UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the three months ended March 31, 2023

 

Commission File No. 001-41010

 

MAINZ BIOMED N.V.

(Translation of registrant’s name into English)

 

Robert Koch Strasse 50
55129 Mainz
Germany

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F

 

Form 20-F ☒   Form 40-F  ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)  ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)  ☐

  

 

 

 

 

 

Other Events

 

On May 16, 2023, Mainz Biomed N.V. made available its Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three months ended March 31, 2023. A copy of the report is attached hereto as Exhibit 99.1.

 

On May 16, 2023, Mainz Biomed N.V. made available its Financial Statements for the three months ended March 31, 2023. A copy of the report is attached hereto as Exhibit 99.2.

 

Furnished as Exhibit 99.3 to this Report on Form 6-K is a press release of Mainz Biomed N.V. (the “Company”) dated May 16, 2023, announcing the Company’s results for the three months ended March 31, 2023.

 

This current report on Form 6-K and exhibits 99.1 and 99.2 hereto are hereby incorporated by reference into the Company’s Registration Statement on Form F-3 (File No. 333-269091).

 

Exhibit No.   Exhibit
99.1   Management’s Discussion and Analysis of Financial Condition and Results of Operations of Mainz Biomed N.V. for the three months ended March 31, 2023
99.2   Financial Statements of Mainz Biomed N.V. as of and for the three months ended March 31, 2023
99.3    Press Release dated May 16, 2023 
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).

  

1

 

 

SIGNATURE

 

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

 

Date: May 16, 2023 By: /s/ William J. Caragol
  Name:   William J. Caragol
  Title Chief Financial Officer

 

 

2

 

 

Exhibit 99.1

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

 

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes to those statements included in Exhibit 99.2 to this Form 6-K. This discussion and analysis contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives, expectations, forecasts and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under the section titled “Risk Factors” and elsewhere in our Annual Report for the Year ended December 31, 2022 on Form 20-F, filed with the Securities and Exchange Commission on April 7, 2023. You should carefully read the “Risk Factors” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements.

 

Organization and Overview of Operations

 

We develop in-vitro diagnostic (“IVD”) tests for clinical diagnostics in the area of human genetics, focusing in the areas of personalized medicine. We additionally operate a clinical diagnostic laboratory. We develop and distribute our IVD kits to third party laboratories, who in turn provide diagnostic analysis for their patients. The majority of our revenues in 2022 comes from the sale of our IVD kits under the brand name ColoAlert™.

 

In addition, we conduct research and development in order to increase and diversify our product portfolio. Currently, we are managing two government funded research and development projects, which provide us non-refundable grant income that covers a percentage of the individual project related costs. Our PancAlert product candidate research is partially funded with government programming and Company funds.

 

On November 9, 2021, we completed our initial public offering whereby we sold 2,300,000 ordinary shares for gross proceeds of $11,500,000. On January 28, 2022 we completed a follow-on public offering whereby we sold 1,725,000 ordinary shares for gross proceeds of $25,875,000.

 

Results of Operations

 

Comparison of the Three Months Ended March 31, 2022 and 2021

 

The following table provides certain selected financial information for the periods presented:

 

   Three Months Ended
March 31,		         
   2023   2022   Change   % Change 
Revenue  $250,104   $100,565   $149,536    149%
Cost of revenue  $111,163   $54,136   $57,027    105%
Gross profit  $138,941   $46,429   $92,512    199%
Gross Margin   56%   46%          
Research and Development  $2,625,072   $563,572   $2,061,500    366%
Sales and Marketing  $2,410,935   $921,630   $1,489,305    162%
General and Administrative  $1,590,490   $4,192,785   $(2,602,295)   (62)%
Total operating expenses  $6,626,497   $5,677,987   $926,362    17%
Loss from operations  $(6,465,408)  $(5,631,558)  $(855,998)   (15)%
Other expense  $73,360   $32,178   $41,182    128%
Net loss  $(6,560,916)  $(5,663,736)  $(897,180)   (16)%
Total Comprehensive Loss  $(6,621,488)  $(5,627,297)  $(994,191)   (18)%
Basic and dilutive loss per common share  $(0.45)  $(0.42)  $(0.03)   (7)%
Weighted average number of common shares outstanding – basic and diluted   14,688,361    13,348,349                   

 

 

 

Revenue

 

Revenue for the three months ended March 31, 2023 was $250,104 as compared to $100,565 for the three months ended March 31, 2022, an increase of 149%. This increase was primarily attributable to ColoAlert sales, which increased 152% for the three-month ended March 31, 2023, compared to the three months ended March 23, 2022. Our ColoAlert revenue in both three-month periods were primarily in Germany. We intend to continue our efforts to grow the market for ColoAlert, both in Germany and extending to other countries in Europe and the rest of world.

 

Our revenue by product and service category is as follows:

 

   Three Months Ended
March 31,		 
   2023   2022 
ColoAlert  $250,077   $99,051 
Other revenue   27    1,514 
Total Revenue  $250,104   $100,565 

 

Cost of Revenue

 

Cost of Revenue for the three months ended March 31, 2023 was $111,163 as compared to $54,136 for the three months ended March 31, 2033, a 105% increase. This increase was the result of increased ColoAlert sales volume.

 

Gross profit

 

Gross profit increased to $138,941 in the three months ended March 31, 2023 compared to $46,429, for the three months ended March 31, 2022. This gross profit increase, resulting in an improvement of gross margin from 46% to 56%, was attributable to improved profits resulting from lowered unit cost of goods sold with increased volumes.

 

Research and Development Expenses

 

Research and development expenses for the three months ended March 31, 2023 were $2,625,072 compared to $563,572 for the three months ended March 31, 2022, an increase of $2,061,500. This increase was driven by increases in labor costs and office and lab lease expenses to support our increased staffing. Labor costs (salary and consulting costs) increased by $1,987,903 for the three months ended March 31, 2023, compared to the same period in 2022, representing substantially all of the year over year increase. Our increases in research and development expenses are the result of our continued development of our ColoAlert product and research related to our PancAlert product candidate and the funding of our feasibility studies in the U.S. and in Europe.

 

Sales and Marketing Expenses

 

Sales and marketing expenses for the three months ended March 31, 2023, were $2,410,935 compared to $921,630 for the three months ended March 31, 2022, an increase of $1,489,305. This increase was the result of an increase in marketing and advertising expenses of approximately $741,904 and an increase of $772,632 related to labor costs (salary and consulting) to support the sale of our ColoAlert product.

 

General and Administrative Expenses

 

General and administrative expenses for the three months ended March 31, 2023 were $1,590,490 compared to $4,192,785 for the three months ended March 31, 2022, an decrease of $2,602,295. The decreased expenses were primarily the result of a decrease of $1,944,284 of non-cash stock option expense, and decreased costs from service providers of $312,921, related to legal, banking, and accounting fees primarily related to our capital raising efforts in the first three months of 2022.

 

2

 

 

Other Expense

 

Other expense, net for the three months ended March 31, 2023 was $73,360 compared to $32,178 for the three months ended March 31, 2022, resulting in increased other expenses (net) of $41,182. This increase was primarily the result of other income from a government grant program under which we earned $36,288 in the three months ended March 31, 2022; this program ended during 2022.

 

Liquidity and Capital Resources

 

Our principal liquidity requirements are for working capital and operating losses. We fund our liquidity requirements primarily through cash on hand, cash flows from operations, and equity financing. As of March 31, 2023, we had $10,858,202 of cash and cash equivalents, with $17,141,775 as of December 31, 2022.

 

The following table summarizes our cash flows from operating, investing and financing activities:

 

   Three Months Ended
March 31,		     
   2023   2022   Change 
Cash used in operating activities  $(5,659,391)  $(2,758,108)  $(2,901,281)
Cash used in investing activities  $(1,400,930)  $(75,860)  $(1,325,070)
Cash provided by financing activities  $773,484   $24,110,487   $(23,337,003)

 

Cash Flow from Operating Activities

 

For the three months ended March 31, 2023, cash flows used in operating activities was $5,659,391 compared to $2,758,108 used during the three months ended March 31, 2022. The increase in cash flows used in operating activities of $2,901,283 was primarily the result of our operating loss for the three months ended March 31, 2023, net of non-cash stock-based compensation, depreciation and amortization, and timing differences for the settlement of assets and liabilities.

 

Cash Flows from Investing Activities

 

During the three months ended March 31, 2023, we used $1,400,930 in investing activities compared to $75,860 used during the year ended six months ended three months ended March 31, 2022. The increase in cash flows used in investing activities of $1,325,070 was the result of capital expenditures related to the expansion of our office and lab space, and the payment of $500,000 for the first installment related to the purchase of our ColoAlert intellectual property in February of 2023.

 

Cash Flows from Financing Activities

 

During the three months ended March 31, 2023, we had cash flow provided by financing activities of $773,484 compared to cash flow provided by financing activities of $24,110,487 for the three months ended March 31, 2022, a decrease of $23,337,003. This decrease was the result of our sale of 1,725,000 ordinary shares on January 28, 2022, for net proceeds of $23,865,890.

 

Working Capital Discussion

 

The Company has recurring losses, accumulated deficit totaling $49,593,210 and negative cash flows used in operating activities of $5,659,391 as of and for the three months ended March 31, 2023. The Company also had $10,858,202 of cash on hand on March 31, 2023, and working capital, excluding liabilities to be settled with ordinary shares, of $7,679,572. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. If the Company is unable to obtain funding, the Company could be forced to further delay, reduce or eliminate its research and development, regulatory, and commercial efforts which could adversely affect its future business prospects and its ability to continue as a going concern.

