 2021 4,438,047 $ 2.16
Number
Weighted Average
Price

December 31, 2020 3,393,651 $ 4.63
Issued pursuant to Unit Purchase Agreement 8,521,187 2.25
Issued 230,000 1.39
December 31, 2021 12,144,838 $ 2.90
Issued pursuant to Unit Purchase Agreement 8,360,152 2.25
Issued 878,398 1.16
Exercised (300,000 ) 0.01
Expired (113,637 ) 3.00
September 30, 2022 20,969,751 $ 2.61

During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, the Company issued the following:

On ~~May 27, 2021,~~January 26 and February 14, 2022, in exchange for services of Mr. Richmond, the Company granted him 300,000 warrants to purchase an aggregate 300,000 shares of Marizyme’s common stock at an exercise price of $0.01 per share. The warrants issued had an average term of 5 years, vested immediately, and were fair valued at $568,677 and recorded in salary expense in the condensed consolidated statements of operations for the nine months ended September 30, 2022. On March 15, 2022, Mr. Richmond exercised 300,000 warrants issued to him.
On June 26, 2022, the Company issued additional 347,039 warrants to Mr. Richmond and 231,359 warrants to Univest Securities, LLC to purchase an aggregate 578,398 shares of Marizyme’s common stock at an exercise price of $1.75 per share. The warrants issued had an average term of 5 years, vested immediately, and were fair valued at $1,281,854, of which $769,113 was recorded in salary expense and $512,471 in professional fees in the condensed consolidated statements of operations for the nine months ended September 30, 2022.
In the nine months ended September 30, 2022, pursuant to the Unit Purchase Agreement ~~(Note 9)~~ the Company issued ~~Class A Warrants for the purchase~~an aggregate of ~~29,978~~8,360,152 ~~shares of common stock and~~additional New Class ~~B Warrants for the purchase of~~ ~~29,978~~ ~~shares of common stock. The Class A~~C warrants ~~had a strike~~with an exercise price of $~~3.13~~2.25 ~~per share and a term of~~ ~~five years. The Class B warrants had a strike price of $5.00~~ ~~per~~ share and a term of five years.

~~In July 2021 pursuant to the May Unit Purchase Agreement the Company issued Class A Warrants for~~ ~~440,000~~ ~~shares of common stock and Class B Warrants for~~ ~~440,000~~ ~~shares of common stock.~~
~~On September 29, 2021, pursuant to the modification to the Unit Purchase Agreement as described in Note 9, all Class A and Class B warrants were replaced with an aggregate of~~ ~~1,044,396~~ ~~pro-rata Class C warrants. The warrants have a strike price of~~ ~~2.25~~ ~~per share and a term of~~ ~~five years. The detachable warrants issued were accounted for as an equity instrument and were ascribed the fair market value of $571,807 using the residual fair value allocation method.~~
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~~During the year end December 31, 2020, the Company issued the following:~~
~~On July 31, 2020, the Company completed the Somah Acquisition (Note 4) whereas~~ ~~10,000,000~~ ~~shares of common stock and~~ ~~3,000,000~~ ~~warrants were issued. The warrants have a strike price of $5.00~~ ~~per share and a term of~~ ~~five years. The valuation of the warrants granted was completed in the six months ended June 30, 2021, and the fair market value was determined to be $0.40~~ ~~per share or $1,200,000~~.
~~On September 25, 2020, the Company issued two warrants for services. The warrants were to purchase for~~ ~~168,008~~ ~~and~~ ~~112,006~~ ~~shares with a strike price of $1.375~~ ~~and a term of~~ ~~five years. The fair market value was determined to be $0.9062~~ ~~per share or $152,249~~ ~~and $101,500, respectively, or $253,749, collectively.~~
e)f) Stock-based compensation

During the three and nine ~~month~~months ended September 30, ~~2021,~~2022, the Company recorded $~~64,074~~ 271,517and $~~593,116~~1,664,191~~, respectively,~~ in non-cash share-based compensation in the stock-based compensation line on the condensed consolidated statements of operations, respectively (September 30, ~~2020~~2021 - $~~1,107,085~~ 64,074and $~~1,674,200~~ 626,449respectively). ~~Additionally, the Company recognized $33,333of stock-based compensation on restricted common stock in the nine months ended September 30, 2021.~~
As of September 30, ~~2021, the Company had~~2022, there was $~~652,932~~1,323,100 of total unrecognized compensation cost related to non-vested stock-based compensation ~~expense, which~~awards. The unrecognized compensation cost is expected to be recognized over a ~~weighted-average~~weighted average period of ~~2.44~~1.71 years.

NOTE 119 – RELATED PARTY TRANSACTIONS

As at September 30, ~~2021,~~2022, the Company owed an aggregate of $~~638,530~~123,266 (December 31, ~~2020~~2021 - $~~Nil~~1,132,634) to related parties of the Company. The majority of the balance was owed to Mr. Frank Maresca, a related party and shareholder of the Company, and comprised of the following:

i. ~~During the three months ended September 30, 2021, the Company entered into a promissory note agreement with a related party of the Company, for the total proceeds of $151,000. The note bears no interest, unsecured, and has no terms of repayment.~~

~~ii.~~ ~~During the nine months ended September 30, 2021, the Company entered into another promissory note agreement with a related party and shareholder of the Company, for the total proceeds of $215,000. The note bears no interest, unsecured, and has no terms of repayment.~~
~~iii.~~● The Company received consulting services from ~~a shareholder and consultant of the Company,~~Mr. Maresca and pursuant to the agreement incurred $~~30,000~~ ~~and $270,000~~240,000 in professional expenses in the ~~three and~~ nine months ended September 30, 2022 (September 30, 2021 ~~respectively (three and nine months ended~~- $300,000). At September 30, ~~2020 - $90,000). The related party also incurred $2,530~~ ~~in administrative and general expenses on behalf of the Company. As at September 30, 2021,~~2022, the Company owes ~~the related party~~ a total of $~~272,530~~121,316 for consulting services provided and service-related expenses ~~reimbursement (December 31, 2020 – $Nil~~).incurred by Mr. Maresca during the period ended September 30, 2022.
In the nine months ended September 30, 2022, the Company incurred and settled additional $133,797 in professional services rendered by related parties of the Company and settled $149,178 various expenses incurred by these parties in relation to their services rendered to the Company.

Additionally, as part of the Somah ~~transaction~~acquisition in 2020, ~~(Note 4),~~ the Company recorded a prepaid royalty to the shareholders of Somahlution. The primary beneficial owner is Dr. Vithal Dhaduk, currently ~~the Interim CEO,~~ a director, and significant shareholder of the Company. As at September 30, ~~2021,~~2022, the ~~company~~Company had $~~340,969~~339,091 in prepaid royalties (December 31, ~~2020~~2021 - $~~344,321~~339,091) which had been classified as non-current in the condensed ~~consolidation~~consolidated balance sheets.
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NOTE 1210 – COMMITMENTS AND CONTINGENCIES

Legal Matters

~~The Interim CEO~~On August 19, 2021, Dr. Neil Campbell, former President, Chief Executive Officer and director of ~~Marizyme, Dr. Vithal D. Dhaduk, also,~~the Company, and Bruce Harmon, former Chief Financial Officer and Secretary of the Company, each filed a ~~co-founder of Somahlution, LLC~~Complaint and Demand for Jury Trial against the Company and Insperity Peo Services, L.P., a Delaware limited partnership (“Dhaduk”), was the subject of a complaint filed in the United States District Court, Middle District of Pennsylvania, Civil Action No. 3:17 cv 02243 in December 2017 by Mukeshkkumar B. Patel (“Patel”Insperity”), a ~~former business partner~~joint employer of ~~Dhaduk, which complaint made claims~~Dr. Campbell and Mr. Harmon with the Company under a Client Service Agreement, dated November 30, 2020 (collectively, the “Campbell/Harmon Complaints”). Both Campbell/Harmon Complaints allege that the Company and Insperity violated Section 448.105 of ~~breach~~the Florida Private Whistleblower Act as a result of ~~contract, promissory estoppel~~the constructive terminations of Dr. Campbell and ~~unjust enrichment regarding a Memorandum~~Mr. Harmon after the occurrence of ~~Understanding, dated July 16, 2015, between Patel~~violations federal and ~~Dhaduk (“MOU”). The MOU provided~~state law, including federal securities law, at the Company that ~~Dhaduk would~~exposed Dr. Campbell and Mr. Harmon to civil and criminal forms of liability and that the Company was not addressing to their satisfaction. Both Campbell/Harmon Complaints demand approximately $30,000 - $50,000 in back pay ~~Patel $9,450,000~~and benefits, interest on back pay, front pay and/or lost earning capacity, compensatory damages, costs and attorney’s fees, and such other relief as consideration for Patel’s agreement to, among other things, (i) exit certain legal entities that were purportedly jointly owned by certain affiliates of Dhaduk and Patel, including Somahlution LLC, and (ii) relinquish his ownership interests in such entities. On December 2, 2019, the court ~~granted Patel’s motion for summary judgment on his breach of contract claim.~~
~~The complaint was settled between Dhaduk and Patel in~~deems equitable. In the nine months ended September 30, ~~2021,~~2022, both cases were dismissed with noprejudice and without any financial impact toon the Company.

Contingencies

a. On July 13, 2019, the Company signed a consulting agreement, whereby the individual will receive:

● $30,000 per month through July 13, ~~2022,~~2025,
● Option to purchase 250,000 shares of common stock at a strike price of $1.50, which vest monthly through July 13, 2021. The vesting of these options was accelerated by the Board ~~of Directors~~ on September 2, 2020.
● Royalties based on sales of Krillase assets, equal to 10% of net sales of the product. During the nine months ended September 30, ~~2021,~~2022, no revenues were derived from sales of Krillase product.

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b. As part of the DuraGraft Acquisition, completed on July 31, 2020, ~~(Note 4),~~ the Company entered into the Agreement with Somah stockholders, whereby Marizyme is legally obligated to pay royalties on all net sales for ~~Somahlution,~~Somah, Inc. The royalties associated with the Agreement are calculated as follows:

~~Royalties on U.S. sales equal to:~~
Royalties on U.S. sales equal to:

● 5% on the first $50,000,000 of net sales,
● 4% on net sales of $50,000,001 up to $200,000,000, and
● 2% on net sales over $200,000,000.
Royalties on sales outside of the U.S.:

● 6% on the first $50,000,000 of net sales,
● 4% on net sales of $50,000,001 up to $200,000,000, and
● 2% on net sales over $200,000,000.

~~The royalties are in perpetuity. As at September 30, 2021,~~
The royalties are in perpetuity. During the nine months ended September 30, 2022, the Company had not earned any revenues from Krillase and did not have any sales of the DuraGraft products in U.S., therefore no royalties have been accrued or paid in the period.
Upon receiving FDA clearance for the Duragraft product, the Company will:
● Issue performance warrants with a strike price determined based on the average of the closing prices of the Company’s common stock for the 30 calendar days following the date of the public announcement of the FDA approval; and
● Upon liquidation of all or substantially all of the assets relating to DuraGraft, the Company will pay 15% of the net sale proceeds up to $20 million.
c. The Company has entered into arrangements for office and laboratories spaces. As atof September 30, ~~2021,~~2022, minimum lease payments in relation to lease commitments are payable as described in Note 5.
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Risks and Uncertainties
Starting in late 2019, a novel strain of the coronavirus, or COVID-19, began to rapidly spread around the world and every state in the United States. At this time, there continues to be significant volatility and uncertainty relating to the full extent to which the COVID-19 pandemic and the various responses to it will impact the Company’s business, operations and financial results.
Most states and cities have at various times instituted quarantines, restrictions on travel, “stay at home” rules, social distancing measures and restrictions on the types of businesses that could continue to operate, as well as guidance in response to the pandemic and the need to contain it. As a result, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, including such authorities in Europe, which could result in delays of reviews and approvals. While there have been no specific notices of delay from federal or foreign government authorities, potential interruptions, delays, or changes to the operations of the FDA, or of any foreign authority with which the Company might interact, might impact the approval of any applications the Company plans and will need to file in the future.
In addition, the Company is dependent upon certain contract manufacturers and suppliers and their ability to reliably and efficiently fulfill orders is critical to our business success. The COVID-19 pandemic has impacted and may continue to impact certain manufacturers and suppliers. As a result, the Company has have faced and may continue to face delays or difficulty sourcing certain products, which could negatively affect its business and financial results.
The spread of COVID-19 has also adversely impacted global economic activity and has contributed to significant volatility and negative pressure in financial markets. The pandemic has resulted, and may continue to result, in a significant disruption of global financial markets, which may reduce the Company’s ability to access capital in the future, which could negatively affect its liquidity.
If the COVID-19 pandemic does not continue to slow and the spread of COVID-19 is not contained, the Company’s business operations, including those of contract manufacturers, could be further delayed or interrupted. The duration of any business disruption cannot be reasonably estimated at this time but may materially affect the Company’s ability to operate its business and result in additional costs. It is not possible to reliably measure or quantify the impact COVID-19 has had on the financial results of the Company. If the COVID-19 pandemic continues for an extended period, it may materially adversely impact business operations and, consequently, future financial results.
NOTE 1311 - SUBSEQUENT ~~EVENT~~EVENTS

