AXIM BIOTECHNOLOGIES: Discussion and analysis by management of the financial situation and operating results. (form 10-Q)

WHERE YOU CAN FIND MORE INFORMATION



We file annual, quarterly and current reports, proxy statements and other
information required by the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), with the Securities and Exchange Commission (the "SEC"). You
may read and copy any document we file with the SEC at the SEC's public
reference room located at 100 F Street, N.E., Washington, D.C. 20549, U.S.A.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference room. Our SEC filings are also available to the public from the SEC's
internet site at http://www.sec.gov.



On our website, http://www.aximbiotech.com, we post the following recent filings as soon as reasonably possible after they are filed electronically or provided to the SECOND: our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K and any amendments to these reports filed or provided in accordance with section 13 (a) or 15 ( d) of the Foreign Exchange Law.

When we use the terms “AXIM”, “Company”, “we”, “our” and “we”, we mean Axim Biotechnologies, Inc., a Nevada company, and its consolidated subsidiaries, taken as a whole, as well as any predecessor entity, unless the context indicates otherwise.


                           FORWARD LOOKING STATEMENTS



This Quarterly Report on Form 10-Q, the other reports, statements, and
information that the Company has previously filed with or furnished to, or that
we may subsequently file with or furnish to, the SEC and public announcements
that we have previously made or may subsequently make include, may include, or
may incorporate by reference certain statements that may be deemed to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended, and that are intended to enjoy the
protection of the safe harbor for forward-looking statements provided by that
Act. To the extent that any statements made in this report contain information
that is not historical, these statements are essentially forward-looking.
Forward-looking statements can be identified by the use of words such as
"anticipate", "estimate", "plan", "project", "continuing", "ongoing", "expect",
"believe", "intend", "may", "will", "should", "could", and other words of
similar meaning. These statements are subject to risks and uncertainties that
cannot be predicted or quantified and, consequently, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Such risks and uncertainties include, without limitation, marketability of our
products; legal and regulatory risks associated with trading publicly; our
ability to raise additional capital to finance our activities; the future
trading of our common stock; our ability to operate as a public company; our
ability to protect our proprietary information; general economic and business
conditions; the volatility of our operating results and financial condition; our
ability to attract or retain qualified senior management personnel and research
and development staff; and other risks detailed from time to time in our filings
with the SEC, or otherwise.



Information regarding market and industry statistics contained in this report is
included based on information available to us that we believe is accurate. It is
generally based on industry and other publications that are not produced for
purposes of securities offerings or economic analysis. Forecasts and other
forward-looking information obtained from these sources are subject to the same
qualifications and the additional uncertainties accompanying any estimates of
future market size, revenue and market acceptance of products and services. We
do not undertake any obligation to publicly update any forward-looking
statements. As a result, investors should not place undue reliance on these
forward-looking statements.



Overview



Axim Biotechnologies, Inc., a Nevada corporation, was originally incorporated in
the State of Nevada on November 18, 2010, under the name AXIM International,
Inc. On July 24, 2014, we changed our name to AXIM Biotechnologies, Inc. to
better reflect our business operations. Our principal corporate headquarters are
located at 6191 Cornerstone Court, E., Suite 114, San Diego, CA 92121. Our
website address is www.aximbiotech.com. The information contained on, or that
can be accessed through, our website is not a part of this prospectus. The
trademarks, trade names and service marks appearing in this prospectus are the
property of their respective owners.



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The acquisition of Sapphire Biotech, Inc.

At March 17, 2020, the Company has entered into a share exchange agreement (“agreement”) with Sapphire Biotech, Inc., a Delaware Company (“Sapphire”) and all of the shareholders of Sapphire (collectively, the “Sapphire Shareholders”). Following the closing of the transaction, Sapphire became a wholly owned subsidiary of AXIM.

Ongoing operations following the acquisition of Sapphire Biotech, Inc.


Oncology


We continue to advance our mission of improving global cancer care through the
development of novel therapeutics for controlling metastatic cancer spread, and
diagnostics for early cancer detection, response to treatment, and for
monitoring post-treatment recurrence. We have made significant progress with the
development of additional anologs of SBI-183 licensed from Mayo Clinic and
Arizona State University.



We have been investigating the enzyme Quiescin Sulfhydryl Oxidase 1 (QSOX1), a
master regulator of extracellular matrix remodeling, and its overexpression by
tumor cells. Overexpression of QSOX1 has been unambiguously linked to promoting
tumor invasion and metastasis. One of the Company's co-founders, Dr. Douglas
Lake, has discovered that a small molecule SBI-183 inhibited the enzymatic
activity of QSOX1 and as a result suppressed tumor cell invasion in vitro and
metastasis of breast tumor cells in vivo. Through its medicinal chemistry
efforts the Company synthesized multiple structural analogs of SBI-183 and
unveiled SPX-1009 lead compound that demonstrated ten-fold improvement in
suppressing invasion and metastasis in several cancer models.



The Company believes that its therapeutic drug development strategy targeting
the metastatic spread is a unique, novel and pioneering approach to saving
lives. The near-term objective of the Company is to demonstrate the ability of
its lead anti-QSOX1 drug candidates to suppress tumor growth and metastasis and
to advance them into pre-clinical studies.