 

3

 

 

The Company plans to fund its cash flow and working capital needs through current cash on hand and future debt and/or equity financings which it may obtain through one or more public or private equity offerings, debt financings, government or other third-party funding, strategic alliances or collaboration agreements. In December 2022 the Company entered into a $50,000,000 Controlled Equity Offering (see Note 12); the Company raised $1.3 million of cash from this facility over a seven-week period during the three months ended March 31, 2023. The Company has also implemented plans to reduce its expenses through the delay and deferral of programs and projects not related to its commercial efforts or its clinical study called eAArly Detect, which is expected to be completed and report results in the third quarter of 2023. Management believes that its expense reduction plans, coupled with the availability of its Controlled Equity Offering, and ability to execute a financing after the reporting of its eAArly Detect clinical study, will provide the financing necessary to fund the Company’s working capital needs for the foreseeable future.

 

Critical Accounting Policies and Significant Judgments and Estimates

 

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our 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 described in more detail in the notes to our financial statements included elsewhere in this prospectus, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

 

We believe our most critical accounting policies and estimates relate to the following:

 

  ● Revenue Recognition

 

  ● Foreign Currency Translation

 

  ● Stock Option Compensation

 

  ● Lease Accounting

 

  ● Financial Instruments

 

Revenue Recognition

 

Our revenue is primarily derived through providing selling our ColoAlert genetic diagnostic test kits to customers. We recognize revenue in accordance with International Financial Reporting Standards (“IFRS”) 15 “Revenue from Contracts with Customers”.

 

In accordance with IFRS 15, revenue is recognized upon the satisfaction of performance obligations. Performance obligations are satisfied at the point at which control of the promised goods or services are transferred to customers, in an amount that reflects the consideration we expect to be entitled to receive for those goods and services.

 

We provide a genetic diagnostic testing service and testing kits which are not considered separately identifiable from each other as we use the testing kits to collect samples in order to deliver the diagnostic test results to the customer. Accordingly, we have one performance obligation which is fulfilled upon the delivery of the test results to the customer and revenue is recognized at that point in time.

 

4

 

 

We also receive income from government sponsored R&D grants. Income is recognized on these programs when funds are received and all performance obligations, as defined in the grant, are completed. This income is included in the Statements of Comprehensive Loss as Other Income.

 

Foreign Currency Translation

 

The functional currency is determined using the currency of the primary economic environment in which that entity operates. The functional, as determined by our management, is the Euro (EUR).

 

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the period-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

 

Exchange differences arising on the translation of monetary items or on settlement of monetary items are recognized in the statement of comprehensive loss in the period in which they arise, except where deferred in equity as a qualifying cash flow or net investment hedge.

 

Exchange differences arising on the translation of non-monetary items are recognized in other comprehensive income to the extent that gains and losses arising on those non-monetary items are also recognized in other comprehensive income. Where the non-monetary gain or loss is recognized in profit or loss, the exchange component is also recognized in profit or loss.

 

Our reporting currency is the US dollar. For presentation purposes, all amounts are translated from the Euro functional currency to the US dollar presentation currency for each period using the exchange rate at the end of each reporting period for the statement of financial position. Revenues and expenses are translated on the basis of average exchange rates during the year.

 

Exchange gains and losses arising from translation to our presentation currency are recorded as exchange differences on translation to reporting currency, which is included in other comprehensive income (loss).

 

Stock Option Compensation

 

We have adopted our 2021 Omnibus Incentive Plan and 2022 Omnibus Incentive Plan (the (“Plans”). Under the Plans, we are authorized to issue equity incentives in the form of incentive stock options, non-statutory stock options, restricted shares, restricted share units, share appreciation rights, performance units or performance shares under separate award agreements. Under the Plans, the aggregate number of shares underlying awards that we could issue cannot exceed, 2,800,000 ordinary shares.

 

On November 4, 2021, we awarded 1,484,650 stock options under the Plans, with a strike price of $5.00, the per share price in our November 2021 initial public offering. Such stock options were granted to all of our current employees, directors, advisors and senior management team. Such stock options for our non-senior management team, independent directors and advisors will begin vesting on November 4, 2022 and stop vesting on November 4, 2025 at the latest. Such stock options for the four members of our senior management team began vesting in portions equal to 25% of such options granted if, prior to November 4, 2025, the four-year anniversary of our initial public offering, for ten consecutive trading days (with at least 100,000 shares traded per trading day) the volume-weighted average price of the ordinary shares on the principal market is at least:

 

  ● $7.50;

 

  ● $10.00;

 

  ● $12.50, provided that such options cannot vest until the twelve-month anniversary of our initial public offering at the earliest; and

 

  ● $15.00, provided that such options cannot vest until the twelve-month anniversary of our initial public offering at the earliest.

 

As of June 30, 2022, all of these criteria had been met, resulting in 100% of these options being fully vested on November 5, 2022.

 

5

 

 

We have valued these stock options as follows: (a) for those options that have time-based vesting, we will use the Black-Scholes method to value the stock options at the time of award and record the compensation expense in our Statement of Operations over the vesting period, and (b) for options issued with milestone based vesting criteria, we will use a Monte Carlo simulation to value the options at the time of issuance and each subsequent reporting date until fully vested or expired, with any change in compensation expense measured by such method to be recorded in our Statement of Operations.

 

The Black-Scholes option pricing model considers, among other factors, the expected term of the award and the expected volatility of our stock price. Due to the lack of an adequate history of a public market for the trading of our ordinary shares, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded with historical share price information sufficient to meet the expected life of the stock-based awards. The Monte Carlo simulation approach is a class of computational algorithms that rely on repeated random sampling to compute their results. This approach allows the calculation of the value of such stock options based on a large number of possible stock price path scenarios. Expense for the market-condition stock options will be recognized over the derived service period as determined through the Monte Carlo simulation model.

 

Lease Accounting

 

We assess at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. We apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. We recognize lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

 

At the commencement date of the lease, we recognize lease liabilities measured at the present value of lease payments to be made over the lease term. Lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. Lease payments also include the exercise price of a purchase option reasonably certain to be exercised by us and payments of penalties for terminating the lease, if the lease term reflects us exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, we use our incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

 

We recognize right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

 

Financial Instruments

 

(a) Classification

 

The Company classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (loss) (“FVTOCI”) or at amortized cost. The Company determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Company’s business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified as FVTPL. For other equity instruments, on the day of acquisition the Company can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or if the Company has opted to measure them at FVTPL.

 

6

 

 

(b) Measurement

 

Financial assets and liabilities at amortized cost

 

Financial assets and liabilities at amortized cost are initially recognized at fair value plus or minus transaction costs, respectively, and subsequently carried at amortized cost less any impairment.

 

Financial assets and liabilities at FVTPL

 

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statements of loss and comprehensive loss. Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of loss and comprehensive loss in the period in which they arise.

 

Debt investments at FVTOCI

 

These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

 

Equity investments at FVTOCI

 

These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Other net gains and losses are recognized in OCI and are never reclassified to profit or loss.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditure or capital resources that is material to investors.

 

 

7

 

 

Exhibit 99.2

 

INDEX TO FINANCIAL STATEMENTS

 

    Page
MAINZ BIOMED N.V.    
Three Months Ended March 31, 2023    
Financial Statements (Unaudited):    
Condensed Interim Consolidated Statements of Financial Position   F-2
Condensed Interim Consolidated Statements of Profit and Loss and Comprehensive Loss   F-3
Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Deficit)   F-4
Condensed Interim Consolidated Statements of Cash Flows   F-5
Notes to the Unaudited Condensed Interim Consolidated Financial Statements   F-6

 

F-1

 

 

Mainz Biomed N.V.

Condensed Interim Consolidated Statements of Financial Position

(Unaudited)

(Expressed in US Dollars).

 

      March 31,   December 31, 
   Note  2023   2022 
            
ASSETS           
Current Assets           
Cash     $10,858,202   $17,141,775 
Trade and other receivables, net  4   449,441    259,138 
Inventories      266,056    175,469 
Prepaid expenses  5   750,752    801,959 
Total Current Assets      12,324,451    18,378,341 
              
Property and equipment, net  6   1,446,969    661,692 
Intangible asset  7   3,724,680    
-
 
Right-of-use asset  8   2,018,037    1,177,695 
Other assets      23,570    23,275 
Total assets     $19,537,707   $20,241,003 
              
LIABILITIES AND SHAREHOLDERS’ EQUITY             
Current Liabilities             
Accounts payable and accrued liabilities  9  $3,148,766   $2,916,679 
Convertible debt  10   43,603    43,057 
Convertible debt - related party  10   32,589    32,181 
Silent partnership  11   708,020    759,168 
Silent partnership - related party  11   261,208    206,167 
Intellectual property acquisition liability – related party  7   2,055,000    
-
 
Lease liabilities  8   450,693    285,354 
Total current liabilities      6,699,879    4,242,606 
              
Silent partnerships  11   348,511    687,128 
Silent partnerships - related party  11   210,290    256,086 
Intellectual property acquisition liability  7   950,821    
-
 
Lease liabilities  8   1,650,815    959,116 
Total Liabilities      9,860,316    6,144,936 
              
Shareholders’ equity             
Share capital  12   167,012    164,896 
Share premium  12   40,127,574    38,831,542 
Reserve  12   18,984,405    18,079,741 
Accumulated deficit      (49,593,210)   (43,032,294)
Accumulated other comprehensive income      (8,390)   52,182 
Total shareholders’ equity      9,677,391    14,096,067 
              
Total liabilities and shareholders’ equity     $19,537,707   $20,241,003 

 

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

 

F-2

 

 

Mainz Biomed N.V.

