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Mainz Biomed(MYNZ) - 2022 Q4 - Annual Report
Mainz BiomedMainz Biomed(US:MYNZ)2023-04-07 20:45

PART I This section details company identity, key information, business operations, and financial performance ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS This section states that the information is not applicable ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE This section states that the information is not applicable ITEM 3. KEY INFORMATION This section includes reserved items, capitalization, offer details, and critical risk factors 3.A. [Reserved] This section is reserved and contains no information 3.B. Capitalization and Indebtedness This section states that the information is not applicable 3.C. Reasons for the offer and use of proceeds This section states that the information is not applicable 3.D. Risk Factors This section details significant risks including operating losses, financing dependence, competition, and regulatory hurdles - The company is an early revenue stage company with recurring operating losses and negative cash flow since inception, reporting net losses of $26,387,336 in 2022 and $11,690,098 in 20213435 - The auditor's opinion for the fiscal year ended December 31, 2022, includes an explanatory paragraph indicating substantial doubt about the company's ability to continue as a going concern due to recurring losses from operations and negative cash flows41 - The company's success is heavily dependent on the commercial success of its ColoAlert screening test, which faces challenges from physician reluctance, competing diagnostic tests, and the need to establish and strengthen its brand535456 - The company is incorporated under Dutch law, and a substantial portion of its assets, officers, and directors reside outside the United States, which may limit the ability of U.S. investors to protect their interests through U.S. federal courts4243 - The company expects to incur significant expenses and devote substantial management effort to comply with Section 404 of the Sarbanes-Oxley Act once it ceases to qualify as an 'emerging growth company'100 ITEM 4. INFORMATION ON THE COMPANY This section outlines the company's history, business operations, organizational structure, and assets 4.A. History and development of the Company Mainz Biomed N.V. was incorporated in the Netherlands on March 8, 2021, to acquire PharmGenomics GmbH, which it completed on September 20, 2021 - Mainz Biomed N.V. was incorporated on March 8, 2021, and acquired PharmGenomics GmbH on September 20, 2021103 - The company converted into a Dutch public company on November 9, 2021, and its ordinary shares are registered under the Exchange Act103104 4.B. Business Overview Mainz Biomed commercializes IVD tests, notably ColoAlert for CRC screening, and is developing PancAlert, with a strategy for market expansion and FDA approval - Mainz Biomed is a molecular genetic diagnostic company commercializing IVD tests, with its flagship product ColoAlert (CRC screening test) sold in Europe, and PancAlert (pancreatic cancer screening test) in early research106109 - The company acquired the ColoAlert test and related intellectual property in February 2023 for $2 million cash (to be paid over four years), 300,000 ordinary restricted shares, and a revenue share limited to $1 per test sold for a period of 10 years119391 - In February 2023, the company acquired the UdeS Biomarkers for €25,000 in cash and a profit share of 2% of the net sales of any products using these biomarkers, aiming to integrate them into ColoAlert to enhance sensitivity and specificity121395 - Ongoing clinical studies include ColoFuture (international multi-center, 662 subjects, evaluating UdeS biomarkers for ColoAlert enhancement, enrollment by late 2023) and eAArly DETECT (U.S. multi-center, 450 subjects, feasibility and stability of UdeS biomarkers, enrollment H1 2023, topline results H1 2023)123140[141](index=141&type=chunk] - ColoAlert has demonstrated a sensitivity of 85% and a specificity of 92% in an independent clinical test, with 98% patient satisfaction, and the occult blood test component has since been updated to further increase accuracy117128 - The addressable market for CRC screening in Europe is around 126 million individuals (based on a 65% participation rate for 194 million people over 50), and in the United States, it is projected to increase from $3.7 billion to over $5.2 billion annually with new guidelines recommending screening from age 45111112 - The company's strategy focuses on expanding the commercial opportunity of ColoAlert in Europe through commercial teams and partnerships, preparing for FDA market authorization in the U.S., and continuing research and development of PancAlert129132133138 - Research and development efforts are centered on developing PancAlert and initiating the ColoFuture study (expanded to eAArly DETECT in the U.S.) to evaluate UdeS biomarkers for ColoAlert enhancement143[144](index=144&type=chunk] - The company's global operations are subject to numerous and complex legal and regulatory requirements in Europe (IVDR) and the U.S. (FDA PMA for Class III IVD, CLIA, HIPAA, anti-fraud laws), which are costly and time-consuming to comply with747677818284147151152158159160161[166](index=166&type=chunk] 4.C. Organizational structure Mainz Biomed N.V. operates with two wholly-owned subsidiaries: Mainz Biomed Germany GmbH and Mainz Biomed USA, Inc - The company has two wholly-owned subsidiaries: Mainz Biomed Germany GmbH (f/k/a PharmGenomics GmbH) and Mainz Biomed USA, Inc178[419](index=419&type=chunk] 4.D. Property, plant and equipment The company's principal premises are located in Mainz, Germany, under a fifteen-year lease agreement from 2013, with additional leases added in 2022 - The company's principal premises are located in Mainz, Germany, under a fifteen-year lease agreement from 2013, with additional lease agreements entered into during 2022179 - These facilities are used for administrative purposes, research and development, manufacturing of products, and analysis by laboratories, and are believed to satisfy the company's needs for the next 12 months180 ITEM 4A. UNRESOLVED STAFF COMMENTS This section states that the information is not applicable ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS This section analyzes financial condition and operations, highlighting increased net loss, expense growth, and going concern status Organization and Overview of Operations Mainz Biomed N.V. was incorporated in 2021 to acquire Mainz