~~On November 1, 2021, Marizyme entered into~~The Financial Industry Regulatory Authority, Inc. (“FINRA”) Staff has determined that certain securities previously received by each of Univest Securities, LLC (“Univest”) and Bradley Richmond, a ~~definitive arrangement agreement~~registered representative of Univest, in connection with ~~Health Logic Interactive Inc. (“HLII”)~~the following transactions with the Company constituted underwriting compensation in connection with the Company’s anticipated public offering pursuant to ~~which~~FINRA Rule 5110, based on the ~~Company will acquire~~FINRA Staff’s interpretation of such rule: (a) the Company’s Units Private Placement conducted between May 2021 and August 2022, (b) the My Health Logic ~~Inc.,~~acquisition, (c) a ~~wholly-owned subsidiary~~consulting agreement that the Company entered into with Mr. Richmond in September 2020, and (d) a stock option exercisable for 68,437 shares of ~~HLII (the “Transaction”).~~
~~The Transaction will be effected~~common stock received by ~~way~~Mr. Richmond from one of the Company’s former executives in March 2022. Consequently, each of Univest and Mr. Richmond, pursuant to a ~~plan of arrangement under the Business Corporations Act (British Columbia). In connection~~letter agreement entered into with the ~~plan of arrangement, Marizyme will issue~~Company (the “October 2022 Letter Agreement”), has agreed to forego their rights, to an aggregate of ~~4,600,000~~416,604 shares of ~~its~~ common stock beneficially owned by them collectively (including shares of common stock and shares of common stock issuable upon exercise and conversion of warrants, convertible notes and a stock option), which were issued pursuant to ~~HLII, which will be subject to certain terms and restrictions. Upon closing, My Health Logic Inc. will be a wholly-owned subsidiary of Marizyme.~~
~~The acquisition is subject to, among other things,~~ the ~~approval~~transactions listed above, not accept the receipt of the ~~Supreme Court of British Columbia, the approval~~aforementioned securities or undo or dispose of the ~~NEX board~~aforementioned securities. Pursuant to the October 2022 Letter Agreement, the parties thereto agreed that the cancellation or disposal of the ~~TSX Venture Exchange, and requires the approval of at least two-thirds of the votes cast~~aforementioned securities shall be without recourse by ~~HLII shareholders at the upcoming annual and special meeting of HLII shareholders. The Transaction is expected to close in December 2021.~~either Univest or Mr. Richmond.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion covers the three months and nine months ended September 30, 2022 and the subsequent period up to the date of issuance of this Quarterly Report on Form 10-Q. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the unaudited interim financial statements and notes thereto included in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and notes thereto for the year ended December 31, ~~2020~~2021 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (“~~2020~~2021 Form 10-K”).

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, ~~(the “Securities Act”),~~ and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements other than statements of historical facts contained in this quarterly report, including statements regarding our future results of operations and financial position, business strategy, research and development plans and costs, the impact of COVID-19, the timing and likelihood of regulatory filings and approvals, commercialization plans, pricing and reimbursement, the potential to develop future product candidates, the timing and likelihood of success of the plans and objectives of management for future operations, and future results of anticipated product development efforts, are forward-looking statements. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations. The forward-looking statements in this quarterly report are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, operating results, business strategy, short-term and long-term business operations and objectives. These forward-looking statements speak only as of the date of this quarterly report and are subject to a number of risks, uncertainties and assumptions, including those described in the Part II, Item 1A under the heading “Risk Factors.” The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

OVERVIEW

Marizyme is a multi-technology ~~platform life science~~biomedical company ~~with clinically tested and patented product platforms for myocardial and vein graft preservation, protein enzyme therapeutics for wound healing, thrombosis and pet health. Marizyme is~~ dedicated to the ~~acquisition,~~accelerated development and commercialization of ~~therapies, devices and related products~~medical device technologies that ~~maintain cellular viability and support metabolism, thereby promoting cellular~~improve patient health and proper function. Our common stock is currently quoted on the OTC Markets’ QB tier under the symbol “MRZM.” The Company is actively working toward listing its common stock on the NASDAQ Stock Market within the next twelve months from the date of this report. We may also examine our options with respect to listing of our common stock on the New York Stock Exchange (“NYSE”).outcomes.

~~Our Products~~
~~Krillase~~ - through our acquisition of the Krillase technology from ACB Holding AB in 2018, we purchased a European Union researched and evaluated protease therapeutic platform that has the potential for use in the treatment of chronic wounds and burns, and other clinical applications. Krillase is a drug which has been classified as a Class III medical device in Europe for treating chronic wounds. Krillase, derived from Antarctic krill, shrimp-like crustaceans, is a combination of endo and exopeptidases that safely and efficiently breaks down organic material. The mix of proteinases and peptidases in Krillase helps the Antarctic krill digest and break down its food in the extremely cold Antarctic environment. As a result, this specialized collection of enzymes provides a unique biochemical “cutting” capability. As a “biochemical knife”, Krillase can potentially break down organic matter, such as necrotic tissue, thrombogenic material, and biofilms produced by microorganisms. As such, it may be useful in the mitigation or treatment of multiple disease states in humans. For example, Krillase may dissolve arterial thrombogenic plaque safely and efficiently, promote faster healing and support the grafting of skin for the treatment of chronic wounds and burns, and reduce bacterial biofilms associated with poor oral health in humans and animals.
~~We have acquired a Krillase-based product pipeline that is focused on developing products that treat several conditions across the critical care market. Itemized below is a breakdown~~Key elements of our ~~projected Krillase development pipeline:~~strategy include:

● ~~MB101~~Advancing development of three medical technology platforms – ~~Therapy for complex wounds~~DuraGraft, MATLOC and ~~burns,~~Krillase – each of which is backed by a portfolio of patented or patent-pending assets;
● ~~MB102 – Therapy~~Advancing DuraGraft, our endothelial damage inhibitor, or EDI, for ~~acute ischemic stroke,~~the Food and Drug Administration, or FDA, De Novo classification process. We filed a pre-submission letter for DuraGraft with the FDA in November 2021 and we expect to submit the De Novo request for DuraGraft to the FDA in 2022; and
● ~~MB104 – Therapy for deep vein thrombosis,~~Progressing the development of Krillase through planning an animal clinical study which will be conducted in 2022 and
● ~~MB105 – Therapy for dissolving plaque~~ we expect will facilitate our entry into the pet health market and ~~biofilms on teeth.~~
~~Krillase received medical device status in the European Union for debridement of deep partial and full-thickness wounds in hospitalized patients, on July 19, 2005.~~
As of the date of this filing, the Company continues to evaluate commercial, clinical, research, and regulatory considerations involved in marketing our Krillase-based product line. Our commercial strategy in developing this product line is two-fold:
● ~~First, leverage and maximize near-term~~generate revenue ~~generating opportunities with products for commercial or clinical applications that have low regulatory risk, and~~
● ~~Second, develop products for applications~~through the sale of the Krillase platform that address unmet medical needs or address medical market needs better than existing products in the marketplace, in clinical applications that have higher regulatory risk, but significant commercial potential.Krillase-based dental hygiene products.

~~We anticipate finalizing our development, operation, and commercial strategy for the Krillase platform by 2022 and expect the first stream of revenue from sale of the product to be generated in 2023.~~
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~~DuraGraft~~ – through our acquisition of Somah in July 2020, we acquired its key intellectual products, based on its cytoprotective platform technology, to prevent ischemic injury to organs and tissues in grafting and transplantation surgeries. Its products and product candidates, which are referred to as the Somah Products, include DuraGraft, a one-time intraoperative vascular graft treatment for use in vascular and bypass surgeries that maintains endothelial function and structure, thereby reducing the incidence and complications of graft failure and improving clinical outcomes post bypass surgery.
DuraGraft is an “endothelial damage inhibitor” indicated for cardiac bypass, peripheral bypass, and other vascular surgeries. It is CE marked and is approved for marketing in 33 countries worldwide on 4 continents including, but not limited to the European Union, Turkey, Singapore, Hong Kong, India, the Philippines, and Malaysia. Somahlution has also been focused on developing products to mitigate the effects of ischemia reperfusion injury in other grafting and transplantation surgeries and other indications in which ischemic injury can cause disease. Multiple products derived from the cytoprotective platform technology for several indications are under various stages of development.
According to market analysis reports, the size value of the coronary artery bypass graft market globally was approximately $16 billion. This market is forecasted to increase at a CAGR of 5.8% from 2017 to 2025 (Grand View Research, March 2017). Globally, it is estimated that approximately 800,000 CABG procedures are performed each year (Grand View Research, March 2017), with procedures performed in the U.S. being a substantial percentage of the total global procedures performed. In the U.S., it is estimated that approximately 340,000 CABG surgeries are performed each year. The number of CABG procedures performed is predicted to decline at a rate of approximately 0.8% per year to less than 330,000 annually by 2026, primarily due to medical and technological advances in the use of percutaneous coronary intervention, also known as “angioplasty” (idata Research, September 2018).
In 2017, the number of peripheral vascular surgeries, which include angioplasty and bypass of peripheral arteries, vein removal, thrombectomy, and endarterectomy operations, were approximately 3.7 million worldwide. The number of peripheral vascular procedures is forecasted to increase at a CAGR of 3.9% in years 2017 to 2022 and is expected to exceed 4.5 million procedures by 2022 (Research and Markets, October 2018).
The Company is currently working with local distributors of cardiovascular disease-related products, in accordance with local regulatory requirements, to sell and increase the market share of DuraGraft in Europe, South America, Australia, Africa, the Middle East, and the Far East. As of the date of this filing, the Company anticipates that the submission of a de novo 510k application to the U.S will occur in the second quarter of 2022 and is optimistic that the approval will be granted by the end of 2022.
In anticipation of the filing of the de novo 510k application for DuraGraft, the company plans to submit a pre-submission document to the FDA that describes the strategy for demonstrating the clinical safety and efficacy of the product. FDA application for the use of DuraGraft in CABG procedures is expected to take place in 2022.
DuraGraft commercialization plan with CE Mark and existing distribution partners in select European and Asia countries will begin in Q2 2022, with a targeted approach based on market access, existing KOL’s, clinical data and revenue penetration. The company will also begin the process of developing the US CABG market for DuraGraft with the development of KOL’s, existing publications, select clinical studies, digital marketing, and multiple sales channels.
~~Key Elements of our Strategy~~
● Continue to grow the core of our business through the current market channels for DuraGraft and expand the sale of DuraGraft into additional markets globally as well as explore further use of the cytoprotective platform for new research and clinical applications,
● Continue the integration of the Somah assets and begin the marketing and distribution of the Somah products in Europe and other global markets, which will allow the Company to continue its growth and international product rollout,
● ~~Focus our efforts and resources on continuous development, seek regulatory approval and commercialization of DuraGraft and related Somah Products in the United States,~~
● ~~Begin to commercialize our Krillase platform through the development of manufacturing and distribution in Europe and South America of a Krillase wound healing product, and~~
● ~~Expand our product portfolio through the identification and acquisition of additional life science assets in areas of innovative medicine.~~
We have incurred losses for each period from ~~our~~ inception. ~~For~~Our net loss was approximately $1.6 million and $14.6 million for the three and nine months ended September 30, ~~2021~~2022, respectively ($1.6 million and ~~2020, our net loss was approximately~~ $5.5 million for the three and ~~$3.0 million, respectively.~~nine month ended September 30, 2021, respectively). We expect to incur significant expenses and operating losses over the next several years. Accordingly, we will need additional financing to support our continuing operations. We will seek to fund our operations through public or private equity offerings, debt financings, government or other third-party funding, collaborations and licensing arrangements. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would impact our going concern and would have a negative impact on our financial condition and our ability to pursue our business strategy and continue as a going concern. We will need to generate significant revenues to achieve profitability, and we may never do so.