Additionally, the Company believes that QSOX1 has a significant potential to be
developed into an important biomarker for liquid biopsy cancer test. The Company
anticipates that ongoing diagnostic product development in 2020 will result in a
commercial prototype in early 2021 of a universal companion diagnostic to
measure the efficacy of any ongoing cancer treatments based on measuring QSOX1
levels. Ultimately, the Company aims to develop a blood test that makes possible
the early detection of cancer.



Covid-19



With the onset of the COVID-19 pandemic, we began creating COVID-19 rapid
diagnostic tools, including multiple first-in-class COVID-19 neutralizing
antibody tests and other innovations. AXIM's rapid diagnostic test for detecting
neutralizing antibodies is the first of its kind. The test has the ability to
deliver results in under 10 minutes and can detect the level of neutralizing
antibodies an individual has. We have designed this test to be used at
point-of-care facilities to measure levels of neutralizing antibodies in
convalescent plasma so that plasma with the highest levels of neutralizing
antibodies can be identified and administered to patients fighting COVID-19.
Without this knowledge, many patients could be undertreated with
non-neutralizing plasma and may not benefit from this treatment. Another
application of our point-of-care test is to help ensure that vaccines and
monoclonal antibody drugs elicit high levels of neutralizing antibodies. When a
vaccine is available, manufacturers can employ AXIM's rapid point-of-care test
to evaluate protective immune responses in vaccine recipients.



Our high throughput rapid neutralizing antibody test, NeuCovix-HT™, was designed
to solve a major issue that COVID-19 researchers are currently facing.
NeuCovix-HT™ solves the problem of vaccine and monoclonal antibody drug
manufacturers' requirement in Phase 3 clinical trials to measure neutralizing
antibody levels longitudinally in large groups of volunteer recipients using
expensive and laborious virus-based assays. Clinical centers participating in
the vaccine trials could employ NeuCovix-HT™ tests to measure neutralizing
antibodies from vaccine recipients in thousands of plasma samples per day and be
able to test all recipient's multiple times.



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As more of the population recovers from COVID-19, we believe NeuCovix-HT™ will
benefit clinical laboratories running batches of thousands of tests per week to
measure levels of neutralizing antibodies in COVID-19 convalescent plasma.
NeuCovix-HT™ distinguishes which convalescent plasmas contain low and high
levels of neutralizing antibodies so that patients fighting COVID-19 can be
treated with plasma from donors with the highest levels of neutralizing
antibodies. We are in the process of sourcing materials and optimizing the test
and expect to finish in the first quarter of 2021.



As our scientific team was hard at work developing our COVID-19 rapid diagnostic
tests and virus-capturing face mask, we were frustrated by the delays and costs
caused by lack of supply of a recombinant virus binding protein (VBP) for
SARS-CoV-2 that was essential to our testing. To continue our projects as
planned and decrease overall costs, AXIM's talented team decided to make its own
VBP that is even more potent than current outsourced options. AXIM's laboratory
tests have proven the RBD spike protein binds with our novel VBP. Initial tests
also show that our novel VBP is approximately 10 times more potent and stable
than current VBP options on the market. This now in-house development of the
core ingredients needed to manufacture strips and masks could potentially derive
additional revenue and allows us to control our supply chain. We have already
manufactured enough VBP for millions of rapid diagnostic tests.



In August, we signed an exclusive licensing, manufacturing and distribution
agreement with Empowered Diagnostics LLC to execute the high volume production
of our rapid point-of-care diagnostic test. AXIM and Empowered have completed
the technology transfer and Empowered Diagnostics has built out their production
facility to be able to manufacture millions of our tests per month. As what we
believe to be the last step for the EUA application already filed with the FDA
for our plasma test we will be conducting a live virus comparison study on 30
plasma samples at a Biosafety Level 3 (BSL3) laboratory. As soon as this
comparison study is finished, we will amend the EUA and we expect to begin sales
and manufacturing immediately and we expect to see significant revenue shortly
thereafter.



We have also received Institutional Review Board approval to begin a clinical
study at Arizona State University with our point-of-care whole blood test as the
last step in what will be another EUA application. We hope to be the first
FDA-approved rapid point-of-care test for neutralizing antibodies.



Milestones 2020 to Date


On January 13, 2020, Sapphire Biotech enters into an agreement with Skysong
Innovations, LLC for an exclusive license to technology relating to SBI-183, an
anti-metastatic compound suppressing tumor cell growth and blocking metastasis
(and grants equity to Mayo Clinic Ventures and Arizona State University).



At February 6, 2020, Sapphire Biotech signs a sponsored research agreement (SRA) with Arizona State University conduct in vitro testing and preclinical in vivo animal studies on cancer inhibiting agents that will prevent metastasis.

At March 18, 2020, Axim Biotechnologies announces the acquisition of Sapphire Biotech.

On March 24, 2020, Sapphire announces the completion of in-vitro studieson the
new compound, SPX-1009 proving ten-fold greater inhibition of tumor metastasis
than parent compound SBI-183 following testing of over 80 analogs.



At March 27, 2020, Sapphire Biotech signs agreement with TD2 to initiate animal studies to assess the efficacy of SPX-1009 as an anti-metastatic treatment and to measure QSOX1 levels as a potential companion diagnostic test.

