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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 March 31, 2024

☐ 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)

(561) 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.

The number of the registrant’s shares of common stock outstanding was 131,793,088 as of May 28, 2024.

MARIZYME, INC.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION

ITEM 1.	Condensed Consolidated Financial Statements.	3
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	19
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk.	26
ITEM 4.	Controls and Procedures.	26

PART II - OTHER INFORMATION

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

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARIZYME, INC.

Condensed Consolidated Balance Sheets

	March 31, 2024			December 31, 2023
	(unaudited)
ASSETS:
Current
Cash	$	6,146		$	148,465
Accounts receivable		-			60,284
Other receivables		35,823			35,797
Prepaid expenses		677,811			699,377
Inventory		15,209			24,855
Total current assets		734,989			968,778
Non-current
Property, plant and equipment, net		12,500			12,500
Operating lease right-of-use assets, net		1,000,702			1,101,211
Intangible assets, net		14,255,352			14,364,129
Prepaid royalties, non-current		120,500			122,457
Deposits		30,000			30,000
Goodwill		5,416,000			5,416,000
Total non-current assets		20,835,054			21,046,297
Total assets	$	21,570,043		$	22,015,075

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT):
Current
Accounts payable and accrued expenses	$	2,584,044		$	2,322,064
Notes payable		1,300,532			633,692
Due to related parties		270,900			230,153
Convertible notes - Units Private Placement		15,807,061			14,288,335
Convertible notes - OID		5,448,468			2,694,256
Operating lease obligations		436,795			434,082
Total current liabilities		25,847,800			20,602,582
Non-current
Operating lease obligations, net of current portion		563,907			667,129
Contingent liabilities		5,991,000			5,406,000
Total non-current liabilities		6,554,907			6,073,129
Total liabilities		32,402,707			26,675,711

Commitments and contingencies (Note 10)		-			-

Stockholders’ equity (deficit):
Preferred stock, $0.001 par value, 25,000,000 shares authorized, no shares issued and outstanding as of March 31, 2024 and December 31, 2023		-			-
Common stock, par value $0.001, 2,000,000,000 shares authorized, issued and outstanding shares - 131,793,088 at March 31, 2024 and December 31, 2023		131,792			131,792
Additional paid-in capital		146,598,185			146,543,921
Accumulated deficit		(157,562,641	)		(151,336,349	)
Total stockholders’ equity (deficit)		(10,832,664	)		(4,660,636	)
Total liabilities and stockholders’ equity (deficit)	$	21,570,043		$	22,015,075

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

MARIZYME, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	2024			2023
	Three Months Ended March 31,
	2024			2023

Revenue	$	32,855		$	128,974
Direct cost of revenue		9,647			39,275
Gross profit		23,208			89,699
Operating expenses:
Professional fees (includes related party amounts of $148,500 and $161,000 respectively)		264,096			384,806
Salary expenses		310,159			266,968
Research and development		321,867			605,997
Stock-based compensation		54,264			210,966
Depreciation and amortization		108,777			210,338
Royalty expense		1,957			36,183
Other general and administrative expenses		334,180			507,324
Total operating expenses		1,395,300			2,222,582
Total operating loss		(1,372,092	)		(2,132,883	)

Other income (expense)
Interest and accretion expenses		(4,161,830	)		(1,697,701	)
Change in fair value of contingent liabilities		(585,000	)		1,276,000
Loss on debt extinguishment		(107,370	)		-
Total other income (expense)		(4,854,200	)		(421,701	)

Net loss	$	(6,226,292	)	$	(2,554,584	)

Loss per share – basic and diluted	$	(0.05	)	$	(0.06	)

Weighted average number of shares of common stock outstanding – basic and diluted		131,793,088			40,757,524

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

MARIZYME, INC.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the Three Months Ended March 31, 2024 and 2023

(Unaudited)

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

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 (unaudited)		40,768,191	$	40,768	$	103,735,216	$	(88,544,017	)	$	15,231,967

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

Balance, December 31, 2023		131,793,088	$	131,792	$	146,543,921	$	(151,336,349	)	$	(4,660,636	)
Balance		131,793,088	$	131,792	$	146,543,921	$	(151,336,349	)	$	(4,660,636	)
Stock-based compensation expense		-		-		54,264		-			54,264
Net loss		-		-		-		(6,226,292	)		(6,226,292	)
Balance, March 31, 2024 (unaudited)		131,793,088	$	131,792	$	146,598,185	$	(157,562,641	)	$	(10,832,664	)
Balance		131,793,088	$	131,792	$	146,598,185	$	(157,562,641	)	$	(10,832,664	)

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

MARIZYME, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	2024			2023
	Three Months Ended March 31,
	2024			2023

Cash flows from operating activities:
Net loss	$	(6,226,292	)	$	(2,554,584	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		108,777			210,338
Amortization of ROU asset		100,509			94,981
Stock-based compensation		54,264			210,966
Interest and accretion on convertible notes and notes payable		4,161,830			1,697,701
Change in fair value of contingent liabilities		585,000			(1,276,000	)
Loss on debt extinguishment		107,370			-
Shares issued for a legal settlement		-			153,600
Change in operating assets and liabilities:
Accounts and other receivable		60,258			(10,284	)
Prepaid expenses		21,566			(133,469	)
Inventory		9,646			39,039
Accounts payable and accrued expenses		167,374			358,540
Due to related parties		40,747			89,016
Net cash used in operating activities		(808,951	)		(1,120,156	)

Cash flows from financing activities:
Proceeds from promissory notes		755,000			1,000,000
Repayments of promissory notes		(88,368	)		(60,904	)
Net cash provided by financing activities		666,632			939,096

Net change in cash		(142,319	)		(181,060	)

Cash at beginning of period		148,465			510,865

Cash at end of period	$	6,146		$	329,805

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

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

MARIZYME, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2024

NOTE 1 – DESCRIPTION OF BUSINESS

Maryzime, 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 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 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 $157,562,641 at March 31, 2024 (December 31, 2023 - $151,336,349). Additionally, the Company has negative working capital of $25,112,811 (December 31, 2023 - $19,633,804) and $6,146 (December 31, 2023 - $148,465) of cash on hand, which is not 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, meet its debt obligations until such time future profitable revenues are achieved, and raise funds beyond its working capital balance in order to finance future development of its intangible assets.

