Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Mar. 29, 2017 | |
Details | ||
Registrant Name | AXIM BIOTECHNOLOGIES, INC. | |
Registrant CIK | 1,514,946 | |
SEC Form | 10-Q | |
Period End date | Jun. 30, 2017 | |
Fiscal Year End | --12-31 | |
Trading Symbol | AXIM | |
Tax Identification Number (TIN) | 274,029,386 | |
Number of common stock shares outstanding | 52,569,441 | |
Filer Category | Smaller Reporting Company | |
Current with reporting | Yes | |
Voluntary filer | No | |
Well-known Seasoned Issuer | No | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Entity Incorporation, State Country Name | Nevada | |
Entity Address, Address Line One | 45 Rockefeller Plaza, 20th Floor, Suite 83 | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10,111 | |
City Area Code | 212 | |
Local Phone Number | 751-0001 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (June 30 2017 Unaudited) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 4,103,815 | $ 713,346 |
Inventory | 63,682 | 38,446 |
Reservation fee deposit | 76,155 | 76,155 |
Prepaid expenses | 83,836 | 40,753 |
Loan receivable | 5,000 | 505,000 |
Total current assets | 4,332,488 | 1,373,700 |
Property, Plant and Equipment, Net | 10,627 | 12,305 |
Other Assets: | ||
Acquired intangible asset - intellectual property licensing agreement, net | 63,167 | 63,167 |
Security deposits | 7,440 | 0 |
Total other assets | 70,607 | 63,167 |
TOTAL ASSETS | 4,413,722 | 1,449,172 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 328,914 | 401,220 |
Due to shareholder | 5,000 | 5,000 |
Due to first insurance funding | 0 | 22,978 |
Due to related party | 1,619,067 | 1,619,067 |
Convertible note payable -current portion | 2,000,000 | 0 |
Total current liabilities | 4,933,799 | 3,016,829 |
Long-term liabilities: | ||
Total long-term liabilities | 2,908,600 | 803,933 |
TOTAL LIABILITIES | 7,842,399 | 3,820,762 |
STOCKHOLDERS' DEFICIT | ||
Common Stock, Value, Issued | 5,257 | 5,251 |
Additional paid in capital | 15,724,489 | 15,672,631 |
Common stock, to be issued | 0 | 20,064 |
Accumulated deficit | (19,158,523) | (18,069,636) |
TOTAL STOCKHOLDERS' DEFICIT | (3,428,677) | (2,371,590) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | 4,413,722 | 1,449,172 |
Preferred Stock | ||
STOCKHOLDERS' DEFICIT | ||
Preferred Stock, Value, Issued | 0 | 0 |
Series A Convertible Preferred stock | ||
STOCKHOLDERS' DEFICIT | ||
Preferred Stock, Value, Issued | 0 | 0 |
Undesignated Preferred stock | ||
STOCKHOLDERS' DEFICIT | ||
Preferred Stock, Value, Issued | 0 | 0 |
Series B Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT | ||
Preferred Stock, Value, Issued | 50 | 50 |
Series C Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT | ||
Preferred Stock, Value, Issued | 50 | 50 |
Convertible notes payable due to shareholder | ||
Long-term liabilities: | ||
Notes Payable, Noncurrent | 46,601 | 45,793 |
Convertible note payable | ||
Long-term liabilities: | ||
Notes Payable, Noncurrent | 2,016,732 | 0 |
Convertible note payable 2 | ||
Long-term liabilities: | ||
Notes Payable, Noncurrent | $ 845,267 | $ 758,140 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (June 30 2017 Unaudited) - Parenthetical - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 6,152 | $ 4,474 |
Preferred Stock, Shares Issued | 300,000,000 | |
Preferred Stock, Shares Outstanding | 300,000,000 | |
Common Stock, Par or Stated Value Per Share | $ 0.0001 | |
Common Stock, Shares, Issued | 52,569,441 | 52,506.441 |
Common Stock, Shares, Outstanding | 52,569,441 | 52,506.441 |
Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 |
Series A Convertible Preferred stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 0 | 0 |
Preferred Stock, Shares Issued | 0 | |
Preferred Stock, Shares Outstanding | 0 | |
Undesignated Preferred stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 4,000,000 | 4,000,000 |
Preferred Stock, Shares Issued | 0 | |
Preferred Stock, Shares Outstanding | 0 | |
Series B Convertible Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 500,000 | 500,000 |
Preferred Stock, Shares Issued | 500,000 | |
Preferred Stock, Shares Outstanding | 500,000 | |
Series C Convertible Preferred Stock | ||
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
Preferred Stock, Shares Authorized | 500,000 | 500,000 |
Preferred Stock, Shares Issued | 500,000 | |
Preferred Stock, Shares Outstanding | 500,000 | |
Promissory note - related party | ||
Interest Payable, Current | $ 100,818 | $ 88,564 |
Convertible notes payable due to shareholder | ||
Interest Payable, Current | 1,601 | 792 |
Convertible note payable | ||
Interest Payable, Current | 16,609 | |
Debt Instrument, Unamortized Discount, Noncurrent | 1,259,877 | 0 |
Convertible note payable 2 | ||
Interest Payable, Current | 53,029 | 15,646 |
Debt Instrument, Unamortized Discount, Noncurrent | $ 1,273,862 | $ 1,323,606 |
Condensed Consolidated Statemen
Condensed Consolidated Statement of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Revenues | $ 3,738 | $ 11,241 | $ 22,358 | $ 25,246 |
Cost of goods sold | 1,486 | 12,082 | 40,416 | 27,296 |
Gross profit (loss) | 2,252 | (841) | (18,058) | (2,050) |
Operating Expenses: | ||||
Research and development expenses | 62,949 | 45,049 | 203,314 | 76,229 |
Selling, general and administrative | 375,713 | 444,756 | 690,514 | 1,353,708 |
Depreciation | 839 | 839 | 1,678 | 1,678 |
Total operating expenses | 439,501 | 490,644 | 895,506 | 1,431,615 |
Loss from operations | (437,249) | (491,485) | (913,564) | (1,433,665) |
Other (Income) expenses: | ||||
Interest Income | 0 | 0 | (1,597) | 0 |
Amortization of debt discount | 84,995 | 0 | 109,867 | 0 |
Loss on extinguishment of debt | 0 | 1,385,000 | 0 | 1,385,000 |
Interest expense | 42,493 | 12,087 | 67,053 | 24,009 |
Total other (income) expenses | 127,488 | 1,397,087 | 175,323 | 1,409,009 |
Loss before provision of income tax | (564,737) | (1,888,572) | (1,088,887) | (2,842,674) |
provision for income tax | 0 | 0 | 0 | 0 |
Net Income (Loss) Attributable to Parent | (564,737) | (1,888,572) | (1,088,887) | (2,842,674) |
Less: Dividend on preferred stocks | 0 | 0 | 0 | 0 |
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ (564,737) | $ (1,888,572) | $ (1,088,887) | $ (2,842,674) |
Loss per common share - basic and diluted | $ (0.01) | $ (0.05) | $ (0.02) | $ (0.07) |
Weighted average common shares outstanding -basic and diluted | 52,568,174 | 39,762,659 | 52,542,308 | 39,736,261 |
Condensed Consolidated Stateme5
Condensed Consolidated Statement of Stockholders' Deficit - 6 months ended Jun. 30, 2017 - USD ($) | Total | Common Stock | Preferred Stock | Series A Convertible Preferred stock | Series B Convertible Preferred Stock | Series C Convertible Preferred Stock | Common stock to be issued | Additional Paid-in Capital | Retained Earnings |
Equity Balance, Starting at Dec. 31, 2016 | $ (2,371,590) | $ 5,251 | $ 0 | $ 0 | $ 50 | $ 50 | $ 20,064 | $ 15,672,631 | $ (18,069,636) |
Shares Outstanding, Starting at Dec. 31, 2016 | 52,506,441 | 0 | 0 | 500,000 | 500,000 | ||||
Stock Issued During Period, Value, Other | 0 | $ 6 | $ 0 | $ 0 | $ 0 | $ 0 | (20,064) | 20,058 | 0 |
Stock Issued During Period, Shares, Other | 60,000 | 0 | 0 | 0 | 0 | ||||
Stock Issued During Period, Value, Issued for Services | 31,800 | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | 0 | 31,800 | 0 |
Stock Issued During Period, Shares, Issued for Services | 3,000 | 0 | 0 | 0 | 0 | ||||
Net Income (Loss) | (1,088,887) | $ 0 | $ 0 | $ 0 | $ 0 | $ 0 | 0 | 0 | (1,088,887) |
Equity Balance, Ending at Jun. 30, 2017 | $ (3,428,677) | $ 5,257 | $ 0 | $ 0 | $ 50 | $ 50 | $ 0 | $ 15,724,489 | $ (19,158,523) |
Shares Outstanding, Ending at Jun. 30, 2017 | 52,569,441 | 0 | 0 | 500,000 | 500,000 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (1,088,887) | $ (2,842,674) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 1,678 | 1,678 |
Amortization of prepaid services | 0 | 736,438 |
Amortization of prepaid insurance | 41,917 | 42,616 |
Amortization of debt discount | 109,867 | 0 |
Loss on extinguishment of debt | 0 | 1,385,000 |
Stock based compensation | 31,800 | 176,948 |
Inventory written off | 0 | 9,753 |
Changes in operating assets and liabilities: | ||
(Decrease) increase Accounts payable and accrued expenses | (96,018) | 1,706 |
(Increase) decrease in prepaid insurance | (85,000) | (85,000) |
Increase in inventory | (25,236) | (40,673) |
Increase in credit card payable | 286 | 0 |
Increase in royalty fee payable | 449 | 0 |
Increase in accrued interest payable | 67,053 | 23,614 |
Due to first insurance funding | 0 | 45,036 |
Increase in Security Deposits | (7,440) | 0 |
Net cash used in operating activities | (1,049,531) | (545,558) |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
Net cash used in investing activities | 0 | 0 |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Proceeds from due to related party | 0 | 430,000 |