Condensed Interim Consolidated Statements of Profit and Loss and Comprehensive Loss

(Unaudited)

(Expressed in US Dollars)

 

      Three months ended 
      March 31, 
   Note  2023   2022 
            
Revenue     $250,104   $100,565 
Cost of sales  13   111,163    54,136 
Product margin      138,941    46,429 
              
Operating expenses:             
Sales and marketing  18   2,410,935    921,630 
Research and development  18   2,625,072    563,572 
General and administrative  18   1,590,490    4,192,785 
Total operating expenses      6,626,497    5,677,987 
              
Loss from operations      (6,487,556)   (5,631,558)
              
Other income (expense)             
Other income  15   63,825    101,335 
Other expense      (137,185)   (133,513)
Total other expense      (73,360)   (32,178)
              
Loss before income tax      (6,560,916)   (5,663,736)
Income taxes provision      
-
    
-
 
Net loss     $(6,560,916)  $(5,663,736)
              
Foreign currency translation gain (loss)      (60,572)   36,439 
Comprehensive loss     $(6,621,488)  $(5,627,297)
              
Basic and dilutive loss per ordinary share
     $(0.45)  $(0.42)
Weighted average number of ordinary shares outstanding      14,688,361    13,348,349 

 

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

 

F-3

 

 

Mainz Biomed N.V.

Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity (Deficit)

(Unaudited)

(Expressed in US Dollars)

 

For the Three Months Ended March 31, 2023

 

                          Accumulated   Total 
      Number of   Share   Share       Accumulated   Other
comprehensive		   Shareholders’
Equity		 
   Note  shares   Capital   Premium   Reserve   Deficit   Income (loss)   (Deficit) 
Balance, December 31, 2022      14,629,457   $164,896   $38,831,542   $18,079,741   $(43,032,294)  $52,182   $14,096,067 
                                       
Sale of ordinary shares  12   195,044    2,094    1,281,291    -    -    -    1,283,385 
Share based expense  12   2,112    22    14,741    -    -    -    14,763 
Stock option expense  12   -    -    -    904,664    -    -    904,664 
Net loss      -    -    -    -    (6,560,916)   -    (6,560,916)
Foreign currency translation      -    -    -    -    -    (60,572)   (60,572)
Balance, March 31, 2023      14,826,613   $167,012   $40,127,574   $18,984,405   $(49,593,210)  $(8,390)  $9,677,391 

 

For the Three Months Ended March 31, 2022

 

                       Accumulated   Total 
   Number of   Share   Share       Accumulated
   Other
comprehensive		   Shareholders’
Equity		 
   shares   Capital   Premium   Reserve   Deficit   Income   (Deficit) 
Balance, December 31, 2021    12,010,001   $141,075   $13,126,493   $9,736,066   $(16,644,958)  $2,479   $6,361,155 
                                    
Sale of ordinary shares    1,725,000    15,525    23,850,364    - 
 
  - 
 
  - 
 
  23,865,889 
Issuance of ordinary shares for exercise of warrants    107,500    968    321,533    (64,156)   
-
    
-
    258,344 
Share based expense    58,000    522    787,098    
-
    
-
    
-
    787,620 
Stock option expense    392,757    4,784    3,115    500,338    -    -    508,237 
Net loss    -    
-
    
-
    
-
    (5,663,736)   
-
    (5,663,736)
Foreign currency translation    -    
-
    
-
    
-
    
-
    36,439    36,439 
Balance, March 31, 2022    14,293,258   $162,874   $38,088,603   $10,172,248   $(22,308,694)  $38,918   $26,153,948 

 

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

 

F-4

 

 

Mainz Biomed N.V.

Condensed Interim Consolidated Statements of Cash Flows

(Unaudited)

(Expressed in US Dollars)

 

      Three months ended 
      March 31, 
   Note  2023   2022 
Cash Flows From Operating Activities           
Net loss     $(6,560,916)  $(5,663,736)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:             
Share based compensation  12   919,427    2,863,711 
Depreciation and amortization      287,352    34,858 
Bad debt expense      53,296    
-
 
Accretion expense  10, 11   39,004    20,623 
Changes in operating assets and liabilities:             
Trade and other receivables      27,660    (184,428)
Inventory      (87,313)   
-
 
Prepaid expenses and other assets      53,577    104,934 
Accounts payable and accrued liabilities      (390,167)   65,930 
Deferred revenue      (1,310)   
-
 
Net cash used in operating activities      (5,659,391)   (2,758,108)
              
Cash Flows From Investing Activities             
Purchase of intangible assets  7   (500,000)   
-
 
Purchase of property and equipment  6   (900,930)   (75,860)
Net cash used in investing activities      (1,400,930)   (75,860)
              
Cash Flows From Financing Activities             
Sale of ordinary shares  12   1,283,385    23,865,890 
Warrant exercise proceeds  23   
-
    382,500 
Repayment of silent partnerships  11   (418,626)   
-
 
Repayment of loans payable      
-
    (113,974)
Repayment of lease obligations  8   (91,275)   (23,929)
Net cash provided by financing activities      773,484    24,110,487 
              
Effect of changes in exchange rates      3,264    (30,227)
              
Net change in cash      (6,283,573)   21,246,292 
Cash at beginning of period      17,141,775    8,727,542 
Cash at end of period     $10,858,202   $29,973,834 
              
Non-Cash Investing And Financing Activities             
Right of use asset additions     $922,545   $445,835 
Acquisition of intellectual property for ordinary shares and deferred payments     $3,271,828   $
-
 
Interest expense paid     $42,749   $133,692 

 

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

 

F-5

 

 

Mainz Biomed N.V.

Notes to the Condensed Interim Consolidated Financial Statements

(Unaudited)

(Expressed in US dollars)

March 31, 2023

 

1. NATURE OF OPERATIONS AND GOING CONCERN

 

Mainz Biomed N.V. (the “Company”) is domiciled in the Netherlands. The Company’s registered office is at Keizersgracht 391A, EJ Amsterdam. The Company was formed to acquire the business of Mainz Biomed Germany GmbH (f/k/a PharmGenomics GmbH (“PharmaGenomics”, “PG”)). In September 2021, the Company completed such acquisition.

 

We develop in-vitro diagnostic (“IVD”) tests for clinical diagnostics in the area of human genetics, focusing in the areas of personalized medicine, led by our flagship ColoAlert™ product in European markets. We additionally operate a clinical diagnostic laboratory. We develop and distribute our IVD kits to third-party laboratories and through our on-line store.

 

Throughout these consolidated financial statements, Mainz Biomed N.V. and its wholly owned subsidiaries, Mainz Biomed USA, Inc. and Mainz Biomed GmbH (f/k/a PharmGenomics GmbH), are referred to, collectively and individually as “Mainz”, “Mainz Biomed”, or the “Company”.

 

Share Exchange

 

On August 3, 2021, the Company entered into a contribution agreement (the “Contribution Agreement”) between Mainz Biomed B.V. (“Mainz”), which was a private company with limited liability under Dutch law incorporated for the purpose of acquiring PharmGenomics. Under the Contribution Agreement, 100% of the shares of PharmGenomics were acquired in exchange for 6,000,000 shares of the Company. Upon the closing of the Contribution Agreement, PharmGenomics became a wholly owned subsidiary of the Company and the former shareholders of PharmGenomics held approximately 62% of the outstanding shares of the Company prior to the Company’s initial public offering. On September 20, 2021 PharmGenomics and the Company closed the Contribution Agreement.

 

IPO and Follow-on Equity Offering

 

In November 2021, the Company completed its initial public offering of its ordinary shares on the Nasdaq Capital Market, selling 2,300,000 shares at $5.00 per share. Upon its IPO, Mainz Biomed B.V. became Mainz Biomed N.V. In January 2022, the Company completed a follow on offering of its ordinary shares, selling 1,725,000 ordinary shares issued for gross proceeds of approximately $25.9 million (proceeds net of offering expenses was $23.9 million).

 

Going Concern

 

The Company has recurring losses, accumulated deficit totaling $49,593,210 and negative cash flows used in operating activities of $5,659,391 as of and for the three months ended March 31, 2023. The Company also had $10,858,202 of cash on hand on March 31, 2023, and working capital, excluding liabilities to be settled with ordinary shares, of $7,679,572. These conditions raise substantial doubt as to the Company’s ability to continue as a going concern for a period of one year from the issuance of these financial statements. If the Company is unable to obtain funding, the Company could be forced to further delay, reduce or eliminate its research and development, regulatory, and commercial efforts which could adversely affect its future business prospects and its ability to continue as a going concern.

