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 June 30, ~~2022~~2023

☐ 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.

(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, Florida 33458

(Address of principal executive offices) (Zip Code)

~~(925)~~(561) ~~400-3123~~935-9955

(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 August ~~15, 2022,~~18, 2023, the registrant had ~~40,828,188~~45,666,760 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	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~~	6
	~~Notes to Unaudited Condensed Consolidated Financial Statements~~	7
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18	23
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	26	48
ITEM 4.	Controls and Procedures	26	49

PART II - OTHER INFORMATION

ITEM 1.	Legal Proceedings	27	50
ITEM 1A.	Risk Factors	28	50
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28	50
ITEM 3.	Defaults Upon Senior Securities	29	50
ITEM 4.	Mine Safety Disclosures	29	50
ITEM 5.	Other Information	29	50
ITEM 6.	Exhibits	29	51
	Signatures		3053

PART I – FINANCIAL INFORMATION

ITEM 1. ~~CONDENSED CONSOLIDATED~~ FINANCIAL STATEMENTS

MARIZYME, INC.

Condensed Consolidated Balance Sheets

June 30, 2022 December 31, 2021
(unaudited)
ASSETS:
Current
Cash $ 2,044,976 $ 4,072,339
Accounts receivable 53,083 8,650
Other receivables 12,589 41,307
Prepaid expenses 235,382 257,169
Inventory 268,413 22,353
Total current assets 2,614,443 4,401,818
Non-current
Property, plant and equipment, net 12,681 12,817
Operating lease right-of-use assets, net 1,667,151 1,158,776
Intangible assets, net 52,445,606 52,866,192
Prepaid royalties, non-current 339,091 339,091
Deposits 30,000 30,000
Goodwill 7,190,656 7,190,656
Total non-current assets 61,685,185 61,597,532
Total assets $ 64,299,628 $ 65,999,350

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current
Accounts payable and accrued expenses $ 617,041 $ 1,596,147
Notes payable 241,392 127,798
Due to related parties 223,661 1,132,634
Operating lease obligations 418,330 277,142
Total current liabilities 1,500,424 3,133,721
Non-current
Operating lease obligations, net of current portion 1,248,821 881,634
Notes payable, net of current portion — 469,252
Convertible notes 842,946 26,065
Derivative liabilities 4,423,725 2,485,346
Contingent liabilities 14,935,000 11,313,000
Total non-current liabilities 21,450,492 15,175,297
Total liabilities 22,950,916 18,309,018

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 June 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 June 30, 2022 and December 31, 2021, respectively 40,828 40,528
Additional paid-in capital 102,180,316 95,473,367
Accumulated deficit (60,872,432 ) (47,823,563 )
Total stockholders’ equity 41,348,712 47,690,332
Total liabilities and stockholders’ equity $ 64,299,628 $ 65,999,350

	June 30, 2023			December 31, 2022
	(unaudited)
ASSETS:
Current
Cash	$	205,226		$	510,865
Accounts receivable		72,975			87,801
Other receivables		34,306			15,310
Prepaid expenses		606,347			1,125,761
Inventory		139,723			215,566
Total current assets		1,058,577			1,955,303
Non-current
Property, plant and equipment, net		12,500			12,545
Operating lease right-of-use assets, net		1,294,442			1,485,023
Intangible assets, net		27,254,434			27,675,020
Prepaid royalties, non-current		140,843			339,091
Deposits		30,000			30,000
Goodwill		7,190,656			7,190,656
Total non-current assets		35,922,875			36,732,335
Total assets	$	36,981,452		$	38,687,638

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current
Accounts payable and accrued expenses	$	2,038,005		$	1,365,443
Notes payable		283,290			1,132,829
Due to related parties		143,351			-
Convertible notes- Units Private Placement		12,316,495			-
Convertible notes - OID		150,086			-
Derivative liabilities		5,461,702			-
Operating lease obligations		428,789			423,495
Total current liabilities		20,821,718			2,921,767
Non-current
Operating lease obligations, net of current portion		865,653			1,061,528
Convertible notes– Units Private Placement		307,425			2,751,633
Derivative liabilities		-			4,823,725
Contingent liabilities		7,717,000			9,707,000
Total non-current liabilities		8,890,078			18,343,886
Total liabilities		29,711,796			21,265,653

Commitments and contingencies (Note 10)		-			-

Stockholders’ equity:
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022		-			-
Common stock, par value $0.001, 300,000,000 shares authorized, issued and outstanding shares - 45,366,760 at June 30, 2023 and 40,528,191 at December 31, 2022		45,366			40,528
Additional paid-in capital		116,344,709			103,370,890
Accumulated deficit		(109,120,419	)		(85,989,433	)
Total stockholders’ equity		7,269,656			17,421,985
Total liabilities and stockholders’ equity	$	36,981,452		$	38,687,638

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

MARIZYME, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	2023			2022			2023			2022
	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022

Revenue	$	184,739		$	61,809		$	313,713		$	61,809
Direct cost of revenue		49,611			11,025			88,886			11,025
Gross profit		135,128			50,784			224,827			50,784
Operating expenses:
Professional fees (includes related party amounts of $161,000, $163,200, $322,000 and $266,400 respectively)		511,844			873,865			896,650			1,417,905
Salary expenses		335,004			902,106			601,972			1,817,746
Research and development		691,393			1,371,470			1,297,390			2,589,766
Stock-based compensation		160,762			676,242			371,728			1,392,674
Depreciation and amortization		210,293			210,361			420,631			420,722
Royalty expense		162,065			-			198,248			-
Other general and administrative expenses		2,867,749			618,498			3,375,073			1,009,070
Total operating expenses		4,939,110			4,652,542			7,161,692			8,647,883
Total operating loss		(4,803,982	)		(4,601,758	)		(6,936,865	)		(8,597,099	)

Other income (expense)
Interest and accretion expenses		(13,424,169	)		(530,226	)		(15,121,870	)		(829,770	)
Change in fair value of contingent liabilities		714,000			(1,792,000	)		1,990,000			(3,622,000	)
Loss on debt extinguishment		(684,682	)		-			(684,682	)		-
Loss on issuance of debt		(2,377,569	)		-			(2,377,569	)		-
Total other income (expense)		(15,772,420	)		(2,322,226	)		(16,194,121	)		(4,451,770	)

Net loss	$	(20,576,402	)	$	(6,923,984	)	$	(23,130,986	)	$	(13,048,869	)

Loss per share – basic and diluted	$	(0.48	)	$	(0.17	)	$	(0.55	)	$	(0.32	)
Loss per share – basic	$	(0.48	)	$	(0.17	)	$	(0.55	)	$	(0.32	)

Weighted average number of shares of common stock outstanding – basic and diluted		43,187,439			40,828,188			41,979,194			40,728,740
Weighted average number of shares of common stock outstanding – basic		43,187,439			40,828,188			41,979,194			40,728,740

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

MARIZYME, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Three and Six Months Ended June 30, 2023 and 2022

(Unaudited)

	Shares		Amount		Capital		Deficit			Equity
	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		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		40,828,188	$	40,828	$	102,180,316	$	(60,872,432	)	$	41,348,712

	Common Stock				Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Capital			Deficit			Equity

Balance, December 31, 2022		40,528,191	$	40,528	$	103,370,890		$	(85,989,433	)	$	17,421,985
Stock-based compensation expense		-		-		210,966			-			210,966
Issuance of shares		240,000		240		153,360			-			153,600
Net loss		-		-		-			(2,554,584	)		(2,554,584	)
Balance, March 31, 2023		40,768,191		40,768		103,735,216			(88,544,017	)		15,231,967
Balance		40,768,191		40,768		103,735,216			(88,544,017	)		15,231,967
Stock-based compensation expense		-		-		160,762			-			160,762
Issuance of shares		1,946,410		1,946		221,540			-			223,486
Exercise of warrants		2,652,159		2,652		262,564			-			265,216
Issuance of warrants on debt extinguishment		-		-		19,058,426			-			19,058,426
Issuance of warrants on promissory note		-		-		1,333,128			-			1,333,128
Warrants cancelled in debt extinguishment		-		-		(8,426,927	)		-			(8,426,927	)
Net loss		-		-		-			(20,576,402	)		(20,576,402	)
Balance, June 30, 2023		45,366,760	$	45,366	$	116,344,709		$	(109,120,419	)	$	7,269,656
Balance		45,366,760	$	45,366	$	116,344,709		$	(109,120,419	)	$	7,269,656

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

MARIZYME, INC.

Condensed Consolidated Statements of ~~Operations~~Cash Flows

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2022 2021 2022 2021

Revenue $ 61,809 $ 160,785 $ 61,809 $ 234,737

Operating expenses:
Direct cost of revenue 11,025 119,221 11,025 150,063
Professional fees (includes related party amounts of $163,200, $90,000, $266,400, and $180,000 respectively) 873,865 455,552 1,417,905 984,625
Salary expenses 902,106 683,197 1,817,746 1,567,238
Research and development 1,371,470 244,686 2,589,766 636,190
Stock-based compensation 676,242 194,657 1,392,674 562,375
Depreciation and amortization 210,361 26,715 420,722 (186,216 )
Other general and administrative expenses 618,498 349,496 1,009,070 645,068
Total operating expenses 4,663,567 2,073,524 8,658,908 4,359,343
Total operating loss $ (4,601,758 ) $ (1,912,739 ) $ (8,597,099 ) $ (4,124,606 )

Other income (expense)
Interest and accretion expenses (530,226 ) (4,189 ) (829,770 ) (4,189 )
Change in fair value of contingent liabilities (1,792,000 ) 278,000 (3,622,000 ) 278,000
Total other income (expense) (2,322,226 ) 273,811 (4,451,770 ) 273,811

Net loss $ (6,923,984 ) $ (1,638,928 ) $ (13,048,869 ) $ (3,850,795 )

Loss per share – basic and diluted $ (0.17 ) $ (0.05 ) $ (0.32 ) $ (0.11 )

Weighted average number of shares of common stock outstanding – basic and diluted 40,828,188 35,928,188 40,728,740 35,928,188

	2023			2022
	Six Months Ended June 30,
	2023			2022

Cash flows from operating activities:
Net loss	$	(23,130,986	)	$	(13,048,869	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		420,631			420,722
Stock-based compensation		371,728			1,392,674
Interest and accretion on convertible notes and notes payable		15,121,870			829,770
Issuance of warrants for services		-			1,850,533
Change in fair value of contingent liabilities		(1,990,000	)		3,622,000
Loss on debt extinguishment		684,682			-
Loss on issuance of debt		2,377,569			-
Shares issued as part of the Confidential Settlement Agreement		153,600			-
Shares issued for services		138,000			-
Warrants issued as part of promissory note agreement		1,333,128			-
Change in operating assets and liabilities:
Accounts and other receivable		(4,171	)		(15,715	)
Prepaid expenses		519,414			21,787
Inventory		75,843			(246,060	)
Accounts payable and accrued expenses		1,467,328			(973,544	)
Due to related parties		143,351			(908,973	)
Net cash used in operating activities		(2,318,013	)		(7,055,675	)

Cash flows from financing activities:
Proceeds from issuance of Convertible Notes - OID, net of issuance cost		870,000			5,120,743
Proceeds from shares issued for exercise of warrants		265,216			3,000
Proceeds from promissory notes, net of repayments		877,158			(95,431	)
Net cash provided by financing activities		2,012,374			5,028,312

Net change in cash		(305,639	)		(2,027,363	)

Cash at beginning of period		510,865			4,072,339

Cash at end of period	$	205,226		$	2,044,976

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	$	5,461,702		$	1,938,379
Warrants and debt discount issued in connection with convertible notes	$	19,058,426		$	3,461,042
Settlement of notes payable with convertible notes	$	2,064,133		$	278,678
Warrants cancelled in debt extinguishment	$	8,426,927		$	-
Shares issued on conversion of convertible notes	$	84,140		$	-

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 Six Months Ended June 30, 2022 and 2021~~

~~(Unaudited)~~

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 - - - (2,211,867 ) (2,211,867 )
Balance, March 31, 2021 35,928,188 $ 35,928 $ 82,411,719 $ (39,037,501 ) $ 43,410,146
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 35,928,188 $ 35,928 $ 81,874,076 $ (40,676,429 ) $ 41,233,575

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 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 40,828,188 $ 40,828 $ 102,180,316 $ (60,872,432 ) $ 41,348,712

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

~~MARIZYME, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Six Months Ended June 30,
2022 2021

Cash flows from operating activities:
Net loss $ (13,048,869 ) $ (3,850,795 )
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and amortization 420,722 (186,216 )
Stock-based compensation 1,392,674 529,042
Stock-based compensation - restricted common stock - 33,333
Interest and accretion on convertible notes and notes payable 829,770 -
Issuance of warrants for services 1,850,533 -
Change in fair value of contingent liabilities 3,622,000 (278,000 )
Change in operating assets and liabilities:
Accounts and other receivable (15,715 ) (78,686 )
Prepaid expense 21,787 44,701
Inventory (246,060 ) 39,600
Accounts payable and accrued expenses (973,544 ) 506,418
Due to related parties (908,973 ) 265,000
Net cash used in operating activities (7,055,675 ) (2,975,603 )

Cash flows from financing activities:
Proceeds from promissory notes, net of issuance cost 5,120,743 74,945
Repayment of notes payable (95,431 ) -
Proceeds from exercise of warrants 3,000 -
Net cash provided by financing activities 5,028,312 74,945

Net change in cash (2,027,363 ) (2,900,658 )

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

Cash at end of period $ 2,044,976 $ 2,104

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 $ 1,938,379 $ 24,982
Warrants and debt discount issued in connection with convertible notes $ 3,461,042 $ 49,963
Settlement of notes payable with convertible notes $ 278,678 $ -
Contingent liabilities $
-
$ 9,648,000

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

MARIZYME, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

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 OTCQB tier of OTC ~~Markets’ QB tier~~Markets Group, Inc. under the symbol “MRZM”.

NOTE 2 – GOING CONCERN

The Company’s unaudited condensed consolidated financial statements are prepared using 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, which require the Company to rely on investing and ~~to allow it~~financing activities in order 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 $~~60,872,432~~109,120,419 at June 30, ~~2022~~2023 (December 31, ~~2021~~2022 - $~~47,823,563~~85,989,433). ~~Additionally,~~At June 30, 2023, the Company has negative working capital of $~~1,114,019~~19,763,141 (December 31, ~~2021~~2022 - $~~1,268,097~~966,464) and $~~2,044,976~~205,226 (December 31, ~~2021~~2022 - $~~4,072,339~~510,865) of cash on 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 and receive ~~a clearance~~an approval from the U.S. Food and Drug Administration ~~(the “FDA”~~(“FDA”) to extend the selling of ~~the~~its products into the U.S. market which ~~will allow~~may result in the Company ~~to attain~~attaining profitable operations.

During the next twelve months from the date the unaudited condensed consolidated financial statements were issued, 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”~~(“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 ~~offerings.~~offering. 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: My Health Logic ~~Inc~~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.

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 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 March ~~31, 2022~~24, 2023 (the ~~“2021~~“2022 Form 10-K”). The condensed consolidated balance sheet as of December 31, ~~2021~~2022 was derived from audited consolidated financial statements included in the ~~2021~~2022 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 1 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 to fairly present the results of operations, financial condition, cash flows and stockholders’ equity for the periods indicated. Except as otherwise disclosed, all such adjustments are of a normal recurring nature.

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 condensed consolidated statements of operations. As of June 30, 2023, the Company had deferred offering costs of $Nil (December 31, 2022 - $387,412) reported as a prepaid expense on the accompanying condensed consolidated balance sheets, and expensed an aggregate of $1,203,537of deferred offering costs - $535,717 of which was related to the extinguishment of 2021 Unit Purchase Agreement (see Note 7) and $667,820 related to a planned uplisting, which was not pursued due to a management’s decision to seek different means to obtain financing.

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 unaudited 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 and contingent ~~liabilities and deferred tax valuations.~~liabilities.

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 and considers counterparty credit risk in its assessment of fair value.

The carrying amounts of certain accounts and other ~~receivable,~~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~~Somahlution 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.

	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~~5.96 years. For the three and six months ended June 30, ~~2022,~~2023, changes in these assumptions resulted in a $582,000 and $1,206,000 decrease in fair value of these liabilities, respectively (June 30, 2022 – $2,092,000 and $2,898,000 increase, ~~in fair value of these liabilities, respectively.~~respectively). At June 30, ~~2022,~~2023, the fair market value of performance warrants and pediatric vouchers warrants liabilities was $~~7,250,000~~221,000 (December 31, ~~2021~~2022 – $~~4,352,000~~1,427,000).

	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 six months ended June 30, ~~2022,~~2023, changes in these assumptions resulted in a $129,000 and $796,000 decrease in fair value of this liability, respectively (June 30, 2022 – $293,000 decrease and $772,000 increase, ~~in fair value of this liability, respectively.~~respectively). At June 30, ~~2022,~~2023, the fair market value of royalty payments was $~~4,760,000~~4,606,000 (December 31, ~~2021~~2022 – $~~3,988,000~~5,402,000).

	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%. For the three and six months ended June 30, ~~2022,~~2023, changes in these assumptions resulted in a $3,000 decrease and $12,000 increase in fair value of this liability, respectively (June 30, 2022 – $7,000 and $48,000 decrease, ~~in fair value of this liability, respectively.~~respectively). At June 30, ~~2022,~~2023, the fair market value of rare pediatric voucher sales liability was $~~1,102,000~~1,067,000 (December 31, ~~2021~~2022 – $~~1,150,000~~1,055,000).

	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. 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 5 years. No~~years. No~~ changes to the fair value of liquidation preference liability were recorded in the three and six months ended June 30, 2023 and 2022. At June 30, ~~2022,~~2023, the fair market value of liquidation preference was $1,823,000 (December 31, ~~2021~~2022 – ~~$1,823,000)~~$1,823,000).

The derivative liabilities 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 7).~~convertible promissory notes and warrants transactions as described in Note 7.

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 June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, the fair values of these financial instruments were as follows:

SCHEDULE OF FAIR VALUES OF FINANCIAL INSTRUMENTS

June 30, 2023							Level 1		Level 2		Level 3
	Fair Value Hierarchy						Fair Value Hierarchy
June 30, 2022	Level 1		Level 2		Level 3
June 30, 2023							Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	-	$	-	$	4,423,725	$	-	$	-	$	5,461,702
Contingent liabilities		-		-		14,935,000		-		-		7,717,000
Total	$	-	$	-	$	19,358,725	$	-	$	-	$	13,178,702

December 31, 2022							Level 1		Level 2		Level 3
	Fair Value Hierarchy						Fair Value Hierarchy
December 31, 2021	Level 1		Level 2		Level 3
December 31, 2022							Level 1		Level 2		Level 3
Liabilities
Derivative liabilities	$	-	$	-	$	2,485,346	$	-	$	-	$	4,823,725
Contingent liabilities		-		-		11,313,000		-		-		9,707,000
Total	$	-	$	-	$	13,798,346	$	-	$	-	$	14,530,725

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

~~RECONCILIATION~~SCHEDULE OF LIABILITIES AT FAIR VALUE MEASURED

Derivative and Contingent Liabilities
Balance at December 31, 2021 $ 13,798,346
Change in fair value of contingent liabilities 3,622,000
Derivative liabilities issued pursuant to Unit Purchase Agreement 1,938,379
Balance at June 30, 2022 $ 19,358,725

Derivative and Contingent Liabilities
Balance at December 31, 2022	$	14,530,725
Change in fair value of contingent liabilities		(1,990,000	)
Derivative liabilities extinguished pursuant to Unit Private Placement (Note 7)		(4,823,725	)
Derivative liabilities issued pursuant to OID Purchase Agreement (Note 7)		5,461,702
Balance at June 30, 2023	$	13,178,702

~~The Company had $Nil~~ ~~in contingent liabilities and $24,982~~ ~~in derivative liabilities as at June 30, 2021.~~

Research and Development Expenses and Accruals

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,~~DuraGraft, and costs related to manufacturing ~~Duragraft~~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.

Stock-Based Compensation

Stock-based compensation expense for employees and directors is recognized in the ~~Condensed Consolidated Statements~~condensed consolidated statements of ~~Operations~~operations based on estimated amounts, including the grant date fair value and the expected service period. For stock options, ~~we estimate~~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. ~~We estimate~~The Company estimates 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, ~~we estimate~~the Company estimates the grant date fair value using ~~our~~its closing stock price on the date of grant. ~~We recognize~~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. ~~We recognize~~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 ~~our~~ share-based awards vest.

~~Comparative Information~~New Accounting Standards and Updates from the Securities and Exchange Commission

~~To conform with~~In June 2016, the ~~current period’s financial statement presentation,~~Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments - Credit Losses (Topic 326)”. The new standard amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. In February 2020, the FASB issued ASU 2020-02, “Financial Instruments-Credit Losses (Topic 326)” and “Leases (Topic 842)” - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (Topic 842), which amends the effective date of the original pronouncement for smaller reporting companies. ASU 2016-13 and its amendments will be effective for the Company ~~reclassified certain professional fees, salaries, rent~~for interim and ~~repairs~~annual periods in fiscal years beginning after December 15, 2022. Current Expected Credit Losses estimates of expected credit losses on trade receivables over their life will be required to be recorded at inception, based on historical information, current conditions, and ~~maintenance expenses related to research~~reasonable and ~~development activities for~~supportable forecasts. The Company adopted the ~~three and six months ended June 30, 2021, into the research and development expenses line item~~standard in its first quarter of 2023. There was no material impact on the ~~Condensed Consolidated Statements~~results of ~~Operations. Such reclassifications were not considered material and did not have any effect on the Company’s net loss for the three- and six- month periods ended June 30, 2021.~~operations.

~~NOTE 4 –~~ ~~ACQUISITION~~

~~My Health Logic Inc.~~

On November 1, 2021, Marizyme entered into a definitive arrangement agreement with Health Logic Interactive Inc. (“HLII”) pursuant to which the Company would acquire all of the issued and outstanding common shares of My Health Logic, a wholly owned subsidiary of HLII, in exchange for common shares of Marizyme (the “Marizyme Shares”).

Marizyme is dedicated to the 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.

~~On December 22, 2021, Marizyme received the necessary regulatory, court and stock exchange approval to complete the acquisition of 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 the total number of issued and outstanding Marizyme Shares (based on~~ ~~40,528,188~~ ~~Marizyme Shares issued and outstanding immediately after closing).~~

In accordance with ASC 805-10 the substance of a transaction constitutes a business combination as the business of 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 was 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 the estimated useful life of identifiable assets and liabilities acquired, provided below, to change, the tax basis related to these intangible assets is not final and remains preliminary at June 30, 2022.

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

~~SCHEDULE OF PRELIMINARY ALLOCATION OF CONSIDERATION~~

Consideration given up
Common shares $ 7,774,000
Total consideration given up $ 7,774,000

Fair value of identifiable assets acquired, and liabilities assumed
Net working deficit $ (613,156 )
Property, plant, and equipment 12,500
Intangible assets 6,600,000
Goodwill 1,774,656
Total identifiable assets $ 7,774,000

As a result of the My Health Logic acquisition, we 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, we acquired ownership rights to MATLOC patents issued in the European Union, Canada, and the United States.

~~The intangible assets acquired include:~~

	●	~~Trade name, with estimated remaining economic life of~~ 14 ~~years,~~
	●	~~Software, which enables customers to track and update their test results, with economic life of~~ 15 ~~years, and~~
	●	~~Biotechnology intangible assets related to lab-on-chip technology, with estimated remaining economic life of~~ 17 ~~years.~~

~~As part of the acquisition, Marizyme assumed an aggregate of $468,137~~ ~~in notes payable, the notes are unsecured, bear interest at a rate of~~ 9~~% per annum and mature on~~ ~~August 12, 2022. For the three and six months ended June 30, 2022, Marizyme recognized $4,501~~ ~~and $10,586~~ ~~of interest expense on the notes payable, respectively (June 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 six months ended June 30, 2022 (Note 7). As of June 30, 2022, balance of notes payable was $209,025~~ ~~(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 ~~37.5% was used in the fair value assumptions for the assembled workforce acquired.~~

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

NOTE 54 – LEASES

On December 11, 2020, the Company entered into a ~~5.5~~ ~~- year~~five-and-a-half-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 $10,800, 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 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 an 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 the total expanded premises have increased from approximately $12,000 to $17,500 per month. The term of the lease remains unchanged. As of June 30, ~~2022,~~2023, the remaining lease term was ~~4.08~~3.08 years. The lease ~~had~~has 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 six months ended June 30, 2023 was $37,674 and $192,502, respectively (June 30, 2022 ~~was approximately~~– $110,353 and $221,253~~, respectively (June 30, 2021 - $55,812~~ ~~and $91,412~~, respectively).

The following table summarizes supplemental condensed consolidated balance sheet information related to the operating ~~lease~~leases as of June 30, ~~2022,~~2023, and December 31, ~~2021.~~2022:

SCHEDULE OF RIGHT-OF-USE ASSET AND RELATED LEASE LIABILITIES

	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Right-of-use asset	$	1,667,151	$	1,158,776
Right-of-use assets					$	1,294,442	$	1,485,023

Operating lease liabilities, current	$	418,330	$	277,142	$	428,789	$	423,495
Operating lease liabilities, non-current		1,248,821		881,634		865,653		1,061,528
Total operating lease liabilities	$	1,667,151	$	1,158,776	$	1,294,442	$	1,485,023

As of June 30, ~~2022,~~2023, the maturities of the lease liabilities for the periods ending December 31 are as follows:

SCHEDULE OF MATURITIES OF THE LEASE LIABILITIES

2022 $ 206,583
2023 423,495
2024 434,082
2025 444,934
2026
266,034
Total lease payments 1,775,128
Less: present value discount (107,977 )
Total $ 1,667,151


2023	$	211,747
2024		434,082
2025		444,934
2026		266,034
Total lease payments		1,356,797
Less: Present value discount		(62,355	)
Total	$	1,294,442

NOTE 65 – 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, 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.~~

At December 31, 2022, management determined that the carrying value of Krillase exceeded its recoverable amount. Impairment of $24,350,000 was recognized on Krillase intangible assets and recorded in the impairment of intangible assets in the consolidated statements of operations for the year ended December 31, 2022. However, for the three and six months ended June 30, 2023 and 2022, no impairment has been recognized on Krillase intangible assets.