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Our Products
DuraGraft®
Through our acquisition of the Somah assets in July 2020, we acquired key intellectual products based on a patent protected cytoprotective platform technology designed to reduce ischemic injury to organs and tissues in grafting and transplantation surgeries. These assets include DuraGraft, a one-time intraoperative vascular graft treatment, that is able to protect endothelial cells from ischemic damage and reperfusion injury, and reduce complications associated with Vein Graft Failure, or VGF, post-CABG, thereby reducing major adverse cardiac events such as repeat revascularization and myocardial infarction, reducing incidence and complications of graft failure, and improving clinical outcomes.
DuraGraft is an endothelial damage inhibitor, or EDI, indicated for cardiac bypass, peripheral bypass, and other vascular surgeries. It carries CE marking and is approved for marketing in 18 countries worldwide on three continents including, but not limited to, the European Union countries, such as Spain, Austria, and Germany, Switzerland, Philippines, Chile, and Turkey. Somah had also been focused on developing products to mitigate the effects of ischemia reperfusion injury in other grafting and transplantation surgeries and other indications in which ischemic injury can cause disease. Now, under our ownership, multiple products derived from the cytoprotective platform technology for several indications are under various stages of development.
According to market analysis reports, the size of the coronary artery bypass graft (“CABG”) procedures market globally was approximately $16.7 billion as of 2020 (Expert Markets Research, 2020). This market is forecast to increase at a compound annual growth rate (“CAGR”) of 2.5% between 2021 and 2026 (Expert Markets Research, 2020). Globally, it is estimated that approximately 800,000 CABG procedures are performed each year (Grand View Research, March 2017), with procedures performed in the U.S. being a substantial percentage of the total global procedures performed. In the U.S., it is estimated that approximately 340,000 CABG surgeries are performed each year. The number of CABG procedures performed is predicted to decline at a rate of approximately 0.8% per year to less than 330,000 annually by 2026, primarily due to medical and technological advances in the use of percutaneous coronary intervention, also known as “angioplasty” (idata Research, September 2018).
In 2020, the U.S. peripheral vascular device market size was valued at $7.1 billion, with over 8.26 million peripheral vascular procedures performed each year with an expected market size of $10.4 billion by 2026. The vascular device market size globally was valued at $11.9 billion in 2020 with more than 16 million yearly peripheral vascular procedures performed. The market size is expected to increase at a CAGR of 5.2% and reach $16.9 billion in 2026. (idata Research, 2020).
For 2022, our main business priority is applying for FDA clearance of DuraGraft for CABG procedures through a De Novo classification request. We also plan to finalize the development of fat grafting procedures using DuraGraft for plastic surgery procedures in the U.S. It is reported that 22.4 million such surgeries take place annually in the U.S. (American Society of Plastic Surgeons, 2020).
Following the FDA approval of DuraGraft, which we expect to obtain in 2023, we will seek to commercialize DuraGraft in the U.S. through the assistance of a strategic partner who will be responsible for marketing and sales. We will continue our DuraGraft marketing efforts in Europe relying on our DuraGraft CE marking and our distribution partners. We also intend to develop additional applications for the U.S. marketplace including, but not limited to, fat grafting for plastic surgery. The CE marking signifies that DuraGraft may be sold in the EEA and that DuraGraft has been assessed as meeting safety, health, and environmental protection requirements. We intend to strive for rapid revenue growth using multiple strategic partners and revenue channels. We expect that we will market DuraGraft internationally, through multiple distribution partners with a focus on sales to cardiac surgeons and cardiologists. We are currently working with local distributors of cardiovascular disease-related products, in accordance with local regulatory requirements, to sell and increase the market share of DuraGraft in Spain, Austria, Switzerland, Philippines, Germany, Chile, and Turkey. In the U.S., we intend to enter into a commercialization arrangement with a strategic partner who will be responsible for the marketing and sales of DuraGraft. If we are not able to find an appropriate strategic partner, we will have to build our own marketing and sales capabilities which we expect would be time consuming and costly.
MATLOC 1
On December 22, 2021, we acquired My Health Logic, its lab-on-chip technology platform and its patient-centric, digital point-of-care screening device, MATLOC 1.
The excitement over microfluidics, also known as lab-on-a-chip technology, lies in its potential for producing revolutionary, timely, accessible, and practical point-of-care devices; devices that are patient-centric (one-to-many, rather than doctor centric, one-to-one) and support self-care and independence. Microfluidics is a technology for analyzing small volumes of fluids, with the potential to miniaturize complex laboratory procedures onto a small microchip, hence the term “lab-on-chip”.
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Marizyme’s lab-on-chip technology is currently being developed for screening and diagnosis related to the three leading biomarkers for chronic kidney disease (CKD), a disease estimated to affect 37 million Americans – or one out of every seven people (National Kidney Foundation, 2019). If left untreated, many patients will advance to end stage renal disease (ESRD), often leading to kidney transplant, renal failure, or dialysis. Since 90% of those with CKD do not know they have it, the risk of progression in the disease is high and this creates massive burdens for CKD patients and healthcare systems (National Kidney Foundation, 2019). CKD and ESRD costs the U.S. public healthcare systems hundreds of billions of dollars a year. In 2018 Medicare alone spent $130 billion on CKD and ESRD-related costs (National Kidney Foundation, 2019). With the increase of diabetics and hypertension cases in the U.S., which make up roughly two-thirds of all CKD patients (National Kidney Foundation, 2022), CKD related healthcare costs are expected to increase significantly. Compounding this development is the fact that less than 50% of diabetic patients, the highest at-risk group, are annually screened or tested for CKD (Mayo Clinic Proceedings, 2021). This creates an unmet need for point-of-care technologies that facilitate CKD screening and diagnosis, which further facilitates earlier screening and diagnosis and detection to slow down or eliminate the CKD progression. By combining lab-on-chip technology with Marizyme’s MATLOC 1 device, it will be able to quantitatively read the two urine biomarkers, albumin and creatine, necessary for effective CKD screening at point-of-care with results available instantly on a patient’s smartphone.
MATLOC 2, the Company’s next-generation point-of-care device in development, is designed to provide a fully integrated, quantitative diagnostic assessment of estimated glomerular filtration rate, or eGFR, using a blood-based biomarker. eGFR is a key measure of kidney function health and/or stage of kidney disease and our MATLOC 2 device is designed to provide a fully integrated, complete diagnostic assessment for CKD, potentially eliminating the need for lab visits and in-person assessment.
The COVID-19 pandemic has accelerated the ongoing transformation in healthcare. Connected consumer electronic devices are enabling 24/7 home-based digital healthcare. We believe that consumers have the desire and are now becoming empowered to manage their own healthcare and that they will seek to utilize our point-of-care MATLOC 1 device.
With our lab-on-chip technology and MATLOC 1 device in development, we are striving to achieve earlier detection and slowing of the progression of CKD, allowing patients and healthcare systems to reduce the enormous costs of kidney failure, transplant, and/or dialysis. After completing the technology for CKD assessment, we plan to explore the commercial potential of other biomarkers for chronic diseases to be measured at point-of-care.
MATLOC 1, upon FDA approval, which we anticipate but cannot guarantee, is expected to be marketed and sold through an experienced medical device distribution partner network with a focus on nephrologists in hospitals, ambulatory surgery centers and private practices, to better assess patients and slow the progression of CKD.
Krillase
Through our acquisition of ACB Holding AB in 2018, we acquired the Krillase technology, a protease therapeutic platform originally researched and evaluated in the European Union that has the potential for use in the treatment of chronic wounds and burns, and other clinical applications.
Krillase, derived from Antarctic krill, shrimp-like crustaceans, is a combination of endo- and exopeptidases that safely and efficiently breaks down organic material. As a “biochemical knife,” Krillase can potentially break down organic matter, such as necrotic tissue, thrombogenic material, and biofilms produced by microorganisms. As such, it may be useful in the mitigation or treatment of multiple disease states in humans. For example, Krillase may promote faster healing, support the grafting of skin for the treatment of chronic wounds and burns, and reduce bacterial biofilms associated with poor oral health in humans and animals.
We are currently focused on developing a Krillase-based product for the dissolving of plaque and biofilms on teeth for the pet health dental market. In addition, our Krillase platform team is planning a pet health study, and we expect that the results of this study may enable us to introduce our Krillase products into the pet health market in the United States. We believe that the U.S. pet health market presents a substantial opportunity for the marketing of our Krillase products. We expect to establish the first stream of revenue from the sale of Krillase-based pet health products in 2023.
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Our strategic plan for Krillase is, first, to leverage and maximize near-term revenue generating opportunities with Krillase products for commercial or clinical applications with low regulatory risk, such as in the pet health market, and second, to develop products for applications of the Krillase platform that address unmet medical needs or address medical market needs better than existing products in the marketplace, in clinical applications with higher regulatory risk but significant commercial potential.
Our Competitive Strengths
We believe that the following competitive strengths will enable us to compete effectively:
● Superior, first-in-class vascular graft storage and flushing solution. Management believes that the DuraGraft platform provides a significant and substantial competitive advantage over current methods. Having received CE marking in Europe, DuraGraft is certified for marketing in Europe as an endothelial damage inhibitor.
● Early detection at point-of-care. Through our MATLOC platform, we plan to provide the ability to quantitatively screen and diagnose for CKD at point-of-care. We believe that the platform’s lab-on-chip technology’s low threshold of detection and sensitivity will enable earlier screening and diagnosis of CKD while the point-of-care capabilities of our MATLOC device(s) will allow for testing outside of a lab setting.
● Superior dental cleaning method. Our Krillase platform could provide a significant and substantial competitive advantage by achieving superior pet dental cleaning through the reduction of plaque and tartar build up.
Our Growth Strategies
We will strive to grow our business by pursuing the following key growth strategies:
● Commercialize DuraGraft and related products.
● Commercialize MATLOC 1 and related products.
● Commercialize Krillase and related products.
● Acquire more life science assets.
The strategic plans described above will require capital. We expect to raise a substantial portion of the required capital in our planned future offerings. There can be no assurances, however, that we will be able to raise the capital that we need to execute our plans or that capital, whether through securities offerings, either private or public, will be available to us on acceptable terms, if at all. An inability to raise sufficient funds could cause us to scale back our development and growth plans or discontinue them altogether.

KEY ~~2021~~ HIGHLIGHTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

~~Acquisition of My Health Logic~~Financing

~~On November 1,~~In 2021 ~~Marizyme entered into a definitive arrangement agreement with Health Logic Interactive Inc. (“HLII”) pursuant to which~~and 2022, the Company ~~will acquire My Health Logic Inc. (“MHL”), a wholly owned subsidiary of HLII (the “Transaction”).~~
The Transaction will be effected by way of a plan of arrangement under the Business Corporations Act (British Columbia). In connection with the plan of arrangement, Marizyme will issue an aggregate of 4,600,000 shares of its common stock to HLII, which will be subject to certain terms and restrictions. Upon closing, My Health Logic Inc. will be a wholly owned subsidiary of Marizyme. The transaction is expected to close on or before December 31, 2021.
The acquisition will provide Marizyme with access to consumer-focused handheld point-of-care diagnostic devices that connect to patients’ smartphones and digital continued care platforms, developed by MHL. My Health Logic Inc. plans to use its patent pending lab-on-chip technology to provide rapid results and facilitate the transfer of that data from the diagnostic device to the patient’s smartphone. MHL expects this data collection will allow it to better assess patient risk profiles and provide better patient outcomes. My Health Logic Inc.’s mission is to empower people with the ability to get early detection anytime, anywhere with actionable digital management for chronic kidney disease.
With the completion of the transaction, the Company will acquire MHL’s digital diagnostic device MATLOC1. MATLOC 1 is the proprietary diagnostic platform technology in development for the testing of different biomarkers, with a current focus on the urine-based biomarkers albumin and creatinine for chronic kidney disease screening and eventual diagnosis. The Company anticipates MATLOC 1 device will be submitted for FDA approval in late 2022 and the management is optimistic that the approval will be received by mid-2023.
~~Financing~~
~~In May 2021, the Company began its offering in a private placement under Rule 506 of Regulation D under the Securities Act up to 4,000,000~~offered units (the ~~“Offering”~~“Units Offering”), comprised of a convertible notes and warrants, with the intent to raise up to ~~$10,000,000~~$17,000,000 on a rolling basis. ~~The~~In late 2021, due to the Company’s continuous growth and need for additional capital to sustain its operations and progress towards its goals, the Company amended certain terms and conditions of the ~~Offering were amended in September 2021. For the nine-month period ended September 30,~~Units Offering. As a result:
● In 2021 the Company issued an aggregate of 4,260,594 units for gross proceeds of $7.4 million.
● During the nine months ended September 30, 2022 the Company issued an additional 4,180,071 units for gross proceeds of $7.3 million.
In aggregate, the Company ~~sold and issued an aggregate of 522,198 Units for~~received $14.8 million in proceeds from the ~~total proceeds of $1,060,949.~~units private placement . The proceeds from the ~~offering~~Units Offering were used to settle certain debt obligations and will be used to sustain the Company’s growth and meet its capital obligations.

Reverse Stock Split
On August 1, 2022, the Board of Directors (the “Board”) of Marizyme approved a reverse stock split of the Company’s authorized and outstanding common stock at a ratio of 1-for-4. On August 3, 2022, the Company effected the reverse stock split by filing a Certificate of Change with the Secretary of State of the State of Nevada. As a result, the total number of shares of common stock held by each stockholder was converted automatically into the number of whole shares of common stock equal to the number of issued and outstanding shares of common stock held by such stockholder immediately prior to the reverse stock split, divided by four, subject to rounding of fractional shares. The Company expects that the reverse stock split will be reflected in the trading price of the common stock after the Financial Industry Regulatory Authority, Inc. (“FINRA”) completes its processing of the reverse stock split, which is expected to be the date on which the common stock is listed on the Nasdaq Capital Market tier operated by Nasdaq in the event that the Company’s listing application to Nasdaq is approved.
As a result of the reverse stock split, there are approximately 10,207,212 shares of common stock outstanding, not including the shares of common stock included in the units that the Company expects to issue in this public offering or upon any exercise of the Over-Allotment Option or of any warrants included in the units issued to investors or of the representative’s warrant. No fractional shares have been or will be issued, and no cash or other consideration has been or will be paid. Instead, the Company issued one whole share of the post-reverse stock split common stock to any stockholder who otherwise would have received a fractional share as a result of the reverse stock split. The Company’s existing shareholders’ percentage ownership interests in the Company remains the same following the reverse stock split (subject to rounding of fractional shares).
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As of November 14, 2022, the approval from Nasdaq is still pending and FINRA has not yet completed the processing of the reverse stock split for purposes of the trading price of the common stock.
Operational

~~During the nine months ended September 30,~~In 2021 Marizyme ~~has been undergoing~~undertook a corporate restructuring, whereby the key officers, directors, and management team ~~has~~ changed in order to accelerate Company’s progress toward meeting its key objectives and deliver on its strategy. ~~After~~In the ~~closure~~nine months ended September 30, 2022, the executive and ~~completion~~management team was focused on meeting and delivering on the Company’s objectives to commercialize its products and advance in its search for more life science assets. Additionally, the Board of ~~MHL transaction,~~Directors of the Company ~~anticipates more changes~~was increased to ~~its key management team to further streamline~~seven members and ~~improve the overall performance~~a new Chair of the ~~Company.~~Audit Committee was elected.

