MARIZYME, INC. Forward Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the
meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of
the Securities Act of 1934, as amended, that involve substantial risks and
uncertainties. These forward-looking statements are not historical facts, but
rather are based on current expectations, estimates and projections about our
industry, our beliefs, and our assumptions. Words such as "anticipate,"
"expects," "intends," "plans," "believes," "seeks" and "estimates" and
variations of these words and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future
performance and are subject to risks, uncertainties and other factors, some of
which are beyond our control and difficult to predict and could cause actual
results to differ materially from those expressed or forecasted in the
forward-looking statements. You should not place undue reliance on these
forward-looking statements, which apply only as of the date of this Form 10-
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These forward-looking statements, which reflect our management's beliefs,
objectives, and expectations as of the date hereof, are based on the best
judgement of our management. All forward-looking statements speak only as of the
date on which they are made. Such forward-looking statements are subject to
certain risks, uncertainties and assumptions relating to factors that could
cause actual results to differ materially from those anticipated in such
statements, including, without limitation, the following: economic, social and
political conditions, global economic downturns resulting from extraordinary
events such as the COVID-19 pandemic and other securities industry risks;
interest rate risks; liquidity risks; credit risk with clients and
counterparties; risk of liability for errors in clearing functions; systemic
risk; systems failures, delays and capacity constraints; network security risks;
competition; reliance on external service providers; new laws and regulations
affecting our business; net capital requirements; extensive regulation,
regulatory uncertainties and legal matters; failure to maintain relationships
with employees, customers, business partners or governmental entities; the
inability to achieve synergies or to implement integration plans and other
consequences associated with risks and uncertainties detailed in our filings
with the
Company Overview
We are a
We changed our name to
In the second half of 2018, we acquired the protease-based therapeutic platform
called Krillase® from
Recent Events
Somahlution Asset Acquisition
On
Pursuant to the terms of the Acquisition, Somah is entitled to appoint two
members to our board of directors, one of whom must be independent. In
Private Placement
On
Our Products DuraGraft®
On
The DuraGraft Product
Somahlution has been engaged in developing products based on its DuraGraft platform technology, to prevent ischemic injury to organs and tissues in grafting and transplantation surgeries. Its products and product candidates, which are referred to as the Somah Products, include DuraGraft, a one-time intraoperative vascular graft treatment for use in vascular and bypass surgeries that maintains endothelial function and structure, thereby reducing the incidence and complications of graft failure and improving clinical outcomes post bypass surgery.
52 DuraGraft Indications
DuraGraft is an "endothelial damage inhibitor" indicated for cardiac bypass,
peripheral bypass, and other vascular surgeries. It is CE marked and is approved
for marketing in 33 countries worldwide on 4 continents including, but not
limited to the
? DuraGraft is a CE-marked endothelial damage inhibitor that protects free
vascular grafts and endothelium against ischemic injury.
? DuraGraft is approved in Europe for graft protection and preservation during
bypass (cardiac and peripheral) and other vascular surgeries.
? DuraGraft protects graft tissue from harvesting through anastomosis and is
used during coronary artery bypass grafting, or CABG, (and other vascular
surgeries) as a treatment to maintain the structural and functional integrity
of the endothelium of isolated vascular grafts.
? The use of DuraGraft is associated with the reduction of post-CABG
complications associated with graft disease and failure; myocardial
infarction, repeat revascularization, and major adverse cardiovascular events,
or MACE.
Unmet Clinical Needs
? CABG remains the standard treatment for multi-vessel coronary artery disease
or left main artery disease.
? Benefits of CABG are, however, limited by high patient level of vein graft
failure (VGF) rates (50%) that have not changed in decades.
? "The Early Promise of Coronary Bypass Grafting has not been fulfilled and an
insidiously deadly variety of atherosclerosis progressively chokes vein grafts
and extinguishes their benefits," Fitzgibbons, 1996.
? "VGF remains one of the leading causes of poor in-hospital and long-term
outcomes after CABG," Harskamp, 2013.
? "The Issue of Low Patency Rates Owing to VGF Needs Urgent Attention," de
Vries, 2016.
? Vein graft failure is result of damage to graft endothelium that occurs during
CABG surgery.
? Ischemic reperfusion injury is the primary cause of endothelial damage.
? Vein graft failure post-CABG is associated with poor clinical outcomes.
? DuraGraft minimizes endothelial damage, reduces graft disease, and improves
clinical outcomes.
53
Current and Planned Operations
For the current fiscal year, the Company has the following goals:
? Sell More DuraGraft. DuraGraft is CE marked and is currently marketed in EU
member countries and several countries around the world including, but not
limited to Turkey , Singapore , Hong Kong , India , the Philippines , and Malaysia .
The Company will pursue market expansions of sales within these countries by
working with current product distributors to expand within its current base of
customers found within the registry sites, support peer to peer promotion and
will work aggressively identify, onboard, and train new distributors in other
key targeted regions of the world (Far East, Middle East , and South America ).
This effort, if successful, would significantly expand DuraGraft's market and
would make the product available to a significantly greater number of CABG
patients worldwide.
? Make Progress Towards Regulatory Clearance of DuraGraft in the U.S. This
fiscal year, the Company plans to continue a dialog with the FDA regarding the
clinical studies required to obtain regulatory clearance of DuraGraft for use
in coronary bypass surgeries in the U.S. The Company has, and will continue,
this formal dialog with the FDA in planned pre-submission filing(s) and
discussions designed to gain consensus regarding the clinical data necessary
to obtain clearance for use of the product in the U.S.