Proceeds from convertible notes | 3,940,000 | 0 |
Proceeds from loan receivable | 500,000 | 0 |
Net cash provided by financing activities | 4,440,000 | 430,000 |
Net increase (decrease) in cash and cash equivalents | 3,390,469 | (115,558) |
Cash and cash equivalents at beginning of period | 713,346 | 134,170 |
Cash and cash equivalents at end of period | 4,103,815 | 18,612 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Interest | 0 | 302 |
Income taxes - net of tax refund | 0 | 0 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Common stock issued against common stock to be issued | 20,064 | 52,500 |
Common stock issued against conversion of debt and interest | 0 | 159,000 |
Conversion of Series A convertible preferred stock into common stock | 0 | 100 |
Debt discount and initial derivative liability at issuance of note | $ 1,320,000 | $ 0 |
NOTE 1_ ORGANIZATION
NOTE 1: ORGANIZATION | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 1: ORGANIZATION | NOTE 1: ORGANIZATION The Company was originally incorporated in Nevada on November 18, 2010, as Axim International Inc. On July 24, 2014, the Company changed its name to AXIM Biotechnologies, Inc. to better reflect its business operations. The Companys principal executive office is located at 45 Rockefeller Plaza 20th Floor, Suite 83, New York, NY 10111. 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. |
NOTE 2_ BASIS OF PRESENTATION
NOTE 2: BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 2: BASIS OF PRESENTATION | NOTE 2: BASIS OF PRESENTATION: The unaudited condensed consolidated financial statements of AXIM Biotechnologies, Inc. (formerly Axim International, Inc.) The following (a) balance sheets as of June 30, 2017 (unaudited) and December 31, 2016, 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 six months ended June 30, 2017 are not necessarily indicative of results that may be expected for the year ending December 31, 2017. These unaudited financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2016 included in the Companys Annual Report on Form 10-K, filed with the Securities and Exchange Commission (SEC) on April 14, 2017. |
NOTE 3_ SIGNIFICANT ACCOUNTING
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES | NOTE 3: SIGNIFICANT ACCOUNTING POLICIES Use of estimates The preparation of the unaudited 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. 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. Inventory Inventory consists of finished goods available for sale and raw materials owned by the Company and are stated at the lower of cost or market. During the six months ended June 30, 2017, the Company wrote off finished goods inventory worth $ -0-. As of June 30, 2017 the finished goods inventory totaled $0 and raw materials in production totaled $46,795 and raw materials for clinical trials totaled $16,887. 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. For both the three and six months ended June 30, 2017 and 2016 the Company recorded $839 and $1,678 of depreciation expense, respectively. Intangible Assets As required by generally accepted accounting principles, trademarks and patents are not amortized since they have an indefinite life. Instead, they are tested annually for impairment. Intangible assets as of June 30, 2017 amounted to $63,167 net of accumulated impairment losses of $652,265. Revenue Recognition The Company recognizes revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on managements judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. Revenue is generally recognized upon shipment. Revenues from continuing operations recognized for the three and six months ended June 30, 2017 and 2016 amounted to $3,738 and $11,241 and $22,358 and $25,246, respectively. Principles of Consolidation The consolidated financial statements include the accounts of Axim Biotechnologies, Inc. and its wholly owned subsidiaries Axim Holdings, Inc. and Can Chew License Company as of June 30, 2017. All significant intercompany transactions and balances have been eliminated in consolidation. Derivative Liabilities The Company assessed the classification of its derivative financial instruments as of June 30, 2017, which consist of convertible instruments and rights to shares of the Companys common stock, and determined that such derivatives meet the criteria for liability classification under ASC 815. ASC 815 generally provides 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 instrument 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 subject to the requirement of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deem to be conventional, as described. Fair Value of Financial Instruments Effective January 1, 2008, the Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, or ASC 820, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements established a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact the Companys financial position or operating results, but did expand certain disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market date Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entitys own assumptions. The company did not have any Level 2 or Level 3 assets or liabilities as of June 30, 2017, with the exception of its convertible notes payable and derivative liability. The carrying amounts of these liabilities at June 30, 2017 approximate their respective fair value based on the Companys incremental borrowing rate. Cash is considered to be highly liquid and easily tradable as of June 30, 2017 and therefore classified as Level 1 within our fair value hierarchy. In addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments. 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 provides 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 entitys control could or require net cash settlement, then the contract shall be classified as an asset or a liability. Income Taxes The Company follows Section 740-10, Income tax (ASC 740-10) Fair Value Measurements and Disclosures of the FASB Accounting Standards Codification, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the Statements of Operations in the period that includes the enactment date. The Company recognizes deferred tax assets to the extent that the Company believes that these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including reversals of any existing taxable temporary differences, projected future taxable income, tax planning strategies, and the results of recent operations. If the Company determines that it would be able to realize a deferred tax asset in the future in excess of any recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. The Company adopted section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25"). Section 740-10-25 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent (50%) likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. The Company had no liabilities for unrecognized income tax benefits according to the provisions of Section 740-10-25. 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. The Company does not have accounts receivable and allowance for doubtful accounts at June 30, 2017 and December 31, 2016. 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 17,120,567 common share equivalents at June 30, 2017 and 16,216,652 common shares at December 31, 2016. For the three and six months ended June 30, 2017 and 2016 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. 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. 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. The Company incurred research and development expenses of $62,949 and $45,049 and $203,314 and $76,229 for the three and six months ended June 30, 2017 and 2016; respectively. 