During the next twelve months from the date the 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 SEC, and the payment of expenses associated with its product development. The Company may experience a cash shortfall and be required to raise additional capital. Management intends to raise additional funds by way of a private or public offering. In April of 2024, the Company engaged in a Co-Development Agreement with Qualigen Therapeutics, Inc. (“Qualigen”) aimed at furthering the commercialization efforts of DuraGraft™. Pursuant to the Agreement, Qualigen has committed to providing up to $1,500,000 in funding over the next few months to support the commercial launch of DuraGraft™ in the United States, including funding for post-clearance clinical studies. While the Company has been successful in raising capital in the past and 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 (“My Health Logic” or “MHL”), Somahlution, Inc. (“Somahlution”), Somaceutica, Inc. (“Somaceutica”), (collectively – “Somahlution”), 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 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 May 13, 2024 (the “2023 Form 10-K”). The condensed consolidated balance sheet as of December 31, 2023 was derived from audited consolidated financial statements included in the 2023 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 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 (deficit) for the periods indicated. Except as otherwise disclosed, all such adjustments are of a normal recurring nature.

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 recoverability of long-term assets including intangible assets and goodwill, amortization expense, valuation of warrants, stock-based compensation, and contingent 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 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 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 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.

The performance warrants and pediatric vouchers warrants liabilities were initially 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 months ended March 31, 2024, changes in these assumptions resulted in a $42,000 decrease in fair value of these liabilities. At March 31, 2024, the fair market value of performance warrants and pediatric vouchers warrants liabilities was $183,000 (December 31, 2023 – $225,000).

	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 initially estimated at 20.6%. For the three months ended March 31, 2024, changes in these assumptions resulted in a $627,000 increase in fair value of this liability. At March 31, 2024, the fair market value of royalty payments was $3,985,000 (December 31, 2023 – $3,358,000).

	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%. The rare pediatric voucher could only be applied for medical devices prior to receiving FDA approval. However, because DuraGraft received FDA approval in late 2023, obtaining the rare pediatric voucher is no longer possible. Therefore, as of December 31, 2023, the fair market value of rare pediatric vouchers was $Nil, and there has been no change in the fair market value during the three months ended March 31, 2024.

	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 months ended March 31, 2024. At March 31, 2024, the fair market value of liquidation preference was $1,823,000 (December 31, 2023 – $1,823,000).

The detachable warrants attached to the OID Convertible Notes (see Note 7) are classified as equity. These warrants were valued using the Black-Scholes pricing model. The following weighted average assumptions were used in the Black-Scholes model: a risk-free rate of 4.25%, expected volatility of 349.95%, expected dividend yield of $Nil, and an expected life of 0.17 years. During the three months ended March 31, 2024, the Company extended the maturity dates of certain OID Warrants (see Note 7), as part of modification of OID Convertible Notes that resulted in a substantive modification and extinguishment of old debt. As a result, the Company recognized an incremental fair value increase of $1,128,078 as a change in the fair value of warrants, which was recorded as debt discount and is being amortized to interest and accretion expense using the effective interest method over the term of the OID Convertible Notes.

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 of March 31, 2024, and December 31, 2023, the fair values of these financial instruments were as follows:

March 31, 2024	Level 1		Level 2		Level 3
	Fair Value Hierarchy
March 31, 2024	Level 1		Level 2		Level 3
Liabilities
Contingent liabilities	$	-	$	-	$	5,991,000
Total	$	-	$	-	$	5,991,000

December 31, 2023	Level 1		Level 2		Level 3
	Fair Value Hierarchy
December 31, 2023	Level 1		Level 2		Level 3
Liabilities
Contingent liabilities	$	-	$	-	$	5,406,000
Total	$	-	$	-	$	5,406,000

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

Contingent Liabilities
Balance at December 31, 2023	$	5,406,000
Change in fair value of contingent liabilities		585,000
Balance at March 31, 2024	$	5,991,000

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 condensed consolidated 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 based on estimated amounts, including the grant date fair value and the expected service period. For stock options, the Company estimates the grant date fair value using a Black-Scholes valuation model, which requires the use of multiple subjective inputs including estimated future volatility, expected forfeitures and the expected term of the awards. The Company 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 compensation expense when the forfeitures occur. The estimated forfeiture rates may differ from actual forfeiture rates which would affect the amount of expense recognized during the period. The Company recognizes the value of the awards over the awards’ requisite service or performance periods. The requisite service period is generally the time over which share-based awards vest.

New Accounting Standards and Updates from the Securities and Exchange Commission (“SEC”)

In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). ASU 2020-06 will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (i) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (ii) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for the Company for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company has fully adopted ASU 2020-06 as of January 1, 2024, and this adoption does not have a material impact on the way the Company is accounting for its debt.

NOTE 4 – LEASES

On December 11, 2020, the Company entered into a 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 $15,641 increasing to $16,032 in 2024 and will continue to increase by 2.5% annually thereafter until the end of the term. The monthly operating expenses for total expanded premises have increased from approximately $12,000 to $17,500 per month. The term of the lease remains unchanged. As of March 31, 2024, the remaining lease term was 2.33 years. The lease 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 months ended March 31, 2024 was $97,173 (March 31, 2023 – $154,828).

The following table summarizes supplemental balance sheet information related to the operating lease as of March 31, 2024, and December 31, 2023:

	March 31, 2024		December 31, 2023
Right-of-use asset	$	1,000,702	$	1,101,211

Operating lease liabilities, current	$	436,795	$	434,082
Operating lease liabilities, non-current		563,907		667,129
Total operating lease liabilities	$	1,000,702	$	1,101,211

As of March 31, 2024, the maturities of the lease liabilities for the periods ending December 31, are as follows:


2024	$	325,562
2025		444,934
2026		266,034
Total lease payments	$	1,036,530
Less: Present value discount		(35,828	)
Total	$	1,000,702

NOTE 5 – 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.

