AXIM 10-Q

Axim Biotechnologies, Inc. (AXIM)

10-Q 2022-08-16 For: 2022-06-30

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		Page
Condensed Consolidated Balance Sheet as of June 30, 2022 (unaudited) and December 31, 2021		3

Condensed Consolidated Statements of Operations for the three and six months periods ended June 30, 2022 and 2021 (unaudited)		4

Condensed Consolidated Statement of Changes in Shareholders’ Deficit for the three and six months ended June 30, 2022 and 2021 (unaudited)		5

Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2022 and 2021 (unaudited)		6

Notes to Condensed Consolidated Financial Statements (unaudited).		7

AXIM BIOTECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2022			2021
	(Unaudited)
ASSETS

Current assets:
Cash	$	65,163		$	452,963
Prepaid expenses		87,921			163,561
Inventory		20,089			20,089
Total current assets		173,173			636,613

Property and equipment, net of accumulated depreciation		107,491			116,810

Other Assets:
Notes receivable- related party		-			104,268
Patents (net of accumulated amortization of $18,142 and $7,409; respectively)		231,858			242,591
Licenses (net of accumulated amortization of $315,208 and $128,718; respectively)		3,954,792			4,141,282

Security deposit		5,000			5,000
Operating lease right-of-use asset		48,742			76,871
Total other assets		4,240,392			4,570,012

TOTAL ASSETS	$	4,521,056		$	5,323,435

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
Accounts payable and accrued liabilities	$	859,956		$	909,458
Derivative liability		1,722,190
Lease liability obligations		48,742			56,871
Due to shareholder		-			180
Due to first insurance funding		80,614			32,873
Convertible note payable (including accrued interest of $0 and $16,919 net of unamortized discount of $0 and $0)		-			1,126,919

Promissory note (including accrued interest of $0 and $44,041, respectively) (see note 7)		-			454,693
Total current liabilities		2,711,502			2,580,994

Long-term liabilities:
Deferred tax liability		-			-
Convertible note payable (including accrued interest of $233,228 and $209,685, respectively) net of unamortized debt discount of $1,844,558 and $605,639, respectively(see note 11)		1,256,079			761,604
Convertible note payable - related party (including accrued interest of $286,537 and $299,037, respectively)		4,286,537			4,299,037
Lease liability obligations		-			20,000
Total long-term liabilities		5,542,616			5,080,641

TOTAL LIABILITIES		8,254,118			7,661,635

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 162,687,639 and 138,099,981 shares issued and outstanding, respectively		16,269			13,811
Additional paid in capital		57,399,438			51,000,166
Subscription Receivable		(92,240)			-
Common stock to be issued		135,000			4,530,000
Accumulated deficit		(61,191,579	)		(57,882,227	)
TOTAL STOCKHOLDERS' DEFICIT		(3,733,062	)		(2,338,200	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	4,521,056		$	5,323,435

See accompanying notes to these unaudited condensed consolidated financial statements

AXIM BIOTECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		For the			For the			For the			For the
		Three Months Ended			Three Months Ended			Six Months Ended			Six Months Ended
		June 30,			June 30,			June 30,			June 30,
		2022			2021			2022			2021

Revenues	$	-			$	14,875		$	-		$	47,524

		-				14,875			-			47,524

Operating Expenses:

Research and development expenses			35,171			48,066			79,364			149,019
Selling, general and administrative			918,708			1,499,917			1,876,915			2,293,263
Amortization of other assets			98,612			641,096			197,233			641,096
Depreciation and amortization			7,402			6,834			15,318			13,184

Total operating expenses from continuing operations			1,059,893			2,195,913			2,168,830			3,096,562

Loss from continuing operations			(1,059,893	)		(2,181,038	)		(2,168,830	)		(3,049,038	)

Other (income) expenses:

