Axim Biotechnologies, Inc 10-Q for FY2023 Q2
Axim Biotechnologies, Inc. (AXIM)
About this 10-Q
Axim Biotechnologies, Inc filed this 10-Q on August 21, 2023, covering the quarter ended June 30, 2023 (FY2023 Q2).
Headline figures
Quarter ended June 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $9929
- Net loss
- $3.72M
- compared with a net loss of $1.22M a year earlier
- Diluted EPS
- -$0.02
- compared with -$0.01 a year earlier
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
or
For the transition period from ________ to ________
Commission
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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Smaller reporting Company |
Emerging growth Company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act of 1934 after the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: of common stock, par value $0.0001 per share, outstanding as of August 18, 2023.
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
AXIM BIOTECHNOLOGIES, INC.
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AXIM BIOTECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
| 30-Jun-23 | 31-Dec-22 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Prepaid expenses | ||||||||
| Other Current Assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net of accumulated depreciation | ||||||||
| Other Assets: | ||||||||
| Intangible Asset, net | ||||||||
| Security deposit | ||||||||
| Operating lease right-of-use asset | ||||||||
| Total other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Lease liability obligations (see Note 14) current portion | ||||||||
| Due to first insurance funding | ||||||||
| Advances from shareholder | ||||||||
| Deferred revenue | ||||||||
| Derivative liability conversion feature | ||||||||
| Total current liabilities | ||||||||
| Long-term liabilities: | ||||||||
| Convertible
note payable related party (Including accrued interest of $ | ||||||||
| Convertible
note payable (including accrued interest of $ | ||||||||
| Convertible
note payable - related party (including accrued interest of $ | ||||||||
| Lease liability obligations (see Note 14) | ||||||||
| Total long-term liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $ par value, shares authorized; | ||||||||
| Series B Convertible Preferred Stock, $ par value shares designated, and shares issued, and outstanding, respectively | ||||||||
| Series C Convertible Preferred Stock, $ par value shares designated, and shares issued and outstanding, respectively | ||||||||
| Common stock, $ par value, shares authorized and shares issued and outstanding, respectively | ||||||||
| Stock Subscription receivable | ( | ) | ( | ) | ||||
| Additional paid in capital | ||||||||
| Common stock to be issued | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | ( | ) | ( | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | $ | ||||||
See accompanying notes to these unaudited condensed consolidated financial statements
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AXIM BIOTECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
| For the | For the | For the | For the | |||||||||||||
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues | $ | $ | $ | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Research and development expenses | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Depreciation and amortization | ||||||||||||||||
| Total operating expenses from continuing operations | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other (income) expenses: | ||||||||||||||||
| Interest income | ( | ) | ||||||||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Derivative liability insufficient shares | ||||||||||||||||
| Amortization of debt discount | ||||||||||||||||
| Loss (Gain) on extinguishment of debt | ( | ) | ||||||||||||||
| Interest expense | ||||||||||||||||
| Total other expenses (income) | ||||||||||||||||
| Loss before provision of income tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Provision for income tax | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Loss per share | ||||||||||||||||
| Basic | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
| Weighted average common shares outstanding - basic and diluted | ||||||||||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
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AXIM BIOTECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
| Series C Convertible | Additional | |||||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Common Stock to be | Paid In | Subscription | Accumulated | |||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Issued | Capital | receivable | Deficit | Total | ||||||||||||||||||||||||||||
| Balance at December 31, 2021 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Common stock issued under S-1 | ||||||||||||||||||||||||||||||||||||
| Common stock issued against common stock to be issued purchase of ATD assets | ( | ) | ||||||||||||||||||||||||||||||||||
| Common stock issued against common stock to be issued received in PY | ( | ) | ||||||||||||||||||||||||||||||||||
| Common stock issued stock purchase agreements | ||||||||||||||||||||||||||||||||||||
| Common stock issued for services | ( | ) | ||||||||||||||||||||||||||||||||||
| Cashless exercise stock options | ( | ) | ||||||||||||||||||||||||||||||||||
| Stock issued on settlement of debt | ||||||||||||||||||||||||||||||||||||
| Stock based compensation - stock options | ||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at March 31, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Stock issued on settlement of debt | ||||||||||||||||||||||||||||||||||||
| Stock based compensation - stock options | ||||||||||||||||||||||||||||||||||||
| Common stock issued under S-1 | ||||||||||||||||||||||||||||||||||||
| Stock issued settlement of claim | ||||||||||||||||||||||||||||||||||||
| Beneficial conversion refinance of debt | ||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | ( | ) | ||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Common stock issued under S-1 | ||||||||||||||||||||||||||||||||||||
| Common stock issued against common stock to be issued | ( | ) | ||||||||||||||||||||||||||||||||||
| Shares issued extinguishment of debt Beneficial conversion payment of interest | ||||||||||||||||||||||||||||||||||||
| Debt modifications / conversions | ||||||||||||||||||||||||||||||||||||
| Stock based compensation - stock options | ||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Common stock issued under S-1 | ||||||||||||||||||||||||||||||||||||
| Stock based compensation- stock options | ||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
5
AXIM BIOTECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| For the | For the | |||||||
| Six Months Ended | Six Months Ended | |||||||
| 30-Jun-23 | 30-Jun-22 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | ( | ) | $ | ( | ) | |||
| Adjustments to reconcile net loss to cash provided by (used in) operating activities: | ||||||||
| Depreciation | ||||||||
| Derivative Liability insufficient Shares | ||||||||
| Stock based compensation | ||||||||
| Amortization of prepaid insurance/expense | ||||||||
| Amortization of debt discount | ||||||||
| Common stock issued for services | ||||||||
| Amortization of intangible assets | ||||||||
| Loss (gain) on extinguishment of debt | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Non-cash interest expense | ||||||||
| Proceeds from convertible notes | ||||||||
| Changes in operating assets & liabilities: | ||||||||
| Decrease in other assets | ||||||||
| Increase in shareholder advances | ||||||||
| (Increase) in prepaid expenses | ( | ) | ||||||
| Decrease in deferred revenue | ( | ) | ||||||
| Increase (decrease) in accounts payable and accrued expenses | ||||||||
| Net cash (used in) operating activities | ( | ) | ( | ) | ||||
| CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash (used in) investing activities | ( | ) | ||||||
| CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
| Common stock issued under registration statement on Form S-1 | ||||||||
| Common stock issued under SPA | ||||||||
| Repayment of first insurance funding | ( | ) | ||||||
| Proceeds from convertible notes | ||||||||
| Repayment of convertible notes | ( | ) | ||||||
| Repayment of promissory note | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | |||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| CASH PAID DURING THE PERIOD FOR: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes - net of tax refund | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Common stock issued against common stock to be issued | $ | $ | ||||||
| Initial derivative liability at issuance of notes | $ | $ | ||||||
| Initial debt discount at issuance of notes | $ | $ | ||||||
| Convertible note converted to common stock | $ | $ | ||||||
| Convertible note issued against settlement of liabilities | $ | $ | ||||||
| Initial debt discount on extinguishment of notes | $ | $ | ||||||
| Common stock issued against stock subscription receivable | $ | $ | ||||||
| Common stock issued on cashless exercise of options | $ | $ | ||||||
| Common stock issued against Common stock to be issued for acquisition | $ | $ | ||||||
See accompanying notes to these unaudited condensed consolidated financial statements.
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AXIM BIOTECHNOLOGIES, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2023
NOTE 1: ORGANIZATION
The
Company was originally incorporated in Nevada on November 18, 2010, as Axim International Inc. On July 24, 2014, the Company changed
its name to AXIM Biotechnologies, Inc. to better reflect its business operations. The Company’s principal executive office is located
at 6191 Cornerstone Court E suite 114 San Diego Ca 92121. On August 7, 2014, the Company formed a wholly owned Nevada subsidiary named
Axim Holdings, Inc. This subsidiary will be used to help facilitate the anticipated activities planned by the Company. On May 11, 2015
the Company acquired a
On March 17, 2020, the Company acquired Sapphire Biotech, Inc., (“Sapphire’) which is research and Development Company that has a mission to improve global cancer care through the development of proprietary therapeutics for inhibiting cancer growth and metastasis. Sapphire is also developing a line of novel diagnostics for early cancer detection, response to treatment, and recurrence monitoring. Additionally, with the onset of the COVID-19 pandemic, the Company decided to begin creating COVID-19 rapid diagnostic tools, including multiple first-in-class COVID-19 neutralizing antibody tests and other innovations.
Sapphire’s operations are located in the Greater San Diego Area.
COVID-19 impact and related risks
The ongoing global outbreak of COVID-19, and the various attempts throughout the world to contain it, have created significant volatility, uncertainty and disruption. In response to government directives and guidelines, health care advisories and employee and other concerns, A number of the Company’s employees have had to work remotely from home and those on site have had to follow the Company’s social distance guidelines, which could impact their productivity. COVID-19 could also disrupt the Company’s operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who cannot effectively work remotely but who elect not to come to work due to the illness affecting others in the Company’s office or laboratory facilities, or due to quarantines.
Because of COVID-19, travel, visits, and in-person meetings related to The Company’s business have been severely curtailed or canceled and the Company has instead used on-line or virtual meetings to meet with potential customers and others.
In addition to operational adjustments, the consequences of the COVID-19 pandemic have led to uncertainties related to The Company’s business growth and ability to forecast the demand for its diagnostic testing and resulting revenues.
The full extent to which the COVID-19 pandemic and the various responses to it might impact The Company’s business, operations and financial results will depend on numerous evolving factors that are not subject to accurate prediction and that are beyond The Company’s control.
Changes to the Company’s Board of Directors
On January 4, 2022, Mauricio Gatto Bellora tendered his resignation as a member of the Company’s Board of Directors, and the Company on that date accepted his resignation. Mr. Bellora’s decision to resign was not the result of any disagreement with the Company.
On
January 6, 2022,
7
Mr.
Blake N. Schroeder, 42, began his career with a commercial litigation law firm in Salt Lake City, Utah. Beginning in 2008, Schroeder
focused on the sale and marketing of natural products and opening international marketplaces to those products. From 2008 to 2014 Mr.
Schroeder served in various capacities at MonaVie, LLC developing international business plans and growing international businesses.
From August 2014 to February 2016, Mr. Schroeder served as the Chief Operating Officer of For evergreen International, where he was responsible
for global operation and sales of the multinational organization, including oversight of a global supply chain. From 2021 to the present,
Mr. Schroeder has served as the Chief Executive Officer and Chairman of the Board of Medical Marijuana, Inc. From 2016 to the present,
Mr. Schroeder serves as the chief executive officer of Kannaway USA, LLC, a wholly owned subsidiary of Medical Marijuana, Inc. Medical
Marijuana, Inc. is one of the Company’s largest shareholders holding approximately
Changes in the Business
On March 7, 2022, the Company announced that is has shifted its focus for its rapid COVID-19 Neutralizing Antibody (“Nab”)(NAb) Test to become For Research Use Only (“RUO”). The test will provide researchers an important tool for COVID-19 research and is not intended for use in diagnostic procedures. The Company has also entered a separation agreement with Empowered Diagnostics, LLC following the FDA recall of Empowered’s products, including the NabNAb test.
NOTE 2: ACQUISITION OF INTELLECTUAL PROPERTY OF ADVANCED TEAR DIAGNOSTIC, LLC.
AXIM
entered into two substantially contemporaneous transactions to acquire patents and 510(K) Licenses from Advanced Tear Diagnostics, LLC
(the “Seller”) (collectively, the “Asset Acquisition”) for a total amount of $
The
first transaction occurred on July 29, 2021, in which AXIM purchased five patents (the “Patents”) from the Seller for $
The
second transaction occurred on August 26, 2021, in which AXIM purchased certain eye disease diagnostic technology, which consisted of
a 510(K) license for Lactoferrin, a biomarker for dry eye disease and a 510(K) license for IgE, a biomarker for allergic ocular reaction
(collectively, the “510(K) Licenses”). The purchase price for the 510(K) Licenses was $
Together,
the Patents and the 510(K) Licenses constitute the acquired technology asset (the “Technology Asset”), which for accounting
purposes, are considered one unit of account. We are amortizing the Technology Asset ratably over the
In accordance with FASB’s requirements for accounting for business combinations (FASB Accounting Standards Codification, Topic 805, Business Combinations (“Topic 805”)), since all of the value of this acquisition resides in one asset, the Technology Asset, we have accounted for this transaction as the acquisition of an asset. The seller had not been able to commercialize or complete development of the Technology Asset prior to the asset acquisition and AXIM has established an Ophthalmology Division to commercialize and market the diagnostic technology. In an asset acquisition, the total purchase price of the transaction, including transaction expenses, is allocated to the assets acquired based on the fair value of the assets acquired. In our acquisition of the Technology Asset, the total amount of the purchase price was allocated to the Technology Asset.
8
NOTE 3: BASIS OF PRESENTATION:
The interim unaudited condensed financial statements included herein reflect all material adjustments (consisting of normal recurring adjustments and reclassifications and non-recurring adjustments) which, in the opinion of the Company’s management, are ordinary and necessary for a fair presentation of results for the interim periods. Certain information and footnote disclosures required under generally accepted accounting principles in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The Company’s management believes the disclosures are adequate to make the information presented not misleading.
The condensed balance sheet information as of December 31, 2022 was derived from the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Annual Report”), filed with the SEC pursuant to Section 13 or 15(d) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on April 17, 2023. These interim unaudited condensed financial statements should be read in conjunction with the 2022 Annual Report. The results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be expected for the entire fiscal year or for any other period.
Principles of Consolidation
The consolidated financial statements include the accounts of Axim Biotechnologies, Inc. and its wholly owned subsidiaries Axim Holdings, Inc., Marina Street LLC, Axim Biotechnologies (the Netherland Company) and Sapphire Biotech, Inc. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-company balances and transactions have been eliminated upon consolidation.
NOTE 4: GOING CONCERN
The
Company’s consolidated financial statements have been presented assuming that the Company will continue as a going concern. As
shown in the consolidated financial statements, the Company has negative working capital of $
NOTE 5: SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenue and expenses during reporting periods. Actual results could differ from these estimates. Significant estimates are assumptions about collection of useful life of intangible assets and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate and expected dividend rate.
9
Operating lease
We lease property under various operating leases which are disclosed on our consolidated Balance sheet in accordance with ASC 842.
Risks and uncertainties
The Company operates in a dynamic and highly competitive industry and is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to, development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, contract manufacturer and contract research organizations, compliance with government regulations and the need to obtain additional financing to fund operations. Product candidates currently under development will require significant additional research and development efforts, including extensive preclinical studies and clinical trials and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel infrastructure and extensive compliance and reporting. The Company believes that changes in any of the following areas could have a material adverse effect on the Company’s future financial position, results of operations, or cash flows; ability to obtain future financing; advances and trends in new technologies and industry standards; results of clinical trials; regulatory approval and market acceptance of the Company’s products; development of sales channels; certain strategic relationships; litigation or claims against the Company based on intellectual property, patent, product, regulatory, or other factors; and the Company’s ability to attract and retain employees necessary to support its growth.
Products developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained or maintained, that the products will receive the necessary approvals, or that any approved products will be commercially viable. If the Company was denied approval, approval was delayed or the Company was unable to maintain approval, it could have a materially adverse impact on the Company. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate revenue from product sales. The Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies. In addition, the Company is dependent upon the services of its employees, consultants and other third parties.