DuraGraft

As part of ~~Somah~~Somahlution acquisition in 2020, Marizyme purchased $18,170,000 of intangible assets related to the DuraGraft® technology.No impairment has been recognized on DuraGraft intangible assets for the three and six months ended June 30, 2023 and 2022.

My Health Logic

As part of My Health Logic acquisition ~~(Note 4),~~completed on December 22, 2021, 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.No impairment has been recognized on My Health Logic intangible assets for the three and six months ended June 30, 2023 and 2022.

SCHEDULE OF INTANGIBLE ASSETS AMORTIZATION EXPENSE

	June 30, 2022							December 31, 2021							June 30, 2023
	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	$	4,250,000	$	-		$	4,250,000
Patents in process		122,745		-			122,745		122,745		-			122,745		122,745		-			122,745
DuraGraft patent		5,256,000		(774,922	)		4,481,078		5,256,000		(572,768	)		4,683,232		5,256,000		(1,179,230	)		4,076,770
Duragraft - Distributor relationship		308,000		(59,033	)		248,967		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
DuraGraft - Distributor relationship																308,000		(89,833	)		218,167
DuraGraft IPR&D - Cyto Protectant Life Sciences																12,606,000		-			12,606,000
My Health Logic - Trade name		450,000		(16,875	)		433,125		450,000		(804	)		449,196		450,000		(49,018	)		400,982
My Health Logic - Biotechnology		4,600,000		(142,059	)		4,457,941		4,600,000		(6,765	)		4,593,235		4,600,000		(412,647	)		4,187,353
My Health Logic - Software		1,550,000		(54,250	)		1,495,750		1,550,000		(2,583	)		1,547,417		1,550,000		(157,583	)		1,392,417
Total intangibles	$	53,492,745	$	(1,047,139	)	$	52,445,606	$	53,492,745	$	(626,553	)	$	52,866,192	$	29,142,745	$	(1,888,311	)	$	27,254,434

	December 31, 2022
	Gross Carrying Amount		Accumulated Amortization			Impairment			Net Carrying Amount
Krillase intangible assets	$	28,600,000	$	-		$	(24,350,000	)	$	4,250,000
Patents in process		122,745		-			-			122,745
DuraGraft patent		5,256,000		(977,076	)		-			4,278,924
DuraGraft - Distributor relationship		308,000		(74,433	)		-			233,567
DuraGraft IPR&D - Cyto Protectant Life Sciences		12,606,000		-			-			12,606,000
My Health Logic - Trade name		450,000		(32,947	)		-			417,053
My Health Logic - Biotechnology		4,600,000		(277,353	)		-			4,322,647
My Health Logic - Software		1,550,000		(105,916	)		-			1,444,084
Total intangibles	$	53,492,745	$	(1,467,725	)	$	(24,350,000	)	$	27,675,020

SCHEDULE OF GOODWILL

Goodwill		DuraGraft				My Health Logic				Total
Balance, June 30, 2023 and December 31, 2022		$	5,416,000			$	1,774,656			$	7,190,656

~~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 June 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, 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 (420,586 )
Balance, June 30, 2022 $ 52,445,606

Balance, December 31, 2021	$	52,866,192
Impairment		(24,350,000	)
Amortization expense		(841,172	)
Balance, December 31, 2022		27,675,020
Amortization expense		(420,586	)
Balance, June 30, 2023	$	27,254,434

Future amortizations for ~~Duragraft~~DuraGraft and My Health Logic intangible assets for the remaining six month of the fiscal 2023 will be $420,586, for the next five years ~~will be~~from 2024 through 2028 - $841,172for each year, ~~from 2023 through 2027~~ and for 2029 and thereafter- $~~6,910,999~~6,069,827 ~~for 2028 and thereafter.~~. Amortization related to ~~the Krillase product and in process~~in-process research and development will be determined upon the Company achieving commercialization.

NOTE 6 – NOTES PAYABLE

a) On October 23, 2022, the Company issued a note payable to Hub International for $204,050 bearing interest at the annual rate of 6.75% per annum, due September 23, 2023, payable monthly starting November 23, 2022. As of June 30, 2023, the balance of note payable due was $41,887 (December 31, 2022 - $164,729).

b) On December 28, 2022, the Company issued a promissory note to Hexin for the principal amount of $750,000 bearing interest at the annual rate of 20% per annum, due June 28, 2023 (the “Hexin Promissory Note”). For the three and six months ended June 30, 2023, the Company accrued $25,914 and $64,133 in interest on the promissory note, respectively (June 30, 2022 - $Nil and $Nil, respectively). Hexin agreed to cancel the Hexin Promissory Note with the outstanding balance of $814,133 (the aggregate amount of principal plus accrued and unpaid interest as of May 30, 2023) in exchange for the issuance of 9,578,040 OID Units (see Note 7), which the Company issued to Hexin on May 30, 2023.

c) On February 2, 2023, the Company issued an unsecured promissory note to Walleye Opportunities Master Fund Ltd. (the “Walleye Promissory Note”) for $1,000,000 with a maturity date of May 7, 2023. The note carried no interest and the principal amount was required to be repaid in full on the maturity date. In the event that the principal amount was not repaid in full on maturity date, the principal amount required to be increased to $1,250,000. As of the maturity date of the note, the principal amount was not repaid and therefore increased from $1,000,000 to $1,250,000. Walleye agreed to cancel the promissory note, with the outstanding balance of $1,250,000 in exchange for the issuance of 14,705,890 OID Units (see Note 7), which were issued to Walleye on May 30, 2023.

d) As part of the My Health Logic Inc. acquisition, completed in November 2021, 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. The Company settled an aggregate of $278,678 of these notes payable as part of Unit Purchase Agreement issuances during the year ended December 31, 2022 (see Note 7). For the three and six months ended June 30, 2023, the Company accrued $5,298 and $18,366in interest on the notes payable, respectively (June 30, 2022 - $4,501 and $10,586, respectively). As of June 30, 2023, balance of the remaining note payable was $241,403 (December 31, 2022 - $218,100).

1213

NOTE 7 - CONVERTIBLE PROMISSORY NOTES AND WARRANTS

~~May~~ 2021 ~~Unit Purchase Agreement~~

~~On May 27, 2021, Marizyme entered into a 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 convertible into common stock of the Company, (ii) a warrant to purchase one share of common stock of the Company (the ‘Class A Warrant’);Convertible Notes 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 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.~~

~~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 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.~~

~~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.~~
	~~(ii)~~	~~Decreased the conversion price from $2.50~~ ~~per share to $2.25~~ ~~per share for all current Unit holders and all future investors~~
	~~(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 terms of the New Securities were substantially different from the Original Securities, and, as such the exchange of 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~~ ~~621,087~~ ~~Units previously issued were replaced with an aggregate of~~ ~~832,022~~ ~~pro-rata Units.~~

~~During the six months ended June 30, 2022, the Company issued additional~~ ~~3,322,929~~ ~~units under the New Securities agreement for the gross proceeds of $5,815,138. Of the total~~ ~~3,322,929~~ ~~Units issued: (i)~~ ~~159,245~~ ~~Units were issued to settle notes payable assumed on acquisition of My Health Logic (Note 4), (ii)~~ ~~22,857~~ ~~Units were issued to settle accounts payable, and~~ ~~171,428~~ ~~Units were issued in exchange for services rendered to the Company in the six months ended June 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.

~~The fair value of the warrants issued in the six months ended June 30, 2022, of $3,461,042~~ ~~(December 31, 2021 - $4,299,649) and the fair value of derivative liabilities of $1,938,379~~ ~~issued (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.~~

~~During the three and six months ended June 30,~~From May 2021 to August 2022, the Company ~~recognized interest~~conducted a private placement (the “Units Private Placement”) of units (the “Units”) consisting of 10% secured convertible promissory notes (the “Convertible Notes”) and ~~accretion expense~~accompanying warrants (the “Class C Warrants”), as were modified or amended from time to time. The most recent terms of $~~524,884~~the Convertible Notes and $~~816,881, respectively (June 30, 2021 - $4,189~~ ~~and $4,189, respectively) in the condensed consolidated statements of operations.~~

~~SCHEDULE OF CONVERTIBLE NOTES~~

Convertible Notes, Net of Debt Discount
Balance, December 31, 2021 $ 26,065
Convertible notes issued - new securities 5,815,138
Issuance costs (415,717 )
Debt discount (5,399,421 )
Debt accretion 816,881
Balance, June 30, 2022 $ 842,946

~~As of June 30, 2022 and December 31, 2021, the Company had the following convertible notes, net of debt discount outstanding:~~Class C Warrants were as follows:

~~SCHEDULE OF CONVERTIBLE NOTES NET OF DEBT DISCOUNT~~

June 30, 2022 December 31, 2021
Convertible notes - total principal $ 13,271,177 $ 7,482,104
Unamortized issuance costs and discount (12,428,231 ) (7,456,039 )
Convertible notes, net of debt discount $ 842,946 $ 26,065

Convertible Notes Terms

The Convertible Notes mature in 24 months from the initial closing date and accrue 10% of simple interest per annum on the outstanding principal 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 the September 2021 Amendment and originally $2.50 per the May Unit Purchase Agreement).~~share. 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 $1.75 per unit.

In the event that the Company consummates, while the Convertible Note is outstanding, an equity financing with a gross aggregate amount of securities sold less than $10,000,000 (“Unqualified Financing”), then the conversion price of the Convertible Notes of $1.75 per share and the exercise price of Class C warrants of $2.25 per share will change to the equity offering price. Moreover, in that event, the Class C Warrant holders may also apply a most-favored-nations clause in their warrants to request that their Class C Warrants provide that their warrant exercise rights should be further adjusted to allow them to purchase a proportionately higher number of additional shares equal to the initial number of shares which may be purchased by exercise of their Class C Warrants, multiplied by a fraction equal to the current exercise price divided by the adjusted exercise price, which would allow such Class C Warrant holders to purchase the same aggregate dollar amount of shares as initially provided such Class C Warrants. If the Convertible Notes and Class C Warrants’ conversion or exercise rights become so adjusted as a result of such an equity financing, then the Company would be required to register the additional shares of common stock that these securities may be converted into or exercised to purchase for resale. The Convertible Notes are secured by a first priority security interest in all assets of the Company.

~~New~~ Class C Warrants Terms

	●	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%.

The Company determined that the optional and automatic conversion feature and the share redemption feature attached to the Convertible Notes met the definition of derivative liabilities and that the detachable warrants issued did not meet the definition of a liability and therefore was accounted for as an equity instrument.

The fair value of the warrants issued and the fair value of derivative liabilities issued 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.

In 2021, the Company issued an aggregate of 4,260,594 Units for the proceeds of $6,692,765 net of issuance costs. In 2022, the Company issued additional 4,180,071 units for the proceeds of $6,500,743 net of issuance cost.

Adjustment to Conversion Price of Convertible Notes and Exercise Price of Class C Warrants

On April 13, 2023, the Company obtained exercise and conversion rights waivers and amendments from holders of the Convertible Notes and Class C Warrants (“Original Securities”), pursuant to which, the conversion price of the Convertible Notes and the exercise price of the Class C Warrants was adjusted to $0.10 per share (“New Securities”) and all other terms remained the same. On April 13, 2023, outstanding Convertible Notes had underlying principle of $14,432,996, and outstanding Class C Warrants were exercisable to purchase a total of 16,538,486 shares of common stock.

The Company determined that the terms of the New Securities were substantially different from the Original Securities, and, as such the exchange of the Original Securities for the New Securities was accounted for as an extinguishment of debt on April 13, 2023, and the New Securities accounted for as a new debt issuance.

As a result of this substantial modification, a total of 8,269,237 Units outstanding were replaced with an aggregate of 190,584,260 pro rata Units, and a loss on debt extinguishment of $684,682was recorded in condensed consolidated statements of operations for the six months ended June 30, 2023 (June 30, 2022 - $Nil).

The Company determined that the optional conversion feature attached to the Convertible Notes did not meet the definition of derivative liabilities and that the detachable warrants issued did not meet the definition of a liability and therefore was accounted for as an equity instrument. The fair value of $19,058,426 of the warrants issued has been recorded as a component of equity and a debt discount and is being amortized to interest and accretion expense using the effective interest method over the term of the Convertible Notes.

During the three and six months ended June 30, 2023, the Company recognized interest and accretion expense of $5,730,714 and $7,286,891, respectively, on the Original and New Securities in aggregate (June 30, 2022 - $524,884 and $816,881, respectively) in the condensed consolidated statements of operations.

Each of the Convertible Notes provides that any default on indebtedness of more than $100,000, other than indebtedness under the respective Convertible Notes, will also result in default under the Convertible Notes. Due to the non-repayment of the initial principal amount of $1,000,000 under the Walleye Promissory Note by its maturity date of May 7, 2023 (see Note 6), the Company also defaulted under the Convertible Notes on the same date. The Convertible Notes provide that due to this default, the Company became obligated to pay 135% of the outstanding principal amount under each of the Convertible Notes on the date on which the default occurred (the “Mandatory Default Amount”). The Mandatory Default Amount may be declared due by each holder immediately. The aggregate Mandatory Default Amount that may be due under the Convertible Notes was $27,996,132 on the date of the default, or $7,258,256 more than would otherwise have been due under the Convertible Notes on the date of the default. Therefore, as a result of the event of the default, the Company accreted $7,258,256 to the value of the Convertible Notes and included this amount in interest and accretion expenses on the condensed consolidated statement of operations. The holders of the Convertible Notes have not exercised any remedies applicable to the Convertible Notes as of the date of this report. In the event that the balance owed under the Convertible Notes, including the respective Mandatory Default Amount, is not repaid upon demand, the holders of the Convertible Notes may seek to take possession of some or all of the Company’s and its subsidiaries’ assets, force the Company and its subsidiaries into bankruptcy proceedings, or seek other legal remedies against the Company and its subsidiaries. In such an event, the Company’s business, operating results and financial condition may be materially adversely affected.

The following table summarizes supplemental balance sheet information related to the convertible notes, net of debt discount outstanding, as of June 30, 2023, and December 31, 2022:

SCHEDULE OF CONVERTIBLE NOTES

Convertible Notes, Net of Debt Discount
Balance, December 31, 2021	$	26,065
Principal of Convertible Notes issued - Original securities		7,315,138
Issuance costs		(535,717	)
Debt discount		(6,479,421	)
Debt accretion		2,763,749
Debt extinguishment		(338,181	)
Balance, December 31, 2022		2,751,633
Debt accretion on Original securities		1,835,741
Debt extinguishment		(4,587,374	)
Principal of Convertible Notes issued - New securities		19,058,426
Debt discount		(19,058,426	)
Debt accretion on New Securities		5,451,150
Debt accretion associated with Mandatory Default Amount		7,258,256
Conversion of debt		(85,486	)
Balance, June 30, 2023	$	12,623,920

SCHEDULE OF CONVERTIBLE NOTES NET OF DEBT DISCOUNT

	June 30, 2023			December 31, 2022
Convertible notes - total principal	$	18,824,730		$	14,432,996
Mandatory Default Amount		7,258,256			-
Unamortized issuance costs and discount		(13,459,066	)		(11,681,363	)
Convertible Notes, Net of Debt Discount	$	12,623,920		$	2,751,633

	June 30, 2023		December 31, 2022
Current portion	$	12,316,495	$	-
Non-current portion		307,425		2,751,633
Convertible Notes, Net of Debt Discount	$	12,623,920	$	2,751,633

2023 Convertible Notes and Warrants

On May 12, 2023, the Company conducted the initial closing (the “OID Units Initial Closing”) of a private placement of up to $10,000,000 for an aggregate of up to 100,000,000 units (the “OID Units”) under a Unit Purchase Agreement, dated as of the same date, with accredited investors (the “OID Purchase Agreement”), each consisting of (i) a 15% original issue discount unsecured subordinated convertible promissory note (each, a “OID Convertible Note” and collectively, the “OID Convertible Notes”), convertible into shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment, (ii) a warrant for the purchase of 125% of the shares of common stock into which the related OID Convertible Notes may be converted at $0.10 per share, subject to adjustment (the “Class E Warrant”), and (iii) a warrant for the purchase of 125% of the shares of common stock into which the related OID Convertible Note may be converted at $0.20 per share, subject to adjustment (each, a “Class F Warrant,” and each Class F Warrant together with each Class E Warrant collectively, the “OID Warrants”).

As part of the OID Units Initial Closing and on the same date, Walleye Opportunities Master Fund Ltd. (“Walleye”) paid a subscription amount of $1,000,000 and the Company issued Walleye 11,764,710 OID Units consisting of (i) an OID Convertible Note in the principal amount of $1,176,471, convertible into 11,764,710 shares of common stock plus additional shares based on accrued interest at $0.10 per share, (ii) a Class E Warrant for the purchase of 14,705,880 shares of common stock, and (iii) a Class F Warrant for the purchase of 14,705,880 shares of common stock at $0.20 per share.

On May 30, 2023, the Company conducted the second closing (the “OID Units Second Closing”) of the OID Units Private Placement. In the OID Units Second Closing, Hexin Global Ltd. (“Hexin”) and Walleye agreed to the cancellation of the Hexin Promissory Note and the Walleye Promissory Note (see Note 6), respectively, and Frank Maresca (“Maresca”), a consultant to the Company, agreed to the cancellation of certain indebtedness, in exchange for OID Units and related agreements, as described below.

First, under a Cancellation and Exchange Agreement, dated as of May 30, 2023, between the Company and Hexin (the “Hexin Cancellation Agreement”), Hexin agreed to cancel the Hexin Promissory Note (see Note 6) in exchange for the issuance of 9,578,040 OID Units consisting of (a) an OID Convertible Note in the principal amount of $957,804 for a subscription equal to $814,133, convertible into 9,578,040 shares of common stock plus additional shares based on accrued interest at $0.10 per share, (b) a Class E Warrant for the purchase of 11,972,550 shares of common stock at $0.10 per share, and (c) a Class F Warrant for the purchase of 11,972,550 shares of common stock at $0.20 per share.

Second, under a Cancellation and Exchange Agreement, dated as of May 30, 2023, between the Company and Walleye (the “Walleye Cancellation Agreement”), Walleye agreed to cancel the Walleye Promissory Note (see Note 6) in exchange for the issuance of 14,705,890 Units consisting of (a) an OID Convertible Note in the principal amount of $1,470,589 for a subscription equal to $1,250,000, convertible into 14,705,890 shares of common stock plus additional shares based on accrued interest at $0.10 per share, (b) a Class E Warrant for the purchase of 18,382,362 shares of common stock at $0.10 per share, and (c) a Class F Warrant for the purchase of 18,382,362 shares of common stock at $0.20 per share.

Third, under a Cancellation and Exchange Agreement, dated as of May 30, 2023, between the Company and Maresca (the “Maresca Cancellation Agreement” and together with the Hexin Cancellation Agreement and the Walleye Cancellation Agreement, the “Cancellation and Exchange Agreements”), Maresca agreed to cancel $150,000 of the aggregate short-term indebtedness to Maresca, which arose in the ordinary course of business for certain consulting services provided by Maresca to the Company, in exchange for the issuance of 1,764,710 Units consisting of (a) an OID Convertible Note in the principal amount of $176,471 for a subscription equal to $150,000 (the amount of the indebtedness being cancelled), convertible into 1,764,710 shares of common stock plus additional shares based on accrued interest at $0.10 per share, (b) a Class E Warrant for the purchase of 2,205,887 shares of common stock at $0.10 per share, and (c) a Class F Warrant for the purchase of 2,205,887 shares of common stock at $0.20 per share.

The Company determined that the optional conversion feature attached to the OID Convertible Notes did not meet the definition of derivative liability and that the detachable warrants issued met the definition of a liability and therefore was accounted for as a derivative liability instrument. The warrants were fair valued at $5,461,702 and recorded as derivative liabilities on the condensed consolidated balance sheets at June 30, 2023. As a result of the warrant liability exceeding the value of the debt principal, the Company recorded a $2,377,569 loss on issuance of debt that was recorded in condensed consolidated statements of operations for the six months ended June 30, 2023 (June 30, 2022 - $Nil).

During the three and six months ended June 30, 2023, the Company recognized interest and accretion expense of $150,086 and $150,086, respectively (June 30, 2022 - $Nil and $Nil, respectively), in the condensed consolidated statements of operations.

The following table summarizes supplemental balance sheet information related to the OID Convertible Notes, net of debt discount outstanding, as of June 30, 2023, and December 31, 2022:

SCHEDULE OF CONVERTIBLE NOTES

OID Convertible Notes, Net of Debt Discount
Balance, December 31, 2022	$	-
Issuance of convertible notes		3,781,335
Issuance cost		(697,202	)
Debt discounts		(3,084,133	)
Debt accretion		150,086
Balance, June 30, 2023	$	150,086

SCHEDULE OF CONVERTIBLE NOTES NET OF DEBT DISCOUNT

	June 30, 2023			December 31, 2022
OID Convertible Notes - total principal	$	3,781,335		$	-
Unamortized issuance costs and discount		(3,631,249	)		-
OID Convertible Notes, Net of Debt Discount	$	150,086		$	-

	June 30, 2023		December 31, 2022
Current portion	$	150,086	$	-
Non-current portion		-		-
OID Convertible Notes, Net of Debt Discount	$	150,086	$	-

2023 Convertible Notes Terms

The OID Convertible Notes will mature in nine months from the date of the OID Units Initial Closing and accrue 10% of interest per annum on the outstanding principal amount. The OID Convertible Notes will be unsecured and subordinated to any senior indebtedness of the Company. The OID Convertible Notes’ principal and accrued interest may generally be converted at any time at a conversion price of $0.10 per share, subject to adjustment, at the option of the holder, into shares of common stock, subject to certain limitations: (i) conversion would not cause the holder to beneficially own more than 4.99% of the Company’s common stock, or more than 9.99% if the holder beneficially owns more than 4.99% of common stock based on ownership of equity securities of the Company other than the OID Convertible Notes or the respective warrants; and (ii) the Company’s articles of incorporation have been amended to increase the number of authorized shares of common stock to a sufficient amount to permit the full conversion of the OID Convertible Notes (the “Capital Event Amendment”).

2023 Warrants Terms

The Class E Warrants and Class F Warrants are generally exercisable for a period from the date of the Capital Event Amendment until five years from the date of issue. The exercise right is subject to a similar beneficial ownership limitation that applies to conversion of the OID Convertible Notes above, i.e., exercise is permitted only if it would not cause the holder to beneficially own more than 4.99% of the Company’s common stock, or more than 9.99% if the holder beneficially owns more than 4.99% of common stock based on ownership of equity securities of the Company other than the OID Convertible Notes or the Class E Warrants and Class F Warrants.

NOTE 8 – 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 June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, there were 0no shares of preferred stock issued or outstanding.

b)	*Common stock*

The Company is authorized to issue a total number of ~~75,000,000~~300,000,000 shares of common stock with a par value of $0.001.

As of June 30, ~~2022, and December 31, 2021,~~2023, there were ~~40,828,188~~45,366,760 ~~and~~(December 31, 2022 - ~~40,528,188~~40,528,191) shares of common stock issued and ~~outstanding, respectively.~~ outstanding.

During the six months ended June 30, ~~2022,~~2023, the Company ~~issued~~ ~~300,000~~ ~~shares of common stock for exercise of warrants.~~completed the following issuances:

14	●	The Company issued 240,000 shares of common stock to Nicholas DeVito as part of the Confidential Settlement Agreement, dated November 18, 2022 (see Note 10).
	●	The Company issued 2,652,159 shares of common stock on exercise of warrants granted as part of the Somahlution acquisition, completed on July 30, 2020.
	●	The Company issued 600,000 shares to Mr. Frank Maresca in order to reimburse Mr. Maresca for the shares of Common Stock that were previously cancelled.
	●	The Company issued 1,346,410 shares on conversion of the debt (see Note 7).

c)	*Options*

On May 18, 2021, ~~our~~the Company’s Board of Directors approved the Marizyme, Inc. Amended and Restated 2021 Stock Incentive Plan (“SIP”). The SIP incorporates stock options issued prior to May 18, 2021. The SIP authorized 5,300,000 options for issuance. On December 27, 2022, the Board of Directors requested that stockholders ratify an amendment to the SIP to increase the maximum number of shares of common stock available for issuance pursuant to awards granted under the SIP by 1,900,000 to 7,200,000, which was approved by the stockholders. As of June 30, ~~2022,~~2023, there remains ~~899,057~~2,924,057 options available for issuance (December 31, ~~2021~~2022 – ~~1,274,057~~2,924,057).

During the three and six months ended June 30, ~~2022,~~2023, the Company granted ~~400,000~~Nil (December 31, ~~2021~~2022 – ~~1,532,500~~400,000) share purchase options to directors of the Company.

The summary of option activity for the six months ended June 30, ~~2022,~~2023, 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, 2020		3,800,943		$	1.36		8.82
Granted		1,532,500			1.51
Forfeited		(1,682,500	)		1.36
Outstanding at December 31, 2021		3,650,943		$	1.24		8.34	$	1,951,117		3,650,943		$	1.24		8.34
Granted		400,000			2.20		9.95		196,000		400,000			2.20
Outstanding at June 30, 2022		4,050,943			1.33		8.05		5,505,984
Exercisable at June 30, 2022		2,970,111		$	1.13		7.52	$	4,629,586
Expired											(62,502	)		1.25
Forfeited											(62,498	)		1.25
Outstanding at December 31, 2022											3,925,943		$	1.33		6.06	$	-
Granted/forfeited											-			-		-		-
Outstanding at June 30, 2023											3,925,943			1.33		5.56		-
Exercisable at June 30, 2023											3,479,831		$	1.26		5.17	$	-

As of June 30, ~~2022,~~2023, the Company had the following options outstanding:

SCHEDULE OF OPTIONS OUTSTANDING AND EXERCISABLE

Exercise Price	Exercise Price	Number of Options Outstanding		Number of Options Exercisable		Weighted Average Remaining Contractual Years		Intrinsic Value		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		6.93	$	3,336,384	1.01		1,985,943		1,985,943		3.00	$	-
	1.25		665,000		584,168		8.60		957,600	1.25		540,000		533,888		7.66		-
	1.37		200,000		200,000		8.14		264,000	1.37		200,000		200,000		7.14		-
	1.75		800,000		200,000		9.41		752,000	1.75		800,000		520,000		8.41		-
	2.20		400,000		-		9.95		196,000	2.20		400,000		240,000		8.95		-
$	1.33		4,050,943		2,970,111		8.05	$	5,505,984	1.33		3,925,943		3,479,831		5.56		-

d)	*Restricted Share Units*

During the year ended December 31, 2021, the Company granted restricted share awards for an aggregate of 350,000 shares of common stock to directors, senior officers and consultants of the Company, with underlying performance conditions. As of June 30, ~~2022, we determined that the following~~2023, only two out of four performance ~~condition attached to the restricted share awards granted in the fiscal 2021 were more likely than not to be 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~~conditions have been achieved. Compensation cost of $~~295,750~~Nil for the restricted share awards was recognized in stock-based compensation for the three and six months ended June 30, ~~2022~~2023 (June 30, ~~2021~~2022 - $Nil) and $295,750, respectively).

e)	*Warrants*

As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, there ~~are~~were ~~19,255,465~~478,757,133 and ~~12,144,838~~20,048,487 warrants outstanding, respectively.