At December 31, 2023, management determined that the carrying value of Krillase exceeded its estimated recoverable amount of $Nil as of December 31, 2023. Impairment of $4,250,000 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, 2023. There have been no changes in the estimated recoverable amount of Krillase intangible assets in the three months ended March 31, 2024.

DuraGraft

As part of the Somahlution acquisition in 2020, Marizyme purchased $18,170,000 of intangible assets related to the DuraGraft® technology.

At December 31, 2023, management determined that the carrying value of DuraGraft intangible assets exceeded its recoverable amount. Impairment of $2,442,000 was recognized on DuraGraft intangible assets and recorded in the impairment of intangible assets in the consolidated statements of operations for the year ended December 31, 2023. The recoverable amount of DuraGraft intangible assets was estimated at $14,241,384 as of December 31, 2023. There have been no changes in the estimated recoverable amount of DuraGraft intangible assets in the three months ended March 31, 2024.

My Health Logic

As part of the My Health Logic acquisition in 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. At December 31, 2023, management determined that carrying value of assets exceeded its recoverable amount. Impairment of $5,777,720 was recognized on MHL’s intangible assets and recorded in the impairment of intangible assets in the consolidated statements of operations for the year ended December 31, 2023. There have been no changes in the estimated recoverable amount of MATLOC intangible assets in the three months ended March 31, 2024.

Additionally, as part of the My Health Logic acquisition in 2021, the Company recognized goodwill of $1,774,656. At December 31, 2023, management determined that the carrying value of goodwill exceeded its recoverable amount. As a result, the Company recognized an impairment of $1,774,656, which was recorded in the consolidated statements of operations for the year ended December 31, 2023.

	March 31, 2024
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Patents in process	$	122,745	$	-		$	122,745
DuraGraft patent		5,256,000		(1,482,460	)		3,773,540
DuraGraft - Distributor relationship		308,000		(112,933	)		195,067
DuraGraft IPR&D - Cyto Protectant Life Sciences		10,164,000		-			10,164,000
	$	15,850,745	$	(1,595,393	)	$	14,255,352

	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization			Impairment			Net Carrying Amount
Krillase intangible assets	$	4,250,000	$	-		$	(4,250,000	)	$	-
Patents in process		122,745		-			-			122,745
DuraGraft patent		5,256,000		(1,381,383	)		-			3,874,617
DuraGraft - Distributor relationship		308,000		(105,233	)		-			202,767
DuraGraft IPR&D - Cyto Protectant Life Sciences		12,606,000		-			(2,442,000	)		10,164,000
My Health Logic - Trade name		450,000		(65,090	)		(384,910	)		-
My Health Logic - Biotechnology		4,600,000		(547,941	)		(4,052,059	)		-
My Health Logic - Software		1,550,000		(209,249	)		(1,340,751	)		-
Total intangibles	$	29,142,745	$	(2,308,896	)	$	(12,469,720	)	$	14,364,129

Goodwill			DuraGraft				My Health Logic				Total
Balance, December 31, 2023 and March 31, 2024			$	5,416,000			$	-			$	5,416,000

The following changes to the Company’s intangible assets had taken place in the periods indicated:

SCHEDULE OF INTANGIBLE ASSETS

Balance, December 31, 2022	$	27,675,020
Impairment		(12,469,720	)
Amortization expense		(841,171	)
Balance, December 31, 2023	$	14,364,129
Amortization expense		(108,777	)
Balance, March 31, 2024	$	14,255,352

Future amortizations for DuraGraft intangible assets for the next five years will be $435,108 for each year from 2025 through 2029 and $1,793,066 for 2030 and thereafter. Amortization related to in process research and development will be determined upon the Company achieving commercialization.

NOTE 6 – NOTES PAYABLE

a) On October 23, 2023, the Company issued a note payable to Hub International for $165,469 bearing interest at the annual rate of 8% per annum, due August 23, 2024, payable monthly starting November 23, 2023. Failure to pay past due amounts and monthly installments may result in cancellation of the Company’s insurance. As of March 31, 2024, the Company has outstanding balance under the note payable in the amount of $72,102 (December 31, 2023 - $130,122).

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 year ended December 31, 2023, the Company accrued $64,133 in interest on the promissory note. 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. At the maturity date of the Walleye Promissory Note, the principal amount remained unpaid, resulting in an increase from $1,000,000 to $1,250,000. Of this increment, $250,000 was recognized as interest expense in the consolidated statements of operations for the year ended December 31, 2023. 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 month ended March 31, 2024, the Company accrued $5,540 in interest on the notes payable (March 31, 2023 - $13,068). As of March 31, 2024, balance of the remaining note payable was $252,430 (December 31, 2023 - $252,223).

e) As of March 31, 2024, the Company has outstanding borrowings under a note payable to Mr. Richmond in the principal amount of $151,000 (December 31, 2023 - $151,000). The note payable bears no interest and is due on demand.

f) As of March 31, 2024, the Company has outstanding borrowings under a note payable to Santander Bank: Sullivan & Worcester LLP in the principal amount of $65,000 (December 31, 2023 - $65,000). The note payable bears no interest and is due on demand.

g) As of March 31, 2024, the Company has outstanding borrowings under a note payable in the principal amount of $755,000 (December 31, 2023 - $Nil). The note payable bears no interest and is due on demand.

NOTE 7 - CONVERTIBLE PROMISSORY NOTES AND WARRANTS

From May 2021 to August 2022, the Company conducted a private placement (the “Units Private Placement”) of units (the “Units”) consisting of 10% secured convertible promissory notes (the “Convertible Notes”) and accompanying warrants (the “Class C Warrants”), as were modified or amended from time to time.

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.

In 2023, the Company amended the conversion price of the Convertible Notes and the exercise price of the Class C Warrants to $0.10 per share.

The Company determined that the terms of the new securities were substantially different from the original securities, and, as such the transaction was accounted for as an extinguishment of debt 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 $684,682 was recorded in consolidated statements of operations for the year ended December 31, 2023.

Additionally, in 2023 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. As the result, the Company accreted a default amount of $7,378,993 to the value of the Convertible Notes in 2023.