FINANCIAL OPERATIONS REVIEW

Component of Results of Operations

Revenue

Revenue represents gross product sales less service fees and product returns. For our Distribution Partner channel, we recognize revenue for product sales at the time of delivery of the product to our Distribution Partner. As our products have an expiration date, if a product expires, we will replace the product at no charge. Currently, all of our revenue is generated from the sale of DuraGraft in European and Asian markets where the product ~~met~~has the required regulatory approvals.

Direct ~~Costs~~Cost of Revenue

Direct costs of revenue include primarily product costs, which include all costs directly related to the purchase of raw materials, charges from our contract manufacturing organizations, and manufacturing overhead costs, as well as shipping and distribution charges. Direct costs of revenue also include losses from excess, slow-moving or obsolete inventory and inventory purchase commitments, if any.

Professional Fees

Professional fees include legal fees relating to intellectual property development, due diligence and corporate matters, and consulting fees for accounting, finance, and valuation services. Professional fees paid to a related party relate to certain consulting services - see Note 9 to the financial statements accompanying this report for further related party disclosures. We anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and ~~Securities and Exchange Commission~~SEC requirements.

Salaries and Stock-Based Compensation

Salaries consists of compensation and related personnel costs. Stock-based compensation represents the fair value of equity-settled share awards on stock options and restricted share awards granted by the Company to its employees, officers, directors, and consultants. The fair value of awards is calculated using the Black-Scholes option pricing model, which considers the following factors: exercise price, current market price of the underlying shares, expected life, risk-free interest rate, expected volatility, dividend yield, and forfeiture rate.

Research and Development
All research and development costs are expensed in the period incurred and consist primarily of salaries, payroll taxes, and employee benefits for individuals involved in research and development efforts, external research and development costs incurred under agreements with contract research organizations and consultants to conduct and support the Company’s ongoing clinical trials of Duragraft, and costs related to manufacturing Duragraft for clinical trials. The Company has entered into various research and development contracts with various organizations and other companies.
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Depreciation and Amortization
Intangible assets are recorded at cost less accumulated amortization and accumulated impairment losses. Intangible assets acquired as a result of an acquisition or in a business combination are measured at fair value at the acquisition date. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortized over the estimated useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The estimated useful life and amortization method are reviewed at the end of each reporting period, with the effect of any changes in estimates being accounted for on a prospective basis.
Other General and Administrative Expenses

Other general and administrative expenses consist principally of marketing and selling expenses, facility costs, administrative and office expenses, director and officer insurance premiums, and investor relations costs associated with operating a public company.

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Other Income ~~and Expenses~~(Expenses)

Other income ~~and expenses~~(expenses) consists of ~~mark to market~~mark-to-market adjustments on contingent liabilities assumed on the acquisition of Somah assets and interest and accretion expenses related to our convertible notes issued pursuant to the ~~Unit Purchase Agreement.~~units private placement.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2022 and 2021
The following table summarizes our results of operations for the three months ended September 30, 2022 and 2021:
Three Months Ended September 30,
2022 2021 Change

Revenue $ 76,012 $ 37,215 $ 38,797

Operating expenses:
Direct costs of revenue 15,503 18,356 (2,853 )
Professional fees (includes related party amounts of $155,000 and $90,000, respectively) 303,574 460,378 (156,804 )
Salary expenses 330,221 517,192 (186,971 )
Research and development 708,220 241,748 466,472
Stock-based compensation 271,517 64,074 207,443
Depreciation and amortization 210,361 1,425 208,936
Other general and administrative expenses 469,656 489,820 (20,164 )
Total operating expenses 2,309,052 1,792,993 516,059
Total operating loss $ (2,233,040 ) $ (1,755,778 ) $ (477,262 )
Other income (expenses):
Interest and accretion expense (810,598 ) (70,221 ) (737,960 )
Change in fair value of contingent liabilities 1,491,000 194,000 1,297,000
Net loss $ (1,552,638 ) $ (1,631,999 ) $ 81,778
Revenue
We recognized revenue of approximately $0.08 million for the three months ended September 30, 2022 compared to approximately $0.04 million for the three months ended September 30, 2021. The increase in revenues was due to the impact of COVID-19 on the Company’s supply chain in fiscal 2021 and its ability to produce Duragraft inventory during 2021 and the resumption of production of the Company’s DuraGraft inventory and sales in Q2 2022.
Direct Costs of Revenue
The higher direct costs of revenue in the comparative Q3 2021 quarter was predominantly due to the COVID-19 interruptions to the Company’s supply chain and limited access to raw materials for DuraGraft product. During the three months ended September 30, 2022, our executive and management teams’ efforts to re-establish the Company’s business relationships with its trusted manufacturing and distribution partners, and the loosening of COVID-19 restrictions, led to a decrease in direct costs of revenue.
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Professional Fees
Professional fees decreased by approximately $0.2 million or 34% to approximately $0.3 million in Q3 2022 compared to approximately $0.5 million in Q3 2021. The decrease relates to higher professional fees incurred in the prior comparative period due to the acquisition of the Somah assets.
Salary Expenses
Salary expenses in Q3 2022 were approximately $0.3 million, an approximately $0.2 million or 36% decrease from the comparative period. The decrease in the cost is attributable to the restructuring in the prior comparative period as the Company restructured its executive and management teams in 2021.
Research and Development
Research and development expenses in Q3 2022, were approximately $0.7 million, an approximately $0.5 million or 193% increase from the comparative period. The increase in research and development expenses can be mainly attributed to the Company’s acquisition of MATLOC 1 assets in late 2021 and its focus on development and advancement of DuraGraft, Krillase, and MATLOC 1 towards commercialization.
Stock-Based Compensation
Stock-based compensation increased from approximately $0.06 million to approximately $0.27 million during the three months ended September 30, 2021 and 2022, respectively, a $0.21 million or 324% increase. The increase in stock-based compensation can be explained by am additional 400,000 stock options granted in 2022 and 350,000 restricted share awards granted in late 2021, which were fair valued significantly higher compared to the stock options granted and outstanding in the comparative period. This was due to a 58% increase in the Company’s stock price period over period to $1.90 as of September 30, 2022 from $1.20 as of September 30, 2021.
Depreciation and Amortization
Depreciation and amortization increased approximately $0.21 million or 324% in Q3 2022. The increase was due to the acquisition of My Health Logic in December 2021 and its intangible capital assets and acquisition of the Somah assets in July 2020 where key intellectual products were acquired.
Other General and Administrative Expenses
Other general and administrative expenses decreased approximately $0.02 million or 4% to approximately $0.47 million in Q3 2022. The majority of the expenses in Q3 2022 were due to the Company’s lower non-legal fees related to the filing of an amendment to a Registration Statement on Form S-1 in the period and preparation for the Company’s public offering compared to the higher general and administrative expenses in Q3 2021 from higher non-legal fees related to the acquisition of the Somah entities.
Other Income (Expenses)
In Q3 2022, the Company incurred approximately $0.8 million of interest and accretion costs associated with convertible notes issued at discount as part of its units private placement . Additionally, the Company recognized $1.5 million of fair value gain from mark-to-market adjustments on the contingent liabilities assumed on the acquisition of the Somah assets due to the change of the fair value of the contingent consideration.
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Comparison of the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021

The following table summarizes our results of operations for the nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:

Nine Months Ended
September 30, Nine Months Ended September 30,
2021 2020 Change 2022 2021 Change

Revenue $ 271,952 $ 124,985 $ 146,967 $ 137,821 $ 271,952 $ (134,131 )

Operating expenses:
Direct costs of revenue 168,419 25,714 142,705 26,528 168,419 (141,891 )
Professional fees 1,808,093 494,295 1,313,798
Professional fees (includes related party amounts of $422,000 and $180,000, respectively) 1,721,479 1,445,004 276,475
Salary expenses 2,478,357 433,318 2,045,039 2,147,967 2,084,430 63,537
Research and development 3,297,986 877,936 2,420,050
Stock-based compensation 626,449 1,674,200 (1,047,751 ) 1,664,191 626,449 1,037,742
Depreciation and amortization 631,083 5,849 625,234
Other general and administrative expenses 1,071,017 468,782 602,235 1,478,726 944,248 534,478
Total operating expenses 6,152,335 3,096,309 3,056,026 10,967,960 6,152,335 4,815,625
Total operating loss $ (5,880,383 ) $ (2,971,324 ) $ (2,909,059 ) $ (10,830,139 ) $ (5,880,383 ) $ (4,949,756 )
Other income (expenses):
Interest and accretion expenses (74,410 ) - (74,410 )
Interest and accretion expense (1,640,368 ) (74,410 ) (1,563,541 )
Change in fair value of contingent liabilities 472,000 - 472,000 (2,131,000 ) 472,000 (2,603,000 )
Net loss $ (5,482,793 ) $ (2,971,324 ) $ (2,511,469 ) $ (14,601,507 ) $ (5,482,793 ) $ (9,116,297 )
Revenue

We recognized revenue of ~~$0.27~~approximately $0.1 million for the nine months ended September 30, ~~2021~~2022 compared to ~~$0.12~~approximately $0.3 million for the nine months ended September 30, ~~2020. The increase~~2021. No revenue was generated in ~~revenue over the comparative period can be primarily attributed~~Q1 2022 due to the ~~growing sales~~impact of COVID-19 on the Company’s supply chain in fiscal 2021 and its ability to produce DuraGraft inventory. As the result of the Company’s executive and management teams’ efforts to re-establish the Company’s business relationships with its trusted manufacturing and distribution partners, the production of DuraGraft ~~which was acquired as part of the Somah Transaction.~~inventory and sales resumed in Q2 2022 and continued into Q3 2022.

Direct Costs of Revenue
~~During~~Direct costs of revenue decreased by approximately $0.1 million or 84% to approximately $0.03 million for the nine months ended September 30, 2021, we incurred $0.17 million in direct costs of revenue, representing increase of $0.15 million if compared to $0.03 million of the direct cost of revenue incurred during the nine months ended September 30, 2020. Cost of sales grew at a higher rate if compared to the revenue growth,2022. This was predominantly due to fewer units of DuraGraft product produced in the current period because of the shortage of ~~the~~ raw materials as a result of ~~COVID-19 pandemic which directly impacted the costs of finding, securing, and acquiring alternative high-quality materials.~~COVID-19.

Professional Fees

Professional fees increased by ~~$1.3~~approximately $0.3 million or ~~266%~~19% to ~~$1.81~~approximately $1.7 million for the period ended September 30, 2021, compared to $0.49 million for the period ended September 30, 2020. The Company has undergone a number of corporate transactions, including acquisition of the Somah entities and a corporate restructuring, which resulted in legal fees increasing significantly period over period. The increase in professional fees was also a result of the Company’s preparations for the FDA approval and other advancement and development of intellectual property. Additionally, Marizyme relied on number of external consulting firms to oversee multiple facets of the business, including finance and accounting functions of the Company. In the nine months ended September 30, 2022 compared to approximately $1.4 million for the comparative period ended September 30, 2021. The increase in professional fees can be attributed to legal support with preparation and filing of the Company’s amendment to its Registration Statement on Form S-1 with the SEC, audit fees in connection with the audit of the 2021 ~~Marizyme has also initiated~~Form 10-K, and compensation costs incurred in connection with closings of the ~~public offering transaction, which further contributed~~Company’s units private placement financing. Related party professional fees increased by approximately $0.2 million or 134% to approximately $0.4 million from approximately $0.2 million during the third quarter of 2022 compared to the ~~professional fees increase~~third quarter of 2021 because the Company retained additional consulting services in ~~the period.~~order to advance development of its medical technologies.

Salary Expenses

Salary expenses for the ~~period~~nine months ended September 30, ~~2021,~~2022, were ~~$2.48~~approximately $2.1 million, ~~a $2.05~~an approximately $0.1 million or ~~472%~~3% increase from the comparative period. The increase in the salary cost is attributable to the restructuring and growth of the organization as the Company continues to expand into ~~the~~ new markets and ~~working~~work towards commercialization of ~~the~~ DuraGraft in the United States.
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Research and Development
Research and development expenses for the nine months ended September 30, 2022 were approximately $3.3 million, an approximately $2.4 million or 276% increase from the comparative period. The increase in research and development expenses can be mainly attributed to the Company’s acquisition of MATLOC 1 assets in late 2021 and its focus on development and advancement of DuraGraft, Krillase, and MATLOC 1 towards commercialization.
Stock-Based Compensation
Stock-based compensation for the nine months ended September 30, 2022 increased by approximately $1.0 million or 166% to approximately $1.7 million if compared to the nine months ended September 30, 2021. The increase in stock-based compensation can be explained by an additional 400,000 stock options granted in 2022 and 350,000 restricted share awards granted in late 2021, which were fair valued significantly higher compared to the stock options granted and outstanding in the comparative period. This was due to a 58% increase in the Company’s stock price period over period to $1.90 as of September 30, 2022 from $1.20 as of September 30, 2021.
Depreciation and Amortization
Depreciation and amortization increased approximately $0.6 million or 10,690% in Q3 2022. The increase was due to the acquisition of My Health Logic in December 2021 and its intangible capital assets and acquisition of the Somah assets in July 2020 where key intellectual products were acquired.
Other General and Administrative Expenses

Other general and administrative expenses increased ~~$0.6~~approximately $0.5 million or ~~128%~~57% to ~~$1.07~~approximately $1.5 million in the nine months ended September 30, ~~2021.~~2022. The increase was due to the Company’s ~~restructuring, growth,~~non-legal fees related to the filing of an amendment to a Registration Statement on Form S-1, preparation for the Company’s public offering, increased rent due to the lease of additional office and ~~increased marketing~~laboratory space, and ~~public relations~~ expenses associated with ~~product branding and costs attributed to~~ running a public ~~company.~~company, during the nine-month period ended September 30, 2022. Due to the planned continued buildout of administrative and commercial functions we expect general and administrative expenses to increase in future periods.

