Mosaic ImmunoEngineering Inc

Previous wording

In addition, under the Binding Term Sheet, (i) we will continue the development work necessary to achieve the mutually agreed upon milestones upon the requisite funding, (ii) Oncotelic will provide a loan to us to cover certain operational costs of the Company through June 1, 2024, (iii) Oncotelic will assist the Company in potentially raising initial funding to support the technologies of $2 million, and (iv) in the event the Company is unable to raise the requisite funding, then the transaction may proceed to a reverse acquisition/merger, with conditions typical of such a transaction.

Current wording

In addition, under the Binding Term Sheet, (i) we will continue the development work necessary to achieve the mutually agreed upon milestones upon the requisite funding, (ii) Oncotelic will provide a loan to us to cover certain operational costs of the Company initially through June 2024, (iii) Oncotelic will assist the Company in potentially raising initial funding to support the technologies of $2 million, and (iv) in the event the Company is unable to raise the requisite funding, then the transaction may proceed to a reverse acquisition/merger, with conditions typical of such a transaction.

Previous wording

If we do not receive shareholder approval for the transaction and receive the required waivers from the holders of the Convertible Notes within ninety (90) days of signing the Binding Term Sheet (or by July 25, 2024), we may not be able to enter into a definitive agreement with Oncotelic, and we may need to cease our operations altogether.

Current wording

If we do not receive shareholder approval for the transaction and receive the required waivers from the holders of the Convertible Notes within ninety (90) days of signing the Binding Term Sheet (or by July 25, 2024), we may not be able to enter into a definitive agreement with Oncotelic, and we may need to cease our operations altogether. On August 9, 2024, the expiration date to enter into a possible transaction with Oncotelic was extended from July 25, 2024 to December 31, 2024 (see Note 12 to the accompanying unaudited condensed consolidated financial statements).

Previous wording

On May 8, 2024, we entered into a convertible note purchase agreement with Oncotelic for up to $70,000 in funding and we received initial loan proceeds from Oncotelic of $40,000 to pay certain expenses of the Company in exchange for an unsecured convertible note (“Note”) pursuant to the Binding Term Sheet. The Note bears interest at a rate of 16% per annum and is due and payable upon closing a financing of at least $2.0 million or converted into additional shares of common stock of Mosaic, at the sole discretion of Oncotelic. The number of shares of common stock to be issued, if elected, would be equal to the entire unpaid principal amount of such Note and the accrued and unpaid interest thereon divided by the closing price of our common stock on the date that is one day prior to such election.

Current wording

On May 8, 2024, we entered into a convertible note purchase agreement with Oncotelic for up to $70,000 in funding and we received initial loan proceeds from Oncotelic of $40,000 to pay certain expenses of the Company in exchange for an unsecured convertible note (“Note”) pursuant to the Binding Term Sheet. The Note bears interest at a rate of 16% per annum and is due and payable upon closing a financing of at least $2.0 million or converted into additional shares of common stock of Mosaic, at the sole discretion of Oncotelic. The number of shares of common stock to be issued, if elected, would be equal to the entire unpaid principal amount of such Note and the accrued and unpaid interest thereon divided by the closing price of our common stock on the date that is one day prior to such election. As of June 30, 2024 we have received a total of $55,000 in loan proceeds from Oncoletic and accrued interest of $1,133.

Previous wording

Research and development expenses of approximately $67,000 for the three months ended March 31, 2024 are primarily related to salaries and related costs for personnel in research and development functions and related consulting fees. The decrease in research and development expenses of approximately $111,000 for the three months ended March 31, 2024 as compared to the same prior year period was primarily due to a decrease in payroll and related costs of approximately $74,000 due to a reduced time commitment by certain employees, combined with a decrease in consulting fees of approximately $37,000 due to a lower time commitment by our independent contractors. We believe our research and development expenses will increase significantly over time if we are able to raise sufficient capital to advance our programs.