Interest income			-			(257	)		(256	)		(513	)
Change in fair value of derivative Liability			(332,579	)		-			(919,656	)		-
Income from grants from government			-			(129,995	)		-			(219,995	)
Amortization of note discount			50,489			181,295			86,080			203,122
Loss on extinguishment of debt			384,659			1,535,264			391,531			1,535,264
Interest expense			60,176			59,576			1,582,825			119,908
Total other (income) expenses			162,745			1,645,883			1,140,524			1,637,786

Loss before provision of income tax			(1,222,638	)		(3,826,921	)		(3,309,354	)		(4,686,824	)
Provision for income tax			-			-			-			-

Income (loss) from continuing operations			(1,222,638	)		(3,826,921	)		(3,309,354	)		(4,686,824	)

Income (loss) from discontinued operations			-			-			-			(4,633	)

NET LOSS			(1,222,638	)		(3,826,921	)		(3,309,354	)		(4,691,457	)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$		(1,222,638	)	$	(3,826,921	)	$	(3,309,354	)	$	(4,691,457	)

Earnings per share from continuing operations
Basic			(0.01	)		(0.03	)		(0.01	)		(0.04	)
Diluted			(0.01	)		(0.03	)		(0.01	)		(0.04	)

Earnings per share from discontinued operations
Basic			-			-			-			-
Diluted			-			-			-			-

Earnings per share
Basic			(0.01	)		(0.03	)		(0.01	)		(0.04	)
Diluted			(0.01	)		(0.03	)		(0.01	)		(0.04	)

Weighted average common shares outstanding - basic and diluted			154,945,617			129,741,614			151,076,091			127,740,107

See accompanying notes to these unaudited condensed consolidated financial statements

									Series A Convertible				Series B Convertible				Series C Convertible				Common
	Common Stock				Preferred Stock				Preferred Stock				Preferred Stock				Preferred Stock				Stock to be			Additional Paid In			Subscription Amount			Accumulated
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Issued			Capital			Receivable			Deficit			Total

Balance at December 31, 2020		125,327,579		12,533		-		-		-		-						500,000		50		201,974			43,201,186			-			(41,849,922	)		1,565,821
Common stock to be issued for purchase of shares																						168,500												168,500
Common stock issued against common stock to be issued received in prior year		108,965		11																		(66,974	)		66,963									-
Common stock issued for severance payable of discontinued operations		379,463		38																					224,963									225,001
Common stock and warrants 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 and accrued interest converted to common stock		2,647,464		265																					582,442									582,707
Other		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
Balance at December 31, 2021		138,099,981		13,811		-		-		-		-		-		-		500,000		50		4,530,000			51,000,166			-			(57,882,227	)		(2,338,200	)
Common stock issued under s-1		4,000,000		400																					594,470									594,870
Common stock issued against common stock to be issued purchase of Advanced Tear Diagnostics		7,000,000		700																		(4,270,000	)		4,269,300									-
Common stock issued against common stock to be issued received in prior year		166,667		17																		(25,000	)		24,983									-
Common stock issued stock purchase agreements		976,870		98																					104,902									105,000
Common stock issued for services		802,115		80																		(100,000	)		179,420									79,500
Cashless exercise stock options		282,759		28																					(28	)
Stock issued on settlement of debt		173,390		17																					32,927									32,944
Stock based compensation - stock options																									188,917									188,917
Net loss																															(2,086,714	)		(2,086,714	)
Balance at March 31, 2022		151,501,782		15,151		-		-		-		-		-		-		500,000		50		135,000			56,395,057			-			(59,968,941	)		(3,423,683	)

Stock issued on settlement of debt		891,610		89																					64,107									64,196
Stock based compensation - stock options																									182,215									182,215
Common stock issued under s-1		6,750,000		675																					285,710			(92,240	)					286,385
Stock issued settlement of claim		3,544,247		354																					225,817									226,171
Loss on extinguishment of debt																									154,292									154,292
Net loss																															(1,222,638	)		(1,222,638	)
Balance June 30, 2022		162,687,639		16,269														500,000		50		135,000			57,399,438			(92,240	)		(61,191,579	)		(3,733,062	)

See accompanying notes to these unaudited condensed consolidated financial statements