Biomed Germany GmbH, which became a wholly-owned subsidiary - Mainz Biomed N.V. acquired Mainz Biomed Germany GmbH in September 2021, which was treated as a reverse acquisition for accounting purposes185[186](index=186&type=chunk] - The company's primary revenue source is expected to be the sale of its ColoAlert product, having terminated its COVID-19 testing revenue stream prior to the start of 2022187 - The company completed an initial public offering in November 2021, raising $11,500,000 in gross proceeds, and a follow-on public offering in January 2022, raising $25,875,000 in gross proceeds189[207](index=207&type=chunk] Results of Operations Revenue decreased by 8% in 2022, while operating expenses surged 170%, resulting in a 126% higher net loss Selected Financial Information (Year Ended December 31, 2022 vs. 2021) | Metric | 2022 (USD) | 2021 (USD) | Change (USD) | % Change | | :-------------------------- | :----------- | :----------- | :----------- | :------- | | Revenue | 529,877 | 577,348 | (47,471) | (8)% | | Cost of revenue | 347,726 | 399,726 | (52,000) | (13)% | | Gross profit | 182,151 | 177,622 | 4,529 | 3% | | Gross profit percentage | 34.4% | 30.8% | | | | Research and Development | 3,660,495 | 466,689 | 3,193,806 | 684% | | Sales and Marketing | 5,702,143 | 957,522 | 4,744,621 | 496% | | General and Administrative | 17,328,942 | 8,478,017 | 8,850,925 | 104% | | Total operating expenses | 26,691,580 | 9,902,228 | 16,789,352 | 170% | | Loss from operations | (26,509,429) | (9,724,606) | (16,784,823) | 173% | | Net loss | (26,387,336) | (11,690,098) | (14,697,238) | 126% | | Basic and dilutive loss per common share | (1.86) | (1.62) | (0.24) | (15)% | | Weighted average number of common shares outstanding | 14,157,492 | 7,210,889 | 6,946,603 | 96% | Revenue by Product and Service Category (Year Ended December 31, 2022 vs. 2021) | Category | 2022 (USD) | 2021 (USD) | | :-------------------------- | :----------- | :----------- | | ColoAlert | 519,728 | 226,438 | | Covid-19 Testing | - | 233,662 | | Research use only product sales | - | 48,886 | | Other revenue | 10,149 | 68,362 | | Total Revenue | 529,877 | 577,348 | - Research and development expenses increased by $3,193,806 (684%) in 2022, primarily due to an increase in headcount from three to 29 employees, leading to higher compensation, lab and office expenses, and materials for clinical studies195[196](index=196&type=chunk] - Sales and marketing expenses increased by $4,744,621 (496%) in 2022, mainly attributable to a $4.3 million increase in advertising and marketing for ColoAlert in Germany and Europe, and a $0.4 million increase in compensation due to headcount growth from two to seven employees197 - General and administrative expenses increased by $8,850,925 (104%) in 2022, driven by a $2.5 million increase in stock option expense, a $2.9 million increase in salaries and benefits from senior management expansion, and $2.4 million in consulting and professional fees related to capital raising198 Liquidity and Capital Resources Operating cash outflow increased to $14.77 million in 2022, funded by $23.94 million from financing, addressing going concern - Net cash flows used in operating activities increased by $11,459,266 to $14,769,590 for the year ended December 31, 2022, primarily due to the increase in net loss204[205](index=205&type=chunk] - Cash provided by financing activities was $23,943,418 in 2022, primarily attributable to a follow-on public offering in January 2022 for $25.9 million and proceeds of $0.4 million from warrant exercises204[207](index=207&type=chunk] - The company had $17,141,775 of cash on hand at December 31, 2022, and believes this, combined with its ability to raise additional capital, will sufficiently fund its planned expenditures and obligations for at least one year, despite recurring losses and negative operating cash flows202[490](index=490&type=chunk] Cash Flow Summary (Year Ended December 31, 2022 vs. 2021) | Activity | 2022 (USD) | 2021 (USD) | Change (USD) | | :----------------------------------- | :----------- | :----------- | :----------- | | Cash used in operating activities | (14,769,590) | (3,220,324) | (11,549,266) | | Cash provided by (used in) investing activities | (658,483) | 1,203,151 | 1,861,634 | | Cash provided by financing activities | 23,943,418 | 10,610,534 | 13,332,884 | Critical Accounting Policies and Significant Judgments and Estimates This section details critical accounting policies and estimates for revenue, currency, stock options, leases, and financial instruments - The company's most critical accounting policies and estimates relate to Revenue Recognition (IFRS 15), Foreign Currency Translation (Euro functional, USD presentation), Stock Option Compensation (Black-Scholes, Monte Carlo), Lease Accounting (IFRS 16, using incremental borrowing rate), and Financial Instruments209210214222224227506514522534[544](index=544&type=chunk] - Revenue from sales to laboratory partners is recognized upon delivery, while sales to patients (end users) are recognized when samples are delivered to the lab, tested, and results are delivered to the end user212[508](index=508&type=chunk] - Stock options with time-based vesting are valued using the Black-Scholes method, and those with milestone-based vesting criteria are valued using a Monte Carlo simulation, with compensation expense recorded over the vesting period222223[535](index=535&type=chunk] Contractual Obligations (as of December 31, 2022) | Contractual Obligation | Less than One Year (USD) | 1 – 3 Years (USD) | 3 – 5 Years (USD) | Over 5 Years (USD) | | :--------------------- | :----------------------- | :---------------- | :---------------- | :----------------- | | Office Rent | 164,053 | 401,852 | 314,412 | 174,941 | | Laboratory Equipment | 124,560 | 176,731 | 740 | - | | Automobiles | 35,341 | 46,580 | 6,359 | - | | Office Equipment | 14,800 | 27,004 | 11,733 | - | | TOTAL | 338,754 | 652,167 | 333,244 | 174,941 | ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES This section outlines the company's directors, senior management, compensation, board structure, and employee details 6.A. Directors and Senior Management The company's leadership includes Guido Baechler (CEO), William Caragol (CFO), Dr. Moritz Eidens (CSO), Philipp Freese (COO), and Darin Leigh (CCO), along with five independent non-executive directors - Key management personnel include Guido Baechler (Chief Executive Officer), William Caragol (Chief Financial Officer), Dr. Moritz Eidens (Chief Scientific Officer), Philipp Freese (Chief Operating