| 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 United States generally accepted accounting principles (“U.S. GAAP”) and include the
accounts of Mosaic ImmunoEngineering, Inc. and our subsidiaries. All intercompany accounts and transactions among the consolidated entities
have been eliminated in the consolidated financial statements. 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. 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 In February 2007, we invested an aggregate of
$ 370,000 2,100,000 46 840,000 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, derivative liability, accrued compensation, accrued consulting, 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 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 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 FASB’s Accounting Standards
Codification (“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 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. 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, 2023 and 2022, there were no 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 net 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 Convertible Notes and Series A and B Preferred 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 Convertible Notes and Series B Preferred Stock outstanding during the period is calculated using
the if-converted method assuming the conversion of Convertible Notes 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. The following table presents common share equivalents
excluded from the calculation of diluted net income (loss) per share for the years ended December 31, 2023 and 2022, as the effect of
their inclusion would have been anti-dilutive during periods of net loss:
Schedule of anti dilutive shares
Year Ended December 31, 2023 Year Ended December 31, 2022
Convertible Notes 1,054,508 899,579
Series B Preferred 802,786 802,786
Unvested RSUs 541,957 533,597
Total 2,399,251 2,235,962 Moreover, in connection with an acquisition of
Crossflo by PTSC (see Note 10), 5,690 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 that closed in August 2020, 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 that
closed in August 2020. As a result of this determination, we have recorded a full valuation allowance against our deferred tax assets. Recently Issued Accounting Standards Not Yet Adopted As of December 31, 2023, there are no recently
issued accounting standards not yet adopted that may have a material effect on the Company’s consolidated financial statements other
than as follows: In August 2020, the FASB issued Accounting Standards
Updates (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging
— Contracts in Entity’s Own Equity (Subtopic 815-40). The guidance simplifies the accounting for certain financial instruments,
eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments,
and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.
It also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s
own equity and amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible
instruments. The guidance is effective for public business entities that meet the definition of a Securities and Exchange Commission filer,
excluding entities eligible to be smaller reporting companies as defined by the Securities and Exchange Commission, for fiscal years beginning
after December 15, 2021, including interim periods within those fiscal years. For all other entities, the guidance is effective for fiscal
years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, but no earlier
than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted the guidance
as of January 1, 2024 and is currently assessing the impact of the adoption of this standard on its consolidated financial statements. |
