AXIM BIOTECHNOLOGIES, INC. - Quarter Report: 2021 September (Form 10-Q)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 000-54296

AXIM Biotechnologies, Inc.

(Exact name of registrant as specified in its charter)

Nevada

27-4029386

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

6191 Cornerstone Court, E. Suite 114

San Diego, CA 92121

(Address of principal executive offices)

(858) 923-4422

(Registrant’s telephone number, including area code)

___________________________________________

(Former name, former address and former fiscal year, if changed since last report)

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 Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 was required to submit and post such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated

Filer

Accelerated

Filer

Non-accelerated filer

(Do not check if smaller

reporting company)

Smaller

reporting

Company

Emerging

growth

Company

☐

☒

☐ ☑

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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: 136,178,104 of common stock, par value $0.0001 per share, outstanding as of November 19, 2021.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AXIM BIOTECHNOLOGIES, INC.

		Page
Condensed Consolidated Balance Sheet as of September 30, 2021 (unaudited) and December 31, 2020		3

Condensed Consolidated Statements of Operations for the three and nine months periods ended September 30, 2021 and 2020 (unaudited)		4

Condensed Consolidated Statement of Changes in Shareholders’ Deficit for the nine months ended September 30, 2021 and 2020 (unaudited)		5-6

Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)		7

Notes to Condensed Consolidated Financial Statements (unaudited).		8

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AXIM BIOTECHNOLOGIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2021			December 31, 2020
	(Unaudited)
ASSETS

Current assets:
Cash	$	338,377		$	457,181
Prepaid expenses		141,542			255,923
Inventory		20,127			-
Total current assets		500,046			713,104

Property and equipment, net of accumulated depreciation		103,997			104,094

Other Assets:
Notes receivable- related party		104,012			103,242
Patents (net of accumulated amortization of $2042 and $0; respectively)		247,958			-
Licenses (net of accumulated amortization of $35,474 and $0; respectively)		4,234,526			-
Goodwill		2,458,233			2,458,233
Intellectual Property and In-Process Research (net of accumulated amortization of $1,296,438 and $0; respectively)		6,503,562			7,800,000
Security deposit		5,000			5,000
Operating lease right-of-use asset		90,630			130,722
Total other assets		13,643,921			10,497,197

TOTAL ASSETS	$	14,247,964		$	11,314,395

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$	931,819		$	1,073,142
Lease liability obligations		58,540			53,851
Due to shareholder		180			180
Due to first insurance funding		65,880			25,369
Promissory note (including accrued interest of $34,222 and $19,507, respectively) (see note 8)		538,440			343,725
Total current liabilities		1,594,859			1,496,267

Long-term liabilities:
Deferred tax liability		2,340,000			2,340,000
Convertible note payable (including accrued interest of $208,089 and $236,148, respectively) net of unamortized debt discount of $623,095 and $843,673, respectively(see note 11)		1,369,307			1,676,788
Convertible note payable - related party (including accrued interest of $264,037 and $158,648, respectively)		4,264,037			4,158,648
Lease liability obligations		32,090			76,871
Other liabilities of discontinued operations		-			-
Total long-term liabilities		8,005,434			8,252,307

TOTAL LIABILITIES		9,600,293			9,748,574

STOCKHOLDERS’ DEFICIT
Preferred stock, $0.0001 par value, 5,000,000 shares authorized;

Series B Convertible Preferred Stock, $0.0001 par value 500,000 shares designated,
Series C Convertible Preferred Stock, $0.0001 par value 500,000 shares designated,
500,000 and 500,000 shares issued and outstanding, respectively		50			50

Common stock, $0.0001 par value, 300,000,000 shares authorized 135,885,104 and 125,327,579 shares issued and outstanding, respectively		13,589			12,533
Additional paid in capital		50,009,591			43,201,186
Common stock to be issued		4,457,500			201,974
Accumulated deficit		(49,833,059	)		(41,849,922	)
TOTAL STOCKHOLDERS’ DEFICIT		4,647,671			1,565,821

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	14,247,964		$	11,314,395

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
	Nine Months Ended			Nine Months Ended			Three Months Ended			Three Months Ended
	September 30,			September 30,			September 30,			September 30,
	2021			2020			2021			2020

Revenues	$	55,651		$	-		$	8,127		$	-

Operating Expenses:

Research and development expenses		216,282			235,431			67,263			109,139
Selling, general and administrative		4,812,790			2,442,420			2,519,527			1,184,267
Amortization of other assets		1,333,954			-			692,858			-
Depreciation		20,119			10,497			6,935			5,372

Total operating expenses from continuing operations		6,383,145			2,688,348			3,286,583			1,298,778

Loss from continuing operations		(6,327,494	)		(2,688,348	)		(3,278,456	)		(1,298,778	)

Other (income) expenses:

Interest income		(769	)		(419	)		(256	)		(260	)
Income from Grants from Government		(279,981	)		(25,899	)		(59,986	)		(25,899	)
Unrealized loss (gain) on marketable securities		-			104,705			-			-
Realized loss (gain) on marketable securities					109,040			-			-
Amortization of note discount		220,578			63,745			17,456			22,313
Loss on Extinguishment of Debt		1,535,264			923,604			-			923,604
Interest expense		175,915			179,344			56,007			73,268
Total other (income) expenses		1,651,007			1,354,120			13,221			993,026

Loss before provision of income tax		(7,978,501	)		(4,042,468	)		(3,291,677	)		(2,291,804	)
Provision for income tax		-			-			-			-

Income (loss) from continuing operations		(7,978,501	)		(4,042,468	)		(3,291,677	)		(2,291,804	)

Income (loss) from discontinued operations		(4,633	)		29,144			-			386,237

NET LOSS	$	(7,983,134	)	$	(4,013,324	)	$	(3,291,677	)	$	(1,905,567	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(7,983,134	)	$	(4,013,324	)	$	(3,291,677	)	$	(1,905,567	)

Earning per share from continuing operations
Basic	$	(0.06	)	$	(0.04	)	$	(0.02	)	$	(0.02	)
Diluted	$	(0.06	)	$	(0.04	)	$	(0.02	)	$	(0.02	)

Earning per share from discontinued operations
Basic	$	-		$	-		$	-		$	-
Diluted	$	-		$	-		$	-		$	-

Earning per share
Basic	$	(0.06	)	$	(0.04	)	$	(0.02	)	$	(0.02	)
Diluted	$	(0.06	)	$	(0.04	)	$	(0.02	)	$	(0.02	)

Weighted average common shares outstanding - basic and diluted		129,803,948			105,383,791			133,663,974			123,496,143

See accompanying notes to these unaudited condensed consolidated financial statements

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AXIM BIOTECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statement of Stockholders’ Deficit

	Common Stock						Preferred Stock				Series A Convertible Preferred Stock				Series B Convertible Preferred Stock						Series C Convertible Preferred Stock				Common Stock			Additional Paid In			Subscription Amount		Accumulated
	Shares			Amount			Shares		Amount		Shares		Amount		Shares			Amount			Shares		Amount		to be Issued			Capital			Receivable		Deficit			Total
Balance at December 31, 2019		64,854,539		$	6,486			-	$	-		-	$	-		500,000		$	50			500,000	$	50	$	50,000		$	28,623,060		$	-	$	(35,440,042	)	$	(6,760,397	)
Common stock to be issued for Note receivable and True-up adjustment																																					-
Common stock issued against common stock to be issued received in PY		250,000			25																					(50,000	)		49,975								-
Common stock issued for services		662,839			66																								287,434								287,500
Common stock issued under registration statement on Form S-3		3,541,667			355																								962,145								962,500
Subscription price adjustment																													(518,948	)							(518,948	)
Beneficial conversion of 190K convertible note																													190,000								190,000
Common stock issued for acquisition		54,000,000			5,400																								7,500,600								7,506,000
Net loss																																		(2,028,367	)		(2,028,367	)
Balance at March 31, 2020		123,309,045			12,331			-		-		-		-		500,000			50			500,000		50		-			37,094,266			-		(37,468,409	)		(361,712	)
Common stock to be issued																										135,000											135,000
Common stock issued for severance		477,025			48																								149,952								150,000
Common stock issued under registration statement on Form S-3		3,953,125			395																								547,605								548,000
Common stock issued per stock purchase agreement		3,975,383			397																								699,603								700,000
Series B preferred stock retirement																(500,000	)		(50	)																	(50	)
Retired common stock		(18,570,356	)		(1,857	)																															(1,857	)
Subscription price adjustment																													(90,887	)							(90,887	)
Net loss																																		(79,389	)		(79,389	)
Balance at June 30, 2020		113,144,222			11,314			-		-		-		-		-			-			500,000		50		135,000			38,400,539			-		(37,547,798	)		999,105
Common stock issued for services		773,943			77																								378,613								378,690
Common stock issued for severance		314,852			32																								254,968								255,000
Convertible note converted to common stock		5,141,377			514																								50,900								51,414
Common stock issued per stock purchase agreement		5,822,576			582																								1,098,048								1,098,630
Stock based compensation - stock options																													414,839								414,839
Loss on extinguishment of debt																													823,497								823,497
Loss on conversion of convertible note																													171,889								171,889
Net loss																																		(1,905,567	)		(1,905,567	)
Balance at September 30, 2020		125,196,970			12,519			-		-		-		-		-			-			500,000		50		135,000			41,593,293			-		(39,453,365	)		2,287,497

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	Common Stock				Preferred Stock				Series A Convertible Preferred Stock				Series B Convertible Preferred Stock				Series C Convertible Preferred Stock				Common Stock to be			Additional Paid In			Subscription Amount			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Issued			Capital			Available			Deficit			Total
Balance at December 31, 2020		125,327,579		12,533		-		-		-		-		-		-		500,000		50		201,974			201,974			43,201,186			(41,849,922	)		1,565,821
Common stock to be issued for Note receivable and True-up adjustment																																		-
Common stock to be issued for purchase of shares																						168,500												168,500
Common stock issued against common stock to be issued received in PY		108,965		11																		(66,974	)		66,963									-
Common stock issued for severance payable of discontinued operation		379,463		38																					224,963									225,001
Common stock issued for cash		1,712,500		171																					433,829									434,000
Stock based compensation - stock options																									99,742									99,742
Net loss																															(864,536	)		(864,536	)
Balance at March 31, 2021		127,528,507		12,753		-		-		-		-		-		-		500,000		50		303,500			44,026,683			-			(42,714,458	)		1,628,528
Common stock issued for services		1,114,351		111																		(16,000	)		792,389									776,500
Common stock issued for cash		1,234,113		123																		(152,500	)		402,376									249,999
Convertible note #5 and accrued interest converted to common stock		2,647,464		265																					582,442									582,707
S-1 agreement subscription receivable		500,000		50																					332,450			(332,500	)					-
Stock based compensation - stock options		-		-																					91,526									91,526
Loss on extinguishment of debt																									1,535,264									1,535,264
Net loss																															(3,826,924	)		(3,826,924	)
Balance at June 30, 2021		133,024,435		13,302		-		-		-		-		-		-		500,000		50		135,000			47,763,130			(332,500	)		(46,541,382	)		1,037,600
Common stock to be issued																						4,322,500												4,322,500
Common stock issued for services		1,415,554		142																					1,111,758									1,111,900
Common stock issued for cash		1,445,115		145																					476,581									476,726
Subscription receivable share price adjustment																									(103,688	)		103,688						-
Subscription price receivable																												228,812						228,812
Stock based compensation - stock options		-		-																					761,810									761,810
Net loss																															(3,291,677	)		(3,291,677	)
Balance at September 30, 2021		135,885,104	$	13,589		-	$	-		-	$	-		-	$	-		500,000	$	50	$	4,457,500		$	50,009,591		$	-		$	(49,833,059	)	$	4,647,671

See accompanying notes to these unaudited condensed consolidated financial statements

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AXIM BIOTECHNOLOGIES, INC.