Officer), and Darin Leigh (Chief Commercial Officer)234 - The Board of Directors consists of seven directors, five of whom qualify as 'independent' according to Nasdaq Stock Market rules258[301](index=301&type=chunk] 6.B. Compensation Executive compensation aligns with shareholder interests, comprising base salary and stock options, with total cash compensation of $1.51 million in FY2022 - Executive compensation policies and practices are designed to align management incentives with long-term shareholder interests, consisting of base salary and long-term incentives in the form of stock options264265[267](index=267&type=chunk] Summary Compensation for All Executive Officers (FY2022) | Component | Amount (USD in thousands) | | :-------------------------- | :------------------------ | | Base compensation | 1,229,400 | | Bonuses | 170,002 | | Additional benefit payments | 111,314 | | Total cash compensation | 1,510,716 | - As of April 4, 2023, 2,399,150 stock options were awarded under the Plans, with strike prices ranging from $5.00 to $20.87 and a weighted average strike price of $7.20295[296](index=296&type=chunk] - Independent directors received an aggregate of $130,250 for their services in fiscal year 2022, with a quarterly fee of $10,500 for directors and $15,000 for the Board Chairman298 6.C. Board Practices The company has a one-tier board structure with two executive and five non-executive directors, elected by the general meeting - The company has a one-tier board structure consisting of two executive directors and five non-executive directors, who are elected by the general meeting upon a binding nomination338[340](index=340&type=chunk] - Three committees have been established under the board of directors: an Audit Committee (Chair: Nicole Holden, financial expert), a Compensation Committee (Chair: Dr. Heiner Dreismann), and a Nominating Committee (Chair: Gregory Tibbitts), each comprised of independent directors303304305306[441](index=441&type=chunk] - An informal Strategic Advisory Board, currently with three members, assists the Board of Directors in setting strategies, achieving goals, and analyzing opportunities303307308309[310](index=310&type=chunk] 6.D. Employees As of April 4, 2023, the company had 58 full-time and 6 part-time employees across manufacturing, R&D, sales & marketing, finance & administration, and executives Employee Breakdown by Activity (as of April 4, 2023) | Activity | Number of Full-Time Employees | Number of Part-Time Employees | | :-------------------------- | :---------------------------- | :---------------------------- | | Manufacturing and Clinical Laboratory | 12 | 1 | | Research & Development | 29 | 3 | | Sales & Marketing | 7 | 2 | | Finance & Administration | 5 | 1 | | Executives | 5 | 0 | | Total | 58 | 6 | 6.E. Share Ownership This section refers to Item 7 for shareholdings of officers and directors and states that officers and directors do not hold any other convertible securities besides stock options - The shareholdings of officers and directors are set out in Item 7314 - Officers and directors do not hold any other securities convertible into ordinary shares, apart from stock options315 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS This section identifies major shareholders and details transactions involving related parties 7.A. Major Shareholders Major shareholders include institutional and individual investors, with directors and officers owning 23.2% of shares Beneficial Ownership of Ordinary Shares (as of April 4, 2023) | Name | Ordinary Shares Beneficially Owned | Percentage of Ordinary Shares Beneficially Owned | | :------------------------------------------------- | :------------------------------- | :--------------------------------------------- | | Guido Baechler, CEO, Executive Director | 722,357 | 4.7% | | William Caragol, CFO | 175,950 | 1.2% | | Dr. Moritz Eidens, CSO, Executive Director | 1,124,577 | 7.5% | | Philipp Freese, COO | 360,201 | 2.4% | | Darin Leigh, CCO | 57,500 | 0.4% | | Dr. Heiner Dreismann, Non-Executive Director | 78,000 | 0.5% | | Dr. Alberto Libanori, Non-Executive Director | 25,000 | 0.2% | | Hans Hekland, Non-Executive Director | 1,147,885 | 7.7% | | Nicole Holden, Non-Executive Director | 25,000 | 0.2% | | Gregory Tibbits, Non-Executive Director | - | -% | | Directors and Executive Officers as a Group (Ten Persons) | 3,716,470 | 23.2% | | Kreditanstalt für Wiederaufbau | 1,237,501 | 8.4% | | Coloalert AS | 1,121,427 | 7.6% | - Approximately 7,821,777 ordinary shares, accounting for about 52.8% of outstanding shares as of April 4, 2023, are held by eight record holders in the United States, including Cede & Co. as nominee for The Depository Trust Company318 7.B. Related Party Transactions Beyond employment/consulting agreements and the ColoAlert IP acquisition, the company has immaterial, arms'-length service arrangements with immediate family members of its COO and CSO - The company has immaterial, arms'-length service arrangements with the wife of its Chief Operating Officer (approximately €5,400 per year, ended June 2022) and the wife of its Chief Scientific Officer (approximately €42,000 per year)320 7.C. Interests of Experts and Counsel This section states that the information is not applicable ITEM 8. FINANCIAL INFORMATION This section presents consolidated financial statements, other financial data, and reports significant changes 8.A. Consolidated Statements and Other Financial Information FY2022 IFRS financial statements are audited, with no material legal proceedings or planned dividends - The company's financial statements for the year ended December 31, 2022, have been prepared in accordance with IFRS and are included under Item 18, audited by Reliant CPA PC322 - The company is not currently a party to any material litigation or legal proceedings323 - The company has not paid any dividends and does not intend to declare or pay any cash dividends in the foreseeable future, planning to retain all future earnings for business operation and development324 8.B. Significant Changes This section states that no significant changes have occurred since the date of the consolidated financial statements, except as disclosed in the Form 20-F ITEM 9. THE OFFER AND LISTING This section details the company's offer, listing on Nasdaq, market information, and related expenses 9.A. Offer and Listing The company's ordinary shares are traded on the Nasdaq Capital Market under the symbol "MYNZ" - The company's ordinary shares are traded on the Nasdaq Capital Market under the symbol "MYNZ"327 9.B. Plan