SCHEDULE OF WARRANTS OUTSTANDING

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 6,645,866 2.25
Issued 878,398 1.16
Exercised (300,000 ) 0.01
Expired (113,637 ) 3.00
June 30, 2022 19,255,465 $ 2.64

	Number			Weighted Average Price
Balance, December 31, 2021		12,144,834		$	2.90
Issued pursuant to Unit Purchase Agreement		8,360,147			2.25
Issued		878,398			1.16
Exercised		(300,000	)		0.01
Expired		(113,637	)		3.00
Cancelled pursuant to FINRA		(578,398	)		1.75
Cancelled as part of debt extinguishment		(342,857	)		2.25
Balance, December 31, 2022		20,048,487		$	2.64
Warrants modified pursuant to debt extinguishment (Note 7)		355,577,447			0.10
Issued pursuant to debt agreements (Note 7)		94,533,358			0.15
Issued pursuant to Hexin Promissory Note (Note 6)		11,250,000			0.13
Exercised		(2,652,159	)		0.10
Balance, June 30, 2023		478,757,133		$	0.12

~~During the six months ended June 30, 2022, the Company issued the following:~~

On ~~January 26 and February 14, 2022, in exchange for services of Mr. Richmond, we granted him~~ ~~300,000~~ ~~warrants~~April 13, 2023, the Company delivered offer letter agreements (the “Somahlution Warrant Offer Letter Agreements”) to the Former Somahlution Owners, which offered to allow the Former Somahlution Owners to exercise the Somahlution Warrants to purchase ~~an aggregate~~ ~~300,000~~the number of restricted shares of ~~Marizyme’s~~ common stock issuable under the Somahlution Warrants at an exercise price reduced by the Company from $5.00 per share to $0.10 per share, on or prior to April 21, 2023, for maximum total cash proceeds of $299,996. As of the conclusion of this offer period, four of the Former Somahlution Owners had entered into Somahlution Warrant Offer Letter Agreements and had exercised their Somahlution Warrants to purchase a total of ~~0.01~~2,652,159 shares of common stock for gross proceeds of approximately $265,216 (the “Somahlution Warrants Exercise”).

As a result of this warrant exercise, pursuant to the terms applicable to the Convertible Notes and the Class C Warrants (see Note 7), the conversion price of the Convertible Notes adjusted from $1.75 per share to $0.10 per share, the exercise price of the Class C Warrants adjusted from $2.25 per share to $0.10 per share, and the number of shares that the Class C Warrants may be exercised to purchase was increased proportionately. In connection with these developments and the lack of sufficient authorized shares of common stock under the Company’s articles of incorporation to meet its obligations under outstanding convertible or exercisable securities, the Company also obtained additional conversion and exercise rights waivers from Convertible Note and Class C Warrant holders. As a result of these adjustment provisions and the conversion and exercise terms applicable to the Class C Warrants, including the effect of the applicable waivers, the number of shares that the Class C Warrants may be exercised to purchase adjusted from 5,109,904 shares of common stock to 114,973,110 shares.

In May 2023, the Company issued OID Convertible Notes for aggregate principal of $3,781,335 and convertible into up to 37,813,350 shares of common stock not including shares convertible from interest under the Convertible Notes, Class E Warrants exercisable for the purchase of 47,266,679 shares of common stock at $0.10 per share, and Class F Warrants for the purchase of 47,266,679 shares of common stock at $0.20 per share. The OID Convertible Notes, Class E Warrants and Class F Warrants will not be convertible or exercisable until the Capital Event Amendment becomes effective. As described in Note 7, Class E and Class F warrants were accounted for as a liability, were fair valued at an aggregate amount of $5,461,702 and were recorded as a short-term derivative liability on the condensed consolidated balance sheets at June 30, 2023.

Pursuant to the Hexin Promissory Note (see Note 6), on May 22, 2023, the Company issued Hexin a Class E Warrant that may be exercised to purchase 7,500,000 shares of common stock for $0.10 per share, and a Class F Warrant that may be exercised to purchase 3,750,000 shares of common stock for $0.20 per share (collectively, the “Hexin Warrants”). The Hexin Warrants will be exercisable in accordance with the exercise terms and conditions of the other Class E and Class F Warrants described above (see Note 7). The warrants issued had an average term of 5 years, vested immediately, and were fair valued at $~~568,677~~1,333,127 and were recorded in ~~salary expense~~other general and administrative expenses in the condensed consolidated statements of operations for the three and six months ended June 30, ~~2022. On March 15, 2022, Mr. Richmond exercised~~ ~~300,000~~ ~~warrants issued to him.~~2023.

1519

~~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 six months ended June 30, 2022.~~

~~In the six months ended June 30, 2022, pursuant to the Unit Purchase Agreement the Company issued an aggregate of~~ ~~6,645,866~~ ~~additional New Class C warrants with an exercise price of $2.25~~ ~~per share and a term of~~ ~~five years~~.

f)	*Stock-based compensation*

During the three and six months ended June 30, ~~2022,~~2023, the Company recorded $160,762 and $371,728 in non-cash share-based compensation, respectively (June 30, 2022 - $676,242 and $1,392,674 ~~in non-cash share-based compensation in the stock-based compensation line on the condensed consolidated statements of operations, respectively (June 30, 2021 - $194,657~~ ~~and $562,375~~, respectively). ~~As of June 30, 2022, there was $2,154,935~~ ~~of total unrecognized compensation cost related to non-vested stock-based compensation awards. The unrecognized compensation cost is expected to be recognized over a weighted average period of~~ ~~1.85~~ ~~years.~~

NOTE 9 – RELATED PARTY TRANSACTIONS

As at June 30, ~~2022,~~2023, the Company owed an aggregate of $~~223,661~~143,351 (December 31, ~~2021~~2022 - $~~1,132,634~~Nil) 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:~~

●

~~The Company received consulting services from Mr. Maresca~~

For the three and ~~pursuant to the agreement incurred $180,000~~ ~~in professional expenses in the six months ended June 30, 2022 (June 30, 2021 - $180,000). At June 30, 2022, the Company owes a total of $221,316~~ ~~for consulting services provided and service-related expenses incurred by Mr. Maresca during the period ended June 30, 2022.~~

~~In the~~ six months ended June 30, ~~2022,~~2023, the Company incurred and settled ~~additional~~$72,000 and $144,000, respectively (June 30, 2022 -$24,400 and $86,400, respectively), in professional ~~services~~service rendered by related parties of the Company and incurred and settled $~~101,781~~12,621 inof various expenses incurred by these parties in relation to their services rendered to the Company. The services were provided by entities which are controlled by management and are pursuant to various consulting agreements.

During the three and six months ended June 30, 2023, the Company also incurred $332,750 and $665,500 in compensation to Directors and Executive Officers for their services rendered, respectively (June 30, 2022 – $43,200 and $86,400, respectively), and settled $387,750 and $631,500 in compensation, respectively.

Additionally, as part of the ~~Somah~~Somahlution acquisition in 2020, the Company recorded a prepaid royalty to the shareholders of Somahlution. The former primary beneficial owner is Dr. Vithal Dhaduk, currently a director, and significant shareholder of the Company. During the three and six months ended June 30, 2023, the Company accrued $11,065 and $47,248 in royalties payable incurred on sales of the DuraGraft product outside of the U.S., respectively. This amount was offset against the prepaid royalty receivable.

During the six months ended June 30, 2023, the Company and shareholders of Somahlution agreed to reduce the prepaid royalty balance by 50% or by $151,000. As at June 30, ~~2022,~~2023, the Company had $~~339,091~~140,843 in prepaid royalties (December 31, ~~2021~~2022 - $339,091) which had been classified as non-current in the condensed consolidated balance sheets.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Legal Matters

~~On August 19, 2021, Dr. Neil Campbell, former President, Chief Executive Officer and director of~~Under a Confidential Settlement Agreement, dated November 18, 2022, the Company and ~~Bruce Harmon, former Chief Financial Officer and Secretary~~Nicholas DeVito agreed that Mr. DeVito would dismiss a Complaint that Mr. DeVito filed on June 7, 2022 in the Circuit Court of the ~~Company, each filed a Complaint~~Fifteenth Judicial Circuit in and ~~Demand~~ for Jury Trial 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 allegePalm Beach County, Florida, Case No. 50-2022-CA-005437. The parties also agreed 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 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 thatfollowing an anticipated reverse split, the Company was ~~not addressing~~required to ~~their satisfaction. Both Campbell/Harmon Complaints demand approximately $~~issue Mr. DeVito ~~30,000~~16,000 ~~- $50,000~~“post-split” shares to be delivered in ~~back pay~~paper certificate form within three (3) business days of the reverse split. The settlement agreement further provided that the delivered shares would be subject to normal 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~~customary restrictions pursuant to Rule 144 of the ~~court deems equitable.~~SEC. In the ~~six months ended June 30,~~event no split occurred by December 12, 2022, ~~both cases were dismissed with prejudice~~the Company was required to issue Mr. DeVito 60,000 “pre-split” shares. In addition, the parties agreed that no further continuous service is required pursuant to Section 2 of the Mutual Release of Claims Agreement between Mr. DeVito and ~~without any financial impact~~the Company dated as of August 27, 2020. Pursuant to the agreement, on January 5, 2023, the ~~Company.~~Company issued 240,000 shares of common stock to Mr. DeVito (see Note 8b).

Contingencies

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

	●	$30,000 per month through July 13, ~~2022,~~2022.
	●	Option to purchase250,000 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 on September 2, 2020.
	●	Royalties based on sales of Krillase assets, equal to 10% of net sales of the product. During the six months ended June 30, ~~2022,~~2023, no revenues were derived from sales of Krillase product.

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

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. During the three and six months ended June 30, ~~2022,~~2023, the Company had not earned any revenues from Krillase, ~~and~~however the Company did ~~not have any~~incur sales of the DuraGraft products inoutside of the U.S., ~~therefore no~~on which $11,065 and $47,248 in royalties have been accrued ~~or paid in~~and offset against the ~~period.~~prepaid royalties receivable, respectively (see Note 9).

Upon receiving FDA clearance for the ~~Duragraft~~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.

The Company has entered into arrangements for office and laboratories spaces. As of June 30, ~~2022,~~2023, minimum lease payments in relation to lease commitments are payable as described in Note 5.4.

~~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 our 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 we might interact, might impact the approval of any applications we plan and will need to file in the future.

In addition, we are dependent upon certain contract manufacturers and suppliers and their ability to reliably and efficiently fulfill our orders is critical to our business success. The COVID-19 pandemic has impacted and may continue to impact certain of our manufacturers and suppliers. As a result, we have faced and may continue to face delays or difficulty sourcing certain products, which could negatively affect our 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 our ability to access capital in the future, which could negatively affect our liquidity.

If the COVID-19 pandemic does not continue to slow and the spread of COVID-19 is not contained, our 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 our ability to operate our 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 11 - SUBSEQUENT EVENTS

~~Reverse Stock Split~~Third Closing of OID Private Placement

On ~~August 1, 2022,~~July 10, 2023, the ~~Board of Directors (the “Board”~~Company conducted the third closing (“OID Units Third Closing”) of ~~Marizyme approved~~the OID Unit Private Placement of up to $10,000,000 for an aggregate of up to 100,000,000 OID Units under a ~~reverse stock split of the Company’s common stock at a ratio of~~ ~~1-for-4~~ ~~(the “Reverse Stock Split”) in connection with a proposed Nasdaq listing. The Reverse Stock Split will become effective after the Financial Industry Regulatory Authority (“FINRA”) approval~~Unit Purchase Agreement between Hexin and the ~~Nasdaq Stock Market LLC approval of the Company’s listing application (the “Effective Date”)~~Company (see Note 7).

OnIn connection with the ~~Effective Date, the total number~~OID Units Third Closing, on July 10, 2023, Hexin paid a subscription amount of ~~shares of common stock held by each stockholder will be converted automatically into the number of whole shares of Common Stock equal to the number of issued~~$1,000,000, and ~~outstanding shares of common stock held by such stockholder immediately prior to the Reverse Stock Split, divided by four.~~

~~As of August 15, 2022, there were~~ ~~40,828,188~~ ~~shares of common stock outstanding. As a result of the Reverse Stock Split, there will be approximately~~ ~~10,207,048~~ shares of common stock outstanding, not including the shares of common stock that the Company expects to issue in its anticipated public offering. No fractional shares will be issued, and no cash or other consideration will be paid. Instead, the Company will issue 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.

~~Final Closing of Unit Purchase Agreement~~

~~On August 12, 2022, the Company conducted the final closing of the Unit Purchase Agreement, in which~~ the Company issued ~~to an investor Un~~11,764,710~~its~~ OID Units consisting of ~~a convertible note~~(i) an OID Convertible Note in the ~~aggregate~~ principal amount of $~~1,500,000~~1,176,471, convertible into ~~857,142~~11,764,710 shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment, ~~and~~(ii) a Class CE Warrant for the purchase of ~~1,714,285~~14,705,880 shares of common stock at $~~2.25~~0.10 per share, subject to adjustment, and (iii) a Class F Warrant for the purchase of 14,705,880 shares of common stock at $0.20 per share, subject to adjustment.

In connection with the OID Units Third Closing, the Company received net proceeds of $730,000.

The OID Convertible Note issued in the OID Units Third Closing will mature nine months after issuance and accrue 10% of interest per annum on the outstanding principal amount (see Note 7).

Special Stockholder Meeting, Change in Capitalization

On August 9, 2023 the Company held a special meeting of stockholders where an amendment to the Company’s articles of incorporation to increase the total number of shares of authorized common stock from 300,000,000 to 2,000,000,000 (the “Capital Event Amendment”) was proposed, voted on and approved.

Reinstatement of Compensation to Univest Securities, LLC and Mr. Richmond

On February 14, 2022, the Company filed a registration statement on Form S-1, which was subsequently amended on certain dates (the “Withdrawn Registration Statement”), relating to the Company’s proposed underwritten public offering (the “Offering”). Univest was named as the representative of the underwriters of the Offering. The staff (“FINRA Staff”) of the Corporate Financing Department of the Financial Industry Regulatory Authority, Inc. (“FINRA”) determined that the sales of Units, securities, as well as a grant of a stock option to Mr. Richmond constituted underwriting compensation in connection with the Company’s proposed public offering pursuant to FINRA Rule 5110, based on the FINRA Staff’s interpretation of such rule. Consequently, each of Univest and Mr. Richmond, pursuant to a letter agreement entered into with the Company, dated October 28, 2022, addressed and submitted to the FINRA Staff (the “October 2022 Letter Agreement”), agreed to forego their applicable rights to these securities. Pursuant to the October 2022 Letter Agreement, the parties thereto agreed that the cancellation or disposal of the aforementioned securities shall be without recourse by either Univest or Mr. Richmond. Accordingly, all issued Units and shares were subsequently cancelled, and the Company and Mr. Richmond agreed to the transfer of his stock option to a Company designee who is unaffiliated with Mr. Richmond.

On June 22, 2023, Univest and Mr. Richmond requested that the Company either reissue the cancelled securities or issue them new securities with equivalent terms and conditions, in light of the fact that the Company was not proceeding with the Offering.

Pursuant to these requests, on July 25, 2023, the Company approved the grant of replacement securities to Univest and Mr. Richmond: (i) Convertible Notes, convertible into shares of common stock at $0.10 per share, such that the adjusted principal is $137,984 and $206,975, respectively, maturing on July 25, 2025, such that up to 1,683,131 and 2,524,697 shares of common stock are issuable upon conversion thereof if held to maturity; (ii) Class C Warrants with the exercise price of $0.10 per share, exercisable into up to 3,548,148 and 5,322,223 shares of common stock, respectively; (iii) placement agent warrants with the exercise price per share of $0.10, exercisable into up to 4,048,782 and 6,073,182 shares of common stock, respectively; and (iv) 300,000 shares of common stock to Mr. Richmond.

1722

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

This discussion covers the three ~~months (“Q2 2022” or the “Quarter”)~~ and six months ended June 30, ~~2022~~2023 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, ~~2021~~2022 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, ~~2021 (“2021~~2022 (the “2022 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.~~amended (the “Exchange Act”). 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.~~“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 life science~~medical technology company ~~dedicated~~seeking to change the landscape of cardiac care by delivering innovative solutions for coronary artery bypass, or CABG, surgery.

We are focused on commercializing or developing three medical technologies and related products – DuraGraft^®, MATLOC^® and MAR-FG-001. DuraGraft is a first-in-class CE marked intra-operative vascular graft storage and flushing solution used during CABG surgeries. MATLOC is a point-of-care, lab-on-chip digital screening and diagnostic device platform, initially being developed for quantitative chronic kidney disease, or CKD, assessment. MAR-FG-001 is a technology in development for use in fat grafting procedures formulated as a tumescent solution base for protecting adipose tissue during adipose tissue harvesting and storage. DuraGraft, MATLOC and MAR-FG-001 are expected to serve an unmet significant market need in several areas, including, cardiac surgery, CKD assessment, and fat grafting.

Since August 2014, DuraGraft has had the CE marking required to be sold in the European Economic Area, or EEA, and DuraGraft has therefore been assessed as meeting the EEA safety, health, and environmental protection requirements. For the remainder of 2023, our primary business priority is completing the U.S. Food and Drug Administration, or FDA, review of DuraGraft as a medical device for CABG procedures through the De Novo classification request process in order to meet health and safety requirements for DuraGraft’s use in the United States. In November 2021, we filed a pre-submission letter for DuraGraft with the FDA, and in January 2023, we submitted the De Novo request for DuraGraft to the ~~acceleration,~~FDA.

Also during 2023, we intend to continue the advancement of our other two primary product technologies, MATLOC and MAR-FG-001. Our MATLOC CKD point-of-care device is being developed toward a functional prototype, mainly through the development of its lab-on-chip technology under a Sponsored Research Agreement, or SRA. An SRA is an agreement (which may be classified as a grant, contract or cooperative agreement) under which one party (the “Sponsor”) provides funding to a second party to support the performance of a specified research project or related activity. The Sponsor may be a foundation, government agency, for-profit entity, research institute, or another university. We will also continue to ready MAR-FG-001 for viability for development and manufacturing. We intend to fully develop and market MAR-FG-001 in the U.S. for fat grafting for procedures such as plastic and cosmetic surgery.

In the near term, we expect to generate revenue primarily from the sale of DuraGraft through the expansion of our international marketing efforts by our distribution partners in Europe and in other countries that accept CE marking. Once we achieve FDA approval for DuraGraft, which we anticipate but cannot guarantee, we intend to prioritize the commercialization of DuraGraft in the U.S. through U.S.-based distribution partners. We anticipate that once we enter DuraGraft’s U.S. distribution phase, we will be able to generate sustainable revenue growth, accelerate the development of a functional MATLOC device prototype, and expedite the development of MAR-FG-001 into medical ~~technologies that promote patient health and present potential for rapid revenue growth.~~products.

Key elements of our strategy include:

	●	~~Advancing~~*Commercialize DuraGraft and related products*. Continue (i) the distribution of DuraGraft in Europe and other countries that accept the CE marking, and (ii) the development, regulatory approval and commercialization of ~~three medical technology platforms -~~ DuraGraft ~~MATLOC and Krillase – each of which is clinically tested and backed by a portfolio of patented or patent-pending assets;~~

	●	~~Advancing DuraGraft - our endothelial damage inhibitor, or “EDI”, and MATLOC 1 - our “CKD” screening and diagnostic device, for~~in the ~~Food and Drug Administration De Novo classification process and 510(k) application, respectively.~~United States. We filed a pre-submission letter for DuraGraft with the FDA in November 2021 and we ~~expect to submit~~submitted the ~~DuraGraft~~ De Novo request for DuraGraft to the FDA in ~~2022;~~

	●	~~Progressing the development~~January 3, 2023. Upon receiving FDA approval of ~~Krillase through planning an animal clinical study~~DuraGraft, which ~~will be conducted in 2022 and~~we anticipate but cannot guarantee, we expect ~~will facilitate our entry into~~to quickly commercialize the ~~pet health market~~product and ~~generate~~build revenue ~~through~~rapidly utilizing multiple strategic partners and revenue channels in the ~~sale of Krillase-based canine dental hygiene products.~~United States.

●

Develop MATLOC and related products. Continue the development of MATLOC toward a functional device prototype.

~~We have incurred losses for each period from inception.~~

●

Develop MAR-FG-001 fat grafting technology and products. Continue the development of MAR-FG-001 to validate its protective abilities and its improvements to the retention of fat volume.

●

Acquire more life science assets. Expand our product portfolio through the identification and acquisition of additional life science assets.

Our net loss was approximately ~~$6.9~~$20.6 million and ~~$13.0~~$23.1 million for the three and six months ended June 30, 2023, respectively (June 30, 2022 ~~respectively ($1.6~~- $6.9 million and ~~$3.9~~$13.0 million, ~~for the three and six month ended June 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.

Impact of COVID-19 Pandemic

The Company has been impacted by the COVID-19 pandemic and related supply chain shortages and other economic conditions, and some of its earlier plans to diversify and expand its operations were delayed as a result. Moreover, the impact of the COVID-19 pandemic on the Company’s supply chain and its ability to produce DuraGraft inventory was a primary reason that we did not generate substantial revenue from sales of DuraGraft during 2021 and 2022. The Company’s inventory production of DuraGraft returned to its pre-pandemic level at the end of the second quarter of 2022, but lingering effects of the COVID-19 pandemic continued to depress demand for DuraGraft and cause revenues from DuraGraft during the first and second quarters of 2023 to be minimal. There can be no assurance that future supply chain disruptions and other effects of COVID-19 outbreaks will not adversely impact our revenues.

In addition, the Company is dependent upon certain contract manufacturers and suppliers and their ability to reliably and efficiently fulfill its orders is critical to the Company’s business success. The COVID-19 pandemic has impacted and may continue to impact certain of the Company’s manufacturers and suppliers. As a result, the Company has faced and may continue to face delays or difficulty sourcing certain products, which could negatively affect the Company’s business and financial results.

While it is not possible at this time to estimate the total impact that COVID-19 could have on our business in the future, the continued spread of COVID-19 and variants of the virus, the rate of vaccinations regionally and globally and the measures taken by the government authorities, and any future epidemic disease outbreaks, could: Disrupt the supply chain and the manufacture or shipment of products and supplies for use by us in our research activities and by strategic partners for their distribution and sales activities; delay, limit or prevent us in our research activities and strategic partners in their distribution and sales activities; impede our negotiations with strategic partners; impede testing, monitoring, data collection and analysis and other related activities by us; interrupt or delay the operations of the FDA or other regulatory authorities, which may impact review and approval timelines for initiation of clinical trials or marketing; or impede the launch or commercialization of any approved products; any of which could delay our strategic partnership plans, increase our operating costs, and have a material adverse effect on our business, financial condition and results of operations.

Principal Factors Affecting Our ~~Products~~Financial Performance

~~DuraGraft®~~Our operating results are primarily affected by the following factors:

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.

●

our ability to generate revenue from sales of our products;

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.

●

our ability to obtain FDA approval for our products;

1824

~~According to market analysis reports,~~

●

our ability to access additional capital and the size and timing of subsequent financings, if any;

●

our ability to become listed on a national securities exchange;

●

the costs of acquiring and utilizing data, technology, and/or intellectual property to successfully reach our goals and to remain competitive;

●

personnel and facilities costs in any region in which we seek to introduce and market our products;

●

the costs of sales, marketing, and customer acquisition;

●

the average price for our products that will be paid by consumers;

●

the number of our products ordered per quarter;

●

costs to manufacture our products;

●

the costs of compliance with any unforeseen regulatory obstacles or governmental mandates in any states or countries in which we seek to operate; and

●

the costs of any additional clinical studies which are deemed necessary for us to remain viable and competitive in any region of the world.

Smaller Reporting Company

We are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the ~~coronary artery bypass graft (“CABG”) procedures~~fiscal year in which (1) the market ~~globally was approximately $16.7 billion~~value of our shares held by non-affiliates equals or exceeds $250 million as of ~~2020 (Expert Markets Research, 2020). This~~the prior June 30^th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market ~~is forecast to increase at a compound annual growth rate (“CAGR”)~~value 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 percentageour shares held by non-affiliates equals or exceeds $700 million as 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)prior June 30^th.

~~In 2020,~~Summary of Significant Events During Three Months Ended June 30, 2023

Below is a summary of certain events relating to 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~~Company’s capital structure and financial condition that occurred during the three months ended June 30, 2023. For further discussion 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 CAGRthese developments, see the related subsections of ~~5.2%~~“—Liquidity and ~~reach $16.9 billion in 2026. (idata Research, 2020).~~Capital Resources – Funding Requirements and Other Liquidity Matters” below.

~~For 2022, our main business priority is receiving 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).

●

In May 2023, the Company made a state filing which provided for the increase of the Company’s authorized common stock from 20,000,000 shares to 300,000,000 shares and the corresponding change of every one (1) share of the Company’s issued and outstanding common stock to fifteen (15) shares, such that there are now 300,000,000 authorized shares of common stock with no proportional change to the outstanding shares of common stock, which totaled 45,666,760 shares as of August 18, 2023.

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.

