AXIM BIOTECHNOLOGIES, INC. 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 theSecurities and Exchange Commission (the "SEC"). You may read and copy any document we file with theSEC at theSEC's public reference room located at100 F Street, N.E. ,Washington, D.C. 20549,U.S.A. Please call theSEC at 1-800-SEC -0330 for further information on the public reference room. OurSEC filings are also available to the public from theSEC's internet site at http://www.sec.gov.
On our Internet website, http://www.aximbiotech.com, we post the following
recent filings as soon as reasonably practicable after they are electronically
filed with or furnished to the
When we use the terms "AXIM", "Company", "we", "our" and "us" we mean
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.
34
Acquisition of
On
Current Operations Following the Acquisition of
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 fromMayo Clinic andArizona 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. 35
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 withEmpowered Diagnostics LLC to execute the high volume production of our rapid point-of-care diagnostic test. AXIM and Empowered have completed the technology transfer andEmpowered 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 receivedInstitutional Review Board approval to begin a clinical study atArizona 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
OnJanuary 13, 2020 , Sapphire Biotech enters into an agreement withSkysong 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 toMayo Clinic Ventures andArizona State University ).
On
On
OnMarch 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.
On
OnJuly 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 36 OnAugust 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 OnAugust 11, 2020 , Sapphire was awarded a$395,880 phaseI Small Business Innovation Research (SBIR) grant by theNational 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
On
OnSeptember 16, 2020 , re filed the Emergency Use Authorization (EUA) application with theFood and Drug Administration (FDA) for measuring COVID-19 neutralizing antibodies in plasma and serum through its first-in-class rapid diagnostic test. Status: Ongoing OnSeptember 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.
On
OnSeptember 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.
On
On
OnMarch 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.
On
Anticipated Expenses
During the next twelve months we anticipate incurring costs related to: (i) filing Exchange Act reports, (ii) contractual obligations, (iii) clinical trials, and (iv) continued research and development.
37 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. Anti-Neoplastic Compounds and Methods Targeting QSOX1
1.US Provisional Patent Application No. 62/218.732 filed on
PCT Provisional Patent Application W02017048712A1
US Nonprovisional Application No. 15/748,784 filed on
Notice of Patent Allowance dated
Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1
Assignee:
Exclusive Licensee:
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.US Provisional Patent Application No. 62/916,065 filed on
Title: Chemical Compounds that Inhibit QSOX1 for the Treatment of Cancer
Assignees:
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 filedOctober 16, 2019
Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1
Assignees:
38
Exclusive Licensee:
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
Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1
Assignees:
Exclusive Licensee:
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.US Provisional Patent Application No. 62959752 filed
Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1 and Inhibiting Cellular Responses to MET Receptor.
Assignee:
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 Diagnostic for Various Cancers
1. US Provisional Patent Application No. 62/829,556 filed
Utility Patent Application No. 16/841,521 filed
International Patent Application No. PCT/US2020/026936 filed
Title: Systems and Methods for Rapid Diagnostic for Various Cancers
Assignee:
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. 39
II. SARS-CoV-2-RELATED INVENTIONS
A. Rapid Diagnostic Test to Measure Levels of Neutralizing Antibodies to SARS-CoV2
1.US Provisional Application No. 63/023,646 filed
Title: Convalescent Plasma Testing and Treatment
Assignee:
Exclusive Licensee:
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
Title: Rapid LFA Diagnostic Test to Measure Levels of Neutralizing Antibodies to SARS- CoV-2 from Whole Blood
Assignee:
Exclusive Licensee:
The invention methods and test kits can be used with any sample in which the presence, absence and/or quantity of neutralizing antibodies (nAbs) to SARS-CoV-2 is desired to be determined, such as for example, serum, plasma, whole blood, saliva, mucous, and other biological fluids. In a particular embodiment, the invention methods and/or kits are used with whole blood.