 

The Company plans to fund its cash flow and working capital needs through current cash on hand and future debt and/or equity financings which it may obtain through one or more public or private equity offerings, debt financings, government or other third-party funding, strategic alliances or collaboration agreements. In December 2022 the Company entered into a $50,000,000 Controlled Equity Offering (see Note 12); the Company raised $1.3 million of cash from this facility over a seven-week period during the three months ended March 31, 2023. The Company has also implemented plans to reduce its expenses through the delay and deferral of programs and projects not related to its commercial efforts or its clinical study called eAArly Detect, which is expected to be completed and report results in the third quarter of 2023. Management believes that its expense reduction plans, coupled with the availability of its Controlled Equity Offering, and ability to execute a financing after the reporting of its eAArly Detect clinical study, will provide the financing necessary to fund the Company’s working capital needs for the foreseeable future.

 

F-6

 

 

These financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. These financial statements do not reflect the adjustments to the carrying values of assets and liabilities, the reported revenues and expenses, and the statement of financial position classifications used, that would be necessary if the Company were unable to realize its assets and settle its liabilities as a going concern in the normal course of operations. Such adjustments could be material.

 

COVID-19 Impact

 

On March 11, 2020, the outbreak of the novel strain of coronavirus specifically identified as “COVID-19” was declared a pandemic by the World Health Organization. The outbreak has resulted in governments worldwide enacting emergency measures to combat the spread of the virus which in turn have caused material disruption to business globally. Global equity markets have experienced significant volatility and weakness. Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions and the severity and frequency of new strains of the coronavirus. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

 

2. BASIS OF PRESENTATION

 

Basis of Presentation and Statement of Compliance

 

These condensed interim financial statements, including comparatives, have been prepared in accordance with International Accounting Standards (“IAS”) 34, “Interim Financial Reporting” using accounting policies consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and International Financial Reporting Interpretations Committee (“IFRIC”). These condensed interim financial statements do not include all of the information required of a full set of annual financial statements and are intended to provide users with an update in relation to events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the end of the last annual reporting period. It is therefore recommended that these condensed interim financial statements be read in conjunction with the annual financial statements of the Company for the year ended December 31, 2022 and notes thereto contained in the Company’s Form 20-F. 

 

These condensed interim financial statements have been prepared on a historical cost basis, modified where applicable. In addition, these condensed interim financial statements have been prepared using the accrual basis of accounting except for cash flow information.

 

The condensed unaudited interim financial statements were authorized for issuance by the Audit Committee of the Board of Directors on May 15, 2023.

 

3. ACCOUNTING POLICIES, ESTIMATES AND SIGNIFICANT MANAGEMENT JUDGMENTS

 

Inventories

 

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on a weighted average cost and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

 

F-7

 

 

Reclassifications

 

Certain prior year amounts have been reclassified for consistency with the current period presentation.

 

Critical Accounting Estimates and Significant Management Judgments

 

The preparation of financial statements in accordance with IFRS requires the Company to use judgment in applying its accounting policies and make estimates and assumptions about reported amounts at the date of the financial statements and in the future. The Company’s management reviews these estimates and underlying assumptions on an ongoing basis, based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Revisions to estimates are adjusted for prospectively in the period in which the estimates are revised.

 

Useful lives of property and equipment

 

Estimates of the useful lives of property and equipment are based on the period over which the assets are expected to be available for use. The estimated useful lives are reviewed annually and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence, not electing to exercise renewal options on Leases, and legal or other limits on the use of the relevant assets. In addition, the estimation of the useful lives of the relevant assets may be based on internal technical evaluation and experience with similar assets. It is possible, however, that future results of operations could be materially affected by changes in the estimates brought about by changes in the factors mentioned above. The amounts and timing of recorded expenses for any period would be affected by changes in these factors and circumstances. A reduction in the estimated useful lives of the property and equipment would increase the recorded expenses and decrease the non-current assets.

 

Provision for expected credit losses on trade receivables

 

The provision for expected credit losses on trade receivables are estimated based on historical information, customer concentrations, customer solvency, current economic and geographical trends, and changes in customer payment terms and practices. The Company will calibrate its provision matrix to adjust the historical credit loss experience with forward-looking information. The assessment of the correlation between historical observed default rates, forecast economic conditions and expected credit losses is a significant estimate. The amount of expected credit losses is sensitive to changes in circumstances and of forecast economic conditions. The Company’s historical credit loss experience and forecast of economic conditions may also not be representative of customer’s actual default in the future.

  

Estimating the incremental borrowing rate on leases

 

The Company cannot readily determine the interest rate implicit in leases where it is the lessee. As such, it uses its incremental borrowing rate (“IBR”) to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of comparable value to the right-of-use asset in a similar economic environment. IBR therefore reflects what the Company “would have to pay”, which requires estimation when no observable rates are available or where the applicable rates need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates.

 

Estimating the fair value of share-based payment transactions

 

The Company utilizes a Black-Scholes model, or where appropriate, a Monte-Carlo Simulation to estimate the fair value of its share-based payments. In applying these models, management must estimate the expected future volatility of the Company’s estimated share price, and makes such assumptions based on a proxy of publicly-listed entities under an expectation that historical volatility is representative of the expected future volatility. Additionally, estimates have been made by management, in respect of the performance warrants, regarding the length of the vesting period as well as the number of performance warrants that are likely to vest.

 

F-8

 

 

Estimating the fair value of financial instruments

 

When the Company recognizes a financial instrument, where there is no active market for such instrument, the Company utilizes alternative valuation methods. The Company utilizes inputs from observable markets to the extent that an appropriate market can be identified, but when there is a lack of such a market, the Company applies judgment to determine a fair value. Such judgments require those such as risk and volatility, of which changes in such assumptions may impact the fair value of the financial instrument.

 

Other significant judgments

 

The preparation of these financial statements in accordance with IFRS requires the Company to make judgments, apart from those involving estimates, in applying accounting policies. The most significant judgments in applying the Company’s financial statements include:

 

  ● The assessment of the Company’s ability to continue as a going concern and whether there are events or conditions that may give rise to significant uncertainty;

 

  ● The determination of the lease term of contracts with renewal and termination options;

 

  ● Determination of the extent to which it is probable that future taxable income will be available to allow all or part of the temporary differences and net operating losses to be utilized;

 

  ● Whether there are indicators of impairment of the Company’s long-lived assets;

 

  ● Development costs do not meet the conditions for capitalization in accordance with IAS 38 and therefore all research and development costs have been expensed as incurred. 

 

4. TRADE AND OTHER RECEIVABLES

 

   March 31,   December 31, 
   2023   2022 
Accounts receivable  $179,964   $130,588 
Less: allowance for doubtful accounts   (55,621)   (66,852)
Accounts receivable, net   124,343    63,736 
VAT receivable   322,949    192,154 
Other   2,149    3,248 
   $449,441   $259,138 

 

For the three months ended March 31, 2023, the Company recorded bad debt reserve of $53,296 for VAT receivable.

 

5. PREPAID AND OTHER CURRENT ASSETS

 

   March 31,   December 31, 
   2023   2022 
Prepaid insurance  $561,033   $624,033 
Other prepaid expense   80,607    55,356 
Security deposit   109,112    122,570 
   $750,752   $801,959 

 

F-9

 

 

6. PROPERTY AND EQUIPMENT

 

   Laboratory equipment   Office equipment   Construction in progress   Total 
Cost                
Balance at December 31, 2022  $579,171   $176,347   $
-
   $755,518 
Additions   717,173    36,154    44,974    798,301 
Disposal   
-
    
-
    
-
    
-
 
Effects of currency translation   15,963    2,670    541    19,174 
Balance at March 31, 2023  $1,312,307   $215,171   $45,515   $1,572,993 
                     
Accumulated depreciation                    
Balance at December 31, 2022  $77,833   $15,993   $
-
   $93,826 
Depreciation   19,037    11,603    
-
    30,640 
Effects of currency translation   1,215    343    
-
    1,558 
Balance at March 31, 2023  $98,085   $27,939   $
-
   $126,024 

  

7. INTANGIBLE ASSET

 

Our principal product is ColoAlert, a colorectal cancer (“CRC”) screening stool DNA (“deoxyribonucleic acid”) test. On January 1, 2019, we entered into an exclusive licensing agreement (the “Licensing Agreement”) with ColoAlert AS to license the ColoAlert test. On February 11, 2021, we obtained an option exercisable for three years to acquire the intellectual property for the ColoAlert test for (i) either a one-time cash payment of €2,000,000 or a €4,000,000 payment in ordinary shares at the valuation of our most recent financing plus (ii) a lifetime royalty payment of €5 per ColoAlert test sold (the “Option”). Subsequent to February 11, 2021, ColoAlert AS assigned their interest in ColoAlert and in the Licensing Agreement and the Option to Uni Targeting Research AS.

 

On February 15, 2023, we entered into an Intellectual Property Asset Purchase Agreement (“IPA”), which supersedes the Licensing and Options Agreements. Pursuant to the IPA, we acquired the intellectual property for the ColoAlert test. Pursuant to the IPA, we were able to reduce the price paid for the intellectual property to (i) $2 million cash, to be paid out over the next four years, (ii) 300,000 ordinary restricted shares and (iii) a revenue share limited to $1 per test sold for a period of 10 years. The Company recognized an intangible asset from this purchase and assigned a 10-year useful life. The intangible assets were valued: (a) for the portion to be settled in stock of the Company at the value on the day of closing, or $6.85 per share, and (b) for the cash portion, at the present value of the future payments using a 10% discount. During the three months ended March 31, 2023 the Company paid $500,000 to the seller. The Company recorded amortization of $47,148 for the three months ended March 31, 2023.