●

In June 2023, the Company filed with the Securities and Exchange Commission (the “SEC”) and distributed to certain stockholders of record a definitive proxy statement relating to a special meeting of stockholders to be held on August 9, 2023, to consider and vote on the following proposals: (i) to approve an amendment to the Company’s articles of incorporation, as amended to date, to increase the total number of shares of authorized common stock from 300,000,000 to 2,000,000,000 (the “Capital Event Amendment”), and (ii) to approve an amendment to the Company’s articles of incorporation, as amended to date, to provide that holders of any of the Company’s bonds, debentures or other obligations of the Company may have, at the option of the board of directors of the Company, any of the rights of a stockholder of the Company.

~~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”.

Marizyme’s lab-on-chip technology is currently being developed for screening and diagnosis related to the three leading biomarkers for chronic kidney disease, 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 the lab-on-chip technology with Marizyme’s MATLOC 1 device, we 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 (“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 massively 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 MATLOC devices 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.

●

In April 2023, the Company filed an application with the SEC for the withdrawal of a registration statement, as amended, relating to a proposed underwritten public offering for gross proceeds of approximately $8 million. The application for withdrawal of the registration statement was subsequently deemed granted. The application for withdrawal was filed to withdraw the registration statement because the Company no longer intended to pursue the proposed public offering.

1925

~~We are currently preparing our MATLOC 1 device for the FDA submission process with~~ ~~clearance~~ anticipated by the end of 2023. More specifically, we expect to continue the advancement of MATLOC 1 through the conclusion of a clinical trial in 2022 followed by the filing with the FDA of a 510(k) notification and an expected FDA clearance of a 510(k) application by the end of 2023. Upon FDA approval, we will seek rapid revenue growth using multiple strategic partners and revenue channels.

~~MATLOC 1, upon FDA~~ ~~clearance~~ in the United States, 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 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, 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 dissolve arterial thrombogenic plaque safely and efficiently, 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 focused on developing a Krillase-based product pipeline to address several conditions across the critical care market, including therapies for treating complex wounds and burns, acute ischemic stroke, deep vein thrombosis, and for dissolving plaque and biofilms on teeth.

In addition, our Krillase platform team is planning a pet health study for later in 2022. We expect the results of this study will 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.

Our strategic plan for Krillase is to first, 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, 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 surgery graft solution~~*~~. Management believes~~In April 2023, the Company agreed to allow certain warrants with an exercise price of $5.00 per share to be exercised during a certain period for $0.10 per share to purchase a total of 2,652,159 shares of common stock for gross proceeds of approximately $265,216. As a result of this warrant exercise, pursuant to the terms applicable to the Company’s outstanding 10% Secured Convertible Promissory Notes (the “Convertible Notes”) and the Company’s outstanding Class C Common Stock Purchase Warrants (the “Class C Warrants”), the conversion price of the Convertible Notes adjusted from $1.75 per share to $0.10 per share, the exercise price of the Class C Warrants adjusted from $2.25 per share to $0.10 per share, and the number of shares that the ~~DuraGraft platform provides a significant~~Class C Warrants may be exercised to purchase was increased proportionately. In connection with these developments and ~~substantial competitive advantage. Having received CE marking in Europe, DuraGraft is a “first-in-class” product, certified for sale in Europe for vein graft preservation.~~

	●	*~~Early detection at point-of-care.~~* ~~Through our MATLOC platform, we plan~~the lack of sufficient authorized shares of common stock under the Company’s articles of incorporation to ~~provide~~meet its obligations under outstanding convertible or exercisable securities, the ~~ability to quantitatively screen~~Company also obtained additional conversion and ~~diagnose for CKD at point-of-care. The lab-on-chip technology’s low limit of detection and sensitivity enable earlier screening and diagnosis of CKD while the point-of-care capabilities~~exercise rights waivers from certain holders of the ~~MATLOC device(s) allow for testing outside~~Convertible Notes and Class C Warrants. As a result of ~~a lab setting.~~

	●	*~~Superior wound-healing method~~*~~. Our Krillase platform provides a significant~~these adjustment provisions and ~~substantial competitive advantage as clinical studies in Europe have shown Krillase~~the conversion and exercise terms applicable to ~~achieve superior wound-healing effects in treatment~~the Convertible Notes and Class C Warrants, including the effect of ~~necrotic leg ulcers.~~the applicable waivers, the number of shares into which the Convertible Notes may be converted adjusted from 2,554,944 shares of common stock to 44,711,770 shares, not including shares convertible from interest under the Convertible Notes, and the number of shares that the Class C Warrants may be exercised to purchase adjusted from 5,109,904 shares of common stock to 114,973,110 shares.

~~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 HIGHLIGHTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2022~~

~~Financing~~

In 2021, the Company offered up to 4,000,000 units (the “Units Offering”), comprised of convertible notes and warrants, with the intent to raise up to $10,000,000 on a rolling basis. 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 Units Offering. As the result:

●

In ~~2021~~May 2023, the Company did not repay the amount of the principal under an unsecured promissory note (the “Walleye Promissory Note”) issued anto Walleye Opportunities Master Fund Ltd (“Walleye”) by its maturity date, and accordingly, the principal under the note increased from $1,000,000 to $1,250,000. Due to this nonpayment, the Company also cross-defaulted under the Convertible Notes. As a result, the aggregate ~~of 4,260,594 units for gross proceeds of $7,397,445.~~amount due under the Convertible Notes increased to approximately $21.4 million from approximately $16.2 million and became immediately due upon demand.

	●	~~During the first half of 2022,~~ In May 2023, the Company issued ~~additional 3,322,929 units~~15% Original Issue Discount Unsecured Subordinated Convertible Promissory Notes (each, an “OID Convertible Note” and together with other 15% Original Issue Discount Unsecured Subordinated Convertible Promissory Notes, the “OID Convertible Notes”) for aggregate principal of $3,781,335 and convertible into up to 40,544,200 shares of common stock if held to maturity, Class E Common Stock Purchase Warrants (each, a “Class E Warrant” and together with warrants of the same class, the “Class E Warrants”), exercisable for the ~~gross proceeds~~purchase of ~~$5,815,138.~~
	●	~~Subsequent to the Q2 2022 end, on August 12, 2022, the Company conducted the final closing~~54,766,686 shares of common stock at $0.10 per share, and Class F Common Stock Purchase Warrants (each, a “Class F Warrant” and together with warrants of the ~~Unit Offering and issued 857,142 units~~same class, the “Class F Warrants”), exercisable for the ~~gross~~purchase of 51,016,686 shares of common stock at $0.20 per share. The OID Convertible Notes, Class E Warrants and Class F Warrants provided that they were not convertible or exercisable until the effectiveness of the Capital Event Amendment. Net proceeds ~~of $1,500,000.~~from the issuances totaled $870,000.

In aggregate, the Company received $14,712,583 in proceeds from the Unit Purchase Agreement. The proceeds from the 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~~

Subsequent to the Q2 2022 end, on August 1, 2022, the Board of Directors of Marizyme approved a reverse stock split of the Company’s common stock at a ratio of 1-for-4 in connection with a proposed Nasdaq listing. The Reverse Stock Split will become effective after the FINRA approval and the Nasdaq Stock Market LLC approval of the Company’s listing application.

On the Effective Date, the total number of shares of common stock held by each stockholder will be 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. No fractional shares will be issued, and no cash or other consideration will be paid. Instead, the Company will issue 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.

~~Operational~~

In 2021 Marizyme had undergone a corporate restructuring, whereby the key officers, directors, and management team changed in order to accelerate Company’s progress toward meeting its key objectives and deliver on its strategy. In the first half of 2022, the executive and management team has been 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, during the six months ended June 30, 2022, the Board of Directors of the Company was increased from five to seven members and a new Chair of the Audit Committee was elected.

FINANCIAL OPERATIONS REVIEW

~~Component~~Components of Results of Operations

Revenue

Revenue represents gross product sales less service fees and product returns. For our ~~Distribution Partner~~distribution partner channel, we recognize revenue for product sales at the time of delivery of the product to our ~~Distribution Partner.~~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 has the required regulatory approvals.

Direct Cost of Revenue

Direct ~~costs~~cost 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~~cost 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 certain related party relate to certain consulting services. ~~See Note 9 to the financial statements accompanying this report for further related disclosures. We anticipate increased~~Increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with SEC requirements and with securities exchange rules in future periods are likely to occur, including likely increases in costs of compliance with SEC regulations of public companies in general, and with securities exchange rules due to the Company’s plans to resume the securities exchange listing ~~and SEC~~process when it can meet securities exchange listing requirements.

Salaries and Stock-Based Compensation

Salaries ~~consists~~consist 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~~those 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,~~DuraGraft, and costs related to manufacturing ~~Duragraft~~DuraGraft for clinical trials. The Company has entered into various research and development contracts with various organizations and other companies.

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.

Royalty Expenses

In connection with the Somahlution Acquisition (as defined in “—Liquidity and Capital Resources – Funding Requirements and Other Liquidity Matters – Exercise of Somahlution Warrants with Reduced Exercise Price”), the Company entered into the Somahlution Agreement (as defined in “—Liquidity and Capital Resources – Funding Requirements and Other Liquidity Matters – Exercise of Somahlution Warrants with Reduced Exercise Price”), under which the Company became legally obligated to pay royalties on all net sales of certain products. Royalty expenses consists of royalty payable accrued on net sales of DuraGraft product within and outside of the U.S.

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.

Other Income (Expenses)

Other income ~~(expenses) consists~~and expenses consist of mark-to-market adjustments on contingent liabilities assumed on the acquisition of ~~Somah~~all of the assets of Somahlution, Inc. (“Somahlution”), Somahlution, LLC, and Somaceutica LLC (collectively, “Somahlution”), including our DuraGraft-related assets (the “Somahlution Assets”) and interest and accretion expenses related to our ~~convertible notes issued pursuant to the Unit Purchase Agreement.~~Convertible Notes.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, ~~2022~~2023 and ~~2021~~2022

The following table summarizes our results of operations for the three months ended June 30, ~~2022~~2023 and ~~2021:~~2022:

	Three Months Ended June 30,									Three Months Ended June 30,
	2022			2021			Change			2023			2022			Change

Revenue	$	61,809		$	160,785		$	(98,976	)	$	184,739		$	61,809		$	122,930

Cost of goods sold											49,611			11,025			38,586
Gross profit											135,128			50,784			84,344
Operating expenses:
Direct costs of revenue		11,025			119,221			(108,196	)
Professional fees (includes related party amounts of $163,200 and $90,000, respectively)		873,865			455,552			418,313
Professional fees											511,844			873,865			(362,021	)
Salary expenses		902,106			683,197			218,909			335,004			902,106			(567,102	)
Research and development		1,371,470			244,686			1,126,784			691,393			1,371,470			(680,077	)
Stock-based compensation		676,242			194,657			481,585			160,762			676,242			(515,480	)
Depreciation and amortization		210,361			26,715			183,646			210,293			210,361			(68	)
Royalty expense											162,065			-			162,065
Other general and administrative expenses		618,498			349,496			269,002			2,867,749			618,498			2,249,251
Total operating expenses		4,663,567			2,073,524			2,590,043			4,939,110			4,652,542			286,568
Total operating loss	$	(4,601,758	)	$	(1,912,739	)	$	(2,689,019	)	$	(4,803,982	)	$	(4,601,758	)	$	(202,224	)
Other income (expenses):
Interest and accretion expense		(530,226	)		(4,189	)		(526,037	)		(13,424,169	)		(530,226	)		(12,893,943	)
Change in fair value of contingent liabilities		(1,792,000	)		278,000			(2,070,000	)		714,000			(1,792,000	)		2,506,000
Loss on debt extinguishment											(684,682	)		-			(684,682	)
Loss on issuance of debt											(2,377,569	)		-			(2,377,569	)
Net loss	$	(6,923,984	)	$	(1,638,928	)	$	(5,285,056	)	$	(20,576,402	)	$	(6,923,984	)	$	(13,652,418	)

Revenue and Direct Cost of Revenue

We recognized revenue of approximately $0.18 million for the three months ended June 30, 2023 compared to $0.06 million for the three months ended June 30, ~~2022 compared to $0.16 million for~~2022. Immaterial revenue was generated in the ~~three months ended June 30, 2021. The decrease in revenues was~~second quarter of 2022 due to the impact of the COVID-19 ~~impact~~pandemic on the Company’s supply chain ~~in the fiscal 2021~~ and its ability to produce ~~Duragraft~~DuraGraft inventory. ~~No revenue from Duragraft sales was generated in Q1 2022, but as anticipated, as the result of the executive and management teams efforts to re-establish the~~The Company’s ~~business relationships with its trusted manufacturing and distribution partners, the~~inventory production of ~~Duragraft inventory and sales resumed in Q2 2022.~~

~~Direct Costs~~DuraGraft returned to its pre-pandemic level at the end of ~~Revenue~~

~~Direct costs of revenue decreased by $0.11 million or 91% to $0.01 million for~~ the second quarter of 2022, ~~compared~~but lingering effects of the pandemic continued to ~~$0.12~~depress demand for DuraGraft and caused revenues from DuraGraft during the second quarter of ~~2021. This was predominantly due~~2023 to ~~fewer units of product produced in the current period because of the shortage of the raw materials as a result of COVID-19.~~

be minimal.

Professional Fees

Professional fees ~~increased~~decreased by ~~$0.42~~approximately $0.4 million or ~~92%~~41.4% to ~~$0.87~~approximately $0.5 million in ~~Q2 2022~~the three months ended June 30, 2023 compared to ~~$0.46~~approximately $0.9 million in ~~Q2 2021.~~the three months ended June 30, 2022. The ~~increase~~decrease was ~~mainly~~ due to ~~the compensation extended to Univest Securities, LLC for their services rendered in relation to the Unit Purchase Agreement financing. Related party professional~~reduced legal fees ~~increased by $0.07 million or 81% to $0.16 million from $0.09 million~~and placement agent fees and expenses during the ~~second~~ quarter ~~of 2022~~ended June 30, 2023 compared to the ~~second~~ quarter ~~of 2021 – the Company retained additional consulting services in order to advance development of its three medical technology platforms - DuraGraft, MATLOC and Krillase.~~ended June 30, 2022.

Salary Expenses

Salary expenses in ~~Q2 2022,~~the three months ended June 30, 2023 were ~~$0.90~~approximately $0.3 million, ~~a $0.22~~an approximately $0.6 million or ~~32% increase~~62.9% decrease from the comparative ~~period.~~quarter. The ~~increase~~decrease can be attributed to reductions in employee salaries as part of efforts to streamline the cost is attributable to the restructuring and growth of the organization as the Company restructured its executive and management teams in the late 2021 and continues to expand into the new markets and working towards commercialization of the DuraGraft in the United States.Company’s operations.

Research and Development

Research and development expenses in ~~Q2 2022,~~the three months ended June 30, 2023 were ~~$1.37~~approximately $0.7 million, approximately a ~~$1.13~~$0.7 million or ~~461% increase~~49.6% decrease from the comparative period. The ~~increase~~decrease in ~~the~~ research and development expenses can be mainly attributed to the Company’s ~~acquisition~~suspension of expenditures required for FDA approvals of the Company’s MATLOC ~~1 product in late 2021~~ and ~~its focus on development and advancement of all its products – DuraGraft, Krillase, and MATLOC 1 towards commercialization.~~Krillase-related assets during the quarter ended June 30, 2023 that were incurred during the quarter ended June 30, 2022.

~~Stock-Based Compensation~~

The ~~increase~~Company previously sought to develop and commercialize FDA-approved products based on its Krillase and MATLOC assets simultaneously with its DuraGraft products. Since the first quarter of 2023, the Company has prioritized the completion of regulatory processes to obtain FDA approval for the commercialization of DuraGraft in the ~~stock-based compensation can~~United States and the development of a functional MATLOC device prototype and MAR-FG-001-based viable products. The Company intends to maintain the Krillase assets for potential future development and commercialization or disposition. Any determination as to these matters would be ~~explained by additional 400,000 stock options granted~~based on a number of factors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Principal Factors Affecting Our Financial Performance” for a summary of factors that we may consider in ~~2022~~this respect. There is no assurance that any of the Company’s intellectual property assets will ever be developed and ~~350,000 restricted share awards granted in late 2021, fair value of~~fully commercialized and generate significant revenues or will ever attract significant interest from potential buyers or investors. See “Item 1A. Risk Factors – Risks Related to Our Business – We may not be able to monetize intangible assets, which ~~have increased significantly from the stock options granted and outstanding~~may result in the ~~comparative period due~~need to record an impairment charge.” in the ~~increased stock price period over period.~~2022 Form 10-K.

2228

~~Other General and Administrative Expenses~~

Other general and administrative expenses increased $0.27 million or 77% to $0.62 million in Q2 2022. The increase was due to the Company’s non-legal fees related to the filing of S-1 form in the period, preparation toward the public offering, increased rent due to the lease of additional office and laboratory space, and expenses associated with running a public company. Due to the planned continued buildout of administrative and commercial functions we expect general and administrative expenses to increase in future periods.

~~Other Income (Expenses)~~

In Q2 2022, the Company incurred $0.53 million of interest and accretion costs associated with convertible notes issued at discount as part of the Units Offering Agreements. Additionally, the Company recognized $1.79 million of fair value loss from mark-to-market adjustments on the contingent liabilities assumed on the acquisition of Somah due to the change of the fair value of the contingent consideration.

~~Comparison of the Six Months Ended June 30, 2022 and 2021~~

~~The following table summarizes our results of operations for the six months ended June 30, 2022 and 2021:~~

Six Months Ended June 30,
2022 2021 Change

Revenue $ 61,809 $ 234,737 $ (172,928 )

Operating expenses:
Direct costs of revenue 11,025 150,063 (139,038 )
Professional fees (includes related party amounts of $266,400, and $180,000, respectively) 1,417,905 984,625 433,280
Salary expenses 1,817,746 1,567,238 250,508
Research and development 2,589,766 636,190 1,953,576
Stock-based compensation 1,392,674 562,375 830,299
Depreciation and amortization 420,722 (186,216 ) 606,938
Other general and administrative expenses 1,009,070 645,068 364,002
Total operating expenses 8,658,908 4,359,343 4,299,565
Total operating loss $ (8,597,099 ) $ (4,124,606 ) $ (4,472,493 )
Other income (expenses):
Interest and accretion expense (829,770 ) (4,189 ) (825,581 )
Change in fair value of contingent liabilities (3,622,000 ) 278,000 (3,900,000 )
Net loss $ (13,048,869 ) $ (3,850,795 ) $ (9,198,074 )

~~Revenue~~

We recognized revenue of $0.06 million for the six months ended June 30, 2022 compared to $0.23 million for the six months ended June 30, 2021. No revenue was generated in Q1 2022 due to COVID-19 impact on the Company’s supply chain in the fiscal 2021 and its ability to produce Duragraft inventory, but as anticipated, as the result of the executive and management teams efforts to re-establish the Company’s business relationships with its trusted manufacturing and distribution partners, the production of Duragraft inventory and sales resumed in Q2 2022.

~~Direct Costs of Revenue~~

Direct costs of revenue decreased by $0.14 million or 92.65% to $0.01 million for the first six months of 2022 compared to $0.15 million for the first six months of 2021. This was predominantly due to fewer units of product produced in the current period because of the shortage of the raw materials as a result of COVID-19.

~~Professional Fees~~

Professional fees increased by $0.43 million or 44% to $1.42 million for the six months ended June 30, 2022 compared to $0.98 million for the comparative period ended June 30, 2021. The increase in professional fees in the first half of 2022 can be attributed to legal support with preparation and filling of the S-1 form with the SEC, audit fees in connection with the audit of the 2021 10-K Form, and compensation costs incurred in connection with closing of the four rounds of the Unit Purchase Agreement financing. Related party professional fees increased by $0.09 million or 48% to $0.27 million from $0.18 million during the second quarter of 2022 compared to the second quarter of 2021 – the Company retained additional consulting services in order to advance development of its three medical technology platforms - DuraGraft, MATLOC and Krillase.

~~Salary Expenses~~

Salary expenses for the period ended June 30, 2022, were $1.82 million, a $0.25 million or 16% increase from the comparative period. The increase in the salary cost is attributable to the restructuring and growth of the organization as the Company restructured its executive and management teams in the late 2021 and continues to expand into the new markets and working towards commercialization of the DuraGraft in the United States.

~~Research and Development~~

Research and development expenses for the six months ended June 30, 2022, were $2.59 million, a $1.95 million or 307% increase from the comparative period. The increase in the research and development expenses can be mainly attributed to the Company’s acquisition of MATLOC 1 product in late 2021 and its focus on development and advancement of all its products – DuraGraft, Krillase, and MATLOC 1 towards commercialization.

Stock-Based Compensation

Stock-based compensation decreased by $0.5 million or 76.2% to approximately $0.2 million for the ~~first half of the 2022 increased by $0.83 million or 148% to $1.39 million if compared to the six~~three months ended June 30, ~~2021. The increase~~2023 from approximately $0.7 million in the comparative quarter ended June 30, 2022. The decrease in stock-based compensation ~~can be explained by additional 400,000~~was due to acceleration of vesting of certain stock options ~~granted~~by the Company’s Board of Directors in ~~2022~~the comparative quarter ended June 30, 2022.

Depreciation and ~~350,000 restricted share awards granted~~Amortization

Depreciation and amortization remained consistent at $0.2 million in ~~late 2021, fair value~~the current and comparative period. The Company did not acquire any new tangible or intangible capital assets in any of ~~which have increased significantly from~~ the ~~stock options granted and outstanding~~periods indicated.

Royalty Expense

During the three months ended June 30, 2023, the Company recorded an aggregate of $0.16 million in royalty expense - $0.01 million in royalties payable was incurred on sales of DuraGraft outside of the U.S.; the remaining $0.15 million in royalties expense was recorded as a 50% reduction of the prepaid royalty balance owed to the former beneficial owners of Somahlution. No royalties were accrued in the comparative period ~~due to~~as no sales of DuraGraft occurred in the ~~increased stock price period over period.~~three months ended June 30, 2022.

Other General and Administrative Expenses

Other general and administrative expenses increased ~~$0.36~~approximately $2.2 million or ~~56%~~363.7% to ~~$1.01~~approximately $2.9 million in the ~~six~~three months ended June 30, ~~2022. The~~2023. Approximately $0.5 million of the increase ~~was~~can be attributed to the deferred offering costs expensed as a result of adjustments to the terms of the Convertible Notes and $0.7 million of the deferred offering costs that were expensed due to the Company’s ~~non-legal fees related to the filing~~withdrawal of ~~S-1 form in the period, preparation toward the~~its registration statement for a public offering ~~increased rent due to the lease~~in April 2023. Additionally, $1.3 million of ~~additional office and laboratory space, and expenses associated with running a public company. Due to the planned continued buildout of administrative and commercial functions we expect~~other general and administrative expenses can be attributed to ~~increase~~the valuation of a Class E Warrant for the purchase of 7,500,000 shares of common stock at $0.10 per share and a Class F Warrant for the purchase of 3,750,000 shares of common stock at $0.20 per share that were issued on May 22, 2023 in ~~future periods.~~connection with the First OID Units Closing (as defined in “—Liquidity and Capital Resources – Funding Requirements and Other Liquidity Matters – OID Units Private Placement – First Closing”) of the OID Units Private Placement (as defined in “—Liquidity and Capital Resources – Recent Developments – Third Closing of OID Units Private Placement”) pursuant to the terms of the Hexin Promissory Note (as defined in the same section).

Other Income (Expenses)

~~During~~

In the ~~six~~three months ended June 30, ~~2022,~~2023, the Company incurred ~~$0.83~~approximately $5.7 million of interest and accretion costs associated with ~~convertible notes~~certain securities issued at discount ~~as part~~relating to the Units Private Placement (as defined in “—Liquidity and Capital Resources – Recent Developments – Issuance of Replacement Securities”) and the OID Units Private Placement (as defined in “—Liquidity and Capital Resources – Recent Developments – Third Closing of OID Units Private Placement”), compared to $0.5 million of interest and accretion costs recorded in the second quarter of 2022 on the Convertible Notes. Additionally, due to the non-repayment of the ~~Units Offering Agreements.~~ initial principal amount of $1.0 million under the Walleye Promissory Note by its maturity date of May 7, 2023, the Company also defaulted under the Convertible Notes on the same date, resulting in a default amount of approximately $7.3 million accrued to the principal of the Convertible Notes. This represents a $12.9 million or 2,431.8% increase over the comparative quarter ended June 30, 2022.

Additionally, the Company recognized ~~$3.62~~$0.7 million of fair value ~~loss~~gain from mark-to-market adjustments on the contingent liabilities assumed on the acquisition of ~~Somah~~the Somahlution Assets due to the change of the fair value of the contingent ~~consideration.~~consideration compared to $1.8 million of fair value loss, an increase of $2.5 million from mark-to-market adjustment on the contingent liability in the comparative quarter ended June 30, 2022.

In the three months ended June 30, 2023, due to the substantial reduction of the conversion price of the Convertible Notes and Class C Warrants in April 2023, the Company recorded a loss of approximately $0.68 million on the extinguishment of the Convertible Notes. The Company also recordeda loss of $2.4 million on issuance of OID Convertible Notes due to the fair value of Class E and Class F warrants exceeding the value of the debt principal.

Comparison of the Six Months Ended June 30, 2023 and 2022

The following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023			2022			Change

Revenue	$	313,713		$	61,809		$	251,904
Cost of goods sold		88,886			11,025			77,861
Gross profit		224,827			50,784			174,043
Operating expenses:
Direct costs of revenue
Professional fees		896,650			1,417,905			(521,255	)
Salary expenses		601,972			1,817,746			(1,215,774	)
Research and development		1,297,390			2,589,766			(1,292,376	)
Stock-based compensation		371,728			1,392,674			(1,020,946	)
Depreciation and amortization		420,631			420,722			(91	)
Royalty expense		198,248			-			198,248
Other general and administrative expenses		3,375,073			1,009,070			2,366,003
Total operating expenses		7,161,692			8,647,883			(1,486,191	)
Total operating loss	$	(6,936,865	)	$	(8,597,099	)	$	1,660,234
Other income (expenses):
Interest and accretion expense		(15,121,870	)		(829,770	)		(14,292,100	)
Change in fair value of contingent liabilities		1,990,000			(3,622,000	)		5,612,000
Loss on debt extinguishment		(684,682	)		-			(684,682	)
Loss on issuance of debt		(2,377,569	)		-			(2,377,569	)
Net loss	$	(23,130,986	)	$	(13,048,869	)	$	(10,082,117	)

Revenue and Direct Cost of Revenue

We recognized revenue of approximately $0.31 million for the six months ended June 30, 2023 compared to $0.06 million for the six months ended June 30, 2022. Immaterial revenue was generated in the six months ended June 30, 2022 due to the impact of the COVID-19 pandemic on the Company’s supply chain and its ability to produce DuraGraft inventory. The Company’s inventory production of DuraGraft returned to its pre-pandemic level at the end of the second quarter of 2022, but lingering effects of the pandemic continued to depress demand for DuraGraft and caused revenues from DuraGraft during the first half of 2023 to be minimal.

