Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 03, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2021 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2021 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 0-22182 | |
Entity Registrant Name | MOSAIC IMMUNOENGINEERING INC. | |
Entity Central Index Key | 0000836564 | |
Entity Tax Identification Number | 84-1070278 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 1537 South Novato Blvd | |
Entity Address, Address Line Two | #5 | |
Entity Address, City or Town | Novato | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94947 | |
City Area Code | 657 | |
Local Phone Number | 208-0890 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 7,228,093 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 582,304 | $ 352,738 |
Prepaid expenses and other current assets | 20,025 | 51,349 |
Investment in affiliated company | 0 | 27,637 |
Refundable income taxes | 0 | 26,078 |
Total current assets | 602,329 | 457,802 |
Total assets | 602,329 | 457,802 |
Current liabilities: | ||
Accounts payable | 69,115 | 86,014 |
Accrued payable to founders | 0 | 49,997 |
Derivative liability | 104,300 | 83,500 |
Accrued expenses and other | 1,319,767 | 660,832 |
Total current liabilities | 1,493,182 | 880,343 |
Convertible notes | 622,933 | 0 |
Total liabilities | 2,116,115 | 880,343 |
Stockholders’ deficit: | ||
Common stock, $0.00001 par value: 100,000,000 shares authorized: 7,228,093 and 805,803 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 72 | 8 |
Additional paid-in capital | 1,115,162 | 420,198 |
Accumulated deficit | (2,629,021) | (842,754) |
Total stockholders’ deficit | (1,513,786) | (422,541) |
Total liabilities and stockholders’ deficit | 602,329 | 457,802 |
Series A Preferred Stock [Member] | ||
Stockholders’ deficit: | ||
Preferred stock, value | 0 | 6 |
Series B Preferred Stock [Member] | ||
Stockholders’ deficit: | ||
Preferred stock, value | $ 1 | $ 1 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited (Parenthetical) - $ / shares | Jun. 30, 2021 | Dec. 31, 2020 |
Preferred stock, par value | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Common Stock, Par or Stated Value Per Share | $ 0.00001 | $ 0.00001 |
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 |
Common Stock, Shares, Issued | 7,228,093 | 805,803 |
Common Stock, Shares, Outstanding | 7,228,093 | 805,803 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 630,000 | 630,000 |
Preferred stock, shares issued | 0 | 630,000 |
Preferred stock, shares outstanding | 0 | 630,000 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 70,000 | 70,000 |
Preferred stock, shares issued | 70,000 | 70,000 |
Preferred stock, shares outstanding | 70,000 | 70,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2021 | |
Operating expenses: | ||||
Research and development | $ 376,767 | $ 0 | $ 0 | $ 622,915 |
General and administrative | 533,935 | 511 | 40 | 1,092,235 |
Total operating expenses | 910,702 | 511 | 40 | 1,715,150 |
Other income (expense): | ||||
Interest income | 11 | 0 | 0 | 16 |
Change in valuation of derivative liability | (20,800) | 0 | 0 | (20,800) |
Non-cash interest expense on convertible notes | (6,931) | 0 | 0 | (6,931) |
Accretion to redemption value on convertible notes | (41,002) | 0 | 0 | (41,002) |
Total other expense, net | (68,722) | 0 | 0 | (68,717) |
Loss before income taxes | (979,424) | (511) | (40) | (1,783,867) |
Provision for income taxes | 0 | 0 | 0 | 2,400 |
Net loss | $ (979,424) | $ (511) | $ (40) | $ (1,786,267) |
Basic and diluted loss per common share | $ (0.14) | $ 0 | $ 0 | $ (0.29) |
Weighted average number of common shares outstanding – basic | 7,222,403 | 0 | 0 | 6,228,900 |
Weighted average number of common shares outstanding – diluted | 7,222,403 | 0 | 0 | 6,228,900 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Stockholders' Deficit (Unaudited) - USD ($) | Series A Convertible Voting Preferred Stock [Member] | Series B Convertible Voting Preferred Stock [Member] | Common Stock [Member] | Common Stock Subscribed [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total | |
Beginning balance, value at Mar. 29, 2020 | [1] | |||||||
Balance at beginning, shares at Mar. 29, 2020 | ||||||||
Common stock subscribed and not yet issued | 63 | 63 | ||||||
Share-based compensation | 0 | |||||||
Net loss | (511) | (511) | ||||||
Ending balance, value at Jun. 30, 2020 | 63 | (511) | (448) | |||||
Balance at ending, shares at Jun. 30, 2020 | ||||||||
Beginning balance, value at Mar. 31, 2020 | 63 | (471) | (408) | |||||
Balance at beginning, shares at Mar. 31, 2020 | ||||||||
Net loss | (40) | (40) | ||||||
Ending balance, value at Jun. 30, 2020 | 63 | (511) | (448) | |||||
Balance at ending, shares at Jun. 30, 2020 | ||||||||
Beginning balance, value at Dec. 31, 2020 | $ 6 | $ 1 | $ 8 | 420,198 | (842,754) | (422,541) | ||
Balance at beginning, shares at Dec. 31, 2020 | 630,000 | 70,000 | 805,803 | |||||
Conversion of Series A Convertible Voting Preferred Stock | $ (6) | $ 64 | (58) | |||||
Conversion of Series A Convertible Voting Preferred Stock, Shares | (630,000) | 6,422,290 | ||||||