Beginning in late 2019, the outbreak of a novel strain of virus named SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), or coronavirus, which causes coronavirus disease 2019, or COVID-19, has evolved into a global pandemic. The extent of the impact of the coronavirus outbreak on the Company’s business will depend on certain developments, including the duration and spread of the outbreak and the extent and severity of the impact on the Company’s clinical trial activities, research activities and suppliers, all of which are uncertain and cannot be predicted. At this point, the extent to which the coronavirus outbreak may materially impact the Company’s financial condition, liquidity or results of operations is uncertain. The Company has expended and will continue to expend substantial funds to complete the research, development and clinical testing of product candidates. The Company also will be required to expend additional funds to establish commercial-scale manufacturing arrangements and to provide for the marketing and distribution of products that receive regulatory approval. The Company may require additional funds to commercialize its products. The Company is unable to entirely fund these efforts with its current financial resources. If adequate funds are unavailable on a timely basis from operations or additional sources of financing, the Company may have to delay, reduce the scope of or eliminate one or more of its research or development programs which would materially and adversely affect its business, financial condition and operations.
There have been no material changes in the accounting policies from those disclosed in the financial statements and the related notes included in the Form 10-K.
Cash equivalents
The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. As of June 30, 2023, the Company had no cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company had no uninsured balances at June 30, 2023 and December 31, 2022. The Company has never experienced any losses related to these balances.
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Accounts Receivable
It is the Company’s policy to review accounts receivable at least on a monthly basis for conductibility and follow up with customers accordingly. Covid19 has slowed collection as our customers are in a mandated pause. We do not have geographic concentration of customers.
Concentrations
At
June 30, 2023 and December 31, 2022, there were no accounts receivable. For the three and six months ended June 30, 2023 one customer
accounted for
Property and equipment
Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using straight-line method over the estimated useful life. New assets and expenditures that extend the useful life of property or equipment are capitalized and depreciated. Expenditures for ordinary repairs and maintenance are charged to operations as incurred. The Company’s property and equipment consisted of the following at June 30, 2023 and December 31, 2022, respectively.
| Schedule of property and equipment relating to continuing operations | ||||||||
June 30, 2023 | December 31, 2022 | |||||||
| Equipment | $ | $ | ||||||
| Less: accumulated depreciation | $ | $ | ||||||
| $ | $ | |||||||
Depreciation
expense was $
Intangible Assets
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. We conduct an impairment analysis for goodwill annually in the fourth quarter or more frequently if indicators of impairment exist or if a decision is made to sell or exit a business. Significant judgments are involved in determining if an indicator of impairment has occurred. Such indicators may include deterioration in general economic conditions, negative developments in equity and credit markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among others. The fair value that could be realized in an actual transaction may differ from that used to evaluate the impairment of goodwill.
We first may assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test included in U.S. GAAP. To the extent our assessment identifies adverse conditions, or if we elect to bypass the qualitative assessment, goodwill is tested using a quantitative impairment test.
Impairment of Indefinite-Lived Intangible Assets
For indefinite-lived intangible assets such as in-process research and development (IPRD), we conduct an impairment analysis annually in the fourth quarter or more frequently if indicators of impairment exist. We first perform a qualitative assessment to determine if it is more likely than not that the carrying amount of each of the in-process research and development assets exceeds its fair value. The qualitative assessment requires the consideration of factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows. If we determine it is more likely than not that the fair value is less than its carrying amount of the in-process research and development assets, a quantitative assessment is performed. The quantitative assessment compares the fair value of the in-process research and development assets to its carrying amount. If the carrying amount exceeds its fair value, an impairment loss is recognized for the excess.
11
We elected to perform a quantitative assessment of indefinite-lived intangible assets and determined that the fair value of the goodwill and IPRD related to the Sapphire acquisition was less than its carrying amount and that in-process research and development were fully impaired.
The Company’s intangible assets relating to continuing operations consisted of the following at June 30, 2023 and December 31, 2022, respectively.
| Schedule of intangible assets relating to continuing operation | ||||||||
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Patents | $ | $ | ||||||
| Licenses | ||||||||
| Less: accumulated amortization | ||||||||
| $ | $ | |||||||
Estimated aggregate amortization expense for each of the five succeeding years ending December 31 is as follows:
| Estimated aggregate amortization expense | ||||||||||||||||||||||||
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 and thereafter | |||||||||||||||||||
| Amortization expense | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Amortization
expense recorded for the three and six months ended June 30, 2023 and 2022 was $
Revenue Recognition
The Company follows the guidance contained in Topic 606 (FASB ASC 606). The core principle of Topic 606 (FASB ASC 606) is that an entity should recognize revenue to depict the transfer of goods of services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The revenue recognition guidance contained in Topic 606, to follow the five-step revenue recognition model along with other guidance impacted by this standard: (1) identify the contract with the customer; (2) identify the performance obligations in the contract; (3) determine the transportation price; (4) allocate the transportation price; (5) recognize revenue when or as the entity satisfies a performance obligation. All revenue was from operations that were divested.
Revenues are recognized when title for goods is transferred; non-refundable fees and proceeds from irrevocable agreements recognized when inflows or other enhancements of assets of the Company are received.
Revenues
from continuing operations recognized for three and six months ended June 30, 2023 and 2022 amounted to $
Fair Value Measurements
The Company applies the guidance that is codified under ASC 820-10 related to assets and liabilities recognized or disclosed in the financial statements at fair value on a recurring basis. ASC 820-10 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements.
12
The Company’s financial instruments are cash and cash equivalents, accounts receivable, accounts payable, notes payable, and long-term debt. The recorded values of cash and cash equivalents and accounts payable approximate their fair values based on their short-term nature. The recorded values of notes payable and long-term debt approximate their fair values, as interest approximates market rates.
ASC 820-10 clarifies that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820-10 requires valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows:
| Fair Value Hierarchy | Inputs to Fair Value Methodology | |
| Level 1 | Quoted prices in active markets for identical assets or liabilities | |
| Level 2 | Quoted prices for similar assets or liabilities; quoted markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the financial instrument; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from, or corroborated by, observable market information | |
| Level 3 | Pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption is unobservable or when the estimation of fair value requires significant management judgment |
All items required to be recorded or measured on a recurring basis are based upon Level 3 inputs.
To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.
The Company recognizes its derivative liabilities as Level 3 and values its derivatives using the methods discussed below. While the Company believes that its valuation methods are appropriate and consistent with other market participants, it recognizes that the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The primary assumptions that would significantly affect the fair values using the methods discussed are that of volatility and market price of the underlying common stock of the Company.
Items recorded or measured at fair value on a recurring basis in the accompanying condensed consolidated financial statements consisted of the following items as of June 30, 2023.
| Derivative liabilities measured at fair value on recurring basis | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
| Derivative liabilities - Insufficient shares | $ | $ | ||||||||||||||
December 31, 2022
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||
13
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in its convertible instruments in accordance with professional standards for “Accounting for Derivative Instruments and Hedging Activities.”
Professional standards generally provide three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instruments are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. Professional standards also provide an exception to this rule when the host instrument is deemed to be conventional as defined under professional standards as “The Meaning of “Conventional Convertible Debt Instrument.”
The Company accounts for convertible instruments (when it has determined that the embedded conversion options should not be bifurcated from their host instruments) in accordance with professional standards when “Accounting for Convertible Securities with Beneficial Conversion Features,” as those professional standards pertain to “Certain Convertible Instruments.” Accordingly, the Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their earliest date of redemption. The Company also records when necessary deemed dividends for the intrinsic value of conversion options embedded in preferred shares based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note.
ASC 815-40 provides that, among other things, generally, if an event is not within the entity’s control could or require net cash settlement, then the contract shall be classified as an asset or a liability.
Income Taxes
The Company follows Section 740-10, Income tax (“ASC 740-10”) Fair Value Measurements and Disclosures of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date.
The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including reversals of any existing taxable temporary differences, projected future taxable income, tax planning strategies, and the results of recent operations. If the Company determines that it would be able to realize a deferred tax asset in the future in excess of any recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes.
The Company adopted section 740-10-25 of the FASB Accounting Standards Codification (“Section 740-10-25”). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25.
14
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “Cares Act”) was enacted. The CARES Act included loans and grants to certain businesses, and temporary amendments to the Internal Revenue Code which changed net loss carryforward and back provisions and the business interest expenses limitation. Under the CARES Act provisions, the most relevant income tax considerations to Oncocyte relate to the amounts received under the Paycheck Protection Program loan program and the possible forgiveness of those loans by the SBA.
On December 21, 2020, the U.S. president has signed into law the “Consolidated Appropriations Act, 2021” which includes further COVID-19 economic relief and extension of certain expiring tax provisions. The relief package includes a tax provision clarifying that businesses with forgiven PPP loans can deduct regular business expenses that are paid for with the loan proceeds for federal tax purposes. Additional pandemic relief tax measures include an expansion of the employee retention credit, enhanced charitable contribution deductions, and a temporary full deduction for business expenses for food and beverages provided by a restaurant.
Concentrations of Credit Risk
Financial
instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and
cash equivalents. The Company had $
Net loss per common share is computed pursuant to section 260-10-45 Earnings Per Share (“ASC 260-10”) of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding and the member potentially outstanding during each period. In periods when a net loss is experienced, only basic net loss per share is calculated because to do otherwise would be anti-dilutive.
There were common share equivalents at June 30, 2023 and at December 31, 2022. For the Period ended June 30, 2023 these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. If necessary, the company would increase authorized shares to honour conversion agreements. The company recognized a derivative short share expense for the three and six months ending June 30, 2023 in the amounts of $ and $ respectively as a result of authorized shares being insufficient to redeem convertible securities and notes. This will be corrected in Quarter ending September 30, 2023. See subsequent events.
All stock-based payments to employees and to nonemployee directors for their services as directors, including any grants of restricted stock and stock options, are measured at fair value on the grant date and recognized in the statements of operations as compensation or other expense over the relevant service period. Stock-based payments to nonemployees are recognized as an expense over the period of performance. Such payments are measured at fair value at the earlier of the date a performance commitment is reached, or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable the measurement date is the date the award is issued. The Company accounts for stock options issued to non-employees based on the estimated fair value of the awards using the Black-Scholes option pricing model in accordance with ASC 505-50, Equity-Based Payment to Non-employees. Stock-based compensation expense related to stock options granted to non-employees is recognized as the stock options vest. The Company believes that the fair value of the stock options is more reliably measurable than the fair value of the services received. Stock options granted to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustments as such options vest and at the end of each reporting period, and the resulting change in value, if any, is recognized in the Company’s statements of operations and comprehensive loss during the period the related services are rendered.
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Research and Development
The
Company accounts for research and development costs in accordance with the Accounting Standards Codification subtopic 730-10, Research
and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred.
Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed
when the contracted work has been performed or as milestone results have been achieved. Company-sponsored research and development costs
related to both present and future products are expensed in the period incurred. For the three and six months ended June 30, 2023 and
2022 the Company incurred research and development expenses of $
Material Equity Instruments
The Company evaluates stock options, stock warrants and other contracts (convertible promissory note payable) to determine if those contracts or embedded components of those contracts qualify as derivative financial instruments to be separately accounted for under the relevant sections of ASC 815-40, Derivative Instruments and Hedging: Contracts in Entity’s Own Equity (“ASC 815”). The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative financial instrument and is marked-to-market at each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative financial instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC 815 are reclassified to a liability account at the fair value of the instrument on the reclassification date.
Certain of the Company’s embedded conversion features on debt and outstanding warrants are treated as derivative liabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuant to SEC staff guidance that permits a sequencing approach based on the use of ASC 840-15-25 which provides guidance for contracts that permit partial net share settlement. The sequencing approach may be applied in one of two ways: contracts may be evaluated based on (1)earliest issuance date or (2) latest maturity date. In the case of insufficient authorized share capital available to fully settle outstanding contracts, the Company utilizes the earliest maturity date sequencing method to reclassify outstanding contracts as derivative instruments. These contracts are recognized currently in earnings until such time as the convertible notes or warrants are exercised, expire, the related rights have been waived and/or the authorized share capital has been amended to accommodate settlement of these contracts. These instruments do not trade in an active securities market.
Recently Issued Accounting Standards
Accounting Standards Implemented Since December 31, 2022
ASC Update 2021-04
Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force).
16
The amendments in this Update affect all entities that issue freestanding written call options that are classified in equity. Specifically, the amendments affect those entities when a freestanding equity-classified written call option is modified or exchanged and remains equity classified after the modification or exchange. The amendments that relate to the recognition and measurement of EPS for certain modifications or exchanges of freestanding equity-classified written call options affect entities that present EPS in accordance with the guidance in Topic 260, Earnings Per Share. The amendments in this Update do not apply to modifications or exchanges of financial instruments that are within the scope of another Topic. That is, accounting for those instruments continues to be subject to the requirements in other Topics. The amendments in this Update do not affect a holder’s accounting for freestanding call options.
ASC Update No. 2020-10
In October 2020, the FASB issued ASC Update No. 2020-10, Codification Improvements. Update No. 2020-10 amends a wide variety of Topics in the Codification in order to improve the consistency of the Codification and the application thereof, while leaving Generally Accepted Accounting Principles unchanged.
ASC Update No. 2020-06
In August 2020, the FASB issued ASC Update No. 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendments in Update No. 2020-06 simplify the complexity associated with applying U.S. GAAP for certain financial instruments with characteristics of liabilities and equity. More specifically, the amendments focus on the guidance for convertible instruments and derivative scope exception for contracts in an entity’s own equity.
Other recent accounting pronouncements issued by the FASB and the SEC did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
NOTE 6: PREPAID EXPENSES
Prepaid expenses consist of the following as of June 30, 2023 and December 31, 2022 respectively:
| Schedule of prepaid expenses | ||||||||
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Prepaid insurance | $ | $ | ||||||
| Prepaid interest | ||||||||
| $ | $ | |||||||
For
the three and six months ended June 30, 2023 and 2022 the Company recognized amortization of prepaid expense and prepaid insurance of
$-
17
NOTE 7: RELATED PARTY TRANSACTIONS
Related Party
The
Company has an employment agreement with Catalina Valencia at a rate of $
The
company has a consulting agreement with Glycodots LLC whereby it will provide the services of Dr. Sergei A. Svarovsky at a rate of $
Purchase of Promissory Note and Forbearance Agreement
Effective
May 4, 2020, the Company acquired from TL-66, a California limited liability company (“Seller”), a promissory note issued
to Seller by Dr. Anastassov (“Maker”) dated December 1, 2017, with a face value of $
NOTE 8: DUE TO FIRST INSURANCE FUNDING
On
June 25, 2022, the Company renewed its D&O insurance policy with total premiums, taxes and fees for $
The
total outstanding due to First Insurance Funding as of June 30, 2023 and December 31, 2022 is $-
The policy was cancelled for non-payment of premium in April 2023.