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. Recently Issued Accounting Standards In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. In January 2017, the FASB issued ASU 2017-04, Intangibles Goodwill and Other (Topic 350) In August 2014, the FASB issued ASU 2014-15 requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entitys ability to continue as a going concern, which is currently performed by the external auditors. Management will be required to perform this assessment for both interim and annual reporting periods and must make certain disclosures if it concludes that substantial doubt exists. This ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2016. The adoption of this guidance is not expected to have a material effect on our financial statements. In October 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-16-Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current GAAP in which the tax effects of intra-entity asset transfer are deferred until the transferred asset is sold to a third party or otherwise recovered through use. The guidance will be effective for the first interim period of our 2019 fiscal year, with early adoption permitted. In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ASU N. 2016-15, Classification of Certain Cash Receipts an Cash Payments (ASU 2016-15). ASU 2016-15 provides guidance regarding the classification of certain items within the statement of cash flows. ASU 2016-15 is effective for annual periods beginning afer December 15, 2017 with early adoption permitted. In connection with its financial instruments project, the FASB issued ASU 2016-13- Financial Instruments Credit Losses: Measurement of Credit Losses on Financial Instruments in June 2016 and ASU 2016-01 Financial Instruments Overall: Recognition and Measurement of Financial Assets and Financial Liabilities in January 2016. · · In April 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) ASU 2016 10 Revenue from Contract with Customers: identifying Performance Obligations and Licensing. The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the entitys intellectual property (which is satisfied over time). The amendments in this Update are intended to reduce the degree of judgment necessary to comply with Topic 606. This guidance has no effective date as yet. The Company is currently evaluating the impact of adopting this guidance. In March 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) ASU 2016 09 Improvements to Employee Share-Based Payment Accounting which is intended to improve the accounting for employee share-based payments. The ASU simplifies several aspects of the accounting for share-based payment award transactions, including; the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The new standard is effective for fiscal years and interim periods beginning after December 15, 2016, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, which amends the guidance in U.S. GAAP on accounting for operating leases, a lessee will be required to recognize assets and liabilities for operating leases with lease terms of more than 12 months on the balance sheet. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted. The Company is currently evaluating the impact of adopting this guidance. In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. 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 4_ PREPAID EXPENSES
NOTE 4: PREPAID EXPENSES | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 4: PREPAID EXPENSES | NOTE 4: PREPAID EXPENSES Prepaid expenses consist of the following as of June 30, 2017 and December 31, 2016: June 30, 2017 December 31, 2016 Prepaid interest and insurance $ 83,836 $ 40,753 $ 83,836 $ 40,753 For the three and six months ended June 30, 2017 and 2016, the Company recognized amortization of prepaid expense of $20,959, $159,506 and $41,917 and $779,054, respectively. |
NOTE 5_ RESERVATION FEE DEPOSIT
NOTE 5: RESERVATION FEE DEPOSIT | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 5: RESERVATION FEE DEPOSIT | NOTE 5: RESERVATION FEE DEPOSIT The Company entered into a reservation agreement with the Municipality of Almere in the Netherlands. In October 2015 the Company paid the reservation fee in the amount of $65,170. The reservation fee deposit gives the company an exclusive right to purchase the building land for a purchase price of 1,110,000. Starting in October 2015 the second reservation period was extended for a period of twelve (12) months expiring September 2016. Starting in October 2016 the second reservation period was extended to October 20, 2017 under the same terms as the previous period. If the company proceeds to purchase the building land the reservation fee will be offset against the purchase price. The Company is not entitled to a refund of the reservation fee if the current agreement is terminated by the Company in the event of insolvency or a moratorium on the transfer or assignment of rights or in the event of a failure to notify or notify on time. The agreement is not transferable. The rights and obligations of this agreement cannot be assigned. The municipality is entitled to terminate the agreement by means of a registered letter if during the reservation period compelling objections exist or arise, or through the insolvency of the Company. |
NOTE 6_ PROMISSORY NOTE - RELAT
NOTE 6: PROMISSORY NOTE - RELATED PARTY | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 6: PROMISSORY NOTE - RELATED PARTY | NOTE 6: PROMISSORY NOTE - RELATED PARTY On August 8, 2014 the Company entered into a Promissory Note Agreement with Can Chew 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. The following table summarizes promissory note payable as of June 30, 2017 and December 31, 2016: June 30, 2017 December 31, 2016 Promissory note payable, due on demand, interest at 3% p.a. $ 880,000 $ 880,000 Accrued Interest 100,818 88,564 $ 980,818 $ 968,564 For the three months ended June 30, 2017 and 2016 the Company recognized interest expense of $6,581 and $12,087, respectively on this note. For the six months ended June 30, 2017 and 2016 the Company recognized interest expense of $12,254 and $24,009, respectively. |
NOTE 7_ RELATED PARTY TRANSACTI
NOTE 7: RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 7: RELATED PARTY TRANSACTIONS | NOTE 7: RELATED PARTY TRANSACTIONS The Company has received working capital advances from CCB totaling $1,619,067 as of June 30, 2017, which includes $0 and $0 received during the three and six months ended June 30, 2017; respectively. The advances currently bear no interest and are payable on demand. The Company is in discussions to have the advances reduced to a longer term, fixed maturity note. The Company owes $5,000 to the president of the Company for a working capital advance of $5,000 made in May of 2014. On August 15, 2016 the Company issued 1,000,000 shares of its Series A Convertible Preferred Stock in exchange for 1,000,000 shares of its Undesignated Preferred Stock (see Footnote 10 - "Preferred Stock" for a discussion of the Company's preferred stock). The Undesignated Preferred Stock was held by Sanammad Foundation and MJNA Investment Holdings, LLC (500,000 shares each), which parties together own a majority of the common stock of the Company. Under the terms of the exchange, the 1,000,000 shares of Series A Convertible Preferred received in the exchange were immediately converted into 5,000,0000 restricted shares of the Company's common stock (2,500,000 shares for each of Sanammad Foundation and MJNA Investment Holdings, LLC). As a result, the Series A Convertible Preferred Stock is retired and no longer available for future issuance. The three members of the Sanammad Foundation also serve as the current three directors of the Company and Sanammad, along with MJNA Investment Holdings, LLC, hold a majority of the outstanding stock of the Company. On August 18, 2016 the Company issued all 500,000 shares of its newly designated Series B Preferred Stock to Sanammad Foundation in exchange for cash of $50,000. As the holders of the Series B Preferred Stock, Sanammad has designated the current directors, Dr. George E. Anastassov, Dr. Philip A. Van Damme and Mr. Lekhram Changoer as their three Series B Directors. 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. At this time the holders of the Series C Preferred Stock have decided not to elect any Series C Directors. |
NOTE 8_ DUE TO FIRST INSURANCE
NOTE 8: DUE TO FIRST INSURANCE FUNDING | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 8: DUE TO FIRST INSURANCE FUNDING | NOTE 8: DUE TO FIRST INSURANCE FUNDING One June 25, 2017, the Company renewed its D&O insurance policy with total premiums, taxes and fees for $85,000. A cash down payment of $17,000 was paid on June 30, 2017. Under the terms of the insurance financing, payments of $7,736, which include interest at the rate of 5.7% per annum, are due each month for nine months commencing on July 25, 2017. For the six months ended June 30, 2017, the Company recognized insurance expense of $41,917. |
NOTE 9_ CONVERTIBLE NOTES PAYAB