On July 15, 2020, AXIM announced the development of a rapid diagnostic test
measuring levels of functional neutralizing antibodies that are believed to
prevent SARS-CoV-2 from entering the host cells. Unlike currently available
serological COVID-19 tests that detect an antibody response to the virus, AXIM's
rapid 10-minute test measures a specific subpopulation of antibodies to block
binding of the virus to host cell receptors. While there are expensive, time
consuming laboratory tests that measure neutralizing antibodies, AXIM's
test differs in that it is a portable, low cost, rapid point-of-care test with
results in 10 minutes. Status: Ongoing



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On August 5, 2020, announced today the development, patent filing and Emergency
Use Approval (EUA) filing of NeuCovix-HT™, a high throughput (HT) patent-pending
diagnostic test that measures levels of functional antibodies in plasma or serum
that neutralize SARS-CoV-2, the virus that causes COVID-19. Unlike current
serology tests for COVID-19 that qualitatively detect antibodies to the virus,
NeuCovix-HT™ quantitatively measures functional antibodies that block binding of
the virus to host cell receptors. Status: Ongoing



On August 11, 2020, Sapphire was awarded a $395,880 phase I Small Business
Innovation Research (SBIR) grant by the National Cancer Institute (NCI). The
grant will support the continued development of novel small molecules that
inhibit the enzymatic activity of Quiescin Sulfhydryl Oxidase I ("QSOX1") based
on a lead compound. QSOX1 is a tumor-derived enzyme that is important for cancer
growth, invasion and metastasis. Status: Ongoing



At Aug 24, 2020, Axim has signed an exclusive limited license, manufacturing and distribution agreement with Authorized diagnostics LLC (“Authorized diagnostics“) for the high volume production of the AXIM rapid diagnostic test measuring the levels of functional neutralizing antibodies that would prevent SARS-CoV-2 from entering host cells. Status: ongoing



On September 16, 2020, re filed the Emergency Use Authorization (EUA)
application with the Food and Drug Administration (FDA) for measuring COVID-19
neutralizing antibodies in plasma and serum through its first-in-class rapid
diagnostic test. Status: Ongoing



On September 22, 2020, Axim announced that the United States Patent and
Trademark Office (USPTO) has issued the Company a new Notice of Allowance for a
patent (Application No. 15/748,784) on anti-neoplastic compounds and methods
targeting Quiescin Sulfhydryl Oxidase 1 (QSOX1), an enzyme important for tumor
cell growth, invasion and metastasis.



At September 29, 2020, Axim announced that it has filed a provisional patent for a first-class face mask that captures and deactivates SARS-CoV-2, the coronavirus responsible for the ongoing COVID-19 pandemic. Status: In progress

On September 30, 2020, Axim announced today that it has filed a provisional
patent for a recombinant virus binding protein (VBP) for SARS-CoV-2, the
coronavirus responsible for the current COVID-19 pandemic, and is now
manufacturing the VBP. The Company no longer needs to rely on outside protein
supply to continue our research and can greatly cut down on our manufacturing
costs.


At December 3, 2020, we announced the development and filing of a patent for an enzyme-linked immunosorbent assay (“ELISA”) -based diagnostic test for the detection of neutralizing antibodies to SARS-CoV-2. Status: In progress

At February 3, 2021, we announced the launch of clinical trials for ImmunoPass, our rapid point-of-care test that semi-quantitatively measures levels of neutralizing antibodies against COVID-19. Status: In progress



On March 8, 2021, we announced that we had successfully completed point-of-care
clinical trials on our much awaited ImmunoPass rapid test that
semi-quantitatively measures levels of COVID-19 neutralizing antibodies to help
understand COVID-19 immunity, validate vaccine's effectiveness and estimate how
long the vaccine will be effective in patients.



At March 24, 2021, the Company, through Authorized diagnostics, has filed a UAE application with the FDA to measure COVID-19 neutralizing antibodies in whole blood for rapid point-of-care diagnostic testing. Status: In progress


Anticipated Expenses


Over the next twelve months, we expect to incur costs related to: (i) filing Exchange Act reports, (ii) contractual obligations, (iii) clinical trials and (iv) continuing research and development.


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Intellectual Property



I. QSOX1-RELATED INVENTIONS.



QSOX1 (Quiescin Sulfhydryl Oxidase 1) is an enzyme that is over-expressed in
multiple tumor types. Genetically silencing QSOX1 in tumors slows their growth,
migration, invasion and metastasis. Based on these findings, the inventors of
the inventions described below tested libraries of chemical compounds for the
ability to inhibit QSOX1. Several inhibitors of the QSOX1 enzyme were
identified. Initially, SBI-183 was identified and animal studies confirmed its
ability to suppress tumor growth. The inventors subsequently developed an entire
library of analogs of the parent compound, SBI-183, detailed in several
inventions below to identify compounds with greater inhibitory activity. These
compounds have the potential to be developed into therapeutic treatments for
metastasis and to be used in conjunction with other neoplastic treatments,
such
as chemotherapy.



Included in the group of QSOX1-related inventions below is the identification of
a specific splice variant of QSOX1, identified as QSOX1-L, as a unique Biomarker
for the detection of certain tumors overexpressing QSOX1. This biomarker formed
the basis for the invention relating to a Rapid Diagnostic Test for certain
cancers.



