Document and Entity Information
Document and Entity Information - USD ($) | 7 Months Ended | ||
Dec. 31, 2020 | Mar. 01, 2021 | Jun. 28, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Mosaic ImmunoEngineering Inc. | ||
Entity Central Index Key | 0000836564 | ||
Document Type | 10-KT | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer | No | ||
Is Entity a Voluntary Filer | No | ||
Is Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 999,790 | ||
Entity Common Stock, Shares Outstanding | 7,228,093 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Small Business | true | ||
Entity Emerging Growth | false | ||
Entity file number | 000-22182 | ||
Entity state of incorporation | DE | ||
Shell Company | false | ||
Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2020 | May 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 352,738 | $ 500 |
Receivable from founders | 0 | 63 |
Prepaid expenses and other current assets | 51,349 | 0 |
Investment in affiliated company | 27,637 | 0 |
Refundable income taxes | 26,078 | 0 |
Total current assets | 457,802 | 563 |
Total assets | 457,802 | 563 |
Current liabilities: | ||
Accounts payable | 86,014 | 0 |
Accrued payable to founders | 49,997 | 1,011 |
Derivative liability | 83,500 | 0 |
Accrued expenses and other | 660,832 | 0 |
Total current liabilities | 880,343 | 1,011 |
Total liabilities | 880,343 | 1,011 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Preferred stock value | 0 | 0 |
Common stock value | 8 | 0 |
Common stock subscribed and not yet issued | 0 | 63 |
Additional paid-in capital | 420,198 | 0 |
Accumulated deficit | (842,754) | (511) |
Total stockholders' deficit | (422,541) | (448) |
Total liabilities and stockholders' deficit | 457,802 | 563 |
Series A Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock value | 6 | 0 |
Series B Preferred Stock [Member] | ||
Stockholders' deficit | ||
Preferred stock value | 1 | 0 |
Common Class A [Member] | ||
Stockholders' deficit | ||
Common stock value | 0 | 0 |
Common Class B [Member] | ||
Stockholders' deficit | ||
Common stock value | $ 0 | $ 0 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2020 | May 31, 2020 |
Preferred stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 805,803 | 0 |
Common stock, shares outstanding | 805,803 | 0 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares issued | 630,000 | 0 |
Preferred stock, shares outstanding | 630,000 | 0 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares issued | 70,000 | 0 |
Preferred stock, shares outstanding | 70,000 | 0 |
Common Class A [Member] | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 900,000 | 900,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Common Class B [Member] | ||
Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 0 | 0 |
Common stock, shares outstanding | 0 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 2 Months Ended | 7 Months Ended | |
May 31, 2020 | [1] | Dec. 31, 2020 | |
Operating expenses: | |||
Research and development | $ 0 | $ 342,727 | |
General and administrative | 511 | 492,905 | |
Total operating expenses | 511 | 835,632 | |
Other income (expense): | |||
Interest income | 0 | 91 | |
Equity in loss of affiliated company | 0 | (5,102) | |
Total other expense, net | 0 | (5,011) | |
Loss before provision for income taxes | (511) | (840,643) | |
Provision for income taxes | 0 | 1,600 | |
Net loss | $ (511) | $ (842,243) | |
Basic loss per common share | $ 0 | $ (1.12) | |
Diluted loss per common share | $ 0 | $ (1.12) | |
Weighted average number of common shares outstanding - basic and diluted | 0 | [2] | 752,407 |
[1] | Private Mosaic was incorporated on March 30, 2020. | ||
[2] | As of May 31, 2020, shares of common stock were subscribed but not yet issued. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Common Stock Subscribed | Class A Common Stock | Class B Common Stock | Common Stock | Series A Convertible Voting Preferred | Series B Convertible Voting Preferred | Additional Paid-In Capital | Accumulated Deficit | Total | ||
Beginning balance, shares at Mar. 29, 2020 | [1] | ||||||||||
Beginning balance, value at Mar. 29, 2020 | [1] | ||||||||||
Common stock subscribed and not yet issued to founders | 63 | 63 | |||||||||
Share-based compensation | |||||||||||
Net loss | (511) | (511) | [1] | ||||||||
Ending balance, shares at May. 31, 2020 | |||||||||||
Ending balance, value at May. 31, 2020 | 63 | (511) | (448) | ||||||||
Issuance of Class A Common Stock to founders, shares | 630,000 | ||||||||||
Issuance of Class A Common Stock to founders, value | (63) | $ 63 | |||||||||
Issuance of Class B Common Stock under License Option Agreement, shares | 70,000 | ||||||||||
Issuance of Class B Common Stock under License Option Agreement, value | $ 7 | 7 | |||||||||
Exchange of Class A and Class B Common Stock for Series A and Series B Convertible Voting Preferred Stock under Reverse Merger, shares | (630,000) | (70,000) | 630,000 | 70,000 | |||||||
Exchange of Class A and Class B Common Stock for Series A and Series B Convertible Voting Preferred Stock under Reverse Merger, value | $ (63) | $ (7) | $ 6 | $ 1 | 63 | ||||||
Net assets acquired under Reverse Merger, shares | 802,786 | ||||||||||
Net assets acquired under Reverse Merger, value | $ 8 | 374,427 | 374,435 | ||||||||
Issuance of whole shares in lieu of fractional shares from Reverse Stock Split, shares | 3,017 | ||||||||||
Issuance of whole shares in lieu of fractional shares from Reverse Stock Split, value | |||||||||||
Share-based compensation | 45,708 | 45,708 | |||||||||
Net loss | (842,243) | (842,243) | |||||||||
Ending balance, shares at Dec. 31, 2020 | 805,803 | 630,000 | 70,000 | ||||||||
Ending balance, value at Dec. 31, 2020 | $ 8 | $ 6 | $ 1 | $ 420,198 | $ (842,754) | $ (422,541) | |||||
[1] | Private Mosaic was incorporated on March 30, 2020. |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 2 Months Ended | 7 Months Ended | |
May 31, 2020 | Dec. 31, 2020 | ||
Operating activities: | |||
Net loss | $ (511) | [1] | $ (842,243) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Equity in loss of affiliated company | 0 | [1] | 5,102 |
Fair value of common stock issued under License Option Agreement | 0 | 7 | |
Anti-dilution rights derivative liability expense | 0 | 83,500 | |
Share-based compensation | 45,708 | ||
Changes in operating assets and liabilities: | |||
Prepaid expenses and other current assets | 0 | (40,947) | |
Accounts payable | 0 | (34,712) | |
Accrued payable to founders | 1,011 | 48,986 | |
Accrued expenses and other | 0 | 481,559 | |
Net cash (used in) provided by operating activities | 500 | (253,040) | |
Investing activities: | |||
Net cash, cash equivalents and restricted cash acquired in Reverse Merger | 0 | 605,215 | |
Net cash provided by investing activities | 0 | 605,215 | |
Financing activities: | |||
Proceeds from the issuance of Class A common stock | 0 | 63 | |
Net cash provided by financing activities | 0 | 63 | |
Net increase in cash and cash equivalents | 500 | 352,238 | |
Cash and cash equivalents, beginning of period | 0 | 500 | |
Cash and cash equivalents, end of period | 500 | 352,738 | |
Supplemental disclosure of non-cash investing activities: | |||
Net liabilities assumed in Reverse Merger, net of cash and restricted cash acquired | 0 | (230,780) | |
Common stock subscribed and not yet issued | 63 | 0 | |
Supplemental Disclosure of Cash Flow Information: | |||
Cash paid for income taxes | $ 0 | $ 1,600 | |
[1] | Private Mosaic was incorporated on March 30, 2020. |
1. Organization and Business
1. Organization and Business | 7 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | 1. Organization and Business Mosaic ImmunoEngineering Inc. (the “Company,” “combined company,” “Mosaic,” “we,” “us,” or “our”), formerly known as Patriot Scientific Corporation, is a corporation organized under Delaware law on March 24, 1992. The Company is an early-stage biotechnology company focused on a novel platform technology using immunostimulatory nanotechnology-based therapeutics and vaccines to treat and prevent cancer and infectious diseases. The Company has two wholly owned subsidiaries: Mosaic ImmunoEngineering Development Company (formerly referred to as Private Mosaic in connection with the Reverse Merger), a corporation organized under Delaware law on March 30, 2020 (date of inception) and Patriot Data Solutions Group, Inc., an inactive subsidiary of PTSC. Patriot Data Solutions Group (formerly known as Crossflo Systems, Inc.) was acquired in September 2008 and was previously engaged in data-sharing services and products primarily in the public safety and government sector. During April 2012, PTSC sold substantially all of our assets in Patriot Data Solutions Group. On August 21, 2020, we closed a Reverse Merger transaction by and between Patriot Scientific Corporation (now known as Mosaic ImmunoEngineering Inc.) and privately held Mosaic ImmunoEngineering Inc. (“Private Mosaic”). On November 30, 2020, we filed our amended and restated articles of incorporation with the Secretary of State of the State of Delaware (“Amended and Restated Certificate”) to change the name of the Company to Mosaic ImmunoEngineering Inc. (“Name Change”), to implement a 1-for-500 reverse stock split (“Reverse Stock Split”), and to reduce the number of authorized shares of common stock from 600 million to 100 million. The Reverse Stock Split was effective on December 2, 2020. All share numbers and preferred stock conversion numbers included herein have been retroactively adjusted to reflect the 1-for-500 Reverse Stock Split. On December 30, 2020, the Board of Directors approved a change to our fiscal year end from May 31 to December 31. Additional information regarding the aforementioned events is further discussed below. Recent Events Name Change On November 30, 2020, upon filing our Amended and Restated Certificate, we changed our name from Patriot Scientific Corporation to Mosaic ImmunoEngineering Inc. (“Name Change”) to align our corporate name with our new strategic direction. Change in Fiscal Year On December 30, 2020, the Board of Directors approved a change to our fiscal year end from May 31 to December 31. The change in fiscal year is effective for the Company’s 2020 fiscal year, which began June 1, 2020 and ended December 31, 2020. Accordingly, the Company is filing this transition report on Form 10-KT for the seven-month period from June 1, 2020 through December 31, 2020. Stock Purchase Agreement On August 19, 2020, Patriot Scientific Corporation (now known as Mosaic ImmunoEngineering Inc.) and Private Mosaic entered into a stock purchase agreement (“Stock Purchase Agreement”), whereby one of the wholly owned subsidiaries of Patriot Scientific Corporation merged with and into Private Mosaic, with Private Mosaic surviving as a wholly owned subsidiary of Patriot Scientific Corporation (the “Reverse Merger”) (see Note 2). The transaction closed on August 21, 2020 (“Closing Date”) in accordance with the terms of the Stock Purchase Agreement. On the Closing Date, Patriot Scientific Corporation acquired 100% of the issued and outstanding common stock of Private Mosaic, representing 630,000 shares of its Class A common stock (“Class A Stock”) and 70,000 shares of its Class B common stock (“Class B Stock”) (collectively referred to as “Target Common Stock”). In exchange for the Target Common Stock, the holders of the Class A Stock received 630,000 shares of Patriot Scientific Corporation’s (now known as Mosaic ImmunoEngineering Inc.) Series A Convertible Voting Preferred Stock (“Series A Preferred”) and holders of the Class B Stock received 70,000 shares of Patriot Scientific Corporation’s (now known as Mosaic ImmunoEngineering Inc.) Series B Convertible Voting Preferred Stock (“Series B Preferred”). Each share of Series A Preferred converts into 10.194106 