Professional Fees

Professional fees decreased by approximately $0.5 million or 36.8% to approximately $0.9 million in the six months ended June 30, 2023 compared to approximately $1.4 million in the six months ended June 30, 2022. The decrease was due to reduced legal fees and placement agent fees and expenses during the six months ended June 30, 2023 compared to the six months ended June 30, 2022.

Salary Expenses

Salary expenses in the six months ended June 30, 2023 were approximately $0.6 million, an approximately $1.2 million or 66.9% decrease from the comparative period. The decrease is attributable to reductions in employee salaries as part of efforts to streamline the Company’s operations.

Research and Development

Research and development expenses in the six months ended June 30, 2023 were approximately $1.3 million, approximately a $1.3 million or 49.9% decrease from the comparative period. The decrease in research and development expenses can be mainly attributed to the Company’s suspension of expenditures required for FDA approvals of the Company’s MATLOC and Krillase-related assets during the six months ended June 30, 2023 that were incurred during the six months ended June 30, 2022.

The Company previously sought to develop and commercialize FDA-approved products based on its Krillase and MATLOC assets simultaneously with its DuraGraft products. Since the first quarter of 2023, the Company has prioritized the completion of regulatory processes to obtain FDA approval for the commercialization of DuraGraft in the United States and the development of a functional MATLOC device prototype and MAR-FG-001-based viable products. The Company intends to maintain the Krillase assets for potential future development and commercialization or disposition. Any determination as to these matters would be based on a number of factors. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Principal Factors Affecting Our Financial Performance” for a summary of factors that we may consider in this respect. There is no assurance that any of the Company’s intellectual property assets will ever be developed and fully commercialized and generate significant revenues or will ever attract significant interest from potential buyers or investors. See “Item 1A. Risk Factors – Risk Factors – Risks Related to Our Business – We may not be able to monetize intangible assets, which may result in the need to record an impairment charge.” in the 2022 Report.

Stock-Based Compensation

Stock-based compensation decreased by $1.0 million to approximately $0.4 million for the six months ended June 30, 2023 from approximately $1.4 million in the comparative period ended June 30, 2022, which represents a 73.3% decrease period over period. The decrease in stock-based compensation was mainly due to acceleration of vesting of certain stock options by the Company’s Board of Directors in the second quarter ended June 30, 2022.

Depreciation and Amortization

Depreciation and amortization remained consistent at $0.4 million in the current and comparative period. The Company did not acquire any new tangible or intangible capital assets in any of the periods indicated.

Royalty Expense

During the six months ended June 30, 2023, the Company recorded an aggregate of $0.2 million in royalty expense - $0.05 million in royalties payable was incurred on sales of DuraGraft outside of the U.S.; the remaining $0.15 million in royalties expense was recorded as a 50% reduction of the prepaid royalty balance owed to the former beneficial owners of Somahlution. No royalties were accrued in the comparative period as minimal sales of DuraGraft occurred in the six months ended June 30, 2022.

Other General and Administrative Expenses

Other general and administrative expenses increased approximately $2.4 million or 234.5% to approximately $3.4 million in the six months ended June 30, 2023. Approximately $0.5 million of the increase can be attributed to the deferred offering costs expensed as a result of adjustments to the Convertible Notes and $0.7 million of the deferred offering costs that were expensed due to the Company’s withdrawal of its registration statement for a public offering in April 2023. Additionally, $1.3 million of other general and administrative expenses can be attributed to the valuation of a Class E Warrant for the purchase of 7,500,000 shares of common stock at $0.10 per share and a Class F Warrant for the purchase of 3,750,000 shares of common stock at $0.20 per share that were issued on May 22, 2023 in connection with the First OID Units Closing pursuant to the terms of the Hexin Promissory Note.

Other Income (Expenses)

In the six months ended June 30, 2023, the Company incurred approximately $7.9 million of interest and accretion costs associated with certain securities issued at discount relating to the Units Private Placement (as defined in “—Liquidity and Capital Resources – Recent Developments – Issuance of Replacement Securities”) and the OID Units Private Placement (as defined in “—Liquidity and Capital Resources – Recent Developments – Third Closing of OID Units Private Placement”), compared to $0.8 million of interest and accretion costs recorded in the first half of 2022 on the Convertible Notes. Additionally, due to the non-repayment of the initial principal amount of $1.0 million under the Walleye Promissory Note by its maturity date of May 7, 2023, the Company also defaulted under the Convertible Notes on the same date, resulting in a default amount of $7.3 million accrued to the principle of the Convertible Notes. This represents a $14.3 million or 1,722.4% increase over the six months ended June 30, 2022.

Additionally, the Company recognized $2.0 million of fair value gain from mark-to-market adjustments on the contingent liabilities assumed on the acquisition of the Somahlution Assets due to the change of the fair value of the contingent consideration compared to $3.6 million of fair value loss, an increase of $5.6 million from mark-to-market adjustment on the contingent liability from the comparative period ended June 30, 2022.

In the six months ended June 30, 2023, due to the substantial reduction of the conversion price of the Convertible Notes in April 2023, the Company recorded a loss of approximately $0.68 million on the extinguishment of the Convertible Notes. The Company also recorded a loss of $2.4 million on issuance of OID Convertible Notes due to the fair value of Class E and Class F warrants exceeding the value of the debt principal.

~~LIQUIDUTY~~

LIQUIDITY AND CAPITAL RESOURCES

To date, we have incurred significant net losses and negative cash flows from operations. As of June 30, ~~2022,~~2023, we had available cash of ~~$2,044,976~~approximately $0.2 million and accumulated deficit of ~~$60,872,432.~~approximately $109.1 million. We ~~fund~~have funded our operations ~~through~~primarily from capital raises.

Recent Developments

Special Stockholder Meeting, Change in Authorized Shares, and Approval of Voting Rights for Certain Debtholders

A special meeting of stockholders was held on August 9, 2023 (the “Special Stockholders Meeting”) to consider and vote on the following proposals: (i) to approve an amendment to increase the total number of shares of authorized common stock to 2,000,000,000 (the “Capital Event Amendment”), and (ii) to approve an amendment to the Company’s articles of incorporation, as amended to date, to provide that holders of any of the Company’s bonds, debentures or other obligations of the Company may have, at the option of the board of directors of the Company, any of the rights of a stockholder of the Company, and that the holders of the Convertible Notes issued between December 21, 2021 and August 12, 2022, shall be entitled, from the date of the filing with the Secretary of State of Nevada (the “Nevada Secretary of State”) of the Certificate of Amendment providing such amendment, to vote with the shares of the Company’s common stock, on an as-converted to common stock basis without actually having converted the Convertible Notes to shares of the Company’s common stock, with respect to all corporate matters of the Company on which the holders of common stock are entitled to vote, as provided in of the Convertible Notes (the “Voting Rights Amendment”). Approval of each proposal required a “quorum” at the meeting consisting of a majority (more than 50%) of the outstanding voting shares as of the record date, present in person or represented by proxy, and the affirmative “for” vote of the holders of a majority of the shares represented at the meeting, in person or by proxy, and entitled to vote.

At the Special Stockholders Meeting, a quorum was attained, and each of the proposals described above was approved by the required number of votes of the Company’s stockholders. On August 15, 2023, the board of directors of the Company approved resolutions authorizing each of the holders of the Convertible Notes to vote with the shares of common stock, on an as-converted to common stock basis, with respect to all corporate matters of the Company on which the holders of common stock are entitled to vote, subject to any applicable beneficial ownership limitations, upon the effectiveness of the Certificate of Amendment Pursuant to Nevada Revised Statutes (“NRS”) 78.380 & 78.390 (the “Certificate of Amendment”) to be filed with the Nevada Secretary of State providing for the Capital Event Amendment and the Voting Rights Amendment. On August 16, 2023, the Company filed the Certificate of Amendment with the Nevada Secretary of State providing for the Capital Event Amendment and the Voting Rights Amendment, and the Certificate of Amendment became effective upon filing. Accordingly, upon the filing of the Certificate of Amendment, (i) the Company’s authorized shares of common stock were increased from 300,000,000 to 2,000,000,000 with no corresponding change in the number of issued and outstanding shares of common stock; (ii) the Company’s board of directors may grant any of the rights of stockholders to any of the holders of any of the Company’s bonds, debentures or other obligations; and (iii) all of the holders of the Convertible Notes became entitled to vote with the shares of the Company’s common stock, on an as-converted to common stock basis without actually having converted the Convertible Notes to shares of the Company’s common stock, with respect to all corporate matters of the Company on which the holders of common stock are entitled to vote, as provided in the Convertible Notes.

Issuance of Replacement Securities

As previously reported in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed on March 31, 2022 and the 2022 Form 10-K, in May 2021, the Company entered into an exclusive Placement Agency Agreement, subsequently modified on December 21, 2021 (the “2021 Placement Agency Agreement”) with Univest Securities, LLC (“Univest”) pursuant to which Univest agreed to act as the Company’s exclusive placement agent for a private placement (the “Units Private ~~Placements~~Placement”) of up to $18,000,000 in units which, subsequent to certain modifications of the terms of such private placement, consisted of the Convertible Notes, initially convertible into shares of common stock at a conversion price of $1.75 per share, subject to adjustment, and Class C Warrants, initially exercisable for shares of common stock at an exercise price of $2.25 per share, subject to adjustment. On January 24, 2022, the Company issued each of Univest and its designee, Bradley Richmond (“Mr. Richmond”), as a registered representative of Univest entitled to a portion of Univest’s compensation due to his employment terms, a Convertible Note in the principal amount of $120,000 and $180,000, respectively (collectively, the “Placement Agent Notes”), and a Class C Warrant for the purchase of 137,142 and 205,714 shares of common stock, subject to adjustment, respectively (collectively, the “Placement Agent Class C Warrants”), in exchange for Univest’s and Mr. Richmond’s services provided to the Company in connection with the Company’s acquisition of My Health Logic Inc. (“My Health Logic”). In addition, as previously reported in the 2022 Report, on June 26, 2022, pursuant to the 2021 Placement Agency Agreement, in anticipation of the final closing of the Units Private Placement, in exchange for $100, the Company issued Univest a warrant for the purchase of 231,239 shares of common stock, and a warrant to Mr. Richmond, as a registered representative of Univest who is entitled to a portion of Univest’s compensation due to his employment terms, for the purchase of 347,039 shares of common stock (the “2022 Placement Agent Warrants”), each of which was initially exercisable at $1.75 per share, subject to adjustment.

Separately, on January 26, 2022 and February 14, 2022, the Company granted Mr. Richmond two warrants (the “Consultant Warrants”) to purchase up to 150,000 shares of common stock at an exercise price of $0.01 per share as compensation for certain services. Mr. Richmond fully exercised both of the Consultant Warrants for 300,000 shares of common stock in March 2022 (the “Consultant Shares” and together with the Placement Agent Notes, the Placement Agent Class C Warrants, and the 2022 Placement Agent Warrants, the “Cancelled Securities”).

On February 14, 2022, the Company filed a registration statement on Form S-1, which was subsequently amended on certain dates, relating to the Company’s proposed underwritten public offering for gross proceeds of approximately $8 million. Univest was named as the representative of the underwriters of the Offering. As previously reported in the 2022 Report, the staff (“FINRA Staff”) of the Corporate Financing Department of the Financial Industry Regulatory Authority, Inc. (“FINRA”) determined that the sales of the Placement Agent Notes, the Placement Agent Class C Warrants, the 2022 Placement Agent Warrants, the Consultant Shares, as well as a grant of a stock option to Mr. Richmond constituted underwriting compensation in connection with the Company’s proposed public offering pursuant to FINRA Rule 5110, based on the FINRA Staff’s interpretation of such rule. Consequently, each of Univest and Mr. Richmond, pursuant to a letter agreement entered into with the Company, dated October 28, 2022, addressed and submitted to the FINRA Staff (the “October 2022 Letter Agreement”), agreed to forego their applicable rights to these securities. Pursuant to the October 2022 Letter Agreement, the parties thereto agreed that the cancellation or disposal of the aforementioned securities shall be without recourse by either Univest or Mr. Richmond. Accordingly, the Placement Agent Notes, the Placement Agent Class C Warrants, the 2022 Placement Agent Warrants, and the Consultant Shares were subsequently cancelled, and the Company and Mr. Richmond agreed to the transfer of his stock option to a Company designee who is unaffiliated with Mr. Richmond.

The Convertible Notes including the Placement Agent Notes prior to their cancellation, Class C Warrants including the Placement Agent Class C Warrants prior to their cancellation, and the 2022 Placement Agent Warrants contained certain adjustment provisions as described below under “—Funding Requirements and Other Liquidity Matters – Adjustments to Conversion Price of Convertible Notes and Exercise Price of Class C Warrants and Number of Underlying Shares”, except that the terms of the January 2023 Letter Agreement (as defined and described in that section) did not expressly apply to the Placement Agent Class C Warrants or the 2022 Placement Agent Warrants, which had previously been cancelled as described above.

In April 2023, as a result of the events described below under “—Funding Requirements and Other Liquidity Matters – Exercise of Somahlution Warrants at Reduced Exercise Price”, and pursuant to the adjustment provisions described below under “—Funding Requirements and Other Liquidity Matters – Adjustments to Conversion Price of Convertible Notes and Exercise Price of Class C Warrants and Number of Underlying Shares”, the conversion price of the Convertible Notes and the exercise price of the Class C Warrants were both adjusted to $0.10 per share of common stock. As a result of these adjustment provisions and the conversion or exercise terms of the Convertible Notes and Class C Warrants, the aggregate number of shares into which the Convertible Notes may be converted or the Class C Warrants may be exercised to purchase adjusted upwards proportionately.

On April 21, 2023, prior to the effectiveness of the registration statement for its proposed public offering, the Company filed an application with the SEC for the withdrawal of the registration statement, including all amendments and exhibits to the registration statement. The application for withdrawal stated that the Company did not intend to pursue the contemplated public offering at that time. Pursuant to Rule 477 under the Securities Act, the application was deemed granted at the time the application was filed, because it was filed before the effective date of the registration statement, and the SEC did not notify the Company that the application for withdrawal would not be granted within 15 calendar days after the Company had filed the application.

On June 22, 2023, Univest and Mr. Richmond requested through counsel that the Company either reissue the Cancelled Securities or issue them new securities with equivalent terms and conditions, in light of the fact that the Company was not proceeding with the public offering. On July 16, 2023, Univest and Mr. Richmond communicated through counsel that they believed that the Cancelled Securities should be reissued as if they were never canceled, meaning that they should have all of the adjusted terms that may have applied to the Cancelled Securities had they not been cancelled.

Pursuant to these requests, on July 25, 2023, the Company approved the grant of the following securities to Univest and Mr. Richmond: (i) Convertible Notes (the “Replacement Convertible Notes”) with terms and conditions equivalent to or at least as favorable as those that would have applied to each of the respective Placement Agent Notes, such that, among other adjustments, the principal and any accrued interest under the Replacement Convertible Notes is convertible into shares of common stock at $0.10 per share, subject to adjustment, reflecting adjustments to their terms equivalent to those that applied to the Convertible Notes as a result of the Somahlution Warrants Exercise, and with principal increased to reflect the amount of interest that would have been incurred under the respective Placement Agent Notes up to the date of issuance, such that the adjusted principal under the Replacement Convertible Notes is $137,983.56 and $206,975.34, respectively, being the original principal under the Placement Agent Notes plus pre-issuance interest that would have accrued since the date of the issuance of the Placement Agent Notes as of July 25, 2023, maturing on July 25, 2025, such that up to 1,683,131 and 2,524,697 shares of common stock are issuable upon conversion thereof if held to maturity, subject to adjustment, without regard to any beneficial ownership limitation or any other conversion limitations or restrictions therein or applicable thereto; (ii) Class C Warrants (the “Replacement Class C Warrants”) with terms and conditions equivalent to or at least as favorable as those that would have applied to each of the respective Placement Agent Class C Warrants, reflecting adjustments to their terms equivalent to those that applied to the Class C Warrants as a result of the Somahlution Warrants Exercise such that the exercise price per share of the Replacement Class C Warrants is $0.10 per share, subject to adjustment, and the number of shares of common stock issuable upon exercise of each of the Replacement Class C Warrants reflecting a proportional increase relative to the number of shares issuable under the respective Placement Agent Class C Warrants equivalent to the difference between the exercise price per share of the Placement Agent Class C Warrants and the exercise price of such Replacement Class C Warrants, such that up to 3,548,148 and 5,322,223 shares of common stock, respectively, are issuable upon exercise thereof, subject to adjustment, without regard to any beneficial ownership limitation or any other exercise limitations or restrictions therein or applicable thereto; (iii) Placement Agent Warrants (the “Replacement Placement Agent Warrants”) with terms and conditions equivalent to or at least as favorable as those that would have applied to those that applied to each of the respective 2022 Placement Agent Warrants, reflecting adjustments to their terms equivalent to those that applied to the Class C Warrants as a result of the Somahlution Warrants Exercise such that the exercise price per share of the Replacement Placement Agent Warrants is $0.10 per share, subject to adjustment, and the number of shares of common stock issuable upon exercise of each of the Replacement Placement Agent Warrants reflecting a proportional increase relative to the number of shares issuable under the respective 2022 Placement Agent Warrants equivalent to the difference between the exercise price per share of the 2022 Placement Agent Warrants and the exercise price of the Replacement Placement Agent Warrants, such that up to 4,048,782 and 6,073,182 shares of common stock, respectively, are issuable upon exercise thereof, subject to adjustment, without regard to any beneficial ownership limitation or any other exercise limitations or restrictions therein or applicable thereto; and (iv) 300,000 shares of common stock to Mr. Richmond, being the same number of shares as the Consultant Shares (the “Replacement Consultant Shares” and together with the Replacement Convertible Notes, the Replacement Class C Warrants, and Replacement Placement Agent Warrants, the “Replacement Placement Agent and Consultant Securities”). In connection with these grants, each of Univest and Mr. Richmond agreed to waivers of any registration rights that would have been applicable to each of the Replacement Convertible Notes, the Replacement Class C Warrants, and the Replacement Placement Agent Warrants.

In May 2023, the event described under “—Funding Requirements and Other Liquidity Matters – Default Under Promissory Note” and “—Funding Requirements and Other Liquidity Matters – Cross-Default Under Convertible Notes” occurred. Assuming that the event described would have triggered the cross-default provision in the Placement Agent Notes if they had not been cancelled, and assuming that each of the Replacement Placement Agent Notes are also subject to immediate payment of the applicable Mandatory Default Amount (as defined in “—Funding Requirements and Other Liquidity Matters – Cross-Default Under Convertible Notes”), the aggregate Mandatory Default Amount that may be due under the Replacement Placement Agent Notes would be $456,929, or approximately $0.1 million more than would otherwise have been due under the Placement Agent Notes on the date of the default had they been outstanding on that date.

Under the unit purchase agreement entered into on May 27, 2021 with certain holders of several of the Convertible Notes, each of the Company’s subsidiaries entered into a guaranty to guarantee the repayment of the Company’s obligations under the Convertible Notes, and the Company and its subsidiaries entered into security agreements granting security interests in all of their respective assets for up to the dollar value owed under the respective Convertible Notes. The respective Convertible Notes were issued for aggregate principal of approximately $1.2 million. Under each unit purchase agreement entered into with respect to subsequent issuances of the Convertible Notes, including the unit purchase agreement entered into with each of Univest and Mr. Richmond in connection with the issuance of the Placement Agent Notes, the Company and its subsidiaries were obligated to enter into similar security agreements and guaranties, but did not do so.

Univest and Mr. Richmond have not exercised any remedies applicable to the Replacement Convertible Notes or given notice of any intention to do so as of the date of this report. In the event that the balance owed under the Replacement Convertible Notes, including the respective Mandatory Default Amount, is not repaid upon demand, Univest and Mr. Richmond may seek to take possession of some or all of the Company’s and its subsidiaries’ assets, force the Company and its subsidiaries into bankruptcy proceeds, or seek other legal remedies against the Company and its subsidiaries. In such event, the Company’s business, operating results and financial condition may be materially adversely affected.

Third Closing of OID Units Private Placement

~~Unit Purchase Agreement~~

During the six months ended June 30, 2022, the Company issued additional 3,322,929 units under the New Securities Unit Purchase Agreement for the gross proceeds of $5,815,138. Of the total 3,322,929 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 in the six months ended June 30, 2022. The remaining proceeds from this offering will be used to sustain the Company’s growth and meet its capital obligations.

~~Subsequent to the Q2 2022 end, on August 12, 2022,~~On July 10, 2023, the Company conducted the ~~final~~third closing (the “Third OID Units Closing”) of a private placement (the “OID Units Private Placement”) of up to $10,000,000 for an aggregate of up to 100,000,000 units (“OID Units”), under a unit purchase agreement between Hexin Global Ltd. (“Hexin”), an “accredited investor” as such term is defined by Rule 501(a) of the ~~Unit Purchase Agreement, in which~~Securities Act of 1933, as amended (the “Securities Act”), and the Company ~~issued~~(each, an “OID Units Purchase Agreement”), with each issuance of OID Units to an investor in the OID Units Private Placement consisting of a(i) an OID Convertible Note, convertible ~~note in the aggregate principal amount of $1,500,000, convertible~~ into ~~857,142~~ shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment, ~~and~~(ii) a Class CE Warrant for the purchase of ~~1,714,285~~125% of the shares of common stock into which the OID Convertible Note may be converted at $0.10 per share, subject to adjustment, and (iii) a Class F Warrant for the purchase of 125% of the shares of common stock into which the OID Convertible Note may be converted at $0.20 per share, subject to adjustment. The Class E Warrant and Class F Warrant owned by Hexin or other investors are collectively sometimes referred to as the “Class E and F Warrants”. Under each OID Units Purchase Agreement, the minimum investment permitted is $1,000. The Company retained Univest as the Company’s exclusive placement agent in connection with the sale of the OID Units under a Placement Agency Agreement, dated April 27, 2023 (the “April 2023 PAA”). In addition to the rights set forth in each OID Units Purchase Agreement, the OID Convertible Notes, and the Class E and F Warrants, the investor party to the OID Units Purchase Agreement and the holder of the OID Convertible Note or the Class E and F Warrants will have rights under the Registration Rights Agreement between the Company and each investor in the OID Units Private Placement (each, “OID Units Registration Rights Agreement”), as described below.

In connection with the Third OID Units Closing, on July 10, 2023, Hexin paid a subscription amount of $1,000,000, and the Company issued 11,764,710 OID Units consisting of (i) an OID Convertible Note in the principal amount of $1,176,471, convertible into 11,764,710 shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment, (ii) a Class E Warrant for the purchase of 14,705,880 shares of common stock at ~~$2.25~~$0.10 per share, subject to adjustment, and (iii) a Class F Warrant for the purchase of 14,705,880 shares of common stock at $0.20 per share, subject to adjustment.

See below for additional related discussion of these securities. In connection with the Third OID Units Closing, after deducting Univest’s 8% fee of $80,000 and $50,000 for reimbursement of Univest’s legal fees pursuant to the April 2023 PAA, and, pursuant to the 2021 Placement Agency Agreement, after deducting Univest’s outstanding fees of $140,000 or 8% from the issuances of the Walleye Promissory Note for the principal amount of $1,000,000 on February 6, 2023 and an unsecured promissory note (the “Hexin Promissory Note”) to Hexin on December 28, 2022 for the principal amount of $750,000 for gross proceeds of $1,750,000, the Company received net proceeds of $730,000.

~~Public Offering~~

Amendment to Certain OID Units Registration Rights Agreements

~~On February 14, 2021, Marizyme completed~~In connection with the First OID Units Closing as described below under “—OID Units Private Placement – First Closing”, which occurred on May 12, 2023, an OID Units Registration Rights Agreement, dated as of May 12, 2023 (the “May 12, 2023 Registration Rights Agreement”), between the Company and Walleye, provided that the Company file a ~~preliminary prospectus~~registration statement within 60 days of such closing, registering the resale of the shares of common stock issuable pursuant to conversion of the 15% original issue discount unsecured subordinated convertible promissory note and exercise of the Class E Warrant and Class F Warrant issued to that investor in connection with ~~intention~~such closing, and contained other terms and conditions. Also in connection with the First OID Units Closing, pursuant to ~~raise up to $17,250,000.~~the Hexin Promissory Note, on May 22, 2023, the Company issued Hexin a Class E Warrant and a Class F Warrant, which provide for registration rights under the May 12, 2023 Registration Rights Agreement. As atpreviously reported in a Current Report on Form 8-K filed on June 5, 2023, in connection with the ~~end~~second closing of ~~Q2 2022,~~ the ~~final prospectus has not yet been filed~~OID Units Private Placement, which occurred on May 30, 2023, an OID Units Registration Rights Agreement, dated as of May 30, 2023 (the “May 30, 2023 Registration Rights Agreement” and each of the May 30, 2023 Registration Rights Agreement and the ~~final amount~~May 12, 2023 Registration Rights Agreement respectively, the “Amended OID Units Registration Rights Agreements”), between the Company and Walleye, Hexin and Frank Maresca (“Mr. Maresca”), also provided that the Company file a registration statement within 60 days of such closing, registering the resale of the ~~offering will~~shares of common stock issuable pursuant to conversion of the OID Convertible Notes and exercise of the Class E Warrants and Class F Warrant issued to these investors in connection with such closing, and contained other terms and conditions.