AXIM BIOTECHNOLOGIES, INC.
Unaudited Condensed Consolidated Statements of Cash Flows

	For the			For the
	Six Months Ended June 30, 2022			Six Months Ended June 30, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		(3,309,354	)	$	(4,691,457	)
Less: (Loss) gain from discontinued operations		-			(4,633	)
Loss from continuing operations		(3,309,354	)		(4,686,824	)

Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation		15,318			13,184
Stock based compensation		371,133			191,266
Amortization of prepaid insurance/expense		166,659			216,158
Amortization of debt discount		86,080			203,121
Common stock issued for services		79,500			776,500
Amortization (impairment) of intangible assets		197,223			641,096
Loss on extinguishment of debt		391,531			1,535,264
Change in fair value of derivative liability		(919,656	)		-
Non-cash interest expense		1,316,846			-
Severance cost (Note receivable waived)		102,387			-

Changes in operating assets & liabilities:
(Increase) decrease in accounts receivable		-			(11,872	)
(Increase) decrease in interest receivable		1,701			(514	)
(Increase) decrease in prepaid expenses		(91,018	)		(137,493	)
(Increase) decrease in inventory		-			(20,509	)
Increase in accounts payable and accrued expenses		184,054			124,263
Net cash provided by (used in) operating activities from continuing operations		(1,407,596	)		(1,156,360	)
Net cash provided by (used in) operating activities from discontinued operations					(4,633	)
Net cash provided by (used in) operating activities		(1,407,596	)		(1,160,993	)

CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(6,000	)		(20,022	)
Net cash provided by (used in) investing activities from continuing operations		(6,000	)		(20,022	)
Net cash provided by (used in) investing activities from discontinued operations		-			-
Net cash provided by (used in) investing activities		(6,000	)		(20,022	)

CASH FLOW FROM FINANCING ACTIVITIES:
Common stock issued under registration statement on Form S-1		881,255			-
Common stock issued under SPA		105,000			852,500
Repayment of first insurance funding		47,741			73,519
Proceeds from convertible notes		1,325,000
Repayment of convertible notes		(1,243,200	)
Repayment of promissory note		(90,000	)		-
Net cash provided by (used in) continuing financing activities		1,025,796			926,019
Net cash provided by (used in) discontinued financing activities		-			-
Net cash provided by (used in) financing activities		1,025,796			926,019

Net (decrease) increase in cash and cash equivalents		(387,800	)		(254,996	)

Cash and cash equivalents at beginning of period		452,963			457,181
Cash and cash equivalents at end of period		65,163			202,185
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	$	125,000		$	66,974
Common stock issued for severance	$	64,197		$	225,000
Convertible note converted to common stock	$	32,944		$	582,707
Common stock issued on cashless exercise of options	$	28		$
Common stock issued against Common stock to be issued for acquisition	$	4,270,000		$	-
Initial derivative liability at issuance of notes	$	2,641,846		$	-
Initial debt discount at issuance of notes	$	1,325,000		$	-
Promissory note refinanced against convertible note	$	367,931		$	-
Common shares issued against subscription receivable	$	92,240		$	-

See accompanying notes to these unaudited condensed consolidated financial statements

	June 30, 2022		December 31, 2021
Equipment of continuing operations	$	181,282	$	175,283
Less: accumulated depreciation		73,791		58,473
	$	107,491	$	116,810

	June 30,		December 31,
	2022		2021
Patents	$	250,000	$	250,000
Licenses		4,270,000		4,270,000
		4,520,000		4,520,000

Less: accumulated amortization		333,350		136,127
	$	4,186,650	$	4,383,873

		2022				2023				2024				2025				2026 and thereafter
Amortization expense		$	197,226			$	394,450			$	394,450			$	394,450			$	2,806,073

Fair Value Hierarchy		Inputs to Fair Value Methodology
Level 1		Quoted prices in active markets for identical assets or liabilities
Level 2		Quoted prices for similar assets or liabilities; quoted markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the financial instrument; inputs other than quoted prices that are observable for the asset or liability; or inputs that are derived principally from, or corroborated by, observable market information
Level 3		Pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption is unobservable or when the estimation of fair value requires significant management judgment