Common stock subscribed and not yet issued | 0 | |||||||
Share-based compensation | 695,022 | 695,022 | ||||||
Net loss | (1,786,267) | (1,786,267) | ||||||
Ending balance, value at Jun. 30, 2021 | $ 1 | $ 72 | 1,115,162 | (2,629,021) | (1,513,786) | |||
Balance at ending, shares at Jun. 30, 2021 | 70,000 | 7,228,093 | ||||||
Beginning balance, value at Mar. 31, 2021 | $ 1 | $ 72 | 694,383 | (1,649,597) | (955,141) | |||
Balance at beginning, shares at Mar. 31, 2021 | 70,000 | 7,228,093 | ||||||
Share-based compensation | 420,779 | 420,779 | ||||||
Net loss | (979,424) | (979,424) | ||||||
Ending balance, value at Jun. 30, 2021 | $ 1 | $ 72 | $ 1,115,162 | $ (2,629,021) | $ (1,513,786) | |||
Balance at ending, shares at Jun. 30, 2021 | 70,000 | 7,228,093 | ||||||
[1] | Private Mosaic was incorporated on March 30, 2020. |
Condensed Consolidated Statem_3
Condensed Consolidated Statement of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2020 | Jun. 30, 2021 | |
Operating activities: | ||
Net loss | $ (511) | $ (1,786,267) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 0 | 695,022 |
Change in fair value of derivative liability | 0 | 20,800 |
Non-cash interest on convertible notes | 0 | 6,931 |
Accretion to redemption value on convertible notes | 0 | 41,002 |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other current assets | 0 | 31,324 |
Refundable income taxes | 0 | 26,078 |
Accounts payable | 0 | (16,899) |
Accrued payable to founders | 1,011 | 0 |
Accrued expenses and other | 0 | 658,935 |
Net cash provided by (used in) operating activities | 500 | (323,074) |
Investing activities: | ||
Proceeds from dissolution of affiliate | 0 | 27,637 |
Net cash provided by investing activities | 0 | 27,637 |
Financing activities: | ||
Proceeds from the issuance of convertible notes | 0 | 525,003 |
Net cash provided by financing activities | 0 | 525,003 |
Net increase in cash and cash equivalents | 500 | 229,566 |
Cash and cash equivalents, beginning of period | 0 | 352,738 |
Cash and cash equivalents, end of period | 500 | 582,304 |
Supplemental disclosure of non-cash financing activities: | ||
Common stock subscribed and not yet issued | 63 | 0 |
Conversion of Series A Convertible Voting Preferred Stock to common stock | 0 | 64 |
Conversion of accrued payable to founder to convertible note | 0 | 49,997 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | $ 0 | $ 2,400 |
1. Organization and Business
1. Organization and Business | 6 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
1. Organization and Business | 1. Organization and Business Organization 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. We are a preclinical, development-stage biotechnology company focused on developing and eventually commercializing our proprietary technology designed to activate the innate immune system to treat and prevent cancer and infectious diseases. Our lead product candidate, MIE-101, is based on a naturally occurring plant virus that is non-infectious in animals and humans but has been shown to act as strong adjuvant that activates multiple Toll-like receptors (“TLRs”) through its natural immune recognition. When injected into a tumor, MIE-101 naturally triggers the body’s innate immune system, thereby altering the tumor microenvironment and directing activated anti-tumor T cells to attack both the injected tumor as well as other tumors throughout the body. Our goal is to advance MIE-101 into human and veterinary studies in 2022 if sufficient funding becomes available. 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 the assets in Patriot Data Solutions Group. On August 21, 2020, we completed a reverse merger transaction pursuant to a stock purchase agreement by and between PTSC (now known as Mosaic ImmunoEngineering Inc.) and Private Mosaic as further described below. 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 70,000 630,000 70,000 10.194106 11.46837 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 In addition, on June 10, 2021 and June 14, 2021, our Board of Directors and majority shareholders, respectively, approved a discretionary reverse stock split whereby our Board of Directors have broad authority to implement a future reverse stock split at a ratio ranging from 1-for-2 to 1-for-4 at any time on or before June 25, 2022 in order to meet the initial listing bid price requirement and other listing regulations of the Nasdaq Stock Market or other national exchanges. The Board believes that listing our common stock on a national exchange will increase the liquidity of our common stock by providing us with a market for our common stock that is more accessible than if our common stock were to continue to trade on the OTCQB or on the “pink sheets” maintained by the OTC Markets Group, Inc. If the Board of Directors believes that a discretionary reverse stock split is in the best interests of the Company and its shareholders, it will consider certain factors in selecting the specific reverse stock split ratio, including prevailing market conditions, the trading price of our common stock and the steps that we will need to take in order to meet the initial listing bid price requirement and other listing regulations of the Nasdaq Stock Market or other national exchanges. We currently do not expect to list our securities on the Nasdaq Stock Market or other national exchange until after we have filed our Annual Report on Form 10-K for the year ending December 31, 2021. Liquidity and Management’s Plans The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. At June 30, 2021, the Company had cash and cash equivalents of $ 582,304 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. Significant Accounting Polic
2. Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
2. Significant Accounting Policies | 2. Significant Accounting Policies Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. All intercompany accounts and transactions have been eliminated. 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 unaudited condensed 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 June 30, 2020. In addition, operating results for the three months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the results for the interim period presented. 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: 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 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 had a 50 4) 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, accrued expenses and other, and convertible notes. The carrying value of these financial instruments, except for the derivative liability and convertible notes, 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). The convertible notes are initially recorded at their amortized cost and are being accreted to their redemption value over the estimated conversion period using the effective interest method (see Note 7). 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 unaudited condensed consolidated financial statements include those related to the fair value of the anti-dilution issuance rights liability (derivative liability), the timing of conversion of the convertible notes, 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. Convertible Notes The Company follows ASC 480-10, “Distinguishing Liabilities from Equity” in its evaluation of the accounting for share-settled debt. ASC 480-10-25-14 requires liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics: a) A fixed monetary amount known at inception; b) Variations in something other than the fair value of the issuer’s equity shares; or c) Variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty moves in the opposite direction as the value of the issuer’s shares Moreover, equity classification was not an appropriate classification for the convertible notes because the underlying terms of the convertible notes do not expose the investors to risks and rewards similar to those of an owner and, therefore, do not create a shareholder relationship. Pursuant to ASC 835-30, the convertible notes were initially recorded at their amortized cost and are being accreted to their redemption value over the estimated conversion period using the effective interest method (see Note 7). 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. 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 June 30, 2021, 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 B Preferred outstanding during the period is calculated using the if-converted method assuming the conversion of 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. The following table presents the securities excluded from the calculation of diluted net income (loss) per share for the three and six months ended June 30, 2021 and the three months ended June 30, 2020 and period March 30, 2020 (date of inception) to June 30, 2020, as the effect of their inclusion would have been anti-dilutive during periods of net loss: Schedule of anti-dilutive shares Three months ended June 30, 2021 Three months ended June 30, 2020 Six months ended June 30, 2021 March 30, 2020 (1) to June 30, 2020 Series B Preferred 802,786 – 802,786 – Unvested RSUs 423,166 – 379,267 – Total 1,225,952 – 1,182,053 – Moreover, in connection with an acquisition of Crossflo by PTSC (see Note 1), 5,690 Recently Adopted Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. The Company adopted ASU 2018-13 effective January 1, 2021. Implementation of this guidance did not have a material impact on the Company’s unaudited condensed consolidated financial statements. |
3. Fair Value of Financial Inst
3. Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
