Item 1.01 Entry into a Material Definitive Agreement.
On March 17, 2020, AXIM Biotechnologies, Inc., a Nevada corporation (“AXIM”) entered into a Share Exchange Agreement (“Agreement”) with Sapphire Biotech, Inc., a Delaware corporation (“Sapphire”) and all of the Sapphire stockholders (collectively, the “Sapphire Stockholders”). Following the closing of the transaction, Sapphire will become a wholly owned subsidiary of AXIM.
Under the terms of the Agreement, AXIM intends to: (i) acquire 100% of Sapphire’s outstanding capital (consisting of 100,000,000 shares of common stock and zero (0) shares of Preferred Stock); and (ii) assume all of the outstanding debt of Sapphire. The outstanding debt includes two (2) convertible notes in the principal amounts of $310,000 and $190,000, respectfully.
Pursuant to the terms of the Share Exchange Agreement, AXIM acquired 100% of the issued and outstanding shares of Sapphire by means of a share exchange with the Sapphire Stockholders in exchange for 54,000,000 newly issued shares of the common stock of AXIM (the “Share Exchange”). As a result of the Share Exchange, Sapphire became a 100% owned subsidiary of AXIM, which on a going forward basis will result in consolidated financial reporting by AXIM to include the results of Sapphire. The closing of the Share Exchange occurred concurrently with entry into the Share Exchange Agreement (the “Closing”).
As a condition of the Share Exchange, certain Sapphire Stockholders (each a “Sapphire Management Stockholder”) executed agreements which contain certain lock-up and leak out restrictions (the “Lock-up Agreement(s)”) on the AXIM securities (the “Lock-up Securities”) they acquired in the Share Exchange.
Pursuant to the Lock-up Agreements:
a Sapphire Management Stockholder may sell the Lock-up Securities at any time following the 1-year anniversary and prior to the 2-year anniversary of the Closing, provided that the Management Sapphire Stockholder does not sell securities in an amount greater than 2.5% of the daily volume times a percentage equal to the Management Sapphire Stockholder’s pro rata share of the aggregate shares owned by the Sapphire Management Stockholders as a group on any given trading day.
a Sapphire Management Stockholder may sell the balance of the Lock-up Securities at any time following the 2-year anniversary and prior to the 3-year anniversary of the Closing, provided that the Management Sapphire Stockholder does not sell securities in an amount greater than 5.0% of the daily volume times a percentage equal to the Management Sapphire Stockholder’s pro rata share of the aggregate shares owned by the Sapphire Management Stockholders as a group on any given trading day.
the Lock-up Agreements expire on the third anniversary of the Closing and a Sapphire Management Stockholder may sell the balance of any Lock-up Securities at any time following the 3-year anniversary of the Closing.
A form of Lock-up Agreement is attached hereto as Exhibit 10.1 and incorporated herein by reference.
The Share Exchange Agreement also includes customary representations, warranties and covenants by the parties, including, but not limited to, representations by Sapphire related to its business, by the Sapphire Stockholders related to their right, title and interest in their shares of Sapphire and accredited investor status, and by AXIM related to its capitalization and its authority to enter into the agreement.
The 54,000,000 newly issued shares of AXIM common stock issued to the Sapphire Stockholders shall constitute approximately 45.43% of the number of shares of the issued and outstanding common stock of AXIM after giving effect to the Share Exchange. The shares of common stock of AXIM issued and outstanding immediately prior to the Closing will remain issued and outstanding. As a result of the Share Exchange, AXIM will acquire the business of Sapphire, which includes all assets owned by Sapphire.
Sapphire is a research and development company that aims to improve global cancer care through the development of proprietary therapeutics for inhibiting cancer growth and metastasis.
The foregoing descriptions of the Share Exchange Agreement and form of Lock-up Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Share Exchange Agreement and form of Lock-up Agreement, copies of which are filed as Exhibits 2.1 and 10.1, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.