Holders of rights to 67% or more of the shares issuable upon conversion of the OID Convertible Notes and exercise of the Class E Warrants and the Class F Warrants may agree to amend or waive the requirements of each of the respective Amended OID Units Registration Rights Agreements. Under an Amendment to Registration Rights Agreement, dated as of July 6, 2023 (“Amendment to Registration Rights Agreement”), Walleye and Hexin, being holders of such rights, agreed to an amendment to each of the Amended OID Units Registration Rights Agreements to provide that the initial filing of the registration statement required by such Amended OID Units Registration Rights Agreements shall be ~~dependent~~made on ~~market conditions. The proceeds from~~or before the ~~offering will be used by~~date that is 67 days after 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. The management anticipatesdate of the ~~offering to close in Q3 2022.~~respective closing of the OID Units Private Placement.

Funding Requirements and Other Liquidity Matters

~~Marizyme expects~~We expect 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~~are expected to develop build efficient infrastructure to support development and commercialization of therapies and ~~devices,~~devices;
	●	Increase in research and development and legal ~~expenses~~support as we continue to develop our products, conduct clinical trials and pursue FDA ~~clearances~~, clearances;
	●	Expand our product portfolio through the identification and acquisition of additional life science ~~assets,~~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. On February 14, 2022, we filed a registration statement on Form S-1, subsequently amended, relating to a proposed underwritten public offering for gross proceeds of approximately $8 million from the issuance of units consisting of a share of common stock and two warrants to purchase one share of common stock. On April 21, 2023, prior to the effectiveness of the registration statement, we filed an application with the SEC for the withdrawal of the registration statement, including all amendments and exhibits to the registration statement. The application for withdrawal was filed to withdraw the registration statement because the Company no longer intended to pursue the proposed public offering. Pursuant to Rule 477 under the Securities Act, the application was deemed granted at the time the application was filed, because it was filed before the effective date of the registration statement, and the SEC did not notify us that the application for withdrawal would not be granted within 15 calendar days after er had filed the application.

We have not withdrawn the listing application that we submitted to list our common stock on the Nasdaq Capital Market tier of The Nasdaq Stock Market LLC (“Nasdaq”) in connection with the proposed public offering. We expect to resume the securities exchange listing process when we believe that we can meet all applicable securities exchange listing requirements and standards. We believe that such a listing may be an important factor in the Company’s efforts to gain sufficient financing to fund its operations in the short-term and long-term. There is no guarantee or assurance that our common stock will be approved for listing on the Nasdaq Capital Market. If we are unable to list our common stock on the Nasdaq Capital Market or other national securities exchange, we may experience heightened difficulty in raising sufficient funding to meet our capital and cash requirements over the 12 months ended March 31, 2024 and any period beyond that date. 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~~the interests 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. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

See “—Going Concern” below.

Cash Flows

Six months ended June 30,
2023 2022 $ Change
Net Cash provided by/(used in):
Operating activities $ (2,318,013 ) $ (7,055,675 ) $ 4,737,662
Financing activities 2,012,374 5,028,312 (3,015,938 )
Net change in cash $ (305,639 ) $ (2,027,363 ) $ 1,721,724

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

Six Months Ended June 30,
2022 2021 $ Change
Net Cash provided by/(used in):
Operating activities $ (7,055,675 ) $ (2,975,603 ) $ (4,080,072 )
Financing activities 5,028,312 74,945 4,953,367
Net change in cash $ (2,027,363 ) $ (2,900,658 ) $ 873,295

Operating Activities

Net cash used in operating activities was approximately ~~$7.06~~$2.3 million and ~~$3.0~~$7.1 million infor the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The net cash used in operating activities infor the ~~first half of 2022,~~six months ended June 30, 2023 was due to approximately ~~$1.42~~$1.3 million spent on ~~professional fees, $1.82~~research and development, approximately $0.6 million spent on salaries and related compensation expenses, $3.4 million in other general and ~~$2.59~~administrative expenses and approximately $0.9 million spent on professional fees. The net cash used in operating activities for the six months ended June 30, 2022 was due to approximately $2.6 million spent on research and development, ~~activities. The net change in operating assets and liabilities primarily related to $0.25~~approximately $1.42 million spent on ~~the manufacturing of Duragraft product~~professional fees and $1.8 million spent on salaries and related compensation expenses. The decrease in net cash used in operating activities in the ~~period and a $1.88 million increase in accounts payable, accrued expenses, and amounts~~six months ended June 30, 2023 compared to the six months ended June 30, 2022 was primarily due to ~~related parties~~the decrease in ~~support of~~ the ~~growth of our~~Company’s research and development expenses, salaries and other ~~operating activities.~~compensation, and professional fees.

Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2023 was $2.0 million, of which $0.9 million was due to funds raised from the issuance of an OID Convertible Note. An additional $1.0 million of funds was raised from the issuance of the Walleye Promissory Note and approximately $0.3 million was received from the exercise of the Somahlution Warrants. During the six months ended June 30, 2023 the Company also repaid approximately $0.2 million in notes payable.

Net cash provided by financing activities for the six months ended June 30, 2022 was due to ~~$5.12~~$5.2 million of funds raised from the issuance of ~~promissory notes pursuant to the Unit Purchase Agreement, net of issuance costs. During the six months ended June 30, 2022, the~~Convertible Notes. The Company also settled an aggregate of ~~$0.33~~$0.3 million in notes payable as part of the ~~Unit~~Units Private Placement during the six months ended June 30, 2022.

Exercise of Somahlution Warrants at Reduced Exercise Price

On December 15, 2019, the Company entered into an asset purchase agreement (the “Somahlution Agreement”), as amended on March 31, 2020, May 29, 2020, and July 30, 2020, with Somahlution. Pursuant to the terms of the Somahlution Agreement, as amended, the Company agreed to the purchase of the Somahlution Assets (the “Somahlution Acquisition”). On August 4, 2020, the Somahlution Acquisition closed. As consideration for the Somahlution Acquisition, the Company issued to Somahlution’s former owners (the “Former Somahlution Owners”) a total of 10,000,000 restricted shares of common stock (the “Somahlution Purchase ~~Agreement issuances~~Shares”) and ~~repaid $0.1 million in notes~~five-year warrants to purchase an additional 2,999,955 shares of common stock with an exercise price of $5.00 per share (the “Somahlution Warrants”).

On April 13, 2023, the Company delivered offer letter agreements (the “Somahlution Warrant Offer Letter Agreements”) to the Former Somahlution Owners, which offered to allow the Former Somahlution Owners to exercise the Somahlution Warrants to purchase the number of restricted shares of common stock issuable under the Somahlution Warrants at an exercise price reduced by the Company from $5.00 per share to $0.10 per share, on or prior to April 21, 2023, for maximum total cash proceeds of $299,995.50. As of the conclusion of this offer period, four of the Former Somahlution Owners had entered into Somahlution Warrant Offer Letter Agreements and had exercised their Somahlution Warrants to purchase a total of 2,652,159 shares of common stock for gross proceeds of approximately $265,216 (the “Somahlution Warrants Exercise”). Univest as the Company’s placement agent, which facilitated the Somahlution Warrants Exercise, waived any fees or reimbursable expenses that would otherwise have been payable ~~assumed on~~with respect to the ~~acquisition of My Health Logic.~~Somahlution Warrants Exercise pursuant to the 2021 Placement Agency Agreement.

Adjustments to Conversion Price of Convertible Notes and Exercise Price of Class C Warrants and Number of Underlying Shares

As described under “—Convertible Notes” below, during the fiscal years ended December 31, 2021 and 2022, the Company conducted a private placement of units (the “Units Private Placement”) consisting of the Convertible Notes and the Class C Warrants, as were modified or amended from time to time, the general terms of which are described in detail in that section. Among their other terms, the Convertible Notes and Class C Warrants provide that a lower price per share, or more favorable terms, respectively, under subsequent equity issuances, not including any Qualified Financing (as defined in “—Convertible Notes”) and certain other exempt issuances, will be applicable to the conversion or exercise rights under the Convertible Notes and Class C Warrants, respectively. In addition, under a Letter Agreement between the Company and Univest as placement agent for the investors in the Units Private Placement, dated January 12, 2023 (the “January 2023 Letter Agreement”), the parties agreed that simultaneously with any adjustment to the exercise price under the Class C Warrants as a result of any equity issuances, not including Qualified Financings and certain other exempt issuances, the number of shares of common stock that may be purchased under the Class C Warrants will be increased such that the aggregate exercise price of such shares will be the same as the aggregate exercise price in effect immediately prior to the adjustment, without regard to any limitations on exercise contained in the Class C Warrants, including the beneficial ownership limitation that would otherwise be applicable.

At the time of the Somahlution Warrants Exercise, the balance under the Convertible Notes was convertible at a conversion price of $1.75 per share and the Class C Warrants were exercisable at an exercise price of $2.25 per share. Outstanding Convertible Notes had underlying principal of $14,471,177, and outstanding Class C Warrants were exercisable to purchase a total of 16,538,473 shares of common stock. As the Somahlution Warrants Exercise constituted a financing at a lower price per share that the conversion price and exercise price of the Convertible Notes and Class C Warrants, respectively, and such financing was not a Qualified Financing, as a result of the Somahlution Warrants Exercise and pursuant to the adjustment provisions described above, the conversion price of the Convertible Notes and the exercise price of the Class C Warrants adjusted to $0.10 per share. In connection with the transaction contemplated by the Somahlution Warrant Offer Letter Agreements and the lack of sufficient authorized shares of common stock under the Company’s articles of incorporation, the Company obtained an exercise and conversion rights waiver from a certain holder of the Convertible Notes and Class C Warrants, which reduced the principal underlying Convertible Notes with conversion rights to Convertible Notes with a total of $4,471,177 in principal, and reduced outstanding Class C Warrants with exercise rights to Class C Warrants having exercise rights to Class C Warrants exercisable to purchase 5,109,904 shares of common stock. As a result of these adjustment provisions and the conversion and exercise terms applicable to the Convertible Notes and Class C Warrants, including the effect of applicable waivers of conversion or exercise rights, the number of shares into which the Convertible Notes may be converted adjusted from 2,554,944 shares of common stock, not including shares convertible from interest under the Convertible Notes, to 44,711,770 shares of common stock, not including shares convertible from interest under the Convertible Notes, and the number of shares that the Class C Warrants may be exercised to purchase adjusted from 5,109,904 shares of common stock to 114,973,110 shares. At that time, we expect that the total number of shares into which the Convertible Notes may be converted and for which the Class C Warrants may be exercised to purchase, including all interest that may accrue under the Convertible Notes up to the date of maturity, will be 544,348,332 shares.

Default Under Promissory Note

On February 6, 2023, under a securities purchase agreement, the Company issued the Walleye Promissory Note to Walleye for $1,000,000 with a maturity date of May 7, 2023. The Walleye Promissory Note did not carry interest. The principal amount under the Walleye Promissory Note was required to be repaid in full on the maturity date. In the event that the principal amount was not repaid in full on the maturity date, the principal amount was to increase to $1,250,000. As of May 8, 2023, the Company had not repaid the Walleye Promissory Note. Accordingly, the principal outstanding under the Walleye Promissory Note increased to $1,250,000. See “—Cross-Default under Convertible Notes” and “—OID Units Private Placement – Second Closing” below for related developments.

Cross-Default Under Convertible Notes

Each of the Convertible Notes provides that any default on indebtedness of more than $100,000, other than indebtedness under the respective Convertible Notes, will also result in default under the Convertible Notes. The Convertible Notes provide that such default is not subject to any cure period. Due to the non-repayment of the initial principal amount of $1,000,000 under the Walleye Promissory Note by the Maturity Date, the Company also defaulted under the Convertible Notes on the same date. The Convertible Notes provide that due to this default, the Company became obligated to pay 135% of the outstanding principal amount under each of the Convertible Notes on the date on which the default occurred (the “Mandatory Default Amount”). The Mandatory Default Amount may be declared due by each holder immediately. The aggregate Mandatory Default Amount that may be due under the Convertible Notes was $21,871,631 on the date of the default, or approximately $5.7 million more than would otherwise have been due under the Convertible Notes on the date of the default.

Under the unit purchase agreement entered into on May 27, 2021 with certain holders of several of the Convertible Notes, each of the Company’s subsidiaries entered into a guaranty to guarantee the repayment of the Company’s obligations under the Convertible Notes, and the Company and its subsidiaries entered into security agreements granting security interests in all of their respective assets for up to the dollar value owed under the respective Convertible Notes. The respective Convertible Notes were issued for aggregate principal of approximately $1.2 million. Under each unit purchase agreement entered into with respect to subsequent issuances of the Convertible Notes, the Company and its subsidiaries were obligated to enter into similar security agreements and guaranties, but did not do so.

The holders of the Convertible Notes have not exercised any remedies applicable to the Convertible Notes or given notice of any intention to do so as of the date of this report. In the event that the balance owed under the Convertible Notes, including the respective Mandatory Default Amount, is not repaid upon demand, the holders of the Convertible Notes may seek to take possession of some or all of the Company’s and its subsidiaries’ assets, force the Company and its subsidiaries into bankruptcy proceeds, or seek other legal remedies against the Company and its subsidiaries. In such event, the Company’s business, operating results and financial condition may be materially adversely affected.

Convertible Notes

During the years ended December 31, 2022 and 2021, the Company issued 147,711,770 units in the Units Private Placement, consisting of Convertible Notes and Class C Warrants, at a post-adjustment price per unit of $0.10, giving effect to the adjustments in the terms of the Units Private Placement resulting from the Somahlution Warrants Exercise as described above under “—Adjustments to Conversion Price of Convertible Notes and Exercise Price of Class C Warrants and Number of Underlying Shares”, for gross cash proceeds of approximately $14.2 million. Of the total 147,711,770 units issued, the following were issued for no cash payment: 2,786,780 units were issued to settle notes payable assumed on acquisition of My Health Logic, 400,000 units were issued to settle accounts payable, and 3,000,000 units were issued in exchange for services rendered to the Company in the year ended December 31, 2022. The number of units issued in the Units Private Placement corresponds with the number of shares of common stock into which the principal underlying the Convertible Notes may be converted. The cash proceeds from the Units Private Placement were used to sustain the Company’s growth and meet its capital obligations.

In connection with the Units Private Placement, we issued the Convertible Notes, which in aggregate were initially convertible into an aggregate of 8,269,228 shares of common stock, prior to the adjustment described below and the execution of certain conversion rights waivers. The principal under outstanding Convertible Notes as of June 30, 2023 was $14,471,177. Each Convertible Note was initially convertible into common stock of the Company at a price per share of $1.75, subject to adjustment. As a result of the adjustments applicable to the Convertible Notes described under “—Adjustments to Conversion Price of Convertible Notes and Exercise Price of Class C Warrants and Number of Underlying Shares”, the execution of certain conversion rights waivers described below, and the adjustment provisions described below, the conversion price of the Convertible Notes was reduced to $0.10 per share, and, as adjusted, the number of shares into which the Convertible Notes may be converted adjusted to 44,711,770 shares of common stock, not including shares convertible from interest under the Convertible Notes. In addition, due to the event triggering of the cross-default provision under the Convertible Notes described above under “—Cross-Default Under Convertible Notes”, the aggregate Mandatory Default Amount that may be due under the Convertible Notes was $21,871,631 on the date of the default, or approximately $5.7 million more than would otherwise have been due under the Convertible Notes on the date of the default.

On June 14, 2023, a Convertible Note with $119,980 underlying principal and approximately $14,693 accrued interest was fully converted into 1,346,410 shares of common stock at the applicable conversion price of $0.10 per share at the election of the Convertible Note holder.

The Convertible Notes mature 24 months after their issuance date and accrue 10% of simple interest per annum on the outstanding principal amount. The Convertible Notes’ principal and accrued interest can be converted at any time at the option of each holder at the conversion price. Under the unit purchase agreement entered into on May 27, 2021 with certain holders of several of the Convertible Notes, each of the Company’s subsidiaries entered into a guaranty to guarantee the repayment of the Company’s obligations under the Convertible Notes, and the Company and its subsidiaries entered into security agreements granting security interests in all of their respective assets for up to the dollar value owed under the respective Convertible Notes. The respective Convertible Notes were issued for aggregate principal of approximately $1.2 million. Under each unit purchase agreement entered into with respect to subsequent issuances of the Convertible Notes, the Company and its subsidiaries were obligated to enter into similar security agreements and guaranties, but did not do so.

The Convertible Notes issued in exchanged for the cancellation of previously-issued convertible notes from May 2021 to December 2021, and the Convertible Notes issued from December 2021 until March 24, 2022, provide that in the event the Company consummates a Qualified Financing, and provided that the shares into which the Convertible Notes may be converted may be issued or resold under an effective registration statement, then all outstanding principal, together with all unpaid accrued interest, under the Convertible Notes, would automatically convert into shares of common stock at the lesser of 75% of the cash price per share paid in the Qualified Financing and the otherwise applicable conversion price. All outstanding Convertible Notes provide that a lower price per share under subsequent equity issuances, not including Qualified Financings, will be applied to the conversion price of the Convertible Notes, and have customary antidilution provisions.

All of the outstanding Convertible Notes provide that if at any time following the 60-day anniversary of the final closing date or termination of the Units Private Placement, and provided there is an effective registration statement permitting the issuance or resale of the shares of common stock into which the Convertible Notes may be converted, if (A) the common stock is listed on a senior national securities exchange, (B) the daily volume-weighted average price for the prior twenty (20) consecutive trading days is $6.00 or more (adjusted for splits and similar distributions) and (C) the daily trading volume is at least $1,000,000 during such 20-day period, then the Company will have the right to require the Convertible Notes to convert all or any portion of the principal and accrued interest then remaining under the Convertible Notes into shares of common stock at the above conversion price in effect on the mandatory conversion date.

Each holder of a Convertible Note will not have the right to convert the Convertible Note to the extent that the holder (together with any other person with which the holder is considered to be part of a “group” under Section 13 of the Exchange Act or with which the holder otherwise files reports under Section 13 and/or Section 16 of the Exchange Act) would become the “beneficial owner” (as such term is defined in the Exchange Act and the rules and regulations thereunder) of in excess of 4.99% of the number of shares of common stock outstanding, or 9.99% if the holder becomes the beneficial owner of more than 4.99% of the outstanding shares of common stock, subject to a 61-day notice requirement. This limitation does not apply to certain adjustment provisions of the Convertible Notes. In addition, under the January 2023 Letter Agreement, we agreed that simultaneously with any adjustment to the exercise price under the Class C Warrants as a result of any equity issuances, not including Qualified Financings and certain other exempt issuances, the number of shares of common stock that may be purchased under the Class C Warrants will be increased such that the aggregate exercise price of such shares will be the same as the aggregate exercise price in effect immediately prior to the adjustment, without regard to any limitations on exercise contained in the Class C Warrants, including the beneficial ownership limitation described above. Under the January 2023 Letter Agreement, the Somahlution Warrants Exercise, which constituted a financing that was not a Qualified Financing, had the effect of requiring an adjustment to the exercise price of the Class C Warrants and corresponding increase in the number of shares that may be purchased under the Class C Warrants, and a number of the Class C Warrants became exercisable to purchase more than 4.99%, but not more than 9.99%, of the outstanding shares of common stock due to the applicable terms of the beneficial ownership limitation, and a number of Class C Warrants became exercisable to purchase more than 9.99% of the outstanding shares of common stock due to the effective non-application of the beneficial ownership limit as to such Class C Warrants. See “—Adjustments to Conversion Price of Convertible Notes and Exercise Price of Class C Warrants and Number of Underlying Shares”. The Convertible Notes that are held by holders that became beneficial owners of more than 4.99% but less than 9.99% of the outstanding shares of common stock as a result of the Somahlution Warrants Exercise may now convert their Convertible Notes to the extent that they will not become beneficial owners of more than 9.99% of the outstanding shares of common stock. The Convertible Notes that are held by holders that became beneficial owners of more than 9.99% of the outstanding shares of common stock as a result of the Somahlution Warrants Exercise may now convert their Convertible Notes without an effective beneficial ownership limit.

The Convertible Notes in our March 24, 2022 and subsequent closings were also modified to provide that upon the occurrence of a Qualified Financing, such Convertible Notes may be voluntarily, not automatically, convertible at the option of the holders, at the lower of 75% of the price per equity security in such financing and the otherwise applicable conversion price. The conversion provision was also modified to remove the requirement that an effective registration statement allow for the issuance or resale of shares of common stock into which the Convertible Notes may be converted in order for the conversion price of the Convertible Notes to be subject to the reduction to 75% of the price per equity security in a Qualified Financing.

The Convertible Notes have certain registration requirements as to the shares of common stock underlying the Convertible Notes upon the final closing of the Units Private Placement under the respective registration rights agreements between the Company and the purchasers of the Convertible Notes. By executing certain lock-up agreements with Univest acting as the representative of the underwriters of a proposed public offering that we no longer intend to pursue or waiver agreements with the Company, the purchasers of the Convertible Notes agreed that doing so amounted to a waiver of their rights under the respective registration rights agreements, and that any such registration rights will be afforded to such purchasers in a subsequent registration statement. One assignee of a Convertible Note has entered into a waiver and consent with the Company providing for the waiver and deferral of all registration rights under its Convertible Note until a date and time that the Company shall determine in its sole discretion that it may provide for such rights. We and Univest may terminate the respective waivers at any time, but do not intend to do so until after the date that the Company’s registration statement registering the resale of the shares underlying the Convertible Notes becomes effective.

Each Convertible Note provides that its holder may vote with the shares of common stock, on an as-converted to common stock basis, with respect to all corporate matters of the Company on which the holders of common stock are entitled to vote, subject to any applicable beneficial ownership limitations. Under the NRS, the right to vote is generally a feature of a share of any class or series of stock of a corporation and, thus, a right granted to stockholders of a corporation. The NRS does not provide that convertible promissory notes (or any other form of bond, debenture or other obligation) issued by a Nevada corporation may grant holders with voting rights, in general. However, Section 78.197 of the NRS provides that a Nevada corporation “may provide in its articles of incorporation that the holder of a bond, debenture or other obligation of the corporation may have any of the rights of a stockholder in the corporation.” Although we provided voting rights as a contractual feature of the Convertible Notes, our articles of incorporation currently do not provide that the holders of the Convertible Notes will be able to vote as stockholders of the Company. We scheduled the Special Stockholder Meeting to be held on August 9, 2023, to consider and vote on, among other proposals, a proposal to approve the Voting Rights Amendment, i.e., an amendment to the Company’s articles of incorporation, as amended to date, to provide that holders of any of the Company’s bonds, debentures or other obligations of the Company may have, at the option of the board of directors of the Company, any of the rights of a stockholder of the Company. Approval of each proposal required a “quorum” at the meeting consisting of a majority (more than 50%) of the outstanding voting shares as of the record date, present in person or represented by proxy, and the affirmative “for” vote of the holders of a majority of the shares represented at the meeting, in person or by proxy, and entitled to vote. See “—Recent Developments – Special Stockholder Meeting, Change in Authorized Shares, and Approval of Voting Rights for Certain Debtholders” for related recent developments subsequent to June 30, 2023.

The 2021 Placement Agency Agreement and form of unit purchase agreement relating to the Units Private Placement provide that up to $18 million and $17 million of the units containing the Convertible Notes may be sold, respectively. On August 12, 2022, we completed the final closing of the Units Private Placement.

In August 2022, certain holders of the Convertible Notes executed limited waiver and consent agreements waiving their conversion rights. The limited waiver and consent agreements were to expire on December 31, 2022, or if earlier to occur, upon the approval of an increase in the number of the authorized shares of common stock under the Company’s articles of incorporation by the Company’s stockholders by majority written consent or via stockholder vote at the Company’s next stockholder meeting and the implementation of such increase, which were to occur as soon as practicable after such stockholder approval. On December 27, 2022, we held the Annual Meeting. At the Annual Meeting, stockholders holding shares of common stock in the Company representing at least a majority of the voting power approved, among other matters, the Authorized Capital Increase. As a result, the limited waiver and consent agreements expired in accordance with their terms.

Effective January 2023 and April 2023, certain holders of the Convertible Notes that would otherwise be convertible into 80,000,000 shares of common stock plus additional shares from accrued interest executed waivers of their conversion rights under the Convertible Notes.

OID Units Private Placement

First Closing

On May 12, 2023, the Company conducted the first closing (the “First OID Units Closing”) of the OID Units Private Placement of up to $10,000,000 for an aggregate of up to 100,000,000 OID Units, under an OID Units Purchase Agreement, with accredited investors, with each issuance of OID Units to an investor in the OID Units Private Placement consisting of (i) an OID Convertible Note, convertible into shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment, (ii) a Class E Warrant for the purchase of 125% of the shares of common stock into which the respective OID Convertible Note may be converted at $0.10 per share, subject to adjustment, and (iii) a Class F Warrant for the purchase of 125% of the shares of common stock into which the respective OID Convertible Note may be converted at $0.20 per share, subject to adjustment. Under the OID Units Purchase Agreement, the minimum investment permitted is $1,000. The Company retained Univest as its exclusive placement agent in connection with the sale of the OID Units pursuant to the OID Units Purchase Agreement under the April 2023 PAA. In addition to the rights set forth in each OID Units Purchase Agreement, the OID Convertible Notes, and the Class E and F Warrants, each investor party to each OID Units Purchase Agreement and each holder of one of the OID Convertible Notes or the Class E and F Warrants will have rights under an OID Units Registration Rights Agreement, as described below.

In connection with the First OID Units Closing, on May 12, 2023, Walleye entered into an OID Units Purchase Agreement dated as of such date, paid a subscription amount of $1,000,000, and the Company issued 11,764,710 OID Units consisting of (i) an OID Convertible Note in the principal amount of $1,176,471, convertible into 11,764,710 shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment, (ii) a Class E Warrant for the purchase of 14,705,880 shares of common stock at $0.10 per share, subject to adjustment, and (iii) a Class F Warrant for the purchase of 14,705,880 shares of common stock at $0.20 per share, subject to adjustment. In connection with the First OID Units Closing, pursuant to the April 2023 PAA and the OID Units Purchase Agreement, the Company received net proceeds of $870,000 after deducting Univest’s 8% fee and $50,000 for reimbursement of Univest’s legal fees and expenses. See below for additional related discussion.