Unaudited Condensed Consolidated Statements of Cash Flows

	For the			For the
	Nine Months Ended			Nine Months Ended
	September 30, 2021			September 30, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(7,983,134	)	$	(4,013,324	)
Less: (Loss) gain from discontinued operations		(4,633	)		29,144
Loss from continuing operations		(7,978,501	)		(4,042,468	)

Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation		20,119			10,496
Stock based compensation		953,076			779,029
Amortization of prepaid insurance/expense		296,542			146,583
Amortization of debt discount		220,578			63,745
Common stock issued for services		1,904,400			-
Amortization(impairment) of Intangible Assets		1,333,954			-
Loss on extinguishment of debt		1,535,264			923,604
Unrealized (gain) loss on marketable securities		-			104,705
Realized (gain) loss on marketable securities		-			109,040

Changes in operating assets & liabilities:
Increase in interest receivable		(770	)		(419	)
Increase in prepaid expenses		(182,161	)		(94,779	)
Increase (decrease) in inventory		(20,127	)		-
Increase (decrease) in security deposit					(255	)
Increase in accounts payable and accrued expenses		228,426			234,364
Net cash provided by (used in) operating activities from continuing operations		(1,689,200	)		(1,766,355	)
Net cash provided by (used in) operating activities from discontinued operations		(4,633	)		(834,429	)
Net cash provided by (used in) operating activities		(1,693,833	)		(2,600,784	)

CASH FLOW FROM INVESTING ACTIVITIES:
Cash acquired in acquisition		-			79,814
Acquisition of patents		(10,000	)		-
Increase (decrease) in property and equipment		(20,022	)		(86,169	)
Net cash provided by (used in) investing activities from continuing operations		(30,022	)		(6,355	)
Net cash provided by (used in) investing activities from discontinued operations		-			-
Net cash provided by (used in) investing activities		(30,022	)		(6,355	)

CASH FLOW FROM FINANCING ACTIVITIES:
Common stock issued under registration statement on Form S-3		-			1,510,500
Common stock issued under SPA		1,542,040			1,798,630
Borrowed from First Insurance Funding		40,511			8,618
Proceeds from common stock to be issued per stock purchase agreement		52,500			-
Repayment of Promissory note		(30,000	)		-
Net cash provided by (used in) continuing financing activities		1,605,051			3,317,748
Net cash provided by (used in) discontinued financing activities		-			(65,000	)
Net cash provided by (used in) financing activities		1,605,051			3,252,748

Net (decrease) increase in cash and cash equivalents		(118,804	)		645,609
Cash and cash equivalents at beginning of period		457,181			511,630
Cash and cash equivalents at end of period	$	338,377		$	1,157,239
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	$	66,974		$	50,000
Account receivable against conversion of debt and interest	$	-		$	75,074
Common stock issued for services recorded as prepaid expense	$	-		$	302,000
Common stock issued for severance	$	225,000		$	450,000
Shares issued for acquisition of Sapphire Biotechnology	$	-		$	7,506,000
Deferred tax liability accounted for as a result of Sapphire Biotech Acquisition	$	-		$	1,845,000
Assets acquired and liability assumed for as a result of Sapphire Biotech Acquisition	$	-			525,365
BCF related to discount on conversion	$	-		$	190,000
Common stock issued for note receivable	$	-		$	135,000
Adoption of lease obligation and ROU asset	$	-		$	164,910
Common stock retired	$	-		$	1,857
Subscription price adjustment	$	-		$	609,835
Convertible note converted to common stock	$	-		$	51,414
Assets acquired as a result of Sapphire Biotech Acquisition	$	-		$	33,319
Acquisition of patents against Notes payable and accounts payable	$	240,000			-
Common stock to be issued for acquisition	$	4,270,000			-

See accompanying notes to these unaudited condensed consolidated financial statements

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AXIM BIOTECHNOLOGIES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021 and 2020

NOTE 1: ORGANIZATION

Axim Biotechnologies, Ind., (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 6181 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 100% interest in Can Chew License Company a Nevada incorporated licensing Company, through the exchange of 5,826,706 shares of its common stock.

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.

Company Developments – Divesture of Cannabis Related Assets

On May 6, 2020 (the “Effective Date”), AXIM Biotechnologies, Inc., a Nevada corporation (the “Company”), entered into an Agreement (the “Separation Agreement”) by and among the Company, CanChew License Company (“CanCo”), CanChew Biotechnologies, LLC (“CanChew”), Medical Marijuana, Inc., Dr. George A. Anastassov (“Dr. Anastassov”), Dr. Philip A. Van Damme (“Dr. Van Damme”), Lekhram Changoer (“Mr. Changoer”), Sanammad Foundation, Netherlands and Sanammad Foundation, US (collectively, the “Sanammad Parties”), pursuant to which, among other matters as described herein, Drs. Anastassov and Van Damme and Mr. Changoer resigned as members of the Company’s Board of Directors.

Pursuant to the Separation Agreement, the Company transferred and assigned to an entity designated by Dr. Anastassov all of the Company’s cannabis-related intellectual property other than the inventions and discoveries described in that certain cannabis-related patent application filed by the Company’s wholly-owned subsidiary, Sapphire Biotech, Inc. (water-soluble cannabinoid molecules). The Company also transferred 100% of its interest in CanCo and CanChew to an entity designated by Dr. Anastassov. In consideration for the transfers set forth above, any and all indebtedness owed by the Company to CanChew, totaling approximately $2.61 million, was satisfied and paid in its entirety.

In addition, in consideration for the payment by the Company of $65,000, the Company purchased 100% of the issued and outstanding shares of Series B Preferred Stock held by the Sanammad Parties. Such shares shall be retired to treasury of the Company. The Sanammad Parties also agreed to forfeit and assign back to treasury, for no consideration, a total of 18,570,356 shares of the Company’s common stock.

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NOTE 2: ACQUISITION OF SAPPHIRE BIOTECH, INC.

On March 17, 2020, the Company entered into a Share Exchange Agreement (“Agreement”) with Sapphire Biotech, Inc., a Delaware corporation (“Sapphire”) and all 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: (i) acquired 100% of Sapphire’s outstanding capital (consisting of 100,000,000 shares of common stock and zero (0) shares of Preferred Stock); and (ii) assume all of the outstanding debt of Sapphire. The outstanding debt includes two (2) convertible notes in the principal amounts of $310,000 and $190,000. Pursuant to the terms of the Share Exchange Agreement, the Company acquired 100% of the issued and outstanding shares of Sapphire by means of a share exchange with the Sapphire Stockholders in exchange for 54,000,000 newly issued shares of the common stock of AXIM (the “Share Exchange”). As a result of the Share Exchange, Sapphire became a 100% owned subsidiary of AXIM, which on a going forward basis will result in consolidated financial reporting by AXIM to include the results of Sapphire. The closing of the Share Exchange occurred concurrently with entry into the Share Exchange Agreement (the “Closing”).

In March 2020, the Company acquired SAPPHIRE BIOTECH, Inc., a biotechnology company focusing on improving cancer care through the development of proprietary therapeutics for inhibiting cancer growth and metastasis. The Company issued 54,000,000 shares of common stock with a total fair value of $7,506,000 and assumed net liabilities of $412,233 (resulting in a total acquisition cost of $7,918,233), in exchange for all outstanding shares of SAPPHIRE BIOTECH, Inc. The Company accounted for the acquisition using the acquisition method of accounting for business combinations. On the acquisition date, the Company performed a preliminary allocation of the purchase price to include the tangible assets acquired and the liabilities assumed with the remainder of the purchase price allocated to patents pending approval, in-process research and development (IPR&D) and goodwill. The Company incurred $6,000 of acquisition-related costs, which will be recorded as expense after the evaluation work been completed. In addition, the Company recorded an estimated deferred tax liability on the assets acquired, except for goodwill for which deferred taxes are not applicable.

The Company completed the valuation of the intangible assets acquired in the SAPPHIRE BIOTECH, Inc. transaction by September 2020. Pursuant to the valuation, the Company determined that the patents continue to be expanded and chose to subsume the patents within the IPR&D balance. In management’s judgment, the amount assigned to IPR&D represents the amount the Company would reasonably expect to pay an unrelated party for each project included in the technology. Based on the final valuation, the remaining excess purchase price has been allocated to goodwill.

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The aggregate purchase price of $7,918,233consisted of common stock valued at $7,506,000 and the net liabilities assumed of $412,233. The value of the $7,506,000 of common shares issued was determined based on the closing price of the Company’s common shares at the acquisition date.

The following table summarizes the consideration paid for SAPPHIRE BIOTECH and the estimated amounts of the assets acquired and liabilities assumed recognized at the acquisition date.

Consideration:
Cash and cash equivalents	$	79,814
Property and equipment, net		20,533
In process Research & Development (IPRD)		7,800,000
Goodwill		2,458,233
Security deposit		12,785
Total asset acquired	$	10,371,365

Accrued expenses and other current liabilities	$	5,767
Deferred taxes liability		2,340,000
Notes Payable including convertible and discount on conversion		519,598
Total liabilities assumed	$	2,865,365
Net assets acquired	$	7,506,000

The fair value of acquired IPR&D was determined using the income approach, based on the likelihood of success of products reaching final development and commercialization. The fair value of acquired IPR&D was capitalized as of the Closing Date and is subsequently accounted for as an indefinite-lived intangible asset until completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the Closing Date, this asset will not be amortized over a period of 36 months.

The acquired in process Research and development as it relates to rapid COVID testing has reached the commercialization stage and is awaiting FDA EUA.

The $2,458,233 of goodwill is not expected to be deductible for tax purposes.

The effective settlement of receivable/payable between the Company and Sapphire deemed to be not material, which was recorded as gain on intercompany transaction in P&L.

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NOTE 3: ACQUISITION OF INTELLECTUAL PROPERTY 0F ADVANCED TEAR DIAGNOSTIC, LLC.

AXIM entered into two substantially contemporaneous transactions to acquire patents and 510(K) Licenses from Tear Diagnostics, LLC (the “Seller”) (collectively, the “Asset Acquisition”) for a total amount of $4,520,000.

The first transaction occurred on July 29, 2021, in which AXIM purchased five patents (the “Patents”) from the Seller for $250,000 (which includes assuming and paying $30,000 of the Seller’s 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 second transaction occurred on July 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 $4,270,000, which price was paid by issuing to the Seller 7 million shares of AXIM restricted common stock.

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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 11.54 average remaining life of the Patents.

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 a 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.

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NOTE 4: BASIS OF PRESENTATION:

The unaudited condensed consolidated financial statements of AXIM Biotechnologies, Inc. (formerly Axim International, Inc.) as of September 30, 2021, and for the three and nine months period ended September 30, 2021 and 2020 have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”).

The following (a) balance sheets as of September 30, 2021 (unaudited) and December 31, 2020, which have been derived from audited financial statements, and (b) the unaudited interim statements of operations and cash flows of AXIM Biotechnologies, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of results that may be expected for the year ending December 31, 2021. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on April 26, 2021.

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.

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NOTE 5: GOING CONCERN

The Company’s condensed consolidated financial statements have been presented assuming that the Company will continue as a going concern. The Company has incurred significant losses and negative cash flows from operations in all periods since inception and had an accumulated deficit as of September 30, 2021. The Company has historically financed its operations primarily through the sale of common stock, promissory notes and convertible notes. To date, none of the Company’s products related to continuing operations are still in the product development phase. Management expects operating losses to continue and increase for the foreseeable future, as the Company progresses into clinical development activities for its lead product candidates. The Company’s prospects are subject to risks, expenses and uncertainties frequently encountered by companies in the biotechnology industry. As shown in the condensed consolidated financial statements, the Company has deficit in working capital of $1,094,813 and has an accumulated deficit of $49,833,059 and has cash used in operating activities of continuing operations $1,689,200 and discontinued operations of $4,633. The Company intends to raise substantial additional capital through private placements of debt and equity securities, but there can be no assurance that these funds will be available on terms acceptable to the Company or will be sufficient to enable the Company to fully complete its development activities or sustain operations. If the Company is unable to raise sufficient additional funds, it will have to develop and implement a plan to further extend payables, reduce overhead, or scale back its current business plan until sufficient additional capital is raised to support further operations. There can be no assurance that such a plan will be successful. That will raise a doubt about the ability of the Company to continue as a going concern. The unaudited condensed consolidated 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.

NOTE 6: SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of the unaudited condensed consolidated 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 accounts receivable, intangible assets, useful life of intangible assets, determination of the discount rate for operating leases and assumptions used in Black-Scholes-Merton, or BSM, valuation methods, such as expected volatility, risk-free interest rate and expected dividend rate.

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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.

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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 September 30, 2021 and December 31, 2020, 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 September 30, 2021 and December 31, 2020. The Company has never experienced any losses related to these balances.

Accounts Receivable

It is the Company’s policy to review accounts receivable at least on monthly basis for conductibility and follow up with customers accordingly. COVID19 has slowed collection as our customers are in a mandated pause. The Company have geographic concentration of customers for the three months ending September 30, 2021 and 2020. There were no accounts receivable as of September 30, 2021’

Concentrations

At December 31, 2020, one customer accounted for 100% of accounts receivable. There were no accounts receivable as of September 30, 2021.

Inventory

Inventory consists of raw materials owned by the Company and are stated at the lower of cost or market. As of September 30, 2021 and December 31, 2020, the Company had $20,127 and $-0-; respectively.

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 relating to continuing operations consisted of the following on September 30, 2021 and December 31, 2020, respectively, and none related to discontinued operations.

	September 30,		December 31,
	2021		2020
Equipment	$	154,809	$	134,788
Less: accumulated depreciation	$	50,812	$	30,694
	$	103,997	$	104,094

For the nine months ended September 30, 2021 and 2020, the Company recognized depreciation expense of $20,119 and $10,497 respectively. For the three months ended September 30, 2021 and 2020, the Company recognized depreciation expense of $6,935 and $5,372, respectively.

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In-Process Research and Development (IPR&D)

The fair value of IPR&D acquired through a business combination is capitalized as an indefinite-lived intangible asset until the completion or abandonment of the related research and development activities. When the related research and development is completed, the asset will be assigned a useful life and amortized.

The fair value of an IPR&D intangible asset is determined using an income approach. This approach starts with a forecast of the net cash flows expected to be generated by the asset over its estimated useful life. The net cash flows reflect the asset’s stage of completion, the probability of technical success, the projected costs to complete, expected market competition, and an assessment of the asset’s life-cycle. The net cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.

The product development related to the IPR&D acquired reached completion in April 2021.

Goodwill

Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of the identifiable net assets acquired. Goodwill is not amortized but is tested for impairment at least annually at the reporting unit level or more frequently if events or changes in circumstances indicate that the asset might be impaired.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances between annual tests indicate that the asset may be impaired. Impairment loss is recognized based on a comparison of the fair value of the asset to it carrying value, without consideration of any recoverability.