shares of common stock (as adjusted for the Reverse Stock Split) of the Company and possesses full voting rights, on an as-converted basis, as the common stock of the Company, as defined in the Series A Certificate of Designation. Each share of Series B Preferred converts into 11.46837 shares of common stock (as adjusted for the Reverse Stock Split) of the Company, possesses full voting rights, on an as-converted basis, as the common stock of the Company and contains certain anti-dilution rights, as defined in the Series B Certificate of Designation. On a fully diluted, as converted basis, the holders of Series A Preferred and Series B Preferred, in aggregate, own approximately 90% of the issued and outstanding shares of common stock of the Company. Private Mosaic was determined to be the accounting acquirer based upon the terms of the Stock Purchase Agreement and other factors including: (i) Private Mosaic stockholders owned 90% of the combined organization immediately following the Closing Date, (ii) Private Mosaic directors held a majority of board seats in the combined organization and (iii) Private Mosaic management held all key positions in the management of the combined company. Reverse Stock Split On October 21, 2020 and October 22, 2020, our Board of Directors and majority shareholders, respectively, approved the Reverse Stock Split of one (1) share of our common stock for every 500 shares of our common stock (“1-for-500”). On November 30, 2020, we filed the Amended and Restated Certificate to effect a Reverse Stock Split on December 2, 2020, whereby every 500 shares of the Company’s issued and outstanding common stock were combined into one share of its common stock, except to the extent that the Reverse Stock Split resulted in any of the Company’s stockholders owning a fractional share, which was rounded up to the next highest whole share. In connection with the Reverse Stock Split, there was no change in the par value per share of $0.00001. The accompanying consolidated financial statements and notes give retroactive effect to the reverse stock split for all periods presented. The following chart reflects the changes in our capital structure, including the assumed conversion of Series A Preferred and Series B Preferred, following the Reverse Stock Split, and the issuance of 3,017 new shares of common stock in lieu of fractional shares under the Reverse Stock Split. Reverse Stock Split Ratio Shares of Common Stock Issued and Outstanding Series A Preferred (1) Shares of Common Stock to Be Issued Upon Conversion of Series A Preferred (1) Series B Preferred (2) Shares of Common Stock to Be Issued Upon Conversion of Series B Preferred (2) Fully Diluted Shares of Common Stock Outstanding, on an as-converted basis No split (Pre Reverse Stock Split) 401,392,948 630,000 3,211,143,390 70,000 401,392,950 4,013,929,288 1-for-500 (Post Reverse Stock Split) 805,803 630,000 6,422,290 70,000 802,786 8,030,879 _________________ (1) Each share of the Series A Preferred shall convert into 10.194106 shares of common stock of the Company and possesses full voting rights, as defined in the Series A Certificate of Designation. (2) Each share of the Series B Preferred shall convert into 11.46837 shares of common stock of the Company, possesses full voting rights and includes certain anti-dilution rights (see Notes 3 and 7) as defined in the Series B Certificate of Designation. Liquidity and Management’s Plans The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. At December 31, 2020, the Company had cash and cash equivalents of $352,738 and has not yet generated any revenues. Therefore, 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 and cash equivalents on hand will not satisfy our operational and capital requirements through twelve months from the filing date of this transitional report on Form 10-KT. There are a number of uncertainties associated with our ability to raise additional capital and we have no current arrangements with respect to any additional financing. In addition, the continuation of disruptions caused by COVID-19 may cause investors to slow down or delay their decision to deploy capital based on volatile market conditions which will adversely impact our ability to fund future operations. Consequently, there can be no assurance that any additional financing on commercially reasonable terms, or at all, will be available when needed. The inability to obtain additional capital will delay our ability to conduct our business operations. Any additional equity financing may involve substantial dilution to our then existing stockholders. The above matters raise substantial doubt regarding our ability to continue as a going concern. |
2. Summary of Significant Accou
2. Summary of Significant Accounting Policies | 7 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of Mosaic ImmunoEngineering Inc. (formerly known as Patriot Scientific Corporation) and our subsidiaries. All intercompany accounts and transactions among the consolidated entities have been eliminated in the consolidated financial statements. In conjunction with the Reverse Merger, Private Mosaic’s historical results of operations replaced PTSC’s historical results of operations for all periods prior to the Reverse Merger and, for all periods following the Reverse Merger, the results of operations of the combined company are included in the Company’s consolidated financial statements. Since Private Mosaic was incorporated on March 30, 2020, prior year financial information covers the period March 30, 2020 (date of inception) to May 31, 2020. In addition, operating results for the seven months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021. Segment Reporting The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. No revenue has been generated since inception, and all tangible assets are held in the United States. Reverse Merger On August 21, 2020, Private Mosaic completed a Reverse Merger with PTSC pursuant to which Private Mosaic merged into PTSC (see Note 1). Due to the nominal assets and limited operations of PTSC prior to the Reverse Merger, the transaction was treated as a reverse acquisition under the provision of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 whereby Private Mosaic became the accounting acquirer (legal acquiree) and PTSC was treated as the accounting acquiree (legal acquirer). As the transaction was treated as a reverse asset acquisition, no intangibles, including goodwill, were recognized. The net tangible assets acquired and liabilities assumed totaled $374,435 which were acquired by Private Mosaic in connection with the transaction and were recorded at their estimated acquisition date fair values as of the Closing Date, as follows: Cash and cash equivalents $ 427,971 Restricted cash and cash equivalents 177,244 Refundable income taxes 26,078 Prepaid expenses and other current assets 10,402 Investment in affiliated company 32,739 Accounts payable, accrued expenses and other (299,999 ) Net assets acquired $ 374,435 Cash and Cash Equivalents We consider all highly liquid investments acquired with a maturity of three months or less from the purchase date to be cash equivalents. Investment in Affiliated Company We have a 50% interest in Phoenix Digital Solutions LLC (“PDS”). We account for our investment using the equity method of accounting since the investment provides us the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if we have an ownership interest in the voting stock of the investee of between 20% and 50%, although other factors, such as representation on the investee’s Board of Directors, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the investee and is recognized in the consolidated statements of operations in the caption “Equity in earnings (loss) of affiliated company” and also is adjusted by contributions to and distributions from PDS. We review our investment in PDS to determine whether events or changes in circumstances indicate that the carrying amount may not be recoverable. If the decline in value is deemed to be other than temporary, we would recognize an impairment loss. On September 29, 2020, the managing members of PDS agreed to wind up and dissolve PDS as the underlying intellectual property was not deemed enforceable by the managing members (see Note 4). We own 100% of the preferred stock of Holocom (see Note 4). Prior to impairment, this investment was accounted for at cost since we do not have the ability to exercise significant influence over the operating and financial policies of Holocom. Financial Instruments and Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents. We invest our cash and cash equivalents primarily in money market funds. Cash and cash equivalents are maintained with high quality financial institutions, which are regularly monitored by management. At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. We perform ongoing evaluations of these financial institutions to limit our concentration of risk exposure. Fair Value of Financial Instruments Our financial instruments consist principally of cash and cash equivalents, accounts payable, accrued payable to founders, derivative liability, and accrued expenses and other. The carrying value of these financial instruments, except for the derivative liability, approximates fair value because of the immediate or short-term maturity of the instruments. We record the derivative liability at fair value (see Note 3). Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP 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 and the reported amounts of expenses during the reporting period. Significant estimates in these consolidated financial statements include those related to the fair value of the anti-dilution issuance rights liability (derivative liability), investment in affiliated company, the provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. On an ongoing basis, the Company evaluates its estimates, judgments, and methodologies. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Due to the inherent uncertainty involved in making such accounting estimates and assumptions, the actual financial statement results could differ materially from such accounting estimates and assumptions. Assessment of Contingent Liabilities We may be involved in various legal matters, disputes, and patent infringement claims which arise in the ordinary course of our business. We accrue for any estimated losses at the time when we can make a reliable estimate of such loss and it is probable that it has been incurred. By their very nature, contingencies are difficult to estimate. We continually evaluate information related to all contingencies to determine that the basis on which we have recorded our estimated exposure is appropriate. Patent Costs Patent fees and patent related costs in connection with filing and prosecuting patent applications are expensed as incurred and are classified as general and administrative expenses in the accompanying consolidated financial statements. Share-Based Compensation We account for Restricted Stock Units (“RSUs”) and other share-based awards granted under our equity compensation plan in accordance with the authoritative guidance for share-based compensation. The fair value of RSUs is measured at the grant date based on the closing market price of our common stock on the date of grant, and is recognized as expense on a straight-line basis over the period of vesting. Forfeitures are recognized as a reduction of share-based compensation expense as they occur. At December 31, 2020 and May 31, 2020, there were no outstanding share-based awards with market or performance conditions. In addition, we periodically grant RSUs to non-employee consultants, which we account for in accordance with the authoritative guidance for share-based compensation. The cost