3. 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 as of June 30, 2021 and December 31, 2020: Schedule of fair value of financial assets and liabilities Fair Value Measurements at June 30, 2021 Using Fair Value at Quoted Prices Significant Other Significant Assets: Cash and cash equivalents $ 582,304 $ 582,304 $ – $ – Total assets $ 582,304 $ 582,304 $ – $ – Liabilities: Anti-dilution issuance rights liability $ 104,300 $ – $ – $ 104,300 Total liabilities $ 104,300 $ – $ – $ 104,300 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 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. The estimated fair value of the anti-dilution issuance rights at the date of issuance on August 21, 2020 (at inception), December 31, 2020, and June 30, 2021, was $83,500, $83,500 and $104,300, respectively. 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, December 31, 2020 and June 30, 2021, were as follows: Schedule of assumptions used At inception December 31, 2020 June 30, 2021 Fair value of common stock (per share) $3.30 $3.25 $1.60 Estimated additional shares of common stock 57,462 31,353 83,889 Expected volatility 135% 90% 100% Expected term (years) 0.45 0.25 0.25 Risk-free interest rate 0.11% 0.09% 0.05% 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 | 6 Months Ended |
Jun. 30, 2021 | |
Investments in and Advances to Affiliates [Abstract] | |
4. Investment in Affiliated Companies | 4. Investment in Affiliated Companies Phoenix Digital Solutions, LLC (“PDS”) PDS was formed by PTSC to pursue licensing of its intellectual property and we own 50 $ 27,637 |
5. Accrued Expenses and Other C
5. Accrued Expenses and Other Current Liabilities; Accrued Payable to Founders | 6 Months Ended |
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
5. Accrued Expenses and Other Current Liabilities; Accrued Payable to Founders | 5. Accrued Expenses and Other Current Liabilities; Accrued Payable to Founders Accrued expenses and other current liabilities consisted of the following at June 30, 2021 and December 31, 2020: Schedule of accrued expenses and other current liabilities June 30, 2021 December 31, 2020 Accrued compensation $ 851,578 $ 393,431 Accrued consulting 246,750 40,000 Crossflo acquisition liability 177,244 177,244 Other accrued expenses 44,195 50,157 Total accrued expenses and other current liabilities $ 1,319,767 $ 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 December 31, 2020, accrued payable to founders of $49,997 represented the overpayment of common stock subscribed. Amounts payable to founders did not earn interest and were not convertible into any other security. During May 2021, the amount payable to founders was invested in the Company’s convertible notes (see Note 7). |
6. License Option Agreement
6. License Option Agreement | 6 Months Ended |
Jun. 30, 2021 | |
License Option Agreement | |
6. 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 (see Note 2). As of June 30, 2021, the remaining Capital Threshold was approximately $ 626,000 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 three and six months ended June 30, 2021, we incurred $ 11,438 22,817 |
7. Convertible Notes
7. Convertible Notes | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
7. Convertible Notes | 7. Convertible Notes On May 7, 2021 (“Effective Date”), we entered into a convertible note purchase agreement (“Note Agreement”) with five (5) accredited investors, including two (2) members of our Board of Directors that participated on the same terms as other accredited investors (collectively, the “Investors”). Pursuant to the Note Agreement, the Company received $ 525,003 49,997 575,000 The Convertible Notes have no stated maturity date; bear interest at a simple rate equal to eight percent ( 8.0 6,931 The Convertible Notes will convert into the same equity securities offered in the Qualified Financing or Smaller Financing (“Conversion Shares”), as described below, at a conversion price equal to the lower of (i) the product equal to 80% times the lowest per unit purchase price of the equity securities issued for cash in the Qualified Financing or Smaller Financing, or (ii) $ 2.377 Pursuant to the Note Agreement, a Qualified Financing represents a single transaction or series or transactions whereby the Company receives aggregate gross proceeds of at least $5 million from the sale of equity securities following the Effective Date (excluding proceeds from the issuance of any future Convertible Notes). A Smaller Financing represents any sale of equity securities whereby the aggregate gross proceeds are less than $5 million (excluding proceeds from the issuance of any future Convertible Notes). In addition, in the event of a corporate transaction covering the sale of all or substantially all of the Company’s assets, or merger or consolidation with or into another entity, or change in ownership of at least 50% in voting securities of the Company, the holder of the Convertible Note may elect that either: (a) the Company pay the holder of such Convertible Note an amount equal to the sum of (i) all accrued and unpaid interest due on such Convertible Note and (ii) one and one-half (1.5) times the outstanding principal balance of such Convertible Note; or (b) such Convertible Note will convert into that number of conversion shares equal to the quotient obtained by dividing (i) the outstanding principal balance and unpaid accrued interest of such Convertible Note on the date of conversion by (ii) $2.377. The Company follows ASC 480-10, “Distinguishing Liabilities from Equity” in its evaluation of the accounting for share-settled debt. ASC 480-10-25-14 requires liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics: a) A fixed monetary amount known at inception; b) Variations in something other than the fair value of the issuer’s equity shares; or c) Variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty moves in the opposite direction as the value of the issuer’s shares Moreover, equity classification was not an appropriate classification for the Convertible Notes because the underlying terms of the Convertible Notes do not expose the Investors to risks and rewards similar to those of an owner and, therefore, do not create a shareholder relationship. We are instead using our equity shares as the currency to settle our obligation. In addition, pursuant to ASC 835-30, the Convertible Notes were initially recorded at their amortized cost of $ 575,000 718,750 41,002 |
8. Stockholders_ Equity and Sha
8. Stockholders’ Equity and Share-Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
8. Stockholders’ Equity and Share-Based Compensation | 8. 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 (see Notes 1 and 2), we designated and issued 630,000 shares of Series A Convertible Voting Preferred Stock (“Series A Preferred”) and 70,000 shares of Series B Convertible Voting Preferred Stock (“Series B Preferred”). 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 Class 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 possessed full voting rights prior to conversion, on an as-converted basis, as the common stock of the Company, as defined in the Series A Certificate of Designation. On January 29, 2021, 630,000 shares of Series A Preferred automatically converted into an aggregate 6,422,290 shares of common stock upon the effectiveness of a registration statement registering the resale of the underlying shares. The registration statement on Form S-3 was declared effective by the SEC on January 29, 2021. 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 Class 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 Series B Preferred also includes certain anti-dilution rights (“anti-dilution issuance rights”), whereby the holder of Series 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 net working capital of PTSC on the Closing Date was approximately $374,000 (see Note 2). As such, the remaining Capital Threshold was approximately $626,000 as of June 30, 2021. 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. 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 B Preferred, as calculated on an as-converted basis. As of June 30, 2021, we have reserved 802,785 466,739 336,046 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. Share-based compensation expense for the three and six months ended June 30, 2021 was comprised of the following: Schedule of Share-based compensation expense Three months ended June 30, 2021 Six months ended June 30, 2021 Research and development $ 184,476 $ 225,012 General and administrative 236,303 470,010 Total $ 420,779 $ 695,022 There was no share-based compensation expense recognized during the prior periods ended June 30, 2020. The following summarizes our RSUs transaction activity for the six months ended June 30, 2021: Schedule of Restricted Stock Unit Activity Shares Weighted Average Grant Date Fair Value Outstanding at January 1, 2021 336,328 $ 3.30 Granted 130,411 3.34 Vested – – Forfeited – – Outstanding at June 30, 2021 466,739 $ 3.31 As of June 30, 2021, the total estimated unrecognized compensation cost related to non-vested RSUs was approximately $ 876,000 0.52 |
9. Commitments and Contingencie
9. Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
9. Commitments and Contingencies | 9. Commitments and Contingencies Legal Matters While the Company is not involved in any litigation as of June 30, 2021, 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 unaudited condensed 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 |
10. Related Parties
10. Related Parties | 6 Months Ended |
Jun. 30, 2021 | |
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 (“Related Parties”), for their scientific contributions towards advancing the technology platforms, in the monthly amounts of $ 5,000 2,500 2,500 30,000 60,000 100,000 |
11. Subsequent Events
11. Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
11. Subsequent Events | 11. Subsequent Events We have evaluated subsequent events after the consolidated balance sheet date and through the filing date of this Quarterly Report on Form 10-Q, and based on our evaluation, management has determined that no other subsequent events have occurred that would require recognition in the accompanying unaudited condensed consolidated financial statements or disclosure in the notes thereto other than as disclosed herein and in the accompanying notes. |
2. Significant Accounting Pol_2
2. Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules of the Securities and Exchange Commission (“SEC”) for quarterly reports on Form 10-Q and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. All intercompany accounts and transactions have been eliminated. 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 unaudited condensed 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 June 30, 2020. In addition, operating results for the three months ended June 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2021. The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments of a normal recurring nature necessary for a fair presentation of the results for the interim period presented. |
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: 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 |
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 had a 50 4) |
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, accrued expenses and other, and convertible notes. The carrying value of these financial instruments, except for the derivative liability and convertible notes, 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). The convertible notes are initially recorded at their amortized cost and are being accreted to their redemption value over the estimated conversion period using the effective interest method (see Note 7). |
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 unaudited condensed consolidated financial statements include those related to the fair value of the anti-dilution issuance rights liability (derivative liability), the timing of conversion of the convertible notes, 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. |
Convertible Notes | Convertible Notes The Company follows ASC 480-10, “Distinguishing Liabilities from Equity” in its evaluation of the accounting for share-settled debt. ASC 480-10-25-14 requires liability accounting for certain financial instruments, including shares that embody an unconditional obligation to transfer a variable number of shares, provided that the monetary value of the obligation is based solely or predominantly on one of the following three characteristics: a) A fixed monetary amount known at inception; b) Variations in something other than the fair value of the issuer’s equity shares; or c) Variations in the fair value of the issuer’s equity shares, but the monetary value to the counterparty moves in the opposite direction as the value of the issuer’s shares Moreover, equity classification was not an appropriate classification for the convertible notes because the underlying terms of the convertible notes do not expose the investors to risks and rewards similar to those of an owner and, therefore, do not create a shareholder relationship. Pursuant to ASC 835-30, the convertible notes were initially recorded at their amortized cost and are being accreted to their redemption value over the estimated conversion period using the effective interest method (see Note 7). |
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. |
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 June 30, 2021, 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 B Preferred outstanding during the period is calculated using the if-converted method assuming the conversion of 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. The following table presents the securities excluded from the calculation of diluted net income (loss) per share for the three and six months ended June 30, 2021 and the three months ended June 30, 2020 and period March 30, 2020 (date of inception) to June 30, 2020, as the effect of their inclusion would have been anti-dilutive during periods of net loss: Schedule of anti-dilutive shares Three months ended June 30, 2021 Three months ended June 30, 2020 Six months ended June 30, 2021 March 30, 2020 (1) to June 30, 2020 Series B Preferred 802,786 – 802,786 – Unvested RSUs 423,166 – 379,267 – Total 1,225,952 – 1,182,053 – Moreover, in connection with an acquisition of Crossflo by PTSC (see Note 1), 5,690 |
Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. The Company adopted ASU 2018-13 effective January 1, 2021. Implementation of this guidance did not have a material impact on the Company’s unaudited condensed consolidated financial statements. |
2. Significant Accounting Pol_3
2. Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of assets acquired and liabilities assumed | 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 |
Schedule of anti-dilutive shares | Schedule of anti-dilutive shares Three months ended June 30, 2021 Three months ended June 30, 2020 Six months ended June 30, 2021 March 30, 2020 (1) to June 30, 2020 Series B Preferred 802,786 – 802,786 – Unvested RSUs 423,166 – 379,267 – Total 1,225,952 – 1,182,053 – |
3. Fair Value of Financial In_2
3. Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of financial assets and liabilities | Schedule of fair value of financial assets and liabilities Fair Value Measurements at June 30, 2021 Using Fair Value at Quoted Prices Significant Other Significant Assets: Cash and cash equivalents $ 582,304 $ 582,304 $ – $ – Total assets $ 582,304 $ 582,304 $ – $ – Liabilities: Anti-dilution issuance rights liability $ 104,300 $ – $ – $ 104,300 Total liabilities $ 104,300 $ – $ – $ 104,300 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 |