NOTE 9: CONVERTIBLE NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 9: CONVERTIBLE NOTES PAYABLE | NOTE 9: CONVERTIBLE NOTES PAYABLE The following table summarizes convertible note payable- shareholder as of June 30, 2017 and December 31, 2016 June 30, 2017 December 31, 2016 Convertible note payable, due on July 1, 2028, interest at 3.5% p.a. $ 45,000 $ 45,000 Accrued interest 1,601 792 $ 46,601 $ 45,793 On November 26, 2012, the Company entered into an interest free $50,000 convertible loan payable maturing on December 31, 2014. The note was convertible into the Companys common stock at a conversion price of $0.10 per share. The Company was unable to repay the loan as of December 31, 2014, and obtained multiple extensions until December 31, 2015. The Company had paid no interest or other consideration in return for the extensions of the loan. Unable to obtain further extension of the maturity date, on June 29, 2016, the Company entered into a Debt Exchange Agreement with the note holder whereby the Company exchange the note having a balance due of $50,000 as of December 31, 2015, for a long-term convertible note in the amount of $50,000. The new Convertible Note (Note) bears interest at the rate of 3.5% per annum, payable annually beginning on July 1, 2017, and matures on July 1, 2028. The Note is convertible, in whole or in part at any time at the option of the holder, into the Companys common stock at a conversion price of $0.01, provided however, the holder of the Note is not permitted to convert an amount of the Note that would result in the holder and its affiliates owning more than 4.9% of the Companys outstanding common stock. The Company determined fair value of new debt $1,435,000 and as result was recorded $1,385,000 as a loss on debt extinguishment at the year end December 31, 2016. On June 30, 2016, the holder of the Note converted $5,000 face value into 500,000 shares of the Companys common stock. The balance on the Note as of June 30, 2017 is $46,601, including interest accrued thereon of $1,601. The following table summarizes convertible note payable as of June 30, 2017 and December 31, 2016 June 30, 2017 December 31, 2016 Convertible note payable, due on April 21, 2025, interest at 4% p.a. $ 216,100 $ 216,100 Convertible note payable, due on October 1, 2029, interest at 3.5% p.a. 850,000 850,000 Convertible note payable, due on October 1, 2029, interest at 3.5% p.a. 1,000,000 1,000,000 Convertible note payable, due on December 12, 2018, interest at 8% p.a. 4,210,000 - Finance premium costs payable, due on December 12, 2018 1,050,000 - Accrued interest 69,638 15,646 Total 7,395,738 2,081,746 Less unamortized debt discount (2,533,739) (1,323,606) Convertible note payable, net 4,861,999 758,140 Less current portion 2,000,000 - Long term portion $ 2,861,999 $ 758,140 The Company has outstanding convertible note payable having a balance due of $220,432 and $216,100, as of June 30, 2017 and December 31, 2016 respectively. The Note bears interest at the rate of 4% per annum which accrues until maturity at April 21, 2025. The Note was issued in April of 2015 to a third-party as a non-refundable payment for consultancy services to be provided to the Company for a period of at least one year. The Note is convertible, in whole or in part at any time at the option of the holder, into shares of the Companys common stock at a conversion price of $0.10, provided however, the holder of the Note is not permitted to convert an amount of the Note that would result in the holder and its affiliates owning more than 4.9% of the Companys outstanding common stock. On June 30, 2016 the holder of the Note converted $154,000 due under the Note, including interest of $ 19,490, into 1,540,000 shares of the Companys common stock. On December 29, 2016 the holder of the Note converted $29,900 due under the Note including interest of 20,100 into 500,000 shares of the Companys common stock. The balance on the Note as of June 30, 2017 is $220,432, including interest accrued thereon of $4,332. 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 mature 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 (i) $0.2201 or (ii) 80% of closing price of the Companys common stock as of the date of conversion. At the inception of the Convertible Promissory Note, the Company determined a fair value of $1,062,500 of the embedded derivative. On October 20, 2016, the terms of a above Convertible note was modified into convertible note with fixed conversion price of $0.2201. The derivative liability balance on the Note as of modified date is $1,274,422 re-classed into additional paid in capital. 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 Companys common stock at a fixed conversion price equal to (i) $0.2201 or (ii) 80% of closing price of the Companys common stock as of the date of conversion.. 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. On October 20, 2016, the terms of a above Convertible note was modified into convertible note with fixed conversion price of $0.2201. Since the modification happened on the same day, the note was treated to have fixed conversion price and accordingly debt discount was recorded related to beneficial conversion feature. In connection with this convertible note, the Company recorded a $499,318 discount on debt, 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 June 30, 2017 this note has not been converted. On June 12, 2017 (the Closing Date), the Company entered into a Securities Purchase Agreement (SPA) with an institutional accredited investor (Investor) pursuant to which Investor invested $4,000,000 (the Financing). On the Closing Date, the Company issued to Investor an unsecured Convertible Promissory Note (the Note) in the principal amount of $4,210,000, in exchange for payment by Investor of $4,000,000. The principal sum of the Note reflects the amount invested, plus a $200,000 Original Issue Discount (OID) and a $10,000 reimbursement of Investors legal fees. The Company also paid a placement fee of $60,000 to a third-party broker-dealer. The SPA and the Note are collectively referred to herein as the Transaction Documents. The Note matures in 18 months. So long as the Company is not in receipt of redemption notice (discussed below), the Note may be prepaid at any time, in whole or in part in minimum increments of $50,000, by making payment to Investor in an amount of cash equal to 125% of the amount being prepaid, plus accrued and unpaid interest. There are no payments of principal or interest due under the Note for the first six months following its issuance. Commencing on the date that is six (6) months from the issuance of the Note, Investor may redeem a portion of the Note in monthly amounts not to exceed $350,000 in any calendar month. Provided the Company has not suffered an Event of Default and is in compliance with certain Equity Conditions (unless waived by Investor in either case), the Company, in its sole discretion, may make redemption payments in cash or by the issuance of common stock. If the Company chooses to make redemption payment in cash, the cash payment is subject to a 25% premium. If the Company chooses to make the redemption payment in stock, the number of shares issuable shall be 70% (reduced to 65% if the conversion shares are not DTC eligible for a period of at least 5 days) multiplied by the average of the three (3) lowest closing bid prices in the previous twenty (20) trading days. Payments may be made in a combination of cash and stock. Events of Default include the events set forth in Section 4.1 of the Note, and include, but are not limited to, failure to make timely payments, failure to deliver conversion shares, bankruptcy, receivership, insolvency, failure to reserve required shares for issuance upon conversion, and failure to be DTC eligible. Upon an Event of Default under the Note, Investor may accelerate the outstanding principal amount of the Note, plus accrued and unpaid interest, and other amounts owing through the date of acceleration. In the event of such acceleration, the interest rate on the Note shall accrue at the lesser of 22% per annum or the maximum rate permitted under applicable law. Pursuant to the terms of the SPA the Company is required to reserve and keep available out of its authorized and unissued shares of common stock, a minimum of 2,250,000 shares of common stock. The company has recorded the 25% premium on cash payment as a liability and is amortizing it over the term of the note utilizing the effective interest method. During the three months ended June 30, 2017 and 2016 the Company amortized the debt discount on all the notes of $84,995 and $0, respectively, to other expenses. During the six months ended June 30, 2017 and 2016 the Company amortized the debt discount on all the notes of $109,867 and $0 to other expenses. |
NOTE 10_ STOCK INCENTIVE PLAN
NOTE 10: STOCK INCENTIVE PLAN | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 10: STOCK INCENTIVE PLAN | NOTE 10: 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. There were 9,856,000 shares available for issuance under the Plan as of June 30, 2017. |
NOTE 11_ STOCKHOLDERS' DEFICIT