Intangible Assets

As required by generally accepted accounting principles, trademarks and patents are amortized if they have a definite life, the amortization is estimated in straight line through three years starting in April 2021. As a result of the acquisition of asset of Advanced Tear Diagnostic, LLC, we recognize patents and licenses, which are amortized in straight line over their remaining useful lives. The Company’s intangible assets relating to continuing operations and discontinued operations consisted of the following on September 30, 2021 and December 31, 2020, respectively.

	September 30,		December 31,
	2021		2020
Goodwill	$	2,458,233	$	2,458,233
Intellectual Property (IPRD)		7,800,000		7,800,000
Patents		250,000		-
Licenses		4,270,000		-
		14,778,233		10,258,233

Less: accumulated amortization		1,333,954		-
	$	13,444,279	$	10,258,233

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Estimated aggregate amortization expense for each of the three succeeding years ending December 31 is as follows:

		2021				2022				2023				2024
Amortization expense		$	2,088,000			$	2,990,000			$	2,990,000			$	1,040,000

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 nine months ended September 30, 2021 and 2020 amounted to $8,127, $55,651, $-0- and $-0-, respectively. Revenues from discontinued operations recognized for three and nine months ended September 30, 2021 and 2020 amounted to $-0-, $-0-, and $-0-, $7,990, respectively.

Collaboration Revenue

Revenue recognition for collaboration agreements will require significant judgment. The Company’s assessments and estimates are based on contractual terms, historical experience and general industry practice. Revisions in these values or estimations have the effect of increasing or decreasing collaboration revenue in the period of revision.

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On August 21, 2020, the Company entered into a Distribution, License and Supply Agreement (“License Agreement”) with Empowered Diagnostics, LLC ("Empowered Diagnostics”"). The License Agreement has a term of xx years and provides Empowered Diagnostics with a right to commercialize The company’s products worldwide with the exception of Mexico.

Under the License Agreement, the company is responsible for applying for and obtaining necessary regulatory approvals in the US and EU, as well as marketing, sales and distribution of the products. Empowered Diagnostics will pay a transfer price for all licensed products, and upon achievement of certain regulatory and sales milestones, the Company may receive payments from Empowered Diagnostics equal to 8% of the monthly gross revenue. Agreement continues until terminated by mutual consent or uncorrected breach.

Grant Income

In 2021 the Company has received government grants to drive its research and development efforts. Through these government grants, the government has provided funding for the Company to perform research and development activities which will assist in developing its products. The Company believes the government entities funding these grants are interested in the Company advancing its underlying technologies through research activities and not providing incentives for hiring employees or building facilities that would suggest that the grant monies are not for specific research activities.

In determining how to classify the monies received under government grants, the Company acknowledges that there is no specific guidance under US GAAP and that the FASB and AICPA have often drawn upon the guidance in IAS 20 for classification. In considering the alternatives provided by IAS 20 for the presentation of these grants in the Company’s financial statements, the Company believes that recognizing the government grant proceeds as a component of other revenue is a better reflection of the economics of the arrangements as the Company earns the funding through the performance of research and development which is not one of the Company’s primary business activities or central to its operations. The Company believes that presenting research and development funding from government grants, as other revenue provides consistency in our financial reporting. The Company also believes that this presentation clearly presents to users of its financial statements in one line the Company’s sources of funding from these grants. The Company notes that there are no contingencies associated with the receipt of or ability to retain the funds under the grant, other than undertaking and performing the related research and development activities.

The Company recognizes funds received from contractual research and development services and from government grants as other revenue. These contracts and grants are not considered an ongoing major and central operation of the Company’s business. Our Income from Grants from Government for the three and nine months ended September 30, 2021 and 2020, was $59,986, $279,981 and $25,899, $25,899 respectively.

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Cost of Sales

Cost of sales includes the purchase cost of products sold and all costs associated with getting the products to the customers including buying and transportation costs. Cost of sales all related to discontinued operations.

Shipping Costs

Shipping and handling costs billed to customers are recorded in sales. Shipping costs incurred by the company are recorded in general and administrative expenses. Shipping costs all related to discontinued operations.

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.

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.

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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.

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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 places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit.

Net Loss per Common Share

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 30,530,216 common share equivalents at September 30, 2021 and 32,556,727 common shares at December 31, 2020. For the nine months ended September 30, 2021 and 2020 these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share.

Stock Based Compensation

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.

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 nine months ended September 30, 2021 and 2020 the Company incurred research and development expenses of $67,263, $216,282 and $109,139, $235,431 from continuing operations, respectively. For the three and nine months ended September 30, 2021 and 2020 the Company incurred research and development expenses of $-0-, $-0- and $(400,417), $426,665 from discontinued operations, respectively. The Company has entered into various agreements with CROs. The Company’s research and development accruals are estimated based on the level of services performed, progress of the studies, including the phase or completion of events, and contracted costs. The estimated costs of research and development provided, but not yet invoiced, are included in accrued liabilities on the balance sheet. If the actual timing of the performance of services or the level of effort varies from the original estimates, the Company will adjust the accrual accordingly. Payments made to CROs under these arrangements in advance of the performance of the related services are recorded as prepaid expenses and other current assets until the services are rendered.

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Recently Issued Accounting Standards

Accounting Standards Implemented Since December 31, 2020

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)

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.

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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 7: PREPAID EXPENSES

Prepaid expenses consist of the following as of September 30, 2021 and December 31, 2020:

	September 30,		December 31,
	2021		2020
Prepaid insurance	$	96,881	$	45,983
Prepaid services		44,661		209,940
	$	141,542	$	255,923

For the three and nine months ended September 30, 2021 and 2020, the Company recognized amortization of prepaid expense of $80,384, $296,542 and $78,504, $146,583, respectively.

NOTE 8: PROMISSORY NOTE

On August 8, 2014 the Company entered into a Promissory Note Agreement with CanChew Biotechnologies, LLC (CCB), a related party (the owners of CCB also own a majority of the outstanding shares of the Company), under which it borrowed $1,000,000 to fund working capital. The original loan was a demand note bearing interest at the rate of 7% per annum, which amount, along with principal, was payable upon demand. The demand note was amended effective January 1, 2015 to reduce the annual interest rate to 3%. All other terms and conditions shall remain in full force and effect. The Company is in discussions to have the demand note modified or exchanged for a longer term, fixed maturity note.

On May 6, 2020 (the “Effective Date”), AXIM Biotechnologies, Inc., a Nevada corporation (the “Company”), entered into an Agreement (the “Separation Agreement”). Pursuant to the Separation Agreement, the Company transferred 100% of its interest in CanCo and CanChew to an entity designated by Dr. Anastassov. In consideration for the transfers set forth above, any and all indebtedness owed by the Company to CanChew, totaling approximately $2.61 million, was satisfied and paid in its entirety.

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For the three and nine months ended September 30, 2021 and 2020, the Company recognized interest expense of $0, $0 and $0, $0, respectively on this note all was related to continuing operations.

On December 31, 2019, Sapphire Biotech, Inc. had entered into a Debt Exchange Agreement whereas the Company assumed three (3) loans totaling $128,375 of Debt owned by Sapphire Diagnostics, LLC which had an interest rate of 6% per annum. In the same Debt Exchange Agreement, the Company assumed four (4) additional loans made to Sapphire in 2019, which had an interest rate of 6% per annum. All seven (7) loans totaling $310,000, plus the aggregate interest accrued thereon of $14,218 making the face value of the new note $324,218. As of September 30, 2021 and December 31, 2020, the principal and accrued interest balances were $358,315 and $343,725, respectively.

The Company owes $5,000 to the chairman of the board of the Company for a working capital advance of $5,000 made in May of 2014, all was related to discontinued operations.

Under an agreement Mr. Changoer received on March 20, 2018 the Company issued 50,000 restrictive shares of its common stock and recorded $235,000of compensation expenses in the accompanying consolidated financial statements to account for the issuance of the incentive shares. As of September 30, 2021 and December 31, 2020, the total outstanding balance was $20,000 and $60,000 respectively for consulting fees to Mr. Changoer included in accounts payable.

On September 25, 2018, the Company amended Independent Director Compensation agreement. Under the agreement in lieu of the share compensation due to independent director of the Company for his annual service ending May 23, Dr. Philip A. Van Damme shall receive cash compensation of $20,000. Started from August 1, 2019 the company has been paying monthly clinical trial fee of $5,000. As of September 30, 2021 and December 31, 2020, the total outstanding balance was $-0- and $25,000, respectively included in accounts payable.

Effective January 1, 2019 the company entered into a thirty-months consulting agreement with the chairman of the board which pays a monthly consulting fee of $20,000. The company has also been paying a monthly bonus fee of 15,000; this additional fee is on a month-to-month basis at the discretion of management. As of September 30, 2021 and December 31, 2020, the total outstanding balance was $40,000 and $225,000 respectively for consulting fees included in accounts payable.

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In addition, in consideration for the payment by the Company of $65,000, the Company purchased 100% of the issued and outstanding 500,000 shares of Series B Preferred Stock held by the Sanammad Parties. Such shares shall be retired to treasury of the Company. The Sanammad Parties also agreed to forfeit and assign back to treasury, for no consideration, a total of 18,570,356 shares of the Company’s common stock.

In addition, each of Drs. Anastassov and Van Damme and Mr. Changoer have agreed to subject the shares of the Company’s common stock held by each of them to lock-up and leak-out restrictions, as follows: they shall not sell shares for a period of 12 months following the Effective Date and, thereafter, subject to a daily volume limitation of 5%, on an aggregate basis among them.

Further, the Company terminated the Consulting Agreement of Dr. Anastassov and the Employment Agreements for each of Dr. Van Damme and Mr. Changoer. In connection with the termination of Dr. Anastassov’s Consulting Agreement, the Company agreed to pay severance in the amount of $35,000 for March 2020 and $20,000 per month thereafter through July 2021 (the termination date contemplated by the Consulting Agreement). Commencing for the April 2020, the Company may, in its sole discretion, pay the $20,000 severance obligation by the issuance of shares of the Company’s common stock registered pursuant to the Registration Statement on Form S-8 filed with the Commission on May 29, 2015 (“S-8 Shares”). If the gross cash proceeds from the sale of any S-8 Shares issued in lieu of cash severance is less than $20,000, as determined 20 days after issuance of such S-8 Shares, then the Company has agreed to issue additional shares that would serve to “true-up” the value of the shares to the $20,000 monthly severance obligation; provided, however, that if 30 days after the date the severance payment is due the gross proceeds from the sale of S-8 Shares is less than $20,000, the Company must pay the shortfall in cash. In addition, for each month that Dr. Anastassov is entitled to receive severance, he shall receive S-8 Shares in an amount equal to the lesser of (a) 150,000 S-8 Shares, or (b) S-8 Shares valued at $15,000 based upon the closing price of the Company’s common stock as of the due date of the severance payment obligation. In connection with the termination of the Employment Agreements of Dr. Van Damme and Mr. Changoer, Mr. Changoer’s severance payments shall be $20,000 per month for 12 months, commencing April 2020 (paid in arrears) and Dr. Van Damme’s severance payments shall be $5,000 per month for 12 months, similarly commencing April 2020 and paid in arrears. The Company has the right to pay each of Dr. Van Damme’s and Mr. Changoer’s monthly severance payments in S-8 shares in lieu of cash subject to the same terms and restrictions (including true-up terms) as set forth above for Dr. Anastassov. As of September 30, 2021, the accrued severance payment was $40,000 to Dr. Anastassov, $20,000 to Mr. Changoer included in accounts payable.

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The Company retains the right to prepay the severance obligations to Drs. Anastassov and Mr. Changoer, without penalty.

No claims were alleged by the Company against any party, and no claims were alleged against the Company. However, in connection with the transactions described above, the parties entered into a general mutual release of all claims.

On July 29, 2021, the Company recorded a $210,000 note payable in conjunction with the acquisition of patents from Advanced Tear Diagnostics LLC. The note balance as of September 30, 2021 is $180,000 with accrued interest of $125.

NOTE 9: RELATED PARTY TRANSACTIONS

Related Party

The company has an employment agreement with Catalina Valencia CEO Saphire Biotechnologies, Inc.at a rate of $15,000 per month commencing March 17, 2020. The agreement can be terminated with 30 days’ notice by either party.

The company has a consulting agreement with Glycodots LLC whereby it will provide the services of Dr. Sergei A. Svarovsky at a rate of $15,000 per month commencing March 17, 2020. The agreement can be terminated with 30 days’ notice by either party.

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 $350,000 and a remaining balance due of approximately $100,000 (the “Note”). The purchase price for the Note was $100,000 payable by the Company issuing Seller One Million (1,000,000) restricted shares of the Company’s Common Stock. Effective May 6, 2020, the Company and Maker entered into a Forbearance Agreement whereby the Company agreed to forbear from making any collection efforts on the Note for a period of 24 months so long as Maker has not breached the Separation Agreement. Following 24 months, if there has been no breach of the Separation Agreement by Maker, repayment of the Note, including all principal and unpaid interest, will be waived in full. As of May, 4, 2020 the carrying value of the note receivable was $102,567, the value of the common stock to be issued was $135,000, resulting in a loss of $32,433 accounted as loss on debt extinguishment related to discontinued operations. The balance of the Note Receivable as of September 30, 2021 and December 31, 2020 is $102,567 for both periods, plus interest accrued thereon of $1,445 and $675, respectively.