B. AlphaLisa Assay for High Throughput Detection of Neutralizing Antibodies to SARS-CoV2
1. US Provisional Application No. 63/060,635 filed
Title: NeuCovix-HT AlphaLisa assay for high throughput detection of Neutralizing Antibodies to SARS-CoV-2
Assignee:
Exclusive Licensee:
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. 40
C. Direct Competitive ELISA for the Detection of SARS-Cov2 Neutralizing Antibodies
1. US Provisional Application No. 63/152,807 filed
Title: Direct Competitive ELISA for the Detection of SARS-CoV2 Neutralizing Antibodies
Assignee:
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
Title: Super-ACE2 Variants
Assignee:
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 assays for neutralizing antibodies that disrupt RBD- ACE2 interaction.
2)Direct assays for virus spike antigens. Super ACE2 acts as a very specific antibody to capture Spike proteins through the RBD domain.
3)Cardio-vascular, blood-pressure and related disorders therapeutic and diagnostic.
4)Anything related to the virus capture such as (i) Mask treatments, (ii) Aerosols, (iii) Sprays and drops, (iv) Ointment and dermal applications, (v) Surfaces
E. Facemask Having Enhanced Infectious Agent Capturing and Related Methods
1.US Provisional Application No. 63/066,104 filed
Title: Facemask Having Enhanced Infectious Agent Capturing and Related Methods
Assignee:
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 41 III. CANNABINOIDS
A. Polyfunctional Cannabinoids
1.US Provisional Patent Application No 3/014,471 filed
Title: Polyfunctional Cannabinoids
Assignee:
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 withEmpowered Diagnostics LLC to execute the high-volume production of our rapid point-of-care diagnostic test. AXIM and Empowered have completed the technology transfer andEmpowered 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. 42 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 OnJuly 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. OnAugust 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 ofAugust 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
The expense of complying with environmental regulations is of minimal consequence.
43 Results of Operations The following discussion of our financial condition and results of operations for the period endedJune 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 six months and three months ended
For the six months periods ended
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
Our Income form Grants from Government for the three and six months ended
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 endedJune 30, 2021 and 2020, respectively, The changes for the six months period endedJune 30, 2021 , were primarily due to cancel the trading securities in 2020. Our interest expense of continuing operations for the three and six months endedJune 30, 2021 and 2020, was$59,576 ,$119,908 and$55,957 ,$106,075 , respectively. The changes for the three and six months period endedJune 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 endedJune 30, 2021 , as compared to net cash used of$1,012,678 and$797,939 for the six months endedJune 30, 2020 . For the six months endedJune 30, 2021 stock-based compensation was$191,266 and amortization of debt discount was$203,121 . For the six months endedJune 30, 2021 and 2020 the Company recorded increase (decrease) to accounts payable and accrued expenses$124,264 and$209,784 of continuing operating activities. The company realized a loss on extinguishment of debt of 1,535,264 and issued common stock for services valued at 776,500 for the six months endedJune 30, 2021 .
Net Cash Provided by Investing Activities
Net cash used in (provided by) investing activities during the period endedJune 30, 2021 was$(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 provided by financing activities during the six months period ended
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 expenditures or capital resources that is material to investors. 46 Contractual Obligations
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Critical accounting policies The preparation of financial statements in conformity withU.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 issued accounting standards
InMarch 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 ofJanuary 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 inApril 2020 . Thus, the adoption of ASC 842 had no impact on the condensed consolidated financial statements. InNovember 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 afterDecember 15, 2019 and interim periods within those fiscal years, with early adoption permitted. We adopted this standard on its effective date ofJanuary 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. InOctober 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 afterDecember 15, 2019 and interim periods within those fiscal years, with early adoption permitted. We adopted this standard on its effective date ofJanuary 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 InAugust 2018 , the FASB issued ASU 2018-15, Intangibles-Goodwill andOther-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 afterDecember 15, 2019 , including interim periods within those fiscal years, with early adoption permitted. We adopted this standard on its effective date ofJanuary 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. InAugust 2018 , theFinancial 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 afterDecember 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 pronouncements issued by the FASB and the
Foreign Currency Transactions
Our Foreign currency gain (loss) were
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