A. Antineoplastic compounds and methods targeting QSOX1

1. U.S. Provisional Patent Application No. 62 / 218,732 filed on September 15, 2015

PCT Provisional Patent Application W02017048712A1

U.S. Non-Provisional Application No. 15 / 748,784 filed on Jan. 30, 2018

Dated patent authorization notice September 17, 2020

Title: Antineoplastic compounds and methods targeting QSOX1

Assignee: Mayo Clinic / Arizona State University

Exclusive licensee: Axim Biotechnologies, Inc.



Compounds and methods involving inhibition of the enzymatic activity of QSOX1.
The compounds and methods can be used in treatment of neoplastic cells to
suppress tumor growth and invasion in a variety of cancers, including but not
limited to myeloma and cancers of the breast, kidneyand pancreas. Claims include
the compound SBI-183 as a neoplastic agent found to inhibit tumor growth,
invasion and suppress metastasis of tumors by inactivating QSOX1.



2. U.S. Provisional Patent Application No. 62/916,065 filed on October 16, 2019

Title: Chemical compounds that inhibit QSOX1 for the treatment of cancer

Assignees: Arizona State University / Axim Biotechnologies, Inc.



Derivatives of the parent compound SBI-183 have been identified as inhibiting
the enzymatic activity of QSOX1. These compounds can be used in treatment of
neoplastic cells by suppressing tumor growth and invasion in a variety of
cancers that overexpress QSOX1, including but not limited to myeloma and cancers
of the breast, kidney and pancreas.



3. US Provisional Patent Application No. 62/916,067 filed October 16, 2019

Title: Antineoplastic compounds and methods targeting QSOX1

Assignees: Arizona State University / Axim Biotechnologies, Inc.


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Exclusive licensee: Axim Biotechnologies, Inc.

Compounds that are structurally distinguishable from the compound, SBI-183 are
SPX-013 and SPX-014, and have been identified as inhibiting the enzymatic
activity of QSOX1. The compounds and methods can be used in treatment of
neoplastic cells by suppressing tumor growth and invasion in a variety of
cancers, including but not limited to myeloma and cancers of the breast, kidney
and pancreas.


4. US Provisional Patent Application No. 62/944/283 Filed December 5, 2019

Title: Antineoplastic compounds and methods targeting QSOX1

Assignees: Arizona State University / Sapphire Biotech, Inc.

Exclusive licensee: Axim Biotechnologies, Inc.

Compounds that are structurally distinguishable from the SBI-183 have been
identified as inhibiting the enzymatic activity of QSOX1. One in particular,
SPX-1009, also inhibits tumor cell growth, migration and invasion in vitro and
metastasis in a mouse model of triple negative breast cancer. This invention
concerns analogs of this lead compound SPX-1009. In in vitro testing, the lead
compound SPX-1009 and its analogs have been found to be more potent and to have
improved pharmacodynamics in mouse models of cancer.



5. U.S. Provisional Patent Application No. 62959752 Filed January 10, 2020

Title: Anti-neoplastic compounds and methods targeting QSOX1 and inhibiting cellular responses to the MET receptor.

Assignee: Axim Biotechnologies, Inc.



Compounds and methods involving inhibition of the enzymatic activity of QSOX1
and methods of inhibiting cellular responses to the MET receptor signaling are
disclosed which include administering any one or more compounds or
pharmaceutical compositions. The compounds and methods can be used in treatment
of neoplastic cells, for example, to suppress tumor growth and invasion in a
variety of cancers, including but not limited to myeloma and cancers of the
breast, kidney and pancreas. The uniqueness of the invention relates to the
combined inhibition of QSOX1 and cellular responses to the MET receptor
signaling.



B. Unique biomarker QSOX1-L identified and rapid diagnosis for various cancers

1. United States Provisional Patent Application No. 62 / 829,556 Filed April 4, 2019;

Utility Patent Application No. 16 / 841,521 filed April 6, 2020

International patent application No. PCT / US2020 / 026936 filed April 6, 2020

Title: Systems and methods for rapid diagnosis of various cancers

Assignee: Axim Biotechnologies, Inc.



QSOX1-L, a splice variant of QSOX1, has been identified as a novel biomarker of
bladder cancer and possibly other cancers in serum. Proprietary antibodies have
been generated that selectively detect only this variant and not others. QSOX1-L
has been used to develop a rapid and cost-effective diagnostic test for bladder
and possibly other urologic cancers from urine.



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II. INVENTIONS RELATED TO SARS-CoV-2

A. Rapid diagnostic test to measure levels of neutralizing antibodies against SARS-CoV2

1.U.S. Provisional Application No. 63 / 023,646 filed May 12, 2020

Title: Test and treatment of convalescent plasma

Assignee: Axim Biotechnologies, Inc. (Axim) and Arizona State University (KNEW)

Exclusive licensee: Axim Biotechnologies, Inc. (ASU interest) Exclusive licensee: Authorized Diagnostics, Inc. (Axim’s interest)



The invention refers to a Rapid Test to measure levels of Neutralizing
Antibodies to SARS-CoV2. Unlike currently available serological COVID-19 tests
that detect an antibody response to the virus, the rapid 10-minute test measures
a specific subpopulation of antibodies that block binding of the virus to host
cell receptors. In contrast to current tests using live viruses which are
time-consuming, expensive and require trained personnel in a tightly controlled
laboratory setting to measure neutralizing antibodies, the rapid test is a
portable, low cost, rapid point- of-care test that measures levels of
neutralizing antibodies in 10 minutes.