of non-employee services received in exchange for share-based awards are measured based on either the fair value of the consideration received or the fair value of the share-based award issued, whichever is more reliably measurable. Basic and Diluted Income (Loss) Per Common Share Basic income (loss) per common share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share is computed by dividing our net income (loss) available to common stockholders by the sum of the weighted average number of common shares outstanding during the period, plus the potential dilutive effects of unvested RSUs and shares of common stock expected to be issued under our Series A Preferred and Series B Preferred outstanding during the period. The potential dilutive effect of unvested RSUs outstanding during the period are calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The potential dilutive effect of our Series A Preferred and Series B Preferred outstanding during the period is calculated using the if-converted method assuming the conversion of Series A Preferred and Series B Preferred as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive. Since the impact of potentially dilutive securities are anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per common share for the seven months ended December 31, 2020 and the period March 30, 2020 (date of inception) to May 31, 2020. For the seven months ended December 31, 2020, the issuance of 7,225,076 shares of common stock upon the conversion of Series A Preferred and Series B Preferred were excluded in the calculation of diluted loss per share as the impact was anti-dilutive during periods of net loss. In addition, for the seven months ended December 31, 2020, 336,328 RSUs were also excluded in the calculation of diluted loss per share as the impact was anti-dilutive during periods of net loss. Moreover, in connection with an acquisition of Crossflo by PTSC (see Note 1), 5,690 escrow shares were issued that are contingent upon certain representations and warranties made by Crossflo. We exclude these escrow shares from the basic income (loss) per share calculations and would have included the escrowed shares in the diluted income per share calculations if we reported net income. Income Taxes We follow authoritative guidance in accounting for uncertainties in income taxes. This authoritative guidance prescribes a recognition threshold and measurement requirement for the financial statement recognition of a tax position that has been taken or is expected to be taken on a tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under this guidance, we may only recognize tax positions that meet a “more likely than not” threshold. We follow authoritative guidance to evaluate whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. We assess our deferred tax assets annually under more likely than not scenarios in which they may be realized through future income. In addition, utilization of our net operating loss carryforwards may be subject to an annual limitation due to ownership change limitations that may have occurred as a result of the Reverse Merger, or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). These ownership changes may limit the amount of the net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a Company by certain stockholders. Moreover, since we will need to raise substantial additional funding to finance our operations, we may undergo further ownership changes in the future, which could further limit our ability to use net operating loss carryforwards. As a result, if we generate taxable income, our ability to use some of our net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could result in increased future tax liability to us. With the exception of refundable income taxes, we have determined that it was more likely than not that all of our deferred tax assets will not be realized in the future due to our continuing pre-tax and taxable losses in addition to the potential loss of deferred tax assets as a result of the Reverse Merger (see Note 1). As a result of this determination, and with the exception for the aforementioned refundable income taxes, we have recorded a full valuation allowance against our deferred tax assets. Recently Adopted Accounting Standards In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issue addressed in ASU 2016-15 that will affect the Company is classifying distributions received from equity method investments. The guidance provides an accounting policy election for classifying distributions received from equity method investments using either a cumulative earnings approach or a nature of distributions approach. The Company adopted this standard on March 30, 2020 (date of inception). The adoption did not have a material effect on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard on March 30, 2020 (date of inception). Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments- Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The accounting standard update also updates certain presentation and disclosure requirements. The Company adopted ASU 2016-01 on March 30, 2020 (date of inception). Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, as amended, which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements (“ASU 2016-02”). ASU 2016-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 effective March 30, 2020 (date of inception). As permitted under the transition guidance, the Company will carry forward the assessment of whether its contracts contain or are leases, classification of its leases and remaining lease terms. Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which removes, modifies, and adds various disclosure requirements on fair value measurements in Topic 820. ASU 2018-13 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this update. The Company adopted ASU 2018-13 effective March 30, 2020 (date of inception). Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions and improving consistent application in certain areas of Topic 740. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, however, early adoption is permitted. We are currently evaluating the timing and impact of adopting ASU 2019-12 on our consolidated financial statements and related disclosures. |
3. Fair Value of Financial Inst
3. Fair Value of Financial Instruments | 7 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 3. Fair Value of Financial Instruments The Company’s financial instruments consist of money market funds as well as an anti-dilution issuance rights liability pursuant to the License Option Agreement with Case Western Reserve University (“CWRU”) (see Note 6). The anti-dilution issuance rights meet the definition of a derivative under FASB’s ASC Topic 815 and the liability is carried at fair value. Under this authoritative guidance, we are required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We determine fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment or valuations by third-party professionals. The three levels of inputs that we may use to measure fair value are: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; and Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy: Fair Value Measurements at December 31, 2020 Using Fair Value at Quoted Prices Significant Other Significant Assets: Cash and cash equivalents $ 352,738 $ 352,738 $ – $ – Total assets $ 352,738 $ 352,738 $ – $ – Liabilities: Anti-dilution issuance rights liability $ 83,500 $ – $ – $ 83,500 Total liabilities $ 83,500 $ – $ – $ 83,500 Fair Value Measurements at May 31, 2020 Using Fair Value at Quoted Prices Significant Other Significant Assets: Cash $ 500 $ 500 $ – $ – Total assets $ 500 $ 500 $ – $ – Anti-Dilution Issuance Rights Liability Pursuant to the Series B Preferred Certificate of Designation, the Series B Preferred includes certain anti-dilution issuance rights, whereby the holder will continue to maintain equity ownership equal to 10% of the fully diluted shares of common stock outstanding, calculated on an as converted basis, including all other convertible securities outstanding and reserved for issuance (and excluding stock options issued and outstanding and reserved for issuance under a Board approved employee stock option plan reserving for issuance no more than ten percent (10%) of the outstanding common stock of the Company) until the Company raises approximately $626,000 from the sale of common or preferred stock, or a combination thereof (see Note 6). To determine the estimated fair value of the anti-dilution issuance rights liability, the Company used a Monte Carlo simulation methodology, which models the future movement of stock prices based on several key variables. At the date of issuance on August 21, 2020 (at inception) and as of December 31, 2020, the estimated fair value of the anti-dilution issuance rights was $83,500. We initially recorded the fair value as a derivative liability with a corresponding charge to research and development expense and we will mark-to-market at each reporting period, with changes in fair value recognized in other income (expense) in the consolidated statement of operations at each period-end while this derivative instrument is outstanding. The primary inputs used in valuing the anti-dilution issuance rights liability at inception and upon remeasurement at December 31, 2020, were as follows: At December 31, 2020 At inception Fair value of common stock (per share) $3.25 $3.30 Estimated additional shares of common stock 31,353 57,462 Expected volatility 90% 135% Expected term (years) 0.25 0.45 Risk-free interest rate 0.09% 0.11% The fair value of the derivative liability was determined by management with the assistance of an independent third-party specialist. The computation of expected volatility was estimated using available information about the historical volatility of stocks of similar publicly traded companies for a period matching the expected term assumption. In addition, the Company incorporated the estimated number of shares, timing, and probability of future equity financings in the calculation of the anti-dilution issuance rights liability. |
4. Investment in Affiliated Com
4. Investment in Affiliated Companies | 7 Months Ended |
