ITEM 7. 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 consolidated financial statements and the related notes. Some of the information contained in this discussion and analysis or set forth elsewhere, including information with respect to its plans and strategy for our business and related financing, includes forward-looking statements that involve risks, uncertainties and assumptions. You may read the “Forward-Looking Statements” section in this annual report and the sections entitled “Risk Factors” in other documents that we have filed with the U.S. Securities and Exchange Commission for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
The following discussion refers to our financial results for the years ended December 31, 2025 and December 31, 2024. For purposes of this following discussion the terms “we”, ‘our” or “us” or “the Company” and similar references refers to Mainz Biomed N.V. and its affiliates.
Organization and Overview of Operations
We develop and sell in-vitro diagnostic (“IVD”) tests for the early detection of cancer. Throughout our 2025 fiscal year, our legacy ColoAlert product was marketed and sold in European markets. Since 2020, we have been developing both a blood and stool test for the early detection of pancreatic cancer. From 2022 to February 2026, we were developing our next generation colorectal cancer screening product, with the intention to launch these products in the future in the United States and in Europe.
In February 2026, the Board made the decision to close our colorectal cancer line of business to focus on the pancreatic screening line of business. As a result of that decision the Board marketed for sale the two groups of assets related to the ColoAlert and NextGen product lines, which were primarily the two lines intellectual property. The decision also resulted in the termination of all employees of our subsidiary in Germany, with termination dates between February and May 2026.
In March 2026, the Company announced the appointment of Robert Liscouski as its non-executive Chairman, with David Lazar assuming the position of director and co-CEO. These changes were made to align the Company’s strategy to expand its business focus in the area of post-quantum cybersecurity, while continuing to pursue the commercialization of its blood-based pancreatic cancer detection product candidate. The Company announced its intention to change its name, subject to shareholder approval, to Quantum Cyber N.V., while using the name Quantum Cyber as a d/b/a until that time. In conjunction with the name change the Company changed its NASDAQ ticker symbol to QUCY.
Business Highlights
During the fiscal year ended December 31, 2025, the Company continued to advance its diagnostic portfolio, including the commercialization of its ColoAlert colorectal cancer screening test in Europe and the development of next-generation diagnostic products. The Company’s results for the year reflect continued investment in research and development, ongoing commercialization efforts, and actions taken to streamline operations and align costs with strategic priorities. Revenue was primarily generated from sales of ColoAlert test kits in European markets, while operating expenses were driven mainly by research and development activities, sales and marketing efforts, and general and administrative costs.
Known Trends, Events, and Uncertainties
In February 2026, the Board made the decision to close the Company’s colorectal cancer line of business to focus on the pancreatic screening line of business. As a result of that decision the Board marketed for sale the two groups of assets related to the ColoAlert and NextGen product lines, which were primarily the two lines intellectual property. The decision also resulted in the termination of all employees in the Company’s subsidiary in Germany, with termination dates between February and May 2026. As a result of the closing of subsidiary and proposed sales of intellectual property, the Company has recorded an impairment loss on the value of the intellectual property of $2,640,280 in 2025.
Results of Operations
Comparison of the Year Ended December 31, 2025 and 2024
The following table provides certain selected financial information for the periods presented:
Years ended
December 31,
Change
Change
Revenue
Cost of sales
Product margin
Gross Margin
Sales and marketing
Research and development
General and administrative
Impairment loss of intangible asset
Restructuring expense
Total operating expenses
Loss from operations
Other expense
Net loss
Total comprehensive loss
Basic and dilutive loss per ordinary share
Weighted average number of ordinary shares outstanding
Total Revenue
Total revenue for the year ended December 31, 2025 was $537,080 as compared to $893,991 for the year ended December 31, 2024, a decrease of 40%. This decrease was attributable to the Company winding down its direct to consumer business in August 2024 to focus on ColoAlert sales to lab partners, primarily in Germany.
Cost of Revenue
Cost of revenue for the year ended December 31, 2025 was $147,288 as compared to $319,108 for the year ended December 31, 2024, a 54% decrease. This decrease was attributable to the Company winding down its direct to consumer business in August 2024 to focus on ColoAlert sales to lab partners, primarily in Germany.
Gross profit
Gross profit decreased to $389,792 in the year ended December 31, 2025 compared to $574,883, for the year ended December 31, 2024. This gross profit decrease, resulting in an improvement of gross margin from 64% to 73%, was attributable to improved profits resulting from the Company winding down its direct to consumer business in 2024 to focus on ColoAlert sales to lab partners. Margins from product sales are higher than the margins on the direct to consumer business, which included the service element of performing tests in our diagnostic lab.