Second Closing

On May 30, 2023, the Company conducted the second closing (the “Second OID Units Closing”) of the OID Units Private Placement. In connection with the Second OID Units Closing, Hexin and Walleye agreed to the cancellation of the Hexin Promissory Note and the Walleye Promissory Note, respectively, and Mr. Maresca, a consultant to the Company, agreed to the cancellation of certain indebtedness, in exchange for OID Units and related agreements, as described below.

First, under a Cancellation and Exchange Agreement, dated as of May 30, 2023, between the Company and Hexin (the “Hexin Cancellation Agreement”), Hexin agreed to cancel the Hexin Promissory Note in exchange for: (i) the execution of an OID Units Purchase Agreement, dated as of May 30, 2023, between the Company and Hexin, Walleye and Mr. Maresca (the “Second OID Units Purchase Agreement”), (ii) the execution of an OID Units Registration Rights Agreement, dated as of May 30, 2023, between the Company and Hexin, Walleye and Mr. Maresca (the “Second OID Units Registration Rights Agreement”), and (iii) the issuance of 9,578,040 OID Units consisting of (a) an OID Convertible Note in the principal amount of $957,804 for a subscription equal to $814,133 (the aggregate amount of principal plus accrued and unpaid interest under the Hexin Promissory Note as of May 30, 2023), convertible into 9,578,040 shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment (the “Hexin OID Convertible Note”), (b) a Class E Warrant for the purchase of 11,972,550 shares of common stock at $0.10 per share, subject to adjustment (the “Second Hexin Class E Warrant”), and (c) a Class F Warrant for the purchase of 11,972,550 shares of common stock at $0.20 per share, subject to adjustment (the “Second Hexin Class F Warrant”). The Hexin Cancellation Agreement contains a release of claims against the Company relating to the Hexin Promissory Note.

Second, under a Cancellation and Exchange Agreement, dated as of May 30, 2023, between the Company and Walleye (the “Walleye Cancellation Agreement”), Walleye agreed to cancel the Walleye Promissory Note in exchange for: (i) the execution of the Second OID Units Purchase Agreement, (ii) the execution of the Second OID Units Registration Rights Agreement, and (iii) the issuance of 14,705,890 OID Units consisting of (a) an OID Convertible Note in the principal amount of $1,470,589 for a subscription equal to $1,250,000 (the aggregate amount of principal under the Walleye Promissory Note as of May 30, 2023), convertible into 14,705,890 shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment (the “Second Walleye OID Convertible Note”), (b) a Class E Warrant for the purchase of 18,382,362 shares of common stock at $0.10 per share, subject to adjustment (the “Second Walleye Class E Warrant”), and (c) a Class F Warrant for the purchase of 18,382,362 shares of common stock at $0.20 per share, subject to adjustment (the “Second Walleye Class F Warrant”). The Walleye Cancellation Agreement contains a release of claims against the Company relating to the Walleye Promissory Note.

Third, under a Cancellation and Exchange Agreement, dated as of May 30, 2023, between the Company and Mr. Maresca (together with the Hexin Cancellation Agreement and the Walleye Cancellation Agreement, the “Cancellation and Exchange Agreements”), Mr. Maresca agreed to cancel $150,000 of the aggregate short-term indebtedness to Mr. Maresca, which arose in the ordinary course of business for certain consulting services provided by Mr. Maresca to the Company, in exchange for: (i) the execution of the Second OID Units Purchase Agreement, (ii) the execution of the Second OID Units Registration Rights Agreement, and (iii) the issuance of 1,764,710 Units consisting of (a) an OID Convertible Note in the principal amount of $176,471 for a subscription equal to $150,000 (the amount of the indebtedness being cancelled), convertible into 1,764,710 shares of common stock plus additional shares based on accrued interest at $0.10 per share, subject to adjustment (the “Maresca OID Convertible Note”), (b) a Class E Warrant for the purchase of 2,205,887 shares of common stock at $0.10 per share, subject to adjustment (the “Maresca Class E Warrant”), and (c) a Class F Warrant for the purchase of 2,205,887 shares of common stock at $0.20 per share, subject to adjustment (the “Maresca Class F Warrant”). The Maresca Cancellation Agreement contains a release of claims against the Company relating to the cancelled indebtedness.

The Hexin OID Convertible Note, the Second Hexin Class E Warrant and the Second Hexin Class F Warrant are subject to the terms and conditions of the Hexin Cancellation Agreement. The Second Walleye OID Convertible Note, the Second Walleye Class E Warrant and the Second Walleye Class F Warrant are subject to the terms and conditions of the Walleye Cancellation Agreement. The Maresca OID Convertible Note, the Maresca Class E Warrant and the Maresca Class F Warrant are subject to the terms and conditions of the Maresca Cancellation Agreement. The Second OID Units Purchase Agreement and the Second OID Units Registration Rights Agreement are also subject to the terms and conditions of each of the Cancellation and Exchange Agreements.

Univest did not receive a fee in connection with the Second OID Units Closing because there were no gross proceeds.

OID Units Purchase Agreement

Each OID Units Purchase Agreement provides a right of first offer to investor parties to any proposed offer or sale of equity securities by the Company until the first anniversary of the First OID Units Closing (i.e., May 12, 2024). Each OID Units Purchase Agreement also contains certain liquidated damages provisions, including for any failure of the Company to meet the requirements for the OID Convertible Notes or the Class E and Class F Warrants to be converted or exercised for non-restricted shares of common stock under Rule 144, and on every 30th day (pro-rated for periods totaling less than 30 days) thereafter, until cured or such Rule 144 requirements no longer apply, up to a maximum of 25% of each affected investor’s subscription amount. Each OID Units Purchase Agreement also contains a most-favored nations clause that provides that in connection with any subsequent equity financing of the Company for consideration (a “Subsequent Financing”), each investor may accept the securities and terms of the Subsequent Financing in substitution of the securities and terms of each OID Units Purchase Agreement, upon notice from an investor, subject to the terms and conditions of each OID Units Purchase Agreement. Each OID Units Purchase Agreement, the OID Convertible Notes and the Class E and F Warrants will be amended to incorporate the terms and forms of the securities sold in the Subsequent Financing upon the closing of the Subsequent Financing. Each OID Units Purchase Agreement will terminate upon certain events including mutual written consent, by either party upon notice if a closing has not occurred within 15 business days of the date of the agreement, an event of default under the OID Convertible Notes, the full conversion or repayment of the OID Convertible Notes and the non-ownership of any shares of common stock issuable upon conversion of the OID Convertible Notes or exercise of the Class E and F Warrants. Each OID Units Purchase Agreement also contains indemnification of the investors relating to claims relating to the transactions under each OID Units Purchase Agreement which will survive termination. Each investor’s rights under the OID Units Purchase Agreement may be assigned to another “accredited investor” as defined by Rule 501(a) of the Securities Act.

OID Convertible Notes

The OID Convertible Notes will mature nine months after the date of the First OID Units Closing with respect to OID Convertible Notes issued in the first two closings of the OID Units Private Placement and will mature nine months after the date of issuance for subsequent closings. The OID Convertible Notes accrue 10% of interest per annum on the outstanding principal amount. The OID Convertible Notes will be unsecured and subordinated to any senior indebtedness of the Company. The OID Convertible Notes’ principal and accrued interest may generally be converted at any time at a conversion price of $0.10 per share, subject to adjustment, at the option of the holder, into shares of common stock, subject to certain limitations including: (i) only to the extent that the holder (together with any other person with which the holder is considered to be part of a “group” under Section 13 of the Exchange Act or with which the holder otherwise files reports under Section 13 and/or Section 16 of the Exchange Act) would not become the “beneficial owner” (as such term is defined in the Exchange Act and the rules and regulations thereunder) of in excess of 4.99% of the number of shares of common stock outstanding, or 9.99% if the holder becomes the beneficial owner of more than 4.99% of the outstanding shares of common stock (excluding from the calculation of that percentage any common stock or other equity interests in the Company beneficially owned by virtue of the OID Convertible Note or respective Class E and F Warrants), subject to a 61-day notice requirement; and (ii) only after the effectiveness of the Capital Event Amendment. In connection with the second limitation, the OID Convertible Notes contain covenants requiring that the Company promptly call a meeting of stockholders for the purpose of seeking approval of the Capital Event Amendment, use all commercially reasonable efforts to obtain approval, including the hiring of a proxy solicitation firm, and if stockholder approval is not obtained at the meeting, to repeat the process every four months until it is obtained. In the event the Company offers, sells, grants, issues, or otherwise disposes of common stock or securities with rights to common stock, or announces the intention to do one of such things, before the listing of the common stock on NYSE American LLC (“NYSE American”), Nasdaq, or the New York Stock Exchange (the “NYSE” and together with NYSE American and Nasdaq, a “National Stock Exchange”), at a lower price per share than the OID Convertible Notes’ conversion price while the OID Convertible Notes are outstanding, then generally the conversion price of the OID Convertible Notes will be lowered to such price per share. This adjustment provision will apply one time only. The OID Convertible Notes also have customary antidilution provisions in the event of stock splits, certain changes of control or similar transactions, and rights offerings. While the OID Convertible Notes are outstanding and for 12 months after the Company lists its common stock on a National Stock Exchange, the Company may not exchange or cooperate to exchange any indebtedness or securities, reduce or change the conversion, exercise or exchange price of any securities convertible, exercisable or exchangeable for common stock, amend non-convertible debt to convertible debt, issue securities at a price based on or varying with trading prices or quotations for the common stock or with a price reset term, or agree to sell securities at a future determined price. Until 30 days after the OID Convertible Notes are converted or repaid in full, the Company may not sell any securities in a capital or debt raising transaction or series of related transactions which grant to an investor the right to receive additional securities based upon future transactions of the Company on terms more favorable than those granted to such investor in such transaction or series of related transactions. The OID Convertible Notes may not be prepaid by the Company. In the event of default under the OID Convertible Notes, subject to certain cure rights, interest under the OID Convertible Notes will increase to the lower of 18% and the maximum legal interest rate, and the outstanding balance will become immediately due and payable. The OID Convertible Notes have the registration rights set forth in the respective OID Units Registration Rights Agreement. See “—OID Units Registration Rights Agreement” below.

OID Units Registration Rights Agreement

Under each OID Units Registration Rights Agreement, as amended if applicable, the Company is required to file a registration statement with the SEC registering the resale of the shares of common stock issuable pursuant to conversion of the OID Convertible Notes and exercise of the Class E and F Warrants within 67 days of the date of the respective closing of the OID Units Private Placement and to cause the registration statement to become effective within 120 days after such filing date. The Company must maintain the effectiveness of the registration statement until the earlier of the first anniversary of its effectiveness date and the date that the shares registered for resale may be resold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144. If the Company fails to file the registration statement by the filing deadline or cause it to become effective by the effectiveness deadline, or the registration statement ceases to be effective or the related prospectus becomes unavailable for resales for more than 10 consecutive calendar days or more than an aggregate of 15 calendar days during any 12-month period, then on the date of such failure and every 30 calendar days after such date until the failure is cured, the Company must pay to each investor partial liquidated damages equal to 1% of the aggregate purchase price paid by such investor pursuant to the respective OID Units Purchase Agreement, up to a maximum of 10% of the aggregate subscription amount paid by the investor. If the Company fails to pay the partial liquidated damages within seven days of any such failure, the Company will pay interest thereon at a rate of the lesser of 18% per annum or the maximum amount permitted under applicable law to each investor, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. Additional liquidated damages requirements will end when the applicable failure is cured or Rule 144 becomes available for resale of all the shares of common stock otherwise required to be registered for resale under each OID Units Registration Rights Agreement. Liquidated damages will not apply to a failure that is due to limits imposed by the SEC’s interpretation of Rule 415 under the Securities Act. In addition, if there is not an effective registration statement covering all shares of common stock subject to the registration rights under each OID Units Registration Rights Agreement at any time when required and the Company proposes to file a registration statement to register certain other offerings, not including an underwritten public offering of its securities for its own account or the account of others or certain other types of registration statements, then the Company must provide notice to investor parties and include the shares otherwise required to be registered under each OID Units Registration Rights Agreement within 15 days of such notice, unless they are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements). Each OID Units Registration Rights Agreement contains related procedural and filing requirements and investor notice and review rights as to certain events and filings relating to the registration statement. The Company will be responsible for all fees and expenses relating to compliance with each OID Units Registration Rights Agreement, as well as up to $10,000 in reasonable attorney fees for the investors’ review of the registration statement. Each OID Units Registration Rights Agreement contains mutual indemnification provisions for claims relating to a registration statement. The investor’s rights under the OID Units Purchase Agreement may be assigned to another “accredited investor” as defined by Rule 501(a) of the Securities Act.

Holders of rights to 67% or more of the shares issuable upon conversion of the OID Convertible Notes and exercise of the Class E and F Warrants may agree to amend or waive the requirements of each respective OID Units Registration Rights Agreement. As described under “—Recent Developments – Amendment to Certain OID Units Registration Rights Agreements”, under an Amendment to Registration Rights Agreement, dated as of July 6, 2023, sufficient holders of such rights agreed to amend each OID Units Registration Rights Agreement then in effect to provide that the initial filing of the registration statement required by such OID Units Registration Rights Agreement shall be made on or before the date that is 67 days after the date of the respective closing of the OID Units Private Placement. Each subsequent OID Units Registration Rights Agreement also contains the amended term.

April 2023 PAA

Under the April 2023 PAA, Univest acted as the Company’s exclusive placement agent in connection with the OID Units Private Placement. The Company agreed to pay Univest a cash placement fee equal to 8% of the gross proceeds from the sale of the OID Units, 8% of the gross proceeds from the exercise of the Class E and F Warrants, and certain Placement Agent Warrants. The Company further agreed to reimburse Univest for the fees and expenses of its due diligence and legal counsel of up to $200,000. The April 2023 PAA provides indemnification rights to Univest and its affiliates in the event of certain claims relating to the April 2023 PAA or related transactions. Under the April 2023 PAA, Univest has the right to act as the Company’s sole placement agent or an underwriter for any future equity financing occurring during the 18-month period following the consummation of the OID Units Private Placement. The term of the April 2023 PAA continues until the completion of the OID Units Private Placement, subject to termination after 15 days’ notice after July 31, 2023 or earlier in the case of termination for cause. Univest will also receive fees and Placement Agent Warrants on the same basis as described above with respect to any private or public offering or other financing or capital raising transaction of any kind of the Company within 12 months of the termination or expiration of the April 2023 PAA with an investor whom Univest has, directly or indirectly, introduced to the Company during the term of the April 2023 PAA.

Pursuant to the April 2023 PAA, in connection with closings of the OID Units Private Placement, as of June 30, 2023, the Company had paid Univest $80,000 in total fees and $50,000 as reimbursement of Univest’s legal fees.

Other Contractual Obligations and Commitments

Other than disclosed below, there were no material changes outside the ordinary course of our business during the six months ended June 30, 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 2021 Form 10-K.

Royalties and Other Commitments

~~Upon receiving the FDA~~ ~~clearance~~ ~~for the DuraGraft and other key intellectual products,~~On December 15, 2019, the Company ~~will:~~entered into the Somahlution Agreement to acquire the Somahlution Assets, including DuraGraft®. The Somahlution Agreement was amended on March 31, 2020 and May 29, 2020 to extend the termination date. On July 30, 2020, the Company and Somahlution entered into Amendment No. 3 to the Somahlution Agreement (“Amendment No. 3”). Pursuant to the terms of this amendment, it was agreed that, as part of the Somahlution Acquisition, the Company would acquire the outstanding capital stock of Somahlution, Inc., held by Somahlution, LLC, rather than the assets of Somahlution, Inc., in addition to the Somahlution Assets. This change to the Somahlution 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 Somahlution related to clinical and medical expenses. The parties also orally agreed that the payments on the assumed debts would be recorded as a prepaid royalty against future royalties.

Pursuant to the Somahlution Agreement and in consideration of the outstanding capital stock of Somahlution, Inc., the Company agreed to pay to certain beneficial owner designees of Somahlution, among other consideration:

	●	Grant of performance warrants to Somah, 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 ~~clearance~~;
	●	~~Pay royalties~~The following contingent consideration upon receiving FDA final approval and insurance reimbursement approval on the products, and in the amounts, specified below, subject to certain expiration terms, none of which had been earned or granted as of June 30, 2023:

●

DuraGraft products:

■	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;
■	●	~~Pay~~Payment on a pro rata basis of 10% of the cash value of ~~the~~ rare pediatric voucher sales following ~~the~~ FDA ~~clearance~~ approval and subsequent sale to an unaffiliated third party of a rare pediatric voucher based on ~~Somah’s~~Somahlution’s DuraGraft product;
■	●	~~Grant~~Following the FDA approval and subsequent sale to an unaffiliated third party of a rare pediatric voucher based on Somahlution’s DuraGraft product, grant of warrants on a pro rata basis to purchase an aggregate of 250,000 ~~commons~~ shares of common stock with a term of five years and a strike price determined based on the average of the closing prices of the common ~~shares~~stock for the 30 calendar days following the date of the public announcement of FDA ~~clearance~~,approval; and
■	Upon the sale of DuraGraft products, the Company will pay pro rata the Somahlution designees 15% of the net sale proceeds towards the liquidation preference maximum amount of $20 million described below;

●

~~Pay a~~Somahlution derived solid organ transplant products:

	■	Royalties to be paid on all net sales of the product of 6% on the first $50 million of international net sales, 4% for greater than $50 million up to $200 million, and 2% for greater than $200 million;
	■	Upon the sale of DuraGraft products, the Company will pay pro rata the Somahlution designees 15% of the net sale proceeds towards the liquidation preference maximum amount of $20 million described below;

●

Somahlution Assets-derived over-the-counter products:

■

Royalties to be paid on all net sales of the product of 6% on the first $50 million of international net sales, 4% for greater than $50 million up to $200 million, and 2% for greater than $200 million;

○

Other Somahlution Assets-derived products from existing Somahlution pipelines:

■

Royalties to be paid on all net sales of the product of 1%; and

●

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,and the Company will pay 15% of the net sale proceeds towards the liquidation preference maximum ~~amount.~~amount upon the sale by the Company of all or substantially all of the Somahlution Assets.

For additional discussion of this transaction, see “Item 13. Certain Relationships and Related Transactions, and Director Independence – Transactions with Related Persons” of the 2022 Form 10-K.

Office and Laboratories Space Lease ~~Commitments~~

The Company has entered into arrangements for office and laboratories spaces. As at June 30, ~~2022,~~2023, minimum lease payments in relation to lease commitments were payable as outlined in “Note 4 – Leases”, included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q.

Other Promissory Notes

On October 23, 2022, the Company issued a note payable to Hub International Limited for $204,050 bearing interest at the annual rate of 6.75% per annum, due September 23, 2023, payable monthly starting November 23, 2022. As of June 30, 2023, the balance of note payable due was $41,886 (December 31, 2022 - $164,729).

On December 28, 2022, the Company issued the Hexin Promissory Note 5for the principal amount of $750,000 bearing interest at the annual rate of 20% per annum, due June 28, 2023. For the three and six months ended June 30, 2023, the Company accrued $25,914 and $64,133 in interest on the promissory note (June 30, 2022 - $0 and $0 respectively). On May 30, 2023, Hexin agreed to cancel and exchange the Hexin Promissory Note for the issuance of 11,764,710 OID Units as described above under “—Third Closing of OID Units Private Placement”.

On February 2, 2023, the Company issued the Walleye Promissory Note for $1,000,000 with a maturity date of May 7, 2023. The note has no interest and the principal amount shall be paid in full on the maturity date. In the event that the principal amount is not repaid in full on maturity date, the principal amount shall be increased to $1,250,000. The Company did not repay the note upon its maturity, and as of the date of this report, the principal outstanding under the note had been increased to $1,250,000. Walleye agreed to cancel and exchange the Walleye Promissory Note for the issuance of 14,705,890 OID Units as described above under “—Third Closing of OID Units Private Placement”.

As part of the My Health Logic acquisition, Marizyme assumed an aggregate of $468,137 in notes payable. The notes were unsecured, and bore interest at a rate of 9% per annum with no maturity date. The Company settled an aggregate of $278,678 of these notes payable by issuing Convertible Notes in exchange for these notes’ cancellation in connection with the Units Private Placement during the year ended December 31, 2022 (see “Note 7 – Convertible Promissory Notes and Warrants”, included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q ). For the six months ended June 30, 2023, the Company accrued $10,235 in interest on the notes payable (June 30, 2022 - $4,501). As of June 30, 2023, the balance of the remaining note payable was $241,403 (December 31, 2022 - $218,100).

Changes in Capitalization

On May 15, 2023, the Company filed a Certificate of Change Pursuant to NRS 78.209 with the Nevada Secretary of State, which provided for the increase of the Company’s authorized common stock from 20,000,000 shares to 300,000,000 shares and the corresponding change of every one (1) share of the Company’s issued and outstanding common stock to fifteen (15) shares, and which became effective upon filing at 11:40 AM Pacific Time on May 15, 2023. Upon the effectiveness of this filing, authorized shares of common stock was increased to 300,000,000 with a proportional increase in the outstanding shares of common stock to45,366,760 shares of common stock.

Special Stockholder Meeting

On June 30, 2023, the Company filed a definitive proxy statement with the SEC, copies of which were distributed to stockholders of record as of June 20, 2023, relating to the ~~interim~~Special Stockholder Meeting that was held on August 9, 2023, to consider and vote on the following proposals: (i) to approve the Capital Event Amendment, and (ii) to approve the Voting Rights Amendment. Approval of each proposal required a “quorum” at the meeting consisting of a majority (more than 50%) of the outstanding voting shares as of the record date, present in person or represented by proxy, and the affirmative “for” vote of the holders of a majority of the shares represented at the meeting, in person or by proxy, and entitled to vote. See “—Recent Developments – Special Stockholder Meeting, Change in Authorized Shares, and Approval of Voting Rights for Certain Debtholders” for related recent developments subsequent to June 30, 2023.

Going Concern

The Company, since its inception, has incurred recurring operating losses and negative cash flows from operations and has an accumulated deficit of $109,120,419 at June 30, 2023 (December 31, 2022 - $85,989,433). Additionally, the Company has negative working capital of $19,763,141 (December 31, 2022 - $966,464) and $205,226 (December 31, 2022 - $510,865) of cash on 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.

The accompanying consolidated financial statements have been prepared in conformity with U.S. GAAP, which contemplate continuation of the Company as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business. The ability of the Company to continue its operations is dependent on the execution of management’s plans, which include the raising of capital through the debt and/or equity markets, until such time that funds provided by operations are sufficient to fund working capital requirements. If the Company were not to continue as a going concern, it would likely not be able to realize its assets at values comparable to the carrying value or the fair value estimates reflected in the balances set out in the preparation of the consolidated financial statements.

There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company’s current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.

The Company has been impacted by the COVID-19 pandemic and related supply chain shortages and other economic conditions, and some of its earlier plans to further diversify its operations and expand its operating subsidiaries were delayed as a result. See “–Impact of COVID-19 Pandemic” above.

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.

~~For a description of~~While our ~~critical~~significant accounting policies ~~please see~~are more fully described in “Note 3 – Summary of Significant Accounting Policies”, included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q, we believe that the ~~section entitled “Management’s Discussion~~following accounting policies are the most critical for fully understanding and ~~Analysis~~evaluating our financial condition and results of operations.

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. As of June 30, 2023, the Company had recorded deferred offering costs of $697,202 (December 31, 2022 - $387,412) reported as a prepaid expense on the accompanying balance sheets, and expensed $535,717 of deferred offering costs in connection with the extinguishment of indebtedness pursuant to exchange agreements in November 2021 and December 2021 which provided for the cancellation and exchange of certain outstanding convertible promissory notes. See “Note 7 – Convertible Promissory Notes and Warrants” included in “Item 1. Financial ~~Condition~~Statements” of this Quarterly Report on Form 10-Q.

Fair Value Measurements

●	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 ~~Results~~minimize the use of unobservable inputs to the extent possible and considers counterparty credit risk in its assessment of fair value.

The carrying amounts of certain accounts and other receivables, accounts payable and accrued expenses, note payable, and amounts due to related parties approximate fair value due to the short-term nature of these instruments.

The contingent liabilities assumed on the Somahlution Acquisition 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.

	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 5.96 years. For the three and six months ended June 30, 2023, changes in these assumptions resulted in a $582,000 and $1,206,000 decrease in fair value of these liabilities, respectively (June 30, 2022 – $2,092,000 and $2,898,000 increase, respectively). At June 30, 2023, the fair market value of performance warrants and pediatric vouchers warrants liabilities was $221,000 (December 31, 2022 – $1,427,000).

	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 six months ended June 30, 2023, changes in these assumptions resulted in a $129,000 and $796,000 decrease in fair value of this liability, respectively (June 30, 2022 – $293,000 decrease and $772,000 increase, respectively). At June 30, 2023, the fair market value of royalty payments was $4,606,000 (December 31, 2022 – $5,402,000).

	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%. For the three and six months ended June 30, 2023, changes in these assumptions resulted in a $3,000 decrease and $12,000 increase in fair value of this liability, respectively (June 30, 2022 – $7,000 and $48,000 decrease, respectively). At June 30, 2023, the fair market value of rare pediatric voucher sales liability was $1,067,000 (December 31, 2022 – $1,055,000).

	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. 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 5 years. No changes to the fair value of liquidation preference liability were recorded in the three and six months ended June 30, 2023 and 2022. At June 30, 2023, the fair market value of liquidation preference was $1,823,000 (December 31, 2022 – $1,823,000).

The derivative liabilities consist of optional and automatic conversion features and the share redemption feature attached to the convertible notes, issued pursuant to certain convertible promissory notes and warrants transactions (see “Note 7 – Convertible Promissory Notes and Warrants”, included in “Item 1. Financial Statements” of this Quarterly Report on Form 10-Q).

Marizyme measures the following financial instruments at fair value on a recurring basis. As of June 30, 2023, and December 31, 2022, the fair values of these financial instruments were as follows:

June 30, 2023	Level 1		Level 2		Level 3
Derivative liabilities	$	-	$	-	$	5,461,702
Contingent liabilities		-		-		7,717,000
Total	$	-	$	-	$	13,178,702

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

Derivative and Contingent Liabilities
Balance at December 31, 2022	$	14,530,725
Change in fair value of contingent liabilities		(1,990,000	)
Derivative liabilities extinguished pursuant to Unit Purchase Agreement (Note 7)		(4,823,725	)
Derivative liabilities issued pursuant to OID Purchase Agreement (Note 7)		5,461,702
Balance at June 30, 2023	$	13,178,702

Research and Development Expenses and Accruals

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.