of Distribution This section states that the information is not applicable 9.C. Markets This section refers to Section 9.A for market information 9.D. Selling Shareholders This section states that the information is not applicable 9.E. Dilution This section states that the information is not applicable 9.F. Expenses of the Issue This section states that the information is not applicable ITEM 10. ADDITIONAL INFORMATION This section provides additional details on share capital, corporate governance, material contracts, and tax implications 10.A. Share Capital This section states that the information is not applicable 10.B. Memorandum and Articles of Association The company is a Dutch public company with a one-tier board, 45 million authorized ordinary shares, and shareholder pre-emptive rights - The company was incorporated on March 8, 2021, as a private limited liability company under Dutch law and converted into a Dutch public company with limited liability on November 9, 2021335 - The authorized share capital consists of 45,000,000 ordinary shares with a nominal value of EUR 0.01 per share and 5,000,000 preferred shares with a nominal value of EUR 0.01 per share, with no preferred shares currently outstanding343 - Holders of ordinary shares have pre-emptive rights in relation to newly issued ordinary shares under Dutch law, which can be restricted or excluded by a resolution of the general meeting (requiring a two-thirds majority if less than half of the issued share capital is present) or by the Board of Directors if authorized349[350](index=350&type=chunk] - The general meeting, based on a proposal from the Board of Directors, may resolve to amend the articles of association (requiring an absolute majority of votes cast) or dissolve the company (requiring an absolute majority of votes cast)379[380](index=380&type=chunk] 10.C. Material Contracts Material contracts include the PharmGenomics acquisition, ColoAlert IP purchase, UdeS Biomarkers IP acquisition, and various silent partnership loans - On September 20, 2021, the company acquired PharmGenomics GmbH pursuant to a Contribution Agreement, issuing 6,000,000 ordinary shares in exchange for all outstanding shares of PharmGenomics385 - On February 15, 2023, the company acquired the intellectual property for the ColoAlert test through an Intellectual Property Asset Purchase Agreement, for $2 million cash (paid over four years), 300,000 ordinary restricted shares, and a revenue share limited to $1 per test sold for 10 years, superseding previous licensing and option agreements391[612](index=612&type=chunk] - On February 15, 2023, the company acquired the intellectual property rights associated with the UdeS Biomarkers for €25,000 in cash and a profit share of 2% of the net sales of any products using these biomarkers395[614](index=614&type=chunk] - The company has entered into various silent partnership (loan) agreements with different investors, featuring varying interest rates, maturity dates, and profit-sharing clauses, some with options for additional payments at maturity396 10.D. Exchange Controls There are no Dutch laws restricting capital export/import or dividend remittances to non-resident holders, other than withholding tax requirements - There are no Dutch laws or governmental decrees restricting the export or import of capital, or affecting the remittance of dividends, interest, or other payments to a non-resident holder of ordinary shares, other than withholding tax requirements396 10.E. Taxation This section details Dutch tax implications for ordinary shares, including dividend withholding, income, capital gains, gift, and inheritance taxes - Dividends distributed by the company are generally subject to a 15% Dutch dividend withholding tax, but the company is in principle not required to withhold this tax as long as its place of effective management remains in Germany, according to the German-Dutch tax treaty399 - Dutch Resident Individuals are subject to income tax on benefits derived from shares at progressive rates if attributable to an enterprise, or an annual income tax on a deemed return on the net value of investment assets (up to 6.17% in 2023, taxed at a flat rate of 32%)407[408](index=408&type=chunk] - Dutch Resident Entities are subject to Dutch corporate income tax on benefits and capital gains from shares at a rate of 19% for taxable profits up to €200,000 and 25.8% for amounts exceeding that (2023 rates)409 - Non-residents of the Netherlands are generally not subject to Dutch taxes on income or capital gains in respect of shares, provided they do not have a Dutch enterprise or derive benefits from activities in the Netherlands that go beyond ordinary asset management410 10.F. Dividends and Paying Agents This section states that the information is not applicable 10.G. Statements by Experts This section states that the information is not applicable 10.H. Documents on Display Documents referred to in the annual report can be inspected at the company's offices in Mainz, Germany, and at the SEC's public reference facility or website (www.sec.gov) - Documents referred to in this annual report may be inspected at the company's offices in Mainz, Germany, and at the SEC's public reference facility or website (www.sec.gov)[417](index=417&type=chunk) 10.I. Subsidiary Information The company has two wholly-owned subsidiaries: Mainz Biomed Germany GmbH and Mainz Biomed USA, Inc - The company has two wholly-owned subsidiaries: Mainz Biomed Germany GmbH (f/k/a PharmGenomics GmbH) and Mainz Biomed USA, Inc419 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company faces foreign currency risk (USD, Euro) and potential interest rate risk, managed through cash holdings and dynamic hedging - The company is exposed to foreign currency risk on borrowings, investments, sales, purchases, royalties, licenses, management fees, and interest expense/income denominated in currencies other than the functional currency (Euro), managed by holding cash deposits in both U.S. dollars and Euro421 - In the future, the company may be exposed to interest rate risk on variable-rate interest-bearing financial liabilities and plans to apply a dynamic interest rate hedging approach, potentially entering into interest rate swap agreements423 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES This section states that the information is not applicable PART II This section addresses defaults, security holder rights, internal controls, audit committee, ethics, and corporate governance ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES This section states that there have been no defaults with respect to dividends, arrearages, or delinquencies since incorporation ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS Articles of Association were amended, and $33.89 million net proceeds from offerings were used for clinical studies and R&D - On December 15, 2022, the Articles of Association were amended, eliminating the right of shareholders holding more than 20% of outstanding shares from nominating a director430 - The company received approximately $10,358,750 in net proceeds from its November 2021 initial public offering and approximately $23,529,700 in net proceeds from its January 2022 public offering431[432](index=432&type=chunk] - As of the date of this annual report, approximately $10 million of net proceeds remained from these offerings, primarily used for the design and structure of European and U.S. clinical studies for ColoAlert, research and development, recruitment of commercial personnel, and general corporate purposes433 ITEM 15. CONTROLS AND PROCEDURES This section details the effectiveness of disclosure controls and management's report on internal control over financial reporting 15.A. Disclosure Controls and Procedures As of December 31, 2022, the CEO and CFO concluded that the company's disclosure controls and procedures were effective, designed to ensure timely and accurate reporting of required information - As of December 31, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective435 15.B. Management's Annual Report On Internal Control Over Financial Reporting Management, under CEO and CFO supervision, assessed the effectiveness of internal control over financial reporting as of December 31, 2022, based on the COSO 2013 framework, and concluded it was effective - Management, under the supervision of the CEO and CFO, assessed the effectiveness of internal control over financial reporting as of December 31, 2022, based on the COSO (2013) framework, and concluded it was effective438 15.C. Attestation report of the registered public accounting firm This section states that the information is not applicable 15.D. Changes In Internal Control Over Financial Reporting No changes to internal controls over financial reporting occurred during FY2022 that materially affected or are reasonably likely to materially affect them - No changes were made to the company's internal controls over financial reporting during the fiscal year ended December 31, 2022, that have materially affected, or are reasonably likely to materially affect, them440 ITEM 16. [RESERVED] This section is reserved and contains no information ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT The Audit Committee consists of three independent non-executive directors: Nicole Holden (Chair), Gregory Tibbits, and Dr. Alberto Libanori - Nicole Holden, an independent non-executive director, qualifies as an "audit committee financial expert" within the meaning of SEC rules and chairs the Audit Committee441 ITEM 16B. CODE OF ETHICS The company adopted a Code of Ethics and Business Conduct on October 26, 2021, applicable to directors, officers, and employees - The company adopted a Code of Ethics and Business Conduct on October 26, 2021, which applies to its directors, officers, and other employees442 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES Reliant CPA PC replaced BF Borgers CPA P.C. as auditor, with BF Borgers billing $86,000 in fees for FY2022 - Reliant CPA PC was appointed as the independent registered public accounting firm on January 17, 2023, replacing BF Borgers CPA P.C443[451](index=451&type=chunk] Principal Accountant Fees and Services (FY2022 vs. FY2021) | Firm | Category | 2022 (USD) | 2021 (USD) | | :----------------- | :----------------- | :--------- | :--------- | | BF Borgers CPA P.C. | Audit Fees | 60,000 | 45,000 | | | Audit Related Fees | 26,000 | 8,600 | | | Tax Fees | 0 | 0 | | | Total | 86,000 | 53,600 | | Reliant CPA PC | Audit Fees | 0 | 0 | | | Audit Related Fees | 0 | 0 | | | Tax Fees | 0 | 0 | | | Total | 0 | 0 | - The Audit Committee's policy is to pre-approve all audit and permissible non-audit services to be performed by the independent auditors448 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES This section states that the information is not applicable ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS This section states that there were no purchases of equity securities by the issuer and affiliated purchasers ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT. Reliant CPA PC replaced BF Borgers CPA P.C. as the independent registered public accounting firm on January 17, 2023, as previously disclosed - Reliant CPA PC replaced BF Borgers CPA P.C. as the independent registered public accounting firm on January 17, 2023, a change previously disclosed in a Form 6-K filing451 ITEM 16G. CORPORATE GOVERNANCE. As a foreign private issuer, the company follows Dutch corporate governance, differing from Nasdaq rules on quorum and shareholder approvals - As a "foreign private issuer," the company follows Dutch corporate governance practices, which differ from Nasdaq standards regarding quorum requirements for general meetings, solicitation of proxies, and shareholder approval for certain security issuances452[454](index=454&type=chunk] ITEM 16H. MINE SAFETY DISCLOSURE. This section states that the information is not applicable ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS This section states that the information is not applicable PART III This section presents the company's audited financial statements and a list of all filed exhibits ITEM 17. FINANCIAL STATEMENTS This section states that the information is not applicable ITEM 18. FINANCIAL STATEMENTS This section presents audited IFRS financial statements for 2020-2022, including auditor's going concern warning and detailed notes Report of Independent Registered Public Accounting Firm (Reliant CPA PC) Reliant CPA PC issued an unmodified opinion on FY2022/2021 IFRS financials, noting going concern doubt - Reliant CPA PC issued an unmodified opinion on the consolidated financial statements for December 31, 2022, and 2021, stating they present fairly in all material respects, in conformity with International Financial Reporting Standards (IFRS)463 - The auditor's opinion includes an explanatory paragraph indicating substantial doubt about the company's ability to continue as a going concern due to recurring losses from operations and net operating cash outflows during 2022 and 2021464 Report of Independent Registered Public Accounting Firm (BF Borgers CPA PC) BF Borgers CPA PC audited the consolidated financial statements for FY2020, expressing an unmodified opinion that they present fairly in all material respects, in conformity with IFRS - BF Borgers CPA PC issued an unmodified opinion on the consolidated financial statements for the year ended December 31, 2020, stating they present fairly in all material respects, in conformity with International Financial Reporting Standards (IFRS)471 Consolidated Statements of Financial Position Total assets increased to $20.24 million in 2022, with shareholders' equity rising to $14.10 million despite a $43.03 million accumulated deficit Consolidated Statements of Financial Position (as of December 31, 2022 vs. 2021) | Metric | December 31, 2022 (USD) | December 31, 2021 (USD) | | :--------------------------------- | :------------------------ | :------------------------ | | Cash | 17,141,775 | 8,727,542 | | Total Current Assets | 18,378,341 | 9,609,209 | | Property and equipment, net | 661,692 | 37,884 | | Right-of-use asset | 1,177,695 | 393,702 | | Total assets | 20,241,003 | 10,040,795 | | Total current liabilities | 4,242,606 | 1,351,755 | | Total Liabilities | 6,144,936 | 3,679,640 | | Share capital | 164,896 | 141,075 | | Share premium | 38,831,542 | 13,126,493 | | Reserve | 18,079,741 | 9,736,066 | | Accumulated deficit | (43,032,294) | (16,644,958) | | Total shareholders' equity | 14,096,067 | 6,361,155 | Consolidated Statements of Comprehensive Loss Net loss increased to $26.39 million in 2022, driven by a 170% rise in operating expenses, despite stable revenue Consolidated Statements of Comprehensive Loss (Year Ended December 31, 2022 vs. 2021 vs. 2020) | Metric | 2022 (USD) | 2021 (USD) | 2020 (USD) | | :-------------------------- | :----------- | :----------- | :----------- | | Revenue | 529,877 | 577,348 | 493,565 | | Cost of revenue | 347,726 | 399,726 | 370,480 | | Gross profit | 182,151 | 177,622 | 123,085 | | Total operating expenses | 26,691,580 | 9,902,228 | 796,800 | | Loss from operations | (26,509,429) | (9,724,606) | (673,715) | | Net loss | (26,387,336) | (11,690,098) | (586,895) | | Comprehensive loss | (26,337,633) | (11,485,129) | (811,551) | | Basic and dilutive loss per ordinary share | (1.86) | (1.62) | (0.10) | | Weighted average number of ordinary shares outstanding | 14,157,492 | 7,210,889 | 5,607,243 | Consolidated Statement of Changes in Shareholders' Equity (Deficit) Shareholders' equity rose to $14.10 million in 2022, driven by share premiums and stock option expense, despite a $26.39 million net loss Consolidated Statement of Changes in Shareholders' Equity (Deficit) (as of December 31, 2022 vs. 2021 vs. 2020) | Metric | December 31, 2022 (USD) | December 31, 2021 (USD) | December 31, 2020 (USD) | | :--------------------------------- | :------------------------ | :------------------------ | :------------------------ | | Share Capital | 164,896 | 141,075 | 64,265 | | Share Premium | 38,831,542 | 13,126,493 | 41,846 | | Reserve | 18,079,741 | 9,736,066 | 2,309,684 | | Accumulated Deficit | (43,032,294) | (16,644,958) | (4,954,860) | | Accumulated other comprehensive income (loss) | 52,182 | 2,479 | (202,490) | | Total Shareholders' Equity (Deficit) | 14,096,067 | 6,361,155 | (2,741,555) | Consolidated Statements of Cash Flows Operating cash outflow increased to $14.77 million in 2022, offset by $23.94 million from financing, raising cash to $17.14 million Consolidated Statements of Cash Flows (Year Ended December 31, 2022 vs. 2021 vs. 2020) | Activity | 2022 (USD) | 2021 (USD) | 2020 (USD) | | :----------------------------------- | :----------- | :----------- | :----------- | | Net cash used in operating activities | (14,769,590) | (3,220,324) | (468,737) | | Net cash used in investing activities | (658,483) | 1,203,151 | (9,685) | | Net cash provided by financing activities | 23,943,418 | 10,610,534 | 396,681 | | Effect of changes in exchange rates | (101,112) | 11,613 | 721 | | Net change in cash | 8,414,233 | 8,604,974 | (81,020) | | Cash at end of period | 17,141,775 | 8,727,542 | 122,568 | Notes to the Consolidated Financial Statements These notes detail operations, going concern, accounting policies, financial statement components, related parties, and subsequent events 1. Nature of Operations and Going Concern Mainz Biomed, an IVD test developer, faces going concern doubt due to recurring losses, but expects sufficient funding from cash and financing - Mainz Biomed N.V. acquired PharmGenomics GmbH in September 2021 and develops and sells in-vitro diagnostic (IVD) tests, primarily its flagship ColoAlert product, in European markets486487[489](index=489&type=chunk] - The company has recurring losses, an accumulated deficit totaling $43,032,294, and negative cash flows used in operating activities of $14,769,590 as of and for the year ended December 31, 2022, raising substantial doubt about its ability to continue as a going concern490 - Despite the substantial doubt, the company believes its currently available cash on hand ($17,141,775 at December 31, 2022) plus additional sources of funding (e.g., Controlled Equity Offering) will sufficiently fund its planned expenditures and obligations for at least one year490 2. Basis of Presentation The financial statements are prepared in accordance with IFRS as issued by the IASB, on a historical cost and accrual basis - The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), on a historical cost basis and using the accrual basis of accounting493[494](index=494&type=chunk] - Amendments to IAS 1, 'Classification of Liabilities as Current or Non-current,' are effective for reporting periods beginning on or after January 1, 2023, and the company is evaluating their impact on its consolidated financial statements495 3. Summary of Significant Accounting Policies and Use of Estimates and Judgments This section outlines accounting policies for inventories, property, leases, revenue, R&D, financial instruments, and share-based compensation - Inventories are measured at the lower of cost (based on weighted average) and net realizable value497 - Property and equipment are recorded at cost less accumulated depreciation, using the straight-line method over estimated useful lives of 5-10 years for laboratory equipment, 3-10 years for office equipment, and lease terms for right-of-use assets498[499](index=499&type=chunk] - Leases are accounted for under IFRS 16, recognizing right-of-use assets and lease liabilities, with the latter measured at the present value of lease payments using the incremental borrowing