NOTE 9: CONVERTIBLE NOTES PAYABLE
The following table summarizes convertible note payable of related party as of June 30, 2023 and December 31, 2022 respectively:
| Schedule of convertible note payable,related party | ||||||||
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Convertible note payable, due on | $ | $ | ||||||
| Accrued interest | ||||||||
| Convertible note payable, net | $ | $ | ||||||
On
January 23, 2023, Creditor agreed to waive and forfeit all interest accrued on the MMI Note through December 31, 2022, in the aggregate
amount of $
18
For
the three and six months ended June 30, 2023 and 2022, interest expense was $
As
of June 30, 2023 and December 31, 2022, the balance of secured convertible note was $
The following table summarizes convertible note payable as of June 30, 2023 and December 31, 2022 respectively:
| Schedule of convertible notes payable | ||||||||
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Convertible note payable, due on October 1, 2029, interest at 3.5% p.a. (1) | $ | $ | ||||||
| Convertible Note Payable, due on January 27,2032 interest at 3% p.a. (4) | ||||||||
| Convertible note payable, due on October 1, 2029, interest at 3.5% p.a. (2) | ||||||||
| Convertible note payable, due on February 10, 2032, interest at 3.0% p. a. (5) | ||||||||
| Convertible note payable, due on December 31, 2034, interest at 3% p.a. (3) | ||||||||
| Convertible note payable, due on May 23, 2033, interest at 3.75% p.a. | ||||||||
| Convertible note payable, due on May 23, 2033, interest at 3.75% p.a. | ||||||||
| Accrued interest (The accrued interest and principal are both included in the captions titled “convertible note payable” in the balance sheet) | ||||||||
| Total | ||||||||
| Less: unamortized debt discount/finance premium costs | ( | ) | ( | ) | ||||
| Convertible note payable, net | $ | $ | ||||||
(1)
On September 16, 2016, we entered into a convertible note purchase agreement (the “Convertible Note Purchase Agreement” or
“Agreement”) with a third-party investor. Under the terms of the Convertible Note Purchase Agreement the investor may acquire
up to $ of convertible notes from the Company. With various closings, under terms acceptable to the Company and the investor
as of the time of each closing. Pursuant to the Agreement, on September 16, 2016 the investor provided the Company with $
As
of June 30, 2023 and December 31, 2022 respectively, the balance of secured convertible notes was $
(2)
On October 20, 2016, a third-party investor provided the Company with $
19
(1)
& (2) On January 23, 2023, Creditor agreed to waive and forfeit all interest accrued on the Secured Notes through December 31,
2022, in the aggregate amount of $
The
Renegotiation of the above TL-66 notes was deemed to be a debt extinguishment resulting in Amortization of the remaining debt discount
of $
On
June 7, 2021 the Company converted $
(3)
On December 31, 2019, Sapphire Biotech, Inc. entered into a Convertible Note Purchase Agreement whereas the Company issued a convertible
note with a face value of $
Upon issuance, the Convertible Note was convertible into shares of the Company’s common stock at $ per share. At December 31, 2019, the Company determined that the Convertible Note contained a beneficial conversion feature for which a full discount was recorded on the Convertible Note. The fair market value of the Company’s common stock was based upon the estimated per share acquisition price per the pending acquisition of the Company. The discount of $190,000 will be amortized using the effective interest method and will be fully amortized by December 31, 2034.
On
March 17, 2020, the Company entered into a Share Exchange Agreement (“Agreement”) with Sapphire Biotech, Inc., a Delaware
corporation (“Sapphire”) and all of the Sapphire stockholders (collectively, the “Sapphire Stockholders”). Following
the closing of the transaction, Sapphire will become a wholly owned subsidiary of AXIM. Under the terms of the Agreement, the Company
intends to assume the convertible notes in the principal amounts of $. After the acquisition, the Convertible Note was able to
convert shares of Axim’s common stock. Upon assumption of the note, the Company recorded a beneficial conversion feature
of $190,000. As of June 30, 2023 and December 31, 2022, the balance of secured convertible note was $
On
January 27, 2023, Creditor agreed to waive and forfeit all interest accrued on the Sapphire Note through December 31, 2022, in the aggregate
amount of $
(4)
On January 27, 2022, Sapphire Bitotech entered into a debt exchange agreement (effective April 1 2022) whereas the company exchanged
a convertible note with a balance of including accrued interest for a new note charging interest at a rate of
20
On January 23, 2023, Creditor agreed to waive and forfeit all interest accrued on the TL-66 Note through January 27, 2023, in the aggregate amount of $11,190, and to waive all prior defaults on the TL-66 Note through the Effective Date. This was not deemed to be a debt extinguishment since the waiver of accrued interest was not deemed to produce a change in cash flow greater than 10%. The company recorded a gain on modification of $11,190 resulting from forgiveness of accrued interest.
Convertible Note payable – related party (officer)
As
of December 31, 2022, the Company owed to the Executive, for employment in his capacity as CEO of AXIM, $
Payment
of Principal and Interest. From the date of this Convertible Note (the “Note” or “Convertible Note”), interest
shall be payable annually on the basis of a three hundred sixty (360) day year and compounded on a yearly basis at a rate equal to Four
Percent (
As
of June 30, 2023 and December 31, 2022 the Balance due on the note was $
(5) Convertible Notes
Effective
February 10, 2022, the Company issued seven convertible notes to a series of investors having an aggregate face value of $
Each
of the Convertible Notes is (i) unsecured; (ii) bears interest at a rate of 3% per annum; (iii) matures on February 10, 2032; and (iv)
is convertible, in whole or in part, at any time by the holder, into restricted shares of the Company’s common stock at a conversion
price equal to the lesser of $0.08125 or 70% of the average of the two lowest closing prices of the Company’s common stock in the
ten trading days preceding any particular conversion, provided, the holder is prohibited from converting the convertible note, or portion
thereof, if such conversion would result in beneficial ownership by the holder and its affiliates of more than 4.999% of Company’s
issued and outstanding common stock as of the date of the conversion. A debt discount was recorded related to beneficial conversion feature
in connection with this convertible note of $1,325,000, which to be amortized over the life of the note or until the note is converted
or repaid. During the year ended December 31, 2022, $
21
During
the three and six months ended June 30, 2023 and 2022 respectively, the Company amortized the debt discount on all the notes of $
Effective
May 23, 2023, the Company issued 5 convertible notes to a series of investors having an aggregate face value of $
Each
of the Convertible Notes is (i) unsecured; (ii) bears interest at a rate of
Debt Obligations - 2022
Effective February 10, 2022, The Company issued the following debt obligations in exchange for cash. A portion of the funds received by the Company were used to pay off the GS Capital Partners, LLC note, as discussed below.
Short Term Promissory Notes
Effective
February 10, 2022, the Company issued two short term notes, each having a face amount of $
NOTE 10: DERIVATIVE LIABILITIES
Upon the issuance of certain convertible note payable having a variable conversion rate, the Company determined that the features associated with the embedded conversion option embedded in the debt, should be accounted for at fair value, as a derivative liability.
We have determined that certain convertible debt instruments outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging - Contracts in an Entity’s Own Stock (“ASC 815-40”). Certain of the convertible debentures have a variable exercise price, thus are convertible into an indeterminate number of shares for which we cannot determine if we have sufficient authorized shares to settle the transaction with. Accordingly, the embedded conversion option is a derivative liability and is marked to market through earnings at the end of each reporting period. Any change in fair value during the period recorded in earnings as “Other income (expense) - gain (loss) on change in derivative liabilities.”
On
February 10, 2022 i.e. on the date of issuance of derivative instrument, the Company estimated the fair value of the embedded derivatives
of $
22
On
June 30, 2023, the Company estimated the fair value of the embedded derivatives of $
The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities for the six months ended June 30, 2023 and 2022:
| Summary of changes in fair value of financial liabilities | ||||
| Balance, December 31, 2022 | $ | |||
| Issuance of shares in exchange for convertible note payable | ( | ) | ||
| Issuance of convertible notes payable | ||||
| Mark to market | ||||
| Balance, June 30, 2023 | $ | |||
| Loss on change in derivative liabilities for the six months ended June 30, 2023 | $ | |||
| Loss on Change in Fair Value of derivative liability for the three months ended June 30, 2023 | ||||
| Balance, December 31, 2021 | $ | |||
| Issuance of convertible notes payable | ||||
| Mark to market | ( | ) | ||
| Balance, March 31, 2022 | $ | |||
| Mark to Market during the three months ended June 30, 2022 | ( | ) | ||
| Balance June 30, 2022 | ||||
| Gain on change in derivative liabilities for the six months ended June 30, 2022 | $ | |||
| Gain on Change in Fair Value of derivative liability for the three months ended June 30, 2022 |
Derivative liability- insufficient shares
Certain of the Company’s embedded conversion features on debt, convertible preferred stock and outstanding options & warrants are treated as derivative liabilities for accounting purposes under ASC 815-40 due to insufficient authorized shares to settle these outstanding contracts. Pursuant to SEC staff guidance that permits a sequencing approach based on the use of ASC 840-15-25 which provides guidance for contracts that permit partial net share settlement. The sequencing approach may be applied in one of two ways: contracts may be evaluated based on (1) earliest issuance date or (2) latest maturity date. In the case of insufficient authorized share capital available to fully settle outstanding contracts, the Company utilizes the earliest maturity date sequencing method to reclassify outstanding contracts as derivative instruments. These contracts are recognized currently in earnings until such time as the convertible notes or preferred stock or option or warrants are exercised, expire, the related rights have been waived and/or the authorized share capital has been amended to accommodate settlement of these contracts. These instruments do not trade in an active securities market.
On
June 30, 2023, the Company estimated the fair value of the embedded derivatives of using the Black-Scholes Pricing Model based on the
following assumptions: (1) dividend yield of
The
Company recorded $
The
Company recorded $
23
NOTE 11: STOCK INCENTIVE PLAN
On
May 29, 2015, the Company adopted its 2015 Stock Incentive Plan. Under the Plan the Company may issue up to
On
August 2, 2021, Bijan Pedram the Senior Scientific of Sapphire Biotechnology was granted the options to purchase million shares of
Axim common stock under the plan at the purchase price of $
On
August 17, 2021, Jeff Busby the Senior Vice president of Sales of Axim Biotechnology was granted the options to purchase million of
shares of Axim common stock under the plan at the purchase price of $
On
September 1, 2021, Laura M. Periman Medical advisory board member of Axim Biotechnology was granted the options to purchase million
of shares of Axim common stock under the plan at the purchase price of $
On
September 4, 2021, Kelly K. Nichols Medical advisory Board member of Axim Biotechnology was granted the options to purchase million
of shares of Axim common stock under the plan at the purchase price of $
On
September 8, 2021, Joseph Tauber the Ophthalmic Chief Medical Officer (CMO) of Axim Biotechnology was granted the options to purchase
million of shares of Axim common stock under the plan at the purchase price of $
On
August 22, 2022, options were issued with a strike price of $
On
December 9, 2022, options were issued with a strike price of $
The
Company estimated the fair value of the Option value of $ using the Black-Scholes Pricing Model based on the following assumptions:
(1) dividend yield of , (2) expected volatility of , (3) risk-free interest rate of
For the three and six months ended June 30, 2023 and 2022 respectively the Company recorded compensation expense of $, $ and $, $ respectively.
24
NOTE 12: STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company has authorized shares of preferred stock, with a par value of $ per share. Of the 5,000,000 authorized preferred shares, are undesignated “blank check” preferred stock. The Company may issue such preferred shares and designate the rights, privileges and preferences of such shares at the time of designation and issuance. As of June 30, 2023, and December 31, 2022 there are -- and -- shares of undesignated preferred shares issued and outstanding, respectively.
There are zero shares issued and outstanding of Series A and Series B Preferred stock as of June 30, 2023.
Series C Convertible Preferred Stock
On August 17, 2016 the Company designated up to shares of a new Series C Convertible Preferred Stock (Series C Preferred Stock). The holders of the Series C Preferred are entitled to elect four members to the Company’s board of directors and are entitled to cast 100 votes per share on all other matters presented to the shareholders for a vote. Each share of Series C Convertible Preferred is convertible into one share of the Company’s common stock. The Series C Convertible Preferred designation contains a number of protective and restrictive covenants that restrict the Company from taking a number of actions without the prior approval of the holders of the Series C Preferred or the unanimous vote of all four Series C Directors. If at any time there are four Series C Directors, one such director must be independent as that term is defined in the Series C designation. Any challenge to the independence of a Series C Director is a right conferred only upon the holders of the Series B Convertible Preferred Stock and may only be made by the holders of the Series B Convertible Preferred Stock.
On
August 18, 2016 the Company issued all shares of its newly designated Series C Preferred Stock to MJNA Investment Holdings, LLC
in exchange for cash of $
On
February 20, 2019, MJNA Investment Holdings LLC (“Seller”) sold its shares of AXIM Biotechnologies, Inc.’s,
a Nevada corporation (the “Company”) Series C Preferred Stock to Juniper & Ivy Corporation, a Nevada corporation (“Purchaser”)
for a purchase price of $
The holders of the Series C Preferred Stock are entitled to elect four members to the Company’s Board of Directors and are entitled to cast votes per share on all other matters presented to the shareholders for a vote. As a result of this transaction, a change in control has occurred.
Common Stock
The Company has authorized shares of common stock, with a par value of $ per share. As of June 30, 2023 and December 31, 2022, the Company had and shares of common stock issued and outstanding, respectively.
2023 Transactions:
One
million shares were issued in satisfaction of Common stock to be issued Valued at
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Twelve
million shares were issued during the first six months of 2023 pursuant to the Company’s S-1 in exchange for $
The company has received an advance from the shareholder in the amount of $; at this time there are no plans to offset this amount against S-1 proceeds. It will be repaid as cash flow allows.
shares were issued due to conversion of Notes Payable and accrued interest Theron valued at $
2022 Transactions:
During
January 2022, the Company issued
In
January 2022, the Company issued
In January 2022, the Company issued of its shares of common stock, valued at $, in exchange for services which have been recorded as a prepaid expense.
On
January 11, 2022, the company issued
In
March 2022, the Company issued
In March 2022, the Company issued shares of its common stock, valued at $, in settlement of interest due to prepayment of a note.
In March 2022, the company issued of its shares of common stock, valued at $ in exchange for services related to the arrangement of meetings and conferences.
The Company also issued shares of its common stock January thru June of 2022 for cash of $ pursuant to an equity purchase agreement, dated on May 14, 2021, which shares were registered pursuant to that S-1 Registration Statement filed by the Company with the SEC on May 14, 2021, and declared effective by the SEC on June 22, 2021.
The
Company issued of its shares to settle the amounts owed to George Anastassov and Lekhram Changoer. The debt totaled $
The
Company issued of its shares in settlement of claims made by individuals pursuant to various stock Purchase agreements. The
company recognized a current period loss of $
During the third quarter 2022 the company issued shares pursuant to its S-1 for cash of $.
On
July 14, 2022, the Company entered into the Equity Purchase Agreement with Cross & Company, pursuant to which we have the right to
“put,” or sell, up to $ worth of shares of our common stock to Cross. As provided in the Equity Purchase Agreement,
we may require Cross to purchase shares of our common stock from time to time by delivering a put notice to Cross specifying the total
number of shares to be purchased (such number of shares multiplied by the purchase price described below, the “Investment Amount”);
provided there must be a minimum of ten trading days between delivery of each put notice. We may determine the Investment Amount, provided
that such amount may not be more than 300% of the average daily trading volume in dollar amount for our common stock during the five
trading days preceding the date on which we deliver the applicable put notice, unless waived by Cross in its sole discretion. Additionally,
such amount may not be lower than $
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The
Company also issued shares of its common stock January thru December of 2022 for cash of $ and a subscription receivable
of $
Also
during the third quarter of 2022 the company issued
The
Company converted debt of $
NOTE 13: STOCK OPTIONS AND WARRANTS
Options to purchase common stock are granted at the discretion of the Board of Directors, a committee thereof or, subject to defined limitations, an executive officer of the Company to whom such authority has been delegated. Options granted to date generally have a contractual life of ten years.