 

8. LEASES

 

Right-of-Use Assets

 

The Company’s leases certain assets under lease agreements.

 

   Office   Laboratory             
   Equipment   Equipment   Vehicle   Office   Total 
Cost:                    
Balance at December 31, 2022  $64,226   $362,970   $94,008   $1,035,200   $1,556,404 
Additions   
-
    288,589    51,217    582,739    922,545 
Effects of currency translation   814    8,069    1,808    20,128    30,819 
Balance at March 31, 2023  $65,040   $659,628   $147,033   $1,638,067   $2,509,768 
Accumulated amortization:                         
Balance at December 31, 2022  $20,707   $77,838   $22,109   $258,055   $378,709 
Depreciation   2,993    38,280    14,750    50,914    106,937 
Effects of currency translation   299    1,448    457    3,881    6,085 
Balance at March 31, 2023  $23,999   $117,566   $37,316   $312,850   $491,731 

 

F-10

 

 

As of March 31, 2023, management assessed that there were no events or changes in circumstances that would require impairment testing.

 

The carrying amount of the right-of-use assets is amortized on a straight-line basis over the life of the leases, which at March 31, 2023, had an average expected life of 5 years.

 

Lease Liabilities

 

The Company’s lease liabilities consist of office and laboratory equipment and office space. The present value of future lease payments were measured using an incremental borrowing rate of 10% per annum as of January 1, 2022 and January 1, 2023.

 

   Total 
As of December 31, 2022  $1,244,470 
Additions   922,546 
Interest expenses   42,750 
Lease payments   (134,026)
Effects of currency translation   25,768 
As of March 31, 2023  $2,101,508 

  

Lease liabilities  March 31,
2023		   December 31,
2022		 
Current portion  $445,973   $285,354 
Long-term portion   1,655,535    959,116 
Total lease liabilities  $2,101,508   $1,244,470 

 

On March 31, 2023, the Company was committed to minimum lease payments as follows:

 

Maturity analysis  March 31,
2023		 
Less than one year  $445,973 
One to two years   617,002 
Two to three years   521,704 
Three to four years   349,885 
Four to five years   224,049 
More than five years   500,927 
Total undiscounted lease liabilities  $2,659,540 
Amount representing implicit interest   (558,032)
Lease obligations  $2,101,508 

 

F-11

 

 

9. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

   March 31,   December 31, 
   2023   2022 
Accounts payable  $1,141,867   $1,333,044 
Payable for acquisition of intangible asset – related party (current portion)   286,294    
-
 
Accrued liabilities   1,470,531    1,236,942 
Payroll liabilities   250,074    346,693 
   $3,148,766   $2,916,679 

 

10. CONVERTIBLE DEBT – RELATED PARTY

 

During the years ended December 31, 2019 and 2020, the Company entered into loan agreements with related parties totaling EUR417,133 (approximately $467,154) (the “2019 and 2020 Convertible Loans”). The 2019 and 2020 Convertible Loans bear interest at 3.5% and have a maturity date of September 30, 2022. While the 2019 and 2020 Convertible Loans are outstanding, the lenders are entitled to 0.5% of the Company’s net income each year should the Company be profitable and provided that the amount paid does not exceed the principal amount of the debt; the lenders do not partake in the Company’s losses. As the Company incurred losses during 2021, 2020 and 2019, no expense has been recorded in any period for profit sharing. At maturity, the 2019 and 2020 Convertible Loans are convertible into ordinary shares of the Company at EUR1 per share.

 

The 2019 and 2020 Convertible Loans were determined to be a financial instrument comprising an equity classified conversion feature with a host debt component. On initial recognition, the Company used the residual value method to allocate the principal amount of the 2019 and 2020 Convertible Loans between the two components. The host debt component was valued first, based on similar debt securities without an embedded conversion feature and the residual was allocated to the equity-classified conversion feature. The Company recognized debt discounts totaling EUR13,064 on issuance of the 2019 and 2020 Convertible Loans.

 

In November 2017, the Company entered into loan agreements with two shareholders of the Company for loans totaling EUR80,278 (approximately $92,007) (the “2017 Convertible Loans”). The loans are convertible at the option of the lender to shares totaling 4.25% of the Company’s common shares outstanding at the time of conversion. The loans are non-interest bearing, are unsecured and are due on demand. During the year ended December 31, 2019, principal in the amount of EUR5,000 ($5,597) was exchanged for the 2019 and 2020 Convertible Loans and EUR5,000 ($5,597) was extinguished as the lender elected to offset the debt amount against amounts in trade receivables due to the Company. 

 

During the year ended December 31, 2021, the loan amount of EUR417,272 ($508,237) were converted into 392,757 shares of share capital and the Company received cash of EUR6,485 ($7,673) to issue shares.

 

A continuity of the Company’s Convertible Debt and Convertible Debt – Related Party is as follows:

 

   2019 and 2020
Convertible
Loans		   2017
Convertible
Loans		   Total 
Balance, December 31, 2022  $32,181   $45,666   $77,847 
Issued during the period   
-
    
-
    
-
 
Conversion feature   
-
    
-
    
-
 
Accretion   
-
    
-
    
-
 
Repayment   
-
    
-
    
-
 
Effects of currency translation   408    (2,063)   (1,655)
Balance, March 31, 2023  $32,589   $43,603   $76,192 

   

F-12

 

 

11. SILENT PARTNERSHIPS

 

During the year ended December 31, 2020, the Company entered into silent partnership agreements whereby the lender agreed to lend a total of EUR299,400 (approximately $341,740) (the “3% SPAs”). The Company is to repay the amount by December 31, 2025. The Company must pay a minimum of 3% interest per annum on the loans. The lender is entitled to 3% of the Company’s net income each year should the Company be profitable and provided that the amount paid does not exceed the principal amount of the debt; the lender does not partake in the Company’s losses. Upon the amounts coming due, the lender of the 3% SPAs have the option to demand an additional payment equal to 15% of the contribution as a final remuneration (the “Final Renumeration”). The Final Remuneration is considered to be the cost of issuing debt. The 3% SPAs were received at below market interest rates as part of a government program for COVID-19 relief. The initial fair value of the 3% SPAs was determined to be EUR218,120 (approximately $248,966), which was determined using an estimated effective interest rate of 11.5%. The difference between the face value and the fair value of the 3% SPAs of EUR81,280 ($92,774) has been recognized as government grant income during the period. During the year ended December 31, 2021 the Company received the remaining EUR200,000 ($236,640). The initial fair value of the 3.0% SPAs received was determined to be EUR230,000 (approximately $272,136), determined using an estimated effective interest rate of 11.5%. The initial fair value of the 3.0% SPAs received in 2021 was determined to be EUR156,549 (approximately $185,229), which was determined using an estimated effective interest rate of 11.5%. The difference between the face value and the fair value of the 3.0% SPAs received in 2021 of EUR43,451 (approximately $51,410) has been recognized as government grant income during the period.

 

During the year ended December 31, 2020, the Company entered into silent partnership agreements whereby the lender agreed to lend a total of EUR50,000 (approximately $57,071) (the “3.5% SPAs”). The Company is to repay the amount by June 30, 2025. The Company must pay a minimum of 3.5% interest per annum on the loans. The lender is entitled to 0.5% of the Company’s net income each year should the Company be profitable and provided that the amount paid does not exceed the principal amount of the debt; the lender does not partake in the Company’s losses. The 3.5% SPAs are convertible to common shares of the Company at EUR1 per share in the event that the Company is involved in any of the following transactions: capital increases, a share or asset deal or a public offering. Pursuant to the silent partnership agreement, the Company notified the holder, at which point the holder declined the opportunity to convert their loan into common shares. The 3.5% SPAs were determined to be a financial instrument comprising an equity classified conversion feature with a host debt component. On initial recognition, the Company used the residual value method to allocate the principal amount of the 3.5% SPAs between the two components. The host debt component was valued first, based on similar debt securities without an embedded conversion feature and the residual was allocated to the equity-classified conversion feature.

 

Between the years of 2013 to 2016, the Company entered into silent partnership agreements for loans totaling EUR798,694 (approximately $915,383) (the “8.5% SPAs”). Under the 8.5% SPAs, the Company is to repay EUR398,634 (approximately $408,496) of the loans by June 30, 2023 and EUR400,000 (approximately $409,859) of the loans matures on December 31, 2025. The Company must pay a minimum of 8.5% interest per annum on the loans. The lenders are entitled to 1.66% of the Company’s net income each year should the Company be profitable and provided that the amount paid does not exceed the principal amount of the debt; the lenders do not partake in the Company’s losses. At maturity, the lenders of the 8.5% SPAs have the option to demand an additional payment equal to 30% of the principal of the loans as a Final Remuneration. The Final Remuneration is considered to be cost of issuing the debt and as such, the initial fair value of the 8.5% SPAs was determined to be EUR772,568 (approximately $85,440), determined using an estimated effective interest rate of 11.5%. Under the agreements, the lenders also agreed to invest in the Company and contributed EUR676,366 (approximately $775,183) to acquire 27,752 shares of the Company between the years of 2013 and 2016. During the year ended December 31, 2020, EUR80,000 (approximately $99,527) of the 8.5% SPAs was extinguished as the lender, who is also a customer of the Company, elected to offset the debt amount against amounts in trade receivables due to the Company. The debtor did not demand the Final Remuneration, and the Company recognized a gain on the extinguishment of $8,214.