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Other Income ~~and Expenses~~(Expenses)
During the nine months ended September 30, ~~2021,~~2022, the Company ~~conducted the Offering, which included multiple closings in tranches on a rolling basis. The~~incurred approximately $1.6 million of interest and accretion costs associated with convertible notes issued at discount as part of the ~~Offering agreements.~~
Company’s units private placement. Additionally, the ~~company~~Company recognized ~~$0.47~~approximately $2.1 million of fair value ~~gain~~loss from ~~mark to market~~mark-to-market adjustments on the contingent liabilities assumed on the acquisition of ~~Somah.~~
~~Comparison~~Somah due to the change of the ~~Three Months Ended September 30, 2021 and 2020~~fair value of the contingent consideration.

~~The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:~~
Three Months Ended
September 30,
2021 2020 Change

Revenue $ 37,215 $ 124,985 $ (87,770 )

Operating expenses:
Direct costs of revenue 18,356 25,714 (7,358 )
Professional fees 556,254 170,753 385,501
Salary expenses 617,826 433,318 184,508
Stock-based compensation 64,074 1,107,085 (1,043,011 )
Other general and administrative expenses 536,483 453,158 83,325
Total operating expenses 1,792,993 2,190,028 (397,035 )
Total operating loss $ (1,755,778 ) $ (2,065,043 ) $ 309,265
Other income (expenses):
Interest and accretion expenses (70,221 ) - (70,221 )
Change in fair value of contingent liabilities 194,000 - -
Net loss $ (1,631,999 ) $ (2,065,043 ) $ 239,044
~~Revenue and Direct Cost of Revenue~~
We recognized revenue of $0.04 million for the three months ended September 30, 2021 compared to $0.12 million for the three months ended September 30, 2020, which represents a 70% decrease period over period. During the three months ended September 30, 2021, we incurred $0.02 million in direct costs of revenue, representing a decrease of 29% if compared to $0.03 million in the direct cost of revenue incurred during the three months ended September 30, 2020.
COVID-19 pandemic resulted in shortage of the raw materials and interruptions in global supply chains. Additionally, during 2021, Marizyme’s business partners were focused on addressing specific manufacturing needs of the U.S. government in battling COVID-19 pandemic. Moreover, during 2021, demand for elective surgeries have decreased due to overloaded medical systems and potential risks related to patients’ recovery during the pandemic. All of these factors have negatively impacted the Company’s revenue and direct costs of sales for the three months ended September 30, 2021.
~~Professional Fees~~
Professional fees increased by $0.39 million to $0.56 million for the three months ended September 30, 2021 compared to $0.17 million for the three months ended September 30, 2020. The increase in professional fees period over period relates to due diligence process associated with My Health Logic Inc.’s acquisition and finalizing of the valuation process of assets acquired and liabilities assumed on completion of the Somah Transaction.
~~Salary Expenses~~
Salary expenses for the three months ended September 30, 2021, were $0.62 million, a $0.18 million or 43% increase from the comparative period. The increase in the salary cost is attributable to the growth of the organization as the Company continues to expand into the new markets and works towards commercialization of the DuraGraft in the United States.
~~Other General and Administrative Expenses~~
Other general and administrative expenses increased $0.08 million or 18% to $0.5 million in the three months ended September 30, 2021. The increase was predominantly due to the legal, regulatory, and due diligence efforts related to the acquisition of My Health Logic Inc.
~~Other Income and Expenses~~
During the three months ended September 30, 2021, the Company completed its second and the biggest tranche of the Offering and issued the highest amount of the convertible notes to date. The interest and accretion costs associated with convertible notes issued at discount as part of the Offering agreements.
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During the three months ended September 30, 2021, the company recognized $0.19 million of fair value gain from mark to market adjustments on the contingent liabilities assumed on the acquisition of Somah
~~LIQUIDUTY~~LIQUIDITY AND CAPITAL RESOURCES

WeTo date, we have incurred significant net losses and negative cash flows from ~~operations since our inception and anticipate we will continue to incur net losses for the foreseeable future.~~operations. As of September 30, ~~2021,~~2022, we had available cash of approximately $1.2 million and ~~cash equivalents~~accumulated deficit of ~~$16,673.~~approximately $62 million. We fund our operations through capital raises.

~~The~~ ~~Offering~~Units Private Placement

In May of 2021, Marizyme’s Board of Directors, authorized the Company to initiate the Offering and sell up to 4,000,000 units (the “Units”) at a price per Unit of $2.50. Each Unit was comprised of (i) a convertible promissory note convertible into common stock of the Company at an initial price per share of $2.50, (ii) a warrant to purchase one share of common stock of the Company (the ‘Class A Warrant’); and (iii) a second warrant to purchase a share of common stock of the Company (the “Class B Warrant”).
InDuring the nine months ended September ~~2021,~~30, 2022, the Company issued ~~an aggregate of 469,978 Units~~4,180,071 units in ~~connection with the Offering,~~its units private placement for the ~~total~~gross proceeds of ~~$1,060,949.~~
~~On September 29, 2021,~~approximately $7.3 million. Of the total 4,180,071 units issued: (i) 159,245 units were issued to settle notes payable assumed on acquisition of My Health Logic, (ii) 22,857 units were issued to settle accounts payable, and 171,428 units were issued in exchange for services rendered to the Company ~~with the consent of all Unit holders, amended the May 2021 Unit Agreements. By rescinding their investment, the Unit holders agreed to amend the Unit Purchase Agreement resulted~~ in the ~~following changes to the offering:~~
~~(iv)~~ Decreased the offering price under the Unit Purchase Agreement from $2.50 per Unit to $2.25 per Unit for all future sales under the Unit Purchase Agreement. No proceeds from the initial investment were returned,
~~(v)~~ ~~Decreased the conversion price from $2.50 per share to $2.25 per share for all current Unit holders and all future investors, and~~
~~(vi)~~ ~~Cancelled all Class A Warrants and Class B Warrants and replaced them with Class C Warrants.~~
nine months ended September 30, 2022. The Company determined that the modifications of the Unit Purchase Agreement were not significant enough to be considered substantial, therefore the values of original instruments issued were not adjusted. As a result of this modification, the total of 469,978 Units previously issued were replaced with an aggregate of 522,198 pro-rata Units.
~~The Company intends to raise up to $10,000,000 on a rolling basis. The~~remaining proceeds from ~~the~~this offering will be used to sustain the Company’s growth and meet its capital obligations.

Public Offering
On February 14, 2021, Marizyme filed a Registration Statement on Form S-1 to raise up to $17,250,000. As at the end of Q3 2022, the final prospectus had not yet been filed and the final amount of the offering will be dependent on market conditions. The proceeds from the offering will be used by the Company (i) to develop its DuraGraft, MATLOC, and Krillase platforms; (ii) to commercialize and produce its products, and (iii) for general working capital and other corporate purposes. Management anticipates that the offering will close in Q4 2022.
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Funding Requirements and Other Liquidity Matters

Marizyme expects to continue to incur expenses and operating losses for the foreseeable future. We anticipate that our expenses will increase as a result of the following operational and business development efforts:

● Increase our expertise and knowledge through hiring and retaining qualified operational, financial and management personnel, who will build efficient infrastructure to support development and commercialization of therapies and devices,
● Increase in research and development and legal expenses as we continue to develop our products, conduct clinical trials and pursue FDA clearances,
● Expand our product portfolio through the identification and acquisition of additional life science assets, and
● Seek to increase awareness about our products to boost sales and distributions internationally.
Until such time, if ever, as we can generate substantial product revenues to support our cost structure, the Company will continue to have to raise funds beyond its current working capital balance in order to finance future development of products, potential acquisitions, and meet its debt obligations until such time as future profitable revenues are achieved.

We expect to finance our cash needs through a combination of private and public equity offerings, debt financings, government or other third-party funding, and collaborations arrangements or acquisitions. To the extent that we raise additional capital through the sale of common stock, convertible securities or other equity securities, the ownership interest of our stockholders may be materially diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights of our common stockholders. Debt financing and preferred equity financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. Securing additional financing could require a substantial amount of time and attention from our management and may divert a disproportionate amount of their attention away from day-to-day activities, which may adversely affect our management’s ability to oversee the development or acquisition of product.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution, or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
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~~Impact of~~ These factors raise substantial doubt about the ~~Coronavirus~~
~~On January 30, 2020, the World Health Organization (“WHO”), announced a global health emergency because of a new strain of coronavirus, COVID-19 and the risks~~Company’s ability to ~~the international community as the virus spreads globally beyond its point of origin. On March 11, 2020, the WHO classified the COVID-19 outbreak~~continue as a pandemic, based on the rapid increase in exposure globally. The COVID-19 pandemic has affected the United States and global economies and may affect our prospective current and future revenues, and our operations and those of third parties with whom we might interact, including by causing disruptions in the development of our product candidates, product marketing efforts and the conduct of current and expected future clinical trials.
In addition, the COVID-19 pandemic may affect the operations of the FDA and other health authorities, including such authorities in Europe, which could result in delays of reviews and approvals, including with respect to our product candidates and our plans to submit a Q-sub clinical proposal to the FDA for supporting an additional clinical study if required for the DuraGraft product. While there have been no specific notices of delay from federal or foreign government authorities, potential interruptions, delays or changes to the operations of the FDA, or of any foreign authority with which we might interact, might impact the approval of any applications we plan and will need to file in the future.going concern.

Cash Flows

The following table sets forth a summary of the net cash flow activity for each of the periods indicated:

Nine Months Ended
September 30, Nine Months Ended September 30,
2021 2020 Change 2022 2021 $ Change
Net cash provided by/(used in):
Operating activities $ (4,313,038 ) $ (948,305 ) $ (3,364,733 ) $ (9,266,036 ) $ (4,313,038 ) $ (4,952,998 )
Investing activities - (130,333 ) 130,333
Financing activities 1,426,949 6,275,064 (4,848,115 ) 6,375,945 1,426,949 4,948,996
Net increase/(decrease) in cash $ (2,886,089 ) $ 5,196,426 $ (8,082,515 )
Net change in cash $ (2,890,091 ) $ (2,886,089 ) $ (4,002 )
Operating Activities

Net cash used in operating activities was approximately $9.3 million and approximately $4.3 million ~~and $1.0 million for~~in the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The net cash used in operating activities ~~for~~during the nine months ended September 30, ~~2021~~2022 was due to approximately ~~$1.8~~$1.7 million spent on professional fees, ~~and $2.5~~approximately $2.1 million spent on salaries and related compensation ~~expenses.~~expenses and approximately $3.3 million spent on research and development activities . The net change in operating assets and liabilities primarily related to ~~a $1.0~~approximately $0.4 million spent on the manufacturing of DuraGraft product in the period and an approximately $1.8 million increase in accounts payable, accrued expenses, and amounts due to related parties in support of the growth of our research and development and other operating activities.
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Financing Activities

Net cash provided by financing activities for the nine months ended September 30, ~~2021~~2022 was due to ~~$0.4~~approximately $6.5 million of ~~money obtained~~funds raised from the issuance of convertible promissory notes ~~to related parties~~in the Company’s units private placement, net of issuance costs. During the nine months ended September 30, 2022, the Company also repaid notes payable an aggregate of approximately $0.1 million in notes payable as part of the ~~Company~~units private placement issuances and ~~$1.1~~repaid approximately $0.1 million in notes payable assumed on the acquisition of ~~proceeds received from the Unit issuances pursuant to the Unit Purchase Agreement.~~My Health Logic.

Contractual Obligations and Commitments

Other than disclosed below, there were no material changes outside the ordinary course of our business during the nine months ended September 30, ~~2021~~2022 to the information regarding our contractual obligations that was disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our ~~2020~~2021 Form 10-K.

Royalties and Other Commitments

Upon receiving the FDA ~~approval~~ clearance for the DuraGraft and other key intellectual products, the ~~Company:~~Company will:

● ~~Will pay royalties on net sales~~Grant performance warrants to Somah for 4,000,000 restricted common shares of ~~all products obtained through acquisition of Somah’s assets,~~
● ~~Issue performance warrants~~the Company, with a strike price determined based on the average of the closing prices of the common shares for the 30 calendar days following the date of the public announcement of FDA ~~approval, and~~clearance;
● ~~Upon~~Pay royalties on all net sales of the product acquired from Somah of 6% on the first $50 million of international net sales (and 5% on the first $50 million of U.S. net sales), 4% for greater than $50 million up to $200 million, and 2% for greater than $200 million;
● Pay 10% of cash value of the rare pediatric voucher sales following the FDA clearance and subsequent sale to an unaffiliated third party of a rare pediatric voucher based on Somah’s DuraGraft product;
● Grant of rare pediatric voucher warrants to purchase an aggregate of 250,000 commons shares with a term of five years and a strike price determined based on the average of the closing prices of the common shares for the 30 calendar days following the date of the public announcement of FDA clearance, and
● Pay a liquidation preference, up to a maximum of $20 million upon the sale by the Company of all or substantially all of the assets relating to the Somah products. Upon the sale of either or both of the DuraGraft or Somah derived solid organ transplant products, wethe Company will pay 15% of the net sale proceeds ~~up to a~~towards the liquidation preference maximum ~~of $20 million.~~amount.