The stock option activity for six months ended June 30, 2023 and year ended December 31, 2022 respectively is as follows:
| Schedule of stock option activity | ||||||||
Options Outstanding | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Expired or cancelled | ( | ) | ||||||
| Outstanding at December 31, 2022 | $ | |||||||
| Granted | ||||||||
| Expired | ( | ) | ||||||
| Balance June 30, 2023 | $ | |||||||
The following table summarizes the changes in options outstanding, option exercisability and the related prices for the shares of the Company’s common stock issued to employees and consultants under a stock option plan at June 30, 2023:
As of June 30, 2023
| Schedule of option outstanding under stock option plan | |||||||||||||||||||
| Options Outstanding | Options Exercisable | ||||||||||||||||||
Weighted Average Exercise Price ($) | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price ($) | Number Exercisable | Weighted Average Exercise Price ($) | ||||||||||||||
| $ | $ | $ | |||||||||||||||||
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As of December 31, 2022
| Options Outstanding | Options Exercisable | |||||||||||||||||
Weighted Average Exercise Price ($) | Number Outstanding | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price ($) | Number Exercisable | Weighted Average Exercise Price ($) | |||||||||||||
| $ | $ | $ | ||||||||||||||||
The Company determined the value of share-based compensation for options vested using the Black-Scholes fair value option-pricing model with the following weighted average assumptions:
| Schedule of weigted average assumptions using black holes option pricing model | ||||||||
| June 30, | December 31, | |||||||
| 2023 | 2022 | |||||||
| Expected life (years) | ||||||||
| Risk-free interest rate (%) | ||||||||
| Expected volatility (%) | ||||||||
| Dividend yield (%) | ||||||||
| Weighted average fair value of shares at grant date | $ | $ | ||||||
For the three and six months ended June 30, 2023 and 2022 stock-based compensation expense related to vested options was $, $ and $, $ respectively.
Warrants
The following table summarizes warrant activity during the year ended December 31, 2022 and the six months ended June 30, 2023:
| Schedule of warrants activity | ||||||||
| Number of Warrants | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Forfeited/Cancelled | ||||||||
| Exercised | ||||||||
| Outstanding at December 31, 2022 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Expired | ||||||||
| Outstanding at June 30, 2023 | ||||||||
All outstanding warrants are exercisable at June 30, 2023 and there was no unrecognized stock-based compensation expense related to warrants.
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NOTE 14: COMMITMENT AND CONTINGENCIES
On
January 2, 2019 the Company entered into the term of Executive’s employment agreement, at a base salary of $
On
April 24, 2017 the company entered into an employment agreement with Robert Malasek, its Chief Financial Officer and Secretary. The agreement
does not have a set term and may be terminated at any time by the Company or Mr. Malasek with proper notice. The shares were issued in
the 1st quarter 2018. Beginning in October 2019, the board ratified to increase CFO base salary to $
Industry
Sponsored Research Agreement— Sapphire entered into the Industry Sponsored Research Agreement (“SRA”) effective February
7, 2020 to test and confirm the inhibitory activity of SBI-183 (exclusively licensed on January 13, 2020) and SBI-183 analogs, including
those synthesized by the Company. The testing will include cell-based in vitro assays, NMR binding studies and testing to determine if
SBI-183 enhances the activity of cytotoxic drugs in vitro. Animal studies will also be conducted under the SRA. Specifically, SBI-183
analogs will be evaluated in a mouse model of triple negative breast cancer using human tumor xenografts. The work will be performed
over a period of one year with the total cost of the SRA totalling $
On
August 5, 2020 Sapphire was awarded a $
On August 25, 2020 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 neutralizing antibody tests for COVID-19 per month. In exchange for this license Empowered will pay Axim a royalty on net sales on all licensed products sold by Empowered covered by this license which global with the exception of Mexico.
This agreement was cancelled in February, 2022.
On September 15, 2022, the company entered into a license and distribution agreement for its Lactoferrin dry eye test, Ige allergy test for allergic conjunctivitis and quantitative MMp-9 test to identify ocular surface inflammation. The licensee is Versea Ophthalmics, LLC, A Delaware Limited Liability Company.
The agreement will provide Verséa with the exclusive commercial right to AXIM’s proprietary portfolio of point-of-care (POC) lab testing readers and three key biomarker diagnostic tests designed specifically to assist eye-care physicians in detecting and quantifying biomarkers associated with aqueous deficient Dry Eye Disease and non-specific allergic conjunctivitis. The three AXIM’s key biomarker tests – the Ocular Immunoglobulin E (IgE) test, the Lactoferrin test, and the future MMP-9 test – require the collection of 0.5 microliters in tears and provide quantitative results in under 10 minutes, an industry-leading return time.
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Verséa plans to launch IgE and Lactoferrin tests at the upcoming 2022 American Academy of Ophthalmology (AAO) and American Academy of Optometry (AAOPT) conferences. The MMP-9 test is anticipated to follow in the next 18-24 months.
Versea plans to launch sales sometime in second quarter 2023. During first quarter 2023 further modification of the tests and packaging took place.
Operating Lease
Lease
Agreement—On March 3, 2020, Sapphire entered into a 3-year lease agreement (“Lease”) to relocate to a larger space
within the same business park. The new space totals
| Summary of monthly base rent payable for the premises during extended term | ||||||||||||||||
| Month(s) of Term | No. of Months | Monthly Base Rent | Conditionally Abated Monthly Base Rent | Total Monthly Base Rent | ||||||||||||
| $ | $ | |||||||||||||||
| $ | $ | $ | ||||||||||||||
| $ | $ | |||||||||||||||
| $ | $ | |||||||||||||||
| $ | $ | |||||||||||||||
| $ | $ | |||||||||||||||
Operating Leases - Right of Use Assets and Purchase Commitments Right of Use Assets
We have operating leases for office space that expire through 2023. Below is a summary of our right of use assets and liabilities as of June 30,2023.
| Summary of right of use asset and liabilities | ||||
| Right-of-use assets | $ | |||
| Lease liability obligations, current | $ | |||
| Lease liability obligations, noncurrent | ||||
| Total lease liability obligations | $ | |||
| Weighted-average remaining lease term | ||||
| Weighted-average discount rate | % |
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The following table summarizes the lease expense for the three and six months ended June 30, 2023 and 2022 respectively:
| Summary of lease expenses | ||||||||
| Three months ended | June 30, | June 30, | ||||||
| 2023 | 2022 | |||||||
| Operating lease expense | $ | * | $ | |||||
| Short-term lease expense | ||||||||
| Total lease expense | $ | $ | ||||||
| Six months ended | June 30, | June 30, | ||||||
| 2023 | 2022 | |||||||
| Operating lease expense | $ | * | $ | |||||
| Short-term lease expense | ||||||||
| Total lease expense | $ | $ | ||||||
*We
recorded $
*We
recorded $
Approximate future minimum lease payments for our right of use assets over the remaining lease periods as of June 30, 2023, are as follows:
| Schedule of future minimum rental payments for operating leases | ||||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total minimum payments | ||||
| Less: amount representing interest | ( | ) | ||
| Total | $ |
Litigation
As of June 30, 2023 the Company has been named as a defendant in the following legal action: Innovative Medical Supplies, LLC v. Advanced Tear Diagnostics, LLC, Case No. 37-2021-00032000-CU-FR-CTL filed in the Superior Court of the State of California, County of San Diego.
Allegations: The Company has been named as a defendant in this litigation. The First Amended Complaint (“FAC”) alleges causes of action of Fraud; Conspiracy to Defraud; Unjust Enrichment/Constructive Trust; Intentional Interference with Contract; and Interference with Economic Relations against the Company. The FAC prays for relief of Compensatory damages and other Special, general and consequential damages of not less than $280,586 as well as Punitive and exemplary damages and attorney fees and cost of suit.
Status: The litigation is in the pleading stage as against the Company and the Company has not responded to the FAC. The Company has entered into a Settlement Agreement with the Plaintiff’s manager to fully resolve the matter. However, there is a dispute as to who has control over the Plaintiff limited liability company. The Company intends to seek court assistance in enforcing the settlement agreement. At this time the company believes it is more likely than not that it will prevail in the lawsuit. Therefore no loss provision has been accrued in these financial statements.
NOTE 15: SUBSEQUENT EVENTS
Common Stock Issuances
During
July and August 2023, the Company issued shares
under their S-1 totalling $
The company plans to increase authorized shares to One billion to cover shortfall in amounts needed to redeem convertible securities and notes and to cover future capital raises.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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 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 SEC: 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 those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act.
When we use the terms “AXIM”, “Company”, “we”, “our” and “us” we mean Axim Biotechnologies, Inc., a Nevada corporation, and its consolidated subsidiaries, taken as a whole, as well as any predecessor entities, unless the context otherwise indicates.
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.
Liquidity and Capital Resources
We are in our early stages of development and growth, without established records of sales or earnings. We will be subject to numerous risks inherent in the business and operations of financially unstable and early stage or emerging growth companies.
As of June 30, 2023, we had cash and cash equivalents of $97,498, working capital deficit of $(8,267,997), and an accumulated deficit of $70,611,099. We estimate our G&A expenses for 2023 to be approximately $3,500,000, which includes projected audit and accounting costs of $250,000. R&D expenses for 2023 will vary based on drug formulation and clinical trial project activity that the Company is engaged in, which in turn is determined by available capital. We do not expect R&D expenditures to exceed $2 million in 2023.
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We can provide no assurance that the Company can continue to satisfy its cash requirements for at least the next twelve months.
We expect to obtain financing through shareholder loans, private placements and/or registered offerings of our securities. Shareholder loans may be without stated terms of repayment or interest. In addition, we may consider taking on long-term or short-term debt from financial institutions in the immediate future. Shareholders loans may be granted from time to time as required to meet current working capital needs. We have no formal agreement that ensures that we will receive such loans. We may exhaust this source of funding at any time.
We are dependent upon certain related parties to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations. These loans may include terms that may be highly dilutive to existing shareholders.
On September 14, 2017, our Registration Statement on Form S-3 was declared effective by the SEC. We issued 7,494,792 shares common stock pursuant to the Company’s Registration Statement on Form S-3 during the year ending December 31, 2020. No shares were issued in 2021 under the S-3.
On June 22, 2021, our Registration Statement on Form S-1 was declared effective by the SEC. We issued 1,000,000 shares of Company common stock pursuant to an equity purchase agreement, dated on May 14, 2021, and the Registration Statement on Form S-1 during the year ending December 31, 2021. Subsequent to the year ended December 30, 2021, the Company issued an additional 4,000,000 shares of its common stock for cash of $484,126 pursuant to the equity purchase agreement, which shares were also registered pursuant to the S-1 Registration Statement.
During January 2022, the Company issued 519,247 shares for cash of gross proceeds of $75,000 pursuant to various stock purchase agreements. The cash was received in the fourth quarter 2021 and first quarter 2022. The Company also issued warrants to purchase an aggregate of 519,247 shares of common stock at an average exercise price of $0.315 per share. The warrants are exercisable within a three year period from issuance.
Effective February 10, 2022, the Company issued two short term notes, each having a face amount of $250,000, in exchange for a total of $500,000 in cash (the “Short Term Promissory Notes”). The Short Term Promissory Notes bear interest at the rate of 1.5% per annum and were due and payable on or before March 10, 2022, unless demand for payment is made prior to such date. Both of the two notes was paid in full on February 14, 2022.
Effective February 10, 2022, the Company issued seven convertible notes to a series of investors having an aggregate face value of $1,325,000 in exchange for $1,325,000 in cash (the “Convertible Notes”). One of the Convertible Notes, face value $25,000, was purchased by Blake N. Schroeder who is a director of the Company.
Each of the Convertible Notes is (i) unsecured; (ii) bears interest at a rate of 3% per annum; (iii) matures on February 10, 2032; and (iv) is convertible, in whole or in part, at any time by the holder, into restricted shares of the Company’s common stock at a conversion price equal to the lesser of $0.08125 or 70% of the average of the two lowest closing prices of the Company’s common stock in the ten trading days preceding any particular conversion, provided, the holder is prohibited from converting the convertible note, or portion thereof, if such conversion would result in beneficial ownership by the holder and its affiliates of more than 4.99% of Company’s issued and outstanding common stock as of the date of the conversion.
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BUSINESS
Overview
Axim Biotechnologies, Inc., a Nevada corporation, is a leading developer of diagnostic healthcare solutions serving to enhance the health of people. Through the development of diagnostic solutions that quickly and accurately diagnose various diseases, our products allow healthcare workers to quickly test and treat at the point-of-care, which leads to improved patient outcomes and provides numerous economic benefits to the healthcare system.
Axim’s core competencies include development of rapid lateral flow immunoassays, reagents and monoclonal antibody development for such assays. Our current products fall into these categories:
(1) Eye Health, wherein we acquired two FDA cleared 510(k) tests for dye eye disease and have internally developed a third assay; and
(2) SARS-CoV-2 neutralizing antibody tests
Following the acquisition of two FDA cleared 510(k) tests for dye eye disease, the Company’s product focus has been primarily in the area of Eye Health. We continue to maintain the products and assays developed in connection with SARS-CoV-2 neutralizing antibody tests should a commercialization opportunity present itself in the future.
Our principal executive office is located at 6191 Cornerstone Court, E. Suite 114, San Diego, CA 92121. Our telephone number is (858) 923-4422 and our website is www.aximbiotech.com. Unless expressly noted, none of the information on our website is part of this Report. Our common stock is quoted on the OTCQB Marketplace operated by the OTC Markets Group, Inc., under the ticker symbol “AXIM.”
Historical Business Operations
We were 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.
The Company’s historical business operations focused on the research, development and production of pharmaceutical, nutraceutical and cosmetic products based upon our proprietary technologies. This business and its related intellectual property were divested by the Company in May, 2020.
In March 2020, we acquired Sapphire Biotech, Inc. (“Sapphire”), a diagnostic healthcare solutions company, changing our business operations.
Acquisition of Sapphire Biotech, Inc.
On March 17, 2020, we entered into a Share Exchange Agreement with Sapphire and all of its stockholders, pursuant to which, upon closing of the transaction, we: (i) acquired 100% of Sapphire’s outstanding capital, consisting of 100,000,000 shares of common stock; and (ii) assumed all of the outstanding debt of Sapphire. The outstanding debt included two convertible notes in the principal amounts of $310,000 and $190,000, respectfully.
In exchange for 100% of the issued and outstanding shares of Sapphire, we issued an aggregate of 54,000,000 newly issued shares of Company common stock to Sapphire’s existing stockholders (the “Share Exchange”). As a result of the Share Exchange, Sapphire became a wholly owned subsidiary of the Company, which has resulted in consolidated financial reporting by the Company to include the results of Sapphire.
Acquisition of Advanced Tear Diagnostics, LLC Technology
On August 26, 2021, we purchased certain eye disease diagnostic technology from Advanced Tear Diagnostics, LLC, a Delaware Limited Liability Company (“Advanced Tear”), consisting of worldwide exclusive licenses to manufacture, distribute and sell 510(k) cleared medical diagnostic devices already being marketed for Lactoferrin, a biomarker for dry eye disease and a 510(K) license for IgE, a biomarker for allergic ocular reaction and ownership of the two FDA registered 510(k) clearances (collectively, the “DED Licenses”). Pursuant to the agreement, AXIM became the FDA registered owner of the two 510(k)’s. The purchase price for the technology licenses and the 510(k)’s was $4,270,000, which price was paid by issuing 7,000,000 restricted shares of Company common stock to Advanced Tear.
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This asset purchase will prohibit another company from manufacturing the same devices under the 510(k)’s now owned by AXIM. Companies wishing to compete with AXIM by manufacturing the diagnostic devices acquire by AXIM must initiate a new 510(k) application and conduct costly clinical trials in support of the lengthy clearance process.
Also on August 26, 2021, we purchased technology and intellectual property relating to electrochemical impedance spectroscopy which included five pending patent applications, one of which has now been allowed by the US Patent & Trademark Office, from Advanced Tear for $250,000 (included assuming and paying $30,000 of the Advanced Tear liabilities). The bulk of the purchase price ($210,000) was in a note that requires seven equal monthly payments of $30,000, which payment started on September 3, 2021. The note has since been repaid in full.