 

In 2010, the Company entered into a silent partnership agreement whereby the lender agreed to lend the Company EUR300,000 (approximately $343,830) (the “8% SPA”). The Company repaid this loan in January 2023. The Company must pay a minimum of 8% interest per annum on the loan. The lender is entitled to 1.95% of the Company’s net income each year should the Company be profitable and provided that the amount paid does not exceed the principal amount of the debt; the lender does not partake in the Company’s losses. At maturity, the lender of the 8% SPA has the option to demand an additional payment of up to 30% of the principal of the loan as a Final Remuneration. The Final Remuneration is considered to be cost of issuing the debt and as such, the initial fair value of the 8% SPA was determined to be EUR289,900 (approximately $332,254), determined using an estimated effective interest rate of 11.5%.

 

F-13

 

 

A continuity of the Company’s silent partnerships is as follows:

 

   3% SPAs   3.5% SPAs   8.5% SPAs   8% SPAs   Total 
Balance, December 31, 2022  $537,359   $43,938   $909,703   $417,549   $1,908,549 
Issued during the period   
-
    
-
    
-
    
-
    
-
 
Extinguished during the period   
-
    
-
    
-
    (418,626)   (418,626)
Discount   
-
    
-
    
-
    
-
    
-
 
Accretion   10,053    811    7,047    805    18,716 
Interest expense   
-
    
-
    
-
    
-
    
-
 
Effects of currency translation   6,933    566    11,619    272    19,390 
Balance, March 31, 2023  $554,345   $45,315   $928,369   $
-
   $1,528,029 

 

12. EQUITY

 

Ordinary shares

 

The Company has 45 million ordinary shares authorized. Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. The par value of share capital is EUR0.01 per share.

 

Controlled Equity Offering

 

In December 2022, the Company entered into a Controlled Equity Offering, known as an “ATM” facility. Pursuant to the ATM, the Company at its discretion and subject to an effective registration statement with the U.S. Securities and Exchange Commission, may sell through its agent, ordinary shares at market prices, for a fee of 3%. As of December 31, 2022, the Company had not sold any ordinary shares pursuant to the ATM.

 

During the three months ended March 31, 2023, the Company issued ordinary shares as follows:

 

●195,044 shares of common stock were issued for net proceeds of $1,283,385, at an average price of $6.58 per share in connection with the Company’s ATM facility net of commission and fees of $39,740.

  

●2,112 ordinary shares issued for services valued at $14,763

 

Warrants

 

During the year ended December 31, 2021, in conjunction with private sales of ordinary shares, the Company issued 3,755,000 warrants and issued 161,000 underwriter warrants with its IPO, cumulatively valued at $754,286, which was recorded to Reserve in the Statement of Financial Position. The warrants were valued using the Black-Scholes pricing model. The Black-Scholes model requires six basic data inputs: the exercise or strike price, time to expiration, the risk free interest rate, the current stock price, the estimated volatility of the stock price in the future, and the dividend rate. Changes to these inputs could produce a significantly higher or lower fair value measurement.  

 

For the year ended December 31 2021, the estimated fair values of the warrants measured are as follows:

 

    December 31,  
    2021  
Stock price at time of issuance   $ 0.283 - 1.602  
Exercise price   $ 3.00  
Expected term     2 - 5 years  
Expected average volatility     75 - 95 %
Expected dividend yield     0  
Risk-free interest rate     0.16 - 1.08 %

 

F-14

 

 

A summary of activity during the three months ended March 31, 2023 is as follows:

 

   Warrant   Weighted-Average   Weighted-Average 
   Outstanding   Exercise Price   Life (years) 
Balance as of December 31, 2022   3,247,500   $    3.00    3.63 
Grants   
-
    
-
    
-
 
Exercised   
-
    
-
    
-
 
Expired   
-
    
-
    
-
 
Balance as of March 31, 2023   3,247,500   $3.00    0.19 

 

Stock options

 

During 2021, we adopted our 2021 Omnibus Incentive Plan, and on June 28, 2022 we adopted our 2022 Omnibus Incentive Plan (the “Plans”). Under the Plans, we are authorized to issue equity incentives in the form of incentive stock options, non-statutory stock options, restricted shares, restricted share units, share appreciation rights, performance units or performance shares under separate award agreements. Under the Plans, the aggregate number of shares underlying awards that we could issue cannot exceed 2,800,000 ordinary shares.

 

During the three months ended March 31, 2023, the Company granted 22,000 stock options valued at $104,684. Stock options with time-based vesting were valued using the Black-Scholes pricing model.

 

During the three months ended March 31, 2023, the Company recorded share-based compensation of $904,664 and had unamortized expense of $4,420,049 as of March 31, 2023. Forfeitures are estimated at the time of grant and adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

 

For the three months ended March 31, 2023, the estimated fair values of the stock options are as follows:

 

    March 31, 
    2023 
Exercise price  $6.70 - 6.96 
Expected term   5.50 - 7.00 years 
Expected average volatility   73% - 76%
Expected dividend yield   - 
Risk-free interest rate   3.57% - 4.27%

 

A summary of activity during the three months ended March 31, 2023 follows:

 

   Stock options   Weighted-Average   Weighted-Average 
   Outstanding   Exercise Price   Life (years) 
Balance as of December 31, 2022   2,394,150   $      7.18    9.11 
Grants   22,000    6.92    10.00 
Exercised   
-
    
-
    
-
 
Forfeited   (10,000)   5.00    
-
 
Expiry   
-
    
-
    
-
 
Balance as of March 31, 2023   2,406,150   $7.21    8.91 
                
Exercisable as of March 31, 2023   1,478,155   $5.65    8.63 

 

F-15

 

 

13. COST OF REVENUE

 

For the three months ended March 31, 2023 and 2022, cost of revenue consisted of test kit materials, both patient collection kits and lab based PCR kits.

 

14. RELATED PARTY TRANSACTIONS

 

Key management personnel include those persons having authority and responsibility for planning, directing and controlling the activities of the Company as a whole. The Company has determined that key management personnel consist of members of the Company’s Board, its Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Commercial Officer and Chief Scientific Officer. The remuneration of directors and key management personnel during the three months ended March 31, 2023 and 2022 was as follows:

 

   Three months ended 
   March 31, 
   2023   2022 
Salaries and benefits  $387,400   $238,914 

 

Remuneration paid to related parties other than key personnel during the three months ended March 31, 2023 and 2022 was as follows:

 

   Three months ended 
   March 31, 
   2023   2022 
Salaries and benefits  $7,274   $1,515 

 

During the three months ended March 31, 2023 and 2022, the Company incurred interest expense of $8,265 and $8,641 on balances owing to related parties, respectively.

 

During the three months ended March 31, 2023 and 2022, the Company incurred accretion expense of $3,345 and $4,006 on balances owing to related parties, respectively.

 

During the three months ended March 31, 2023 and 2022, we recorded expenses of $52,264 and $83,963, respectively, for the cost of royalties and other associated costs owed to ColoAlert AS (and its successor, Uni Targeting Research AS, collectively “ColoAlert AS”), the company from which we exclusively licensed the ColoAlert product until we purchased the intellectual property on February 15, 2023 (see Note 7). A member of our Board of Directors is also a significant equity holder of ColoAlert AS. During the three months ended March 31, 2023 and 2022, we paid ColoAlert AS $603,838 and $84,165, respectively

 

15. GOVERNMENT GRANTS

 

The Company receives government grants related to its research and development activities. The amount of government grants received during the three months ended March 31, 2023 and 2022 and recognized as research grant revenue were as follows:

 

   Three months ended 
   March 31, 
  2023   2022 
Research and Development Projects        
Rapid detection of antibody-based pathogens  $-   $36,288 
Multi-marker test for the early detection of pancreatic cancer   28,117    51,356 
   $28,117   $87,644 

 

As of March 31, 2023 and December 31, 2022, the grants for rapid detection of antibody-based pathogens and a multi-marker test for the early detection of pancreatic cancer had remaining grant balances of approximately $35,852 and $81,706, respectively. Grant income is included as Other Income in the condensed interim consolidated statements of profit and loss.

 

F-16

 

 

16. FINANCIAL INSTRUMENT RISK MANAGEMENT

 

Basis of Fair Value

 

Financial instruments measured at fair value are classified into one of three levels in the fair value hierarchy according to the relative reliability of the inputs used to estimate the fair values. The three levels of the fair value hierarchy are:

 

  ● Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities;

 

  ● Level 2 — Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and

 

  ● Level 3 — Inputs that are not based on observable market data. 

 

The Company’s financial instruments consist of cash, trade and other receivables, accounts payable and accrued liabilities, lease liabilities, convertible debentures, and loans payable. With the exception of convertible debentures and loans payable, the carrying value of the Company’s financial instruments approximate their fair values due to their short-term maturities. The fair value of convertible debentures and notes payable approximate their carrying value, excluding discounts, due to minimal changes in interest rates and the Company’s credit risk since issuance of the instruments.

 

The Company is exposed in varying degrees to a variety of financial instrument related risks. The Board of Directors approves and monitors the risk management processes, inclusive of documented investment policies, counterparty limits, and controlling and reporting structures.