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NOTE 10: DUE TO FIRST INSURANCE FUNDING

On June 25, 2020, the Company renewed its D&O insurance policy with total premiums, taxes and fees for $93,357. A cash down payment of $18,671 was paid on July 6, 2020. Under the terms of the insurance financing, payments of $8,456, which include interest at the rate of 4.6% per annum, are due each month for nine months commencing on July 25, 2020.

On June 25, 2021, the Company renewed its D&O insurance policy with total premiums, taxes and fees for $98,888. A cash down payment of $24,273 was paid on July 7, 2021. Under the terms of the insurance financing, payments of $1,797, which include interest at the rate of 4.420% per annum, are due each month for nine months commencing on July 25, 2021.

The total outstanding due to First Insurance Funding as of September 30, 2021 and December 31, 2020 is $65,880 and $25,369, respectively.

NOTE 11: CONVERTIBLE NOTES PAYABLE

The following table summarizes convertible note payable of related party as of September 30, 2021 and December 31, 2020:

	September 30,		December 31,
	2021		2020
Convertible note payable, due on November 1, 2026, interest at 3.5% p.a.	$	4,000,000	$	4,000,000
Accrued interest		264,037		158,648
Convertible note payable, net	$	4,264,037	$	4,158,648

The interest on this note is payable bi-annually every May 1 and November 1. On May 1, 2019 the Company paid accrued interest of $60,278.

In 2020 the Company was authorized to apply the accounts receivable of $75,074 due from Kannaway towards its accrued interest.

On May 1, 2020, the Company agreed to modify its existing convertible note with a principal balance of $4 million, 3.5% interest rate convertible note with the current holder of that note. There were two changes to the existing agreement – (a) the conversion price was reduced from the $1.50 conversion price in the original Note to $0.25 cents in the modified Note and (b) the term of the note was extended from the original maturity date of November 1, 2021, to November 1, 2026. The Company’s stock closed trading on the day of the modification at $0.13 per share. The amendment of this convertible Note was also evaluated under ASC Topic 470-50-40, ”Debt Modifications and Extinguishments.” Based on the guidance, the instruments were determined to be substantially different due to the change in the conversion price being substantial, and debt extinguishment accounting was applied. The fair value of the modified convertible note was not different than the carrying value of the original note as such no extinguishment loss was recorded, The Note prior to the amendment of approximately $4 million, and the fair value of the Note and embedded derivatives after the amendment of approximately $4 million. There were no unamortized debt issuance costs and the debt discount associated with the original 2018 Note.

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For the three and nine month ended September 30, 2021 and 2020, interest expenses was $35,000, $105,389 and $35,000, $105,389, respectively.

As of September 30, 2021 and December 31, 2020, the balance of secured convertible note was $4,264,037 and $4,158,648which included $264,037 and $158,648 accrued interest, respectively.

The following table summarizes convertible note payable as of September 30, 2021 and December 31, 2020:

	September 30,			December 31,
	2021			2020
Convertible note payable, due on October 1, 2029, interest at 3.5% p.a.	$	484,478		$	484,478
Convertible note payable, due on October 1, 2029, interest at 3.5% p.a.		500,000			1,000,000
Convertible note payable, due on December 31, 2034, interest at 3% p.a.		190,000			190,000
Convertible note payable, due on July 21, 2032, interest at 3.5% p.a.		609,835			609,835
Accrued interest (The accrued interest and principal are both included in the captions titled “convertible note payable” in the balance sheet)		208,089			236,148
Total		1,992,402			2,520,461
Less: unamortized debt discount/finance premium costs		(623,095	)		(843,673	)
Convertible note payable, net	$	1,369,307		$	1,676,788

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 $5,000,000 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 $850,000 secured convertible note financing pursuant to four (4) Secured Convertible Promissory Notes (the “Notes”). Each of the Notes matures on October 1, 2029, and pay 3.5% compounded interest paid bi-annually. The Note are secured by the assets of the Company, may not be pre-paid without the consent of the holder, and are convertible at the option of the holder into shares of the Company common stock at a conversion price equal to $0.2201 per share.

As of September 30, 2021 and December 31, 2020, the balance of secured convertible notes was $569,278 and $556,420, which included $84,800 and $71,942 accrued interest, respectively.

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On October 20, 2016 a third-party investor provided the Company with $1,000,000 secured convertible note financing pursuant to three (3) Secured Convertible Promissory Notes (the “Notes”). Each of the Notes mature on October 1, 2029 and pay 3.5% compounded interest paid bi-annually. The Notes are secured by the assets of the Company, may not be pre-paid without the consent of the holder, and are convertible at the option of the holder into shares of the Company’s common stock at a fixed conversion price equal of $0.2201 per share. The investor paid cash of $500,000 for one of the Notes and issued to the Company two (2) secured promissory notes of $250,000 each for two (2) Convertible Notes of $250,000 each. The two secured promissory notes issued by the investor (totaling $500,000) as payment for two (2) secured Notes totaling $500,000 mature on February 1, 2017 ($250,000) and March 1, 2017 ($250,000), bear interest at the rate of 1% per annum, are full recourse and additionally secured by 10,486,303 shares of Medical Marijuana, Inc. (Pink Sheets symbol: MJNA) and were valued at $858,828 based upon the closing price of MJNA on October 20, 2016. A debt discount was recorded related to beneficial conversion feature inn connection with this convertible note of $499,318, related to the beneficial conversion feature of the note to be amortized over the life of the note or until the note is converted or repaid. As of September 30, 2021 and December 31, 2020, this note has not been converted and the balance of secured convertible notes was $587,744 and $1,148,944, which included $87,744 and $148,944 accrued interest, respectively.

On June 7, 2021 the Company converted $500,000 of the Convertible Note with TL-66-LLC along with the accrued interest of $82,707 into 2,647,464 shares of the Company’s common stock at $0.2201 per share which resulted in a loss on extinguishment of debt of $1,535,264.

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 $190,000 with a compounding interest rate of 3% per annum, the interest shall be payable annually beginning on December 31, 2020 until the maturity date of December 31, 2034, at which time all principal and interest accrued thereon shall be due and payable. The Convertible Note is secured by substantially all the Company’s tangible and intangible assets. In addition, the Convertible Note includes various non-financial covenants including the Company may not enter into any agreement, arrangement or understanding of any kind that would result in a transaction, or series of transactions, that would result in the sale of 50% or more of the Company’s capital stock without the prior approval of the holder.

Upon issuance, the Convertible Note was convertible into shares of the Company’s common stock at $1.90 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 $190,000. After the acquisition, the Convertible Note was able to convert 6,000,000 shares of Axim’s common stock. Upon assumption of the note, the Company recorded a beneficial conversion feature of $190,000. As of September 30, 2021 and December 31, 2020, the balance of secured convertible note was $199,991 and $195,716, which included $9,991 and $5,716 accrued interest, respectively.

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On July 21, 2020 the Company entered into convertible note purchase agreement with Cross & Company, the Company owed to Cross & Company $609,835 of aggregated payments and desired to satisfy the amount due in full by issuing to Cross & Company a convertible promissory note. The convertible note matures on July 21, 2032 and incurred 3.5% compounded interest paid annually. The Note are secured by the assets of the Company, may not be pre-paid without the consent of the holder, and are convertible at the option of the holder into shares of the Company common stock at a conversion price equal to $0.37. Notwithstanding the foregoing, holder shall not be permitted to convert the note, or portion thereof, if such conversion would result in beneficial ownership by holder and its affiliates of more than 4.9% of the debtor’s outstanding common stock as of the date of conversion. The Company determined that that the conversion of the amounts due into a long-term convertible note resulted in a debt extinguishment due to the change in the fair values exceeding 10%. Accordingly, the loss of $823,497 was included in the statement of operations as loss on debt extinguishment. As of September 30, 2021 and December 31, 2020, the balance of secured convertible note was $635,389 and $619,381, which included $25,554 and $9,546 accrued interest respectively.

During the three and nine months ended September 30, 2021 and 2020, the Company amortized the debt discount on all the notes of $17,546, $220,578 and $22,313, $41,432, respectively, to other expenses. As of September 30, 2021 and December 31, 2020, unamortized debt discount was $623,095 and $843,673, respectively.

NOTE 12: STOCK INCENTIVE PLAN

On May 29, 2015 the Company adopted its 2015 Stock Incentive Plan. Under the Plan the Company may issue up to 10,000,000 S-8 shares to officers, employees, directors or consultants for services rendered to the Company or its affiliates or to incentivize such parties to continue to render services. S-8 shares are registered immediately upon the filing of the Plan and are unrestricted shares that are free-trading upon issuance. On May 20, 2021 the board consent increased the issue up to 20,000,000 shares. As of September 30, 2021 December 31, 2020 there were 8,739,285 and 9,806,000 shares available for issuance under the Plan.

On May 13, 2020, Alim Seit-Nebi the Chief Technology Officer and Co-Founder of Sapphire Biotechnology was granted the options to purchase 1 million shares of Axim common stock under the plan at the exercise price of $0.126 per share. One third of the options will vest six months from the date of grant, one third of the options will vest one year from the date of grant, and the remaining one third of the options will vest two years from the date of grant.

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On May 13, 2020, Dr. Douglas Lake the Chief Clinical Officer and Co-Founder of Sapphire Biotechnology was granted the options to purchase 2 million shares of Axim common stock under the plan at the exercise price of $0.126 per share. One third of the options will vest six months from the date of grant, one third of the options will vest one year from the date of grant, and the remaining one third of the options will vest two years from the date of grant.

On May 13, 2020, Timothy R, Scott the Director of Axim Biotechnology was granted the options to purchase 0.5 million shares of Axim common stock under the plan at the exercise price of $0.126 per share. One third of the options vested immediately, one third of the options will vest six months from the date of grant, and the remaining one third of the options will vest twelve months from the date of grant.

On May 13, 2020, Robert Cunningham the Director of Axim Biotechnology was granted the options to purchase 0.5 million shares of Axim common stock under the plan at the exercise price of $0.126 per share. One third of the options vested immediately, one third of the options will vest six months from the date of grant, and the remaining one third of the options will vest twelve months from the date of grant.

On May 13, 2020, Maurico Bellora the Director of Axim Biotechnology was granted the options to purchase 0.5 million shares of Axim common stock under the plan at the purchase price of $0.126 per share. One third of the options vested immediately, one third of the options will vest six months from the date of grant, and the remaining one third of the options will vest twelve months from the date of grant.

On September 10, 2020, Noel C. Gillespie the Senior Patent Attorney of Axim Biotechnology was granted the options to purchase 0.5 million shares of Axim common stock under the plan at the purchase price of $0.61 per share. One third of the options vested immediately, one third of the options will vest one year from the date of grant, and the remaining one third of the options will vest two years from the date of grant.

On August 2, 2021, Bijan Pedram the Senior Scientific of Sapphire Biotechnology was granted the options to purchase 0.1 million shares of Axim common stock under the plan at the purchase price of $0.67 per share. 25% of the Option shares will be vested upon the one anniversary of the vesting commencement day and the balance of the option shares will be vested of thirty-six (36) successive equal monthly in the first anniversary of the vesting commencement day.

On August 17, 2021, Jeft Busby the Senior Vice president of Sales of Axim Biotechnology was granted the options to purchase 1 million of shares of Axim common stock under the plan at the purchase price of $0.60 per share. 25% of the Option shares will be vested upon the one anniversary of the vesting commencement day, 25% of the Option shares will be vested upon the two anniversaries of the vesting commencement day, 25% of the Option shares will be vested upon the three anniversary of the vesting commencement day and 25% of the Option shares will be vested upon the four anniversaries of the vesting commencement day.

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On September 1, 2021, Laura M. Periman Medical advisory board member of Axim Biotechnology was granted the options to purchase 0.1 million of shares of Axim common stock under the plan at the purchase price of $0.64 per share. 50% of the Option shares will be vested upon the one anniversary of the vesting commencement day and 50% of the Option shares will be vested upon the two anniversaries of the vesting commencement day.

On September 4, 2021, Kelly K. Nichols Medical advisory Board member of Axim Biotechnology was granted the options to purchase 0.1 million of shares of Axim common stock under the plan at the purchase price of $0.62 per share. 50% of the Option shares will be vested upon the one anniversary of the vesting commencement day and 50% of the Option shares will be vested upon the two anniversaries of the vesting commencement day.

On September 8, 2021, Joseph Tauber the Ophthalmic Chief Medical Officer (CMO) of Axim Biotechnology was granted the options to purchase 1 million of shares of Axim common stock under the plan at the purchase price of $0.622 per share. 25% of the Option shares will be vested upon the one anniversary of the vesting commencement day, 25% of the Option shares will be vested upon the two anniversaries of the vesting commencement day, 25% of the Option shares will be vested upon the three anniversary of the vesting commencement day and 25% of the Option shares will be vested upon the four anniversaries of the vesting commencement day.

For the three and nine months ended September 30, 2021 and 2020 the Company recorded compensation expense of $761,810, $953,076 and $414,839, $235,000, respectively.

NOTE 13: STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company has authorized 5,000,000 shares of preferred stock, with a par value of $0.0001 per share. Of the 5,000,000 authorized preferred shares, 4,000,000 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 September 30, 2021, and December 31, 2020 there are -0- and -0- 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 September 30, 2021.

Series C Convertible Preferred Stock

On August 17, 2016 the Company designated up to 500,000 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.

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On August 18, 2016 the Company issued all 500,000 shares of its newly designated Series C Preferred Stock to MJNA Investment Holdings, LLC in exchange for cash of $65,000. As the holders of the Series C Preferred Stock, MJNA Investment Holdings, LLC has designated Dr. Timothy R. Scott, John W. Huemoeller II, Robert Cunningham and Blake Schroeder as their four Series C Directors.