2. US Provisional Application No. 63 / 144,454 filed February 1, 2021; United States Provisional Application No. 63 / 152,774 Filed February 23, 2021

Title: LFA rapid diagnostic test for measuring levels of neutralizing antibodies against SARS-CoV-2 from whole blood

Assignee: Axim Biotechnologies, Inc.

Exclusive licensee: Authorized Diagnostics, Inc.

The methods and test kits of the invention can be used with any sample in which the presence, absence and / or amount of neutralizing antibodies (nAb) against SARS-CoV-2 is to be determined, such as, for example, serum, plasma, all blood, saliva, mucus and other biological fluids. In a particular embodiment, the methods and / or kits of the invention are used with whole blood.

B. AlphaLisa test for high throughput detection of neutralizing antibodies against SARS-CoV2

1. United States Provisional Application No. 63 / 060,635 Filed Aug 3, 2020; United States Provisional Application No. 63 / 061,112 Filed Aug 4, 2020

Title: NeuCovix-HT AlphaLisa test for the high throughput detection of neutralizing antibodies against SARS-CoV-2

Assignee: Axim Biotechnologies, Inc. and Arizona State University (KNEW)

Exclusive licensee: Axim Biotechnologies, Inc. (Interest of ASU)



The invention refers to an AlphaLisa assay for high throughput (HT) detection of
Neutralizing antibodies to SARS-CoV-2. Included in the claims is the HT
diagnostic test that measures levels of functional antibodies in plasma or serum
that neutralize SARS- CoV-2, the virus that causes COVID19. Unlike current
serology tests for COVID 19 that qualitatively detect antibodies to the virus,
the HT test quantitatively measures functional antibodies that block binding of
the virus to host cell receptors.



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C. Direct competitive ELISA for the detection of neutralizing antibodies to SARS-Cov2

1. United States Provisional Application No. 63 / 152,807 Filed February 23, 2021

Title: Direct competitive ELISA for the detection of neutralizing antibodies to SARS-CoV2

Assignee: Axim Biotechnologies, Inc.



The invention relates to a method for rapid detection of SARS-CoV2 Neutralizing
Antibodies in one of the following test samples: human or animal serum, plasma,
saliva, tear, sweat, exhaled breath condensate. The test sample is mixed with an
ACE2 label detection reagent. The sample mixture is incubated, and the quantity
of ACE2 label detection reagent bound to the RBD molecules indicates the
quantity of SARs-Co2 Neutralizing Antibodies.



D.ACE2 Variants


1. US provisional application No. 63 / 081.811 filed September 22, 2020


Title: Super-ACE2 Variants


Assignee: Axim Biotechnologies, Inc.



The invention relates to a new variant recombinant protein of ACE2 identified as
ACE2-614-Fc ("Super ACE2"), that is more potent and has a longer shelf life and
is more stable than wild type ACE2. Super ACE2 variant can be used in a variety
of ways as follows:


1) Development of competitive tests to neutralize antibodies that disrupt the RBD-ACE2 interaction.

2) Direct assays for peak virus antigens. Super ACE2 acts as a very specific antibody to capture Spike proteins across the RBD domain.

3) Cardiovascular, blood pressure and associated therapeutic and diagnostic disorders.

4) Anything related to virus capture such as (i) Mask treatments, (ii) Aerosols, (iii) Sprays and drops, (iv) Ointments and skin applications, (v) Surfaces

E. Facemask Having Enhanced Infectious Agent Capturing and Related Methods

1.U.S. Provisional Application No. 63 / 066,104 filed August 14, 2020

Title: Face mask having improved the capture of infectious agents and associated methods

Assignee: Axim Biotechnologies, Inc.



The invention is a facemask with a filtration material and an infectious agent
capture-moiety. Infectious agent capture-moiety refers to any compound or
biomolecule that can bind to any infectious agent. The filtration material acts
as a scaffold to either directly block or impede the flow-through of the
infectious agent or to support the infectious agent capture moiety. The
infectious agent capture- moiety then functions to directly block or impede the
flow-through of an infectious agent. The infectious agent-capture moiety can
aerosolized and sprayed or applied onto pre-treated filtration material and can
be specific to capture infectious agents, such as SARS-CoV-2. In such
embodiments, the facemasks is capable of providing enhanced protection for the
user and to others from SARS-Co



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III. CANNABINOIDS


A. Polyfunctional cannabinoids

1. US Provisional Patent Application No. 3 / 014,471 filed 23 april 2020

Title: Polyfunctional cannabinoids

Assignee: Axim Biotechnologies, Inc.



The invention relates to cannabinoid constructs that may produce more potent
response than individual cannabinoid molecules with the additional benefit of
being more water- soluble and bioavailable.



Trade Secrets


We rely, in some circumstances, on trade secrets to protect our technology.
However, trade secrets can be difficult to protect. We seek to protect our
proprietary technology and processes, in part, by entering into confidentiality
agreements with our employees, consultants, scientific advisors and contractors.
We also seek to preserve the integrity and confidentiality of our data and trade
secrets by maintaining physical security of our premises and physical and
electronic security of our information technology systems. While we have
confidence in these procedures, agreements or security measures may be breached,
and we may not have adequate remedies for any breach. In addition, our trade
secrets may otherwise become known or be independently discovered by
competitors. To the extent that our consultants, contractors, or collaborators
use intellectual property owned by others in their work for us, disputes may
arise as to the rights in related or resulting know-how and inventions.



