Attached files
| file | filename |
|---|---|
| EX-99.1 - QSAM Biosciences, Inc. | ex99-1.htm |
| EX-10.3 - QSAM Biosciences, Inc. | ex10-3.htm |
| EX-10.2 - QSAM Biosciences, Inc. | ex10-2.htm |
| EX-10.1 - QSAM Biosciences, Inc. | ex10-1.htm |
| 8-K - QSAM Biosciences, Inc. | form8-k.htm |
Exhibit 99.2
DISCONTINUED OPERATIONS
On November 6, 2020, the Company entered into an Omnibus Separation Agreement with Earth Property Holdings LLC (EPH), a related party, whereby the Company, in effect transferred a segment of its business and the related assets and liabilities to EPH.
ASC 205-20 “Discontinued Operations” establishes that the disposal or abandonment of a component of an entity or a group of components of an entity should be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. As a result, the component’s results of operations have been reclassified as discontinued operations on a retrospective basis for all periods presented. Accordingly, the assets and liabilities of this component are separately reported as “assets and liabilities held for disposal” as of December 31, 2019 and June 30, 2020. The results of operations of this component, for all periods, are separately reported as “discontinued operations”.
A reconciliation of the major classes of line items constituting the loss from discontinued operations, net of income taxes as is presented in the Consolidated Statements of Operations for the period ended June 30, 2020, and the year ended December 31, 2019 are summarized below:
| For the six months ended | For the twelve months ended | |||||||
| June 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| REVENUES | ||||||||
| Revenues | $ | - | $ | 250,000 | ||||
| OPERATING EXPENSES | ||||||||
| Payroll and related expenses | 49,182 | 84,986 | ||||||
| Professional fees | 173,561 | 362,522 | ||||||
| General and administrative | 64,942 | 39,317 | ||||||
| Research and development expenses | 110,000 | - | ||||||
| Total Operating Expenses | 397,684 | 486,825 | ||||||
| LOSS FROM OPERATIONS | (397,684 | ) | (236,825 | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Financing costs including interest | (278,161 | ) | (540,877 | ) | ||||
| Change in fair value of convertible bridge notes | (323,185 | ) | 1,057,877 | |||||
| Loss on equity method investment | - | (21,588 | ) | |||||
| Total Other Income (Expense) | (601,346 | ) | 495,412 | |||||
| Income (Loss) from continuing operations before income taxes | (999,030 | ) | 258,587 | |||||
| Income taxes | - | - | ||||||
| Loss from continuing operations | (999,030 | ) | 258,587 | |||||
| Loss from discontinued operations | (311,015 | ) | (940,566 | ) | ||||
| NET LOSS | (1,310,046 | ) | (681,979 | ) | ||||
| PREFERRED STOCK | ||||||||
| Series A convertible contractual dividends | (17,292 | ) | (36,000 | ) | ||||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | (1,327,338 | ) | $ | (717,979 | ) | ||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS: BASIC AND DILUTED | ||||||||
| Continuing operations | $ | (0.02 | ) | $ | 0 | |||
| Discontinued operations | $ | (0.01 | ) | $ | (0.02 | ) | ||
| $ | (0.02 | ) | $ | (0.01 | ) | |||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES | ||||||||
| OUTSTANDING: BASIC AND DILUTED | 56,555,471 | 51,997,460 | ||||||
A reconciliation of the major classes of line items constituting the discontinued operations in the Consolidated Balance Sheets as of June 30, 2020, and December 31, 2019 are summarized below:
| June 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 19,601 | $ | 478 | ||||
| Prepaid expenses and other assets | - | 7,665 | ||||||
| TOTAL CURRENT ASSETS | 19,601 | 8,143 | ||||||
| TOTAL ASSETS | $ | 19,601 | $ | 8,143 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable and accrued expenses | $ | 125,060 | $ | 47,240 | ||||
| Notes payable - convertible | 60,000 | - | ||||||
| Paycheck Protection Program Loan | 142,942 | - | ||||||
| Debentures | 165,000 | 165,000 | ||||||
| Convertible bridge notes, at fair value | 3,074,000 | 2,473,000 | ||||||
| Liabilities held for disposal | 1,517,217 | 1,147,634 | ||||||
| TOTAL CURRENT LIABILITIES | 5,084,219 | 3,832,874 | ||||||
| TOTAL LIABILITIES | 5,084,219 | 3,832,874 | ||||||
| Redeemable convertible preferred stock - Series A; $0.0001 par value, 1,500 designated Series A, 600 shares issued and outstanding (liquidation preference of $765,896) | 765,896 | 748,604 | ||||||
| STOCKHOLDERS’ DEFICIT | ||||||||
| Preferred stock, $0.0001 par value; 5,000,000 shares authorized, no shares issued and outstanding | - | - | ||||||
| Common stock, $0.0001 par value, 100,000,000 shares authorized, 56,997,460 and 51,997,460 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 5,699 | 5,199 | ||||||
| Additional paid-in capital | 6,527,209 | 6,470,676 | ||||||
| Deferred stock-based compensation | (4,167 | ) | - | |||||
| Accumulated deficit | (12,359,255 | ) | (11,049,210 | ) | ||||
| TOTAL STOCKHOLDERS’ DEFICIT | (5,830,514 | ) | (4,573,335 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 19,601 | $ | 8,143 | ||||
The following tables presents (1) the reconciliation of carrying amounts of major classes of assets and liabilities of the Company classified as discontinued operations in the consolidated balance sheet at June 30, 2020 and December 31, 2019; and (2) a summary of accrued salaries to the Company’s former CEO and former President for the period ended June 30, 2020 and the year ended December 31, 2019:
| June 30, | December 31, | |||||||
| 2020 | 2019 | |||||||
| Carrying amounts of major classes of liabilities included as part of liabilities held for disposal | ||||||||
| Accounts payable and accrued expenses | $ | 212,894 | $ | 193,708 | ||||
| Accrued payroll and related expenses | 160,254 | - | ||||||
| Accrued bonus | 150,000 | 150,000 | ||||||
| Accrued interest - related parties | 42,896 | 15,426 | ||||||
| Notes payable - related parties | 951,173 | 788,500 | ||||||
| Total liabilities included in the liabilities held for disposal | $ | 1,517,217 | $ | 1,147,634 | ||||
| Accrued payroll and related expenses | Chairman/CEO | President | ||||||
| January 1, 2019, balance | $ | - | $ | - | ||||
| Accrued payroll | - | - | ||||||
| December 31, 2019, balance | - | - | ||||||
| Accrued payroll | 106,095 | 54,159 | ||||||
| June 30, 2020, balance | $ | 106,095 | $ | 54,159 | ||||