NOTE 11: STOCKHOLDERS' DEFICIT | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 11: STOCKHOLDERS' DEFICIT | NOTE 11: 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 June 30, 2017 and December 31, 2016 there are -0- and -0- shares of undesignated preferred shares issued and outstanding, respectively. Series A Convertible Preferred Stock The Company also has authorized 1,000,000 shares of Series A Convertible Preferred Stock, which had been previously issued to Sanammad Foundation and subsequently assigned and transferred by Sanammad to Treo Holdings, LLC ("Treo"). On June 28, 2016 the Company, Sanammad and Treo agreed that the issuance of the Series A Convertible Preferred be rescinded and that such share issuance be cancelled. The Company accounted this cancelation of preferred stock as equity transaction and accordingly the par value of preferred stock adjusted against additional paid in capital account. Each share of the Series A Convertible Preferred Stock is convertible into five (5) shares of the Company's common stock at any time at the discretion of the holder. The Series A Convertible Preferred Stock provides for a liquidation preference as follows; In the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (a "Liquidation"), the assets of the Company available for distribution to its stockholders shall be distributed as follows. The holders of the Series A Convertible Preferred Stock shall be entitled to receive, prior to the holders of the other series of preferred stock, if any, and prior and in preference to any distribution of the assets or surplus funds of the Company to the holders of any other shares of stock of the Company by reason of their ownership of such stock: (i) all shares of common stock of any subsidiary of the Company which are held by the Company: and (ii) an amount equal to $1.00 per share with respect to each share of Series A Convertible Preferred stock, plus all declared but unpaid dividends with respect to such share. The Series A Convertible Preferred Stock also contains super-majority voting rights and a number of protective covenants. As of June 30, 2017 and December 31, 2016 there are -0- and -0- Series A Convertible Preferred shares issued and outstanding; respectively. On August 15, 2016 the Company issued 1,000,000 shares of its Series A Convertible Preferred Stock in exchange for 1,000,000 shares of its Undesignated Preferred Stock (see Footnote 10 - "Preferred Stock" for a discussion of the Company's preferred stock). The Undesignated Preferred Stock was held by Sanammad Foundation and MJNA Investment Holdings, LLC (500,000 shares each), which parties together own a majority of the common stock of the Company. Under the terms of the exchange, the 1,000,000 shares of Series A Convertible Preferred received in the exchange were immediately converted into 5,000,0000 restricted shares of the Company's common stock (2,500,000 shares for each of Sanammad Foundation and MJNA Investment Holdings, LLC). As a result, the Series A Convertible Preferred Stock is retired and no longer available for future issuance. The three members of the Sanammad Foundation also serve as the current three directors of the Company and Sanammad, along with MJNA Investment Holdings, LLC, hold a majority of the outstanding stock of the Company. During the six months ended June 30, 2017, the Company recorded preferred dividend of $ -0-. Series B Convertible Preferred Stock On August 17, 2016 the Company designated up to 500,000 shares of a new Series B Convertible Preferred Stock (Series B Preferred Stock). The holders of the Series B Preferred are entitled to elect three 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 B Convertible Preferred is convertible into one share of the Company's common stock. The Series B 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 B Preferred or the unanimous vote of all three Series B Directors. On August 18, 2016 the Company issued all 500,000 shares of its newly designated Series B Preferred Stock to Sanammad Foundation in exchange for cash of $50,000. As the holders of the Series B Preferred Stock, Sanammad has designated the current directors, Dr. George E. Anastassov, Dr. Phillip A. Van Damme and Mr. Lekhram Changoer as their three Series B Directors. 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. 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. At this time the holders of the Series C Preferred Stock have decided not to elect any Series C Directors. Amended and Restated Bylaws On August 17, 2016 the Company amended its Bylaws to achieve the following: (i) to fix the number of authorized directors at seven (7), comprised of three (3) seats authorized for Series B Directors and four (4) seats authorized for Series C Directors, (ii) ) to set forth that upon there being four Series C Directors, one such director shall be independent as such term is defined in the certificate of designation for the Series C Convertible Preferred Stock and to set forth that the term, conditions and procedures for electing, determining and challenging such director independence are governed by the certificate of designation for the Series C Convertible Preferred Stock, (iii) to set forth that the holders of the Series B Convertible Preferred Stock and the holders of the Series C Convertible Preferred Stock have the right at any time without a meeting and without prior notice to elect their respective Series B and Series C Directors, (iv) that the holders of two-thirds (2/3) of the Series B or Series C Convertible Preferred Stock have the right at any time without a meeting and without prior notice to remove their respective Series B and Series C Directors, (v) to reduce the number of directors needed to constitute a quorum to a majority of the directors then in office, (vi) to subject the right of the board of directors to form a committee to the rights of the holders of the Series B and Series C Convertible Preferred Stock (and to eliminate any committee related provision that might conflict with the rights of the Series B and Series C holders), and (vii) to clarify and set forth that neither the stockholders (other than the holders of the Series B and Series C Convertible Preferred Stock) nor the board of directors has the right to repeal, amend or adopt bylaws without the prior consent of the holders of both the Series B Convertible Preferred Stock and the holders of the Series C Convertible Preferred Stock. Common Stock The Company has authorized 300,000,000 shares of common stock, with a par value of $0.0001 per share. As of June 30, 2017 and December 31, 2016, the Company had 52,569,441 and 52,569,441 shares of common stock issued and outstanding, respectively. On June 13, 2014, the Company entered into an employment agreement with Dr. George Anastassov, its Chief Executive Officer, Chief Financial Officer and Secretary. On September 13, 2015 following fifteen (15) months of continuous employment, and every three months thereafter, the Company was obligated to issue 125,000 restricted shares of the Companys common stock based upon the average ten (10) day closing price immediately preceding the grant date, as quoted on Yahoo.com. During the period ended March 31, 2016, the Company issued 125,000 shares of common stock towards common stock to be issued against expenses incurred worth $52,500 in prior year. On March 13, 2016 and June 13, 2016, the Company was obligated to issue 125,000 restricted shares; respectively, of the Companys common stock based upon the average ten (10) day closing price immediately preceding the grant date, as quoted on Yahoo.com. During the six months ended June 30, 2017, the Company has issued 60,000 shares of common stock valued at $20,064 which were shown as stock to be issued. On May 8, 2017, the Company issued 3,000 shares of common stock valued at $31,800 for consultancy services. |
NOTE 12_ COMMITMENT AND CONTING
NOTE 12: COMMITMENT AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 12: COMMITMENT AND CONTINGENCIES | NOTE 12: COMMITMENT AND CONTINGENCIES On June 13, 2014, the Company entered into an employment agreement with Dr. George Anastassov, its Chief Executive Officer. On September 13, 2015 following fifteen (15) months of continuous employment, and every three months thereafter, the Company was obligated to issue 125,000 restricted shares of the Companys common stock based upon the average ten (10) day closing price immediately preceding the grant date, as quoted on Yahoo.com. During the period ended March 31, 2016, the Company issued 125,000 shares of common stock towards common stock to be issued against expenses incurred worth $52,500 in prior year. On March 13, 2016 and June 13, 2016, the Company was obligated to issue 125,000 restricted shares; respectively, of the Companys common stock based upon the average ten (10) day closing price immediately preceding the grant date, as quoted on Yahoo.com. As of December 31, 2016, the Company has issued these shares. At the year end December 31, 2016 the Company recorded $115,625 of compensation expense in the accompanying condensed consolidated financial statements, to record for the required issuance of the incentive shares. On September 1, 2016, the Company entered into an amended and restated employment agreement with Dr. George Anastassov, its Chief Executive Officer, Chief Financial Officer and Secretary. The agreement does not have a set term and may be terminated at any time by the Company or Dr. Anastassov with