Dec. 31, 2020 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Investment in Affiliated Companies | 4. Investment in Affiliated Companies Phoenix Digital Solutions, LLC (“PDS”) PDS was previously formed by PTSC to pursue licensing of its intellectual property. We own 50% of the membership interests of PDS, representing $27,637 On September 29, 2020, the members of PDS agreed to wind up and dissolve PDS as the underlying intellectual property was deemed no longer enforceable. As a result of the approval of the dissolution plan, PDS adopted the Liquidation Basis of Accounting, effective September 29, 2020. Although the dissolution plan was approved by the members on September 29, 2020, PDS used the liquidation basis of accounting effective September 30, 2020 as a convenience date. Under the Liquidation Basis of Accounting, the following financial statements are no longer presented (except for periods prior to the adoption of the Liquidation Basis of Accounting): balance sheet, a statement of operations, a consolidated statement of members’ equity and a statement of cash flows. The statement of net assets and the statement of changes in net assets are the principal financial statements presented under the Liquidation Basis of Accounting. Under the Liquidation Basis of Accounting, all of the Company’s assets have been stated at their estimated net realizable value. In January 2021, the remaining cash on hand of $55,274 was equally distributed to its two members according to the dissolution plan. PDS’s statement of net assets under the Liquidation Basis of Accounting as of December 31, 2020 is as follows: December 31, 2020 Cash and cash equivalents $ 55,274 Net assets in liquidation $ 55,274 PDS’s statement of changes in net assets for the period October 1, 2020 to December 31, 2020 under Liquidation Basis of Accounting is as follows: Three Months Ended December 31, 2020 Members’ equity, September 30, 2020 (Going Concern Basis) $ 57,173 Changes in net assets in liquidation: Expenses associated with dissolution (1,899 ) Total net assets in liquidation at December 31, 2020 (Liquidation Basis) $ 55,274 PDS’s statements of operations from the Closing Date of the Reverse Merger (August 21, 2020) to September 30, 2020 is as follows: Period August 21, 2020 to September 30, 2020 Expenses $ (8,305 ) Net loss $ (8,305 ) Holocom, Inc. We currently own 2,100,000 shares of preferred stock, representing approximately a 46% ownership interest, on an as-converted basis, in Holocom, Inc. (“Holocom”), a California corporation that manufactures products that protect information transmitted over secure networks. The shares are convertible at our option into shares of Holocom’s common stock on a one-to-one basis. The preferred stock entitles us to receive non-cumulative dividends at the per annum rate of $0.04 per share, when and if declared by the Board of Directors of Holocom, as well as a liquidation preference of $0.40 per share, plus an amount equal to all declared but unpaid dividends. As of the Closing Date (see Note 2) and as of December 31, 2020, our investment in Holocom was valued at $0 based on various indicators of impairment, including Holocom’s inability to meet its business plan and raise sufficient capital, in addition to the general economic environment. |
5. Accrued Expenses and Other C
5. Accrued Expenses and Other Current Liabilties | 7 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other | 5. Accrued Expenses and Other Current Liabilities; Accrued Payable to Founders Accrued expenses and other current liabilities consisted of the following: December 31, 2020 May 31, 2020 Accrued compensation $ 393,431 $ – Crossflo acquisition liability 177,244 – Other accrued expenses 90,157 – Total accrued expenses and other current liabilities $ 660,832 $ – In September 2008, PTSC acquired Patriot Data Solutions Group, Inc. formerly known as Crossflo Systems, Inc. (“PDSG”). In connection with an acquisition of Crossflo by PTSC, we have accrued $177,244 that could be payable to Crossflo investors. Accrued Payable to Founders At May 31, 2020, accrued payable to founders of $1,011 represents reimbursable advances to the Company to establish the Company and a bank account for operations. At December 31, 2020, accrued payable to founders of $49,997 represents the overpayment of common stock subscribed. Amounts payable to founders do not earn interest and are not convertible into any other security. |
6. License Option Agreement
6. License Option Agreement | 7 Months Ended |
Dec. 31, 2020 | |
License Option Agreement | |
License Option Agreement | 6. License Option Agreement On July 1, 2020, we signed a Material Transfer, Evaluation, and Exclusive Option Agreement (“License Option Agreement”) with CWRU, granting the Company the exclusive right to license certain technology covering immunostimulatory nanotechnology-based therapeutics and vaccines to treat and prevent cancer and infectious diseases in humans and for veterinary use. Under the License Option Agreement, CWRU granted the Company the exclusive option for a period of two (2) years to negotiate and enter into a license agreement with CWRU, provided that we meet certain diligence milestones, including but not limited to, (i) delivering a development plan within 18 months, (ii) raising $3 million in either equity, debt, or grant funding, or a combination thereof within 18 months, (iii), generating sufficient preclinical data to support the identification of the initial field of use to support the initial planned clinical indication for the technology, (iv) determining manufacturing processes and cGMP requirements to manufacture the initial product for use in toxicology studies, and (v) identifying required toxicology studies required to support Phase I clinical trials in the initial field of use. In addition, the parties agreed to the royalty rates payable on net sales of licensed products to fall within the range of 4% to 8% and the parties agree to negotiate in good faith on the final licensing terms. Under the License Option Agreement, Private Mosaic issued CWRU 70,000 shares of Class B Common Stock at the fair market value of $7 on the date of issuance, representing 10% of the fully diluted shares of common stock outstanding of Private Mosaic. On August 21, 2020, the Class B Stock was exchanged for shares of Series B Preferred under the Reverse Merger, which included certain anti-dilution rights. Pursuant to the Certificate of Designation, the Series B Preferred holder will continue to maintain ownership equal to 10% of the fully diluted shares of common stock outstanding of the Company, including for such purposes all other convertible securities outstanding and reserved for issuance except stock options issued and outstanding and reserved for issuance under a board approved employee stock option plans reserving for issuance no more than ten percent (10%) of the outstanding common stock of the Company then outstanding, until we initially raise at least $1 million from the sale of either preferred or common stock, or a combination thereof (“Capital Threshold”). In addition, pursuant to the License Option Agreement, net working capital acquired under the Reverse Merger of approximately $374,000 was applied against the Capital Threshold. As of December 31, 2020, the remaining Capital Threshold was approximately $626,000. The anti-dilution issuance rights under the License Option Agreement meet the definition of a derivative instrument under FASB’s ASC Topic 815, “Derivatives and Hedging” (see Note 3). In addition, we are responsible for the reimbursement of all patent fees incurred by CWRU under the License Option Agreement from the effective date of the License Option Agreement. During the seven months ended December 31, 2020, we incurred $16,852 in patent legal fees which are included in general and administrative expenses, of which $9,441 and $7,411 were included in accounts payable and accrued expenses and other, respectively, at December 31, 2020 in the accompanying consolidated financial statements. Moreover, during the seven months ended December 31, 2020, we incurred $15,000 in legal fees payable to CWRU pursuant to the License Option Agreement, which are included in general and administrative expenses, all of which is included in accounts payable as of December 31, 2020 in the accompanying consolidated financial statements. In addition, if we enter into a license agreement with CWRU, we would be responsible for the reimbursement of all past patent costs incurred by CWRU though the effective date of the License Option Agreement, which amount has been estimated to be approximately $267,000. This amount will be expensed when the Company intends to enter into a license agreement with CWRU. |
7. Stockholders' Equity and Sha
7. Stockholders' Equity and Share-Based Compensation | 7 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 7. Stockholders’ Equity and Share-Based Compensation Stockholders’ Equity The Company’s authorized capital consists of 100,000,000 shares of common stock, par value $0.00001 per share, and 5,000,000 shares of preferred stock, par value $0.00001 per share (“Preferred Stock”). Under the Reverse Merger (as discussed below), we designated and issued 630,000 shares of Series A Convertible Voting Preferred Stock and 70,000 shares of Series A Convertible Voting Preferred Stock. Preferred Stock Issued under Reverse Merger On the Closing Date of the Reverse Merger (see Note 1), PTSC acquired 100% of the issued and outstanding common stock of Private Mosaic, representing 630,000 shares of its Class A Stock and 70,000 shares of its Class B Stock. In exchange for the Target Common Stock, the holders of the Class A Stock received 630,000 shares of the Company’s Series A Preferred and holders of the Class B Stock received 70,000 shares of the Company’s Series B Preferred. In addition, holders of the Series A Preferred and Series B Preferred have certain investor registration rights, although there are no penalties if the Company is unable to comply with the holders request. Moreover, the holders of Series A Preferred and Series B Preferred agreed to vote all shares owned in favor of an increase in the authorized number of shares of common stock or to vote for a reverse stock split, at a ratio determined by the Board of Directors of the Company, to ensure that the Company has sufficient authorized shares of common stock upon the conversion of Series A Preferred and Series B Preferred into shares of common stock. On November 30, 2020, we filed an Amended and Restated Certificate to, among other things, implement a 1-for-500 Reverse Stock Split and to reduce the number of authorized shares of common stock from 600 million to 100 million, as previously approved by the majority stockholders, which provides sufficient authorized shares of common stock for the conversion of Series A Preferred and Series B Preferred. The Reverse Stock Split was effective on December 2, 2020. All share numbers and preferred stock conversion numbers included herein have been retroactively adjusted to reflect the 1-for-500 Reverse Stock Split (see Note 1). Series A Preferred On August 21, 2020, the Company issued 630,000 shares of Series A Preferred (classified as permanent equity), in exchange for 630,000 shares of Series A Common Stock of Private Mosaic. Each share of Series A Preferred has a par value of $0.00001 per share, no dividend rate, a stated value of $6.50 per share, and each share of Series A Preferred converts into 10.194106 shares of common stock of the Company (“Series A Conversion Number”). In addition, the Series A Preferred possesses full voting rights, on an as-converted basis, as the common stock of the Company, as defined in the Series A Certificate of Designation. Furthermore, the Series A Preferred will automatically convert into common stock of the Company upon (i) the Company filing an Amended and Restated Certificate so that the Company has a sufficient number of authorized and unissued shares of common stock so as to permit the conversion of all outstanding shares of the Series A Preferred into common stock and (ii) the effectiveness of any registration statement registering the resale of the underlying shares. On November 30, 2020, we filed the Amended and Restated Certificate to effect a Reverse Stock Split on December 2, 2020 as to permit the conversion of Series A Preferred, and on December 10, 2020, we filed a registration statement on Form S-3 to cover the resale of the underlying shares of common stock, as amended on January 21, 2021 (“S-3/A”). The S-3/A was declared effective on January 29, 2021 and pursuant to the Series A Certificate of Designation, the Company converted 630,000 shares of Series A Preferred and issued, in aggregate, 6,422,290 shares of common stock to the underlying holders of Series A Preferred on January 29, 2021 (see Note 11). Series B Preferred On August 21, 2020, the Company issued 70,000 shares of Series B Preferred (classified as permanent equity), in exchange for 70,000 shares of Series B Common Stock of Private Mosaic. Each share of Series B Preferred has a par value of $0.00001 per share, no dividend rate, a stated value of $6.50 per share, and each share of Series B Preferred converts into 11.46837 shares of common stock of the Company (“Series B Conversion Number”). In addition, the Series B Preferred possesses full voting rights, on an as-converted basis, as the common stock