Eye Health Overview
On August 26, 2021, we acquired the technology, intellectual property and the exclusive global rights to market two FDA cleared lateral flow assays which utilize a non-invasive, quantitative, point of care human tear test to aid in the diagnosis and selection of therapeutics for the treatment of eye diseases. With the acquisition, the Company became focused on improving the landscape for the diagnosis of ophthalmological conditions such as Dry Eye Disease (DED) through rapid diagnostic tests. The Company owns two of the only five FDA Cleared Diagnostic tests for Dye Eye Disease.
Currently, we have an FDA 510(k) clearance to test Lactoferrin (an aqueous deficiency biomarker) and IgE (a non-specific allergy biomarker). Our objective is to establish point of care testing for dry eye disease (“DED”) and to establish this modality as the new standard of care. The tests are quick, simple to use, and inexpensive to the clinic. The tests are CMS and private insurance reimbursable.
Low levels of Lactoferrin confirm inadequate glandular tear production (aqueous deficiency) and high levels of IgE indicate an active ocular allergy. If both biomarkers are normal, the cause of a patient’s dry eye condition could be attributed to evaporative dry eye. So, by performing these two tests, an eye doctor may now better assess the underlying cause of the tear film disorder, its severity and the appropriate treatment protocol to pursue. In addition, these tests are rapid, accurate, reimbursable, profitable and can be performed by a technician, which allows the physician to be more productive and attend to more patients.
While at one time the tests were sold in numerous eye doctors’ locations, when the Company acquired the assays, they had been mothballed. The Company has had to redevelop the tests, reagents and select a quantitative reader. Since the acquisition of the technology, the Company has been successful in redevelopment and is launching sales.
We have signed a supply agreement with Barcelona-based IUL SA (“IUL”) for our iPeak DED readers, which will be deployed for diagnostic testing with a focus on Lactoferrin and IgE levels. This state-of-the-art portable reader is a colorimetric lateral flow reader designed to hold different cassette sizes and can read cassettes of up to five strips and seven lines per strip at a time.
iPeak is equipped with “Flash Eye” technology based on the principles of machine vision illumination. Its camera captures the image of the test illuminated from LED lights situated in the most studied geometry to achieve a precise and uniform illumination and enhance the colors of any lateral flow test. The iPeak technology also allows for more sensitivity, which is the main success of its application.
We evaluated the iPeak readers in the lab against several other comparable products before deciding on IUL’s state-of-the-art products. The Company’s diagnostic testing process for DED, and specifically for Lactoferrin levels as a primary indicator, will include the use of reagent strip samples. The new readers are calibrated with the new test strips and will be distributed to ophthalmologists and optometrists at the point of care. The patients’ tear sample will be obtained and applied to the strips and then an ophthalmologist or optometrist will run the strips through a reader to determine Lactoferrin levels and incidence and severity of DED.
On September 19, 2022 the Company announced that it had signed an exclusive global commercialization agreement with Verséa Ophthalmics, LLC, a business division of Verséa Holdings, Inc. (“Verséa”), is one of the fastest growing U.S. healthcare companies, specialized in the sale and distribution of diagnostic and therapeutic solutions.
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Our tests are considered moderately complex by CLIA. This requires the user of the test to obtain a CLIA certificate of compliance. This is done by filing a simple application with CMS (Form 116) and paying a fee. However, there are various lab requirements that must be in place first, and there is a considerable amount of ongoing record keeping that is required, which restricts potential growth of the business.
The FDA allows for a CLIA waivers, and we intend to pursue a waiver for both current tests and all future product offerings. Our scientists have been diligently making patentable improvements to the tests which will simplify use by the clinician and enhance likelihood of CLIA waiver approval. We plan to file for the waiver in the third quarter of 2023 after conducting a fairly simple comparative clinical study. The objective will be to determine whether the AXIM Eye test system has equal or better simplicity than the other forms of diagnostic testing for DED, which we believe is the case. This study is a key component of the filing process with the FDA for a Clinical Laboratory Improvement Amendment (CLIA) Certificate of Waiver. We believe that the acquisition of these FDA 510(k) cleared diagnostic products, a waiver and the distribution partnership we have with Versea will allow the business to grow at a rapid pace.
Dye Eye Market
An estimated 16 million Americans have been diagnosed with DED, but the actual number of Americans suffering from dry eye symptoms is likely much higher. Some reports indicate that nearly half of all U.S. adults experience dry eye signs and symptoms, and 33% of patients in eye care clinics present with complaints about dry eye.
DED, though widespread, is under-diagnosed, in part because symptoms do not always correlate with objective signs. It has a highly variable symptom profile at different stages of the disease, and there is often a discordance between signs and symptoms. A patient can have severe symptoms yet show no sign of ocular surface damage, while others have advanced ocular surface damage, yet report no symptoms. This lack of correlation between clinical signs and symptoms of DED makes diagnosing and treating patients a challenge. Often times, inflammation is present before the clinical signs of DED.
Currently, our eye business focuses exclusively on ophthalmology and optometry, in the United States, where there are 37,000 optometrists and 19,000 ophthalmologists performing approximately 400,000 medical (dilated) eye exams per day. Of this total, we believe that approximately 20% to 30% would present with symptoms where the Company’s Lactoferrin and IgE tests would be indicated. It is estimated that total US market for our eye care systems could approach 50,000 systems (USA Only).
We have completed development of our immunoassay system, which includes an automated colorimetric photometer reader and two FDA market-cleared point-of-care (POC) quantitative diagnostic ophthalmic lab tests and are now ready to begin manufacturing. These are:
Ocular Lactoferrin Lf) CPT code 83520 2021 CMS reimbursement $17.27/eye *
Ocular Immunoglobulin E (IgE) CPT Code 83520 2021 CMS reimbursement $16.46/eye*
Studies indicate that in 2021, 16-49 million Americans had DED, representing 32 - 98 million potential use cases for our POC tests. These tests are not limited to DED diagnostics, but can also be used to determine the Lactoferrin and allergic components of tear film prior to:
| ● | Contact lens fitting – approximately 45 million people wear contact lens in the US alone (2021). | |
| ● | LASIK surgery- approximately 718,000 (2020). | |
| ● | Cataract surgery with lens exchange - approximately 3.8 million (2018). |
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The barrier for entrance into the dry eye space is difficult and requires extensive clinical studies, large capital expense and FDA 510(k) clearance. This process alone can take several years and substantial investment, with no certainty that the product will receive FDA 510(k) clearance. For this reason, the Company determined that acquiring the two 510(k)’s would be a favorable strategic decision.
Business Model
Our eye business model utilizes a razor/razor blade model with the idea of placing as many readers into the field as possible and selling the disposable tests. It is anticipated that our gross profits will be generated from the manufacturing and sale of tests to our distribution partner who then resells the tests. Discounts will be offered to purchasing groups, corporate accounts, academic institutions engaged in research or training, and others as deemed appropriate. It is anticipated that the average price for the reader will be at our acquisition cost so we can get as many razors in the field, while pricing of consumable diagnostic kits will be at roughly half of the CMS published reimbursement floor rate.
Market demand for the system is expected to be moderate to begin with until we are granted a waiver from CLIA. At which time we expect extremely high demand for our system and tests. We also expect very high demand for our recently developed MMP-9 quantitative test once we obtain a FDA 510(k) clearance. While we must compete with other capital equipment expenditures under consideration in any ophthalmic physician’s office, we believe that no other ophthalmic device offers the combination of compelling clinical and financial benefits afforded by our system. The clinical utility of the tests offers important diagnostic precision, differentiation and treatment management direction. Inner-office efficiencies significantly improve the patient flow characteristics, reducing patients in office visit time and greatly reducing physicians chair time with each patient.
Financially, for every patient tested per day, the physician will receive, on average, $2 in reimbursement for every $1 expended on supplies. CMS and private insurance allow for physicians to retest their patients as often as deemed medically necessary.
Dye Eye Disease Market Competition
Currently there are five FDA approved tests for DED:
| Biomarker | Company | Type | CLIA status |
| Lactoferrin | Axim | (quantitative analysis) | moderate complexity |
| IgE | Axim | (quantitative analysis) | moderate complexity |
| MMP9 | Quidel | (qualitative only) | waived |
| Osmolarity | TearLab | (quantitative analysis) | waived |
| Ocular Adenovirus | Quidel | (qualitative only) | waived |
The preferred clinical analysis is quantitative, giving us an advantage over the competition. Since our reader can interpret many different analytes other than Lf and IgE, it also opens the possibility of additional quantitative test development.
New Quantitative MMP-9 Test
On March 8, 2022, we announced that we had successfully developed what we believe to be the first-ever rapid quantitative tear test for MMP-9, an inflammatory biomarker for DED. Matrix metalloproteinase-9 (MMP-9), an inflammatory biomarker consistently elevated in the tears of dry eye patients, may accelerate early diagnosis when detected.
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Ocular surface disease (OSD) and dry eye syndrome are often mistakenly considered synonymous. OSD occurs when there is damage to the front surface of the eyes, the cornea. The central role of inflammation in OSD is widely recognized, but the ability to measure this in the clinic has been limited to the Quidel InflammaDry test, which measures tear matrix MMP-9 levels and provides a positive/negative result around a threshold of 40ng/ml of MMP-9. This “yes or no” report has clinical value, but it is limited. Currently available MMP-9 testing does not detect a reduction in tear MMP-9 levels until the concentration drops below 40ng/ml and, thus, may miss clinically significant improvement that did not reach that threshold.
The clinical benefits of our quantitative tear MMP-9 testing would be a significant advancement in the ability to measure the degree of inflammation affecting dry eye patients, allowing for more objective classification of their disease. Equally important would be the ability to measure improvement in control of inflammation that is the goal of many of our therapies for OSD, including pharmaceuticals, thermal pulsation treatments and even light based therapies.
We intend to run a clinical study for MMP-9 in the 4th quarter of 2023. The distribution agreement we have with Versea calls for Versea to pay for half of the expense in return for a paid up license to market the test after the 510-k clearance is achieved.
We are also in the process of developing additional biomarker tests that will be done on the existing platform, without the constant need of the clinician to upgrade to a newer platform. The Lateral Flow test reader is software driven and can be programmed to interpret other biomarkers as they are clinically studied and FDA approved. The test uses 1.0 microliters of human tear fluid, that is applied to a disposable lateral flow cassette (one cassette per patient tested). The disposable single use cassette generates a substantial, reoccurring revenue stream for our eye business and our stakeholders.
CURRENT OPERATIONS FOLLOWING ACQUISITION OF SAPPHIRE AND ADVANCED TEAR DIAGNOSTICS ASSETS
Summary:
| ● | AXIM’s strategic focus is on commercializing FDA-cleared Dry Eye Disease (DED) diagnostic system | |
| ● | Plans to address largely underserved DED diagnosis market with patent pending tear collection method and approved tests, supported by world-class DED management team | |
| ● | Supply agreements in place to fulfill demand for DED readers and test strips, creating large revenue opportunity | |
| ● | Company places emphasis on generating positive cash flow through DED program |
The Company has been working diligently to further position AXIM for both immediate and long-term success. Since our acquisition of Sapphire Biotech and with the onset of the COVID-19 pandemic, we have been focused on three key areas specific to the diagnostic area: oncological, COVID-19, and most recently, dry eye disease (DED). Each of these provide strong upside potential for AXIM; however, each comes with its own set of regulatory and scientific hurdles that must be overcome. While the Company remains optimistic about each program, we believe it to be of the utmost importance to focus the most time and resources on the program with the ultimate potential for success, in the nearest term. While these other programs will not be abandoned, the Company recognizes that waiting on the painstaking slow regulatory approvals needed to generate revenue is not the best strategy to further our mission and unlock shareholder value. As such, following an extensive analysis by our management team, board of directors, and expert consultants with an objective perspective, the Company determined our best path forward lies with DED. The DED initiative is an extremely large opportunity for our Company and has been gaining strong momentum in recent months. The Company believes it offers the most potential for rapid and immediate growth, which could lead to ultimate profitability for the organization.
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Since the third quarter of 2021, we have acquired substantial assets, including already approved diagnostic tests, which complement the research we had been conducting to-date. Despite DED being the most common ocular surface disorder, affecting approximately 350 million people worldwide—causing persistent eye irritation, blurred vision, pain and decreased quality of life—the sector has seen little innovation. There remains a desperate demand for better DED testing and diagnosis, especially at the point-of-care, and we believe we are well positioned to dominate this marketplace, while we actively work to develop and bring to market new solutions enabling us to offer comprehensive state-of-the-art suite of DED solutions.
Our next-generation solutions are unique in that they offer patients not only a fast and reliable answer as to why they are suffering, but offer a solution to physicians who are looking to help patients suffering from this overly common disease.
Covid Neutralizing Antibodies
Over the past few years, as COVID ravaged the world, our scientific team proved its world-class scientific acumen by swiftly developing first-in class COVID-19 neutralizing antibody tests. Shortly after its development, we filed for Emergency Use Authorization with the Food and Drug Administration (FDA), signed a distribution and manufacturing agreement, initiated live virus comparison studies, and filed several patent applications on the diagnostic tools. We waited in anticipation that the FDA would move quickly given the nature of the pandemic; however, we were disappointed week after week until we finally received a response that the FDA had changed its guidance and that they were denying our application. This was unfortunate especially given our firm belief in its efficacy and potential to assist in the global fight against this virus. That said, we are fearful that the U.S. government’s drive to approve such solutions is fading, and that it is unlikely to grant an EUA to ours or similar tests in the near future, although it is still a possibility since this virus is likely going to be around for a long time. It is this realism that further compelled readjustment of our focus on the DED program.
DED Business
It is important to underscore the rationale supporting the Company’s decision to focus on DED. According to the American Academy of Ophthalmology, approximately 20 million people in the U.S. have DED and the number is growing in both young and old adults. It is imperative that clinicians determine how to best diagnose and treat DED.
Diagnosing DED is a particular challenge because of the multifactorial nature of the disease, with symptoms similar to other ocular surface conditions. There is often discordance between signs and symptoms, highlighting the need for more sensitive and accurate diagnostic tools. Figures from the American Journal of Ophthalmology corroborate this. As of July 2017, an estimated six million people reported DED symptoms without receiving a diagnosis.
The DED marketplace is massive, with analysts projecting the global market to grow at a CAGR of 6.6% from 2021 to 2026 and reach $6.1 billion by 2024.
Accordingly, in mid-2021, we started building the infrastructure and foundation needed to engage this large and dynamic market successfully. Our cutting-edge, next-generation solutions provide AXIM with far higher prospects of predictable growing revenue and earnings power.
On August 26, 2021, we signed an agreement to acquire two FDA-cleared 510(k)’s DED diagnostic testing technologies. The tests are part of a highly specialized point-of-care (POC) lab testing system explicitly designed to assist eye care physicians in detecting and quantifying various biomarkers associated with external ocular disorders. The tests are also approved for insurance and Medicare reimbursement. Both these tests are non-invasive, Rapid Lateral Flow Assays using tears:
The first is a rapid (10-minute) lateral flow diagnostic assay that tests for exact levels of Lactoferrin through the collection of 1.0 microliter in tears. The benefits of testing Lactoferrin Levels in the tear film include:
| ● | Low Lactoferrin levels directly correlate to DED caused by aqueous deficiency | |
| ● | The severity of DED can be determined by the Lactoferrin level | |
| ● | Low Lactoferrin levels may represent increased surgical risk or contact lens intolerance | |
| ● | Changes in Lactoferrin levels may show the efficacy of the prescribed treatment |
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The second test is for the measurement of Ocular Immunoglobulin E (IgE), a biomarker for allergies and a key biomarker primarily associated with Dry Eye Disease. The benefits of Testing IgE Levels in the Tear Film include:
| ● | The presence of IgE indicates the diagnosis of allergic conjunctivitis | |
| ● | Levels of IgE increase with the severity of the allergic response | |
| ● | IgE testing can help differentiate allergic conjunctivitis from dry eye syndrome | |
| ● | Allergic conjunctivitis is a contraindication for LASIK and other surgical procedures |
Lactoferrin is a tear protein that protects the ocular surface through antimicrobial and anti-inflammatory properties. Lower concentrations of lactoferrin have been demonstrated in patients with dry eye, which is associated with decreased aqueous tear production. Ocular Immunoglobulin E (IgE) is a biomarker for allergies and a key biomarker primarily associated with allergic conjunctivitis. Mild allergic conjunctivitis is frequently challenging to clinically distinguish from dry eye. AXIM’s diagnostic technology allows for eye doctors to not only identify and differentiate clinically overlapping conditions but also drive more targeted therapeutic interventions. The tests provide doctors with access to real-time quantitative results at the point-of-care, allowing them to better prescribe a therapy to patients, leading to overall improved personalized patient care.