proper notice. Under the agreement, Dr. Anastassov receives an annual base compensation of $240,000 and an incentive payment of 2,000,000 shares of the Companys common stock due upon execution of the agreement. Upon the one year anniversary of the agreement, the Company has the direction to grant additional equity awards to Dr. Anastassov. On September 1, 2016, the Company entered into an amended and restated employment agreement with Mr. Lekharm Changoer, its Chief Technology Officer. The agreement does not have a set term and may be terminated at any time by the Company or Mr. Changoer with proper notice. Under the agreement Mr. Changoer receives an annual base compensation of $240,000 and an incentive payment of 2,000,000 shares of the Companys common stock due upon execution of the agreement. Upon the one year anniversary of the agreement, the Company has the discretion to grant additional equity awards to Mr. Changoer. On September 15, 2016 The company entered into an employment agreement with Philip A. Van Damme, its Chief Medical Officer. The agreement does not have a set term and may be terminated at any time by the Company or D. Van A. Damme with proper notice. Under the agreement Dr. Van A. Damme. The shares were issued in the 4 th The Company entered into a reservation agreement with the Municipality of Almere in the Netherlands. In October 2015 the Company paid the reservation fee in the amount of $65,170.The reservation fee deposit gives the company an exclusive right to purchase the building land for a purchase price of 1,110,000. Starting in October 2016 the second reservation period was extended for a period of twelve (12) months expiring October 2017. The Company may not have the ability to acquire the land prior to the expiration of the extended reservation term. Therefore, in that case, the Company intends to seek another extension of the reservation period, however, there can be no assurance that the municipality will agree to such an extension in which case the reservation fee would be forfeited. Operating Lease The company is renting an office at 45 Rockefeller Plaza 20 th Litigation As of June 30, 2017 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 Companys Common Stock is a party adverse to the Company or has a material interest adverse to the Company in any proceeding. |
NOTE 13_ GOING CONCERN
NOTE 13: GOING CONCERN | 6 Months Ended |
Jun. 30, 2017 | |
Notes | |
NOTE 13: GOING CONCERN | NOTE 13: GOING CONCERN The Companys consolidated financial statements have been presented assuming that the Company will continue as a going concern. As shown in the consolidated financial statements, the Company has negative working capital of $601,311 and has an accumulated deficit of $19,158,523 has cash used in operating activities of continuing operations $1,049,531, 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 unaudited condensed consolidated 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. |
NOTE 3_ SIGNIFICANT ACCOUNTIN20
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Use of estimates (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Use of estimates | Use of estimates The preparation of the unaudited 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. |
NOTE 3_ SIGNIFICANT ACCOUNTIN21
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Cash equivalents (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Cash equivalents | 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. |
NOTE 3_ SIGNIFICANT ACCOUNTIN22
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Inventory (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Inventory | Inventory Inventory consists of finished goods available for sale and raw materials owned by the Company and are stated at the lower of cost or market. During the six months ended June 30, 2017, the Company wrote off finished goods inventory worth $ -0-. As of June 30, 2017 the finished goods inventory totaled $0 and raw materials in production totaled $46,795 and raw materials for clinical trials totaled $16,887. |
NOTE 3_ SIGNIFICANT ACCOUNTIN23
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Property and equipment (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Property and equipment | 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. For both the three and six months ended June 30, 2017 and 2016 the Company recorded $839 and $1,678 of depreciation expense, respectively. |
NOTE 3_ SIGNIFICANT ACCOUNTIN24
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Intangible Assets (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Intangible Assets | Intangible Assets As required by generally accepted accounting principles, trademarks and patents are not amortized since they have an indefinite life. Instead, they are tested annually for impairment. Intangible assets as of June 30, 2017 amounted to $63,167 net of accumulated impairment losses of $652,265. |
NOTE 3_ SIGNIFICANT ACCOUNTIN25
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Revenue Recognition | Revenue Recognition The Company recognizes revenue on four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on managements judgments regarding the fixed nature of the fee charged for services rendered and products delivered and the collectability of those fees. Revenue is generally recognized upon shipment. Revenues from continuing operations recognized for the three and six months ended June 30, 2017 and 2016 amounted to $3,738 and $11,241 and $22,358 and $25,246, respectively. |
NOTE 3_ SIGNIFICANT ACCOUNTIN26
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Axim Biotechnologies, Inc. and its wholly owned subsidiaries Axim Holdings, Inc. and Can Chew License Company as of June 30, 2017. All significant intercompany transactions and balances have been eliminated in consolidation. |
NOTE 3_ SIGNIFICANT ACCOUNTIN27
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Derivative Liabilities (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Derivative Liabilities | Derivative Liabilities The Company assessed the classification of its derivative financial instruments as of June 30, 2017, which consist of convertible instruments and rights to shares of the Companys common stock, and determined that such derivatives meet the criteria for liability classification under ASC 815. ASC 815 generally provides 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 instrument 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 subject to the requirement of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deem to be conventional, as described. |
NOTE 3_ SIGNIFICANT ACCOUNTIN28
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Fair Value of Financial Instruments (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Effective January 1, 2008, the Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, or ASC 820, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements established a framework for measuring fair value and expands disclosure about such fair value measurements. The adoption of ASC 820 did not have an impact the Companys financial position or operating results, but did expand certain disclosures. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market date Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entitys own assumptions. The company did not have any Level 2 or Level 3 assets or liabilities as of June 30, 2017, with the exception of its convertible notes payable and derivative liability. The carrying amounts of these liabilities at June 30, 2017 approximate their respective fair value based on the Companys incremental borrowing rate. Cash is considered to be highly liquid and easily tradable as of June 30, 2017 and therefore classified as Level 1 within our fair value hierarchy. In addition, FASB ASC 825-10-25 Fair Value Option, or ASC 825-10-25, was effective for January 1, 2008. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments. |
NOTE 3_ SIGNIFICANT ACCOUNTIN29
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Convertible Instruments (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Convertible Instruments | 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 provides 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 entitys control could or require net cash settlement, then the contract shall be classified as an asset or a liability. |
NOTE 3_ SIGNIFICANT ACCOUNTIN30
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Income Taxes (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Income Taxes | 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. |
NOTE 3_ SIGNIFICANT ACCOUNTIN31
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Concentrations of Credit Risk (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Concentrations of Credit Risk | 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. The Company does not have accounts receivable and allowance for doubtful accounts at June 30, 2017 and December 31, 2016. |