Market, customers and distribution methods

Our focus is on the development of innovative diagnostic and pharmaceutical
products focusing on diseases and conditions for which currently there are no
known efficient therapeutic ingredients or delivery systems. We plan to be an
active player in this field of biosciences with our extensive R&D and pipeline
of innovative products.



In August, we signed an exclusive licensing, manufacturing, and distribution
agreement with Empowered Diagnostics LLC to execute the high-volume production
of our rapid point-of-care diagnostic test. AXIM and Empowered have completed
the technology transfer and Empowered Diagnostics have built out their
production facility to be able to manufacture millions of our neutralizing
antibody tests for Covid-19 per month.



Competition


The biotech industries are characterized by rapidly advancing technologies,
intense competition, a strong emphasis on proprietary products and intellectual
property. While we believe that our scientific knowledge, technology, and
development experience provide us with competitive advantages, we face potential
competition from many different sources, including major pharmaceutical,
specialty pharmaceutical and biotechnology companies, academic institutions,
governmental agencies and public and private research institutions, some or all
of which may have greater access to capital or resources than we do. For any
products that we may ultimately commercialize, not only will we compete with any
existing diagnostic tests and therapies and those products currently in
development, but we will also have to compete with new technologies that may
become available in the future.



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We expect that the market will become increasingly competitive in the future.
Many of our competitors, either alone or together with their collaborative
partners, operate much larger research and development programs, and have
substantially greater commercial and financial resources than we do, as well as
significantly greater experience in: developing product candidates and
technologies, undertaking preclinical studies and clinical trials, obtaining FDA
and other regulatory approvals of product candidates, formulating and
manufacturing diagnostic products and drug candidates and launching, marketing
and selling these candidates. As a result, these companies may obtain marketing
approval more rapidly than we are able and may be more effective in developing,
selling, and marketing their products.



Source and availability of raw materials



As our scientific team was developing our COVID-19 rapid diagnostic tests and
virus-capturing face mask, we were frustrated by the delays and costs caused by
lack of supply of a recombinant virus binding protein (VBP) for SARS-CoV-2 that
was essential to our testing. To continue our projects as planned and decrease
overall costs, AXIM's team decided to make its own VBP. This now in-house
development of the core ingredients needed to manufacture our products allows us
to control our supply chain.



Government Regulation



On July 15, 2020, we announced the submission of an Emergency Use Authorization
("EUA") to the FDA for our rapid diagnostic test kit for the independent
detection of neutralizing antibodies in sera of patients who had been exposed to
the SARS-CoV-2 virus.



On August 5, 2020, announced the development, patent filing and Emergency Use
Approval (EUA) filing of NeuCovix-HT™, a high throughput (HT) patent-pending
diagnostic test that measures levels of functional antibodies in plasma or serum
that neutralize SARS-CoV-2, the virus that causes COVID-19. Unlike current
serology tests for COVID-19 that qualitatively detect antibodies to the virus,
NeuCovix-HT™ quantitatively measures functional antibodies that block binding of
the virus to host cell receptors.



An EUA would allow us to market and sell the test without the need to pursue the
lengthy and expensive drug approval process. The FDA may issue an EUA during a
public health emergency if it determines that the potential benefits of a
product outweigh the potential risks and if other regulatory criteria are met.
If an EUA is granted for the test, we will rely on the FDA policies and guidance
in connection with the marketing and sale of the test. If these policies and
guidance change unexpectedly and/or materially or if we misinterpret them,
potential sales of the test could be adversely impacted. In addition, the FDA
may revoke an EUA where it is determined that the underlying health emergency no
longer exists or warrants such authorization. If granted, we cannot predict how
long an EUA for the test will remain in place. The termination of an EUA for the
test, if granted, could adversely impact our business, financial condition,
and
results of operations.



We may also seek additional EUAs from the FDA for our other product candidates
for the detection and/or treatment of COVID-19 and the SARS-CoV-2 virus. If
granted, the additional EUAs would allow us to market and sell additional
product candidates without the need to pursue the lengthy and expensive drug
approval process. There is no guarantee that we will be able to obtain any
additional EUAs. Failure to obtain additional EUAs or the termination of
such EUAs, if obtained, could adversely impact our business, financial
condition, and results of operations.



Employees



As of August 22, 2021, we have 4 full-time employees and 1 part-time employee.
We allow and utilize the services of independent contractors. We will be
considering the conversion of some of our part-time employees to full-time
positions. We are currently in discussions with qualified individuals to engage
them for positions in sales and marketing, research and development, and
operations. Management believes the Company has good relationships with its
employees.



Costs and effects of compliance with environmental laws

Costs related to compliance with environmental regulations are minimal.


  43




Results of Operations



The following discussion of our financial condition and results of operations
for the period ended June 30,2021 should be read in conjunction with the
financial statements and the notes to those statements that are included
elsewhere in this Report on Form 10-Q. Our discussion includes forward-looking
statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations, and intentions. Actual results and
the timing of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors. We use words such
as "anticipate", "estimate", "plan", "project", "continuing", "ongoing",
"expect", "believe", "intend", "may", "will", "should", "could", and similar
expressions to identify forward-looking statements.



Comparison of the completed six months and three months June 30, 2021 To June 30, 2020.