Schedule of assumptions used | Schedule of assumptions used At inception December 31, 2020 June 30, 2021 Fair value of common stock (per share) $3.30 $3.25 $1.60 Estimated additional shares of common stock 57,462 31,353 83,889 Expected volatility 135% 90% 100% Expected term (years) 0.45 0.25 0.25 Risk-free interest rate 0.11% 0.09% 0.05% |
5. Accrued Expenses and Other_2
5. Accrued Expenses and Other Current Liabilities; Accrued Payable to Founders (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Schedule of accrued expenses and other current liabilities June 30, 2021 December 31, 2020 Accrued compensation $ 851,578 $ 393,431 Accrued consulting 246,750 40,000 Crossflo acquisition liability 177,244 177,244 Other accrued expenses 44,195 50,157 Total accrued expenses and other current liabilities $ 1,319,767 $ 660,832 |
8. Stockholders_ Equity and S_2
8. Stockholders’ Equity and Share-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
Schedule of Share-based compensation expense | Schedule of Share-based compensation expense Three months ended June 30, 2021 Six months ended June 30, 2021 Research and development $ 184,476 $ 225,012 General and administrative 236,303 470,010 Total $ 420,779 $ 695,022 |
Schedule of Restricted Stock Unit Activity | Schedule of Restricted Stock Unit Activity Shares Weighted Average Grant Date Fair Value Outstanding at January 1, 2021 336,328 $ 3.30 Granted 130,411 3.34 Vested – – Forfeited – – Outstanding at June 30, 2021 466,739 $ 3.31 |
1. Organization and Business (D
1. Organization and Business (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Aug. 21, 2020 | Nov. 30, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | |
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Reverse stock split | 1-for-500 | |||
Cash and cash equivalents | $ 582,304 | $ 352,738 | ||
Mosaic Immuno [Member] | Common Class A [Member] | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Stock exchanged, shares exchanged | 630,000 | |||
Mosaic Immuno [Member] | Common Class B [Member] | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Stock exchanged, shares exchanged | 70,000 | |||
Mosaic Immuno [Member] | Series A Preferred Stock [Member] | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Stock exchanged, shares issued | 630,000 | |||
Each share of Preferred stock converts into PTSC common stock | 10.194106 | |||
Mosaic Immuno [Member] | Series B Preferred Stock [Member] | ||||
Acquired Indefinite-lived Intangible Assets [Line Items] | ||||
Stock exchanged, shares issued | 70,000 | |||
Each share of Preferred stock converts into PTSC common stock | 11.46837 |
2. Significant Accounting Pol_4
2. Significant Accounting Policies (Details - Assets acquired and liabilities assumed) - Patriot Scientific [Member] | Aug. 21, 2020USD ($) |
Acquired Indefinite-lived Intangible Assets [Line Items] | |
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 Accou
2. Summary of Significant Accounting Policies (Details - anti-dilutive) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 1,225,952 | 0 | 0 | 1,182,053 |
Series B Preferred [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 802,786 | 0 | 802,786 | |
Unvested R S Us [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive shares | 423,166 | 0 | 0 | 379,267 |
2. Significant Accounting Pol_5
2. Significant Accounting Policies (Details Narrative) - shares | Jun. 30, 2021 | Jan. 31, 2021 |
Due in one year or less | ||
CrossflowLineItems [Line Items] | ||
Shares held in escrow | 5,690 | |
PDS [Member] | ||
CrossflowLineItems [Line Items] | ||
Percentage of investment in affiliated company | 50.00% | 50.00% |
3. Fair Value of Financial In_3
3. Fair Value of Financial Instruments (Details - Fair Value) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | $ 582,304 | $ 352,738 |
Fair value of liabilities | 104,300 | 83,500 |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | 582,304 | 352,738 |
Fair value of liabilities | 0 | 0 |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | 0 | |
Fair value of liabilities | 0 | 0 |
Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | 0 | 0 |
Fair value of liabilities | 104,300 | 83,500 |
Cash [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | 582,304 | 352,738 |
Cash [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | 582,304 | 352,738 |
Cash [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | 0 | |
Cash [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of assets | 0 | |
PDS [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of liabilities | 104,300 | 83,500 |
PDS [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of liabilities | 0 | |
PDS [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of liabilities | 0 | |
PDS [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Fair Value, Off-balance Sheet Risks, Disclosure Information [Line Items] | ||
Fair value of liabilities | $ 104,300 | $ 83,500 |
3. Fair Value of Financial In_4
3. Fair Value of Financial Instruments (Details - Assumption) - $ / shares | 3 Months Ended | 6 Months Ended | 7 Months Ended |
Aug. 21, 2020 | Jun. 30, 2021 | Dec. 31, 2020 | |
Fair Value Disclosures [Abstract] | |||