On February 20, 2019, MJNA Investment Holdings LLC (“Seller”) sold its 500,000 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 $500,000 (the “Purchase Price”) pursuant to a Preferred Stock Purchase Agreement (the “Purchase Agreement”). Payment of the Purchase Price was made as follows (i) a $65,000 payment made by check payable to Seller, which Purchaser borrowed from an unrelated third-party and which has no recourse against the Series C Preferred Stock or assets of Purchaser (the “Loan”), and (ii) the issuance by Purchaser to Seller of a promissory note, face value, $435,000, which has no recourse against the Series C Preferred Stock or assets of Purchaser (the “Note”). The Company’s Chief Executive Officer John W. Huemoeller II is the President of Purchaser. Mr. Huemoeller provided a personal guaranty for the Loan and the Note.

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 100 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.

Effective April 2, 2019, Blake N. Schroeder resigned as a member of the Company’s Board of Directors. Mr. Schroeder’s resignation was not because of any disagreements with the Company on matters relating to its operations, policies and practices.

On April 3, 2019 pursuant to the Company’s Amended and Restated Bylaws, the holder of the Company’s Series C Preferred Stock appointed Mauricio Javier Gatto-Bellora to fill the director seat vacated by the resignation of Mr. Schroeder.

On July 21, 2020 pursuant to the Company’s Amended and Restated Bylaws, the holder of the Company’s Series C Preferred Stock appointed Peter O’Rourke to fill one of the vacant positions on board created by the resignations of Dr. George Anastassov, Lekhram Changoer, and Dr. Philip Van Damme.

Common Stock and Common Stock Warrants

Common Stock

The Company has authorized 300,000,000 shares of common stock, with a par value of $0.0001 per share. As of September 30, 2021, and December 31, 2020, the Company had 135,885,104 and 125,327,579 shares of common stock issued and outstanding, respectively.

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2021 Transactions:

Common Stock

On July 29, 2021 the Company issued 122,000 restricted shares of its common stock to third party valued at $50,000 pursuant to the stock purchase agreement. The cash was received in 2021.

During August and September 2021 the Company issued 1,060,715 commons shares and warrants to purchase 1,060,715 shares of common stock at an exercise price of $0.60 for gross cash proceeds of $297,000 pursuant to various Warrant Stock purchase agreements. The cash was received in the third quarter ending 2021. Warrants are exercisable within a 3 year period from issuance.

During July and September 2021 the company issued 1,415,554 restricted shares of its common stock valued at $1,111,900 to third parties for certain services, recorded as consulting fees.

In September 2021 the company issued 262,400 restricted shares of its common stock valued at $129,724 pursuant to S-1 Agreement to third party for cash, recorded as subscription receivable.

Pursuant to its purchase of Advanced Tear Diagnostics, LLC the company has recorded 7,000,000 shares of its common stock to be issued valued at $4,270,000.

Pursuant to a Stock purchase agreement the company has recorded 175,000 of its common shares to be issued valued at $52,500.

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.

In June 2021 the company issued 500,000 restricted shares of its common stock valued at $332,500 pursuant to S-1 Agreement to third party recorded as subscription receivable. Actual proceeds were $228,812. The difference of $103,688 was adjusted to additional paid in capital and was calculated in accordance with the S-1 agreement.

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During April, May and June 2021 the company issued 2,647,464 restricted shares of its common stock valued at $2,117,971 pursuant to conversion of convertible note and accrued interest of $582,707(Note 12) with a loss on extinguishment of debt $1,535,264.

During April, May and June 2021 the Company issued 1,234,113 shares for cash of gross proceed of $402,500 pursuant to various Warrant Stock purchase agreements. The cash was received in the second quarter ending 2021. Out of these 519,828 shares of common stock valued at $152,500 was adjusted with common stock to be issued of prior period. The company also issued warrants to purchase 175,000 shares of common stock at an exercise price of $0.75 and 714,285 shares of common stock at an exercise price of $0.80. Warrants are exercisable within a 3 year period from issuance.

During April, May and June 2021 the company issued 1,114,351 restricted shares of its common stock valued at $792,389 to third parties for certain services, recorded as consulting fees.

During March 2021 the Company issued 1,712,500 shares for cash of gross $434,000 pursuant to various Stock purchase agreements. The cash was received in the first quarter ending 2021. The company also issued warrants to purchase 900,000 shares of common stock at an exercise price of $0.75. Warrants are exercisable within a 3 year period from issuance.

Company paid finders fees of $20,000 in cash during this period for capital raise and will also issue shares equaling $16,000 in market value, which was issued during the three months ended September 30, 2021.

On March 18, 2021 the company issued 488,428 restricted shares of its common stock valued at $291,974 to third parties for certain services, recorded as consulting fees. Out of these 108,965 shares of common stock valued at $66,974 was adjusted with common stock to be issued of prior year.

2020 Transactions:

During the period between January 1, 2020 and December 31, 2020 the Company issued total 17,292,751 shares valued $3,309,130 pursuant to the Company’s Registration Statement on Form S-3. The Company received $3,309,130 in cash.

On January 13, 2020 the Company issued 250,000 restricted shares of its common stock to third party valued at $50,000, which were carried on the books as stock to be issued.

On January 23, 2020 and February 26, 2020 the Company issued 600,000, and 62,839 restricted shares of its common stock to third party valued at $262,500, and $25,000 pursuant to the stock purchase agreement for certain services, recorded as advertising and promotion expense and License, permits & Patents, respectively.

On March 17, 2020 the company acquired 100% of the issued and outstanding shares of Sapphire by means of a share exchange with the Sapphire Stockholders in exchange for 54,000,000 restricted shares of its common stock at valued $7,506,000.

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On April 21, 2020 the Company issued 1,176,470 restricted shares of its common stock to third party valued at $100,000 pursuant to the stock purchase agreement. The cash was received in 2020.

On May 6, 2020, the Company entered into an agreement with Sanammad Foundation, the Sanammad Parties agreed to forfeit and assign back to treasury, for no consideration, a total of 18,570,356 shares of the Company’s common stock, for which the fair value was $2,562,709, however for accounting purpose this transaction recording at par value adjustment to additional paid in capital. This transaction is related to the divesture of the previous operations to Sanammad.

On May 22, 2020 the Company issued 190,810 and 286,215 S-8 shares valued at $60,000 and $90,000 pursuant to the Company’s Registration Statement on Form S-8 for severance fees.

On June 10, 2020 and June 24, 2020 the Company issued 2,173,913 and 625,000 restricted shares of its common stock to third party valued at $500,000 and $100,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 1, 2020 the Company issued 185,185 and 370,370 restricted shares of its common stock to third party valued at $25,000 and $50,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 2, 2020 and July 9, 2020 the Company issued 714,285 and 1,785,714 restricted shares of its common stock to third party valued at $100,000 and $250,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 10, 2020 the Company issued 5,141,377 restricted shares of its common stock in exchange for the conversion of $51,414 of a convertible note payable, which included $6,414 in interest.

On July 10, 2020 the Company issued 142,857 and 357,153 restricted shares of its common stock to third party valued at $20,000 and $50,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 10, 2020 the Company issued 250,000 and 107,143 restricted shares of its common stock to third party valued at $35,000 and $15,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 14, 2020 the Company issued 200,000 restricted shares of its common stock to third party valued at $23,630 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 21, 2020 the Company entered into convertible note purchase agreement with Cross & Company, the Company owed to Cross & Company $609,835 of aggregated payments due to subscription price adjustment and desired to satisfy the amount due in full by issuing to Cross & Company a convertible promissory note (see note 10).

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On July 22, 2020 the Company issued 65,359 and 130,719 restricted shares of its common stock to third party valued at $20,000 and $40,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 22, 2020 the Company issued 163,398 and 326,797 restricted shares of its common stock to third party valued at $50,000 and $100,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 22, 2020 the Company issued 816,993 and 65,359 restricted shares of its common stock to third party valued at $250,000 and $20,000 pursuant to the stock purchase agreement. The cash was received in 2020, respectively.

On July 24, 2020 359,524 shares for the purchase of prepaid marketing expenses valued at $302,000

On August 4, 2020 the Company issued 141,243 restricted shares of its common stock to third party valued at $50,000 pursuant to the stock purchase agreement. The cash was received in 2020.

On August 6, 2020 the Company issued 148,166 and 166,686 S-8 shares valued at $120,000 and $135,000 pursuant to the Company’s Registration Statement on Form S-8 for severance fees.

On August 12, 2020 the Company issued 414,419 restricted shares of its common stock to third party valued at $76,690 pursuant to the stock purchase agreement for certain services, recorded as commission fees.

On December 7, 2020 the Company issued 130,609 S-8 shares of its common stock to third party value at $75,000 pursuant to the Company’s Registration Statement on Form S-8 for severance fees.

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NOTE 14: 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 nine months ended September 30, 2021 and the year ended December 31, 2020 is as follows:

	Options Outstanding			Weighted Average Exercise Price
Outstanding at December 31, 2019		2,000,000		$	0.75
Granted		8,300,000			0.27
Exercised		-			-
Expired or canceled		-			-
Outstanding at December 31, 2020		10,300,000			0.36
Granted		2,960,715			0.60
Exercised		-			-
Expired or canceled		(2,000,000	)		0.75
Outstanding at September 30, 2021		11,260,715		$	0.36

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 September 30, 2021 and December 31, 2020:2,000,000options issued to John Huemoeller were canceled to allow for issuances to other employees.

As of September 30, 2021

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 ($)

0.36

11,260,715

8.5

0.36

8,227,380

0.36

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As of December 31, 2020

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 ($)

0.36

10,300,000

9.8

0.36

7,466,662

0.36

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:

	September 30,		December 31,
	2021		2020
Expected life (years)		10		10
Risk-free interest rate (%)		1.74		0.61
Expected volatility (%)		190		230
Dividend yield (%)		-		-
Weighted average fair value of shares at grant date	$	1.74	$	0.61

For the three months ended September 30, 2021 and 2020 stock-based compensation expense related to vested options was $761,810 and $0, respectively.

For the nine months ended September 30, 2021 and 2020 stock-based compensation expense related to vested options was $953,076 and $779,029, respectively.

Warrants

The following table summarizes warrant activity during the nine months ended September 30, 2021:

	Number of Warrants		Weighted Average Exercise Price
Outstanding at December 31, 2020		-	$	-
Granted		2,850,000		0.71
Forfeited/Cancelled		-		-
Exercised		-		-
Outstanding at September 30, 2021		2,805,000	$	0.71

All outstanding warrants are exercisable at September 30, 2021 and there was no unrecognized stock-based compensation expense related to warrants. During the nine months ended September 30, 2020 there was no warrant activity.

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NOTE 15: DISCONTINUED OPERATIONS

During May 2020 the Company decided to discontinue most of its operating activities pursuant to the Separation Agreement entered into by and among the Company, CanChew License Company (“CanCo”), CanChew Biotechnologies, LLC (“CanChew”), Medical Marijuana, Inc., Dr. George A. Anastassov (“Dr. Anastassov”), Dr. Philip A. Van Damme (“Dr. Van Damme”), Lekhram Changoer (“Mr. Changoer”), Sanammad Foundation, Netherlands and Sanammad Foundation, US (collectively, the “Sanammad Parties”). (see Note 1)

Pursuant to the terms of the Purchase Agreement dated as of May 6, 2020, Sanammad Parties agreed to acquire from the Company substantially all of its assets and its wholly-owned subsidiaries and to assume certain liabilities and its wholly-owned subsidiaries. Sanammad Parties agreed to pay a purchase price of $2,609,100 reflected in amount due Canchew were deemed paid in full. The sale, which was completed on May 6, 2020, did not include the Company’s cash and certain other excluded assets and liabilities.

The assets sold and liabilities transferred in the transaction were the sole revenue generating assets of the Company. The results of operations associated with the assets sold have been reclassified into discontinued operations for periods prior to the completion of the transaction.

The following is a summary of assets and liabilities sold, stock retired and gain recognized, in connection with the sale of assets to Sanammad parties:

Other current assets	$	5,000
Total current assets	$	510,017
Intangible assets, net of amortization	$	47,375
Total asset	$	562,392

Notes payable	$	880,000
Accounts payable and accrued expenses	$	210,640
Due to Canchew	$	1,526,603
Stock retired	$	1,857
Total liabilities and equity	$	2,619,100

The gain on sale of assets was reported during the period was determined as follows:
Loss on sale of assets	$	562,392
Gain on sale of liabilities	$	2,619,100

Net gain from sale of assets and liabilities	$	2,056,708

The resulting gain from the sale will be fully offset by existing net operating loss carryforwards available to the Company.

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For the nine months ended September 30, 2021 and 2020 the Company recognized interest expense of $-0- and $-0-, respectively.

Additionally, the operating results and cash flows related to assets sold on May 06, 2020 are included in discontinued operations in the consolidated statements of operations and consolidated statements of cash flows for the twelve months ended December 31, 2020 and 2019.

As of September 30, 2021 and 2020, the Company has nil asset and liabilities of the discontinued operations in the unaudited condensed consolidated balance sheet in accordance with the provision of ASC 205-20.

Loss from Discontinued Operations

The sale of the majority of the assets and liabilities related to the Sanammad parties represents a strategic shift in the Company’s business. For this reason, the results of operations related to the assets and liabilities held for sale for all periods are classified as discontinued operations.