Balance, December 31, 2021	$	-
Issuance of convertible note payable		2,641,846
Mark to market during the three months ended March 31, 2022		(587,077	)
Balance, March 31, 2022	$	2,054,769
Mark to market during the three months ended June 30, 2022		(332,579	)
Balance June 30, 2022	$	1,722,190

	Options Outstanding			Weighted Average Exercise Price
Outstanding at December 31, 2020		10,300,000		$	0.36
Granted		2,960,715			0.60
Exercised		(300,000	)		0.35
Expired or canceled		(2,000,000	)		0.75
Outstanding at December 31, 2021		10,960,715		$	0.37
Granted		-			-
Exercised		(500,000	)		0.37
Balance June 30, 2022		10,460,715		$	0.37

	Number of Warrants		Weighted Average Exercise Price
Outstanding at December 31, 2020		-	$	-
Granted		3,025,000		0.71
Forfeited/Cancelled		-		-
Exercised		-		-
Outstanding at December 31, 2021		3,025,000	$	0.71
Granted		519,247		0.31
Exercised
Outstanding at June 30, 2022		3,544,247		0.68

	June 30, 2022		June 30, 2021
Net sales	$	-	$	-
Total expenses	$	-	$	(4,633	)
Gain from sale of asset and liability	$	-	$	-
Other (loss) income	$	-	$	-
(Loss) income from discontinued operations	$	-	$	(4,633	)

	June 30, 2022		June 30, 2021
Net (loss) income from discontinued operations	$	-	$	(4,633	)

Adjustment of non-cash activities		-		-
Decrease in accounts receivable		-		-
Increase in inventory		-		-
Increase in accounts payable and accrued expenses		-		-
Net cash provided by (used in) operating activities	$	-	$	(4,633	)

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

Right-of-use assets	$	48,742

Lease liability obligations, current	$	48,742
Lease liability obligations, noncurrent
Total lease liability obligations	$	48,742

Weighted-average remaining lease term	0.83 years

Weighted-average discount rate		6	%

	June 30,			December 31,
	2022			2021
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, 2022, interest at 6% p.a.		-			1,110,000
Convertible note payable, due on October 1, 2029, interest at 3.5% p.a.		500,000			500,000
Convertible note payable, due on February 10, 2032, interest at 3.0% p. a.		1,325,000			-
Convertible note payable, due on December 31, 2034, interest at 3% p.a.		190,000			190,000
Convertible note payable, due January 27, 2032 interest at 3% p.a.		367,931
Accrued interest (The accrued interest and principal are both included in the captions titled “convertible note payable” in the balance sheet)		233,228			209,685
Total		3,100,637			2,494,163
Less: unamortized debt discount/finance premium costs		(1,844,558	)		(605,639	)
Convertible note payable, net	$	1,256,079		$	1,888,524

2022	$	30,000
2023		20,000
Total minimum payments		50,000
Less: amount representing interest		(1,258	)
Total	$	48,742

	(i)	Measurement of neutralizing antibodies in individuals who have recovered from COVID-19 and/or received a vaccine and to provide an “Immunity Passport” so that they can go back to work and school or participate in social gatherings without risk of infecting others. The primary goal of any vaccine is to induce neutralizing antibody responses that protect vaccine recipients from infection and subsequent disease. As COVID-19 vaccines have been rolling out to the general public, we believe immunity monitoring is starting to play a critical role in determining whether the vaccine is effective, for how long, and when it is time for recipients of the vaccine to get a booster shot. Since immunity to the virus is not anticipated to last forever, the immunity monitoring could continue for many years, even after widespread vaccination throughout the world.

		Additionally, we believe that measuring neutralizing antibodies in vaccine recipients after vaccination may provide greater insight into how vaccine responses hold up over time. That way, when levels of neutralizing antibodies eventually decrease, vaccine recipients will have a sense of when their neutralizing antibodies are unacceptably low and a revaccination is necessary to continue their protection from COVID-19.

