AXIM BIOTECHNOLOGIES, INC. (OTCMKTS:AXIM) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement
Sanammad Parties
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”), 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.
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 50% 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 50% 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.
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 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 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.
The Company retains the right to prepay the severance obligations to Drs. Anastassov and Van Damme 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.
Convertible Promissory Note
As reported on the Company’s Current Report on Form 8-K dated December 7, 2018, on November 30, 2018, the Company issued to an institutional investor a Convertible Promissory Note (the “Note”), and the Note was later transferred to Medical Marijuana, Inc. (“Lender”). On May 6, 2020, the parties entered into an Addendum to the Note to which, commencing on May 1, 2020, interest shall accrue, at the original rate of 3.5%, and shall be payable on a semi-annual basis commencing November 1, 2020. The maturity date of the Note was extended until November 1, 2026. In addition, the Conversion Price was reduced in the Addendum from $1.50 to $0.25 per share.
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.
Item 2.01 Completion of Acquisition or Disposition of Assets
The disclosures set forth in Item 1.01 are incorporated into this Item 2.01 by this reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The disclosures set forth in Item 1.01 are incorporated into this Item 2.03 by this reference.
Item 3.02 Unregistered Sales of Equity Securities
The disclosures set forth in Item 1.01, “Purchase of Promissory Note and Forbearance Agreement”, are incorporated into this Item 3.02 by this reference.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
(b)Effective May 6, 2020, Dr. George E. Anastassov, Dr. Phillip A. Van Damme and Lekhram Changoer each tendered his resignation as a member of the Board of Directors of the Company, and the Company on that date accepted each resignation. None of the resignations were the result of any disagreement with the Company.
About AXIM BIOTECHNOLOGIES, INC. (OTCMKTS:AXIM)
AXIM Biotechnologies, Inc., formerly Axim International, Inc., is a biotechnology company. The Company is engaged in developing the treatment of pain, spasticity, anxiety and other medical disorders with the application of cannabinoids-based products. It is focused on research, development and production of pharmaceutical, nutriceutical and cosmetic products, as well as procurement of genetically and nano-controlled active ingredients. It is engaged in the business of research, development and production of alternative and renewable sources of energy, such as high caloric content fuels produced from industrial hemp and from the byproducts of industrial hemp after completion of the oil extraction/decarboxylation process. It is engaged in the research and development of pharmaceutical delivery systems and active pharmaceutical ingredients (API) for treatment of conditions, such as Parkinson’s disease, Alzheimer’s disease, restless leg syndrome (RLS) and Crohn’s disease.