Additionally, in 2023, the Company issued an aggregate of 4,207,828 Units for the proceeds of $344,959. In December 2023, several note holders exercised their right to convert Convertible Notes, resulting in an aggregate of $9,340,774 worth of Convertible Notes being converted into common stock of the Company. Additionally, subsequent to the conversion, the Company extended the maturity dates the certain outstanding Convertible Notes.

During the three months ended March 31, 2024, the Company amended certain Convertible Note with original maturity dates of March 24, 2024, to extend their term until March 24, 2025. In connection with the extension of the maturity date for the outstanding Convertible Notes, the Company executed a substantial modification that led to the extinguishment of the existing Convertible Notes and the issuance of new Convertible Notes. This modification resulted in a gain on extinguishment of $572,764, which has been recognized in the condensed consolidated statements of operations for the three months ended March 31, 2024 (March 31, 2023 - $Nil).

During the three months ended March 31, 2024, the Company recognized interest and accretion expense of $2,091,490 (March 31, 2023 - $2,763,749) in the condensed consolidated statements of operations.

The Company determined that the optional conversion feature attached to the Convertible Notes did not meet the definition of derivative liability 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 have been recorded as debt discount and is being amortized to interest and accretion expense using the effective interest method over the term of the Convertible Notes.

The following table summarizes supplemental balance sheet information related to the convertible notes, net of debt discount outstanding, as of March 31, 2024 and December 31, 2023:

SCHEDULE OF CONVERTIBLE NOTES

Balance, December 31, 2022	$	2,751,633
Debt accretion on Original securities		1,835,741
Debt extinguishment		(4,587,374	)
Convertible notes issued - new securities		19,403,385
Debt discount		(19,403,385	)
Debt accretion on New Securities		17,792,071
Mandatory Default Amount		7,378,993
Conversion of debt		(9,426,260	)
Extinguishment of debt		(10,518,069	)
Convertible notes issued with extended maturity date		10,518,069
Debt discount		(1,520,047	)
Debt accretion		63,578
Balance, December 31, 2023	$	14,288,335
Debt accretion		2,091,490
Extinguishment of debt		(3,952,573	)
Convertible notes issued with extended maturity date		4,366,512
Debt discount		(986,703	)
Balance, March 31, 2024	$	15,807,061

	March 31, 2024			December 31, 2023
Convertible notes - total principal	$	19,400,891		$	18,955,174
Unamortized issuance costs and discount		(3,593,830	)		(4,666,839	)
Convertible Notes, Net of Debt Discount	$	15,807,061		$	14,288,335

	March 31, 2024		December 31, 2023
Current portion	$	15,807,061	$	14,288,335
Non-current portion		-		-
Convertible Notes, Net of Debt Discount	$	15,807,061	$	14,288,335

2023 Convertible Notes and Warrants

In 2023, the Company conducted five separate closings (the “2023 OID Units Closings”) 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 May 12, 2023, 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”).

Pursuant to the 2023 OID Units Closings, the company issued 69,876,060 OID Units in aggregate, for the total proceeds of $5,404,452, net of issuance costs.

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 originally issued met the definition of a liability and therefore was accounted for as a derivative liability instrument. The warrants were fair valued at $12,292,635 and recorded as derivative liabilities on the condensed consolidated balance sheets. As a result of the warrant liability exceeding the value of the debt principal, the Company recorded a $6,888,475 loss on issuance of debt in the consolidated statements of operations for the year ended December 31, 2023. These warrants were valued using the Black-Scholes pricing method. The changes in the assumptions used to value the warrants as of December 11, 2023, resulted in a $795,934 decrease in fair value of this liability. At December 11, 2023, the fair market value of detachable warrant liability was $11,496,701. Additionally, on December 11, 2023, the Company amended the OID Convertible Notes contracts, resulting in a change in the accounting treatment for the detachable warrants. Following the amendment, the warrants no longer met the definition of liability and were consequently accounted for as equity instruments. This adjustment led to a reclassification of $11,496,701 from derivative liabilities to equity in the Company’s condensed consolidated financial statements.

During the three months ended March 31, 2024, the Company extended the maturity date of certain OID Convertible Notes. Four out of five extensions did not result in a significant modification. However, one extension contract executed on February 12, 2024, extended the maturity date by one year to February 12, 2025, and was deemed substantive. This triggered the extinguishment of the existing OID Convertible Note and the issuance of a new Convertible Note. Additionally, the detachable warrants attached to the OID Convertible Notes had their maturity extended by two years. As a result, the Company recognized an incremental fair value increase of $1,128,078 as a change in the fair value of warrants, which was recorded as a debt discount and is being amortized to interest and accretion expense using the effective interest method over the term of the OID Convertible Notes. The modification of the maturity dates of the OID Convertible Notes and the attached OID Warrants resulted in a loss on extinguishment of $680,135, which has been recognized in the condensed consolidated statements of operations for the three months ended March 31, 2024 (March 31, 2023 - $Nil).

During the three months ended March 31, 2024, the Company recognized interest and accretion expense of $2,074,078 (March 31, 2023 - $Nil), 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 March 31, 2024 and December 31, 2023:

SCHEDULE OF CONVERTIBLE NOTES

OID Convertible Notes, Net of Debt Discount
Balance, December 31, 2022	$	-
Issuance of convertible notes		6,987,606
Issuance cost		(1,583,154	)
Debt discount		(5,404,452	)
Debt accretion		2,694,256
Balance, December 31, 2023	$	2,694,256
Debt accretion		2,074,078
Extinguishment of debt		(1,268,481	)
Convertible note issued with extended maturity date		2,529,786
Debt discount		(581,171	)
Balance, March 31, 2024	$	5,448,468

	March 31, 2024			December 31, 2023
Convertible notes - total principal	$	7,667,742		$	6,987,606
Unamortized issuance costs and discount		(2,219,274	)		(4,293,350	)
Convertible Notes, Net of Debt Discount	$	5,448,468		$	2,694,256

	March 31, 2024		December 31, 2023
Current portion	$	5,448,468	$	2,694,256
Non-current portion	$	-	$	-
Convertible Notes, Net of Debt Discount	$	5,448,468	$	2,694,256

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 (DEFICIT)

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 March 31, 2024, and December 31, 2023, there were no shares of preferred stock issued or outstanding.

b)	*Common stock*

The Company is authorized to issue a total number of 2,000,000,000 shares of common stock with a par value of $0.001.