The following is a summary of the results of operations related to the assets and liabilities held for sale (discontinued operations) for the nine months ended September 30, 2021 and 2020:

	September 30, 2021			September 30, 2020
Net sales	$	-		$	5,097
Total expenses	$	(4,633	)	$	(1,935,278	)
Gain from sale of asset and liability	$	-		$	2,046,708
Other (loss) income	$	-		$	(87,383	)
(Loss) income from discontinued operations	$	(4,633	)	$	29,144

The following is a summary of net cash provided by or used in operating activities, investing activities and financing activities for the assets and liabilities held for sale (discontinued operations) for the nine months ended September 30, 2021 and 2020:

	September 30, 2021			September 30, 2020
Net (loss) income from discontinued operations	$	(4,633	)	$	29,144

Adjustment of non-cash activities		-			(1,551,166	)
Decrease in accounts receivable		-			315,843
Increase in inventory		-			(22,203	)
Increase in accounts payable and accrued expenses		-			393,953
Net cash provided by (used in) operating activities	$	(4,633	)	$	(834,429	)

Net cash provided by (used in) investing activities	$	-		$	-
Net cash provided by (used in) financing activities	$	-		$	(65,000	)

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NOTE 16: COMMITMENT AND CONTINGENCIES

On January 2, 2019 the Company entered into the term of Executive’s employment agreement, at a base salary of $10,000 per month with John W. Huemoeller II to serve as its Chief Executive Officer. The Company and Executive acknowledge and agree that Executive’s employment hereunder shall at all times be “at will,” which means that either Executive may resign at any time for any reason or for no reason, and that the Company may terminate Executive’s employment at any time for any reason or for no reason, in either case, subject to the applicable provisions of this Agreement. In further consideration for Executive’s services and subject to the approval of the Board, Executive will be granted an option to purchase 2,000,000 shares of the Company’s common stock (the “Option Shares”). The option will be subject to the terms and conditions applicable to stock options granted under the Company’s 2015 Stock Incentive Plan, as amended from time to time (the “Plan”), and as described in the Plan and the stock option agreement, which Executive will be required to sign. 50% of the Option Shares shall vest on the date of grant and the remaining 50% of the Option Shares shall vest on the 12- month anniversary of the grant date, subject to Executive’s continued employment by the Company. The exercise price per share will be equal to the fair market value per share on the date of grant, as determined by the last closing price of the Company’s common stock the day prior to grant. Beginning in October 2019, the board decided to increase CEO base salary to $35,000 per month.

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 1^st quarter 2018. Beginning in October 2019, the board ratified to increase CFO base salary to $3,000per month.

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 totaling $150,468 paid prior to acquisition. For the nine months ended September 30, 2021, the Company recorded research and development expenses of $216,282.

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On August 5, 2020 Sapphire was awarded a $395,880 phase I Small Business Innovation Research (SBIR) grant by the National Cancer Institute (NCI). The grant will support continued development of novel small molecules that inhibit the enzymatic activity of Quiescin Sulfhydryl Oxidase I (QSOX1) based on a lead compound. QSOX1 is a tumor-derived enzyme that is important for cancer growth, invasion and metastasis. Sapphire is conducting this research with technology it has exclusively licensed from Skysong Innovations, LLC, the intellectual property management company for Arizona State University. Sapphire will subcontract tumor biology work for evaluating analog inhibitors for QSOX1 to Dr. Doug Lake’s laboratory at Arizona State University and Mayo Clinic Arizona. Grant income received for the nine months ended September 30, 2021 and 2020 was $279,981 and $25,899; respectively.

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.

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 1,908 square feet with monthly base rent in the 1st year $4,713, 2nd year $4,854 and 3rd year $5,000 at implicit interest rate of 6%. Upon commencement of the Lease on April 25, 2020, the previous lease will expire.

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 September 30, 2021.

Right-of-use assets	$	90,630

Lease liability obligations, current	$	58,540
Lease liability obligations, noncurrent		32,090
Total lease liability obligations	$	90,630

Weighted-average remaining lease term	1.58 years

Weighted-average discount rate		6	%

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The following table summarizes the lease expense for the nine months ended September 30, 2021 and 2020:

	September 30,			September 30,
	2021			2020
Operating lease expense	$	43,122	*	$	18,852
Short-term lease expense		11,545			15,313
Total lease expense	$	54,667		$	34,165

*We recorded $54,667 of operating lease expense this includes $11,545 of maintenance charges.

Approximate future minimum lease payments for our right of use assets over the remaining lease periods as of September 30, 2021, are as follows:

Remainder of 2021	$	14,562
2022		59,416
2023		20,000
Total minimum payments		93,978
Less: amount representing interest		(3,348	)
Total	$	90,630

Litigation

As of September 30, 2021, and this report issuing date, the Company is not a party to any pending material legal proceeding. To the knowledge of management, no federal, state or local governmental agency is presently contemplating any proceeding against the Company. To the knowledge of management, no director, executive officer or affiliate of the Company, any owner of record or beneficially of more than five percent of the Company’s Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding.

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NOTE 17: SUBSEQUENT EVENTS

On October 13, 2021 the company issued 118,000 restricted shares of its common stock valued at $70,800 to third party for certain services, recorded as advertising and promotion expense and License, permits & Patents, respectively.

On October 19, 2021, the Company issued a total of 175,000 Common Stock Purchase Warrants (exercise price $0.30) to third party valued at $152,500. Pursuant to an extension approved by the Board of Directors on August 20, 2021, all Warrants shall be valid for 36 months from effective date included cashless exercise. The cash was received in 2021 for the purchase of the warrants.

In October 2021, The Company concluded a Security Purchase Agreement with GS Capital Partners, pursuant to s to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement a 6% convertible note of the Company, in the form attached hereto as Exhibit A in the aggregate principal amount of $1,110,000.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note. The Note shall contain an original issue discount of $100,000.00 such that the purchase price of the Note shall be $1,010,000.

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.

Overview

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

Acquisition of Sapphire Biotech, Inc.

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 became a wholly owned subsidiary of AXIM.

Current Operations Following the Acquisition of Sapphire Biotech, Inc.

Oncology

We continue to advance our mission of improving global cancer care through the development of novel therapeutics for controlling metastatic cancer spread, and diagnostics for early cancer detection, response to treatment, and for monitoring post-treatment recurrence. We have made significant progress with the development of additional analogs of SBI-183 licensed from Mayo Clinic and Arizona State University, funded by the Small Business Innovation Grant awarded Sapphire on August 11, 2020 in the amount of $395,880.

We have been investigating the enzyme Quiescin Sulfhydryl Oxidase 1 (QSOX1), a master regulator of extracellular matrix remodeling, and its over-expression by tumor cells. Over-expression of QSOX1 has been unambiguously linked to promoting tumor invasion and metastasis. One of the Company’s co-founders, Dr. Douglas Lake, has discovered that a small molecule SBI-183 inhibited the enzymatic activity of QSOX1 and as a result suppressed tumor cell invasion in vitro and metastasis of breast tumor cells in vivo. Through its medicinal chemistry efforts the Company synthesized multiple structural analogs of SBI-183 and unveiled SPX-1009 lead compound that demonstrated 40-fold improvement in suppressing invasion and metastasis in several cancer models.

The Company believes that its therapeutic drug development strategy targeting the metastatic spread is a unique, novel and pioneering approach to saving lives. The near-term objective of the Company is to demonstrate the ability of its lead anti-QSOX1 drug candidates to suppress tumor growth and metastasis and to advance them into pre-clinical studies. Subsequently, the Company plans to explore strategic collaborations, including partnerships, joint ventures and out-licensing agreements, in order to pursue development of the chosen drug candidate.

The Company believes that QSOX1 has a significant potential to be developed into an important biomarker for liquid biopsy cancer test. The Company anticipates that ongoing diagnostic product development in 2021 may result in a commercial prototype in the future of a universal companion diagnostic to measure the efficacy of any ongoing cancer treatments based on measuring QSOX1 levels. In order to focus on the Company’s new eye care business and commercialization of its diagnostic test for dry eye disease, the Company aims to explore potential collaborations to co-develop a blood test that makes possible the early detection of cancer.

COVID-19

With the onset of the COVID-19 pandemic, we began creating COVID-19 rapid diagnostic tools, including multiple first-in-class COVID-19 neutralizing antibody tests and other innovations. AXIM’s rapid diagnostic test for detecting neutralizing antibodies is the first of its kind. The test has the ability to deliver results in under 10 minutes and can detect the level of neutralizing antibodies an individual has. We initially designed this test to be used at point-of-care facilities to measure levels of neutralizing antibodies in convalescent plasma so that plasma with the highest levels of neutralizing antibodies can be identified and administered to patients fighting COVID-19. However, we made the strategic decision to develop the capability to test whole blood at the point of care. The pivot was the result of substantial market research and feedback from potential customers. With the advent of several vaccines to immunize against COVID-19, it is anticipated that end users may find AXIM’s test to measure levels of neutralizing antibodies of substantial value.

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

We completed our technology transfer to our manufacturing partner, Empowered Diagnostics LLC and continue to provide clinical and regulatory support relating to the pending Emergency Use Authorization for the neutralizing antibody test. Empowered Diagnostics has built out their production facility to be able to manufacture millions of our tests per month. On August 30, 2021, our manufacturing partner filed an amended EUA with the FDA for our rapid COVID-19 neutralizing antibody test in whole blood at point of care locations. After several discussions with the FDA, the company amended the EUA application for ImmunoPass for the test results to be interpreted qualitatively. The package included updated clinical trials, BSL3 lab live virus comparisons, stability and control studies and a robustness study to further validate the test’s accuracy when conducted under varying conditions. The FDA has initially reviewed the EUA and had several inquiries which were responded to and filed on October 8, 2021. The Company is looking forward to the FDA completing the review of the EUA. If the EUA is approved, the sales and manufacturing activities can commence immediately which we anticipate will result in significant revenue shortly thereafter.

With respect to our other COVID-19 related tests, we have made the strategic decision to suspend development of our high throughput rapid neutralizing antibody test, NeuCovix-HT™ and our ELISA neutralizing antibody test. Our focus has shifted to development of a second generation neutralizing antibody test as we believe there is greater potential in the point of care market versus lab testing. On October 12, 2021, we announced the development of the second generation version of the Company’s Rapid Neutralizing Antibody Test for COVID-19. The first rapid test developed by the Company, currently under FDA review, measures levels of neutralizing antibodies which provide protection from COVID-19 infection if blood levels are high enough. The second generation version of the original test differentiates between antibodies that simply bind to the virus but do not neutralize it versus antibodies that bind and neutralize the virus. This is important because COVID-19 vaccines do not induce high levels of neutralizing antibodies in all recipients. AXIM’s second generation test will provide users with a test that shows if they responded to their COVID-19 vaccine and a semi-quantitative analysis of their neutralizing antibody levels in a single test. We have filed for patent protection of the invention.

Axim Eye Care

Axim Biotechnologies, Inc. has acquired the 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. The barrier for entrance into the dry eye space is difficult and requires extensive clinical studies, large capital expense and FDA 510k approval. This process alone can take several years and substantial investment, with no certainty that the product will receive FDA 510k approval. With the acquisition of the two 510k’s, Axim automatically has FDA clearance to commercialize the test for Lactoferrin (aqueous deficiency biomarker) and the test for Immunoglobulin (non-specific allergy biomarker). The Company’s objective is to establish point of care testing for dry eye disease (DED) as the new modality and 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.

Axim believes that with the acquisition of these FDA 510k diagnostic products along with proven management practices and capital, the business will grow at a rapid pace. 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. By performing these two tests, an eye doctor may now precisely know 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.

Milestones 2020 to Date

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

On February 6, 2020, Sapphire Biotech signs the Sponsored Research Agreement (SRA) with Arizona State University to conduct in vitro testing and in vivo pre-clinical animal studies re cancer inhibitory agents that will prevent metastases.

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

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

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

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

On August 5, 2020, the Company announced the development, patent filing and Emergency Use Authorization (EUA) submission a high throughput (HT) patent-pending diagnostic test that measures levels of functional antibodies in plasma or serum that neutralize SARS-CoV-2, the virus that causes COVID-19. Unlike current serology tests for COVID-19 that qualitatively detect antibodies to the virus, the HT test quantitatively measures functional antibodies that block binding of the virus to host cell receptors. For strategic reasons, the Company has decided to focus on the point of care market and has withdrawn the EUA application for the HT diagnostic test.

On August 11, 2020, Sapphire was awarded a $395,880 phase I Small Business Innovation Research (SBIR) grant by the National Cancer Institute (NCI). The grant will support the continued development of novel small molecules that inhibit the enzymatic activity of Quiescin Sulfhydryl Oxidase I (“QSOX1”) based on the lead compound SBI-183 licensed from Mayo Clinic and Arizona State University. QSOX1 is a tumor-derived enzyme that is important for cancer growth, invasion and metastasis. The term of the grant extends into the 1st quarter, 2022.

On August 24, 2020, Axim signed an exclusive limited licensing, manufacturing and distribution agreement (“Agreement”)with Empowered Diagnostics LLC (“Empowered Diagnostics”) for high volume production of AXIM’s rapid diagnostic test measuring levels of functional neutralizing antibodies that are believed to prevent SARS-CoV-2 from entering the host cells. On November 4, 2020, the parties entered into the Technology Transfer and Supply Agreement related to the Agreement. The tech transfer has now been completed, and the Company’s supply of biologics to Empowered is continuing. If the neutralizing antibody test is approved by the FDA for distribution, the Company anticipates receiving significant revenues from the supply of the biologics as well as royalties agreed to under the Agreement.