NOTE 3_ SIGNIFICANT ACCOUNTIN32
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Net Loss per Common Share (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Net Loss per Common Share | 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 17,120,567 common share equivalents at June 30, 2017 and 16,216,652 common shares at December 31, 2016. For the three and six months ended June 30, 2017 and 2016 these potential shares were excluded from the shares used to calculate diluted earnings per share as their inclusion would reduce net loss per share. |
NOTE 3_ SIGNIFICANT ACCOUNTIN33
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Stock Based Compensation (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Stock Based Compensation | 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. |
NOTE 3_ SIGNIFICANT ACCOUNTIN34
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Cost of Sales (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Cost of Sales | 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. |
NOTE 3_ SIGNIFICANT ACCOUNTIN35
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Research and Development (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Research and Development | 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. The Company incurred research and development expenses of $62,949 and $45,049 and $203,314 and $76,229 for the three and six months ended June 30, 2017 and 2016; respectively. |
NOTE 3_ SIGNIFICANT ACCOUNTIN36
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Shipping Costs (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Shipping Costs | 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. |
NOTE 3_ SIGNIFICANT ACCOUNTIN37
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Recently Issued Accounting Standards (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Policies | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. This new standard will be effective for the Company on January 1, 2018; however, early adoption is permitted with prospective application to any business development transaction. In January 2017, the FASB issued ASU 2017-04, Intangibles Goodwill and Other (Topic 350) In August 2014, the FASB issued ASU 2014-15 requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entitys ability to continue as a going concern, which is currently performed by the external auditors. Management will be required to perform this assessment for both interim and annual reporting periods and must make certain disclosures if it concludes that substantial doubt exists. This ASU is effective for annual periods, and interim periods within those annual periods, beginning on or after December 15, 2016. The adoption of this guidance is not expected to have a material effect on our financial statements. In October 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-16-Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory. ASU 2016-16 will require the tax effects of intercompany transactions, other than sales of inventory, to be recognized currently, eliminating an exception under current GAAP in which the tax effects of intra-entity asset transfer are deferred until the transferred asset is sold to a third party or otherwise recovered through use. The guidance will be effective for the first interim period of our 2019 fiscal year, with early adoption permitted. In August 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ASU N. 2016-15, Classification of Certain Cash Receipts an Cash Payments (ASU 2016-15). ASU 2016-15 provides guidance regarding the classification of certain items within the statement of cash flows. ASU 2016-15 is effective for annual periods beginning afer December 15, 2017 with early adoption permitted. In connection with its financial instruments project, the FASB issued ASU 2016-13- Financial Instruments Credit Losses: Measurement of Credit Losses on Financial Instruments in June 2016 and ASU 2016-01 Financial Instruments Overall: Recognition and Measurement of Financial Assets and Financial Liabilities in January 2016. · · In April 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) ASU 2016 10 Revenue from Contract with Customers: identifying Performance Obligations and Licensing. The amendments in this Update clarify the two following aspects (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entitys promise to grant a license provides a customer with either a right to use the entitys intellectual property (which is satisfied at a point in time) or a right to access the entitys intellectual property (which is satisfied over time). The amendments in this Update are intended to reduce the degree of judgment necessary to comply with Topic 606. This guidance has no effective date as yet. The Company is currently evaluating the impact of adopting this guidance. In March 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) ASU 2016 09 Improvements to Employee Share-Based Payment Accounting which is intended to improve the accounting for employee share-based payments. The ASU simplifies several aspects of the accounting for share-based payment award transactions, including; the income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The new standard is effective for fiscal years and interim periods beginning after December 15, 2016, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance. In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, which amends the guidance in U.S. GAAP on accounting for operating leases, a lessee will be required to recognize assets and liabilities for operating leases with lease terms of more than 12 months on the balance sheet. The new standard is effective for fiscal years and interim periods beginning after December 15, 2018, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted. The Company is currently evaluating the impact of adopting this guidance. In January 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-01, which amends the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affect the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifies guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard is effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except for the provision to record fair value changes for financial liabilities under the fair value option resulting from instrument-specific credit risk in other comprehensive income. The Company is currently evaluating the impact of adopting this guidance. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. 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 4_ PREPAID EXPENSES_ Sched
NOTE 4: PREPAID EXPENSES: Schedule of Prepaid Expenses (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Prepaid Expenses | June 30, 2017 December 31, 2016 Prepaid interest and insurance $ 83,836 $ 40,753 $ 83,836 $ 40,753 |
NOTE 6_ PROMISSORY NOTE - REL39
NOTE 6: PROMISSORY NOTE - RELATED PARTY: Schedule of Promissory Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Promissory Notes Payable | June 30, 2017 December 31, 2016 Promissory note payable, due on demand, interest at 3% p.a. $ 880,000 $ 880,000 Accrued Interest 100,818 88,564 $ 980,818 $ 968,564 |
NOTE 9_ CONVERTIBLE NOTES PAY40
NOTE 9: CONVERTIBLE NOTES PAYABLE: Schedule of Convertible Notes Payable, Shareholder (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Convertible Notes Payable, Shareholder | June 30, 2017 December 31, 2016 Convertible note payable, due on July 1, 2028, interest at 3.5% p.a. $ 45,000 $ 45,000 Accrued interest 1,601 792 $ 46,601 $ 45,793 |
NOTE 9_ CONVERTIBLE NOTES PAY41
NOTE 9: CONVERTIBLE NOTES PAYABLE: Schedule of Convertible Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Tables/Schedules | |
Schedule of Convertible Notes Payable | June 30, 2017 December 31, 2016 Convertible note payable, due on April 21, 2025, interest at 4% p.a. $ 216,100 $ 216,100 Convertible note payable, due on October 1, 2029, interest at 3.5% p.a. 850,000 850,000 Convertible note payable, due on October 1, 2029, interest at 3.5% p.a. 1,000,000 1,000,000 Convertible note payable, due on December 12, 2018, interest at 8% p.a. 4,210,000 - Finance premium costs payable, due on December 12, 2018 1,050,000 - Accrued interest 69,638 15,646 Total 7,395,738 2,081,746 Less unamortized debt discount (2,533,739) (1,323,606) Convertible note payable, net 4,861,999 758,140 Less current portion 2,000,000 - Long term portion $ 2,861,999 $ 758,140 |
NOTE 1_ ORGANIZATION (Details)
NOTE 1: ORGANIZATION (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Details | |
Entity Incorporation, State Country Name | Nevada |
Entity Incorporation, Date of Incorporation | Nov. 18, 2010 |
Entity Information, Former Legal or Registered Name | Axim International Inc. |
Entity Information, Date to Change Former Legal or Registered Name | Jul. 24, 2014 |