? Identify and Demonstrate Progress Towards a Second Clinical Indication for
DuraGraft. The Company believes that DuraGraft, or a different formulation of
the product, may have application in other clinical areas beyond coronary
bypass surgery and cardiovascular disease. The Company has CE mark approval
for vascular conduits used during the harvesting and grafting interval of
vascular surgery as a treatment to maintain structural and functional
integrity of vascular conduits. The Company will work aggressively to
identify, capitalize, and triage these additional potential clinical platform
opportunities for a DuraGraft-like product and make progress towards
commercialization of a cyto-protective product in this secondary application.
? Explore Strategic Partners in the Cardiac and Vascular Arena and New Potential
uses in Life Science and DX. The Company will identify and explore strategic
partnerships where DuraGraft has a strategic fit with Companies in the cardiac
bypass, vascular bypass, and organ preservation space where it adds strategic
fit to marketing and strengthens their portfolio. Examples are companies who
have a significate presence in the Endoscopic Vein Harvesting market and
synthetic graphing products for leg and above the shoulder. The Company will
also explore the use of DuraGraft platform or its derivatives for use in such
areas as cancer cell preservation, life science research and veterinarian
markets.
? Begin to Commercialize our Krillase Platform. The Company intends to pursue
the commercialization of the Krillase platform through the development of (i)
manufacturing and distribution in Europe and South America of a Krillase would
healing product, and (ii) additional Krillase based applications.
COMPARISON OF THE YEAR ENDED
Results of Operations Revenue
For the year ended
Cost of Revenues
The cost of revenues for the year ended
54
General and Administrative Expenses
The general and administrative expenses were
Net Income (Loss) From Operations
The net loss for the year ended
Liquidity and Capital Resources
General
At
Our operating activities used cash of
Cash used in investing activities during the year ended
Cash provided by our financing activities was
As of
For the years ended
December 31,
2020 2019
Cash used in operating activities
(148,656 ) (13,000 )
Cash provided by financing activities 6,275,164 125,000
Net changes to cash$ 2,902,672 $ (14 ) Going Concern
The Company has a net loss for the year ended
The accompanying consolidated financial statements have been prepared in
conformity with
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There can be no assurances that the Company will be successful in generating additional cash from the equity/debt markets or other sources to be used for operations. The consolidated financial statements do not include any adjustments relating to the recoverability of assets and classification of assets and liabilities that might be necessary. Based on the Company's current resources, the Company will not be able to continue to operate without additional immediate funding. Should the Company not be successful in obtaining the necessary financing to fund its operations, the Company would need to curtail certain or all operational activities and/or contemplate the sale of its assets, if necessary.
The Company has been impacted by the COVID-19 pandemic, and some of its earlier plans to further diversify its operations and expand its operating subsidiaries have been paused due to the economic uncertainty.
Off Balance Sheet Arrangements
As of
Critical Accounting Policies and Estimates
Use of Estimates
The preparation of the consolidated financial statements in accordance with
Fair Value of Financial Instruments and Fair Value Measurements
The Company measures its financial assets and liabilities in accordance with FASB ASC 820 (the "Fair Value Topic"). For certain of our financial instruments, including cash, accounts payable, and accrued expenses, the carrying amounts approximate fair value due to their short maturities.
We have adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.
Revenue Recognition
We recognize revenue for products sold and shipped to our distributors. As our products have an expiration date, if a product expires, we provide a replacement for the product at no charge.
56 Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. The Company accounts for non-employee share-based awards in accordance with ASC Topic 505-50. The value of the portion of an award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model.
Recently Issued Accounting Pronouncements
We have decided to take advantage of the exemptions provided to emerging growth companies under the JOBS Act and as a result our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, delay compliance with new or revised accounting standards that have different effective dates for public and private companies until they are made applicable to private companies.
Company management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
We are susceptible to general economic conditions, natural catastrophic events and public health crises, and a potential downturn in advertising and marketing spending by advertisers could adversely affect our operating results in the near future.
Our business is subject to the impact of natural catastrophic events, such as earthquakes, or floods, public health crisis, such as disease outbreaks, epidemics, or pandemics, and all these could result in a decrease or sharp downturn of economies, including our markets and business locations in the current and future periods. The outbreak of the coronavirus (COVID-19) resulted in increased travel restrictions, and shutdown of businesses, which may cause slower recovery of the economy. We may experience impact from quarantines, market downturns and changes in customer behavior related to pandemic fears and impact on our workforce if the virus continues to spread. In addition, one or more of our customers, partners, service providers or suppliers may experience financial distress, delayed or defaults on payment, file for bankruptcy protection, sharp diminishing of business, or suffer disruptions in their business due to the outbreak. The extent to which the coronavirus impacts our results will depend on future developments and reactions throughout the world, which are highly uncertain and will include emerging information concerning the severity of the coronavirus and the actions taken by governments and private businesses to attempt to contain the coronavirus. It is likely to result in a potential material adverse impact on our business, results of operations and financial condition. Wider-spread COVID-19 globally could prolong the deterioration in economic conditions and could cause decreases in or delays in advertising spending and reduce and/or negatively impact our short-term ability to grow our revenues. Any decreased collectability of accounts receivable, bankruptcy of small and medium businesses, or early termination of agreements due to deterioration in economic conditions could negatively impact our results of operations.
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