Current wording

Research and development expenses of approximately $61,000 for the three months ended June 30, 2024 are primarily related to salaries and related costs for personnel in research and development functions and related consulting fees. The decrease in research and development expenses of approximately $62,000 for the three months ended June 30, 2024 as compared to the same prior year period was primarily due to a decrease in payroll and related costs of approximately $45,000 due to a reduced time commitment by certain employees, combined with a decrease in consulting fees of approximately $17,000 due to a lower time commitment by our independent contractors. We believe our research and development expenses will increase significantly over time if we are able to raise sufficient capital to advance our programs.

Previous wording

On July 6, 2022, we entered into a Redemption Agreement with Holocom, pursuant to which we requested full redemption of our Series A Preferred Stock. During the three months ended March 31, 2023, we received cash proceeds in the amount of $77,000 upon the redemption of 192,500 shares of Series A Preferred Stock of Holocom. As of December 31, 2023, we received all proceeds under the Redemption Agreement, and therefore, there were no proceeds received during the three months ended March 31, 2024.

Current wording

On July 6, 2022, we entered into a Redemption Agreement with Holocom, pursuant to which we requested full redemption of our Series A Preferred Stock. During the three months ended June 30, 2023, we received cash proceeds in the amount of $356,000 upon the redemption of 192,500 shares of Series A Preferred Stock of Holocom. As of December 31, 2023, we received all proceeds under the Redemption Agreement, and therefore, there were no proceeds received during the three months ended June 30, 2024.

Previous wording

The change in valuation of the derivative liability of $12,800 for the three months ended March 31, 2023 pertains to a decrease in the estimated fair value of the anti-dilution issuance rights provided under the Series B Preferred. There was no remaining anti-dilution issuance rights liability outstanding as of December 31, 2023.

Current wording

The change in valuation of the derivative liability of $33,900 for the three months ended June 30, 2023 pertains to a decrease in the estimated fair value of the anti-dilution issuance rights provided under the Series B Preferred. There was no remaining anti-dilution issuance rights liability outstanding as of December 31, 2023.

Previous wording

Non-cash interest expense of approximately $18,000 and $18,000 for the three months ended March 31, 2024 and 2023, respectively, represents interest expense on convertible notes.

Current wording

Non-cash interest expense of approximately $19,000 and $18,000 for the three months ended June 30, 2024 and 2023, respectively, represents interest expense on convertible notes and loan payable.

Previous wording

General and administrative expenses of approximately $201,000 for the three months ended March 31, 2024 consist principally of salaries and related costs for personnel and consultants in executive and administrative functions of approximately $176,000, accounting and filing fees of approximately $11,000, director and officer insurance of approximately $9,000, and other expenses of approximately $5,000. The decrease in general and administrative expenses of approximately $80,000 for the three months ended March 31, 2024 as compared to the same prior year period was primarily due to (i) a decrease in legal fees related to intellectual property rights of approximately $28,000 primarily related to lower patent fees owed under the former license agreement with Case Western Reserve University, (ii) a decrease in payroll and related expenses of approximately $33,000 due to a reduced time commitment by certain employees, (iii) a decrease in accounting and filing fees of approximately $11,000 due to timing of services provided, and (iv) a decrease in other expenses of approximately $8,000. We believe our general and administrative expenses will increase over time as we hire new employees to support key administrative functions and the planned expansion of research and development personnel, provided we are able to raise sufficient capital to advance our programs.

Current wording

General and administrative expenses of approximately $415,000 for the six months ended June 30, 2024 consist principally of salaries and related costs for personnel and consultants in executive and administrative functions of approximately $346,000, accounting and filing fees of approximately $39,000, director and officer insurance of approximately $19,000, and other expenses of approximately $12,000. The decrease in general and administrative expenses of approximately $97,000 for the six months ended March 31, 2024 as compared to the same prior year period was primarily due to (i) a decrease in legal fees related to intellectual property rights of approximately $26,000 primarily related to lower patent fees owed under the former license agreement with Case Western Reserve University, (ii) a decrease in payroll and related expenses of approximately $65,000 due to a reduced time commitment by certain employees, and (iii) a decrease in other expenses of approximately $6,000. We believe our general and administrative expenses will increase over time as we hire new employees to support key administrative functions and the planned expansion of research and development personnel, provided we are able to raise sufficient capital to advance our programs.

