Mosaic ImmunoEngineering Inc 10-K for FY2022

Mosaic ImmunoEngineering Inc. (CPMV)

10-K 2023-03-02 For: 2022-12-31

Added on April 06, 2026

About this 10-K

Mosaic ImmunoEngineering Inc filed this 10-K on March 2, 2023, covering the fiscal year ended December 31, 2022 (FY2022).

Headline figures

Fiscal year ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Net loss: $2.38M; compared with a net loss of $3.68M a year earlier
Diluted EPS: -$0.33; compared with -$0.55 a year earlier

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Title of each class		Trading Symbol		Name of each exchange on which registered
Common Stock, $0.00001 par value		None		None

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

PART I

ITEM 1.	Business	4
ITEM 1A.	Risk Factors	12
ITEM 1B.	Unresolved Staff Comments	30
ITEM 2.	Properties	30
ITEM 3.	Legal Proceedings	30
ITEM 4.	Mine Safety Disclosures	30


PART II

ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
ITEM 6.	Selected Financial Data	32
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	41
ITEM 8.	Financial Statements and Supplementary Data	41
ITEM 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	41
ITEM 9A.	Controls and Procedures	41
ITEM 9B.	Other Information	42


PART III

ITEM 10.	Directors, Executive Officers and Corporate Governance	43
ITEM 11.	Executive Compensation	49
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	50
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	52
ITEM 14.	Principal Accountant Fees and Services	53


PART IV

ITEM 15.	Exhibit and Financial Statement Schedules	54
ITEM 16.	Form 10-K Summary	55
	SIGNATURES	56

	•	While the Company’s financial statements have been prepared on a going concern basis, we do not currently have sufficient working capital to fund our planned operations for the next twelve months and we may be required to cease our operations altogether if we are unable to secure sufficient funding.
	•	We expect that we will incur significant losses over the next several years and may never achieve or maintain profitability.
	•	We are early in our development efforts and our product candidates are in preclinical development.
	•	Our short operating history may make it difficult to evaluate the success of our business to date and to assess our future viability.
	•	Business interruptions resulting from the coronavirus disease (COVID-19) outbreak or similar public health crises could cause a disruption of the development of our product candidates and adversely impact our business.
	•	The Company and its subsidiaries have limited insurance for their operations and are subject to various risks of loss.
	•	Drug development involves a lengthy and expensive process with an uncertain outcome, including failure to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the product manufacturing of our product candidates.
	•	If serious adverse events or unacceptable side effects are identified during the development of our product candidates, we may need to abandon or limit our development of some of our product candidates.
	•	Our business and operations would suffer in the event of computer system failures, cyber-attacks or deficiencies in our or third parties’ cyber security.
	•	If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.

	•	We will need substantial additional funding. If we are unable to secure sufficient capital in the near term, we may be required to further reduce or eliminate product development and potentially cease operations
	•	Raising capital will cause dilution to our stockholders, restrict our operations, or require us to relinquish rights to our technologies or product candidates.

	•	We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.
	•	Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.

	•	Future development collaborations may be important to us. If we are unable to enter into or maintain these collaborations, or if these collaborations are not successful, our business could be adversely affected.
	•	We may contract with third parties for the manufacture of our product candidates for preclinical and clinical studies and may expect to continue to do so for commercialization. This potential reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products at an acceptable cost and quality, which could delay, prevent or impair our development or commercialization efforts.
	•	Data provided by collaborators and other parties upon which we rely have not been independently verified and could turn out to be inaccurate, misleading, or incomplete.

	•	If we or Case Western Reserve University (“CWRU”) are unable to obtain and maintain intellectual property protection for technology and products under the License Agreement or if the scope of the intellectual property protection obtained by CWRU is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.
	•	If we fail to comply with our obligations in the License Agreement with CWRU or other agreements under which we may license intellectual property and other rights from third parties or otherwise experience disruptions to our business relationships with our future licensors, we could lose those rights or other rights that are important to our business.
	•	We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time consuming and unsuccessful.
	•	We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
	•	Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the success of our business.
	•	If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.

	•	Our future success depends on our ability to attract, hire, retain and motivate executives, key employees, and our general workforce.
	•	We expect to expand our research and development function, as well as our corporate operations, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
	•	We may face risks related to securities litigation that could result in significant legal expenses and settlement or damage awards.