of the Company, as defined in the Series B Certificate of Designation. Furthermore, the Series B Preferred does not have any mandatory conversion rights and only converts upon written notice from the holder. The Class B Preferred also includes certain anti-dilution rights (“anti-dilution issuance rights”), whereby the holder of Class B Preferred will continue to maintain ownership equal to 10% of the fully diluted shares of common stock outstanding, including for such purposes all other convertible securities outstanding and reserved for issuance except equity awards issued and outstanding and reserved for issuance under a board approved equity compensation plan reserving for issuance no more than ten percent (10%) of the outstanding common stock of the Company then outstanding, until we raise at least $1 million from the sale of either preferred or common stock, or a combination thereof (“Capital Threshold”). In addition, pursuant to the License Option Agreement, any net working capital acquired under a reverse merger or acquisition shall be applied against the Capital Threshold. The preliminary net working capital of PTSC on the Closing Date was approximately $374,000. As such, the remaining Capital Threshold is approximately $626,000 as of December 31, 2020. The anti-dilution issuance rights meet the definition of a derivative instrument under FASB’s ASC Topic 815 (see Note 3). In the event of any Liquidation Event, the Holders of Series B Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of common stock, an amount per share in cash equal to the greater of (x) the stated value of $6.50 for each share of Series B Preferred then held by the holder or (y) the amount payable per share of common stock which such holder of Series B Preferred would have received if such Holder had converted to common stock immediately prior to the Liquidation Event. Share-Based Compensation 2020 Omnibus Incentive Plan On October 21, 2020, we adopted our 2020 Omnibus Incentive Plan (the “2020 Plan”) and on October 22, 2020, the 2020 Plan was approved by our stockholders. The 2020 Plan was adopted to promote our long-term success and the creation of stockholder value by motivating participants, through equity incentive awards, to achieve long-term success in our business. The 2020 Plan permits the discretionary award of stock options, restricted stock, RSUs, and other equity awards to selected participants. Under the 2020 Plan, we have initially reserved 802,785 shares of common stock for issuance thereunder. On the first anniversary date from the adoption date of the 2020 Plan (or October 21, 2021), the number of shares of common stock reserved for issuance under the 2020 Plan shall automatically increase to 20% of the fully diluted shares of common stock outstanding, including shares of common stock reserved for issuance under convertible securities, such as the shares issuable upon the conversion of Series A and Series B Preferred, as calculated on an as-converted basis. The cost of all share-based awards will be recognized in the consolidated financial statements based on the fair value of the awards. The fair value of stock option awards will be determined using the Black-Scholes valuation model on the date of grant. The fair value of restricted stock awards and RSUs will be equal to the closing market price of our common stock on the date of grant. The Company will generally recognize share-based compensation expense over the period of vesting or period that services will be provided for all time-based awards. During the seven months ended December 31, 2020, the Company recognized $45,708 in share-based compensation expense, of which, $6,756 was included in research and development and $38,952 was included in general and administrative in the accompanying consolidated financial statements. There was no share-based compensation expense recognized during the period ended May 31, 2020. As of December 31, 2020, there were 336,328 RSUs outstanding under the 2020 Plan. A summary of RSU awards under the 2020 Plan during the transition period ended December 31, 2020 is as follows: Shares Weighted Average Grant Date Fair Value Outstanding at June 1, 2020 – $ – Granted 336,328 3.30 Vested – – Forfeited – – Outstanding at December 31, 2020 336,328 $ 3.30 The weighted-average grant date fair value of RSUs granted during the transition period ended December 31, 2020 was $3.30. In addition, no RSUs were vested during the transition period ended December 31, 2020. As of December 31, 2020, the total estimated unrecognized compensation cost related to non-vested RSUs was approximately $1,064,000. This cost is expected to be recognized over a weighted average vesting period of 1.11 years. There were no equity incentive plans or awards outstanding as of May 31, 2020. |
8. Income Taxes
8. Income Taxes | 7 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The provision (benefit) for income taxes for the transition period ended December 31, 2020 and the period March 30, 2020 (date of inception) to May 31, 2020 is as follows: December 31, 2020 Period March 31, 2020 (date of inception) to May 31, 2020 Current: Federal $ – $ – State 1,600 – Total current 1,600 – Deferred: Federal – – State – – Total deferred – – Total provision $ 1,600 $ – The reconciliation of the effective income tax rate to the Federal statutory rate for the transition period ended December 31, 2020 and period March 30, 2020 (date of inception) to May 31, 2020 is as follows: December 31, 2020 May 31, 2020 Statutory federal income tax rate 21.00 % 21.00 % State income tax rate, net of Federal effect (0.15)% – Fair market value of derivative liability (2.08)% – Other (0.58)% – Change in valuation allowance (18.38)% (21.00)% Effective income tax rate (0.19)% – Deferred tax assets and liabilities reflect the net tax effect of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of our deferred tax assets as of December 31, 2020 and May 31, 2020 are as follows: December 31, 2020 May 31, 2020 Deferred tax assets (liabilities): State taxes $ 336 $ – Accrued expenses 115,424 – Investment in affiliated company (22,620 ) – Basis difference in property and equipment 7 – Stock based compensation expense 13,639 – Impairment of note receivable 231,180 – 382 limited net operating loss carryforwards 596,600 – Net operating loss carryforwards 96,973 Valuation allowance (1,031,539 ) – Net deferred tax asset $ – $ – We have federal and state net operating loss carryforwards available to offset future taxable income of approximately $2,979,000 and $769,000 at December 31, 2020, respectively, of which approximately $2,654,000 and $445,000, respectively, are subject to a limitation under IRS Section 382. These carryforwards begin to expire in the years ending December 31, 2025 and 2028, respectively. We have refundable alternative minimum tax credits of $26,078 at December 31, 2020 which we expect to collect during the year ending December 31, 2021. We follow authoritative guidance which defines criteria that an individual tax position must meet for any part of the benefit of that position to be recognized in a company’s financial statements and also provides guidance on measurement, derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Interest and penalties, if any, related to unrecognized tax benefits are recorded in income tax expense. Interest and penalties relating to underpayment of income taxes are recorded in general and administrative expense. As of December 31, 2020, we are subject to U.S. Federal income tax examinations for the tax years May 31, 2007 through December 31, 2020, and we are subject to state and local income tax examinations for the tax years May 31, 2007 through December 31, 2020 due to the carryover of net operating losses related to PDSG from previous years. We have no liability relating to unrecognized tax benefits under the authoritative guidance for the transition period ended December 31, 2020 and the period ended May 31, 2020. Our continuing practice is to recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. We do not expect our unrecognized tax benefits to change significantly over the next twelve months. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 7 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies Legal Matters While the Company is not involved in any litigation as of December 31, 2020, the Company may be involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. Any litigation could have a material adverse effect on the Company’s business, financial condition, results of operations, and/or cash flows in the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods. Indemnification We have made certain guarantees and indemnities, under which we may be required to make payments to a guaranteed or indemnified party. We indemnify our directors, officers, employees, and agents to the maximum extent permitted under the laws of the State of Delaware. The duration of the guarantees and indemnities varies, and in many cases is indefinite. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments we could be obligated to make. Historically, we have not been obligated to make any payments for these obligations and no liabilities have been recorded for these guarantees and indemnities in the accompanying consolidated balance sheets. Escrow Shares On August 31, 2009, we gave notice to the former shareholders of Crossflo and Union Bank of California (the “Escrow Agent”) under Section 2.5 of the Agreement and Plan of Merger between us and Crossflo (the “Agreement”), outlining damages incurred by us in conjunction with the acquisition of Crossflo, and seeking the return of 5,690 shares of our common stock held by the Escrow Agent. Subsequently, former shareholders of Crossflo, representing a majority of the escrowed shares responded in protest to our claim, delaying the release of the escrowed shares until a formal resolution is reached. In the event we fail to prevail in our claim against the escrowed shares, we may be obligated to deposit into escrow approximately $256,000 of cash consideration due to the decline in our average stock price over the one-year escrow period calculated in accordance with Section 2.5 of the Agreement. We have evaluated the potential for loss regarding our claim and believe that it is probable that the resolution of this issue will not result in a material obligation to the Company, although there is no assurance of this. Accordingly, we have not recorded a liability for this matter. Patent Expenses Under the License Option Agreement (see Note 6), if we enter into a license agreement with CWRU, we would be responsible for the reimbursement of all past patent costs incurred by CWRU though the date of the License Option Agreement, which amount has been estimated to be approximately $267,000. This amount will be expensed when the Company intends to enter into a license agreement with CWRU. Operating Lease We have no lease obligations as of December 31, 2020. During November 2020, we terminated our month-to-month operating lease and employees are working from home offices at no cost to the Company. Rent expense for the seven months ended December 31, 2020 was $2,575. There was no rent expense for the period ended May 31, 2020. |
10. Related Parties
10. Related Parties | 7 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
10. Related Parties | 10. Related Parties During the seven months ended December 31, 2020, the Company’s Board of Directors approved to enter into consulting agreements with Nicole Steinmetz, Ph.D., acting Chief Scientific Officer, Dr. Steinmetz’s spouse, and Steve Fiering, Ph.D., each a co-founder of Private Mosaic and greater than 5% shareholder of the Company, for their scientific contributions towards advancing the technology platforms, in the monthly amounts of $5,000, $2,500, and $2,500, respectively. While there were no mutually signed consulting agreements in place as of December 31, 2020, we accrued $40,000 in aggregate, included in research and development expenses for the seven months ended December 31, 2020, all of which is included in accrued expenses and other in the accompanying consolidated financial statements as of December 31, 2020. |