Research and Development Expenses
Research and development expenses for the year ended December 31, 2025 were $4,960,566 compared to $5,839,033 for the year ended December 31, 2024, a decrease of $878,467. This decrease was driven by a reduction of personnel related costs of $2.8 million resulting from our restructuring in 2024 offset by an increase of $2.0 million resulting from costs related to the eAArly Detect 2 clinical study.
Sales and Marketing Expenses
Sales and marketing expenses for the year ended December 31, 2025, were $3,820,509 compared to $6,581,333 for the year ended December 31, 2024, a decrease of $2,760,824. This decrease was related to a decrease in our marketing and advertising expense of $1.9 million as we focused more of our efforts on sales to our lab partners as opposed to online marketing for consumer sales. Accompanying this decrease, our reduced labor costs (salary and consulting) decreased by $0.8 million, in line with our shift in focus away from consumer sales.
General and Administrative Expenses
General and administrative expenses for the year ended December 31, 2025 were $5,107,535 compared to $6,650,561 for the year ended December 31, 2024, a decrease of $1,543,026. The decreased expenses were primarily the result of a decrease of $2.1 related reduced labor costs (salary and consulting) resulting from our restructuring in 2024. This was offset by an increase of $1.5 million for non-cash stock option expense for the year ended December 31, 2025 compared to the same period in 2025. Office and insurance cost also decreased by $0.6 million due to our focused cost reduction efforts.
Restructuring Expenses
Restructuring expenses for the year ended December 31, 2025 were nil compared to $277,160 for the year ended December 31, 2023, a decrease of $277,160. During July 2024 and October 2024, the Company restructured its operations to focus on its ColoAlert business in Europe, the development of its next generation product, and planning for the Early Detect 2 clinical study in the U.S. in 2025. In line with that focus, the Company implemented cost reduction efforts which included the reduction of its operating costs, including the reduction of personnel by 65%, reduction of external consulting costs, and the sale of its European Oncology Lab (“EOL”) business in St. Ingbert, Germany to a related party. The sale of the EOL business included a payment to the Company of €31,511 ($32,785). Additionally, the Company amended the employment contracts of its CEO and CFO, reducing the salaries of those officers to 60% and 50% of their then current salaries, respectively, effective November 1, 2024. For the year ended December 31, 2024, the Company recorded severance expenses and impairment loss from this transaction of $277,160 as restructuring expense and gain on sale of EOL of $28,328. In conjunction with its restructuring program, for the year ended December 31, 2024, the Company recorded an on construction in of $47,449 as the construction project was on hold and there is not a plan for future use.
Impairment of Intangible Asset
As a result of the closing of our subsidiary in Germany, in early 2026, and proposed sales of intellectual property, the Company has recorded an impairment loss on the value of the intellectual property of $2,640,280 in 2025.
Other Income (Expense)
Other expense, net for the year ended December 31, 2025 was $71,620 compared to $2,825,568 for the year ended December 31, 2024, resulting in decreased other expenses (net) of $2,753,948. This decrease was primarily the result of decreased interest expense of $0.6 million and the decrease in the fair value adjustment of $2.1 million, from the Company’s convertible debt balances which were substantially reduced for the year ended December 31, 2025 compared to the same period in 2024.
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, debt and equity financing. As of December 31, 2025, we had $889,091 of cash and cash equivalents, compared to $6,235,670 as of December 31, 2024.
The following table summarizes our cash flows from operating, investing and financing activities:
Year Ended
December 31,
Change
Cash used in operating activities
Cash used in investing activities
Cash provided by financing activities
Cash Flow from Operating Activities
For the year ended December 31, 2025, cash flows used in operating activities was $10,979,587 compared to $17,329,254 used during the year ended December 31, 2024. The improvement in cash flows used in operating activities of $6,349,667 was primarily the result of our smaller operating loss for the year ended December 31, 2025, net of non-cash stock-based compensation, impairment losses, changes in the fair value of convertible debt, depreciation and amortization, and timing differences for the settlement of assets and liabilities, as compared to the year ended December 31, 2024.
Cash Flows from Investing Activities
During the year ended December 31, 2025, we used $1,033,401 in investing activities compared to $198,817 used during the year ended December 31, 2024. The increase in cash flows used in investing activities of $834,584 was the primarily the result of payments for the acquisition of our intellectual property for our development of a blood based pancreatic cancer test.