Lease Commitments
The Company has entered into arrangements for office and laboratories spaces. As at September 30, 2022, minimum lease payments in relation to lease commitments were payable as outlined in Note 5 to the interim consolidated financial statements.
Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our financial statements and accompanying notes. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

25
For a description of our critical accounting policies, please see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” contained in our ~~2020~~2021 Form 10-K. There have not been any material changes to the critical accounting policies discussed therein during the nine months ended September 30, ~~2021.~~2022.

~~Other Company Information~~Off-Balance Sheet Arrangements

~~JOBS Act~~
As ~~an emerging growth company under~~of September 30, 2022, the ~~Jumpstart Our Business Startups Act~~Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, changes in financial condition, revenues or expenses, results of ~~2012,~~operations, liquidity, capital expenditures or the JOBS Act, we can, and intend to, take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We also intend to rely on other exemptions provided by the JOBS Act, including without limitation, not being required to comply with the auditor attestation requirements of Section 404(b) of Sarbanes-Oxley.
We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the consummation of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.07 billion, (iii) the last day of the fiscal year in which we are deemed to be a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year, or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.
~~OFF-BALANCE SHEET ARRANGEMENTS~~capital resources.

30
~~During the periods presented we did not have, nor do we currently have, any off-balance sheet arrangements as defined under SEC rules.~~
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
~~Interest Rate Risk~~Not applicable.
Our cash and cash equivalents consist of cash in readily available checking accounts and money market funds. Our long-term debt bears interest at a fixed rate. As a result, the fair value of our portfolio is relatively insensitive to interest rate changes and we do not consider the effects of interest rate movements to be a material risk to our financial condition.
~~Effects of Inflation~~
Inflation generally affects us by increasing our cost of labor and research and development contract costs. We do not believe inflation has had a material effect on our results of operations during the periods presented

ITEM 4. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We evaluated the effectiveness of our ~~internal~~disclosure controls ~~over financial reporting~~and procedures as defined by Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this quarterly report, with the participation, and under the supervision, of our management, including our ~~Interim~~ Chief Executive Officer (“CEO”) and ~~Vice President of Finance.~~Chief Financial Officer (“CFO”). Based upon this evaluation, our ~~Interim Chief Executive Officer~~CEO and ~~VP Finance~~CFO concluded that as of September 30, ~~2021,~~2022, our ~~internal~~disclosure controls ~~over financial reporting~~and procedures were ineffective due to the material weakness described below.

Disclosure controls and procedures means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. A material weakness isin disclosure controls and procedures includes a deficiency, or a combination of deficiencies, in internal ~~controls~~control over financial reporting such that there is a reasonable possibility that a material misstatement of the ~~Company’s~~registrant’s annual or interim ~~consolidated~~ financial statements ~~may~~will not be prevented or detected on a timely ~~basis.~~basis by the company’s internal controls.

~~Specifically, during~~As previously reported in our annual report on Form 10-K for the ~~period~~year ended December 31, 2021, management concluded that, as of such date, our disclosure controls and procedures were not effective due to the existence of a material weakness in the design and operating effectiveness of internal controls related to inadequate internal technical staffing levels and lack of board or management oversight. In connection with our preparation of our interim condensed consolidated financial statements for the three and nine months ended September 30, ~~2021:~~2022, we identified material weaknesses in our disclosure controls and procedures due to the material weaknesses in internal control over financial reporting related to the following:

● ~~Marizyme~~We did not ~~have~~maintain a sufficient complement of internal personnel with appropriate ~~number of independent directors~~knowledge, experience and/or training commensurate with our financial reporting requirements. We relied on ~~its Board of Directors,~~outside consulting technical experts and did not maintain adequate internal qualified personnel to properly supervise and review the information provided by the outside consulting technical experts to ensure certain significant complex transactions and technical matters were properly accounted for.
● ~~Marizyme~~In addition, we did not have proper segregation of duties in certain areas of our financial reporting process. The areas where we had a ~~shortage~~lack of ~~in-house personnel with appropriate level~~segregation of ~~technical knowledge required to identify~~duties include cash receipts and ~~address certain complex or non-routine transactions~~disbursements, approval of purchases and ~~related reporting issues. Management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding~~approval of ~~material, complex and non-routine transactions,~~accounts payable invoices for payment.
● ~~The shortage~~We did not have adequate policies and procedures in place to ensure the timely, effective review of ~~in-house finance personnel resulted~~assumptions used in ~~inappropriate segregation~~measuring the fair value of ~~duties,~~certain financial instruments. We did not have adequate policies and procedures in place to ensure the timely, effective review of compliance with contractual covenants in certain financial instruments, and
● ~~Insufficient documentation of written~~We did not have an independent audit committee to oversee the financial reporting processes and reporting.
To remediate the material weaknesses described above, in addition the measures that management has taken as described under “Changes in Internal Control Over Financial Reporting” below, management will continue to add controls to further enhance and revise the design of the existing controls including:
● Establishing policies and procedures ~~over~~to ensure timely review, by qualified personnel, of assumptions used in measuring fair value of certain financial instruments.
● Reassessing the design and operation of internal controls over financial reporting ~~transaction processing,~~ and ~~period end closing procedures.~~review procedures over the preparation of our financial statements.

26
~~We are taking steps to remediate the material weakness identified by:~~
● ~~Attracting~~Hiring permanent accounting personnel and ~~retaining independent directors~~the use of consultants to ~~add to the Board~~provide support during our quarterly and annual preparation, review, and reporting of ~~Directors and establish an Audit Committee comprised of the independent directors.~~our financial statements.
● ~~Attracting, retaining, and enabling external or~~Maintaining adequate internal ~~top talent in accounting and finance functions~~qualified personnel to properly ~~segregate duties~~supervise and review the information provided by the outside consulting technical experts to ensure ~~timely~~certain significant complex transactions and ~~accurate preparation of the financial statements.~~
● ~~Developing, documenting, and maintaining adequate written accounting policies and procedures.~~technical matters were properly accounted for.

We believe these measures will remediate the material weakness in internal control over financial reporting and disclosure controls and procedures described ~~above by the second quarter of 2022.~~above.
31

Changes in Internal Control Over Financial Reporting
As discussed above, the management is working on ~~remediation~~remediating the material weakness ~~but due to the corporate restructuring and multiple changes to our officers and management team, no significant steps have been taken to remediate the material deficiency~~ in ~~our~~ internal ~~controls~~control over financial reporting ~~during~~identified above. In the nine months ended September 30, ~~2021.~~2022, the Company took the following steps in order to improve its internal controls over financial reporting:

27 ● The Board of Directors of the Company was increased to seven members,
● A new Chair of the Audit Committee was appointed and the Board determined the new Chair to be an “audit committee financial expert” as defined under Item 407(d)(5)(ii) and (iii) of Regulation S-K,
● The Company retained the services of multiple financial consultants, who provide their advice and expertise in audit, valuation, and financial reporting services.

During the nine months ended September 30, 2022, management of the Company will continue to work on addressing to remediate the material weaknesses in internal controls over financial reporting described above.
PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. WeOther than the legal proceedings described below, we are currently not aware of any such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
DeVito Litigation
On June 7, 2022, Nicholas DeVito, a former Interim Chief Executive Officer and Interim Chief Financial Officer of the Company, filed a Complaint in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida, Case No. 50-2022-CA-005437 (the “Florida Circuit Court”), against the Company (the “DeVito Complaint”). The DeVito Complaint claimed breach of contract, declaratory relief, specific performance, breach of an implied covenant of good faith and fair dealing, and unjust enrichment against the Company with respect to the Company’s alleged breach of the common stock issuance requirements of an Incentive Stock Option Agreement between Mr. DeVito and the Company, dated as of July 13, 2019 (the “DeVito ISO”). Under the DeVito ISO, on July 13, 2019, the Company granted an option to Mr. DeVito to purchase 125,000 shares of common stock at $4.04 per share, subject to certain vesting terms. The DeVito ISO provided that it would terminate twelve (12) months after the end of Mr. DeVito’s “Continuous Service,” which was not defined by the DeVito ISO. On August 27, 2020, as part of a Mutual Release of Claims Agreement between Mr. DeVito and the Company dated as of that date (the “DeVito Release”), the Company agreed to immediately vest the unvested portion of the DeVito ISO such that the DeVito ISO became fully vested, to pay Mr. DeVito $20,000 to add in the transition during the month of September 2020, and that Mr. DeVito would retain all of his rights under the DeVito ISO. Under the DeVito Release, Mr. DeVito agreed to step down from his positions as Interim Chief Executive Officer and Interim Chief Financial Officer on September 1, 2020, to assist Marizyme with its transition to a new Chief Executive Officer and Chief Financial Officer for the month of September 2020, and effective as of September 1, 2020 would no longer act as an officer of Marizyme in any capacity. The DeVito Release also recited that the Company requested that Mr. DeVito be available for additional consulting going forward as the needs of the business dictate. The DeVito Release also provided for a general mutual release of claims by the Company and Mr. DeVito apart from continuing employment obligations and corporate officer indemnification obligations of Marizyme. The DeVito Complaint alleged that Mr. DeVito continued his role as an advisor and consultant to the Company. Due to the Company’s alleged nonperformance of Mr. DeVito’s exercise rights under the DeVito ISO, the DeVito Complaint sought declaratory relief, specific performance, direct and consequential damages in an unspecified amount of more than $30,001.00, damages prescribed by the DeVito ISO, reasonable attorney’s fees and costs, prejudgment interest, and such other relief as the court deems equitable. On July 21, 2022, the Company filed a motion to dismiss the claims of declaratory relief, specific performance, and breach of an implied covenant of good faith and fair dealing in the DeVito Complaint. On August 3, 2022, Mr. DeVito filed an amended complaint without a hearing (the “Amended DeVito Complaint”). The Amended DeVito Complaint includes two claims, for breach of contract and unjust enrichment, and otherwise realleges substantially all of the factual allegations of the DeVito Complaint. On August 26, 2022, the Company filed an Answer to the Amended DeVito Complaint denying substantially all of the allegations. The Company is determining whether to file a counterclaim. As of November 2022, this case is pending. [NTD: Please confirm/update]
Chandler Litigation
On January 28, 2022, the Company filed a Complaint in the Florida Circuit Court, case number 50-2022-CA-000859-XXX-MB, against Amy Chandler (the “Chandler Complaint”). The Chandler Complaint sought damages for breach of fiduciary duty, breach of contract, negligence, conversion, and civil theft. The Chandler Complaint alleged that, prior to her resignation in September 2021, Ms. Chandler intentionally and recklessly took actions to cancel the CE certificate required by European Union regulations in order for Marizyme and its subsidiary, Somahlution, LLC, to ship and distribute certain products to/within the European Union. The Chandler Complaint also alleged that Ms. Chandler disregarded her fiduciary duty to Marizyme and responsibilities as the top regulatory and compliance official of Marizyme. As a result, the Chandler Complaint alleged that Ms. Chandler’s actions caused significant disruption and damage to Marizyme’s business, including, but not limited to, financial damages and damage to Marizyme’s reputation and business relationships. The Chandler Complaint further alleged that prior to her last day, Ms. Chandler stole confidential, proprietary files governing Marizyme’s quality management system, which related to internal business operations, and that Marizyme incurred significant costs to recreate these files. The Chandler Complaint alleged damages in excess of thirty thousand dollars ($30,000.00), exclusive of interest, attorneys’ fees, and costs.
32
On February 28, 2022, Ms. Chandler filed an Answer, Affirmative Defenses and Counterclaim with the Florida Circuit Court (the “Answer”). The Answer denied the claims in the Chandler Complaint and most of the factual allegations regarding Ms. Chandler’s alleged actions. The Answer also asserted a counterclaim against the Company for defamation per se. The Answer sought to recover monetary damages, attorneys’ fees, and court costs in connection with this litigation. The Answer also demanded a trial by jury on all triable issues.
On March 18, 2022, the Company filed a Motion to Dismiss Ms. Chandler’s Counterclaim with the Florida Circuit Court (the “Motion to Dismiss”). The Motion to Dismiss stated that Ms. Chandler’s Counterclaim for defamation per se should be dismissed with prejudice. On July 13, 2022, the court ruled that the counterclaim of defamation was dismissed with prejudice. Ms. Chandler’s deposition is now scheduled for September 21, 2022. At that time, the Company’s counsel will attempt to obtain the admissions necessary to confirm Chandler’s liability and to potentially add James Sapirstein and his company, First Wave BioPharma, as defendants. In the coming months, the Company expects to retain a consultant to assist it with quantifying the substantial damages caused by Chandler’s actions. As of August 2022, the remaining matters under litigation in this case are pending.
Campbell/Harmon Litigation
On August 19, 2021, Dr. Neil Campbell, former President, Chief Executive Officer and director of the Company, and Bruce Harmon, former Chief Financial Officer and Secretary of the Company, each filed a Complaint and Demand for Jury Trial in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida, case numbers No. 50-2021-CA-009938 and No. 50-2021-CA-009954, respectively, against the Company and Insperity Peo Services, L.P., a Delaware limited partnership (“Insperity”), a joint employer of Dr. Campbell and Mr. Harmon with the Company under a Client Service Agreement, dated November 30, 2020 (collectively, the “Campbell/Harmon Complaints”). Both Campbell/Harmon Complaints alleged that the Company and Insperity violated Section 448.105 of the Florida Private Whistleblower Act as a result of the constructive terminations of Dr. Campbell and Mr. Harmon after the occurrence of violations of federal and state law, including federal securities law, at the Company that exposed Dr. Campbell and Mr. Harmon to civil and criminal forms of liability and that the Company was not addressing to their satisfaction. Both of the Campbell/Harmon Complaints demanded approximately $30,000-$50,000 in back pay and benefits, interest on back pay, front pay and/or lost earning capacity, compensatory damages, costs and attorney’s fees, and such other relief as the court deems equitable.
Pursuant to a Joint Stipulation of Voluntary Dismissal With Prejudice filed in each of these cases, the arbitrator of these cases dismissed Dr. Campbell and Mr. Harmon’s actions with prejudice on April 18, 2022 and April 14, 2022, respectively, and the court subsequently dismissed Dr. Campbell and Mr. Harmon’s actions with prejudice on April 22, 2022 and April 14, 2022, respectively.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors disclosed in ~~our Annual Report on~~the 2021 Form ~~10-K for the year ended December 31, 2020 filed with the SEC on April 15, 2021, which may be accessed via EDGAR through the Internet at~~ ~~www.sec.gov~~.10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the ~~nine-month~~three-month period ended September 30, ~~2021,~~2022, we did not conduct any unregistered sales of our equity securities that were not previously disclosed in a current report ofon Form 8-K and we did not repurchase any of our common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.
~~On July 6, 2021, the Company’s Board of Directors appointed Dr. Vithal Dhaduk as Interim Chief Executive Officer. He will retain his position as Chairman of the Board of Directors.~~None.
~~On July 12, 2021, in connection with the termination of his consulting agreement, Bruce Harmon resigned as the Chief Financial Officer of Marizyme.~~
On November 10, 2021, the Board of Directors appointed David Barthel as Chief Executive Officer of Marizyme. Dr. Vithalbhai Dhaduk, the former Interim Chief Executive Officer, resigned from this position on November 10, 2021 and remains Chairman of the Board.
2833
ITEM 6. EXHIBITS