11. Subsequent Events
11. Subsequent Events | 7 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | 11. Subsequent Events On January 29, 2021, we issued 6,422,290 shares of common stock upon the automatic conversion of 630,000 shares of Series A Preferred (see Note 7). We have evaluated subsequent events after the consolidated balance sheet date and through the filing date of this transition report on Form 10-KT, and based on our evaluation, management has determined that no other subsequent events have occurred that would require recognition in the accompanying consolidated financial statements or disclosure in the notes thereto other than as disclosed herein and in the accompanying notes. |
2. Summary of Significant Acc_2
2. Summary of Significant Accounting Policies (Policies) | 7 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of Mosaic ImmunoEngineering Inc. (formerly known as Patriot Scientific Corporation) and our subsidiaries. All intercompany accounts and transactions among the consolidated entities have been eliminated in the consolidated financial statements. In conjunction with the Reverse Merger, Private Mosaic’s historical results of operations replaced PTSC’s historical results of operations for all periods prior to the Reverse Merger and, for all periods following the Reverse Merger, the results of operations of the combined company are included in the Company’s consolidated financial statements. Since Private Mosaic was incorporated on March 30, 2020, prior year financial information covers the period March 30, 2020 (date of inception) to May 31, 2020. In addition, operating results for the seven months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021. |
Segment Reporting | Segment Reporting The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. No revenue has been generated since inception, and all tangible assets are held in the United States. |
Reverse Merger | Reverse Merger On August 21, 2020, Private Mosaic completed a Reverse Merger with PTSC pursuant to which Private Mosaic merged into PTSC (see Note 1). Due to the nominal assets and limited operations of PTSC prior to the Reverse Merger, the transaction was treated as a reverse acquisition under the provision of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805 whereby Private Mosaic became the accounting acquirer (legal acquiree) and PTSC was treated as the accounting acquiree (legal acquirer). As the transaction was treated as a reverse asset acquisition, no intangibles, including goodwill, were recognized. The net tangible assets acquired and liabilities assumed totaled $374,435 which were acquired by Private Mosaic in connection with the transaction and were recorded at their estimated acquisition date fair values as of the Closing Date, as follows: Cash and cash equivalents $ 427,971 Restricted cash and cash equivalents 177,244 Refundable income taxes 26,078 Prepaid expenses and other current assets 10,402 Investment in affiliated company 32,739 Accounts payable, accrued expenses and other (299,999 ) Net assets acquired $ 374,435 |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments acquired with a maturity of three months or less from the purchase date to be cash equivalents. |
Investment in Affiliated Company | Investment in Affiliated Company We have a 50% interest in Phoenix Digital Solutions LLC (“PDS”). We account for our investment using the equity method of accounting since the investment provides us the ability to exercise significant influence, but not control, over the investee. Significant influence is generally deemed to exist if we have an ownership interest in the voting stock of the investee of between 20% and 50%, although other factors, such as representation on the investee’s Board of Directors, are considered in determining whether the equity method of accounting is appropriate. Under the equity method of accounting, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the investee and is recognized in the consolidated statements of operations in the caption “Equity in earnings (loss) of affiliated company” and also is adjusted by contributions to and distributions from PDS. We review our investment in PDS to determine whether events or changes in circumstances indicate that the carrying amount may not be recoverable. If the decline in value is deemed to be other than temporary, we would recognize an impairment loss. On September 29, 2020, the managing members of PDS agreed to wind up and dissolve PDS as the underlying intellectual property was not deemed enforceable by the managing members (see Note 4). We own 100% of the preferred stock of Holocom (see Note 4). Prior to impairment, this investment was accounted for at cost since we do not have the ability to exercise significant influence over the operating and financial policies of Holocom. |
Financial Instruments and Concentrations of Credit Risk | Financial Instruments and Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents. We invest our cash and cash equivalents primarily in money market funds. Cash and cash equivalents are maintained with high quality financial institutions, which are regularly monitored by management. At times, deposits held with financial institutions may exceed the amount of insurance provided by the Federal Deposit Insurance Corporation and the Securities Investor Protection Corporation. We perform ongoing evaluations of these financial institutions to limit our concentration of risk exposure. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist principally of cash and cash equivalents, accounts payable, accrued payable to founders, derivative liability, and accrued expenses and other. The carrying value of these financial instruments, except for the derivative liability, approximates fair value because of the immediate or short-term maturity of the instruments. We record the derivative liability at fair value (see Note 3). |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in accordance with U.S. GAAP 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 and the reported amounts of expenses during the reporting period. Significant estimates in these consolidated financial statements include those related to the fair value of the anti-dilution issuance rights liability (derivative liability), investment in affiliated company, the provision or benefit for income taxes and the corresponding valuation allowance on deferred tax assets. In addition, management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows. On an ongoing basis, the Company evaluates its estimates, judgments, and methodologies. The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable. Due to the inherent uncertainty involved in making such accounting estimates and assumptions, the actual financial statement results could differ materially from such accounting estimates and assumptions. |
Assessment of Contingent Liabilities | Assessment of Contingent Liabilities We may be involved in various legal matters, disputes, and patent infringement claims which arise in the ordinary course of our business. We accrue for any estimated losses at the time when we can make a reliable estimate of such loss and it is probable that it has been incurred. By their very nature, contingencies are difficult to estimate. We continually evaluate information related to all contingencies to determine that the basis on which we have recorded our estimated exposure is appropriate. |
Patent Costs | Patent Costs Patent fees and patent related costs in connection with filing and prosecuting patent applications are expensed as incurred and are classified as general and administrative expenses in the accompanying consolidated financial statements. |
Share-Based Compensation | Share-Based Compensation We account for Restricted Stock Units (“RSUs”) and other share-based awards granted under our equity compensation plan in accordance with the authoritative guidance for share-based compensation. The fair value of RSUs is measured at the grant date based on the closing market price of our common stock on the date of grant, and is recognized as expense on a straight-line basis over the period of vesting. Forfeitures are recognized as a reduction of share-based compensation expense as they occur. At December 31, 2020 and May 31, 2020, there were no outstanding share-based awards with market or performance conditions. In addition, we periodically grant RSUs to non-employee consultants, which we account for in accordance with the authoritative guidance for share-based compensation. The cost of non-employee services received in exchange for share-based awards are measured based on either the fair value of the consideration received or the fair value of the share-based award issued, whichever is more reliably measurable. |
Basic and Diluted Income (Loss) Per Common Share | Basic and Diluted Income (Loss) Per Common Share Basic income (loss) per common share is computed by dividing income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share is computed by dividing our net income (loss) available to common stockholders by the sum of the weighted average number of common shares outstanding during the period, plus the potential dilutive effects of unvested RSUs and shares of common stock expected to be issued under our Series A Preferred and Series B Preferred outstanding during the period. The potential dilutive effect of unvested RSUs outstanding during the period are calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The potential dilutive effect of our Series A Preferred and Series B Preferred outstanding during the period is calculated using the if-converted method assuming the conversion of Series A Preferred and Series B Preferred as of the earliest period reported or at the date of issuance, if later, but are excluded if their effect is anti-dilutive. Since the impact of potentially dilutive securities are anti-dilutive during periods of net loss, there was no difference between basic and diluted loss per common share for the seven months ended December 31, 2020 and the period March 30, 2020 (date of inception) to May 31, 2020. For the seven months ended December 31, 2020, the issuance of 7,225,076 shares of common stock upon the conversion of Series A Preferred and Series B Preferred were excluded in the calculation of diluted loss per share as the impact was anti-dilutive during periods of net loss. In addition, for the seven months ended December 31, 2020, 336,328 RSUs were also excluded in the calculation of diluted loss per share as the impact was anti-dilutive during periods of net loss. Moreover, in connection with an acquisition of Crossflo by PTSC (see Note 1), 5,690 escrow shares were issued that are contingent upon certain representations and warranties made by Crossflo. We exclude these escrow shares from the basic income (loss) per share calculations and would have included the escrowed shares in the diluted income per share calculations if we reported net income. |