As of March 31, 2024, there were 131,793,088 (December 31, 2023 - 131,793,088) shares of common stock issued and outstanding. During the three months ended March 31, 2024, the Company did not issue any shares of common stock.

c)	*Options*

On May 18, 2021, 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 March 31, 2024, there remains 2,924,057 options available for issuance (December 31, 2023 – 2,924,057).

During the three months ended March 31, 2024, the Company granted Nil (December 31, 2023 – Nil) share purchase options to directors of the Company.

The summary of option activity for the three months ended March 31, 2024, is as follows:

SCHEDULE OF STOCK OPTION ACTIVITY

	Number of Options			Weighted Average Exercise Price		Weighted Average Contractual Life		Total Intrinsic Value
Outstanding at December 31, 2022		3,925,943		$	1.33		6.06	$	-
Granted/forfeited		-			-		-		-
Outstanding at December 31, 2023		3,925,943			1.33		5.06		-
Forfeited		(165,000	)		1.48		-		-
Outstanding at March 31, 2024		3,760,943			1.33		4.70		-
Exercisable at March 31, 2024		3,570,943		$	1.29		4.53	$	-

As of March 31, 2024, the Company had the following options outstanding:

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		2.24	$	-
	1.25		415,000		415,000		6.90		-
	1.37		200,000		200,000		6.38		-
	1.75		800,000		710,000		7.66		-
	2.20		360,000		260,000		8.19		-
$	1.33		3,760,943		3,570,943		4.70	$	-

d)	*Restricted Share Units*

During the year ended December 31, 2021, the Company granted restricted share awards totaling 350,000 shares of common stock to directors, senior officers, and consultants, contingent upon underlying performance conditions. As of March 31, 2024, the Company determined that only two out of four performance conditions have been met. No compensation cost was recognized for the restricted share awards for the three months ended March 31, 2024 (March 31, 2023- $Nil).

The following performance conditions attached to the restricted share awards were 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 Somahlution and My Health Logic.

e)	*Warrants*

As of March 31, 2024 and December 31, 2023, there were 636,483,634 warrants outstanding, respectively.

SCHEDULE OF WARRANTS OUTSTANDING

	Number			Weighted Average Price
Balance, December 31, 2022		20,048,497		$	2.64
Warrants modified pursuant to debt extinguishment (Note 7)		355,577,447			0.1
Issued pursuant to debt agreements (Note 7)		183,560,497			0.15
Issued		79,949,352			0.11
Exercised		(2,652,159	)		0.10
Exercised		-			-
Balance, December 31, 2023 and March 31, 2024		636,483,634		$	0.12

The detachable warrants attached to the OID Convertible Notes (see Note 7) are classified as equity. These warrants were valued using the Black-Scholes pricing model. During the three months ended March 31, 2024, the Company extended the maturity dates of certain OID Warrants (see Note 7), resulting in a substantive modification. As a result, the Company recognized an incremental fair value increase of $1,128,078 as a debt discount, which is being amortized to interest and accretion expense using the effective interest method over the term of the OID Convertible Notes.

f)	*Stock-based compensation*

During the three months ended March 31, 2024, the Company recorded $54,264 in non-cash share-based compensation (March 31, 2023 - $210,966).

NOTE 9 – RELATED PARTY TRANSACTIONS

As at March 31, 2024, the Company owed an aggregate of $270,900 (December 31, 2023 - $230,153) to related parties of the Company.

In the three months ended March 31, 2024, the Company incurred and settled $336,000 and $72,100, respectively (March 31, 2023 - $404,750 and $243,750, respectively) in professional service rendered by related parties of the Company. The services were provided by entities which are controlled by management and are pursuant to various consulting agreements.

During the three months ended March 31, 2024, the Company also incurred $243,500 in compensation to Directors and Executive Officers for their services rendered (March 31, 2023 – $332,750) and settled $187,500 (March 31, 2023 – $243,750).

Additionally, as part of the Somahlution acquisition in 2020, the Company recorded a prepaid royalty to the stockholders of Somahlution. The former primary beneficial owner is Dr. Vithal Dhaduk, currently a director, and significant stockholder of the Company. During the three months ended March 31, 2024, the Company accrued $1,957 (March 31, 2023 - $36,183) 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 year ended December 31, 2023, the Company and stockholders of Somahlution agreed to reduce the prepaid royalty balance by 50% or by $151,000. As at March 31, 2024, the Company had $120,500 in prepaid royalties (December 31, 2023 - $122,457) which had been classified as non-current in the condensed consolidated balance sheets.

NOTE 10 – COMMITMENTS AND CONTINGENCIES

Contingencies

a) As part of the DuraGraft Acquisition, completed on July 31, 2020, the Company entered into the Agreement with Somahlution stockholders, whereby Marizyme is legally obligated to pay royalties on all net sales for 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 months ended March 31, 2024, the Company had not earned any revenues from Krillase, however the Company did incur sales of the DuraGraft products outside of the U.S., on which $1,957 in royalties have been accrued and offset against the prepaid royalties receivable (see Note 9).

Upon receiving FDA clearance for the DuraGraft product and insurance reimbursement approval on the products pursuant to section 2(b) of the Asset Purchase Agreement dated December 15, 2019, 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 at March 31, 2024, minimum lease payments in relation to lease commitments are payable as described in Note 4.

NOTE 11 - SUBSEQUENT EVENTS

Composition of Board of Directors

On April 12, 2024, Michael Stewart submitted written notice of his resignation from the Board of Directors, effective the same date. Concurrently, the independent director agreement between the Company and Mr. Stewart, dated June 7, 2022, expired in accordance with its terms. Mr. Stewart’s decision to resign from the Board of Directors was not the result of any disagreement relating to the Company’s operations, policies, or practices.