NOTE 3_ SIGNIFICANT ACCOUNTIN43
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Inventory (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Details | |
Inventory write-off, Finished Goods | $ 0 |
Inventory, Finished Goods | 0 |
Inventory, Raw Materials in Production | 46,795 |
Inventory, Raw Materials for clinical trials | $ 16,887 |
NOTE 3_ SIGNIFICANT ACCOUNTIN44
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Property and equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Depreciation | $ 839 | $ 839 | $ 1,678 | $ 1,678 |
NOTE 3_ SIGNIFICANT ACCOUNTIN45
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Intangible Assets (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Details | |
Intangible Assets, Net (Excluding Goodwill) | $ 63,167 |
Impairment of Intangible Assets (Excluding Goodwill) | $ 652,265 |
NOTE 3_ SIGNIFICANT ACCOUNTIN46
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Revenue Recognition (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Revenue, Continuing Operations | $ 3,738 | $ 22,358 | $ 11,241 | $ 25,246 |
NOTE 3_ SIGNIFICANT ACCOUNTIN47
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Net Loss per Common Share (Details) - shares | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Common Share Equivalents | 17,120,567 | 16,216,652 |
NOTE 3_ SIGNIFICANT ACCOUNTIN48
NOTE 3: SIGNIFICANT ACCOUNTING POLICIES: Research and Development (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Research and development expenses | $ 62,949 | $ 45,049 | $ 203,314 | $ 76,229 |
NOTE 4_ PREPAID EXPENSES_ Sch49
NOTE 4: PREPAID EXPENSES: Schedule of Prepaid Expenses (Details) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Details | ||
Prepaid expenses | $ 83,836 | $ 40,753 |
NOTE 4_ PREPAID EXPENSES (Detai
NOTE 4: PREPAID EXPENSES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||||
Amortization of Prepaid Expenses | $ 20,959 | $ 41,917 | $ 159,506 | $ 779,054 |
NOTE 5_ RESERVATION FEE DEPOS51
NOTE 5: RESERVATION FEE DEPOSIT (Details) | 1 Months Ended |
Oct. 31, 2015USD ($) | |
Details | |
Reservation Fee | $ 65,170 |
NOTE 6_ PROMISSORY NOTE - REL52
NOTE 6: PROMISSORY NOTE - RELATED PARTY: Schedule of Promissory Notes Payable (Details) - Promissory note - related party - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument, Description | Promissory note payable | |
Debt Instrument, Interest Rate, Stated Percentage | 3.00% | |
Debt Instrument, Face Amount | $ 880,000 | $ 880,000 |
Interest Payable, Current | 100,818 | 88,564 |
Long-term Debt | $ 980,818 | $ 968,564 |
NOTE 6_ PROMISSORY NOTE - REL53
NOTE 6: PROMISSORY NOTE - RELATED PARTY (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Promissory note - related party | ||||
Interest Expense, Promissory Note | $ 6,581 | $ 12,087 | $ 12,254 | $ 24,009 |
NOTE 7_ RELATED PARTY TRANSAC54
NOTE 7: RELATED PARTY TRANSACTIONS (Details) | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Related Party Transaction 1 | |
Related Party Transaction, Description of Transaction | Company has received working capital advances from CCB |
Related Party Transaction, Amounts of Transaction | $ 1,619,067 |
Related Party Transaction, Date | Jun. 30, 2017 |
Related Party Transaction 2 | |
Related Party Transaction, Description of Transaction | Company owes $5,000 to the president of the Company |
Related Party Transaction, Amounts of Transaction | $ 5,000 |
Related Party Transaction 3 | |
Related Party Transaction, Description of Transaction | Company issued 1,000,000 shares of its Series A Convertible Preferred Stock |
Related Party Transaction, Date | Aug. 15, 2016 |
Related Party Transaction 4 | |
Related Party Transaction, Description of Transaction | Company issued all 500,000 shares of its newly designated Series B Preferred Stock |
Related Party Transaction, Amounts of Transaction | $ 50,000 |
Related Party Transaction, Date | Aug. 18, 2016 |
Related Party Transaction 5 | |
Related Party Transaction, Description of Transaction | Company issued all 500,000 shares of its newly designated Series C Preferred Stock |
Related Party Transaction, Amounts of Transaction | $ 65,000 |
Related Party Transaction, Date | Aug. 18, 2016 |
NOTE 8_ DUE TO FIRST INSURANC55
NOTE 8: DUE TO FIRST INSURANCE FUNDING (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Details | ||
Insurance, Cash Down Payment | $ 17,000 | |
Amortization of prepaid insurance | $ 41,917 | $ 42,616 |
NOTE 9_ CONVERTIBLE NOTES PAY56
NOTE 9: CONVERTIBLE NOTES PAYABLE: Schedule of Convertible Notes Payable, Shareholder (Details) - Convertible notes payable due to shareholder - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Debt Instrument, Description | Convertible note payable | |
Debt Instrument, Maturity Date | Jul. 1, 2028 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | |
Debt Instrument, Face Amount | $ 45,000 | $ 45,000 |
Interest Payable, Current | 1,601 | 792 |
Long-term Debt | $ 46,601 | $ 45,793 |
NOTE 9_ CONVERTIBLE NOTES PAY57
NOTE 9: CONVERTIBLE NOTES PAYABLE: Schedule of Convertible Notes Payable (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Total | $ 7,395,738 | $ 2,081,746 |
Less unamortized debt discount | (2,533,739) | (1,323,606) |
Convertible note payable, net | 4,861,999 | 758,140 |
Less current portion | 2,000,000 | 0 |
Long term portion | $ 2,861,999 | 758,140 |
Convertible Note 1 | ||
Debt Instrument, Description | Convertible note payable | |
Debt Instrument, Maturity Date | Apr. 21, 2025 | |
Debt Instrument, Interest Rate, Stated Percentage | 4.00% | |
Debt Instrument, Face Amount | $ 216,100 | 216,100 |
Convertible Note 2 | ||
Debt Instrument, Description | Convertible note payable | |
Debt Instrument, Maturity Date | Oct. 1, 2029 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | |
Debt Instrument, Face Amount | $ 850,000 | 850,000 |
Convertible Note 3 | ||
Debt Instrument, Description | Convertible note payable | |
Debt Instrument, Maturity Date | Oct. 1, 2029 | |
Debt Instrument, Interest Rate, Stated Percentage | 3.50% | |
Debt Instrument, Face Amount | $ 1,000,000 | 1,000,000 |
Convertible Note 4 | ||
Debt Instrument, Description | Convertible note payable | |
Debt Instrument, Maturity Date | Dec. 12, 2018 | |
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | |
Debt Instrument, Face Amount | $ 4,210,000 | 0 |
Finance Premium Costs | ||
Debt Instrument, Description | Finance premium costs payable | |
Debt Instrument, Maturity Date | Dec. 12, 2018 | |
Debt Instrument, Face Amount | $ 1,050,000 | 0 |
Convertible Notes | ||
Accrued interest | $ 69,638 | $ 15,646 |
NOTE 10_ STOCK INCENTIVE PLAN (
NOTE 10: STOCK INCENTIVE PLAN (Details) | Jun. 30, 2017shares |
Details | |
Stock Incentive Plan, Shares Available for Issuance | 9,856,000 |
NOTE 11_ STOCKHOLDERS' DEFICIT
NOTE 11: STOCKHOLDERS' DEFICIT (Details) - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 | Aug. 18, 2016 |
Shares authorized, Series A Convertible Preferred Stock | 1,000,000 | ||
Shares issued, Series B Preferred Stock | 500,000 | ||
Shares issued, Series C Preferred Stock | 500,000 | ||
Common Stock, Shares Authorized | 300,000,000 | ||
Common Stock, Par or Stated Value Per Share | $ 0.0001 | ||
Common Stock, Shares, Issued | 52,569,441 | 52,506.441 | |
Common Stock, Shares, Outstanding | 52,569,441 | 52,506.441 | |
Preferred Stock | |||
Preferred Stock, Shares Authorized | 5,000,000 | 5,000,000 | |
Preferred Stock, Par or Stated Value Per Share | $ 0.0001 | $ 0.0001 |
NOTE 12_ COMMITMENT AND CONTI60
NOTE 12: COMMITMENT AND CONTINGENCIES (Details) | 6 Months Ended |
Jun. 30, 2017 | |
Commitment 1 | |
Other Commitments, Description | On June 13, 2014, the Company entered into an employment agreement with Dr. George Anastassov, its Chief Executive Officer |
Commitment 2 | |
Other Commitments, Description | On September 1, 2016, the Company entered into an amended and restated employment agreement with Dr. George Anastassov, its Chief Executive Officer, Chief Financial Officer and Secretary |
Commitment 3 | |
Other Commitments, Description | On September 1, 2016, the Company entered into an amended and restated employment agreement with Mr. Lekharm Changoer, its Chief Technology Officer |
Commitment 4 | |
Other Commitments, Description | On September 15, 2016 The company entered into an employment agreement with Philip A. Van Damme, its Chief Medical Officer |
Commitment 5 | |
Other Commitments, Description | The Company entered into a reservation agreement with the Municipality of Almere in the Netherlands |
Commitment 6 | |
Other Commitments, Description | The company is renting an office |
NOTE 13_ GOING CONCERN (Details
NOTE 13: GOING CONCERN (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Details | |||
Working Capital | $ (601,311) | ||
Accumulated deficit | (19,158,523) | $ (18,069,636) | |
Net cash used in operating activities | $ (1,049,531) | $ (545,558) |