Income Taxes | Income Taxes We follow authoritative guidance in accounting for uncertainties in income taxes. This authoritative guidance prescribes a recognition threshold and measurement requirement for the financial statement recognition of a tax position that has been taken or is expected to be taken on a tax return and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under this guidance, we may only recognize tax positions that meet a “more likely than not” threshold. We follow authoritative guidance to evaluate whether a valuation allowance should be established against our deferred tax assets based on the consideration of all available evidence using a “more likely than not” standard. In making such judgments, significant weight is given to evidence that can be objectively verified. We assess our deferred tax assets annually under more likely than not scenarios in which they may be realized through future income. In addition, utilization of our net operating loss carryforwards may be subject to an annual limitation due to ownership change limitations that may have occurred as a result of the Reverse Merger, or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). These ownership changes may limit the amount of the net operating loss carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of the outstanding stock of a Company by certain stockholders. Moreover, since we will need to raise substantial additional funding to finance our operations, we may undergo further ownership changes in the future, which could further limit our ability to use net operating loss carryforwards. As a result, if we generate taxable income, our ability to use some of our net operating loss carryforwards to offset U.S. federal taxable income may be subject to limitations, which could result in increased future tax liability to us. With the exception of refundable income taxes, we have determined that it was more likely than not that all of our deferred tax assets will not be realized in the future due to our continuing pre-tax and taxable losses in addition to the potential loss of deferred tax assets as a result of the Reverse Merger (see Note 1). As a result of this determination, and with the exception for the aforementioned refundable income taxes, we have recorded a full valuation allowance against our deferred tax assets. |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows – Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 provides guidance intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The issue addressed in ASU 2016-15 that will affect the Company is classifying distributions received from equity method investments. The guidance provides an accounting policy election for classifying distributions received from equity method investments using either a cumulative earnings approach or a nature of distributions approach. The Company adopted this standard on March 30, 2020 (date of inception). The adoption did not have a material effect on the Company’s consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). ASU 2016-18 requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this standard on March 30, 2020 (date of inception). Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments- Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). ASU 2016-01 requires equity investments to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The accounting standard update also updates certain presentation and disclosure requirements. The Company adopted ASU 2016-01 on March 30, 2020 (date of inception). Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, as amended, which modifies lease accounting for lessees to increase transparency and comparability by recording lease assets and liabilities for operating leases and disclosing key information about leasing arrangements (“ASU 2016-02”). ASU 2016-02 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. The Company adopted ASU 2016-02 effective March 30, 2020 (date of inception). As permitted under the transition guidance, the Company will carry forward the assessment of whether its contracts contain or are leases, classification of its leases and remaining lease terms. Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), which removes, modifies, and adds various disclosure requirements on fair value measurements in Topic 820. ASU 2018-13 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted upon issuance of this update. The Company adopted ASU 2018-13 effective March 30, 2020 (date of inception). Implementation of this guidance did not have a material impact on the Company’s consolidated financial statements. |
Recently Issued Accounting Standards Not Yet Adopted | Recently Issued Accounting Standards Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions and improving consistent application in certain areas of Topic 740. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, however, early adoption is permitted. We are currently evaluating the timing and impact of adopting ASU 2019-12 on our consolidated financial statements and related disclosures. |
1. Organization and Business (T
1. Organization and Business (Tables) | 7 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of reverse stock split | Reverse Stock Split Ratio Shares of Common Stock Issued and Outstanding Series A Preferred (1) Shares of Common Stock to Be Issued Upon Conversion of Series A Preferred (1) Series B Preferred (2) Shares of Common Stock to Be Issued Upon Conversion of Series B Preferred (2) Fully Diluted Shares of Common Stock Outstanding, on an as-converted basis No split (Pre Reverse Stock Split) 401,392,948 630,000 3,211,143,390 70,000 401,392,950 4,013,929,288 1-for-500 (Post Reverse Stock Split) 805,803 630,000 6,422,290 70,000 802,786 8,030,879 _________________ (1) Each share of the Series A Preferred shall convert into 10.194106 shares of common stock of the Company and possesses full voting rights, as defined in the Series A Certificate of Designation. (2) Each share of the Series B Preferred shall convert into 11.46837 shares of common stock of the Company, possesses full voting rights and includes certain anti-dilution rights (see Notes 3 and 7) as defined in the Series B Certificate of Designation. |
2. Summary of Significant Acc_3
2. Summary of Significant Accounting Policies (Tables) | 7 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of assets acquired and liabilities assumed | Cash and cash equivalents $ 427,971 Restricted cash and cash equivalents 177,244 Refundable income taxes 26,078 Prepaid expenses and other current assets 10,402 Investment in affiliated company 32,739 Accounts payable, accrued expenses and other (299,999 ) Net assets acquired $ 374,435 |
3. Fair Value of Financial In_2
3. Fair Value of Financial Instruments (Tables) | 7 Months Ended |
Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial assets and liabilities | The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy: Fair Value Measurements at December 31, 2020 Using Fair Value at Quoted Prices Significant Other Significant Assets: Cash and cash equivalents $ 352,738 $ 352,738 $ – $ – Total assets $ 352,738 $ 352,738 $ – $ – Liabilities: Anti-dilution issuance rights liability $ 83,500 $ – $ – $ 83,500 Total liabilities $ 83,500 $ – $ – $ 83,500 Fair Value Measurements at May 31, 2020 Using Fair Value at Quoted Prices Significant Other Significant Assets: Cash $ 500 $ 500 $ – $ – Total assets $ 500 $ 500 $ – $ – |
Schedule of assumptions used | The primary inputs used in valuing the anti-dilution issuance rights liability at inception and upon remeasurement at December 31, 2020, were as follows: At December 31, 2020 At inception Fair value of common stock (per share) $3.25 $3.30 Estimated additional shares of common stock 31,353 57,462 Expected volatility 90% 135% Expected term (years) 0.25 0.45 Risk-free interest rate 0.09% 0.11% |
4. Investment in Affiliated C_2
4. Investment in Affiliated Company (Tables) | 7 Months Ended |
Dec. 31, 2020 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Balance sheet and income statement of affiliate | PDS’s statement of net assets under the Liquidation Basis of Accounting as of December 31, 2020 is as follows: December 31, 2020 Cash and cash equivalents $ 55,274 Net assets in liquidation $ 55,274 PDS’s statement of changes in net assets for the period October 1, 2020 to December 31, 2020 under Liquidation Basis of Accounting is as follows: Three Months Ended December 31, 2020 Members’ equity, September 30, 2020 (Going Concern Basis) $ 57,173 Changes in net assets in liquidation: Expenses associated with dissolution (1,899 ) Total net assets in liquidation at December 31, 2020 (Liquidation Basis) $ 55,274 PDS’s statements of operations from the Closing Date of the Reverse Merger (August 21, 2020) to September 30, 2020 is as follows: Period August 21, 2020 to September 30, 2020 Expenses $ (8,305 ) Net loss $ (8,305 ) |
5. Accrued Expenses and Other_2
5. Accrued Expenses and Other Current Liabilities (Tables) | 7 Months Ended |
Dec. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following: December 31, 2020 May 31, 2020 Accrued compensation $ 393,431 $ – Crossflo acquisition liability 177,244 – Other accrued expenses 90,157 – Total accrued expenses and other current liabilities $ 660,832 $ – |
7. Stockholders' Equity and S_2
7. Stockholders' Equity and Share-Based Compensation (Tables) | 7 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Schedule of Restricted Stock Unit Activity | A summary of RSU awards under the 2020 Plan during the transition period ended December 31, 2020 is as follows: Shares Weighted Average Grant Date Fair Value Outstanding at June 1, 2020 – $ – Granted 336,328 3.30 Vested – – Forfeited – – Outstanding at December 31, 2020 336,328 $ 3.30 |
8. Income Taxes (Tables)
8. Income Taxes (Tables) | 7 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of provisions for income taxes | The provision (benefit) for income taxes for the transition period ended December 31, 2020 and the period March 30, 2020 (date of inception) to May 31, 2020 is as follows: December 31, 2020 Period March 31, 2020 (date of inception) to May 31, 2020 Current: Federal $ – $ – State 1,600 – Total current 1,600 – Deferred: Federal – – State – – Total deferred – – Total provision $ 1,600 $ – |
Schedule of effective income tax rate | The reconciliation of the effective income tax rate to the Federal statutory rate for the transition period ended December 31, 2020 and period March 30, 2020 (date of inception) to May 31, 2020 is as follows: December 31, 2020 May 31, 2020 Statutory federal income tax rate 21.00 % 21.00 % State income tax rate, net of Federal effect (0.15)% – Fair market value of derivative liability (2.08)% – Other (0.58)% – Change in valuation allowance (18.38)% (21.00)% Effective income tax rate (0.19)% – |
Schedule of deferred tax assets and liabilities | Significant components of our deferred tax assets as of December 31, 2020 and May 31, 2020 are as follows: December 31, 2020 May 31, 2020 Deferred tax assets (liabilities): State taxes $ 336 $ – Accrued expenses 115,424 – Investment in affiliated company (22,620 ) – Basis difference in property and equipment 7 – Stock based compensation expense 13,639 – Impairment of note receivable 231,180 – 382 limited net operating loss carryforwards 596,600 – Net operating loss carryforwards 96,973 Valuation allowance (1,031,539 ) – Net deferred tax asset $ – $ – |
1. Organization and Business (D
1. Organization and Business (Details - Reverse Stock Split) - shares | 7 Months Ended | ||
Dec. 31, 2020 | May 31, 2020 | ||
Common stock, shares issued | 805,803 | 0 | |
Common stock, shares outstanding | 805,803 | 0 | |
Pre Reverse Stock Split [Member] | |||
Common stock, shares issued | 401,392,948 | ||
Common stock, shares outstanding | 401,392,948 | ||
Common stock diluted shares | 4,013,929,288 | ||
Pre Reverse Stock Split [Member] | Series A Preferred Stock [Member] | |||
Common stock, shares issued | [1] | 630,000 | |
Common stock, shares outstanding | [1] | 630,000 | |
Shares of common stock to be issued upon conversion of preferred stock | 3,211,143,390 | ||
Pre Reverse Stock Split [Member] | Series B Preferred Stock [Member] | |||
Common stock, shares issued | [2] | 70,000 | |
Common stock, shares outstanding | [2] | 70,000 | |