On March 8th of this year, we announced that we had successfully developed what we believe to be the first-ever rapid quantitative tear test for MMP-9, an inflammatory biomarker for DED. Matrix metalloproteinase-9 (MMP-9) is an inflammatory biomarker consistently elevated in the tears of dry eye patients. The central role of inflammation in Ocular Surface Disease (OSD) is widely recognized, but the ability to measure this in the clinic has been limited to the Quidel InflammaDry test, which provides a positive/negative result. This “yes or no” report has clinical value, but it is limited. OSD occurs when there is damage to the front surface of the eyes, the cornea. OSD includes dry eye syndrome, but also refers to a number of other disorders that affect the surface of the eye and can cause significant issues with vision and quality of life.
The clinical benefits of our quantitative tear MMP-9 testing are a significant advance in the ability to measure the degree of inflammation affecting dry eye patients, allowing for more objective classification of their disease. Equally important would be the ability to measure improvement in control of inflammation that is the goal of many therapies for OSD, including pharmaceuticals, thermal pulsation treatments and even light based therapies.
Key Diagnostic Device Supply Agreement
In February of this year, we entered into a key supply agreement for DED test strip readers which will be deployed for diagnostic testing, focusing on lactoferrin levels. The readers, a point of care medical device, will be supplied by Barcelona, Spain-based IUL SA (“IUL”). We will be utilizing state-of-the-art portable iPeak readers that were tested against other comparable products. These readers are designed to hold different cassette sizes and are equipped with connectivity and can read cassettes of up to five strips and seven lines per strip at a time. iPeak is equipped with “Flash Eye” technology based on the principles of machine vision illumination.
We are also in the process of developing additional biomarker tests that will be done on the existing platform, without the constant need of the clinician to upgrade to a newer platform. The Lateral Flow test reader is software-driven and can be programmed to interpret other biomarkers as they are clinically studied and FDA approved. The test uses 1.0 microliters of human tear fluid that is applied to a disposable lateral flow cassette (one cassette per patient tested). The disposable single use cassette generates a substantial, recurring revenue stream for our eye business.
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Exclusive Global Commercial Partnership
On September 19, 2022, the Company announced that it had signed an exclusive global commercialization agreement with Verséa Ophthalmics, LLC, a business division of Verséa Holdings, Inc. (“Verséa”), one of the fastest growing U.S. healthcare companies, specialized in the sale and distribution of ocular diagnostic and therapeutic solutions.
The agreement will provide Verséa with the exclusive commercial right to AXIM’s proprietary portfolio of point-of-care (POC) lab testing readers and three key biomarker diagnostic tests designed specifically to assist eye-care physicians in detecting and quantifying biomarkers associated with aqueous deficient Dry Eye Disease and non-specific allergic conjunctivitis. The three AXIM’s key biomarker tests – the Ocular Immunoglobulin E (IgE) test, the Lactoferrin test, and the future MMP-9 test – require the collection of 1.0 microliters in tears and provide quantitative results in under 10 minutes, an industry-leading return time.
On September 30, 2022, Verséa launched the IgE and Lactoferrin tests at the 2022 American Academy of Ophthalmology (AAO) and American Academy of Optometry (AAOPT) conferences. The MMP-9 test is anticipated to follow in the next 12-18 months upon FDA clearance. In recent months, AXIM has been preparing for the scaling of production of its tests in anticipation of significant new orders and is now prepared to support new orders associated with the Versea agreement and subsequent launch.
The commercial launch of the Company’s IgE and Lactoferrin tests mark the evolution of Axim as a development-stage biotech company to a revenue generating healthcare organization. Since the development of our novel ocular diagnostic tests and subsequent success in proving their effectiveness, the Company had been searching for a partner with a solid commercial infrastructure and a firm commitment to eye care, capable of bringing our tests to clinical offices on a global scale. With existing sales channels to support their human amniotic membrane therapeutics, Verséa has added our technology to their expanding portfolio of healthcare solutions. Our partner’s mission aligns with that of the Company’s—together, we aim to change the landscape of dry eye disease diagnosis.
On October 4, 2022, the Company announced that it had received an initial order of 19,000 point-of-care (POC) diagnostic tests and 100 readers targeting ocular surface diseases through its exclusive global commercialization partner Verséa Ophthalmics, LLC (“Verséa”), marking the Company’s first large-scale revenue generating order.
The order is part of the recently announced exclusive global commercialization agreement reached between Verséa and AXIM to support the commercial launch of sales at the 2022 American Academy of Ophthalmology (AAO) conference in Chicago. The order represents the largest revenue-generating event in the history of the Company. AXIM is completing the manufacturing and is preparing the order for shipment from its laboratory facilities in San Diego, California as per Verséa’s direction. The order includes both the tear based tests for Lactoferrin and Immunoglobulin E (IgE) as well as 100 of the associated digital reader that allows for quantitative test results. The tests provide doctors with access to real-time quantitative results within 10 minutes, allowing them to more accurately diagnose and prescribe targeted therapy to patients, leading to overall improved personalized patient care. Both tests are FDA-cleared and have dedicated Medicare CPT codes that allow for rapid POC diagnosis of common ocular conditions such as dry eye disease (DED) and allergic conjunctivitis.
This large order through our agreement with Verséa Ophthalmics marks a pivotal point for AXIM, where we are revenue generating. This initial order through Versea also supports the Company’s vision that our tests and readers will become available in clinics nationwide. While our readers can be used over and over again, our test strips are one-time use, and we expect to receive repeat orders from clinicians who have performed the tests. This will be a significant revenue additive to the growing new test demand.
The expectation with the Versea partnership is that the launch of the ocular surface disease testing platform is the beginning of a robust testing pipeline of future diagnostic test solutions that can be introduced on the same digital reader system. Eye care professionals have struggled with differentiating mild allergic conjunctivitis from dry eye disease as well as distinguishing between different causes of dry eye [aqueous deficient versus evaporative] which impacts clinical decision making. The portfolio of rapid, tear-based, quantitative point of care tests allows for more specific diagnoses, targeted therapeutic intervention and the potential for therapeutic monitoring which is a true breakthrough for the industry.
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CLIA Waiver Process
Commencing in the 4th quarter of 2023, the Company plans to conduct a comparative clinical study. The objective will be to prove that the AXIM Eye test system has equal or better simplicity than the other forms of diagnostic testing for DED. This study is a key component of our filing process with the FDA for a Clinical Laboratory Improvement Amendment (CLIA) Certificate of Waiver. We will be targeting a waiver for both IgE and the Lactoferrin diagnostic tests. The testing is expected to prove that the products are simple to use with minimal risks of erroneous results. The expected timeline for filing and receiving a final CLIA decision is approximately three to six months.
Patented Tear Collection System
Tear fluid analysis contributes to the greater understanding of various ocular and systemic diseases. However, there is a pressing need for a better tear collection system. AXIM is developing and filed for a patent of a novel tear sample collector system that is extremely cost-effective to produce on a mass scale. It is soft, non-intimidating, and easy to use by untrained personnel. It features a simple indicator that appears on the strip when enough tear fluid has been absorbed.
AXIM 2023: Goals and Targeting Positive Cash Flow
Our DED business strategy is starting to take off. Looking ahead we plan to:
| ● | Successfully complete our clinical trials to prove the accuracy and ease of use to achieve CLIA waivers. | |
| ● | Generate positive, peer reviewed reviews by eye care professionals as to the performance and ease of use. | |
| ● | Penetrate the ophthalmologist and optometrist marketplace through our partner with our industry-changing DED diagnostic technology. | |
| ● | Identify potential strategic acquisition targets to accelerate our DED diagnostic applications and capabilities expansion. | |
| ● | Grow our DED business to reach a positive cash flow run rate by the end of 2023 and build its profitability beyond. |
With our partnership with Versea, Axim is now commercializing a healthcare solution that holds the potential to truly revolutionize the world. With the sales launch of Axim’s diagnostic platform, Axim is executing on our vision of penetrating a market where DED impacts over 350 million people worldwide. This strategy will enable our business to grow revenues and increase our earnings power to enhance shareholder value.
Milestones to Date
On August 03, 2021, we announced that the Company has signed a Binding Term Sheet to acquire the technology for the testing of Dry Eye Disease (DED), including two FDA clearances for the commercial sale of two ophthalmic diagnostic lab tests. The transaction closed on August 26, 2021.
On March 6, 2022, we announced that while the Company explores filing one or more EUA’s for point of care and/or at home use, it would begin to sell the Company’s neutralizing antibody (“Nab”) rapid test For Research Use Only (“RUO”) as it does not require FDA approval.
On March 8, 2022, we announced that we had successfully developed what we believe to be the first-ever rapid quantitative tear test for MMP-9, an inflammatory biomarker for Dry Eye Disease. Matrix metalloproteinase-9 (MMP-9), an inflammatory biomarker consistently elevated in the tears of dry eye patients, may accelerate early diagnosis when detected.
On April 27, 2022, we announced the successful development of a rapid quantitative tear test for Lacritin, a tear protein that autonomously promotes tearing and is deficient in all forms of Dry Eye Disease.
On May 10, 2022, we announced the development of a novel tear sample collector system and the filing of a provisional patent application for it with the U.S. Patent and Trademark Office that provides a more comfortable experience for patients and that facilitates the tear collection process.
On May 24, 2022, we announced that we had completed the optimization of a rapid diagnostics test for the quantitative measurement of Ocular Immunoglobulin E (IgE), a biomarker for ocular allergies.
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On June 2, 2022, we launched the Company’s new mobile-optimized website designed to provide doctors, researchers and other medical professionals with tailored, timely information and resources that will enable them to make informed decisions when purchasing AXIM’s proprietary diagnostic tests.
On July 12, 2022, we announced our publication in collaboration with researchers at Arizona State University (ASU) entitled, “Third COVID-19 Vaccine Dose Boosts Neutralizing Antibodies in Poor Responders” in Communications Medicine, part of the Nature family of journals.
On July 21, 2022, we announced that Axim’s CEO John Huemoeller had been featured on the Vision is More Than 20/20™ podcast.
On July 26, 2022, we announced that we had developed an enhanced version of our rapid Ocular Immunoglobulin E (IgE) test in response to a study recently published in Nature that climate change is making allergy season occur sooner and for a longer period of time than in recent years.
On September 19, 2022, we signed an exclusive global commercial partnership agreement with Verséa Ophthalmics, LLC, a business division of Verséa Holdings, Inc. (“Verséa”), one of the fastest growing US healthcare companies, specialized in the sale and distribution of ocular diagnostic relating to Axim’s proprietary portfolio of point-of-care (POC) lab testing readers and three key biomarker diagnostic tests designed specifically to assist eye-care physicians in detecting and quantifying biomarkers associated with aqueous deficient Dry Eye Disease and non-specific allergic conjunctivitis.
On September 29, 2022, we started selling our ophthalmic point-of-care (POC) diagnostic product portfolio in advance of the American Academy of Ophthalmology Annual Meeting through our exclusive commercialization partner Verséa Ophthalmics, LLC, a subsidiary of Verséa Holdings, Inc.
On October 4, 2022, we received an initial order of 19,000 point-of-care (POC) diagnostic tests and 100 readers targeting ocular surface diseases through our exclusive global commercialization partner Verséa Ophthalmics, LLC (“Verséa”), marking the Company’s first large-scale revenue generating order.
On December 6, 2022, our commercial partner, Versea Ophthalmics highlighted the benefits of AXIM’s Eye Diagnostic Solutions in leading scientific media, including Eyes On 2023 and the Ophthalmology Times.
In both interviews, Dr. Rob Sambursky emphasized the improved features of AXIM’s tests, noting that while osmolarity testing is currently taking place with ocular surface disease patients, the rapid new tear based tests are complementary to those existing tests and enhance a clinician’s ability to manage treatment in a more personalized way.
On December 13, 2022, AXIM announced the development of a novel dual IgE/MMP rapid ophthalmological diagnostic test for which the Company filed a provisional patent with the US Patent and Trademark Office. The new product offers clinicians an innovative new rapid ophthalmological diagnostic solution designed to reliably measure both Ocular Immunoglobulin E (IgE) and MMP-9 in a single test. The test is slated for further clinical development in the first quarter of 2024 and, once FDA approved, will be added to AXIM’s expanding catalog of ophthalmological diagnostic tools available to clinicians throughout North America.
On April 11, 2023, we announced the start of manufacturing of both the Company’s proprietary Ocular Immunoglobulin E (IgE) and Lactoferrin diagnostic assays to fulfill the orders placed by its commercialization partner Versea.
On May 23, 2023, we announced the appointment of Kurty Phinney as the Company’s new Chief Operating Officer. Phinney is a seasoned healthcare operations executive and will play a vital role in scaling and optimizing AXIM’s manufacturing operations for its proprietary ophthalmological diagnostic assays in order to meet rising demand.
On July 12, 2023, AXIM announced that it had begun shipping revenue generating validation kits for Ocular Immunoglobulin E (IgE), a key biomarker primarily associated with non-specific, allergic conjunctivitis, which often mimics Dry Eye Disease.
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On July 25, 2023, Verséa™ Ophthalmics, LLC, a division of Verséa Health, Inc. announces the commencement of initial shipments of its T-POC TOTAL IgE Immunoassay and Lateral Flow Readers. The company focuses on delivering innovative Tear-based Point-of-Care (T-POC) testing and biologic solutions that optimize diagnosis, treatment, and management of various eye care conditions, including ocular surface disease and pterygium surgery.
AXIM supplies the readers and manufactures and supplies the IgE Immunoassay to Verséa, its distribution partner.
On August 1, 2023, AXIM announces that the U.S. Patent & Trademark Office sent the Company notices of U.S. patent allowances for three separate patents, including its rapid point of care neutralizing antibody test.
Anticipated Expenses
During the next twelve months we anticipate incurring costs related to: (i) filing Exchange Act reports, (ii) contractual obligations, (iii) clinical trials, (iv) continued research and development, and (v) inventory for sales of dye eye products.
AXIM INTELLECTUAL PROPERTY
AXIM has been developing a proprietary diagnostic platform that can be adapted to test for a variety of analytes including, for example, SARS-Cov-2, Lactoferrin, IgE, Lacritin, MMP-9. This innovative platform allows clinicians to detect with greater speed and accuracy different conditions that, as an example, allow for point of care testing of viruses, diseases, and conditions such as Dry Eye Disease. The platform capability can also be applied to rapid testing for vaccine candidates, including COVID vaccines and a potential Fentanyl vaccine. AXIM’s proprietary platform can also be used to enable point-of-care detection for one or more cancers using a unique cancer biomarker, QSOX1-L.