For the completed six-month periods June 30, 2021 and 2020, our revenue from continuing operations amounts to $ 47,524 and -0 $– respectively, our revenues from discontinued operations amount to -0 $– and $ 7,990, respectively.


                                      Six months        Six months
                                     Period Ended      Period Ended
                                      30-Jun-21         30-Jun-20         $ Change         % Change

Research and development            $    149,019      $    126,292      $    22,727           18.00 %
Depreciation                              13,184             5,124            8,060          157.30 %
Advertising and promotions               673,283           362,487          310,796           85.74 %
Travel and entertainment
expenses                                  29,032            14,349           14,683          102.33 %
Office/Other expenses                     69,142            73,698           (4,556 )         -6.12 %
Impairment and amortization              641,142             6,763          634,379         9379.46 %
Licenses and permits                      19,473            54,271          (34,798 )        -64.12 %
Legal and other fees                     178,404           221,882          (43,478 )        -19.60 %
Offices salary and wages                 503,335           294,399          208,936           70.97 %
Consulting fees                          440,865            33,000          407,865         1235.95 %
Compensation costs                       191,266             8,200          183,066         2232.51 %
Audit fees                                96,171            81,703           14,468           17.71 %
Filing fees                                5,619             4,898              721           14.72 %
Insurance expense                         46,627            62,166          (15,539 )        -25.00 %
Directors fees                            40,000            40,000               -             0.00 %
Total Operating expenses from
continuing operations               $  3,096,562      $  1,389,232      $ 1,707,330          122.90 %




Our operating expenses from continuing operations for the six months periods
ended June 30, 2021 and 2020, were $3,096,562 and $1,389,232, respectively. Our
operating expenses from discontinued operations for the six months periods ended
June 30, 2021 and 2020, were $4,633 and $357,430, respectively. The Company
incurred $440,865 and $33,000 of Consulting fees included in above table is the
largest changes are Impairment and Amortization of Other Assets of $641,142 this
include the three months of amortization of intangible asset and $325,115 is
because of the increase in Meeting and Conference during the six months ended
June 30, 2021 and 2020, respectively.



  44




For the three months periods ended June 30, 2021 and 2020, our revenues from
continuing operations totaled $14,875 and $-0-, respectively, our revenues from
discontinued operations totaled $-0- and $849, respectively.



                                     Three months      Three months
                                     Period Ended      Period Ended
                                      30-Jun-21          30-Jun-20         $ Change         % Change

Research and development            $     48,066      $     121,437      $   (73,371 )        -60.42 %
Depreciation                               6,834              4,285            2,549           59.49 %
Advertising and promotions               564,296             42,476          521,820         1228.51 %
Travel and entertainment
expenses                                  21,153              1,303           19,850         1523.41 %
Office/Other expenses                     37,094             30,348            6,746           22.23 %
Impairment and amortization              641,096              3,125          637,971        20415.07 %
Licenses and permits                       2,622              1,270            1,352          106.46 %
Legal and other fees                      87,759            134,014          (46,255 )        -34.51 %
Offices salary and wages                 248,154            189,399           58,755           31.02 %
Consulting fees                          366,446             24,000          342,446         1426.86 %
Compensation costs                        91,526                 -            91,526          100.00 %
Audit fees                                32,421             61,703          (29,282 )        -47.46 %
Filing fees                                4,838              3,508            1,330           37.91 %
Insurance expense                         23,608             30,994           (7,386 )        -23.83 %
Directors fees                            20,000             15,000            5,000           33.33 %
Operating expenses from
continuing operations               $  2,195,913      $     662,862      $ 1,533,051          231.28 %




Other (Income) expenses:


Our interest receivable for the three and six months ended June 30, 2021 and 2020, was $ 257, $ 513 and $ 158, $ 158, respectively.

Our Income Form Government Grants for the Completed Three and Six Months June 30, 2021 and 2020, was $ 129,995, $ 219,995 and -0 $-, -0 $– respectively, the increase in this account is due to the Company’s management studies.



The Company recorded a change in FMV of trading securities as unrealized gain
(loss) and realized gain (loss) of $-0-, $-0- and $-0-, $104,705 for from
discontinued operations the three and six months ended June 30, 2021 and 2020,
respectively, The changes for the six months period ended June 30, 2021, were
primarily due to cancel the trading securities in 2020.



Our interest expense of continuing operations for the three and six months ended
June 30, 2021 and 2020, was $59,576, $119,908 and $55,957, $106,075,
respectively. The changes for the three and six months period ended June 30,
2021, were primarily due to accretion of the convertible notes of TL-66.



  45


Going concern



The Company's unaudited condensed consolidated financial statements have been
presented assuming that the Company will continue as a going concern. As shown
in the financial statements, the Company has deficit in working capital of
$952,445 and has an accumulated deficit of $46,541,382, has cash used in
continuing operating activities of $1,156,360 and presently does not have the
resources to accomplish its objectives during the next twelve months. These
conditions raise substantial doubt about the ability of the Company to continue
as a going concern. The financial statements do not include any adjustments
related to the recoverability of assets and classification of liabilities that
might be necessary should the Company be unable to continue in operation.