	•	Our common stock is quoted on the OTCQB tier of the OTC Markets, which could adversely affect the market price and liquidity of our common stock.
	•	If we fail to meet the eligibility requirements of OTCQB, we could be removed from the OTCQB which would limit the ability of broker-dealers to sell our securities in the secondary market.
	•	The market for our common stock is subject to rules relating to low-priced stock (“Penny Stock”) which may limit our ability to raise capital.
	•	Future sales of shares by existing stockholders could cause the Company’s stock price to decline.
	•	We expect our stock price to be volatile, and the market price of our common stock may drop unexpectedly.
	•	We may issue preferred stock, and the terms of such preferred stock may reduce the value of our common stock.
	•	Our executive officers, directors and principal stockholders, if they choose to act together, will have the ability to control all matters submitted to stockholders for approval.
	•	Our amended and restated certificate of incorporation and amended and restated bylaws provides that state or federal court located within the state of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit its stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
	•	Anti-takeover provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

	•	Immuno-Oncology: “Cancer Immunotherapy using Virus Particles”, with PCT Patent Applications, Publication Nos. WO 2016/073972 and WO 2018/165663, and associated U.S. patents and applications, including U.S. Patent No. 11,260,121, and foreign patents or applications in Europe, Japan, China, Canada and Australia; and
	•	Freeze Drying: “Freeze Dried Viral Nanoparticle Constructs”, including U.S. Patent No. 11,390,853.

	•	completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s current Good Laboratory Practices regulations;
	•	submission to the FDA of an IND which must become effective before human clinical trials may begin and must be updated annually;
	•	approval by an independent Institutional Review Board (“IRB”) ethics committee at each clinical site before the trial is initiated;
	•	performance of adequate and well-controlled clinical trials to establish the safety, purity and potency of the proposed biologic, and its safety and efficacy for each indication;
	•	preparation of and submission to the FDA of a Biologics License Application (“BLA”) for a new biologic, after completion of all pivotal clinical trials;
	•	satisfactory completion of an FDA Advisory Committee review, if applicable;
	•	a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;
	•	satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities to assess compliance with current Good Manufacturing Practice (“cGMP”) regulations; and
	•	FDA review and approval of a BLA for a new biologic, prior to any commercial marketing or sale of the product in the United States.

	•	Phase I studies are designed to evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the investigational product in humans, the side effects associated with increasing doses, and if possible, to gain early evidence on effectiveness.
	•	Phase II includes controlled clinical trials conducted to preliminarily or further evaluate the effectiveness of the investigational product for a particular indication(s) in patients with the disease or condition under study, to determine dosage tolerance and optimal dosage, and to identify possible adverse side effects and safety risks associated with the product.
	•	Phase III clinical trials are generally controlled clinical trials conducted in an expanded patient population generally at geographically dispersed clinical trial sites, and are intended to further evaluate dosage, clinical effectiveness and safety, to establish the overall benefit-risk relationship of the investigational product, and to provide an adequate basis for product approval.
	•	Phase IV clinical trials may be required to as post-marketing studies to find out more about the product’s long-term risks, benefits, and optimal use, or to test the drug in different populations.

	•	develop product manufacturing processes under the Food and Drug Administration's (“FDA’s”) current Good Manufacturing Practice regulations (“cGMP”) for each of our product candidates and enter into manufacturing supply agreements to support toxicology studies and our planned Phase I clinical trials;
	•	contract preclinical toxicology studies to support the safety of our product candidates prior to starting any human trial;
	•	continue preclinical research and translational studies to enhance our understanding of the mechanism of action of the product candidates;
	•	enter into collaboration arrangements with regards to product discovery and product development;
	•	operate under the licensing agreement with Case Western Reserve University and acquire rights to other technologies;
	•	prepare regulatory filings, such as filing IND applications with the FDA that are required prior to starting any human clinical trial;
	•	plan, initiate, enroll, and complete clinical trials;
	•	maintain, expand and protect our intellectual property portfolio; and
	•	hire additional personnel to support our research, development, and administrative efforts.

	•	delays or difficulties in planned clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;
	•	delays or difficulties in enrolling patients in our planned clinical trials and further incurrence of additional costs as a result of preclinical study and clinical trial delays and adjustments;

	•	delay or failure in reaching agreement with the FDA, European Medicines Agency (“EMA”), or a comparable foreign regulatory authority on a trial design that we want to execute;
	•	delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority regarding the scope or design of a clinical study;
	•	delays in reaching, or failure to reach, agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;

	•	challenges related to ongoing and increased operational expenses related to the COVID-19 pandemic;
	•	delays, difficulties or increased costs to comply with COVID-19 protocols;
	•	diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of clinical trials;
	•	interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others;
	•	limitations in resources that would otherwise be focused on the conduct of our business or our clinical trials, including because of sickness or the desire to avoid contact with large groups of people or as a result of government-imposed “Stay-at-Home” orders or similar working restrictions;
	•	delays in receiving approval from local regulatory authorities to initiate our planned clinical trials;
	•	delays in preclinical and clinical sites receiving the supplies and materials needed to conduct our planned clinical trials;
	•	interruption in global shipping that may affect the transport of clinical trial materials, such as investigational drug product used in our planned clinical trials;
	•	changes in regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our planned clinical trials may be conducted, or which may result in unexpected costs;
	•	delays in necessary interactions with regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government or contractor personnel; and
	•	increased competition for contract research organizations (“CROs”), suppliers and vendors.