New Patent Allowances
AXIM was recently notified by the United States Patent & Trademark Office (USPTO) of three patent allowances. The first patent application relates to COVID and other neutralizing antibody (Nab) testing and treatment. The allowance confirms that AXIM was a pioneer in developing a rapid point of care Nab test and its novelty. Additionally, the company was notified by the USPTO of a second patent allowance for systems and methods for rapid diagnostic for various cancers. The invention relates to the discovery by AXIM scientists of a unique biomarker for cancer, QSOX1-L. A third patent allowance was received for a point-of-care apparatus and methods for detecting cancer that uniquely uses electrochemical or impedance spectroscopy (EIS).
These allowances have increased the depth of AXIM’S IP portfolio to include 13 patent applications, including the above allowed applications, that cover AXIM’s innovative platforms and technologies. The Company sees a significant value in its IP portfolio whereas it may look to either further develop the covered technologies or license the IP to larger healthcare organizations, both creating significant upside value for the organization. These allowances further validate both the novelty and underlaying science of AXIM’s diagnostic technologies.
Innovations in Diagnostics
While we continue to manufacture and ship our FDA-cleared diagnostic assays to customers through our commercialization partner, we have simultaneously continued to expand our value proposition through innovations in diagnostics field, that are now protected under the USPTO. We see our growing IP portfolio as a major opportunity for the organization, with an unrealized market value which probably exceeds the company’s current market capitalization. For instance, while the original SAR COVID-19 virus which plagued the world in recent years received extensive attention from the medical community, our now protected assay methodology can be applied to any future mutations or new SARS viruses or vaccines.
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Following is an overview of AXIM’s patent portfolio:
SARS-Cov-2
Neutralizing Antibody Testing and Treatment. 1 Allowed Patent; 3 Utility Patent Applications.
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.
The invention is a diagnostic test intended for semi-quantitative measurement of neutralizing antibodies in plasma, serum or whole blood of persons who have had recent or prior infection with SARS-CoV2 or have received a COVID-19 vaccine.
DRY EYE DISEASE
Tests for Human Monomeric Lacritin. 1 Utility Patent Application
The invention relates to a Rapid Point of Care test for Human Monomeric Lacritin. Lacritin is a tear protein that, in its monomeric form, autonomously promotes tearing and ocular surface survival. Lower concentrations of Lacritin may diagnose several eye diseases, including Blepharitis, Sjögren’s syndrome, Dry Eye Disease and other inflammatory conditions.
Tear Sample Collectors Systems and Methods. 1 Utility Patent Application
Tear fluid analysis contributes to the greater understanding of various ocular and systemic diseases and obtaining adequate samples for tear analysis requires effective collection methods. Most tear sample collectors on the market use capillary designs as tear sample collectors. These designs are intimidating to the patient when a sharp looking object is approaching the eye, are rather difficult to use by untrained personnel and are expensive to manufacture. Quidel InflammaDry is using a wick type tear sample collector that does not have any fill-up indicator and is rather intricate to produce on mass scale. Other prototype sample collectors employ Q-tip designs, filter paper strips (Schirmer’s test) are imprecise, some are difficult to produce en masse. The invention relates to a laminated and looped tear sample collector that addresses these and that is: 1) Cost-effective to produce on mass scale 2) Features a fill-up indicator (in case of laminated version) 3) Easy to use 4)Soft and non-intimidating to user and patient.
CANCER DIAGNOSTICS
Systems and Methods for Rapid Diagnostic for Various Cancers. 1 Allowed Patent Application
QSOX1 (Quiescin Sulfhydryl Oxidase 1) is an enzyme that is over-expressed in multiple tumor types. Genetically silencing QSOX1 in tumors has been shown to slow their growth, migration, invasion and metastasis. 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.
DIAGNOSTIC METHODS AND TOOLS
Molecules and Related Assays, Test Kits and Methods. 1 Utility Patent Application, 1 Provisional Patent Application.
The invention relates to the use of various recombinant proteins, test kits, test kit components and methods for detecting and measuring "binding antibodies" (for example, non-neutralizing antibodies) as well as "functional antibodies" (for example, neutralizing) in a single test and at the same time. Such test kit and method can advantageously improve the diagnosis and therapy of various diseases.
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Use of Micromesh Materials in Diagnostic Devices. 1 Provisional Patent Application
When small sample sizes (0.1-2 microliters) are used, such as tears, there is a need for the sample to be spread out over the application area for a proper flow. The invention allows dispersion of a small sample volume over a wide area controllable by the mesh size. This enables homogeneous sample dispersion over the entire sample application area.
VACCINE DIAGNOSTIC TEST
Fentanyl Diagnostic Test. 1 Provisional Patent Application
Researches have reported that broadly neutralizing antibodies may prevent lethality from the fentanyl class of synthetic opioids. The University of Houston is developing a vaccine targeting the dangerous synthetic opioid fentanyl that could block its ability to enter the brain. The invention relates to a test that can measure neutralizing antibodies against fentanyl, either therapeutic or generated by anti-fentanyl vaccine. The test can be used to monitor the vaccine’s response and help decide when a booster is needed.
EIS TECHNOLOGY
Point of Care Apparatus and Methods for Detecting Cancer Using Electrochemical Impedance or Capacitance Spectroscopy (EIS). 1 Allowed Patent, 1 Utility Patent Application
These inventions relate to detection tools, diagnostics and related methods involving the use of an electrochemical sensor in conjunction with electrochemical impedance spectroscopy or electrochemical capacitance spectroscopy (EIS). Such detection tools may be utilized to detect cancer via biomarkers contained in bodily fluids. Many different analyte detection devices and systems exist. However, those that can be practically applied in a clinical, point of care or other setting requiring accuracy and reliability are fairly limited and tend to be complex and expensive.
V. TRADEMARKS
We have two trademarks registered with the United States Patent and Trademark Office: Axim (Registration Date: May 19, 2015; and Axim Biotech (Registration Date: May 31, 2016).
Market, Customers and Distribution Methods
Our focus is on the development of innovative pharmaceutical and diagnostic products. We plan to be an active player in the field of biosciences with our extensive R&D and pipeline of innovative products. Currently, our eye business focuses exclusively on ophthalmology and optometry, in the United States, where there are 37,000 optometrists and 19,000 ophthalmologists performing approximately 400,000 medical (dilated) eye exams per day.
Competition
The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products.
We face competition from many different sources, including commercial pharmaceutical and biotechnology enterprises, academic institutions, government agencies, and private and public research institutions. Our commercial opportunities will be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer side effects or are less expensive than any products that we or our collaborators may develop based on the use of our technologies.
While we believe that the potential advantages of our new technologies will enable us to compete effectively against other providers of technology for Covid-19 NAb product development and manufacturing, many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, clinical trials, regulatory approvals and marketing approved products than we do. Smaller or early stage companies may also prove to be significant competitors, particularly through arrangements with large and established companies, and this may reduce the value of our technologies. In addition, these third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies and technology licenses complementary to our programs or advantageous to our business.
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The barrier for entrance into the dry eye space is difficult and requires extensive clinical studies, large capital expense and FDA 510(k) clearance. This process alone can take several years and substantial investment, with no certainty that the product will receive FDA 510(k) clearance. It is estimated that as of 2021, the total Company funding necessary to develop a Class II 510(k) cleared medical device is approximately $30 million. The development and engineering costs comprise approximately $2-5 million of this total. There are many factors that influence these costs, including the need for clinical studies, regulatory pathway and technology complexity.
We believe that we are well situated in the Eye Health sector with two 510(k) cleared tests. Additionally, the preferred clinical analysis is quantitative, giving us an advantage over the competition. Since our reader can interpret many different analytes other than Lf and IgE, it also opens the possibility of additional quantitative test development.
Source and Availability of Raw Materials
In general there are a limited number of suppliers for raw materials that we use to manufacture our products and product candidates, and there may be a need to assess alternate suppliers to prevent a possible disruption of the manufacture of the materials necessary to produce our product candidates for clinical trials, and if approved, ultimately for commercial sale. We do not have any control over the process or timing of the acquisition of these raw materials by us.
We currently manufacture the majority of our testing materials in-house, and use contract manufacturers for the manufacture of some of our product candidates. We may or may not manufacture the products we develop, if any. Our internal manufacturing and contract manufacturers are subject to extensive governmental regulation. In the dye eye segment, we either make our reagents or they are sourced from select suppliers. We use contract manufacturers for the manufacture of our assays and readers.
Government Regulation
Government authorities in the U.S. (including federal, state and local authorities) and in other countries extensively regulate, among other things, the manufacturing, research and clinical development, marketing, labeling and packaging, storage, distribution, post-approval monitoring and reporting, advertising and promotion, export and import of pharmaceutical products, such as those we are developing. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Moreover, failure to comply with applicable regulatory requirements may result in, among other things, warning letters, clinical holds, civil or criminal penalties, recall or seizure of products, injunction, disbarment, partial or total suspension of production or withdrawal of the product from the market. Any agency or judicial enforcement action could have a material adverse effect on us.
Many, if not all of our customers, are covered entities under the Health Insurance Portability and Accountability Act of August 1996 or HIPAA. As part of the operation of our business, we provide reimbursement assistance to certain of our customers and as a result we act in the capacity of a business associate with respect to any patient-identifiable medical information, or PHI, we receive in connection with these services. We and our customers must comply with a variety of requirements related to the handling of patient information, including laws and regulations protecting the privacy, confidentiality and security of PHI. The provisions of HIPAA require our customers to have business associate agreements with us under which we are required to appropriately safeguard the PHI we create or receive on their behalf. Further, we and our customers are required to comply with HIPAA security regulations that require us and them to implement certain administrative, physical and technical safeguards to ensure the confidentiality, integrity and availability of electronic PHI, or EPHI. We are required by regulation and contract to protect the security of EPHI (electronic protected health information) that we create, receive, maintain or transmit for our customers consistent with these regulations. To comply with our regulatory and contractual obligations, we may have to reorganize processes and invest in new technologies. We also are required to train personnel regarding HIPAA requirements. If we, or any of our employees or consultants, are unable to maintain the privacy, confidentiality and security of the PHI that is entrusted to us, we and/or our customers could be subject to civil and criminal fines and sanctions and we could be found to have breached our contracts with our customers. Under the Health Information Technology for Economic and Clinical Health Act, or HITECH Act, and recent omnibus revisions to the HIPAA regulations, we are directly subject to HIPAA’s criminal and civil penalties for breaches of our privacy and security obligations and are required to comply with security breach notification requirements. The direct applicability of the HIPAA privacy and security provisions and compliance with the notification requirements requires us to incur additional costs and may restrict our business operations.
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U.S. Government Regulation
Government authorities in the United States and other countries extensively regulate, among other things, the research, development, testing, manufacture, labeling, promotion, advertising, distribution and marketing of our product, which is a medical device. In the United States, the FDA regulates medical devices under the Federal Food, Drug, and Cosmetic Act and implementing regulations. Failure to comply with the applicable FDA requirements, both before and after approval, may subject us to administrative and judicial sanctions, such as a delay in approving or refusal by the FDA to approve pending applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, administrative fines or criminal prosecution.
Unless exempted by regulation, medical devices may not be commercially distributed in the United States until they have been registered, cleared or approved by the FDA. Medical devices are classified into one of the three classes, Class I, II or III, on the basis of the controls necessary to reasonably assure their safety and effectiveness. Our tests have been assigned Moderate Complexity by CLIA (Clinical Laboratory Improvement Amendments of 1988). This law requires any facility performing examination of human specimens for diagnosis to be certified by the Department of Health and Human Services to be safe and effective. The assignment of Moderate Complexity to our tests requires laboratories or sites that perform our tests to have a CLIA certificate, to be inspected, and to meet the CLIA quality standards.
After a device receives 510(k) clearance, any modification to the device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, would require a new 510(k) clearance or an approval of a Premarket Approval, or PMA. A PMA is the FDA process of scientific or regulatory review to evaluate the safety and effectiveness of Class III medical devices which are those devices which support or sustain human life, are of substantial importance in preventing impairment of human health, or which present a potential, unreasonable risk of illness or injury. Although the FDA requires the manufacturer to make the initial determination regarding the effect of a modification to the device that is subject to 510(k) clearance, the FDA can review the manufacturer’s determination at any time and require the manufacturer to seek another 510(k) clearance or an approval of a PMA.
CLIA is intended to ensure the quality and reliability of clinical laboratories in the United States by mandating specific standards in the areas of personnel qualifications, administration, and participation in proficiency testing, patient test management, quality control, quality assurance and inspections. The regulations promulgated under CLIA establish three levels of in vitro diagnostic tests: (1) waived; (2) moderately complex; and (3) highly complex. The standards applicable to a clinical laboratory depend on the level of diagnostic tests it performs. A CLIA waiver is available to clinical laboratory test systems if they meet certain requirements established by the statute. Waived tests are simple laboratory examinations and procedures employing methodologies that are so simple and accurate as to render the likelihood of erroneous results negligible or to pose no reasonable risk of harm to patients if the examinations or procedures are performed incorrectly. These tests are waived from regulatory oversight of the user other than the requirement to follow the manufacturer’s labeling and directions for use. We intend to file waiver applications with the FDA for the Axim Eye System.
Regardless of whether a medical device requires FDA clearance or approval, a number of other FDA requirements apply to the device, its manufacturer and those who distribute it. Device manufacturers must be registered and their products listed with the FDA, and certain adverse events and product malfunctions must be reported to the FDA. The FDA also regulates the product labeling, promotion and, in some cases, advertising of medical devices. In addition, manufacturers and their suppliers must comply with the FDA’s quality system regulation which establishes extensive requirements for quality and manufacturing procedures. Thus, suppliers, manufacturers and distributors must continue to spend time, money and effort to maintain compliance, and failure to comply can lead to enforcement action. The FDA periodically inspects facilities to ascertain compliance with these and other requirements.
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Environmental Matters
No significant pollution or other types of hazardous emission result from our current operations, and we do not anticipate that our operations will be materially affected by federal, state or local provisions concerning environmental controls. Our costs of complying with environmental, health and safety requirements have not been material. Furthermore, compliance with federal, state and local requirements regulating the discharge of materials into the environment, or otherwise relating to the protection of the environment, have not had, nor are they expected to have, any material effect on the capital expenditures, earnings or competitive position of the Company. However, we will continue to monitor emerging developments in this area.
Employees
As of June 30, 2023, we had six full-time employees and one part-time employee. We also allow and utilize the services of independent contractors. Management believes that we have a good relationship with our employees.
Company Website
We maintain a corporate Internet website at: www.aximbiotech.com and an eye care-related website at: www.aximeye.com. The contents of our website are not incorporated in or otherwise to be regarded as part of this Report.
We file reports with the Securities and Exchange Commission (“SEC”), which are available on our website free of charge. These reports include annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, “Section 16” filings on Form 3, Form 4, and Form 5, and other related filings, each of which is provided on our website as soon as reasonably practical after we electronically file such materials with or furnish them to the SEC. In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including the Company.
On February 10, 2022, the Company paid in full the remaining balance due on that certain convertible note issued to GS Capital Partners, LLC, face value $1,110,000 (as amended, the “GS Note”). In connection with the repayment, the Company was required to pay accrued interest in the amount of $21,875, by issuing 173,390 restricted shares of the Company’s common stock pursuant to the formula set forth in the GS Note.
In March 2022, the Company issued 624,290 of its shares of common stock pursuant to a stock purchase agreement for cash gross proceeds of $55,000.
In January 2022 the company issued 7,000,000 of its shares in completion of its agreement with Advanced Tear Diagnostics regarding the purchase of various patents.