The Company intends to raise additional capital through private placements of
debt and equity securities, but there can be no assurance that these funds will
be available on terms acceptable to the Company or will be sufficient to enable
the Company to fully complete its development activities or sustain operations.
If the Company is unable to raise sufficient additional funds, it will have to
develop and implement a plan to further extend payables, reduce overhead, or
scale back its current business plan until sufficient additional capital is
raised to support further operations. There can be no assurance that such a
plan
will be successful.


Net cash provided by / used in operating activities

Net cash used in continuing operating activities and discontinued operating
activities was $1,156,360 and $4,633 respectively for the six months ended June
30, 2021, as compared to net cash used of $1,012,678 and $797,939 for the six
months ended June 30, 2020. For the six months ended June 30, 2021 stock-based
compensation was $191,266 and amortization of debt discount was $203,121. For
the six months ended June 30, 2021 and 2020 the Company recorded increase
(decrease) to accounts payable and accrued expenses $124,264 and $209,784 of
continuing operating activities.



The company realized a loss on extinguishment of debt of 1,535,264 and issued
common stock for services valued at 776,500 for the six months ended June 30,
2021.


Net cash provided by investing activities

Net cash used in (provided by) investing activities during the period ended June
30, 2021 was $(20,022) compared to $8,986 for the same period in 2020 due to
$79,814 cash acquired in Sapphire acquisition off set by cash used in equipment
purchase for $(70,828).


Net cash provided by financing activities

Net cash flow generated by financing activities during the six-month period ended
June 30, 2021, was $ 926,019 and $ 2,181,433 for the same period in 2020.

Off-balance sheet provisions



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 expenditures or capital resources that is material to investors.



  46




Contractual Obligations


As a “small reporting company” within the meaning of Article 10 of the SK Regulation, the company is not required to provide this information.


Critical accounting policies



The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates and assumptions that affect the reported amount of
assets and liabilities, the disclosure of contingent assets and liabilities and
the reported amounts of revenue and expenses during the reported periods. The
more critical accounting estimates include estimates related to revenue
recognition and accounts receivable allowances. We also have other key
accounting policies, which involve the use of estimates, judgments and
assumptions that are significant to understanding our results, which are
described in Note 3 to our unaudited condensed consolidated financial
statements.



Recently published accounting standards

In March 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification
Improvements, which provides clarification on implementation issues associated
with adopting ASU 2016-02. The implementation issues noted in ASU 2019-01
include determining the fair value of the underlying asset by lessors that are
not manufacturers or dealers, presentation on the statement of cash flows for
sales-type and direct financing leases, and transition disclosures related to
Topic 250, Accounting Changes and Error Corrections. We will apply the guidance,
if applicable, as of January 1, 2019, the date we adopted ASU 2016-02. Refer to
the discussion of ASU 2016-02 below for the impact on our financial position,
results of operations, cash flows, or presentation thereof.



The Company has a long-term operating lease, and the long-term operating lease
only took effect in April 2020. Thus, the adoption of ASC 842 had no impact on
the condensed consolidated financial statements.



In November 2018, the FASB issued ASU 2018-18, Collaborative Arrangements (Topic
818): Clarifying the Interaction Between Topic 808 and Topic 606, which
clarifies when transactions between participants in a collaborative arrangement
are within the scope of the FASB's revenue standard, Topic 606. The standard is
effective for fiscal years beginning after December 15, 2019 and interim periods
within those fiscal years, with early adoption permitted. We adopted this
standard on its effective date of January 1, 2020. We do not expect the adoption
of this ASU to have a material impact on our consolidated financial position,
results of operations, cash flows, or presentation thereof.



In October 2018, the FASB issued ASU 2018-17, Targeted Improvements to Related
Party Guidance for Variable Interest Entities, that changes the guidance for
determining whether a decision-making fee paid to a decision makers and service
providers are variable interests. The guidance is effective for fiscal years
beginning after December 15, 2019 and interim periods within those fiscal years,
with early adoption permitted. We adopted this standard on its effective date of
January 1, 2020. The adoption of this ASU to have a material impact on our
consolidated financial position, results of operations, cash flows, or
presentation thereof.



  47




In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and
Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for
Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service
Contract. ASU 2018-15 aligns the requirements for capitalizing implementation
costs incurred in a hosting arrangement that is a service contract with the
requirements for capitalizing implementation costs incurred to develop or obtain
internal-use software. The standard is effective for fiscal years beginning
after December 15, 2019, including interim periods within those fiscal years,
with early adoption permitted. We adopted this standard on its effective date of
January 1, 2020. We determined that it had no material impact of this ASU on our
financial position, results of operations, cash flows, or presentation thereof.



In August 2018, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) 2018-13, "Fair Value Measurement (Topic 820):
Disclosure Framework-Changes to the Disclosure Requirements for Fair Value
Measurement." This ASU eliminates, adds and modifies certain disclosure
requirements for fair value measurements as part of its disclosure framework
project. The standard is effective for all entities for financial statements
issued for fiscal years beginning after December 15, 2019, and interim periods
within those fiscal years. Early adoption is permitted. The adoption of this
guidance is not expected to have a material impact on the Company's financial
statements.


Other recent accounting positions issued by the FASB and the SECOND do not or are not considered by management to have a material impact on the current or future consolidated financial statements of the Company.

Foreign currency transactions

Our foreign exchange gains (losses) were $ 3,843, $ 3,995 for the three and six months ended June 30, 2021 was $ 26 and $ 624 for the same period in 2020. All foreign exchange gains (losses) were related to discontinued operations.

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