	•	inability, delay, or failure in identifying and maintaining a sufficient number of trial sites, many of which may already be engaged in other clinical programs;
	•	delay or failure in recruiting and enrolling suitable subjects to participate in a trial;
	•	delay or failure in having subjects complete a trial or return for post-treatment follow-up;
	•	clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory requirements, or dropping out of a trial;
	•	lack of adequate funding to continue the clinical trial, including the incurrence of unforeseen costs due to enrollment delays, requirements to conduct additional clinical studies and increased expenses associated with the services of our contract research organizations (“CROs”) and other third parties;
	•	clinical trials of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;
	•	the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate;
	•	we may experience delays or difficulties in the enrollment of patients that our product candidates are designed to target based on the inclusion and exclusion criteria;
	•	our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
	•	we may have difficulty partnering with experienced Clinical Research Organization and study sites that can identify patients that our product candidates are designed to target and run our clinical trials effectively;
	•	regulators or institutional review boards (“IRBs”) may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
	•	the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; or
	•	there may be changes in governmental regulations or administrative actions.

	•	be delayed in obtaining marketing approval for our product candidates, if ever;
	•	obtain approval for indications or patient populations that are not as broad as intended or desired;
	•	obtain approval with labeling that includes significant use or distribution restrictions or safety warnings that would reduce the potential market for our products or inhibit our ability to successfully commercialize our product candidates;
	•	be subject to additional post-marketing restrictions and/or testing requirements; or
	•	have the product removed from the market after obtaining marketing approval.

	•	the scope, progress, results and costs of product development and manufacture of drug product to support preclinical and clinical development of our product candidates;
	•	the extent to which we enter into additional collaboration arrangements regarding product discovery or development;
	•	the costs, timing and outcome of regulatory review of our product candidates;
	•	our ability to establish additional collaborations with favorable terms, if at all;
	•	the costs of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;
	•	the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
	•	The costs to in-license our product candidates from Case Western Reserve University, and others if we acquire or in-license other products or technologies; and
	•	revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval.

	•	decreased demand for any product candidates or products that we may develop, if approved;
	•	injury to our reputation and significant negative media attention;
	•	withdrawal of clinical trial participants;
	•	significant costs to defend the related litigation;
	•	substantial monetary awards to trial participants or patients;
	•	loss of revenue, if approved;
	•	reduced resources of our management to pursue our business strategy; and
	•	the inability to commercialize any products that we may develop.

	•	reliance on the third party for regulatory compliance and quality assurance;
	•	the possible breach of the manufacturing agreement by the third party;
	•	the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
	•	the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.

	•	results from preclinical testing and clinical trial results, and our ability to obtain regulatory approvals for our product candidates, and delays or failures to obtain such approvals;
	•	issues in manufacturing our product candidates;
	•	the entry into, or termination of, key agreements, including our License Agreement with CWRU and any future license agreement;
	•	the initiation of, material developments in, or conclusion of litigation to enforce or defend any of the underlying intellectual property rights under the License Agreement or defend against the intellectual property rights of others;

	•	announcements by competitors of new commercial products, clinical progress or the lack thereof, significant contracts, or commercial relationships;
	•	the introduction of technological innovations or new therapies that compete with our potential products;
	•	the loss of key employees;
	•	general and industry-specific economic conditions that may affect our research and development expenditures;
	•	changes in the structure of healthcare payment systems; and
	•	issuance of new shares of common stock from raising additional capital, which may not be available on acceptable terms, or at all; and
	•	period-to-period fluctuations in our financial results.

	•	delay, defer or prevent a change in control;
	•	entrench our management and the board of directors; or
	•	impede a merger, consolidation, takeover or other business combination involving the Company that other stockholders may desire.