In December 2019, a novel strain of coronavirus (“COVID-19”) was reported in Wuhan, China. The COVID-19 pandemic, as it was declared by the World Health Organization, has continued to spread and has already caused severe global disruptions. The extent of COVID-19’s effect on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, all of which are uncertain and difficult to predict considering the rapidly evolving landscape.
We expect COVID-19, along with the resulting government-imposed restrictions on businesses, to negatively impact our operations due to decreased consumer demand as well as potential production and warehouse limitations which results in an event or condition, before consideration of management’s plans, that could impact our ability to meet future obligations. We believe that our cash and cash equivalents on hand and these cost reduction measures, as needed, will provide sufficient liquidity to fund our operations for the next 12 months from the issuance of the consolidated financial statements.
Sources of Capital
We expect to sustain our working capital needs through shareholder loans, private placements and/or registered offerings of our securities. Shareholder loans may be without stated terms of repayment or interest. We may consider taking on any long-term or short-term debt from financial institutions in the immediate future. Shareholders loans may be granted from time to time as required to meet current working capital needs. We have no formal agreement that ensures that we will receive such loans. We may exhaust this source of funding at any time.
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During the next twelve months, we anticipate incurring costs related to:
| (i) | filing Exchange Act reports; | |
| (ii) | contractual obligations; | |
| (iii) | building inventory of our approved devices; | |
| (iii) | clinical trials; and | |
| (iv) | continued research and development of our diagnostic tests. |
We believe we will be able to meet these costs through use of funds in our treasury, deferral of fees by certain service providers and additional amounts, as necessary, to be loaned to or invested in us by our shareholders, management or other investors. As of the date of the period covered by this report, we have limited cash. There are no assurances that we will be able to secure any additional funding as needed. Currently, however our ability to continue as a going concern is dependent upon our ability to generate future profitable operations and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. Management’s plan includes obtaining additional funds by equity financing and/or related party advances; however, there is no assurance of additional funding being available.
Known Trends or Uncertainties
We have seen some consolidation in the pharmaceutical and biotechnology industries during economic downturns. These consolidations have not had a negative effect on us to date; however, should consolidations and downsizing in the industry continue to occur, those events could adversely impact our financial results and business operations going forward.
The potential for growth in new markets is uncertain. We will continue to explore these opportunities until such time as we either generate sales or determine that resources would be more efficiently used elsewhere.
As discussed in this Annual Report, the world has been affected due to the COVID-19 pandemic. The pandemic has negatively impacted our business in various ways over the last two years, including, more recently, as a result of global supply chain constraints at least partially attributable to the pandemic. Until the pandemic has passed, there remains uncertainty as to the effect of COVID-19 on our business in both the short and long-term.
Inflation
Inflation has increased during the periods covered by this Annual Report, and is expected to continue to increase for the near future. Inflationary factors, such as increases in the cost of our products (and components thereof), interest rates, overhead costs and transportation costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience some effect in the near future (especially if inflation rates continue to rise) due to supply chain constraints, consequences associated with COVID-19 and the ongoing conflict between Russia and Ukraine, employee availability and wage increases, trade tariffs imposed on certain products from China and increased product pricing due to semiconductor product shortages.
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.
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Going Concern
The Company’s financial statements have been presented assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has negative working capital of $8,267,997 has an accumulated deficit of $70,611,099, has cash used in continuing operating activities of $785,553 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 may not be able to meet its contractual obligations to Arizona State University regarding ongoing research and maintain its staff at current levels required by various employment agreements.
The Company intends to raise additional capital through private placements and/or registered offerings 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.
Results of Operations
Comparison of the six months and the 3 Months ended June 30, 2023 and 2022
| Six Months ended | June 30, 2023 | June 30, 2022 | $ Change | % Change | ||||||||||||
| Revenues | $ | 17,078 | $ | $ | 17,078 | > | 100 | % | ||||||||
| Gross margin percentage | - | - | - | - | ||||||||||||
| Operating expenses | 1,425,442 | 2,168,830 | (743,388) | > | 34 | % | ||||||||||
| Loss from continuing operations | (1,408,364 | ) | (2,168,830 | ) | (760,466 | ) | > | 35 | % | |||||||
| Other expenses (income) | 5,077,559 | 1,140,524 | 3,937,035 | > | 100 | % | ||||||||||
| Net loss | $ | (6,485,923 | ) | $ | (3,309,354 | ) | $ | 3,176,569 | > | 95 | % | |||||
| Three Months ended | June 30, 2023 | June 30, 2022 | $ Change | % Change | ||||||||||||
| Revenues | $ | 9,929 | $ | $ | 9.929 | > | 100 | % | ||||||||
| Gross margin percentage | - | - | - | - | ||||||||||||
| Operating expenses | 707,658 | 1,059,893 | (352,235 | ) | > | 33 | % | |||||||||
| Loss from continuing operations | (697,729 | ) | (1,059,893 | ) | (362,164 | ) | > | 34 | % | |||||||
| Other expenses (income) | 3,025,566 | 162,745 | 2,862,821 | > | 100 | % | ||||||||||
| Net loss | $ | (3,723,295 | ) | $ | (1,222,638 | ) | $ | (2,500,657 | ) | > | 100 | % | ||||
Revenue
Revenues from continuing operations recognized for the six months ended June 30, 2023 and 2022 amounted to $17,078 and $0, respectively.
Cost of Revenue from continuing operations recognized for six months ended June 30, 2023 and 2022 amounted to $0 and $0, respectively. The lack of COGS is due to lack of sales of products to customers in 2023 and 2022.
Revenues from continuing operations recognized for the three months ended June 30, 2023 and 202 amounted to $9,929 and $0, respectively.
Cost of Revenue from continuing operations recognized for three months ended June 30, 2022 and 2021 amounted to $-0- and $-0-, respectively. The lack of COGS is due to lack of sales of products to customers in 2022 and 2021.
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Operating Expenses
Research and Development Expenses
For the three and six months ended June 30, 2023 and 2022 the Company incurred research and development expenses of $33,504 and $35,171, $53,269, $79,364, from continuing operations, respectively.
Selling, General and Administrative Expenses
Our Selling, General and Administrative expenses for the three months and six ending June 30, 2023 and 2022 were $566,829 and $918,708, were $1,157,524, $1,876,915, respectively. The decrease is primarily due to services in legal, consulting and accounting, advertising and increase in salaries because of the ramping up of activity due to acquisition of Sapphire Biotech on March 2020, and the acquisition of assets from Advanced Tear Diagnostics
Depreciation Expenses
For the three and six months ending June 30, 2023 and 2022 our depreciation expenses were $8,143, 7,402 and $16,286, $15,318.
Amortization Expenses
For the three and six months ended June 30, 2023 and June 30, 2022 our amortization expenses were $98,612,98612 as compared to $197,224 and $197,223. due to recognizing the intangible assets as a result of the acquisition of Sapphire Biotech and patents and 510(K) license from advanced Tear Diagnostics, LLC in 2021.
Other Income and Expenses
Our interest expenses for the three and six months ended June 30, 2023 and 2022 were $751,310, $1,60,176, and $809,149, $1,582,825 respectively, variance was due to non-cash interest expenses. Gain (loss) on extinguishment of debt for the three and six months ended June 30, 2023 and 2022 were $0, $(384,659) and $172,731, $(391,531), and respectively, variance was result of debt exchange. Amortization of debt discount was $41,180, $50,489 and $76,652, $86,080 respectively. Loss from derivative liability insufficient shares was 1,637,735, $3,670,779 for the three and six months ending June 30, 2023 as opposed to -0- for the periods ending June 30, 2022. The variances were due to Debt modification agreements.
For the Six months ended June 30, 2023 and 2022
Net Cash Provided by/Used in Operating Activities
Net cash used in continuing operating activities was $785,553, respectively, for the six months ended June 30, 2023, as compared to net cash used of $$1,407,596 for the six months ended June 30, 2022. The cash used in operating activities is primarily attributable to our net loss from operations of $5,774,828 and offset by net changes in the balances of operating assets and liabilities and non-cash expenses. For the six months ended June 30, 2023, stock-based compensation was $125,266, and derivative liability insufficient shares $3,670,779 amortization of debt discount was $76,652, amortization of intangible was $98,612, Gain on extinguishment of debt was $172,731, non-cash interest expense was $-0- and this was offset by change in fair value if derivative liability of $98,640. For the six months ended June 30, 2022, these non-cash expenses were stock-based compensation of $371,133 and amortization of $86,080. For the six months ended June 30, 2023 and 2022 the Company recorded increase (decrease) to accounts payable and accrued expenses of $350,981 and $184,054, respectively, of continuing operating activities.
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Net Cash provided by Investing Activities
Net cash used in (provided by) investing activities during the Period ended June 30, 2023 was $0 compared to $6,000 for the same period in 2022.
Net Cash Provided by Financing Activities
Net cash provided by financing activities during the three months Period ended June 30, 2023, was $823,219, and $1,025,796 for the same period in 2022. The Company has successfully raised significant capital in exchange for its common stock for the six months ended June 30, 2023 and 2022.
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 4 to our consolidated financial statements.
Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements during the reporting periods. These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur in the future. We base our estimates on historical experience, known trends and events, and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants. A fair value hierarchy has been established for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
Research and Development Costs
Research and development costs are expensed as incurred. Research and development reimbursements and grants are recorded by us as a reduction of research and development cost.
Share-Based Payments
We estimate the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. We account for forfeitures of stock options as they occur.
Income Taxes
We use the asset and liability method to calculate deferred taxes. Deferred taxes are recognized based on the differences between the financial reporting and income tax bases of assets and liabilities using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We review deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. A valuation allowance, if necessary, is provided against deferred tax assets, based upon our assessment as to their realization.
We recognize tax when the positions meet a “more-likely-than-not” recognition threshold. There were no tax positions for which it is considered reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next year. We recognize interest related to unrecognized tax benefits in interest expense and penalties in operating expenses.
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Recently Issued Accounting Standards
Note 6 to consolidated financial statements appearing elsewhere in this report includes Recently Issued Accounting Standards.
Foreign Currency Transactions
Foreign exchange gain (loss) in the three and six months ended June 30, 2023 was $0 compared to $0 for the same periods in 2022 which were also $-0-.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2023, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended June 30, 2023 covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We are subject to litigation, claims, investigations, and audits arising from time to time in the ordinary course of our business. However, at this time, we are not aware on any material pending, threatened or unasserted claims.
Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the period between January 1, 2022, and June 30, 2023, the Company issued total 16,401,801 shares valued $4,612,444 that were not registered under the Securities Act.
During the first quarter 2022 the company issued 4,000,000 shares pursuant to an S-3 valued at $594,870.
During the First quarter 2022 the company issued 802,115 restricted shares of its common stock valued at $79,500 to third parties for certain services, recorded as advertising and promotion expense and License, permits & Patents, respectively and 173,390 shares valued at $32,944 in settlement of debt.
The company issued 1,143,537 shares pursuant to various stock purchase agreements valued at $125,000 the cash was received in 2021 and 2022.
The issuance of securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(a)(2) of the Securities Act of 1933 and Regulation D as transactions by an issuer not involving any public offering. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. The sales of these securities were made without general solicitation or advertising.
The Company intends to use the proceeds from sale of the securities, if any, for the operations, research and development and clinical trials, and working capital.
There were no underwritten offerings employed in connection with any of the transactions set forth above.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable
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Item 5. Other Information.
On May 14, 2021, the Company entered into the Equity Purchase Agreement with Cross, pursuant to which we have the right to “put,” or sell, up to $10,000,000 worth of shares of our common stock to Cross. As provided in the Equity Purchase Agreement, we may require Cross to purchase shares of our common stock from time to time by delivering a put notice to Cross specifying the total number of shares to be purchased (such number of shares multiplied by the purchase price described below, the “Investment Amount”); provided there must be a minimum of ten trading days between delivery of each put notice. We may determine the Investment Amount, provided that such amount may not be more than 500% of the average daily trading volume in dollar amount for our common stock during the five trading days preceding the date on which we deliver the applicable put notice, unless waived by Cross in its sole discretion. Additionally, such amount may not be lower than $10,000 or higher than $1,000,000. Cross will have no obligation to purchase shares under the Equity Line to the extent that such purchase would cause Cross to own more than 4.99% of our issued and outstanding shares of common stock.
Compensation of Company Directors and Advisory Board Members
Our Directors are compensated $5,000 on a quarterly basis plus on each annual anniversary of Board service additional $20,000. Our Directors and Advisory Board Members are reimbursed for reasonable out-of-pocket expenses related to attending board of directors’ meetings and for promoting our business. In the future, we may compensate our Directors for serving on Special Committees and our Advisory Board Members with additional cash or other compensation. From time to time we may request certain members of the board of directors to perform services on our behalf. In such cases, we will compensate the directors for their services at rates no more favorable than could be obtained from unaffiliated parties.
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Item 6. Exhibits.
| Statements |
| Condensed Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022. |
| Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (unaudited) |
| Condensed Consolidated Statements of Changes in Shareholders’ Deficit for the three and six months ended June 30, 2023 and 2022 (unaudited) |
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (unaudited) |
| Notes to Condensed Consolidated Financial Statements (unaudited) |
| Schedules |
| All schedules are omitted because they are not applicable, or the required information is shown in the Financial Statements or notes thereto. |
Please see the below Exhibit Index and the Index to Financial Statements and related notes to financials which follows the signature page to this Quarterly report on Form 10-Q and which is incorporated by reference herein.
57
Exhibit Index
58
| XBRL Instance Document | 101.INS | X | ||||||
| XBRL Taxonomy Extension Schema Document | 101.SCH | X | ||||||
| XBRL Taxonomy Extension Calculation Linkbase Document | 101.CAL | X | ||||||
| XBRL Taxonomy Extension Definition Linkbase Document | 101.DEF | X | ||||||
| XBRL Taxonomy Extension Label Linkbase Document | 101.LAB | X | ||||||
| XBRL Taxonomy Extension Presentation Linkbase Document | 101.PRE | X |
59
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| AXIM BIOTECHNOLOGIES, INC. | |||
| Dated: August 21, 2023 | By: | /s/ John W. Huemoeller II | |
| John W. Huemoeller II | |||
| President and Director | |||
| Principal Executive Officer | |||
| Dated: August 21, 2023 | By: | /s/ Robert Malasek | |
| Robert Malasek | |||
| Principal Financial Officer | |||
60
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15(d)-14(a), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John W. Huemoeller II, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q for AXIM Biotechnologies, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: August 21, 2023 | By: | /s/ John W. Huemoeller II | |
John W. Huemoeller II Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15(d)-14(a), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert Malasek, Chief Financial Officer of Axim Biotechnologies, Inc. (the “Company”) certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of the Company; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Dated: August 21, 2023 | By: | /s/ Robert Malasek | |
Robert Malasek Chief Financial Officer (Principal Financial Officer) |
EXHIBIT 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Axim Biotechnologies, Inc., a Nevada corporation, (the “Registrant”) on Form 10-Q for the Period ended June 30, 2023 (the “Report”), I, John W. Huemoeller II, Chief Executive Officer of the Registrant, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| (1) | the Report, as filed with the Securities and Exchange Commission, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Dated: August 21, 2023 | By: | /s/ John W. Huemoeller II | |
John W. Huemoeller II Chief Executive Officer (Principal Executive Officer) |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Axim Biotechnologies, Inc., a Nevada corporation, (the “Registrant”) on Form 10-Q for the Period ended June 30, 2023 (the “Report”), I, Robert Malasek, Chief Financial Officer of the Registrant, do hereby certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
| (1) | the Report, as filed with the Securities and Exchange Commission, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
| Dated: August 21, 2023 | By: | /s/ Robert Malasek | |
Robert Malasek Chief Financial Officer (Principal Financial Officer) |