 

Credit Risk

 

The Company’s principal financial assets are cash and trade receivables. The Company’s credit risk is primarily concentrated in its cash which is held with institutions with a high credit worthiness. The Company carries cash balances at US financial institutions that exceed the federally insured limit of $250,000 per institution and in German financial institutions that exceed €100,000 limit per institution. The Company has not experienced losses on these accounts and management believes, based upon the quality of the financial institutions, that the credit risk with regard to these deposits is not significant.

 

Management believes that the Company is not exposed to any significant credit risk with respect to its cash.

 

The Company mitigates its credit risk on receivables by actively managing and monitoring its receivables. During the three months ended March 31, 2023, the Company incurred $53,295 (related to VAT receivables) in bad debt expense (2022 - $0). The Company mitigates credit risk by evaluating the creditworthiness of customers prior to conducting business with them and monitoring its exposure for credit losses with existing customers.

 

Liquidity Risk

 

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company has a planning and budgeting process in place to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis. As of March 31, 2023, the Company had an unrestricted cash balance of $10,858,202 to settle current liabilities of $5,595,700.

 

Historically, the Company’s primary source of funding has been the issuance of equity securities for cash, primarily through the issuance of ordinary shares and credit facility borrowings. The Company’s access to financing is always uncertain. There can be no assurance of continued access to equity or debt financing.

 

F-17

 

 

The following is an analysis of the contractual maturities of the Company’s financial liabilities as of March 31, 2023:

 

   Within   More than   More than 
   one year   one year   five years 
Accounts payable and accrued liabilities  $2,862,472   $
-
   $
-
 
Defered payment for intellectual property acquisition   286,294    950,821    
-
 
Convertible debt   43,603    
-
    
-
 
Convertible debt - related party   32,589    
-
    
-
 
Silent partnerships   969,228    558,801    
-
 
Lease liabilities   450,693    1,106,658    544,157 
   $4,644,879   $2,616,280   $544,157 

 

Foreign Exchange Risk

 

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. As the Company operates in Germany it holds a portion of its cash balances in Euro to approximate between three to twelve months estimated operating needs. The remainder of the Company’s cash is held in U.S. Dollars, the Company’s reporting currency, which we also expect to be the currency of the Company’s largest cash outlays over the next twenty-four months.

 

Interest Rate Risk

 

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is not exposed to interest rate risk as its financial liabilities carry interest at fixed rates.

 

Capital Management

 

In the management of capital, the Company includes components of stockholders’ equity. The Company aims to manage its capital resources to ensure financial strength and to maximize its financial flexibility by maintaining strong liquidity and by utilizing alternative sources of capital including equity, debt and bank loans or lines of credit to fund continued growth. The Company sets the amount of capital in proportion to risk and based on the availability of funding sources. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. As a young growth company, issuance of equity has been the primary source of capital to date. Additional debt and/or equity financing may be pursued in future as deemed appropriate to balance debt and equity. To maintain or adjust the capital structure, the Company may issue new shares, take on additional debt or sell assets to reduce debt.

 

17. CONCENTRATIONS

 

Major customers are defined as customers that each individually account for greater than 10% of the Company’s annual revenues. For the three months ended March 31, 2023 and 2022, the Company had revenue from one and two customers that accounted for approximately 19% and 43% of revenue, respectively.

 

F-18

 

 

18. OPERATING EXPENSES

 

For the three months ended March 31, 2023 and 2022, operating expenses consisted of the follows:

 

Research and development  2023   2022 
Payroll  $1,354,084   $183,344 
Consulting services   858,307    41,144 
Depreciation and amortization   153,259    - 
Travel and car expenses   51,962    31,492 
Material Consumption   28,735    251 
Training   709    77 
Taxes and insurances   2,785    120,887 
Rent and premises   -    9,770 
Distribution cost   20,826    - 
           
Other expenses   154,405    176,607 
   $2,625,072   $563,572 

 

Sales and marketing  2023   2022 
Payroll  $497,213   $62,319 
Product and brand advertising   1,532,089    790,185 
Consulting services   351,723    13,985 
Travel and car expenses   815    10,704 
Training   2,194    26 
Rent and premises   -    3,321 
Other expenses   26,901    41,090 
   $2,410,935   $921,630 

 

General and administrative  2023   2022 
Payroll  $708,676   $3,060,982 
Consulting services   488,883    801,804 
Insurance and taxes   166,575    135,775 
Depreciation and amortization   31,371    34,859 
Travel and car expenses   38,154    35,371 
IT expense   42,405    
-
 
Rent and premises   32,187    10,973 
Other expenses   82,239    113,021 
   $1,590,490   $4,192,785 

 

19. SUBSEQUENT EVENTS

 

During the period from April 1, 2023 to May 14, 2023, pursuant to the Controlled Equity Offering (see note 12) we sold 28,900 ordinary shares for net proceeds of $144,374.

 

During the period from April 1, 2023 to May 14, 2023, we granted 20,500 stock options with strike prices of $6.23.

 

During the period from April 1, 2023 to May 14, 2023, 666,667 warrants were exercised pursuant to a cashless exercise option, resulting in the issuance of 248,607 ordinary shares.

 

 

F-19

 

 

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Exhibit 99.3

 

 

Mainz Biomed Announces First Quarter 2023 Financial Results and Provides Corporate Update

 

-    ColoAlert® Revenue Increases 152% Year Over Year

 

BERKELEY, US – MAINZ, Germany – May 16, 2023 — Mainz Biomed N.V. (NASDAQ:MYNZ) (“Mainz Biomed” or the “Company”), a molecular genetics diagnostic company specializing in the early detection of cancer, announced today first quarter results which ended March 31, 2023 and provided a corporate update.

 

Key Highlights During Q1 2023

 

●ColoAlert® revenues were USD 250,077, representing a increase of 152% compared to Q1 2022

 

●Expanded the international commercialization for ColoAlert, Mainz Biomed’s highly efficacious and easy-to-use DNA-based detection test for colorectal cancer (CRC) being sold via the Company’s unique business model of marketing products via partnerships with third-party laboratories versus the traditional methodology of operating a single facility

 

●Grew network of laboratory partnerships across Europe with additions in Germany, Spain and England

 

●Launched corporate health program in Germany accessing a EURO 1 billion annual market - Integration into Country’s “BGM” system providing employee health services

 

·U.S. Pivotal Clinical Trial (ReconAAsense) remains on track to commence patient enrollment in 2H 2023 – Opportunity to achieve gold standard status for self-administered CRC screening

 

●Exercised exclusive option with Uni Targeting Research AS to acquire all of the previously licensed scientific IP for ColoAlert

 

●Acquired entire IP portfolio for family of novel gene expression (mRNA) biomarkers from Sciences Sante et Humaines S.E.C. (“SOCPRA”) that demonstrated ability to detect CRC lesions, including advanced adenomas (“AA”), a type of pre-cancerous polyp often attributed to CRC

 

●Continued executing European and U.S. clinical studies (ColoFuture/eAArly DETECT) evaluating the SOCPRA biomarker portfolio for potential inclusion in ReconAAsense - eAArly DETECT on track to report results in mid-2023 & ColoFuture’s readout is expected in H2 2023.

 

●Maintained development pace for pipeline asset PancAlert, a potential first-in-class screening test for pancreatic cancer

 

“The first quarter of 2023 proved to be a remarkable period of progress as we continue to build-out ColoAlert’s commercial franchise across Europe while executing on our programs in development, highlighted by commencement of patient enrollment in the U.S. pivotal study for our CRC test by end of year,” commented Guido Baechler, Chief Executive Officer of Mainz Biomed. “As we prepare for this milestone, we eagerly await the results from the eAArly DETECT clinical trial which if successful, will integrate biomarkers from the SOCPRA portfolio into ReconAAsense, representing the opportunity to bring to market a disruptive, groundbreaking CRC screening solution for early stage disease detection and prevention.”

 

 

 

 

 

Commercial Update: Broadened ColoAlert’s commercial reach in key European markets

 

During the quarter, Mainz Biomed continued ColoAlert’s European commercial roll-out by establishing partnerships with Marylebone Laboratory (Marylebone Lab LTD) and Instituto de Microecologia, two leading independent laboratories covering England, Spain and Portugal. The addressable market in Spain is estimated at 26 million patients and at 9 million patients in the greater London region. In Germany, Mainz Biomed expanded ColoAlert’s availability in the country through a partnership with Dr Staber & Kollegen GmbH (Labor Staber), and the launch of a corporate health program focused on companies across the country, representing a EURO 1 billion annual market. For over 35 years, Labor Staber has been providing physicians and hospitals with medical laboratory services at nine locations across Germany. Mainz Biomed’s corporate health program for ColoAlert was launched through integration into BGM (“betriebliches Gesundheitsmanagement”), a well established corporate health initiative providing services to employees at forty-eight of the fifty largest companies in Germany. Through corporate health management programs such as BGM, best-in-class companies offer employees healthcare services ranging from gym memberships to diabetes management to counseling, all to better their health. Mainz Biomed’s integration into BGM includes the launch of an online portal through which employees can register to be sent the ColoAlert test.