Co-Development Agreement

Subsequent to the quarter ended March 31, 2024, the Company engaged in a Co-Development Agreement (the “Agreement”) with Qualigen Therapeutics, Inc. (“Qualigen”) aimed at furthering the commercialization efforts of DuraGraft™. Pursuant to the Agreement, Qualigen has committed to providing up to $1,500,000 in funding over the next few months to support the commercial launch of DuraGraft™ in the United States, including funding for post-clearance clinical studies. In exchange, Qualigen will be entitled to a portion of Marizyme’s gross profit from future U.S. sales of the product, subject to a cap of 2 times Qualigen’s invested capital. Additionally, Qualigen has obtained an exclusive negotiation period, which concludes on May 31, 2024, during which it may propose and delineate a broader strategic relationship between the two companies. In accordance with the agreement, the Company formed a wholly owned subsidiary called DuraGraft, Inc. subsequent to the quarter ended March 31, 2024.

OID Convertible Notes Amendment

After the quarter ended March 31, 2024, the Company extended the maturity date of OID Convertible Notes with an aggregate amount of $3,781,335 by approximately one year.

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

This discussion covers the three months ended March 31, 2024 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, 2023 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, 2023 (the “2023 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 (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.” 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 medical technology company changing the landscape of cardiac care by delivering innovative solutions for coronary artery bypass graft (CABG) surgery.

Since October 2023, DuraGraft has been authorized for marketing by the U.S. Food and Drug Administration, or FDA, for use as an intra-operative vascular conduit storage and flushing solution used during CABG surgeries in the United States, subject to applicable risks, mitigation requirements, and control provisions. Since August 2014, DuraGraft has also had the CE marking required to be sold in the EEA, and DuraGraft has therefore been assessed as meeting the EEA safety, health, and environmental protection requirements.

Having received FDA authorization for marketing of DuraGraft, we are proceeding with our plans to commercialize DuraGraft in the United States and continue to generate international revenue growth from sales of DuraGraft. In the U.S. marketplace, we intend to employ a small direct sales force focusing on marketing and sales to hospital integrated networks. We have also begun the process of developing the U.S. CABG market for DuraGraft with select clinical studies, the development of known opinion leaders, or KOLs, the promotion of existing publications, and digital marketing. We will also seek to develop and commercialize additional applications for the technology underlying DuraGraft.

Our DuraGraft commercialization plan using its CE marking and existing distribution partners in select European and Asian countries resumed in the second quarter of 2022, with a targeted approach based on market access, existing KOLs, clinical data and revenue penetration. In Europe and elsewhere, we will continue our DuraGraft marketing efforts relying on our DuraGraft CE marking and our distribution partners. 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 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, Germany, Chile, Turkey, Italy, and the UK among others.

We also continue to focus on the development of MAR-FG-001, a technology for use in fat grafting procedures formulated as a tumescent solution base for protecting adipose tissue during adipose tissue harvesting and storage.

We have either paused or significantly slowed down the development of our other pipeline technologies, including Krillase and MATLOC. Our MATLOC CKD point-of-care device is still being developed through 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. Apart from the SRA, no additional capital is going to the Krillase or MATLOC pipeline technologies.

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. We anticipate that once we commence marketing and sales operations for DuraGraft in the U.S., we will be able to generate sustainable revenue growth and continue the expansion of DuraGraft and expedite the development of MAR-FG-001 into medical products.

Our Competitive Strengths

We believe that the following competitive strength will enable us to compete effectively:

●

Superior, first-in-class vascular graft storage and flushing solution. DuraGraft is the first and only medical product that has received authorization by the FDA for marketing for use as an intra-operative vascular conduit storage and flushing solution used during CABG surgeries. DuraGraft is also the only product certified for marketing in Europe and other jurisdictions for this indication.

Our Growth Strategies

We will strive to grow our business by pursuing the following key growth strategies:

	●	*Commercialize DuraGraft*.
	●	*Develop MAR-FG-001 fat grafting technology and related products.*

Our net loss was approximately $6.2 million and $2.6 million for the three months ended March 31, 2024 and 2023, 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.

Principal Factors Affecting Our Financial Performance

Our operating results are primarily affected by the following factors:

●	our ability to generate revenue from sales of our products;

●	our ability to obtain FDA approval for our products;

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

●	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 fiscal year in which (1) the market value of our shares held by non-affiliates equals or exceeds $250 million as of the prior June 30^th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our shares held by non-affiliates equals or exceeds $700 million as of the prior June 30^th.

FINANCIAL OPERATIONS REVIEW

Component of Results of Operations

Revenue

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

Direct Cost of Revenue

Direct 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 cost of revenue also include losses from excess, slow-moving or obsolete inventory and inventory purchase commitments, if any.

Research and Development

All research and development costs are expensed in the period incurred and consist primarily of salaries, payroll taxes, and employee benefits, 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, and costs related to manufacturing DuraGraft for clinical trials. The Company has entered into various research and development contracts with various organizations and other companies.

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 related parties relate to certain consulting services. We anticipate increased expenses related to audit, legal, regulatory, and tax-related services associated with maintaining compliance with SEC requirements, and with listing and maintaining compliance with Nasdaq.

Salaries and Stock-Based Compensation

Salaries consist of compensation and related personnel costs. Stock-based compensation represents the fair value of equity-settled share awards on stock options 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.

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 (Expense)

Other income and expenses consist of mark-to-market adjustments on contingent liabilities assumed on the acquisition of the Somahlution Assets and interest and accretion expenses related to our Convertible Notes.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table summarizes our results of operations for the three months ended March 31, 2024 and 2024:

	Three Months Ended March 31,
	2024			2023			Change

Revenue	$	32,855		$	128,974		$	(96,119	)
Direct cost of revenue		9,647			39,275			(29,628	)
Gross profit		23,208			89,699			(66,491	)
Operating expenses:
Professional fees		264,096			384,806			(120,710	)
Salary expenses		310,159			266,968			43,191
Research and development		321,867			605,997			(284,130	)
Stock-based compensation		54,264			210,966			(156,702	)
Depreciation and amortization		108,777			210,338			(101,561	)
Royalty expense		1,957			36,183			(34,226	)
Other general and administrative expenses		334,180			507,324			(173,144	)
Total operating expenses		1,395,300			2,222,582			(827,282	)
Total operating loss	$	(1,372,092	)	$	(2,132,883	)	$	760,791
Other income (expenses):
Interest and accretion expense		(4,161,830	)		(1,697,701	)		(2,464,129	)
Change in fair value of contingent liabilities		(585,000	)		1,276,000			(1,861,000	)
Loss on debt extinguishment		(107,370	)		-			(107,370	)
Total other income (expense)		(4,854,200	)		(421,701	)		(4,432,499	)

Net loss	$	(6,226,292	)	$	(2,554,584	)	$	(3,671,708	)

Revenue

We recognized revenue of approximately $0.03 million for the three months ended March 31, 2024, compared to $0.1 million for the three months ended March 31, 2023. The decrease can be attributed to a halt in inventory production during the three months ended March 31, 2024, due to constraints on financial resources of the Company.