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

On September 22, 2020, Axim announced that the United States Patent and Trademark Office (USPTO) has issued the Company a new Notice of Allowance for a patent (Application No. 15/748,784) on anti-neoplastic compounds and methods targeting Quiescin Sulfhydryl Oxidase 1 (QSOX1), including the compound SBI-183, an enzyme important for tumor cell growth, invasion and metastasis. Mayo Clinic and Arizona State University have exclusively licensed the rights under this patent to the Company.

On September 29, 2020, Axim announced that it has filed a second provisional patent for a first-in-class face mask that captures and deactivates SARS-CoV-2, the coronavirus responsible for the ongoing COVID-19 pandemic. The earlier provisional filing for the face mask was on August 14, 2020. On August 13, 2021, the Company filed a PCT and U.S. utility applications converting the two provisional applications.

On September 30, 2020, Axim announced that it has filed a provisional patent for a recombinant virus binding protein (VBP) for SARS-CoV-2, the coronavirus responsible for the current COVID-19 pandemic, and is now manufacturing the VBP. The Company no longer needs to rely on outside protein supply to continue our research and can greatly cut down on our manufacturing costs. The Company chose to maintain the confidentiality of the VBP as a trade secret and, thus, decided not to disclose the formula which would have been required for the conversion of the provisional to a utility patent application.

On December 3, 2020, we announced the development and patent filing for an enzyme-linked immunosorbent assay (“ELISA”)-based diagnostic test for the detection of SARS‐CoV-2 neutralizing antibodies. The Company is not pursuing development of the ELISA test, and, instead, will focus resources on the point of care neutralizing antibody test.

On February 3, 2021, we announced the initiation of clinical trials for ImmunoPass, our rapid point-of-care test that semi-quantitatively measures levels of neutralizing antibodies to COVID-19. The clinical trials were completed and the results submitted to the FDA in support of the amended EUA for the neutralizing antibody test that is pending review and approval.

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

On March 24, 2021, the Company, through Empowered Diagnostics, filed an EAU application with the FDA for measuring COVID-19 neutralizing antibodies in whole blood for a Point-of-Care rapid diagnostic test. The application is being review by the FDA, and we have received and responded to their inquiries.

On May 3, 2021, we announced the development of a new ELISA test that measures neutralizing antibodies against six common variants of SARS-CoV-2 virus. The new test may provide vaccine companies with valuable information for how well their vaccines protect against SARS-CoV-2 variants. A patent application was filed for the new diagnostic test.

On May 5, 2021, our manufacturing partner, Empowered Diagnostics filed for approval for our rapid COVID-19 neutralizing antibody test in whole blood at point of care locations in Canada and the EU.

The applications are pending approval in Canada and the EU; CE mark has been filed for Canada.

On May 6, 2021, the Company completed pre-clinical drug studies for SPX-1009, demonstrating the suppression of malignant metastatic melanoma cells. The clinical work was completed by Dr. Douglas Lake at Arizona State University. The Company intends to initiate animal studies to demonstrate suppression of tumor growth and metastasis in a murine model of melanoma mid-2022.

On July 29, 2021, we entered into an Asset Purchase Agreement with Advanced Tear Diagnostics, LLC (ATD) to acquire certain intellectual property relating to electrochemical impedance/capacitance technology (EIS), including three pending patent applications co-owned with Arizona State University and two solely owned by ATD for the purchase price of $250,000. The Company intends to conduct research and development with the aim of exploring EIS as a new platform for its diagnostic tests, initially for ophthalmic applications. EIS is a powerful technique that utilizes a small amplitude, alternating current (AC) signal to probe the impedance characteristics of a cell. EIS offers the potential to develop rapid point of care tests with very high sensitivity capable of molecular measurement and measuring numerous multi-markers on one sensor. The potential exists to develop sensors for virtually any sample type, and any analyte to which there is an antibody available.

On August 3, 2021, the Company and ATD entered into a Binding Term Sheet with the intent to sign the definitive agreement to acquire the technology for testing of Dry Eye Disease, including two 510k premarket clearances from the FDA to commercialize two ophthalmic diagnostic point of care lab tests to measure levels of Lactoferrin, a biomarker for DED, and Immunoglobulin, a biomarker for allergic reaction. The purchase price was seven million (7,000,000) shares of Axim common stock.

On August 26, 2021, we entered into an Asset Purchase Agreement, the definitive agreement to finalize the acquisition of the Dry Eye Disease technology pursuant to the terms of the Binding Term Sheet signed August 2, 2021.

On August 30, 2021, our manufacturing partner filed an amended EUA with the FDA for our rapid COVID-19 neutralizing antibody test in whole blood at point of care locations. After several discussions with the FDA, the company amended the EUA application for ImmunoPass for the test results to be interpreted qualitatively. The package included updated clinical trials, BSL3 lab live virus comparisons, stability and control studies and a robustness study to further validate the test’s accuracy when conducted under varying conditions. The FDA has made inquiries which have been responded to and were filed on October 8, 2021.

On September 15, 2021, we announced the appointment of Jeffrey A. Busby to the position of Senior Vice President-Business Development. Mr. Busby brings 30 years experience developing and managing national and international ophthalmic medical device sales and support. He will be responsible for the launch and commercialization of the Company’s recently acquired diagnostic technologies for dry eye disease.

On September 21, 2021, we announced the appointment of Joseph Tauber, MD, as Chief Medical Officer and Chairman of the Company’s Medical Advisory Board. Dr. Tauber is an internationally recognized authority in the field of ocular surface diseases including dry eye and meibomitis management. Dr. Tauber has over 30 years experience as a clinical trials researcher and has served on numerous scientific advisory boards.

On October 5, 2021, we appointed Dr. Laura Periman to the Company’s Medical Advisory Board. Dr. Periman has extensive clinical practice experience specializing in ocular surface disease and dry eye disease.

On October, 11, 2021, we announced the appointment of Dr. Henry D. Perry to the Company’s Medical Advisory Board joining Chairman Dr. Tauber and Dr. Periman. Dr. Perry is recognized as one of the country’s leading cornea and refractive surgeons.

On October 12, 2021, we announced the our second generation test that measures neutralizing antibodies against COVID-19 . The first rapid test developed by the Company, currently under FDA review, measures levels of neutralizing antibodies which provide protection from COVID-19 infection if blood levels are high enough. The second generation version of the original test differentiates between antibodies that simply bind to the virus but do not neutralize it versus antibodies that bind and neutralize the virus. This is important because COVID-19 vaccines do not induce high levels of neutralizing antibodies in all recipients. AXIM’s second generation test provides users with a test that shows if they responded to their COVID-19 vaccine and a semi-quantitative analysis of their neutralizing antibody levels in a single test. We have also filed for patent protection of the invention.

On October, 20, 2021, we announced the appointment of Kelly K. Nichols, O.D., M.P.H., Ph.D., to the Company’s Medical Advisory Board joining Chairman Dr. Tauber, Dr. Periman and Dr. Perry. Dr. Nichols is a founding member of the Ocular Surface Society of Optometry, and currently serves as Dean of the School of Optometry at The University of Alabama at Birmingham. She is an acknowledged expert on DED and Ocular Surface Disease and has been extensively published.

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) launch and commercialization of two ophthalmic “point of care” diagnostic lab tests.

Intellectual Property

I. QSOX1-RELATED INVENTIONS.

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

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

A. Anti-Neoplastic Compounds and Methods Targeting QSOX1

1. US Provisional Patent Application No. 62/218.732 filed on September 15, 2015

PCT Provisional Patent Application W02017048712A1

US Nonprovisional Application No. 15/748,784 filed on January 30, 2018

Notice of Patent Allowance dated September 17, 2020

Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1

Assignee: Mayo Clinic/Arizona State University

Exclusive Licensee: Axim Biotechnologies, Inc.

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

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

Title: Chemical Compounds that Inhibit QSOX1 for the Treatment of Cancer

Assignees: Arizona State University/Axim Biotechnologies, Inc.

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

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

Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1

Assignees: Arizona State University/Axim Biotechnologies, Inc.

Exclusive Licensee: Axim Biotechnologies, Inc.

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

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

Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1

Assignees: Arizona State University/Sapphire Biotech, Inc.

Exclusive Licensee: Axim Biotechnologies, Inc.

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

5. US Provisional Patent Application No. 62959752 filed January 10, 2020

Title: Anti-Neoplastic Compounds and Methods Targeting QSOX1 and Inhibiting Cellular Responses to MET Receptor.

Assignee: Axim Biotechnologies, Inc.

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

B. Unique Biomarker QSOX1-L Identified and Rapid Diagnostic for Various Cancers

1. US Provisional Patent Application No. 62/829,556 filed April 4, 2019;

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

International Patent Application No. PCT/US2020/026936 filed April 6, 2020

Title: Systems and Methods for Rapid Diagnostic for Various Cancers

Assignee: Axim Biotechnologies, Inc.

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

II. SARS-CoV-2-RELATED INVENTIONS

A. Rapid Diagnostic Test to Measure Levels of Neutralizing Antibodies to SARS-CoV2

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

Title: Convalescent Plasma Testing and Treatment

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

Exclusive Licensee: Axim Biotechnologies, Inc. (ASU’s Interest)

Exclusive Licensee: Empowered Diagnostics, Inc. (Axim’s Interest)

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

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

Title: Rapid LFA Diagnostic Test to Measure Levels of Neutralizing Antibodies to SARS- CoV-2 from Whole Blood

Assignee: Axim Biotechnologies, Inc.

Exclusive Licensee: Empowered Diagnostics, Inc.

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

3. US Provisional Patent Application No. 63/252,908

Filing Date: October 6, 2021

Title: Development of the Engender SAR-Cov2 Recombinant Protein Variants

Assignee: Axim Biotechnologies, Inc.

The invention relates to differentiates between antibodies that bind to the virus but do not neutralize and those that do bind and neutralize the virus. COVID-19 vaccines do not induce high levels of neutralizing antibodies in all recipients. AXIM’s second generation test provides users with a test that shows if they responded to their COVID-19 vaccine and a semi-quantitative analysis of their neutralizing antibody levels in a single test.

4. Status Update: All provisionals referenced in 1. and 2. herein relating to the LFA Diagnostic Test were the subject of a conversion into an International Patent Application No. PCT/US2021/032106.

B. AlphaLisa Assay for High Throughput Detection of Neutralizing Antibodies to SARS-CoV2

1.US Provisional Application No. 63/060,635 filed August 3, 2020; US Provisional Application No. 63/061,112 filed August 4, 2020

Title: NeuCovix-HT AlphaLisa assay for high throughput detection of Neutralizing Antibodies to SARS-CoV-2.

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

Exclusive Licensee: Axim Biotechnologies, Inc. (ASU’s Interest)

2. Status Update: All provisionals referenced in 1. herein relating to the AlphaLisa Assay have been abandoned due to the Company’s decision that commercialization of this technology is not viable.

C. Direct Competitive ELISA for the Detection of SARS-Cov2 Neutralizing Antibodies

1. US Provisional Application No. 63/152,807 filed February 23, 2021

Title: Direct Competitive ELISA for the Detection of SARS-CoV2 Neutralizing Antibodies

Assignee: Axim Biotechnologies, Inc.

2. Status Update: The provisional referenced in 1. herein relating to the ELISA technology has been abandoned due to the Company’s decision that commercialization of this technology is not viable.

D. ACE2 Variants

1. US Provisional Application No. 63/081,811 filed September 22, 2020

Title: Super-ACE2 Variants

Assignee: Axim Biotechnologies, Inc.

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

1)Development of competitive assays for neutralizing antibodies that disrupt RBD- ACE2 interaction.

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

3)Cardio-vascular, blood-pressure and related disorders therapeutic and diagnostic.

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

E. Facemask Having Enhanced Infectious Agent Capturing and Related Methods

1. US Provisional Application No. 63/066,104 filed August 14, 2020;

US Provisional Application No. 63/084,407 filed September 28, 2020

Title: Facemask Having Enhanced Infectious Agent Capturing & Related Methods

Assignee: Axim Biotechnologies, Inc.

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

2. US Nonprovisional Patent Application No. 17/402,355, filed August 13, 2021

Title: Face Masks and Other Protective Devices Having Enhanced Virus

Entrapment Efficiency and Related Methods

The nonprovisional patent application is a conversion of the two provisional applications referenced herein in 1.

III. TECHNOLOGY PLATFORM-RELATED INVENTIONS

A. Electrical Capacitance/Impedance Spectroscopy

1.Title: Imaginary Impedance Approach and Signal Decoupling Algorithm for Multi-Marker Detection Using Electrochemical Impedance Spectroscopy”.

U.S. Patent Application Serial No.: 16/495,682 Filed: March 20, 2018

Exclusive License of Advanced Tear Diagnostics, LLC’s (ATD) Interest: Axim Biotechnologies

Co-owned by Arizona State University.

2. Title: Electrochemical Osmolarity or Osmolality Sensor for Clinical Assessment”.

U.S. Patent Application Serial No.: 62/455,913. Filed: February 7, 2017 PCT: W02018 148236

Exclusive Licensee of ATD’s Interest: Axim Biotechnologies, Inc.