 

Product Development Update: ReconAAsense U.S. pivotal clinical trial, ColoFuture/eAArly DETECT clinical studies & pancreatic test advancements

 

Throughout the first quarter, Mainz Biomed continued to prepare for commencing patient enrollment in the ReconAAsense study (ClinicalTrials.gov Identifier: NCT05636085) in H2 2023. This U.S. pivotal clinical trial assessing Mainz Biomed’s CRC test will form the basis of the data package for review by the U.S. Food and Drug Administration (FDA) to achieve marketing authorization. It will include approximately 15,000 subjects from 150 sites across the U.S., and study’s primary objectives include calculating sensitivity, specificity, positive predictive value (PPV) and negative predictive value (NPV) in average-risk subjects for CRC and AA. Additionally, Mainz Biomed continued executing its ColoFuture (Europe) and eAArly DETECT (U.S.) studies evaluating the Company’s proprietary portfolio of novel gene expression (mRNA) biomarkers for possible inclusion in the ReconAAsense trial because they have previously demonstrated ability to detect CRC lesions, including AA, a type of pre-cancerous polyp often attributed to this deadly disease.

 

The eAArly DETECT clinical trial, which commenced enrollment in December of 2022, remains on track to report results in mid-2023. The multi-center feasibility study is enrolling 250 subjects across 25 sites in the U.S. The international multi-center ColoFuture study continued enrolling patients in Europe (recruiting over 600 patients in the age range of 40-85) with results expected in H2 2023. If any of the biomarkers are integrated into the ReconAAsense trial and the study produces positive results, this next iteration of Mainz Biomed’s CRC test will be positioned as the most robust and accurate at-home diagnostic screening solution on the market, as it will not only detect cancerous polyps with a high degree of accuracy but has the potential to prevent CRC through early detection of precancerous adenomas. To this end, a promising research milestone was achieved during the quarter when Mainz Biomed announced positive results from an independent feasibility study conducted in collaboration with members of the Early Detection Research Network (EDRN) to evaluate the same portfolio of gene expression biomarkers. Key findings included Mainz Biomed’s proprietary nucleic acid extraction and PCR process proved to be highly effective, and two of the mRNA biomarkers were found to be particularly valuable in detecting disease signals in advanced adenoma samples.

 

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During the quarter, Mainz Biomed continued to conduct pre-clinical work on PancAlert, the Company’s novel and potential first-in-class early detection test for pancreatic cancer, a malignant neoplasm of the pancreas with one of the highest mortality rates of all major cancers. In fact, a recent highlight (May 10, 2023) was the establishment of a research partnership with Microba Life Sciences (ASX: MAP), a precision microbiome company that is built around a unique metagenomic platform technology with the ability to produce comprehensive and accurate species profiles of human gastrointestinal samples. The collaboration will focus on leveraging this sequencing technology and bioinformatic tool to potentially discover novel microbiome biomarkers for pancreatic cancer detection for integration into PancAlert’s technical configuration.

 

Corporate Update: Acquired entire IP portfolio for colorectal cancer program

 

A major corporate growth milestone achieved during the first quarter was executing the Company’s option from Uni Targeting Research AS to acquire all of the previously licensed scientific intellectual property (“IP”) for ColoAlert. In addition and in synchronicity with this transaction, Mainz Biomed exercised its exclusive option with SOCPRA Sciences Sante et Humaines S.E.C. to outright purchase all of the IP, including a pending patent associated with the portfolio of novel gene expression (mRNA) biomarkers that are being evaluated in the ColoFuture/eAArly DETECT studies, and which may be integrated into the ReconAAsense pivotal trial. Securing complete IP ownership of these assets is a significant value generating milestone for Mainz Biomed as it streamlines administration, reduces per-test expenses, and provides the opportunity to ramp-up corporate development activities.

 

CONDENSED CONSOLIDATED FINANCIAL INFORMATION

 

During the three months ended March 31, 2023 the Company saw its revenue from ColoAlert grow 152% compared to the same period of 2022, with gross margins expanding from 46% to 56%. During the first three months of 2023 the Company’s operating loss grew from USD 5.7 million to USD 6.5 million, when compared to the first three months of 2022. This increased loss was attributable to growth of sales and marketing and research and development (R&D) costs, mitigated by a decrease in general and administrative costs. Sales & marketing expenses increased as planned due to the expansion of the Company’s commercial activities in Europe. The increased research and development expenses are attributable to the continued development of Mainz Biomed’s next generation colorectal cancer screening test and, during the first quarter of 2023, and continuing into the second quarter, the Company incurred increased R&D costs related to the peak enrollment in its eAArly Detect study in the U.S. With peak enrollment completed, thereby reducing its monthly operating expenses for the second half of the year, and with USD 10.9 million cash on hand at quarter end, the Company believes that it has cash runway past the end of 2023.

 

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The Company has filed a current report on Form 6-K on May 16, 2023, with the U.S. Securities and Exchange Commission, which includes both consolidated financial statements and management’s discussion and analysis of its financial results for the first quarter of 2023. Summary financial tables are included below.

 

Mainz Biomed N.V.

Condensed Statements of Profit or Loss and Other Comprehensive Loss (unaudited)

 

   Three months ended 
   March 31, 
   2023   2022 
Revenue        
ColoAlert Revenue  $250,077   $99,051 
Other Revenue   27    1,514 
Total Revenue   250,104    100,565 
Cost of sales   111,163    54,136 
Gross profit   138,941    46,429 
Gross margin   56%   46%
Operating expenses:          
Sales and marketing   2,410,935    921,630 
Research and development   2,625,072    563,572 
General and administrative   1,590,490    4,192,785 
Total operating expenses   6,626,497    5,677,987 
Loss from operations   (6,487,556)   (5,631,558)
           
Other expense   (73,360)   (32,178)
Income (loss) before income tax   (6,560,916)   (5,663,736)
Income taxes provision   -    - 
Net loss  $(6,560,916)  $(5,663,736)
           
Foreign currency translation gain (loss)   (60,572)   36,439 
Comprehensive loss  $(6,621,488)  $(5,627,297)
           
Basic and dilutive loss per ordinary share  $(0.45)  $(0.42)
Weighted average number of ordinary shares outstanding   14,688,361    13,348,349 

 

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Mainz Biomed

N.V.

 

Condensed Interim Consolidated Statements of Financial Position (unaudited)

 

   March 31,   December 31, 
   2023   2022 
ASSETS        
Current Assets        
Cash  $10,858,202   $17,141,775 
Trade and other receivables, net   449,441    259,138 
Inventories   266,056    175,469 
Prepaid expenses   750,752    801,959 
Total Current Assets   12,324,451    18,378,341 
           
Property and equipment, net   1,446,969    661,692 
Intangible assets   3,724,680    - 
Right-of-use asset   2,018,037    1,177,695 
Other assets   23,570    23,275 
Total assets  $19,537,707   $20,241,003 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current Liabilities          
Accounts payable and accrued liabilities  $3,148,766   $2,916,679 
Intellectual property acquisition liability   2,055,000    - 
Current maturities of long term debt   1,045,420    1,040,573 
Lease liabilities   450,693    285,354 
Total current liabilities   6,699,879    4,242,606 
           
Long term debt   558,801    943,214 
Lease liabilities   1,650,815    959,116 
    950,821    - 
Total Liabilities   9,860,316    6,144,936 
           
Total shareholders’ equity   9,677,391    14,096,067 
           
Total liabilities and shareholders’ equity  $19,537,707   $20,241,003 

 

 

About Mainz Biomed NV

 

Mainz Biomed develops market-ready molecular genetic diagnostic solutions for life-threatening conditions. The Company’s flagship product is ColoAlert, an accurate, non-invasive and easy-to-use, early-detection diagnostic test for colorectal cancer based on real-time Polymerase Chain Reaction-based (PCR) multiplex detection of molecular-genetic biomarkers in stool samples. ColoAlert is currently marketed across Europe. The Company is running a pivotal FDA clinical study for US regulatory approval. Mainz Biomed’s product candidate portfolio also includes PancAlert, an early-stage pancreatic cancer screening test. To learn more, visit mainzbiomed.com or follow us on LinkedIn, Twitter and Facebook.   

 

For media inquiries -

 

In Europe:

MC Services AG

Anne Hennecke/Caroline Bergmann

+49 211 529252 20

mainzbiomed@mc-services.eu

 

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In the US:

Spectrum Science

Melissa Laverty/Valerie Enes

+1 540 272 6465

mainz@spectrumscience.com

 

For investor inquiries, please contact info@mainzbiomed.com

 

Forward-Looking Statements

 

Certain statements made in this press release are “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate”, “believe”, “expect”, “estimate”, “plan”, “outlook”, and “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements reflect the current analysis of existing information and are subject to various risks and uncertainties. As a result, caution must be exercised in relying on forward-looking statements. Due to known and unknown risks, actual results may differ materially from the Company’s expectations or projections. The following factors, among others, could cause actual results to differ materially from those described in these forward-looking statements: (i) the failure to meet projected development and related targets; (ii) changes in applicable laws or regulations; (iii) the effect of the COVID-19 pandemic on the Company and its current or intended markets; and (iv) other risks and uncertainties described herein, as well as those risks and uncertainties discussed from time to time in other reports and other public filings with the Securities and Exchange Commission (the “SEC”) by the Company. Additional information concerning these and other factors that may impact the Company’s expectations and projections can be found in its initial filings with the SEC, including its annual report on Form 20-F filed on May 5, 2022. The Company’s SEC filings are available publicly on the SEC’s website at www.sec.gov. Any forward-looking statement made by us in this press release is based only on information currently available to Mainz Biomed and speaks only as of the date on which it is made. Mainz Biomed undertakes no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by law.

 

 

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