Fair value of common stock (per share) | $ 3.30 | $ 1.60 | $ 3.25 |
Estimated additional shares of common stock | 57,462 | 83,889 | 31,353 |
Expected volatility | 135.00% | 100.00% | 90.00% |
Expected term (years) | 5 months 12 days | 3 months | 3 months |
Risk-free interest rate | 0.11% | 0.05% | 0.09% |
4. Investment in Affiliated C_2
4. Investment in Affiliated Companies (Details Narrative) - PDS [Member] - USD ($) | 1 Months Ended | |
Jan. 31, 2021 | Jun. 30, 2021 | |
Schedule of Investments [Line Items] | ||
Equity interest percentage | 50.00% | 50.00% |
Investment in affiliated company | $ 27,637 |
5. Accrued Expenses and Other_3
5. Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 851,578 | $ 393,431 |
Accrued consulting | 246,750 | 40,000 |
Crossflo acquisition liability | 177,244 | 177,244 |
Other accrued expenses | 44,195 | 50,157 |
Total accrued expenses and other current liabilities | $ 1,319,767 | $ 660,832 |
6. License Option Agreement (De
6. License Option Agreement (Details Narrative) - License Option Agreement [Member] | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021USD ($) | Jun. 30, 2021USD ($) | |
Offsetting Liabilities [Line Items] | ||
Capital threshold remaining | $ 626,000 | $ 626,000 |
General and Administrative Expense [Member] | ||
Offsetting Liabilities [Line Items] | ||
Patent legal fees | $ 11,438 | $ 22,817 |
7. Convertible Notes (Details N
7. Convertible Notes (Details Narrative) - USD ($) | May 07, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2021 |
Debt Instrument [Line Items] | |||||
Proceeds from convertible debt | $ 0 | $ 525,003 | |||
Non-cash interest expense on Convertible Notes | $ 6,931 | 0 | $ 0 | 6,931 | |
Amortization | 575,000 | ||||
Redemption value | 718,750 | ||||
Accretion to Redemption Value | $ 41,002 | $ 0 | $ 0 | $ 41,002 | |
Convertible Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Conversion Price | $ 2.377 | $ 2.377 | |||
Purchase Agreement [Member] | Convertible Note [Member] | |||||
Debt Instrument [Line Items] | |||||
Accrued payable | $ 49,997 | ||||
Principal amount | $ 575,000 | ||||
Interest | 8.00% | ||||
Non-cash interest expense on Convertible Notes | $ 6,931 | ||||
Purchase Agreement [Member] | Board Of Directors [Member] | Convertible Note [Member] | |||||
Debt Instrument [Line Items] | |||||
Proceeds from convertible debt | $ 525,003 |
8. Stockholders' Equity and Sha
8. Stockholders' Equity and Share-Based Compensation (Details - Share Based Compensation) - USD ($) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | |
Share-based compensation expense | $ 420,779 | $ 0 | $ 695,022 |
Research and Development Expense [Member] | |||
Share-based compensation expense | 184,476 | 225,012 | |
General and Administrative Expense [Member] | |||
Share-based compensation expense | $ 236,303 | $ 470,010 |
8. Stockholders' Equity and S_2
8. Stockholders' Equity and Share-Based Compensation (Details -RSU activity) - Restricted Stock Units (RSUs) [Member] | 6 Months Ended |
Jun. 30, 2021$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Options Outstanding, Beginning | shares | 336,328 |
Weighted Average Exercise Price Outstanding, Beginning | $ / shares | $ 3.30 |
Number of Options Granted | shares | 130,411 |
Weighted Average Exercise Price Granted | $ / shares | $ 3.34 |
Number of Options Vested | shares | 0 |
Weighted Average Exercise Price Vested | $ / shares | |
Number of Options Forfeited | shares | 0 |
Weighted Average Exercise Price Forfeited | $ / shares | |
Number of Options Outstanding, Ending | shares | 466,739 |
Weighted Average Exercise Price Outstanding, Ending | $ / shares | $ 3.31 |
8. Stockholders_ Equity and S_3
8. Stockholders’ Equity and Share-Based Compensation (Details Narrative) - USD ($) | 6 Months Ended | |
Jun. 30, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock available for future grants | 336,046 | |
Restricted Stock Units (RSUs) [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Awards outstanding | 466,739 | 336,328 |
Unrecognized compensation cost | $ 876,000 | |
Weighted average vesting period | 6 months 7 days | |
N 2020 Omnibus Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock for reserved for Issuance | 802,785 |
9. Commitments and Contingenc_2
9. Commitments and Contingencies (Details Narrative) | Jun. 30, 2021USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Possible patent cost liability | $ 267,000 |
10. Related Parties (Details Na
10. Related Parties (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2021 | |
Related Party Transaction [Line Items] | ||||
Research and development expenses | $ 376,767 | $ 0 | $ 0 | $ 622,915 |
Accrued consulting fees | 100,000 | 100,000 | ||
Consulting Agreements [Member] | ||||
Related Party Transaction [Line Items] | ||||
Research and development expenses | $ 30,000 | 60,000 | ||
Nicole Steinmetz [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party cost | 5,000 | |||
Steinmetzs Spouse [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party cost | 2,500 | |||
Steve Fiering [Member] | ||||
Related Party Transaction [Line Items] | ||||
Related party cost | $ 2,500 |