Cash Flows from Financing Activities
During the year ended December 31, 2025, we had cash flow provided by financing activities of $6,763,040 compared to cash flow provided by financing activities of $16,791,085 for the year ended December 31, 2024, a decrease of $10,028,045. This decrease was primarily the result of the Company closing an $8.0 million unit financing closed in December 2024, which proceeds were used to fund 2025 operations, and the lower amount of funds necessary to fund operating cash flows.
Working Capital Discussion
We had recurring losses, accumulated deficit totaling $104.9 million and negative cash flows used in operating activities of $11.0 million as of and for the year ended December 31, 2025. We also had $0.9 million of cash on hand on December 31, 2025, and a working capital deficit, of $1.9 million.
These conditions are indicators that impact 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.
Historically, the Company has relied upon funds from its stockholders and loans from third parties. Management may raise additional capital through future public or private offerings of the Company’s stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Company’s failure to do so could have a material and adverse effect upon its operations and its stockholders.
We plan to fund our cash flow and working capital needs through current cash on hand and future debt and/or equity financings which we may obtain through one or more public or private equity offerings, debt financings, government or other third-party funding, strategic alliances or collaboration agreements. During early 2026, the Company completed a $6 million preferred stock offering and has an Equity Distribution Agreement in place which allows the Company to raise additional equity capital.
The Company believes that its currently available cash on hand, together with additional financing described above, may be sufficient to meet its planned expenditures and obligations for at least the one-year period following the issuance of its consolidated financial statements; however, such expectations are subject to significant uncertainty, and substantial doubt remains about the Company’s ability to continue as a going concern.
Our consolidated 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 consolidated 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.
Critical Accounting Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). 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.
In accordance with US GAAP, we evaluate our estimates and judgments on an ongoing basis.
Useful lives of property and equipment
Estimates of the useful lives of property and equipment and intangible assets 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, 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 and intangible assets would increase the recorded expenses and decrease the non-current assets.
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 and warrants. In applying these models, management must estimate the expected future volatility of the Company’s estimated share price and makes such assumptions based on the historical stock price of Company’s common stock under an expectation that historical volatility is representative of the expected future volatility.
Estimating the fair value of financial instruments
When the Company recognizes a financial instrument, where there is no active market for such an 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.
Indefinite-lived intangible assets impairment
We are required to use judgment when applying the indefinite-lived intangible assets impairment test. Changes in these estimates could materially affect our assessment of the fair value and indefinite-lived intangible assets impairment. Significant estimates used in our impairment test include the determination of the discount rate, revenue growth rates, long-term growth rates, and forecasted profitability of our business.
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 the customer’s actual default in the future.
Other significant judgments
The preparation of these financial statements in accordance with U.S. GAAP 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;
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.
Conversion from IFRS to U.S. GAAP
As the Company no longer qualifies as a Foreign Private Issuer, its consolidated financial statements have been retroactively converted from IFRS to U.S. GAAP from inception. Refer to Note 2 (Basis of presentation) for details.
The cumulative effect of the transition from IFRS to U.S. GAAP, for periods prior to those presented, have been recorded as an adjustment to the opening accumulated deficit as of January 1, 2024, resulting in a change from $69,328,021 to $67,092,885 and the details as follows;
Opening accumulated deficit adjustment
Beneficial conversion feature
Reverse acquisition accounting
Leases
The significant differences between IFRS and U.S. GAAP as they relate to the Company are as follows:
Beneficial conversion feature
For convertible instruments with a liability component and a conversion feature that exchanges a fixed amount of cash for a fixed number of shares, under IFRS, the Company applied split accounting between debt contract and the conversion feature. Whereas U.S. GAAP, if the conversion feature is not recorded separately, then the entire convertible instrument may be considered one unit of account.
Reverse acquisition accounting
For a share exchange for reverse acquisition with a public shell entity, under IFRS, the Company applied a share-based payment transactions in accordance with IFRS 2 as a public shell company would not meet the definition of a business under Business Combination IFRS 3. Whereas U.S. GAAP, the Company accounted for a share exchange as a recapitalization.
Leases
Under IFRS, the Company, as lessee, applied the single lease model that is similar to the accounting for a finance lease under U.S. GAAP. Under IFRS, lease expenses are recognized on a straight-line basis for the right-of-use asset amortization component and the effective interest rate method to the lease liability. Under U.S. GAAP, there is dual classification lease accounting model for lessees: finance leases and operating leases. The Company, as lessee, classified all its leases as operating leases and recognizes a single lease expense, including both a right-of-use asset depreciation component and an interest expense component, on a straight-line basis throughout the lease term.