Stock-Based Compensation

Stock-based compensation expense for employees and directors is recognized in the Condensed Consolidated Statements of Operations ~~- Critical Accounting Policies~~based on estimated amounts, including the grant date fair value and ~~Estimates” contained~~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 estimates 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 its closing stock price on the date of grant. The Company recognizes the effect of forfeitures in ~~our 2021 Form 10-K. There have not been any material changes to~~compensation expense when the ~~critical accounting policies discussed therein~~forfeitures occur. The estimated forfeiture rates may differ from actual forfeiture rates which would affect the amount of expense recognized during the ~~six months ended June 30, 2022.~~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.

Off-Balance Sheet Arrangements

As of June 30, ~~2022,~~2023, the 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 operations, liquidity, capital expenditures or capital resources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

~~Conclusion Regarding the Effectiveness of~~ Disclosure Controls and Procedures

~~We evaluated the effectiveness of our disclosure~~Disclosure controls and procedures asare defined ~~by Rules~~in Rule 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 Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, our CEO and CFO concluded that as of June 30, 2022, our disclosure controls and procedures were ineffective due to ~~the material weakness described below.~~

~~Disclosure controls and procedures means~~mean controls and other procedures ~~of an issuer that are~~ designed to ensure that information required to be disclosed by ~~the issuer~~us in the reports that ~~it files~~we file or ~~submits~~submit 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 in~~

At the end of the period covered by this Quarterly Report on Form 10-Q an evaluation was carried out under the supervision of and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operations of our disclosure controls and procedures ~~includes~~(as defined in Rule 13a-15(e) under the Exchange Act). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of June 30, 2023. This conclusion was based on the material weaknesses in our internal control over financial reporting as further described below.

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of ~~the registrant’s~~our annual or interim consolidated financial statements will not be prevented or detected and corrected on a timely ~~basis by the company’s internal controls.~~

basis. As previously reported in ~~our annual report on~~the 2022 Form 10-K, ~~for the 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 six months ended June 30, 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:~~reporting. These material weaknesses were as follows:

	●	We did not maintain a sufficient complement of internal personnel with appropriate knowledge, experience and/or training commensurate with our financial reporting requirements. We relied on 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.
	●	In addition, we did not have proper segregation of duties in certain areas of our financial reporting process. The areas where we had a lack of segregation of duties include cash receipts and disbursements, approval of purchases and approval of accounts payable invoices for payment.
	●	We did not have adequate policies and procedures in place to ensure the timely, effective review of assumptions used in measuring the fair value of 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
	●	We did not have ~~an independent audit committee to oversee the~~sufficient resources with appropriate knowledge, experience and/or training commensurate with our financial reporting ~~processes~~requirements to assist us in our timely and efficient preparation and review over our financial reporting.

In connection with our preparation of our interim condensed consolidated financial statements for the six months ended June 30, 2023, 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:

●

We did not have sufficient resources with appropriate knowledge, experience and/or training commensurate with our financial reporting requirements to assist us in our timely and efficient preparation and review over our financial reporting.

To remediate the material ~~weaknesses~~weakness described above, in addition to 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 to ensure timely review, by qualified personnel,~~Implementation of ~~assumptions used in measuring fair value of certain financial instruments.~~
	●	~~Reassessing the~~reassessed design and operation of internal controls over financial reporting and ~~review~~reviewing procedures over the preparation of our financial statements.
	●	~~Hiring~~Engagement of permanent accounting personnel and ~~the use of~~ consultants to provide support during our quarterly and annual preparation, review, and reporting of our financial statements.
	●	~~Maintaining~~Appointment of qualified personnel to the key management roles to provide oversight and develop stronger controls, policies and procedures.
	●	Maintenance of 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.

We ~~believe~~cannot assure you that these ongoing or planned measures ~~will remediate~~in response to the material weakness in our internal control over financial reporting ~~and disclosure controls and procedures described above by the fourth quarter of 2022.~~will be sufficient to remediate such material weakness or to avoid potential future material weaknesses.

Changes in Internal Control Over Financial Reporting

As discussed above, ~~the~~ management is working on remediating the material weakness in internal control over financial reporting identified above. In the ~~six~~three months ended June 30, ~~2022,~~2023, the Company took the following steps in order to improve its internal controls over financial reporting:

	●	~~The Board~~Implemented controls around operation of ~~Directors~~internal control over financial reporting and reviewing procedures over the preparation of our financial statements such that our management believes that the Company ~~was increased from five~~had adequate policies and procedures in place to ~~seven members,~~
	●	~~A new Chair~~ensure the timely, effective review of assumptions used in measuring the ~~Audit Committee was appointed that the Board determined to be an “audit committee~~fair value of certain financial ~~expert” as defined under Item 407(d)(5)(ii) and (iii) of Regulation S-K,~~
	●	~~The Company retained services of multiple financial consultants, who provide their advice and expertise in audit, valuation, and financial reporting services.~~instruments.

During the second half of the fiscal 2022, management of the Company will continue to work on addressing to remediate the material weaknesses in internal controls over financial reporting described above by the fourth quarter of 2022.

2649

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. ~~Other than the legal proceedings described below, we~~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, against the Company (the “DeVito Complaint”). The DeVito Complaint claimed breach of contract, 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 issued an option to Mr. DeVito to purchase 600,000 shares of common stock at $1.01 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. Under the DeVito Release, Mr. DeVito agreed, among other things, to resign from his positions as Interim Chief Executive Officer and Interim Chief Financial Officer effective September 1, 2020, and provide certain transitional services for the month of September 2020. 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 Complaint alleged that Mr. DeVito continued his role as an advisor and consultant to the Company. However, the Company believes that, pursuant to the DeVito ISO’s forfeiture terms and Mr. DeVito’s resignations from his officer positions on September 1, 2020 and end of transitional services as of September 30, 2020, the option expired unexercised one year after September 30, 2020, or on September 30, 2021. Due to the Company’s alleged nonperformance of Mr. DeVito’s exercise rights under the DeVito ISO, the DeVito Complaint seeks 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. The Company denies any liability and believes the Complaint is without merit. The response to the Complaint is due by July 25, 2022. As of August 2022, this case is pending.

~~Chandler Litigation~~

On January 28, 2022, we filed a Complaint in the Circuit Court of the Fifteenth Judicial Circuit in and for Palm Beach County, Florida (the “Florida Circuit Court”), case number 50-2022-CA-000859-XXX-MB, against Amy Chandler (the “Chandler Complaint”). The Chandler Complaint seeks damages for breach of fiduciary duty, breach of contract, negligence, conversion, and civil theft. The Chandler Complaint alleged that, approximately two months before her resignation in September 2021, Ms. Chandler intentionally and recklessly took affirmative 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, and disregarded her fiduciary duty to Marizyme and responsibilities as its former Executive Vice President for Regulatory Affairs and Quality Management Systems. 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 were required for essential 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), exclusive of interest, attorneys’ fees, and costs.

On February 28, 2022, Ms. Chandler filed an Answer, Affirmative Defenses and Counterclaim to Plaintiff’s Complaint with the Florida Circuit Court (the “Chandler Countercomplaint”). The Chandler Countercomplaint denied the claims in the Chandler Complaint and most of the factual allegations regarding her alleged actions. The Chandler Countercomplaint also included a counterclaim of defamation per se against the Company based on certain statements regarding this litigation that were included in the Registration Statement. As to the claims in the Chandler Complaint, the Chandler Countercomplaint demanded an award of attorneys’ fees and costs, court costs on all counts, and such further relief the court deems just and proper. As to the counterclaim of defamation, the Chandler Countercomplaint requested monetary damages, punitive damages, court costs, and any other relief the court deems just and proper. The Chandler Countercomplaint also demanded trial by jury on all triable issues.

On March 18, 2022, the Company filed a Motion to Dismiss Counterclaim with the Florida Circuit Court (the “Motion to Dismiss”). The Motion to Dismiss stated that the Chandler Countercomplaint for defamation per se should be dismissed with prejudice because the Company has not made any statements about Chandler outside the allegations in the Chandler Complaint. The Motion to Dismiss stated that the statements regarding this litigation that were included in the Registration Statement were as a matter of law not false because they all accurately reproduced the allegations in the Chandler Complaint and such statements were prefaced by the words “The Chandler Complaint alleged”. The Motion to Dismiss further stated that allegations in the litigation are subject to Florida’s litigation privilege and cannot serve as a basis for a defamation claim as a matter of law. On July 11, 2022, the court ruled that the counterclaim of defamation was dismissed with prejudice. 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 ~~out Annual Report on~~the 2022 Form ~~10-K for the year ended December 31, 2021 filed with the SEC on March 31, 2022, 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 three-month period ended June 30, ~~2022,~~2023, 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, ~~other than~~except as ~~described below.~~disclosed below:

On ~~May 11,~~January 24, 2022, we ~~conducted an additional closing~~approved the grant of ~~our units private placement in which we issued a number of investors units consisting of convertible notes in the aggregate principal amount of $1,306,485, convertible into 746,563~~600,000 shares of common stock ~~plus additional~~to a consultant in order to reimburse the consultant for the shares ~~based~~of Company common stock that he had previously surrendered to the Company for cancellation in order to facilitate the closing of a transaction of the Company. Due to a delay, the shares were issued to the consultant on June 15, 2023.

On June 14, 2023, a Convertible Note with $119,980 underlying principal and approximately $14,693 accrued interest ~~and Class C Warrants for the purchase of 1,493,119~~was fully converted into 1,346,410 shares of common stock at ~~$2.25~~the election of the Convertible Note holder at the applicable conversion price of $0.10 per ~~share.~~

share. On June ~~17, 2022, we conducted an additional closing of our units private placement in which~~15, 2023, we issued ~~an investor units consisting of a convertible note in the aggregate principal amount of $500,000, convertible into 285,714~~1,346,410 shares of common stock ~~plus additional shares based on accrued interest, subject~~ to ~~adjustment, and a Class C Warrant for the purchase of 571,428 shares of common stock at $2.25 per share, subject to adjustment.~~

The convertible notes mature 24 months after the applicable closing date and accrue 10% of simple interest per annum on the outstanding principal amount. The convertible notes’ principal and accrued interest can be converted at any time at the option of each holder at the conversion price. The convertible notes are secured by a first priority security interest in all assets of the Company. The convertible notes and Class C Warrants have certain antidilution provisions. The convertible notes and Class C Warrants have certain registration requirements for the shares of common stock underlying the convertible notes and Class C Warrants upon the final closing under the Unit Purchase Agreement between the Company and the investors in the units private placement, subjectOleg Kovalyov pursuant to the ~~expiration~~conversion.

The sales of lock-up agreements between the units private placement investors and the representative of the underwriters for the Company’s anticipated public offering. The current Placement Agency Agreement and form of Unit Purchase Agreement relating to this private placement provide that up to $18 million and $17 million of units may be sold, respectively.

The Company engaged Univest Securities, LLC as the Company’s placement agent for this private placement. The Company paid Univest a cash placement fee equal to 8.0% of the gross proceeds from the sale of the units and will pay Univest 8.0% of the gross proceeds from the exercise of the Class C warrants. In addition, in exchange for a $100 payment by Univest, the Company agreed to issue warrants to Univest to purchase an aggregate of 8.0% of the total number of shares of common stock issuable upon conversion of the convertible notes issued in the private placement, with an exercise price equal to $1.75. These warrants, which may be exercised on a cashless basis, will be exercisable starting on the final closing date of this offering and will be exercisable for a period of five years from that date.

On June 26, 2022, in anticipation of the final closing of our units private placement and pursuant to our Placement Agency Agreement with Univest dated December 10, 2021, we issued Univest, as placement agent, a warrant for the purchase of 231,359 shares of common stock, and a warrant to Bradley Richmond, Univest’s designee, a warrant for the purchase of 347,039 shares of common stock. In accordance with the placement agency agreement, the warrantssecurities described above were issued in exchange for a $100 payment by Univest, and are exercisable on a cash or cashless net exercise basis, in aggregate, to purchase a number of shares of common stock equal to approximately 8% of the units sold in the units private placement. The warrants’ exercise price per share is equal to the price per unit of the units sold in the units private placement, currently $1.75, subject to adjustment. The warrants expire on June 26, 2027.

~~All of the securities issued in the private placement were sold~~conducted pursuant to an exemption from the registration requirements of the Securities Act ~~pursuant to~~under Section 4(a)(2) of the Securities Act and/or Rule 506 of Regulation D promulgated ~~thereunder.~~

thereunder, as transactions by an issuer not involving a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

~~None.~~

The disclosure contained in Part I. Financial Information – Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Recent Developments – Special Stockholder Meeting, Change in Capitalization, and Change in Rights of Certain Debtholders” is incorporated by reference herein.

As a result of the filing of the Certificate of Amendment, the voting rights of the holders of the Company’s common stock may be deemed to be limited and proportionately reduced to the extent that the voting rights granted to the holders of the Convertible Notes by the Certificate of Amendment may be exercised at a meeting or with respect to other applicable actions of the stockholders of the Company. As of the date of this report, the holders of these voting rights have the right to cast up to 146,961,558 votes, not including shares issuable upon conversion of accrued principal, compared to 45,666,760 votes by the holders of shares of the outstanding common stock. As a result, it may be deemed that a change of control of the Company occurred upon the filing of the Certificate of Amendment.

On or around June 9, 2023, the Company entered into a Waiver and Consent (collectively, the “Waiver and Consents”) with 40 assignees of three Class C Warrants assigned to them by the former holder of these Class C Warrants with respect to any registration and exercise rights that would otherwise be applicable to the Class C Warrants. Subject to the Waiver and Consents, the Class C Warrants may be exercised in aggregate to purchase a total of 102,857,141 shares of common stock.

We have no other information to disclose that was required to be disclosed in a Current Report on Form 8-K during the three months ended June 30, 2023 but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors where those changes were implemented after the Company last provided disclosure of such procedures.

ITEM 6. EXHIBITS

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

Exhibit No.		Description
3.1		Articles of Incorporation (incorporated by reference to Exhibit 3.1 to Form SB-2 (File No: 333-146748) filed January 14, 2008)
3.2		Certificate of Amendment to Articles of Incorporation, effective September 6, 2010 (incorporated by reference to Exhibit 3.1.1(2) to Form 10-K filed on July 16, 2012)
3.3		Certificate of Amendment to Articles of Incorporation, effective November 22, 2010 (incorporated by reference to Exhibit 3.1.2 to Form 10-K/A filed on July 15, 2011)
3.4		Certificate of Amendment to the Articles of Incorporation regarding 1-for-29 Reverse Stock Split filed March 20, 2018 (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)
3.6		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 (incorporated by reference to Exhibit 3.1.5 to Form 10 (File No. 000-53223) filed on September 12, 2018)
3.8		~~Bylaws (incorporated by reference to Exhibit 3.2 to Form 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)
3.9		Certificate of Amendment Pursuant to NRS 78.380 & 78.390 to the Articles of Incorporation filed with the Nevada Secretary of State on December 30, 2022 (incorporated by reference to Exhibit 3.1 to Form 8-K filed on January 5, 2023)
3.10		Certificate of Change Pursuant to NRS 78.209, as filed by Marizyme, Inc. with the Secretary of State of the State of Nevada on January 5, 2023 (incorporated by reference to Exhibit 3.3 to Form 8-K filed on January 17, 2023)
3.11		Certificate of Change Pursuant to NRS 78.209, as filed by Marizyme, Inc. with the Secretary of State of the State of Nevada on January 13, 2023, effective on January 17, 2023 at 4:45 PM Pacific time (incorporated by reference to Exhibit 3.4 to Form 8-K filed on January 17, 2023)
3.12		Certificate of Change Pursuant to NRS 78.209, as filed by Marizyme, Inc. with the Secretary of State of the State of Nevada on January 13, 2023, effective on January 17, 2023 at 5:00 PM Pacific time (incorporated by reference to Exhibit 3.5 to Form 8-K filed on January 17, 2023)
3.13		Certificate of Change Pursuant to NRS 78.209, as filed by Marizyme, Inc. with the Secretary of State of the State of Nevada on January 13, 2023, effective on January 17, 2023 at 5:15 PM Pacific time (incorporated by reference to Exhibit 3.6 to Form 8-K filed on January 17, 2023)
3.14		Certificate of Change Pursuant to NRS 78.209, as filed by Marizyme, Inc. with the Secretary of State of the State of Nevada on May 15, 2023 (incorporated by reference to Exhibit 3.7 to Form 8-K filed on May 18, 2023)
3.15		Certificate of Amendment Pursuant to Nevada Revised Statutes 78.380 & 78.390, as filed by Marizyme, Inc. with the Secretary of State of the State of Nevada on August 16, 2023
3.16		Bylaws (incorporated by reference to Exhibit 3.2 to Form SB-2/A (File No: 333-146748) filed January 14, 2008)
4.1		~~Form of 10% Secured~~15% Original Issue Discount Unsecured Subordinated Convertible Promissory Note issued by Marizyme, Inc. to Walleye Opportunities Master Fund Ltd, dated May 12, 2023 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on May 18, 2023)
4.2		Class E Common Stock Purchase Warrant issued by Marizyme, Inc. to Walleye Opportunities Master Fund Ltd, dated May 12, 2022 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on May 18, 2023)
4.3		Class F Common Stock Purchase Warrant issued by Marizyme, Inc. to Walleye Opportunities Master Fund Ltd, dated May 12, 2022 (incorporated by reference to Exhibit 4.3 to Form 8-K filed on May 18, 2023)
4.4		Form of Placement Agent Warrant as to 15% Original Issue Discount Unsecured Subordinated Convertible Promissory Notes (incorporated by reference to Exhibit 4.4 to Form 8-K filed on May 18, 2023)
4.5		Form of Placement Agent Warrant as to Class E Common Stock Purchase Warrants (incorporated by reference to Exhibit 4.5 to Form 8-K filed on May 18, 2023)
4.6		Form of Placement Agent Warrant as to Class F Common Stock Purchase Warrants (incorporated by reference to Exhibit 4.6 to Form 8-K filed on May 18, 2023)
4.7		Class E Common Stock Purchase Warrant issued by Marizyme, Inc. to Hexin Global Ltd., dated May ~~11, 2022~~22, 2023 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on May 24, 2023)
4.8		Class F Common Stock Purchase Warrant issued by Marizyme, Inc. to Hexin Global Ltd., dated May 22, 2023 (incorporated by reference to Exhibit 4.3 to Form 8-K filed on May 24, 2023)
4.9		15% Original Issue Discount Unsecured Subordinated Convertible Promissory Note issued by Marizyme, Inc. to Hexin Global Ltd., dated May 30, 2023 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on June 5, 2023)
4.10		Class E Common Stock Purchase Warrant issued by Marizyme, Inc. to Hexin Global Ltd., dated May 30, 2023 (incorporated by reference to Exhibit 4.2 to Form 8-K filed on June 5, 2023)

4.11		Class F Common Stock Purchase Warrant issued by Marizyme, Inc. to Hexin Global Ltd., dated May 30, 2023 (incorporated by reference to Exhibit 4.3 to Form 8-K filed on June 5, 2023)
4.12		15% Original Issue Discount Unsecured Subordinated Convertible Promissory Note issued by Marizyme, Inc. to Walleye Opportunities Master Fund Ltd, dated May 30, 2023 (incorporated by reference to Exhibit 4.4 to Form 8-K filed on June 5, 2023)
4.13		Class E Common Stock Purchase Warrant issued by Marizyme, Inc. to Walleye Opportunities Master Fund Ltd, dated May 30, 2023 (incorporated by reference to Exhibit 4.5 to Form 8-K filed on June 5, 2023)
4.14		Class F Common Stock Purchase Warrant issued by Marizyme, Inc. to Walleye Opportunities Master Fund Ltd, dated May 30, 2023 (incorporated by reference to Exhibit 4.6 to Form 8-K filed on June 5, 2023)
4.15		15% Original Issue Discount Unsecured Subordinated Convertible Promissory Note issued by Marizyme, Inc. to Frank Maresca, dated May 30, 2023 (incorporated by reference to Exhibit 4.7 to Form ~~10-Q~~8-K filed on ~~May 16, 2022)~~June 5, 2023)
~~4.2~~4.16		~~Form of~~ Class CE Common Stock Purchase Warrant issued by Marizyme, Inc., to Frank Maresca, dated May ~~11, 2022~~30, 2023 (incorporated by reference to Exhibit 4.8 to Form ~~10-Q~~8-K filed on ~~May 16, 2022)~~June 5, 2023)
4.3*4.17		~~Form of 10% Secured Convertible Promissory Note issued by Marizyme, Inc., dated June 17, 2022~~
4.4*		~~Form of~~ Class CF Common Stock Purchase Warrant issued by Marizyme, Inc., to Frank Maresca, dated May 30, 2023 (incorporated by reference to Exhibit 4.9 to Form 8-K filed on June ~~17, 2022~~5, 2023)
10.1*		Waiver and Consent between Marizyme, Inc. and Waichun Logistics Technology Ltd, dated as of April 12, 2023
4.5*10.2		Form of Letter Agreement, dated April 13, 2023 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on April 20, 2023)
10.3		Unit Purchase Agreement between Marizyme, Inc. and each investor identified on Appendix A thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed on May 18, 2023)
10.4		Registration Rights Agreement between Marizyme, Inc. and each of the several purchasers signatory thereto (incorporated by reference to Exhibit 10.2 to Form 8-K filed on May 18, 2023)
10.5		Placement Agency Agreement between Marizyme, Inc. and Univest Securities, LLC, dated April 27, 2023 (incorporated by reference to Exhibit 10.3 to Form 8-K filed on May 18, 2023)
10.6		Unit Purchase Agreement between Marizyme, Inc. and each investor identified on Appendix A thereto, dated as of May 30, 2023 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 5, 2023)
10.7		Registration Rights Agreement between Marizyme, Inc. and each of the several purchasers signatory thereto, dated as of May 30, 2023 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on June 5, 2023)
10.8		Cancellation and Exchange Agreement between Marizyme, Inc. and Hexin Global Ltd., dated as of May 30, 2023 (incorporated by reference to Exhibit 10.3 to Form 8-K filed on June 5, 2023)
10.9		Cancellation and Exchange Agreement between Marizyme, Inc. and Walleye Opportunities Master Fund Ltd, dated as of May 30, 2023 (incorporated by reference to Exhibit 10.4 to Form 8-K filed on June 5, 2023)
10.10		Cancellation and Exchange Agreement between Marizyme, Inc. and Frank Maresca, dated as of May 30, 2023 (incorporated by reference to Exhibit 10.5 to Form 8-K filed on June 5, 2023)
10.11		Form of ~~Placement Agent Warrants issued~~Waiver and Consent with respect to certain registration and exercise rights dated on or around June ~~26, 2022~~
~~10.1+~~		~~First Amendment~~9, 2023 (incorporated by reference to ~~Lease, dated March 16, 2022, between JIC Equities, LLC and Marizyme, Inc., dated~~Exhibit 10.48 to Registration Statement on Form S-1 filed on July 18, 2023)
31.1*		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certifications of Principal Financial and Accounting Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**		Certifications of Principal Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**		Certifications of Principal Financial and Accounting Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*		Inline XBRL Instance Document
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith

** Furnished herewith

~~+ Indicates managementcontract or compensatory plan.~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August ~~15, 2022~~18, 2023	MARIZYME, INC.

		/s/ David Barthel
	Name:	David Barthel
	Title:	~~Title:~~ Chief Executive Officer
		(Principal Executive Officer)

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


	June 30, 2022			December 31, 2021
	(unaudited)
ASSETS:
Current
Cash	$	2,044,976		$	4,072,339
Accounts receivable		53,083			8,650
Other receivables		12,589			41,307
Prepaid expenses		235,382			257,169
Inventory		268,413			22,353
Total current assets		2,614,443			4,401,818
Non-current
Property, plant and equipment, net		12,681			12,817
Operating lease right-of-use assets, net		1,667,151			1,158,776
Intangible assets, net		52,445,606			52,866,192
Prepaid royalties, non-current		339,091			339,091
Deposits		30,000			30,000
Goodwill		7,190,656			7,190,656
Total non-current assets		61,685,185			61,597,532
Total assets	$	64,299,628		$	65,999,350

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current
Accounts payable and accrued expenses	$	617,041		$	1,596,147
Notes payable		241,392			127,798
Due to related parties		223,661			1,132,634
Operating lease obligations		418,330			277,142
Total current liabilities		1,500,424			3,133,721
Non-current
Operating lease obligations, net of current portion		1,248,821			881,634
Notes payable, net of current portion		—			469,252
Convertible notes		842,946			26,065
Derivative liabilities		4,423,725			2,485,346
Contingent liabilities		14,935,000			11,313,000
Total non-current liabilities		21,450,492			15,175,297
Total liabilities		22,950,916			18,309,018

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 June 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 June 30, 2022 and December 31, 2021, respectively		40,828			40,528
Additional paid-in capital		102,180,316			95,473,367
Accumulated deficit		(60,872,432	)		(47,823,563	)
Total stockholders’ equity		41,348,712			47,690,332
Total liabilities and stockholders’ equity	$	64,299,628		$	65,999,350

Derivative and Contingent Liabilities
Balance at December 31, 2021	$	13,798,346
Change in fair value of contingent liabilities		3,622,000
Derivative liabilities issued pursuant to Unit Purchase Agreement		1,938,379
Balance at June 30, 2022	$	19,358,725

Consideration given up
Common shares	$	7,774,000
Total consideration given up	$	7,774,000

Fair value of identifiable assets acquired, and liabilities assumed
Net working deficit	$	(613,156	)
Property, plant, and equipment		12,500
Intangible assets		6,600,000
Goodwill		1,774,656
Total identifiable assets	$	7,774,000


2022	$	206,583
2023		423,495
2024		434,082
2025		444,934
2026		266,034
Total lease payments		1,775,128
Less: present value discount		(107,977	)
Total	$	1,667,151

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		(420,586	)
Balance, June 30, 2022	$	52,445,606

	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		6,645,866			2.25
Issued		878,398			1.16
Exercised		(300,000	)		0.01
Expired		(113,637	)		3.00
June 30, 2022		19,255,465		$	2.64