The following exhibits are filed as part of this report or incorporated by reference:

Exhibit No. Description
~~2.1~~ ~~Signing of Definitive Agreement with Health Logic (filed as an exhibit 2.1 to Form 8-K filed on November 05, 2021)~~
~~3.1.1~~3.1 Articles of Incorporation ~~(filed as an exhibit~~(incorporated by reference to Exhibit 3.1 to Form SB-2 (File No: 333-146748) filed January 14, 2008)
3.2
~~3.1.2~~
Certificate of Amendment to Articles of Incorporation, effective September 6, 2010 ~~(filed as an exhibit~~(incorporated by reference to Exhibit 3.1.1(2) to Form 10-K filed on July 16, 2012)
3.3
~~3.1.3~~ Certificate of Amendment to Articles of Incorporation, effective November 22, 2010 ~~(filed as an exhibit~~(incorporated by reference to Exhibit 3.1.2 to Form 10-K/A filed on July 15, 2011)
3.4
~~3.1.4~~ Certificate of Amendment to the Articles of Incorporation regarding 1-for-29 Reverse Stock Split filed March 20, 2018 ~~(filed as an exhibit~~(incorporated by reference to Exhibit 3.1.2 to Form 10 (File No. 000-53223) filed on September 12, 2018)
3.5 Series A Non-Convertible Preferred Certificate of Designation filed May 11, 2018 (incorporated by reference to Exhibit 3.1.6 to Form 10-12G filed on September 12, 2018)
~~3.1.5~~3.6 Certificate of Withdrawal of Certificate of Designation, effective January 25, 2022 (incorporated by reference to Exhibit 3.5 to Form S-1 filed on February 14, 2022)
3.7 Articles of Merger between Marizyme, Inc. and GBS Enterprises Incorporated filed May 19, 2018 ~~(filed as an exhibit~~(incorporated by reference to Exhibit 3.1.5 to Form 10 (File No. 000-53223) filed on September 12, 2018)
3.8
~~3.1.6~~ ~~Series A Non-Convertible Preferred Certificate of Designation filed May 11, 2018 (filed as an exhibit~~Bylaws (incorporated by reference to Exhibit 3.2 to Form ~~10 (File No. 000-53223) filed on September 12, 2018)~~
~~3.2~~ ~~Bylaws (Filed as an exhibit to Form SB-2~~SB-2/A (File No: 333-146748) filed January 14, 2008)
3.9 Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209, as filed by Marizyme, Inc. with the Secretary of State of the State of Nevada on August 3, 2022 (incorporated by reference to Exhibit 3.1 to Form 8-K filed on August 3, 2022)
4.1 ~~Form of Placement Agent Common Stock Purchase Warrant for 2020 Common Stock and Warrant Private Placement (filed as an exhibit~~10% Secured Convertible Promissory Note issued by Marizyme, Inc., dated August 12, 2022 (incorporated by reference to Exhibit 4.1 to Form ~~10-Q~~8-K filed on August ~~14, 2020)~~18, 2022)
4.2 ~~Form of Incentive~~Class C Common Stock ~~Option Agreement (filed as an exhibit~~Purchase Warrant issued by Marizyme, Inc., dated August 12, 2022 (incorporated by reference to Exhibit 4.2 to Form ~~10-Q~~8-K filed on ~~November 13, 2019)~~August 18, 2022)
10.1 Form of ~~Subscription~~Unit Purchase Agreement ~~for 2020 Common Stock Private Placement (filed as an exhibit~~between Marizyme, Inc. and the investors signatory thereto (incorporated by reference to ~~Form 10-Q filed on August 14, 2020)~~
~~10.1.1~~ ~~Appointment of David Barthel as the new CEO (filed as an exhibit~~Exhibit 10.1 to Form 8-K filed on ~~November 16, 2021)~~December 27, 2021
10.2 Form of Registration Rights Agreement ~~for 2020 Common Stock Private Placement (filed as an exhibit~~between Marizyme, Inc. and the investors signatory thereto (incorporated by reference to Exhibit 10.2 to Form ~~10-Q~~8-K filed on ~~August 14, 2020)~~December 27, 2021)
10.3 ~~Employment~~Placement Agency Agreement between Marizyme, Inc. and Univest Securities, LLC, dated ~~November 1, 2020 with Dr. Neil J. Campbell (filed as an exhibit~~December 10, 2021 (incorporated by reference to Exhibit 10.6 to Form 8-K filed on ~~November 6, 2020)~~
~~10.4~~ ~~Indemnification Agreement dated November 1, 2020 with James Sapirstein (filed as an exhibit to Form 10-K filed on April 15,~~December 27, 2021)
~~10.5~~ ~~Indemnification Agreement dated November 1, 2020 with Terry Brostowin (filed as an exhibit to Form 10-K filed on April 15, 2021)~~
~~10.6~~ ~~Indemnification Agreement dated November 1, 2020 with Bruce Harmon (filed as an exhibit to Form 10-K filed on April 15, 2021)~~
~~10.7~~ ~~Form of Unit Purchase Agreement, dated May 2021 (filed as an exhibit to Form 10-Q filed on August 23, 2021)~~
~~10.71~~ ~~Form of 10% Secured Convertible Promissory Note Agreement~~ ~~(filed as an exhibit to Form 10-Q filed on August 23, 2021)~~
~~10.72~~ ~~Form of Class A Common Stock Purchase Warrant~~ ~~(filed as an exhibit to Form 10-Q filed on August 23, 2021)~~
~~10.73~~ ~~Form of Class B Common Stock Purchase Warrant~~ ~~(filed as an exhibit to Form 10-Q filed on August 23, 2021)~~
~~10.74~~ ~~Form of Placement Agency Agreement~~ ~~(filed as an exhibit to Form 10-Q filed on August 23, 2021)~~
~~10.75~~ ~~Form of Placement Agent Warrant Agreement~~ ~~(filed as an exhibit to Form 10-Q filed on August 23, 2021)~~
~~31.1~~ 31.1* ~~Certification~~Certifications of Principal Executive Officer ~~of Marizyme, Inc. required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted~~filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*
~~31.2~~ ~~Certification~~Certifications of Principal Financial and Accounting Officer ~~of Marizyme, Inc. required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted~~filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
~~32.1~~32.1** ~~Certification~~Certifications of Principal Executive Officer ~~of Marizyme, Inc.~~furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~and Section 1350 Of 18 U.S.C. 63~~
32.2**
~~32.2~~ ~~Certification~~Certifications of Principal Financial and Accounting Officer ~~of Marizyme, Inc.~~furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 ~~and Section 1350 Of 18 U.S.C. 63~~
~~101.INS~~101.INS* Inline XBRL ~~Taxonomy Extension~~ Instance Document
~~101.SCH~~101.SCH* Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
~~101.DEF~~101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document
~~101.PRE~~101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
~~104~~104* Cover Page Interactive Data File ~~(embedded within the~~(formatted as Inline XBRL ~~document)~~and contained in Exhibit 101)

* Filed herewith
** Furnished herewith
3034
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the ~~Registrant~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: November 14, 2022 MARIZYME, INC.
~~(Registrant)~~
~~Date: November 22, 2021~~
~~By:~~ /s/ David Barthel
Name: David Barthel
Title: Chief Executive Officer
(Principal Executive Officer)

/s/ George Kovalyov
Name: George Kovalyov
Title: Chief Financial Officer
(Principal ~~Executive and~~ Accounting and Financial Officer)

3135


	Common Stock				Additional Paid-in				Accumulated
	Shares		Amount		Capital				Deficit			Total
Balance, December 31, 2020		35,928,188	$	35,928	$	82,077,334		-	$	(36,825,634	)	$	45,287,628
Sale of common stock
Sale of common stock, shares
Issuance of common stock for acquisition
Issuance of common stock for acquisition, shares
Issuance of warrants for acquisition
Issuance of warrants for services
Common shares issued in lieu of AP
Common shares issued in lieu of AP , shares
Exercise of options
Exercise of options, shares
Common stock issued for services
Common stock issued for services, shares
Stock-based compensation		-		-		334,385				-			334,385
Issuance of common stock for services
Issuance of common stock for services, shares
Warrants issued
Net loss		-		-		-		-		(2,211,866	)		(2,211,866	)
Balance, March 31, 2021		35,928,188		35,928		82,411,719		-		(39,037,500	)		43,410,147
Stock-based compensation		-		-		194,657				-			194,657
Adjustment of warrants value in connection with finalizing the business combination		-		-		(732,300	)			-			(732,300	)
Net loss		-		-		-		-		(1,638,928	)		(1,638,928	)
Balance, June 30, 2021		35,928,188		35,928		81,874,076		-		(40,676,428	)		41,233,576
Stock-based compensation		-		-		64,074				-			64,074
Warrants issued in connection with convertible notes		-		-		571,807				-			571,807
Net loss		-		-		-		-		(1,631,999	)		(1,631,999	)
Balance, September 30, 2021		35,928,188	$	35,928	$	82,509,957		-	$	(42,308,427	)	$	40,237,458


					Additional Paid-in		Treasury			Accumulated
	Shares		Amount		Capital		Stock			Deficit			Total
Balance, December 31, 2019		19,858,939	$	19,859	$	59,319,594	$	(16,000	)	$	(30,980,581	)	$	28,342,872
Common stock issued for services		125,000		125		124,875		-			-			125,000
Stock-based compensation		-		-		221,058		-			-			221,058
Net loss		-		-		-		-			(471,370	)		(471,370	)
Balance, March 31, 2020		19,983,939		19,984		59,665,527		(16,000	)		(31,451,951	)		28,217,560
Common shares issued in lieu of AP		195,000		195		184,665		-			-			184,860
Exercise of options		5,000		5		5,045					-			5,050
Stock-based compensation		-		-		221,057		-			-			221,057
Net loss		-		-		-		-			(434,911	)		(434,911	)
Balance, June 30, 2020		20,183,939		20,184		60,076,294		(16,000	)		(31,886,862	)		28,193,616
Sale of common stock		5,600,192		5,600		6,269,464		-			-			6,275,064
Issuance of common stock for acquisition		10,000,000		10,000		12,490,000		-			-			12,500,000
Issuance of warrants for acquisition		-		-		1,932,300		-			-			1,932,300
Issuance of warrants for services		-		-		253,749		-			-			253,749
Stock-based compensation		-		-		802,926		-			-			802,926
Issuance of common stock for services		50,000		50		62,450		-			-			62,500
Exercise of options for common stock		54,057		54		59,399		-			-			59,453
Net loss		-		-		-		-			(2,065,043	)		(2,065,043	)
Balance, September 30, 2020		35,888,188	$	35,888	$	81,946,582	$	(16,000	)	$	(33,951,905	)	$	48,014,565

●	●	Level 1 – Quoted prices for identical assets or liabilities in active markets.
●	●	Level 2 – Quoted prices for identical or similar assets and liabilities in markets that are not active; or other model-derived valuations whose inputs are directly or indirectly observable or whose significant value drivers are observable.
●	●	Level 3 – Valuations derived from valuation techniques in which one or more significant inputs to the valuation model are unobservable and for which assumptions are used based on management estimates.