Co-owned by Arizona State University

3. Title: Point of Care Apparatus and Methods for Analyte Detection Using Electrochemical Impedance Spectroscopy”.

U.S. Patent Application: US2021/011778171. PCT/US 2018 03760. Filed: May 4, 2018

Exclusive Licensee of ATD’s Interest: Axim Biotechnologies, Inc.

Co-owned by Arizona State University

4. Title: Point of Care Apparatus and Methods for Detecting Cancer Using Electrochemical Impedance or Capacitance Spectroscopy.”

U.S. Patent Application Serial No.: 16/119,989 Filed: August 3, 2018

Exclusive Licensee: Axim Biotechnologies, Inc.

5. Title: Point of Care Apparatus and Methods for Detecting Cancer Using Electrochemical Impedance or Capacitance Spectroscopy.”

U.S. Patent Application Continuation-in-Part. Serial NO.: 16/121,474 Filed: September 4, 2018.

Exclusive Licensee: Axim Biotechnologies, Inc.

Trade Secrets

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

Market, Customers and Distribution Methods

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

Regarding the 2020 exclusive licensing, manufacturing, and distribution agreement with Empowered Diagnostics LLC to manufacture and sell our rapid point-of-care diagnostic test, the technology transfer has been completed. Empowered Diagnostics have built out their production facility to be able to manufacture millions of our neutralizing antibody tests for COVID-19 per month. The FDA is presently reviewing Empowered’s Emergency Use Authorization relating the test.

With the addition of our new Axim Eye business, the Company will focus 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, approximately 20% to 30% would present with symptoms where ATD’s Lactoferrin & IgE tests would be indicated. It is estimated that total US market for AXIM EYE systems could approach 50,000 systems. (USA Only)

AXIM EYE has completed development of its immunoassay system which includes an automated colorimetric photometer reader and two (2) FDA market cleared point-of-care (POC) quantitative diagnostic ophthalmic lab tests for Ocular Lactoferrin and Ocular Immunoglobulin. Both of these products are covered by CPT codes and CMS reimbursement eligible. Studies indicate that in 2021, there were 16-49 million Americans diagnosed with Dry Eye Disease (DED), representing 32 - 98 million potential Axim Eye 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 (45 million people wear contact lens in the US), LASIK surgery (approximately 7,180,000, Cataract surgery with lens exchange (approximately 3.8 million).

Competition

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

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

In the eye care sector, the tools currently available include tests for osmolarity (salt content in tears) and MMP-9 (eye inflammation). However, both are non-differential meaning they are screening tests that require follow-up testing because positive results could point to conditions other than Dry Eye Disease. Axim’s eye tests are specifically differential for a diagnosis of Dry Eye Disease and also provide a quantitative measure for the doctor to assess the severity of the condition.

Source and Availability of Raw Materials

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

Government Regulation

The Emergency Use Authorization (EUA) submitted on July 15, 2020 for the Company’s rapid diagnostic test kit for the independent detection of neutralizing antibodies in sera of patients who had been exposed to the SARS-CoV-2 virus using plasma and serum samples has been withdrawn. Axim decided to withdraw this EUA in favor of submitting a new EUA filed by our partner, Empowered Diagnostics, for the same test but using whole blood to be administered at the point of care. We believe that the market reception to the point of care test will be greater using whole blood v. plasma or serum. We have already received initial inquiries from the FDA that we responded to and filed on October 8, 2021.

Similarly, Axim decided to withdraw the August 5, 2020 EUA for NeuCovix-HT™, the high throughput (HT) diagnostic test that measures levels of functional antibodies in plasma or serum that neutralize SARS-CoV-2, the virus that causes COVID-19. We have also decided not to pursue commercialization of our ELISA test. We believe our focus on the point of care market versus lab testing with NeuCovix and the ELISA test will be more advantageous for Axim.

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

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

Employees

As of September 15, 2021, we employed an internationally recognized authority in the field of ocular surface diseases included dry eye disease and meibomitis management, Dr. Joseph Tauber, as our Chief Medical Officer and Chairman of our Medical Advisory Board. Also, as of September 15, 2021, we employed Jeffrey Busby, a veteran of the eye care industry, as Senior Vice President of Business Development to launch and commercialize Axim’s diagnostic medical devices to diagnose Dry Eye Disease and Allergic Reaction. As of August 22, 2021, we have 6 full-time employees and 1 part-time employee. We allow and utilize the services of independent contractors. We will be considering the conversion of some of our part-time employees to full-time positions. We are currently in discussions with qualified individuals to engage them for positions in sales and marketing, research and development, and operations. Management believes the Company has good relationships with its employees.

Costs and effects of compliance with environmental laws

The expense of complying with environmental regulations is of minimal consequence.

Results of Operations

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

Comparison of the nine months and three months ended September 30, 2021 to September 30, 2020.

For the nine months periods ended September 30, 2021 and 2020, our revenues from continuing operations totaled $55,651 and $-0-, respectively, our revenues from discontinued operations totaled $-0- and $7,990, respectively.

	Nine months		Nine months
	Period Ended		Period Ended		$ Change			% Change
	30-Sep-21		30-Sep-20

Research and development	$	216,282	$	235,431	$	(19,149	)		-8.13	%
Depreciation		20,119		10,497		9,622			91.66	%
Advertising and promotions		824,425		432,810		391,615			90.48	%
Travel and entertainment expenses		45,755		14,237		31,518			221.38	%
Office/Other expenses		105,578		268,253		(162,675	)		-60.64	%
Impairment and amortization		1,333,954		3,158		1,330,796			42140.47	%
Licenses and permits		30,098		59,619		(29,521	)		-49.52	%
Legal and other fees		1,280,207		353,986		926,221			261.65	%
Offices salary and wages		817,657		315,000		502,657			159.57	%
Consulting fees		496,735		320,937		175,798			54.78	%
Compensation costs		953,076		414,839		538,237			129.75	%
Audit fees		119,671		99,203		20,468			20.63	%
Filing fees		8,489		9,489		(1,000	)		-10.54	%
Insurance expense		71,099		90,889		(19,790	)		-21.77	%
Directors fees		60,000		60,000		-			0.00	%
Total Operating expenses from continuing operations	$	6,383,145	$	2,688,348	$	3,694,797			137.44	%

Our operating expenses from continuing operations for the nine months periods ended September 30, 2021 and 2020, were $6,383,145 and $2,688,348, respectively. Our operating expenses and (income) from discontinued operations for the nine months periods ended September 30, 2021 and 2020, were $4,633 and $(29,144), respectively. The Company included in above table is the largest changes are Impairment and Amortization of Other Assets of $1,333,954 this includes the three months of amortization of intangible asset during the nine months ended September 30, 2021 and 2020, respectively.

For the three months periods ended September 30, 2021 and 2020, our revenues from continuing operations totaled $8,127 and $-0-, respectively, our revenues from discontinued operations totaled $-0- and $-0-, respectively.

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

Research and development	$	67,263	$	109,139	$	(41,876	)		-38.37	%
Depreciation		6,935		5,372		1,563			29.10	%
Advertising and promotions		151,142		70,324		80,818			114.92	%
Travel and entertainment expenses		16,722		195		16,527			8475.52	%
Office/Other expenses		34,634		97,419		(62,785	)		-64.45	%
Impairment and amortization		692,858		-		692,858			100.00	%
Licenses and permits		10,625		5,348		5,277			98.68	%
Legal and other fees		824,823		117,392		707,431			602.62	%
Offices salary and wages		593,059		105,000		488,059			464.82	%
Consulting fees		55,870		130,384		(74,514	)		-57.15	%
Compensation costs		761,810		587,392		174,418			100.00	%
Audit fees		23,500		17,500		6,000			34.29	%
Filing fees		2,870		4,590		(1,720	)		-37.47	%
Insurance expense		24,472		28,723		(4,251	)		-14.80	%
Directors fees		20,000		20,000		-			0.00	%
Operating expenses from continuing operations	$	3,286,583	$	1,298,778	$	1,987,805			153.05	%

Other (Income) expenses:

Our Interest receivable for the three and nine months ended September 30, 2021 and 2020, was $256, $769 and $206, $419, respectively.

Our Income form Grants from Government for the three and nine months ended September 30, 2021 and 2020, was $59,986, $279,981 and $25,899, $25,899 respectively, the increase in this account is because the studies of management of the Company.

The Company recorded a change in FMV of trading securities as unrealized gain (loss) and realized gain (loss) of $-0-, $-0- and $-0-, $104,705 for from discontinued operations the three and nine months ended September 30, 2021 and 2020, respectively.

Our interest expense of continuing operations for the three and nine months ended September 30, 2021 and 2020, was $56,007, $175,915 and $73,268, $179,344, respectively. The changes for the three and nine months period ended September 30, 2021, were primarily due to accretion of the convertible notes of TL-66.

Going concern

The Company’s unaudited condensed consolidated financial statements have been presented assuming that the Company will continue as a going concern. As shown in the financial statements, the Company has deficit in working capital of $1,094,813 and has an accumulated deficit of $49,833,059, has cash used in continuing operating activities of $1,689,200 and presently does not have the resources to accomplish its objectives during the next twelve months. These conditions raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.

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

Net Cash Provided by/Used in Operating Activities

Net cash used in continuing operating activities and discontinued operating activities was $1,689,200 and $4,633 respectively for the nine months ended September 30, 2021, as compared to net cash used of $1,766,355 and $834,429 for the nine months ended September 30, 2020. For the nine months ended September 30, 2021 stock-based compensation was $953,076 and amortization of debt discount was $220,578. For the nine months ended September 30, 2021 and 2020 the Company recorded increase to accounts payable and accrued expenses $193,427 and $234,364 of continuing operating activities.

Net Cash Provided by Investing Activities

Net cash (used in) provided by investing activities during the period ended September 30, 2021 was $(30,022) compared to $6,355 for the same period in 2020 due to $79,814 cash acquired in Sapphire acquisition.

Net Cash Provided by Financing Activities

Net cash provided by financing activities during the nine months period ended September 30, 2021, was $1,605,051 and $3,252,748 for the same period in 2020.

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.

Contractual Obligations

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

Critical accounting policies

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

Recently issued accounting standards

In October 2018, the FASB issued ASU 2018-17, Targeted Improvements to Related Party Guidance for Variable Interest Entities, that changes the guidance for determining whether a decision-making fee paid to a decision makers and service providers are variable interests. The guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years, with early adoption permitted. We adopted this standard on its effective date of January 1, 2020. The adoption of this ASU did not have any material impact on our consolidated financial position, results of operations, cash flows, or presentation thereof.

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

ASC Update 2021-04

ASC Update No. 2020-10

Foreign Currency Transactions

Our Foreign currency gain (loss) were $9,711, and $5,716 for the three and nine months ended September 30, 2021 were $1,569 and $2,113 for the same period in 2020. All Foreign currency gain (loss) were related to discontinued operations.

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 September 30, 2021, 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 September 30, 2021 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.

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, 2021 and September 30, 2021 the Company issued total 1,234,113 shares valued $402,500 pursuant to the Company’s Registration Statement on Form S-3. The Company received in cash.

On April 8, 2021 and June 15, 2021 the Company issued 1,234,113 shares for cash of $402,500 pursuant to various Stock purchase agreements. The cash was received in 2021.

On April 8, 2021, May 28 2021 and June 15, 2021 the company issued 4,261,815 restricted shares of its common stock valued at $1,675,496 to third parties for certain services, recorded as advertising and promotion expense and License, permits & Patents, respectively.

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

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.

Item 6. Exhibits.

Statements

Condensed Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020.

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2021 and 2020 (unaudited)

Condensed Consolidated Statements of Changes in Shareholders’ Deficit for the nine months ended September 30, 2021 and 2020 (unaudited)

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (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.

Item 15. Exhibits.

Exhibits	Exhibit #	Incorporated by Reference (Form Type)	Filing Date	Filed with This Report
Articles of Incorporation, as filed with the Nevada Secretary of State on November 18, 2010.	3.1	10-Q	11/14/2014

Certificate of Amendment, as filed with the Nevada Secretary of State on July 24, 2014.	3.2	10-Q	11/14/2014

Amended and Restated (As of August 17, 2016) Bylaws of AXIM Biotechnologies, Inc.	3.3	10-Q	8/22/2016

Certificate of Designation of Series B Preferred Stock	3.4	10-Q	8/22/2016

Certificate of Designation of Series C Preferred Stock	3.5	10-Q	8/22/2016

Amended and Restated Employment Agreement effective September 1, 2016, by and between AXIM International, Inc. and Dr. George E. Anastassov	10.1	10-Q	11/21/2016

Amended and Restated Employment Agreement effective September 1, 2016, by and between AXIM International, Inc. and Lekhram Changoer	10.2	10Q	11/21/2016

Employment Agreement effective September 1, 2016, by and between AXIM International, Inc. and Dr. Philip A. Van Damme.	10.3	10-Q	11/21/2016

Code of Business Conduct and Ethics	14.1	10-Q	11/20/2017

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	31.1			X

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	31.2			X

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.	32.1			X

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	32.2			X

Nominating and Governance Committee Charter	99.1	10-Q	11/20/2017

Compensation Committee Charter	99.2	10-Q	11/20/2017

Audit Committee Charter	99.3	10-Q	11/20/2017

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

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: November 22, 2021	By:	/s/ John W. Huemoeller II
		John W. Huemoeller II
		President and Director
		Principal Executive Officer

Dated: November 22, 2021	By:	/s/ Robert Malasek
		Robert Malasek
		Principal Financial Officer