rate (IBR) when the interest rate implicit in the lease is not readily determinable502[503](index=503&type=chunk] - Revenue is recognized in accordance with IFRS 15 upon the satisfaction of performance obligations, which occurs upon delivery of products to laboratory partners or when testing results are delivered to end-user patients506[508](index=508&type=chunk] - Expenditure on research activities is recognized in profit or loss as incurred, while development expenditure is capitalized only if specific criteria (e.g., technical/commercial feasibility, probable future economic benefits) are met510[511](index=511&type=chunk] - Financial instruments are classified as at fair value through profit and loss (FVTPL), at fair value through other comprehensive income (FVTOCI), or at amortized cost, with initial recognition at fair value514 - Government grants are recognized as income when there is reasonable assurance of receipt and compliance with conditions; loans received from government grants are recognized at fair value, with the difference between fair value and amount received recorded as government grant gain532[533](index=533&type=chunk] - Share-based compensation for time-based stock options is estimated using the Black-Scholes-Merton pricing model, and for market-based options using Monte Carlo simulation techniques, expensed on a straight-line basis over the vesting/derived service period534[535](index=535&type=chunk] 4. Contribution Agreement The acquisition of PharmGenomics GmbH by Mainz Biomed N.V. in September 2021 was accounted for as a reverse acquisition under IFRS 3 but treated as a share-based payment transaction under IFRS 2 because Mainz Biomed N.V. was not a business - The acquisition of PharmGenomics GmbH by Mainz Biomed N.V. in September 2021 was considered a reverse acquisition under IFRS 3 but accounted for as a share-based payment transaction in accordance with IFRS 2, as Mainz Biomed N.V. did not meet the definition of a business546547[549](index=549&type=chunk] - An acquisition expense of $2,019,739 was recognized in the consolidated statement of loss and comprehensive loss, representing the value in excess of the net identifiable assets acquired from Mainz Biomed N.V549[550](index=550&type=chunk] 5. Trade and Other Receivables As of December 31, 2022, net trade and other receivables were $259,138, up from $111,842 in 2021 Trade and Other Receivables, Net (as of December 31, 2022 vs. 2021) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | | :-------------------------- | :------------------------ | :------------------------ | | Accounts receivable, net | 63,736 | 17,199 | | VAT receivable | 192,154 | 94,085 | | Other | 3,248 | 558 | | Total | 259,138 | 111,842 | 6. Prepaid and Other Current Assets Prepaid and other current assets totaled $801,959 as of December 31, 2022, a slight increase from $769,825 in 2021, primarily consisting of prepaid insurance, other prepaid expenses, and security deposits Prepaid and Other Current Assets (as of December 31, 2022 vs. 2021) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | | :-------------------------- | :------------------------ | :------------------------ | | Prepaid insurance | 624,033 | 743,750 | | Other prepaid expense | 55,356 | 12,590 | | Security deposit | 122,570 | 13,485 | | Total | 801,959 | 769,825 | 7. Property and Equipment Net property and equipment increased significantly to $661,692 as of December 31, 2022, from $37,884 in 2021, primarily due to $658,482 in additions (mainly laboratory and office equipment) Property and Equipment, Net (as of December 31, 2022 vs. 2021) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | | :-------------------------- | :------------------------ | :------------------------ | | Cost | 755,518 | 90,388 | | Accumulated depreciation | (93,826) | (52,504) | | Net Property and equipment | 661,692 | 37,884 | - Additions to property and equipment totaled $658,482 in 2022, primarily comprising laboratory equipment ($496,077) and office equipment ($162,405)553 8. Leases Right-of-use assets increased to $1,177,695 as of December 31, 2022, from $393,702 in 2021, with additions of $1,010,300 in 2022 Right-of-Use Assets (as of December 31, 2022 vs. 2021) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | | :-------------------------- | :------------------------ | :------------------------ | | Cost | 1,556,404 | 559,973 | | Accumulated amortization | (378,709) | (166,271) | | Net Right-of-Use Assets | 1,177,695 | 393,702 | Lease Liabilities (as of December 31, 2022 vs. 2021) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | | :-------------------------- | :------------------------ | :------------------------ | | Current portion | 285,354 | 55,076 | | Long-term portion | 959,116 | 387,766 | | Total Lease Liabilities | 1,244,470 | 442,842 | - The company uses an incremental borrowing rate of 10% per annum to measure the present value of future lease payments558 9. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses significantly increased to $2,656,679 as of December 31, 2022, from $784,786 in 2021, primarily due to increases in accounts payable and accrued liabilities Accounts Payable and Accrued Expenses (as of December 31, 2022 vs. 2021) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | | :-------------------------- | :------------------------ | :------------------------ | | Accounts payable | 1,333,044 | 747,768 | | Accrued liabilities | 1,236,942 | 26,989 | | Payroll liabilities | 86,693 | 6,812 | | Value added taxes payable | - | 3,217 | | Total | 2,656,679 | 784,786 | 10. Convertible Debt – Related Party Convertible debt, including related party loans, decreased to $75,238 as of December 31, 2022, from $77,887 in 2021 Convertible Debt Continuity (as of December 31, 2022 vs. 2021 vs. 2020) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | December 31, 2020 (USD) | | :-------------------------- | :------------------------ | :------------------------ | :------------------------ | | 2019 and 2020 Convertible Loans – Related party | 32,181 | 32,221 | 447,181 | | 2017 Convertible Loans | 43,057 | 45,666 | 86,189 | | Total | 75,238 | 77,887 | 533,370 | - During the year ended December 31, 2021, loan amounts totaling $508,237 were converted into 392,757 shares of share capital565 11. Loans Payable Loans payable decreased to $0 as of December 31, 2022, from $115,546 in 2021, as all loans were extinguished during the year Loans Payable Continuity (as of December 31, 2022 vs. 2021 vs. 2020) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | December 31, 2020 (USD) | | :-------------------------- | :------------------------ | :------------------------ | :------------------------ | | 0.1% Loan | - | 22,754 | 24,528 | | Related party 6% Loans | - | 39,819 | 41,326 | | LOC | - | 52,973 | 66,979 | | Total | - | 115,546 | 132,833 | - All loans payable, including the 0.1% Loan, Related Party 6% Loans, and the Line of Credit (LOC), were extinguished during the year ended December 31, 2022570 12. Silent Partnerships Silent partnership liabilities decreased to $1.91 million in 2022, comprising various agreements with differing interest and profit-sharing terms Silent Partnerships Continuity (as of December 31, 2022 vs. 2021 vs. 2020) | Category | December 31, 2022 (USD) | December 31, 2021 (USD) | December 31, 2020 (USD) | | :-------------------------- | :------------------------ | :------------------------ | :------------------------ | | 3% SPAs | 537,359 | 528,849 | 288,558 | | 3.5% SPAs | 43,938 | 43,271 | 43,313 | | 8.5% SPAs | 909,703 | 935,081 | 1,030,167 | | 8% SPAs | 417,549 | 432,918 | 456,212 | | Total | 1,908,549 | 1,940,119 | 1,818,250 | - The EUR300,000 (approximately $343,830) 8% SPA loan was repaid in January 2022396[575](index=575&type=chunk] - Some silent partnership agreements were received at below market interest rates, with the difference between the face value and fair value recognized as government grant income (e.g., $92,774 for 3% SPAs in 2020 and $51,410 for 3% SPAs in 2021)571[572](index=572&type=chunk] 13. Equity Authorized share capital is 45 million ordinary shares; 2022 saw $25.9 million from share issuance and increased stock options - The company has 45 million ordinary shares authorized, with a par value of EUR0.01 per share577 - During 2022, the company issued 1,725,000 ordinary shares for gross proceeds of approximately $25.9 million, 821,456 ordinary shares from warrant exercises (generating $382,500 in cash proceeds), and 73,000 ordinary shares for services valued at $906,920578 - During 2021, the company issued 6,000,000 common shares for the PharmGenomics acquisition, sold 3,510,000 shares for $2.2 million gross proceeds, sold 2,300,000 shares in its IPO for $10.43 million net proceeds, and issued 392,757 ordinary shares for the conversion of debt580 Warrants Activity (as of December 31, 2022 vs. 2021) | Metric | 2022 | 2021 | | :-------------------------- | :----------- | :----------- | | Balance as of Jan 1 | 3,916,000 | - | | Grants | - | 3,916,000 | | Exercised | (668,500) | - | | Expired | - | - | | Balance as of Dec 31 | 3,247,500 | 3,916,000 | | Weighted Average Exercise Price (Dec 31) | $3.00 | $3.08 | | Weighted Average Life (years) (Dec 31) | 0.44 | 1.60 | Stock Options Activity (as of December 31, 2022 vs. 2021) | Metric | 2022 | 2021 | | :-------------------------- | :----------- | :----------- | | Balance as of Jan 1 | 1,504,650 | - | | Grants | 894,500 | 1,504,650 | | Exercised | - | - | | Forfeited | (5,000) | - | | Expiry | - | - | | Balance as of Dec 31 | 2,394,150 | 1,504,650 | | Weighted Average Exercise Price (Dec 31) | $7.18 | $5.10 | | Weighted Average Life (years) (Dec 31) | 9.11 | 9.85 | | Exercisable as of Dec 31 | 1,398,179 | - | - The company recorded share-based compensation expenses of $8,917,237 in 2022 and $6,430,158 in 2021585 14. Related Party Transactions Key management personnel compensation (salaries and benefits) was $1,291,058 in 2022, up from $673,464 in 2021 Key Management Personnel Compensation (Salaries and Benefits) | Year | Amount (USD) | | :--- | :----------- | | 2022 | 1,291,058 | | 2021 | 673,464 | | 2020 | 202,442 | - The company incurred interest expense of $32,457 and accretion expense of $14,847 on balances owing to related parties during 2022589[590](index=590&type=chunk] - Expenses for royalties and other associated costs owed to ColoAlert AS (a related party) were $97,924 in 2022, with no unpaid liabilities recorded as of December 31, 2022591 15. Government Grants The company received government grants for R&D activities, totaling $151,054 in 2022 and $298,997 in 2021 Government Grants Received for R&D Projects | Project | 2022 (USD) | 2021 (USD) | 2020 (USD) | | :------------------------------------------------- | :----------- | :----------- | :----------- | | Rapid detection of antibody-based pathogens | 42,055 | 102,780 | 91,461 | | Multi-marker test for the early detection of pancreatic cancer | 108,999 | 196,217 | 100,591 | | Microarray based on nucleic acid detection for respiratory pathogens | - | - | 5,995 | | Genetically based rapid detection of respiratory tract infections | - | - | 26,087 | | Total | 151,054 | 298,997 | 224,134 | 16. Financial Instrument Risk Management The company manages foreign currency, credit, and liquidity risks, with $17.14 million cash covering current liabilities, and no interest rate risk - The company is exposed to foreign currency risk (primarily U.S. dollars and Euro) and manages this risk by holding cash deposits in both currencies to match budgeted expenditures601 - As of December 31, 2022, the company had an unrestricted cash balance of $17,141,775 to settle current liabilities of $3,889,340, indicating strong liquidity597 - The company is not exposed to interest rate risk as its financial liabilities carry interest at fixed rates602 Contractual Maturities of Financial Liabilities (as of December 31, 2022) | Category | Within one year (USD) | Between one and five years (USD) | More than five years (USD) | | :-------------------------- | :-------------------- | :----------------------------- | :------------------------- | | Accounts payable and accrued liabilities | 2,656,679 | - | - | | Accrued payroll | 260,000 | - | - | | Convertible debt | 75,238 | - | - | | Silent partnerships | 965,335 | 943,214 | - | | Lease liabilities | 285,354 | 771,457 | 187,659 | | Total | 4,242,606 | 1,714,671 | 187,659 | 17. Concentrations In 2022, three major customers accounted for approximately 77% of the company's annual revenue, indicating a high customer concentration - For the year ended December 31, 2022, three major customers accounted for approximately 77% of the company's annual revenues, indicating a high customer concentration, up from 56% in 2021 and 46% in 2020605 18. Income Taxes The company reported an expected income tax recovery of $0 for 2022, 2021, and 2020, despite significant net losses Income Tax Provision Reconciliation (Year Ended December 31, 2022 vs. 2021 vs. 2020) | Metric | 2022 (USD) | 2021 (USD) | 2020 (USD) | | :------------------------------------------------- | :----------- | :----------- | :---------