	•	providing that our directors may be removed only for cause by the affirmative vote of the holders of at least 75% of the voting power of our then outstanding shares of common stock entitled to vote generally for the election of directors;
	•	providing that any action required or permitted to be taken by the stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing in lieu of a meeting of such stockholders, subject to the rights of the holders of any series of preferred stock with respect to such series, if any;
	•	providing that special meetings of our stockholders may only be called by the board of directors pursuant to a resolution adopted by the affirmative vote of a majority of the board of directors;

	•	providing that our board of directors can be divided into three classes of directors, with each class as nearly equal in number as possible, serving staggered three year terms, other than directors which may be elected by holders of preferred stock, if any. This system of electing and removing directors may tend to discourage a third party from making a tender offer or otherwise attempting to obtain control of us, because it could have the effect of increasing the length of time necessary to change the composition of a majority of the board of directors. In general, at least two annual meetings of stockholders will be necessary for stockholders to effect a change in a majority of the members of the board of directors;
	•	providing that all board vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, or by a sole remaining director and shall not be filled by the stockholders;

	•	providing that our amended and restated bylaws may only be amended by the affirmative vote of the holders of at least two-thirds of our then outstanding common stock;
	•	providing the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; and
	•	limiting the liability of, and providing indemnification to, our directors and officers.

	Bid Quotations
	High	Low
Year Ended December 31, 2022
Quarter Ended March 31, 2022	$3.00	$0.50
Quarter Ended June 30, 2022	$2.05	$0.66
Quarter Ended September 30, 2022	$2.00	$0.88
Quarter Ended December 31, 2022	$1.70	$0.52

Year Ended December 31, 2021
Quarter Ended March 31, 2021	$5.00	$2.80
Quarter Ended June 30, 2021	$4.00	$1.12
Quarter Ended September 30, 2021	$2.54	$0.50
Quarter Ended December 31, 2021	$1.70	$0.10

	(1)	Represents restricted stock units (“RSUs”) granted under our stockholder approved equity compensation plan referred to as the 2020 Omnibus Incentive Plan (“2020 Plan”).
	(2)	Weighted-average exercise price is not shown as there is no exercise price for RSUs.
	(3)	On the first anniversary date from the adoption date of the 2020 Plan (or on October 21, 2022), the total number of shares of common stock reserved for issuance under the 2020 Plan increased 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 convertible preferred stock, as calculated on an as-converted basis. On October 21, 2021, the number of shares reserved for issuance under the 2020 Plan increased to 1,661,966, of which, 1,105,965 are available for future issuance.

Period	Shares of Series A Preferred Stock to be Redeemed each Month	Monthly Redemption Proceeds to the Company
Months 1-12	35,000	$14,000
Months 13-24	43,750	$17,500
Months 25-30	52,500	$21,000

	December 31, 2022		December 31, 2021
Fair value of common stock (per share)	$	0.99	$	1.02
Estimated additional shares of common stock		71,511		134,229
Expected volatility		130%		105%
Expected term (years)		0.25		0.25
Risk-free interest rate		4.42%		0.06%

	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.

	Year Ended December 31, 2022			Year Ended December 31, 2021
Net cash used in operating activities	$	(690,129	)	$	(679,236	)
Net cash provided by investing activities		343,000			27,637
Net cash provided by financing activities		341,632			525,003
Net decrease in cash and cash equivalents	$	(5,497	)	$	(126,596	)

Name	Age	Position and Term
Steven King	58	Director (since August 21, 2020); President and Chief Executive Officer (since August 31, 2020)
Robert Baffi, Ph.D.	67	Director (since July 15, 2021)
Gloria H. Felcyn	80	Director (since October 2002)
Robert Garnick, Ph.D.	73	Director (since August 21, 2020)
Carlton M. Johnson, Jr.	63	Director (since August 2001); former Interim Chief Executive Officer (April 1, 2019 to August 28, 2020) and Interim Chief Financial Officer (October 3, 2019 to August 28, 2020)
Paul Lytle	54	Director (since August 21, 2020); EVP, Chief Financial Officer, Corporate Secretary (since August 31, 2020)
Nicole Steinmetz, Ph.D.	43	Director (since August 21, 2020); acting Chief Scientific Officer (since August 31, 2020)

	•	Leadership Experience – We seek directors who demonstrate extraordinary leadership qualities. Strong leaders bring vision, diverse perspectives, and broad business insight to the Company. They demonstrate practical management experience, skills for managing change, and knowledge of industries, geographies and risk management strategies relevant to the Company;
	•	Finance Experience – We believe that all directors should possess an understanding of finance and related reporting processes. We also seek directors who qualify as “audit committee financial experts” as defined in rules of the SEC for service on the Audit Committee; and
	•	Industry Experience – We seek directors who have relevant industry experience including: existing and new technologies, new or expanding businesses and a deep understanding of the Company’s business environments.