Previous wording

Accretion to redemption value on convertible notes of approximately $1,000 and $9,000 for the three months ended March 31, 2024 and 2023, respectively, pertains to the accretion of the convertible notes to their redemption value of $1,145,790 over the estimated conversion period using the effective interest method.

Current wording

Accretion to redemption value on convertible notes of approximately $1,000 and $11,000 for the six months ended June 30, 2024 and 2023, respectively, pertains to the accretion of the convertible notes to their redemption value of $1,145,790 over the estimated conversion period using the effective interest method. The Convertible Notes have been accreted to their full Redemption Value as of March 31, 2024.

Previous wording

On August 21, 2020, we completed a reverse merger with PTSC, which provided us $605,215 in cash, cash equivalents, and restricted cash. During May 2021, we raised $575,000 from the issuance of convertible notes, which included $49,997 of accrued payable to founder that was invested in convertible notes. During February 2022, we raised an additional $341,632 from the issuance of convertible notes. As of March 31, 2024, we had cash and cash equivalents of $65,039. Our ability to continue our operations is highly dependent on our ability to raise capital to fund future operations. We anticipate, based on currently proposed plans and assumptions, that our cash on hand will not satisfy our operational and capital requirements through twelve months from the filing date of this Quarterly Report.

Current wording

On August 21, 2020, we completed a reverse merger with PTSC, which provided us $605,215 in cash, cash equivalents, and restricted cash. During May 2021, we raised $575,000 from the issuance of convertible notes, which included $49,997 of accrued payable to founder that was invested in convertible notes. During February 2022, we raised an additional $341,632 from the issuance of convertible notes. As of June 30, 2024, we had cash and cash equivalents of $3,734. Our ability to continue our operations is highly dependent on our ability to raise capital to fund future operations. We anticipate, based on currently proposed plans and assumptions, that our cash on hand will not satisfy our operational and capital requirements through twelve months from the filing date of this Quarterly Report.

Previous wording

In addition, under the Binding Term Sheet, (i) we will continue the development work necessary to achieve the mutually agreed upon milestones upon the requisite funding, (ii) Oncotelic will provide a loan to us to cover certain operational costs of the Company through June 1, 2024, (iii) Oncotelic will assist the Company in potentially raising initial funding to support the technologies of $2 million, and (iv) in the event the Company is unable to raise the requisite funding, then the transaction may proceed to a reverse acquisition/merger, with conditions typical of such a transaction.

Current wording

In addition, under the Binding Term Sheet, (i) we will continue the development work necessary to achieve the mutually agreed upon milestones upon the requisite funding, (ii) Oncotelic will provide a loan to us to cover certain operational costs of the Company initially through June 2024, (iii) Oncotelic will assist the Company in potentially raising initial funding to support the technologies of $2 million, and (iv) in the event the Company is unable to raise the requisite funding, then the transaction may proceed to a reverse acquisition/merger, with conditions typical of such a transaction.

Previous wording

If we enter into a definitive agreement under the terms of the Binding Term Sheet, our present stockholders will experience immediate substantial dilution and will not have control of our majority voting securities. If we do not receive shareholder approval for the transaction and receive the required waivers from the holders of the Convertible Notes within ninety (90) days of signing the Binding Term Sheet (or by July 25, 2024), we may not be able to enter into a definitive agreement with Oncotelic, and we may need to cease our operations altogether.

Current wording

If we enter into a definitive agreement under the terms of the Binding Term Sheet, our present stockholders will experience immediate substantial dilution and will not have control of our majority voting securities. If we do not receive shareholder approval for the transaction and receive the required waivers from the holders of the Convertible Notes within ninety (90) days of signing the Binding Term Sheet (or by July 25, 2024), we may not be able to enter into a definitive agreement with Oncotelic, and we may need to cease our operations altogether. On August 9, 2024, the expiration date to enter into a possible transaction with Oncotelic was extended from July 25, 2024 to December 31, 2024 (see Note 12 to the accompanying unaudited condensed consolidated financial statements).