Direct Costs of Revenue

During the period ended March 31, 2024, we incurred approximately $0.01 million in direct costs of revenue, reflecting a $0.03 million decrease, or 75.4%, compared to approximately $0.04 million in direct costs of revenue incurred during the three months ended March 31, 2023. The decrease in cost of goods sold was primarily attributed to reduced sales during the three months ended March 31, 2024, compared to the corresponding period ended March 31, 2023.

Professional Fees

Professional fees decreased by approximately $0.1 million or 31.4% to approximately $0.3 million in the three months ended March 31, 2024 compared to approximately $0.4 million in the three months ended March 31, 2023. The decrease is primarily attributed to higher professional fees incurred in the prior period, driven by spending on consulting for DuraGraft FDA regulatory and clinical support

Salary Expenses

Salary expenses in the three months ended March 31, 2024 were approximately $0.3 million, an approximately $0.05 million or 16.2% increase from the comparative period. This increase can be attributed to a lower portion of salaries being reclassified to research and development expenses, as the Company reduced its R&D efforts in the latter half of fiscal 2023.

Research and Development

Research and development expenses in the three months ended March 31, 2024 were approximately $0.3 million, approximately a $0.3 million or 46.9% decrease from the comparative period. This reduction in research and development expenses is primarily attributed to the Company’s suspension of European study on DuraGraft as well Company’s decision to suspend expenditures related to FDA approvals for MATLOC and Krillase-related assets during the third quarter of 2023.

Stock-Based Compensation

Stock-based compensation decreased to approximately $0.1 million for the three quarters ended March 31, 2024 from approximately $0.2 million in the comparative quarter ended March 31, 20223 which represents 74.3% decrease period over period. A significant portion of options have completed their vesting period in the second quarter of 2023 and no options have been granted since the end of fiscal year 2022, which explains the decrease in stock-based compensation period over period.

Depreciation and Amortization

Depreciation and amortization decreased to approximately $0.1 million for the three months ended March 31, 2024, down from approximately $0.2 million in the comparative quarter ended March 31, 2023, representing a 48.3% decrease period over period. This decrease was attributed to the impairment of intangible assets at the end of fiscal 2023, which were amortized during the comparative quarter.

Other General and Administrative Expenses

Other general and administrative expenses decreased by approximately $0.2 million, or 34.1%, to approximately $0.3 million in the three months ended March 31, 2024. This decrease can be attributed to non-recurring non-legal professional fees incurred in connection with amendments to a registration statement on Form S-1 filed with the SEC for a public offering in the comparative period ended March 31, 2023.

Other Income (Expenses)

In the three months ended March 31, 2024, the Company incurred approximately $4.2 million in interest and accretion costs related to convertible notes issued at a discount as part of its Units Private Placement. This represents a $2.5 million increase, or 145.1%, compared to $1.7 million in the comparative quarter ended March 31, 2023.

Additionally, the Company recognized $0.6 million of fair value loss 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 $1.3 million of fair value gain, a decrease of $1.9 million from mark-to-market adjustment on the contingent liability if compared to the quarter ended March 31, 2023.

In the three months ended March 31, 2024, the Company recorded a $0.1 million loss on the extinguishment of Convertible Notes and OID Convertible Notes due to the amendment of the maturity dates for certain Notes and warrants attached to those Notes. No such event occurred during the three months ended March 31, 2023.

LIQUIDITY AND CAPITAL RESOURCES

To date, we have incurred significant net losses and negative cash flows from operations. As of March 31, 2024 we had available cash of approximately $0.01 million and accumulated deficit of $157.6 million. We fund our operations through capital raises.

Debt

As of March 31, 2024, the Company had outstanding convertible notes with varying maturities for an aggregate principal amount of $21.3 million, all payable within approximately 12 months. Future interest payments associated with the convertible notes total $5.8 million.

The Company also issues unsecured short-term promissory notes for operational purposes. As of March 31, 2024, the Company had $1.3 million of promissory notes outstanding, all of which were payable within 12 months.

Leases

The Company has lease arrangements for office and laboratories facilities. As of March 31, 2024, the Company had fixed lease payment obligations of $1.0 million, with $0.3 million payable within 12 months.

Funding Requirements and Other Liquidity Matters

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

	●	Increase our expertise and knowledge through hiring and retaining qualified operational, financial and management personnel, who are expected to develop build efficient infrastructure to support development and commercialization of therapies and devices;
	●	Increase in research and development and legal support as we continue to develop our products, conduct clinical trials and pursue FDA clearances;
	●	Expand our product portfolio through the identification and acquisition of additional life science assets; and
	●	Seek to increase awareness about our products to boost sales and distributions internationally.

Until such time, if ever, as we can generate substantial product revenues to support our cost structure, the Company will continue to have to raise funds beyond its current working capital balance in order to finance future development of products, potential acquisitions, and meet its debt obligations until such time as future profitable revenues are achieved.

We expect to finance our cash needs through a combination of private and public equity offerings, debt financings, government or other third-party funding, and collaborations arrangements. 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 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 stockholders’ 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 our products.

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.