Shares of common stock to be issued upon conversion of preferred stock | 401,392,950 | ||
Post Reverse Stock Split [Member] | |||
Common stock, shares issued | 805,803 | ||
Common stock, shares outstanding | 805,803 | ||
Common stock diluted shares | 8,030,879 | ||
Post Reverse Stock Split [Member] | Series A Preferred Stock [Member] | |||
Common stock, shares issued | [1] | 630,000 | |
Common stock, shares outstanding | [1] | 630,000 | |
Shares of common stock to be issued upon conversion of preferred stock | 6,422,290 | ||
Post Reverse Stock Split [Member] | Series B Preferred Stock [Member] | |||
Common stock, shares issued | [2] | 70,000 | |
Common stock, shares outstanding | [2] | 70,000 | |
Shares of common stock to be issued upon conversion of preferred stock | 802,786 | ||
[1] | Each share of the Series A Preferred shall convert into 10.194106 shares of common stock of the Company and possesses full voting rights, as defined in the Series A Certificate of Designation. | ||
[2] | Each share of the Series B Preferred shall convert into 11.46837 shares of common stock of the Company, possesses full voting rights and includes certain anti-dilution rights (see Notes 3 and 7) as defined in the Series B Certificate of Designation. |
1. Organization and Business _2
1. Organization and Business (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Aug. 21, 2020 | Nov. 30, 2020 | Dec. 31, 2020 | Dec. 02, 2020 | Dec. 01, 2020 | May 31, 2020 | |
Reverse stock split | 1-for-500 | |||||
Common stock, shares authorized | 100,000,000 | 100,000,000 | 600,000,000 | 100,000,000 | ||
Cash and cash equivalents | $ 352,738 | $ 500 | ||||
Common Class A [Member] | ||||||
Common stock, shares authorized | 900,000 | 900,000 | ||||
Common Class B [Member] | ||||||
Common stock, shares authorized | 100,000 | 100,000 | ||||
Mosaic ImmunoEngineering [Member] | Series A Preferred Stock [Member] | ||||||
Stock exchanged, shares issued | 630,000 | |||||
Each share of Preferred stock converts into PTSC common stock | 10.194106 | |||||
Mosaic ImmunoEngineering [Member] | Common Class A [Member] | ||||||
Stock exchanged, shares exchanged | (630,000) | |||||
Mosaic ImmunoEngineering [Member] | Common Class B [Member] | ||||||
Stock exchanged, shares exchanged | (70,000) | |||||
Mosaic ImmunoEngineering [Member] | Series B Preferred Stock [Member] | ||||||
Stock exchanged, shares issued | 70,000 | |||||
Each share of Preferred stock converts into PTSC common stock | 11.46837 |
2. Summary of Significant Acc_4
2. Summary of Significant Accounting Policies (Details - Reverse Merger) - Patriot Scientific [Member] | Aug. 21, 2020USD ($) |
Cash and cash equivalents | $ 427,971 |
Restricted cash and cash equivalents | 177,244 |
Refundable income taxes | 26,078 |
Prepaid expenses and other current assets | 10,402 |
Investment in affiliated company | 32,739 |
Accounts payable, accrued expenses and other | (299,999) |
Net assets acquired | $ 374,435 |
2. Summary of Significant Acc_5
2. Summary of Significant Accounting Policies (Details Narrative) | 7 Months Ended |
Dec. 31, 2020shares | |
Crossflo [Member] | |
Shares held in escrow | 5,690 |
Preferred Series A and B [Member] | |
Antidilutive shares | 7,225,076 |
Restricted Stock Units (RSUs) [Member] | |
Antidilutive shares | 336,328 |
PDS [Member] | |
Percentage of investment in affiliated company | 50.00% |
3. Fair Value of Financial In_3
3. Fair Value of Financial Instruments (Details - Fair Value) - USD ($) | Dec. 31, 2020 | May 31, 2020 |
Fair value of assets | $ 352,738 | $ 500 |
Fair value of liabilities | 83,500 | |
Cash and cash equivalents [Member] | ||
Fair value of assets | 352,738 | 500 |
Anti-dilution Issuance Rights Liability [Member] | ||
Fair value of liabilities | 83,500 | |
Fair Value Inputs Level 1 | ||
Fair value of assets | 352,738 | 500 |
Fair value of liabilities | 0 | |
Fair Value Inputs Level 1 | Cash and cash equivalents [Member] | ||
Fair value of assets | 352,738 | 500 |
Fair Value Inputs Level 1 | Anti-dilution Issuance Rights Liability [Member] | ||
Fair value of liabilities | 0 | |
Fair Value Inputs Level 2 | ||
Fair value of assets | 0 | 0 |
Fair value of liabilities | 0 | |
Fair Value Inputs Level 2 | Cash and cash equivalents [Member] | ||
Fair value of assets | 0 | 0 |
Fair Value Inputs Level 2 | Anti-dilution Issuance Rights Liability [Member] | ||
Fair value of liabilities | 0 | |
Fair Value Inputs Level 3 | ||
Fair value of assets | 0 | 0 |
Fair value of liabilities | 83,500 | |
Fair Value Inputs Level 3 | Cash and cash equivalents [Member] | ||
Fair value of assets | 0 | $ 0 |
Fair Value Inputs Level 3 | Anti-dilution Issuance Rights Liability [Member] | ||
Fair value of liabilities | $ 83,500 |
3. Fair Value of Financial In_4
3. Fair Value of Financial Instruments (Details - Assumption) - $ / shares | 3 Months Ended | 7 Months Ended |
Aug. 21, 2020 | Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | ||
Fair value of common stock (per share) | $ 3.30 | $ 3.25 |
Estimated additional shares of common stock | 57,462 | 31,353 |
Expected volatility | 135.00% | 90.00% |
Expected term (years) | 5 months 12 days | 2 months 30 days |
Risk-free interest rate | 0.11% | 0.09% |
4. Investment in Affiliated C_3
4. Investment in Affiliated Companies (Details - balance sheet) - USD ($) | 3 Months Ended | |
Dec. 31, 2020 | May 31, 2020 | |
Cash and cash equivalents | $ 352,738 | $ 500 |
PDS [Member] | ||
Cash and cash equivalents | 55,274 | |
Net assets in liquidation | 55,274 | |
Members' equity, beginning balance | 57,173 | |
Expenses associated with dissolution | 1,899 | |
Member's equity, ending balance | $ 55,274 |
4. Investment in Affiliated C_4
4. Investment in Affiliated Company (Details - Statements of Operations) - PDS [Member] | 1 Months Ended |
Sep. 30, 2020USD ($) | |
Expenses | $ (8,305) |
Net loss | $ (8,305) |
4. Investment in Affiliated C_5
4. Investment in Affiliated Company (Details Narrative) - USD ($) | 2 Months Ended | 7 Months Ended | |
May 31, 2020 | Dec. 31, 2020 | ||
Investment in affiliated company | $ 0 | $ 27,637 | |
Equity in loss of affiliated company | $ 0 | [1] | $ (5,102) |
PDS [Member] | |||
Equity interest percentage | 50.00% | ||
Investment in affiliated company | $ 27,637 | ||
Equity in loss of affiliated company | $ (5,102) | ||
Holocom [Member] | |||
Equity interest percentage | 46.00% | ||
Investment in affiliated company | $ 0 | ||
Holocom [Member] | Preferred Stock [Member] | |||
Equity shares owned | 2,100,000 | ||
[1] | Private Mosaic was incorporated on March 30, 2020. |
5. Accrued Expenses and Other L
5. Accrued Expenses and Other Liabilities (Details) - USD ($) | Dec. 31, 2020 | May 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 393,431 | $ 0 |
Crossflo acquisition liability | 177,244 | 0 |
Other accrued expenses | 90,157 | 0 |
Accrued expenses | $ 660,832 | $ 0 |
5. Accrued Expenses and Other_3
5. Accrued Expenses and Other Current Liabilties (Details Narrative) - USD ($) | Dec. 31, 2020 | May 31, 2020 |
Accrued payable to founders | $ 49,997 | $ 1,011 |
Reimbursable Advances [Member] | ||
Accrued payable to founders | $ 1,011 | |
Overpayment of Common Stock Subscribed [Member] | ||
Accrued payable to founders | $ 49,997 |
6. License Option Agreement (De
6. License Option Agreement (Details Narrative) - License Option Agreement [Member] | Dec. 31, 2020USD ($) |
Capital threshold remaining | $ 626,000 |
CWRU [Member] | |
Accrued legal fees | 15,000 |
Patents [Member] | |
Accrued legal fees | 16,852 |
Patents [Member] | Accounts Payable [Member] | |
Accrued legal fees | 9,441 |
Patents [Member] | Accrued Expenses [Member] | |
Accrued legal fees | $ 7,411 |
7. Stockholders' Equity and S_3
7. Stockholders' Equity and Share-Based Compensation (Details - RSU activity) - Restricted Stock Units (RSUs) [Member] | 7 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number of Options | |
Number of Options Outstanding, Beginning | shares | 0 |
Number of Options Granted | shares | 336,328 |
Number of Options Vested | shares | 0 |
Number of Options Forfeited | shares | 0 |
Number of Options Outstanding, Ending | shares | 336,328 |
Weighted Average Exercise Price | |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | |
Weighted Average Exercise Price Granted | $ / shares | 3.30 |
Weighted Average Exercise Price Vested | $ / shares | |
Weighted Average Exercise Price Forfeited | $ / shares | |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 3.30 |
7. Stockholders' Equity and S_4
7. Stockholders' Equity and Share-Based Compensation (Details Narrative) - USD ($) | 2 Months Ended | 6 Months Ended | 7 Months Ended |
May 31, 2020 | Nov. 30, 2020 | Dec. 31, 2020 | |
Reverse Stock Split | 1-for-500 | ||
Share-based compensation expense | $ 45,708 | ||
Restricted Stock Units (RSUs) [Member] | |||
Awards outstanding | 0 | 336,328 | |
Weighted-average grant date fair value of granted | $ 3.30 | ||
Unrecognized compensation cost | $ 1,064,000 | ||
Weighted average vesting period | 1 year 1 month 9 days | ||
Research and Development Expense [Member] | |||
Share-based compensation expense | $ 6,756 | ||
General and Administrative Expense [Member] | |||
Share-based compensation expense | $ 38,952 | ||
2020 Omnibus Incentive Plan | |||
Stock for reserved for Issuance | 802,785 | ||
Awards granted | 0 | ||
Awards outstanding | 0 |
8. Income Taxes (Details - Prov
8. Income Taxes (Details - Provision) - USD ($) | 2 Months Ended | 7 Months Ended | |
May 31, 2020 | Dec. 31, 2020 | ||
Current: | |||
Federal | $ 0 | $ 0 | |
State | 0 | 1,600 | |
Total current | 0 | 1,600 | |
Deferred: | |||
Federal | 0 | 0 | |
State | 0 | 0 | |
Total deferred | 0 | 0 | |
Total provision | $ 0 | [1] | $ 1,600 |
[1] | Private Mosaic was incorporated on March 30, 2020. |
8. Income Taxes (Details - Reco
8. Income Taxes (Details - Reconcilation) | 2 Months Ended | 7 Months Ended |
May 31, 2020 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal income tax rate | 21.00% | 21.00% |
State income tax rate, net of Federal effect | 0.00% | (0.15%) |
Fair market value of derivative liability | 0.00% | (2.08%) |
Other | 0.00% | (0.58%) |
Change in valuation allowance | (21.00%) | (18.38%) |
Effective income tax rate | 0.00% | (0.19%) |
8. Income Taxes (Details - Defe
8. Income Taxes (Details - Deferred tax assets) - USD ($) | Dec. 31, 2020 | May 31, 2020 |
Deferred tax assets (liabilities): | ||
State taxes | $ 336 | $ 0 |
Accrued expenses | 115,424 | 0 |
Investment in affiliated company | (22,620) | 0 |
Basis difference in property and equipment | 7 | 0 |
Stock based compensation expense | 13,639 | 0 |
Impairment of note receivable | 231,180 | 0 |
Capital loss carryover | 596,600 | 0 |
382 limited net operating loss carryforwards | 96,973 | 0 |
Valuation allowance | (1,031,539) | 0 |
Net deferred tax asset | $ 0 | $ 0 |
8. Income Taxes (Details Narrat
8. Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2020 | Dec. 31, 2020 | |
Refundable alternative minimum tax credits | $ 26,078 | |
Federal [Member] | ||
Operating loss carryforwards | 2,979,000 | |
Operating loss carryforwards, expiration date | Dec. 31, 2025 | |
State [Member] | ||
Operating loss carryforwards | $ 769,000 | |
Operating loss carryforwards, expiration date | Dec. 31, 2028 |
9. Commitments and Contingenc_2
9. Commitments and Contingencies (Details Narrative) - USD ($) | 2 Months Ended | 7 Months Ended |
May 31, 2020 | Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Possible patent cost liability | $ 267,000 | |
Rent expenses | $ 0 | $ 2,575 |
10. Related Parties (Details Na
10. Related Parties (Details Narrative) | 7 Months Ended |
Dec. 31, 2020USD ($) | |
Accrued consulting fees | $ 40,000 |
Nicole Steinmetz [Mermber] | |
Related party cost | 5,000 |
Steinmetzs spouse [Mermber] | |
Related party cost | 2,500 |
Steve Fiering [Mermber] | |
Related party cost | $ 2,500 |