	(ii)	Screening plasma collected from individuals recovered from COVID-19 so that patients fighting COVID-19 can be treated with plasma containing high levels of Nabs. Additionally, Nabs need to be monitored in patients receiving convalescent plasma so that we learn what is an effective therapeutic dose.

	·	It specifically tests for neutralizing antibodies, which are those needed to fight COVID-19 within the body;

	·	It can quantitatively measure the amount of neutralizing antibodies a person has;

	·	Patients get their results in just a few minutes; and

	·	It is portable.

	·	Diagnostic Tests: Tests that detect parts of the SARS-CoV-2 virus and can be used to diagnose infection with the SARS-CoV-2 virus. These include molecular tests and antigen tests.

	·	Serology/Antibody and Other Adaptive Immune Response Tests: Tests that detect antibodies (for example, IgM, IgG) to the SARS-CoV-2 virus or that measure a different adaptive immune response (such as, T cell immune response) to the SARS-CoV-2 virus. These types of tests cannot be used to diagnose a current infection.

	·	Tests for Management of COVID-19 Patients: Beyond tests that diagnose or detect SARS-CoV-2 virus or antibodies, there are also tests that are authorized for use in the management of patients with COVID-19, such as to detect biomarkers related to inflammation. Once patients are diagnosed with COVID-19 disease, these additional tests can be used to inform patient management decisions.

	·	Contact lens fitting – approximately 45 million people wear contact lens in the US alone (2021).

	·	LASIK surgery- approximately 718,000 (2020).

	·	Cataract surgery with lens exchange - approximately 3.8 million (2018).

Biomarker	Company	Type	CLIA status

Lactoferrin	Axim	(quantitative analysis)	moderate complexity

IgE	Axim	(quantitative analysis)	moderate complexity

MMP9	Quidel	(qualitative only)	waived

Osmolarity	TearLab	(quantitative analysis)	waived

Ocular Adenovirus	Quidel	(qualitative only)	waived

Category	Issued Patent		Provisional Patent Applications

QSOX-1		1		11
SARS-CoV-2				12
EYE Health				2
EIS Platform				5

	(i)	filing Exchange Act reports;
	(ii)	contractual obligations;
	(iii)	building inventory of our approved devices;
	(iii)	clinical trials; and
	(iv)	continued research and development of our diagnostic tests.

Six Months ended	June 30, 2022			June 30 31, 2021			$ Change		% Change
Revenues	$	-		$	47,524		$	47,524	>	100	%
Gross margin percentage		-			-			-		-
Operating expenses		2,168,830			3,096,562			(927,732)	>	29	%
Loss from continuing operations		(2,168,830	)		(3,049,038)			(880,208)	>	29	%
Loss from discontinued operations					(4,633)			4,633		.100	%
Other expenses (income)		1,140,524			1,637,786			(497,262)		30	%
Net loss	$	(3,309,354	)	$	(4,686,824	)	$	(1,377,470)	>	29	%

Three Months ended	June 30 2022			June 30, 2021			$ Change		% Change
Revenues	$	-		$	14,875		$	(14,875)	>	100	%
Gross margin percentage		-			-			-		-
Operating expenses		1,059,893			2,195,913			(1,136,020)	>	51	%
Loss from continuing operations		(1,059,893	)		(2,181,038	)		(1,121,145)	>	51	%
Loss from discontinued operations										.	%
Other expenses (income)		162,745			1,645,883			(1,483,138)		90	%
Net loss	$	(1,222,638	)	$	(3,826,921	)	$	(2,604,283)	>	68	%

	AXIM BIOTECHNOLOGIES, INC.

Dated: August 16, 2022	By:	/s/ John W. Huemoeller II
		John W. Huemoeller II
		President and Director
		Principal Executive Officer

Dated: August 16, 2022	By:	/s/ Robert Malasek
		Robert Malasek
		Principal Financial Officer