Cash Flows

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

	Three months ended March 31,
	2024			2023			Change
Net cash provided by/(used in):
Operating activities	$	(808,951	)	$	(1,120,156	)	$	311,205
Financing activities		666,632			939,096			(272,464	)
Net change in cash	$	(142,319	)	$	(181,060	)	$	38,741

Operating Activities

Net cash used in operating activities was approximately $0.8 million for the three months ended March 31, 2024, compared to $1.1 million for the same period in 2023. The decrease in cash flows spent on operating activities is primarily attributable to differences in the timing of payments to our vendors and receipts from our customers.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2024, was approximately $0.7 million, raised from the issuance of promissory notes of $0.8 million, with approximately $0.1 million repaid during the current period. In contrast, for the three months ended March 31, 2023, net cash provided by financing activities primarily stemmed from the issuance of an unsecured promissory note to Walleye, generating $1.1 million. Additionally, during the same period in 2023, the Company repaid approximately $0.1 million in notes payable.

Going Concern

The Company, since its inception, has incurred recurring operating losses and negative cash flows from operations and has an accumulated deficit of $157.6 million at March 31, 2024 (December 31, 2023 - $151.3 million). Additionally, the Company has negative working capital of approximately $25.1 million (December 31, 2023 - $19.6 million) and $0.06 million (December 31, 2023 - $0.1 million) 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 condensed 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.

Off-Balance Sheet Arrangements

As of March 31, 2024, 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.

Critical Accounting 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.

While our significant accounting policies 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 following accounting policies are the most critical for fully understanding and evaluating our financial condition and results of operations.

Impairment

	●	Impairment of long-lived assets: The Company reviews long-lived assets, including property, plant and equipment, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than the carrying amount. The impairment loss, if recognized, would be based on the excess of the carrying value of the impaired asset over its respective fair value.

	●	Goodwill: Goodwill is recorded at the time of purchase for the excess of the amount of the purchase price over the fair values of the identifiable assets acquired and liabilities assumed. The fair value is determined using the estimated discounted future cash flows of the reporting unit. Goodwill is not amortized and instead is tested at least annually for impairment, or more frequently when events or changes in circumstances indicate that goodwill might be impaired. This impairment test is performed annually at December 31. Future adverse changes in market conditions or poor operating results of underlying assets could result in an inability to recover the carrying value of the goodwill, thereby possibly requiring an impairment charge.

	●	In-process research and development assets: IPR&D assets are reviewed for impairment annually, or sooner if events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable, and upon establishment of technological feasibility or regulatory approval. An impairment loss, if any, is calculated by comparing the fair value of the asset to its carrying value. If the asset’s carrying value exceeds its fair value, an impairment loss is recorded for the difference and its carrying value is reduced accordingly. Similar to the impairment test for goodwill, the Company may perform a qualitative approach for testing indefinite-lived intangible assets for impairment.

Fair Value of Derivative and Contingent Liabilities

Our derivative and contingent liabilities are revalued at each reporting period with changes in the fair value of the liabilities recorded as a component of other income (expense) in the statements of operations. There are significant judgments and estimates inherent in the determination of the fair value of these liabilities. If we had made different assumptions including, among others, those related to the timing and probability of various corporate scenarios, discount rates, volatilities and exit valuations, the carrying values of our derivative and contingent liabilities, and our net loss and net loss per common share could have been significantly different.

Stock-Based Compensation Expense

Stock-based compensation expense for employees and directors is recognized in the Statement of Operations based on estimated amounts, including the grant date fair value and the expected service period. For stock options, we estimate 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 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 grant date fair value using our closing stock price on the date of grant. We recognize 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 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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures are defined in Rule 13a-15(e) under the Exchange Act to mean controls and other procedures designed to ensure that information required to be disclosed by us in the reports that we file or 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.

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 (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 March 31, 2024. 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 our annual or interim consolidated financial statements will not be prevented or detected and corrected on a timely basis. The following material weakness was previously reported in our Annual Report on Form 10-K for the year ended December 31, 2023 and has remained unchanged for the three months ended March 31, 2024:

●

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 weakness described above, since December 31, 2023, management has added, or intends to add, controls to further enhance and revise the design of the existing controls, including the following:

	●	Implementing reassessed design and operation of internal controls over financial reporting and reviewing procedures over the preparation of our financial statements.
	●	Engaging of permanent accounting personnel and consultants to provide support during our quarterly and annual preparation, review, and reporting of our financial statements.
	●	Appointing of qualified personnel to the key management roles to provide oversight and develop stronger controls, policies and procedures.
	●	Maintaining 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 cannot assure you that these ongoing or planned measures in response to the material weakness in our internal control over financial reporting 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 three months ended March 31, 2024, the Company took the following steps in order to improve its internal controls over financial reporting:

●

Implemented controls around operation of internal control over financial reporting and reviewing procedures over the preparation of our financial statements such that our management believes that the Company had adequate policies and procedures in place to ensure the timely, effective review of assumptions used in measuring the fair value of certain financial instruments.

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. 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.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors disclosed in the 2023 Form 10-K.

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

During the three-month period ended March 31, 2024, we did not conduct any unregistered sales of our equity securities that were not previously disclosed in a current report on Form 8-K and we did not repurchase any of our common stock.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

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		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		Bylaws (incorporated by reference to Exhibit 3.2 to Form SB-2/A (File No: 333-146748) filed January 14, 2008)
4.1		Unsecured Subordinated Convertible Promissory Note issued by Marizyme, Inc., dated February 6, 2023 (incorporated by reference to Exhibit 4.1 to Form 8-K filed on February 7, 2023)
4.2		Class D Common Stock Purchase Warrant issued by Marizyme, Inc. (incorporated by reference to Exhibit 4.2 to Form 8-K filed on February 7, 2023)
10.1		Waiver and Consent between Marizyme, Inc. and Viner Total Investments, dated January 9, 2023 (incorporated by reference to Exhibit 10.13 to Form 8-K filed on January 17, 2023)
10.2		Letter Agreement between Marizyme, Inc. and Univest Securities, LLC, dated January 12, 2023 (incorporated by reference to Exhibit 10.12 to Form 8-K filed on January 17, 2023)
10.3		Securities Purchase Agreement, dated as of February 6, 2023, by and between Marizyme, Inc. and Walleye Opportunities Master Fund Ltd. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 7, 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

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: May 28, 2024	MARIZYME, INC.

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

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

MARIZYME, INC. 10-Q