UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): December 6, 2021

QSAM BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

On December 31, 2020, QSAM Biosciences, Inc. (the “Company”) reported on Form 8-K an amendment to its Certificate of Incorporation authorizing the issuance of up to 8,500 shares of Series E-1 Preferred Stock (the “E-1 Stock”) and issuance of 7,650 shares of E-1 Stock to certain officers, directors and key personnel of the Company. The Company issued the remaining 850 shares of E-1 Stock to a newly appointed independent director in February 2021. The E-1 Stock contains certain rights and priorities over the Company’s common stockholders, such as the right to receive in the aggregate and on a first priority non-dilutable basis 20% of the value of the ultimate sale, licensing or commercialization of the Company’s radiopharmaceutical technology. In light of the progress the Company has made during the last year in advancing its radiopharmaceutical technology into clinical trials and the additional equity funding that management anticipates will be required to continue to advance this technology through possible commercialization, the Company’s Board of Directors (the “Board”) determined that such rights and priorities may complicate the Company’s future fund raising efforts, and as a result, create unintended impediments to ultimately maximizing the potential value of the Company’s assets for all shareholders. After significant analysis and discussion, the Board approved a plan to exchange the E-1 Stock for common stock and to retire all the shares of E-1 Stock.

On December 6, 2021, the Company entered into an Exchange Agreement and Plan of Reorganization (the “Exchange Agreement”) with all E-1 Stock holders pursuant to which all shares of series E-1 Stock were exchanged into an aggregate of 28,839,428 shares of common stock of the Company. The value of the E-1 Stock was determined to be approximately $8.65 million, and was based upon a valuation report provided to the Board by an independent third party expert, and approved for fairness by the independent chairman of the Compensation Committee. The common stock was valued at $0.30 per share based on a 30-day weighted average closing price calculation, and was issued proportionately to each holder based on their individual holdings of E-1 Stock. All shares of common stock issued to the shareholders are subject to the same vesting schedules as was originally provided in each shareholder’s E-1 Stock issuance agreement, meaning that such shares are forfeitable if certain conditions of employment are not met by the holders, and as further described in the Exchange Agreement. As of the current date, approximately 7.2 million of these common shares are subject to such forfeiture provisions.

The foregoing description of the Exchange Agreement is qualified in its entirety by reference to the agreement attached hereto as Exhibit 10.1.

The disclosure in Item 1.01 above is incorporated by reference in its entirety.

The common stock issued in exchange for the E-1 Stock was not registered under the Securities Act of 1933, as amended, but was issued in reliance on an exemption from registration set forth in Section 4(a)(2) of the Securities Act.

The disclosure in Item 1.01 above is incorporated by reference in its entirety.

Amended and Restated Employment Agreements

On December 6, 2021, the Company and each named executive officer listed below entered into an amended and restated employment agreement, which became effective on the same day. The material terms of the employment agreement for each of C. Richard Piazza, Douglas R. Baum, and Christopher Nelson are as follows:

The foregoing description of each of the agreements is qualified in its entirety by reference to the amended and restated employment agreements attached hereto as Exhibits 10.2, 10.3, and 10.4.

Forward-Looking Statements

This Current Report on Form 8-K hereto contains “forward-looking statements”. Forward-looking statements can generally be identified by the use of words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “potential,” “seek,” “should,” “think,” “will,” “would” and similar expressions, or they may use future dates. These forward-looking statements are subject to assumptions, risks and uncertainties that may change at any time, and readers are therefore cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause actual results to differ include, among other things: risks and uncertainties associated with market conditions and our ability to raise capital, our lack of an operating history, obtaining Federal Drug Administration (“FDA”) or other regulatory approvals or clearances for our technology, implementing and achieving successful outcomes for clinical trials of our products, any failure to comply with rigorous FDA and other government regulations, availability of nuclear reactors to manufacture our products, transportation, handling, and disposal of radioactive drugs, changes in regulations of the Nuclear Regulatory Commission (NRC) or the Environmental Protection Agency (EPA) or similar state regulatory agencies, and other risks and uncertainties discussed in the Company’s filings with the SEC, including the “Risk Factors” sections of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The Company undertakes no obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as expressly required by law. All forward-looking statements in this document are qualified in their entirety by this cautionary statement. 

(d) Exhibits

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: December 10, 2021