	i.	The performance warrants and pediatric vouchers warrants liabilities were valued using a Monte Carlo simulation model utilizing the following weighted average assumptions: risk free rate of 1.19%, expected volatility of 69.62%, expected dividend of $0, and expected life of ~~6.21 years~~5.96. years. For the three and nine months ended September 30, ~~2021,~~2022, changes in these assumptions resulted in $~~574,000~~1,999,000 decrease and $~~1,870,000~~ 899,000~~decrease~~ increase in fair value of these liabilities, respectively. At September 30, ~~2021~~2022, the fair market value of performance warrants and pediatric vouchers warrants liabilities was $~~2,899,000~~5,251,000 (December 31, 2021 – $4,352,000).

	ii.	The present value of royalty payments was measured using the scenario-based methodology. In assessing the value attributed to the royalty payments, the estimated future cash flows were discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the revenue from net sales of the product. The cash flows derived from the Company’s fifteen-year strategic plan are based on managements’ expectations of market growth, industry reports and trends, and past performances. These projections are inherently uncertain due to the evolving impact of the COVID-19 pandemic. The discounted cash flow model included projections surrounding revenue, discount rates, and growth rates. The discount rates used to calculate the present value of royalty payments reflect specific risks of the Company and market conditions and the mid-range was estimated at 20.6%. For the three and nine months ended September 30, ~~2021,~~2022, changes in these assumptions resulted in $~~380,000~~516,000 and $~~1,396,000~~ 1,288,000increase in fair value of ~~these liabilities,~~this liability, respectively. At September 30, ~~2021~~2022, the fair market value of royalty payments was $~~3,582,000~~5,276,000 (December 31, 2021 – $3,988,000).

	iii.	Rare pediatric voucher sales liability was valued based on the scenario-based methodology where the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset – ~~20.6%~~20.6%. For the three and nine months ended September 30, ~~2021,~~2022, changes in these assumptions resulted in $~~Nil~~8,000 and $~~2,000~~ 56,000~~increase~~ decrease in fair value of this liability, respectively. At September 30, ~~2021~~2022, the fair market value of rare pediatric ~~vouchers~~voucher sales liability was $1,094,000 (December 31, 2021 – $1,150,000).

	iv.	The present value of liquidation preference liability, included in the contingent consideration, was determined using the Black-Scholes option pricing method and represents the fair value of the maximum payment amount according to the ~~Agreement.~~agreement. The following assumptions were used in the Black-Scholes option pricing model: risk free rate of 0.21%, expected volatility of 78.93%, expected dividend of $0, and expected life of 5years. No changes to the fair value of liquidation preference liability were recorded in the three and nine months ended September 30, ~~2021.~~2022. At September 30, ~~2021~~2022, the fair market value of liquidation preference was $1,823,000 (December 31, 2021 – $1,823,000).

	Fair Value Hierarchy								Fair Value Hierarchy
September 30, 2021	Level 1		Level 2		Level 3		December 31, 2020
September 30, 2022									Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	-	$	-	$	391,648	$	-	$	-	$	-	$	4,923,725
Contingent liabilities		-		-		9,454,000		-		-		-		13,444,000
Total	$	-	$	-	$	9,845,648	$	-	$	-	$	-	$	18,367,725

September 30, 2021	Contingent Liabilities
Balance at December 31, 2020		-
Derivative liabilities	$	391,648
Initial valuation of contingent liabilities in connection with the Somah acquisition¹		9,926,000
Change in fair value of contingent liabilities		(472,000	)
Balance at September 30, 2021	$	9,845,648

Derivative and Contingent Liabilities
Balance at December 31, 2021	$	13,798,346
Change in fair value of contingent liabilities		2,131,000
Derivative liabilities issued pursuant to Unit Purchase Agreement		2,438,379
Balance at September 30, 2022	$	18,367,725

●	~~10 ,000,000~~ ~~restricted shares of common stock of the Company;~~
●	~~Warrants to purchase~~ ~~3,000,000~~ ~~restricted common shares of the Company with a strike price of $5.00~~ ~~per common share and a term of~~ ~~five years~~;
●	~~The Company, on a pro rata basis, shall grant the Seller the following contingent consideration upon receiving the FDA final approval and insurance reimbursement approval on the product:~~

	○	~~Grant of performance warrants for~~ ~~4,000,000~~ restricted common shares of the Company, with a strike price determined based on the average of the closing prices of the common shares for the 30 calendar days following the date of the public announcement of FDA approval;
	○	~~Royalties to be paid on all net sales of the product acquired from Somah of~~ 6~~% on the first $~~50 ~~million of international net sales (and~~ 5~~% on the first $~~50 ~~million of U.S. net sales),~~ 4~~% for greater than $~~50 ~~million up to $200~~ ~~million, and~~ 2~~% for greater than $200~~ ~~million;~~
	○	Payment of 10% of cash value of the rare pediatric voucher sales following the FDA approval and subsequent sale to an unaffiliated third party of a rare pediatric voucher based on Somah’s DuraGraft product;
	○	~~Grant of rare pediatric voucher warrants to purchase an aggregate of~~ ~~250,000~~ commons shares with a term of five years and a strike price determined based on the average of the closing prices of the common shares for the 30 calendar days following the date of the public announcement of FDA approval, and
	○	~~Liquidation preference, up to a maximum of $~~20 million upon the sale by the Company of all or substantially all of the assets relating to the Somah products. Upon the sale of either or both of the DuraGraft or Somah derived solid organ transplant products, the Company will pay 15% of the net sale proceeds towards the liquidation preference maximum amount.

Consideration
Consideration given up
Common shares	$	12,500,000	$	7,774,000
Warrants		1,200,000
Contingent consideration¹		9,926,000
Total consideration	$	23,626,000
Total consideration given up			$	7,774,000

Fair value of identifiable assets acquired, and liabilities assumed
Net working capital	$	30,908
Net working deficit			$	(613,156	)
Property, plant, and equipment		9,092		12,500
Intangible assets		18,170,000		6,600,000
Goodwill		5,416,000		1,774,656
Total identifiable assets	$	23,626,000	$	7,774,000

	●	~~DuraGraft patent,~~Trade name, with estimated remaining economic life of 1314 years,
	●	~~“Distribution relationships”~~Software, which enables customers to track and update their test results, with economic life of 15 years, and
	●	Biotechnology intangible ~~asset~~assets related to ~~DuraGraft products,~~lab-on-chip technology, with estimated remaining economic life of ~~10 years, and~~17
	●	~~In-process research and development intangible asset – “Cyto Protectant Life Sciences” with indefinite economic life.~~ years.


2021	$	52,249
2022		277,142
2023		277,142
2024		277,142
2025		277,142
Thereafter		130,950
Total lease payments		1,291,767
Total lease payments		1,291,767
Less: present value discount		(89,929	)
Total	$	1,201,838

	September 30, 2021			December 31, 2020
Furniture and equipment	$	701		$	701
Computer related		7,220			7,220
Machinery and equipment		1,171			1,171
Total	$	9,092		$	9,092
Less: accumulated amortization		(7,819	)		(1,970	)
Property, plant and equipment, net	$	1,273		$	7,122


2022	$	103,291
2023		423,495
2024		434,082
2025		444,934
2026		266,034
Total lease payments		1,671,836
Less: Present value discount		(95,391	)
Total	$	1,576,445


Goodwill		DuraGraft		My Health Logic		Total
Balance, December 31, 2020	$	-	$	-	$	-
Additions on acquisitions		5,416,000		1,774,656		7,190,656
Impairment				-		-
Balance, December 31, 2021 and September 30, 2022	$	5,416,000	$	1,774,656	$	7,190,656

Balance, December 31, 2019	$	28,613,000
Acquired in asset purchase agreement		14,147,729
Additions		106,971
Amortization expense		(589,489	)
Balance, December 31, 2020		42,278,211
Acquired in Somah Transaction¹		4,022,271
Additions		2,775
Amortization expense¹		81,864
Balance, September 30, 2021	$	46,385,121

Balance, December 31, 2020	$	42,278,211
Acquired in Somah Transaction		4,022,271
Acquired in My Health Logic Transaction		6,600,000
Additions		2,775
Amortization expense		(37,065	)
Balance, December 31, 2021	$	52,866,192
Amortization expense		(630,879	)
Balance, September 30, 2022	$	52,235,313

	September 30, 2021		December 31, 2020
Trade accounts payable	$	1,117,517	$	325,830
Accrued expenses		180,846		21,555
Accrued compensation expenses		98,582		130,718
Total accounts payable and accrued expenses	$	1,396,945	$	478,103

	(i)	Decreased the offering price under the Unit Purchase Agreement from $2.50 per Unit to $2.25 per Unit for all future sales under the Unit Purchase Agreement. No proceeds from the initial investment were ~~returned,~~returned.
	(ii)	Decreased the conversion price from $2.50 per share to $2.25 per share for all current Unit holders and all future investors ~~and~~
	(iii)	Cancelled all Class A Warrants and Class B Warrants and replaced them with Class C Warrants.

	(i)	Decreased the offering price under the Unit Purchase Agreement from $2.25 per Unit to $1.75 per Unit. Outstanding principal and accrued interest were used to purchase Units at the new per unit price.
	(ii)	Extended the maturity date of the notes to December 21, 2023 for all existing notes.
	(iii)	Decreased the conversion price from $2.25 per share to $1.75 per share for the New Units.
	(iv)	Original Class C Warrants were exchanged for New Class C warrants with an exercise price of $2.25 per share (unchanged) and a five-year life measured from the date of the Exchange Agreement. The decrease in the Unit price also resulted in additional number of New Class C Warrants being issued in exchange for the Original Class C Warrants due to the 200% warrant coverage provided for in the Unit Purchase Agreement.

	September 30, 2021			December 31, 2020
Convertible notes issued	$	1,174,945		$	-
Issuance costs		(105,745	)		-
Debt discount		(964,153	)		-
Debt accretion		74,410			-
Convertible notes, net of debt discount	$	179,457		$	-

	September 30, 2022			December 31, 2021
Convertible notes - total principal	$	14,771,177		$	7,482,104
Unamortized issuance costs and discount		(13,122,382	)		(7,456,039	)
Convertible notes, net of debt discount	$	1,648,795		$	26,065

	●	~~Exercise price is the lower of (i) $3.13~~ ~~per share, or (ii) the Automatic Conversion Price (the lesser of (i)~~ 75~~% of the cash price per share paid by the other purchasers of next round securities in the Qualified Financing and (ii) the Conversion Price ($2.50, subject to Customary Antidilution Adjustments).~~
	●	~~Exercisable for a period of~~ 5 ~~years from issuance.~~
	●	~~Warrant Coverage:~~ ~~100~~%.

	●	~~Exercise price is $5.00~~ ~~per share,~~
	●	~~Exercisable for a period of~~ 5 ~~years from issuance.~~
	●	~~Warrant Coverage:~~ ~~100~~%.

	●	Exercise price is the lower of (i) $2.25 per share, or (ii) the Automatic Conversion Price (the lesser of (i) 75% of the cash price per share paid by the other purchasers of next round securities in the Qualified Financing and (ii) the Conversion Price ($2.25, subject to Customary Antidilution Adjustments).
	●	Exercisable for a period of 5 years from issuance.
	●	Warrant Coverage: 200%.

	2021			2020
Risk-free interest rate		0.69	%		0.93	%
Volatility		232.69	%		241.88	%
Exercise price	$	1.25		$	1.37
Dividend yield		0	%		0	%
Forfeiture rate		0	%		0	%
Expected life (years)		3			10

	Number of Options			Weighted Average Exercise Price		Weighted Average Contractual Life		Total Intrinsic Value			Number of Options			Weighted Average Exercise Price		Weighted Average Contractual Life		Total Intrinsic Value
Outstanding at December 31, 2019		2,715,000		$	1.50		9.48	$	N/A	¹
Granted		1,340,000			1.25
Exercised		(254,057	)		1.02
Outstanding at December 31, 2020		3,800,943		$	1.36		8.82	$	123,600			3,800,943		$	1.36		8.82
Granted		732,500			1.25							1,532,500			1.51
Forfeited		(760,626	)		1.25							(1,682,500	)		1.36
Outstanding at September 30, 2021		3,772,817		$	1.37		8.13	$	97,850
Exercisable at September 30, 2021		3,074,476		$	1.39		3.77	$	97,850
Outstanding at December 31, 2021												3,650,943		$	1.24		8.34	$	1,951,117
Granted												400,000			2.20		9.69		-
Expired												(62,502	)		1.25		8.08		-
Forfeited												(62,498	)		1.25		8.08		-
Outstanding at September 30, 2022												3,925,943			1.33		7.79		2,344,489
Exercisable at September 30, 2022												3,050,664		$	1.17		7.35	$	2,256,558

Exercise Price		Number of Options Outstanding		Number of Options Exercisable		Weighted Average Remaining Contractual Years		Intrinsic Value
$	1.01		1,985,943		1,985,943		6.68	$	1,767,489
	1.25		540,000		524,721		8.41		351,000
	1.37		200,000		200,000		7.88		106,000
	1.75		800,000		280,000		9.16		120,000
	2.20		400,000		60,000		9.69		-
$	1.33		3,925,943		3,050,664		7.79	$	2,344,489

	●	The Company will raise financing for the gross proceeds that equal or exceed $5,000,000, and
	●	The Company will complete valuation reports for acquisition of Somah and My Health Logic.

	Number		Weighted Average Exercise Price
December 30, 2019		113,637	$	3.00
Issued on Somah acquisition (Note 4)		3,000,000		5.00
Issued		280,014		1.38
December 30, 2020		3,393,651	$	2.13
Issued		1,044,396		2.25
September 30, 2021		4,438,047	$	2.16