Previous wording

On May 8, 2024, we entered into a convertible note purchase agreement with Oncotelic for up to $70,000 in funding and we received initial loan proceeds from Oncotelic of $40,000 to pay certain expenses of the Company in exchange for an unsecured convertible note (“Note”) pursuant to the Binding Term Sheet. The Note bears interest at a rate of 16% per annum and is due and payable upon closing a financing of at least $2.0 million or converted into additional shares of common stock of Mosaic, at the sole discretion of Oncotelic. The number of shares of common stock to be issued, if elected, would be equal to the entire unpaid principal amount of such Note and the accrued and unpaid interest thereon divided by the closing price of our common stock on the date that is one day prior to such election.

Current wording

On May 8, 2024, we entered into a convertible note purchase agreement with Oncotelic for up to $70,000 in funding. As of June 30, 2024, we have received loan proceeds from Oncotelic totaling $55,000 to pay certain expenses of the Company in exchange for an unsecured convertible note (“Note”) pursuant to the Binding Term Sheet. The Note bears interest at a rate of 16% per annum and is due and payable upon closing a financing of at least $2.0 million or converted into additional shares of common stock of Mosaic, at the sole discretion of Oncotelic. The number of shares of common stock to be issued, if elected, would be equal to the entire unpaid principal amount of such Note and the accrued and unpaid interest thereon divided by the closing price of our common stock on the date that is one day prior to such election.

Previous wording

The following table provides a summary of our net cash flow activity for the three months ended March 31, 2024 and 2023:

Current wording

The following table provides a summary of our net cash flow activity for the six months ended June 30, 2024 and 2023:

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 consisted of our net loss of $288,492, which amount was offset by (i) non-cash share-based compensation expense of $4,867, (ii) non-cash interest expense of $18,283, (iii) the accretion to redemption value on convertible notes of $1,446, and (iv) a net change in operating assets and liabilities of $172,757 primarily due to an increase in accounts payable and accrued compensation of $173,008, in aggregate.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 consisted of our net loss of $582,209, which amount was offset by (i) non-cash share-based compensation expense of $4,867, (ii) non-cash interest expense of $37,698, (iii) the accretion to redemption value on convertible notes of $1,446, and (iv) a net change in operating assets and liabilities of $330,758 primarily due to an increase in accrued compensation of $327,566.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2023 consisted of our net loss of $399,043 combined with a decrease in the fair value of the derivative liability of $12,800 and a gain on redemption of preferred stock of Holocom of $77,000, which amounts were offset by (i) non-cash share-based compensation expense of $5,408, (ii) non-cash interest expense of $18,082, (iii) the accretion to redemption value on convertible notes of $8,596, and (iv) a net change in operating assets and liabilities of $284,889 primarily due to an increase in accounts payable, accrued compensation, accrued consulting, and other accrued expenses of $266,949, in aggregate.

Current wording

Net cash used in operating activities for the six months ended June 30, 2023 consisted of our net loss of $379,431 combined with a decrease in the fair value of the derivative liability of $46,700 and a gain on redemption of preferred stock of Holocom of $433,000, which amounts were offset by (i) non-cash share-based compensation expense of $10,877, (ii) non-cash interest expense of $36,365, (iii) the accretion to redemption value on convertible notes of $11,473, and (iv) a net change in operating assets and liabilities of $509,741 primarily due to an increase in accrued compensation, accrued consulting, and other accrued expenses of $477,890, in aggregate.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2023 consisted of proceeds received from our partial redemption of Holocom’s Series A Preferred Stock of $77,000.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2023 consisted of proceeds received from our redemption of Holocom’s Series A Preferred Stock of $433,000 (see Note 4 to the accompanying unaudited condensed consolidated financial statements).