Item 1.01 Entry into a Material Definitive Agreement.
Convertible Notes Offering
On February 18, 2022 ("Effective Date"), Mosaic ImmunoEngineering, Inc., a
Delaware corporation (the "Company"), entered into a convertible note purchase
agreement ("Agreement") with sixteen (16) accredited investors, including five
(5) members of the Board of Directors ("Board") of the Company that participated
on the same terms as other accredited investors (collectively, the "Investors").
Pursuant to the Agreement, the Company received $341,632 in proceeds and issued
unsecured convertible promissory notes (each a "Convertible Note" and
collectively, the "Convertible Notes") in the aggregate principal amount of
$342,632. Mr. Steven King, President and CEO and member of the Board, Dr. Nicole
Steinmetz, acting Chief Scientific Officer and member of the Board, Dr. Robert
Baffi, member of the Board, Ms. Gloria Felcyn, member of the Board, and Dr.
Robert Garnick, member of the Board, invested $20,000, $10,000, 50,000, $25,000,
and $50,000, respectively. The Convertible Notes were issued as part of a
convertible note offering authorized by the Company's board of directors (the
"Convertible Notes Offering") for raising up to $5 million from the issuance of
Convertible Notes through June 30, 2022. The Company will use the proceeds from
the sale of the Convertible Notes for general corporate purposes.
The Convertible Notes have no stated maturity date; bear interest at a simple
rate equal to eight percent (8.0%) per annum until converted; and automatically
convert into the same equity securities issued for cash in the Qualified
Financing, or at the option of the Investors, into the same equity securities
issued for cash in a Smaller Financing, as described below. Interest on the
Convertible Notes will be accreted and added to the unpaid principal balance
prior to conversion.
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 (representing a 20%
discount), or (ii) $1.00 ("Conversion Price"). The Conversion Price may be
reduced or increased proportionately as a result of stock splits, stock
dividends, recapitalizations, reorganizations, and similar transactions. Upon
any conversion of the Convertible Notes in connection with a Qualified Financing
or a Smaller Financing, as applicable, the Convertible Notes shall convert
immediately prior to the closing thereof, such that the investors paying cash in
such Qualified Financing or Smaller Financing, as applicable, are not diluted by
the conversion of the Convertible Notes.
Pursuant to the 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) $1.00.
The issuance and sale of the Convertible Notes and Conversion Shares
(collectively, the "Securities") has not been, and will not upon issuance be,
registered under the Securities Act, and the Securities may not be offered or
sold in the United States absent registration under or exemption from the
Securities Act and any applicable state securities laws. The Securities were
issued and sold in reliance upon an exemption from registration afforded by
Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated
under the Securities Act, based on the following facts: each of the Investors
has represented that it is an accredited investor as defined in Rule 501(a)
promulgated under the Securities Act, that it is acquiring the Securities for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof in violation of applicable securities
laws and that it has sufficient investment experience to evaluate the risks of
the investment; the Company used no advertising or general solicitation in
connection with the issuance and sale of the Securities to the Investors; the
Securities will be issued as restricted securities.
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The Company did not engage any underwriter or placement agent in connection with
the Convertible Notes Offering.
The preceding description of the Agreement and Convertible Notes is qualified in
its entirety by reference to the copies of the form of Agreement and Convertible
Notes filed herewith as Exhibit 4.1 and Exhibit 10.1 to this Current Report on
Form 8-K, respectively, which are incorporated herein by reference.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
Reference is made to the disclosure set forth in Item 1.01 of this Current
Report on Form 8-K, which disclosure is incorporated by reference into this Item
2.03.
Item 3.02 Unregistered Sales of Equity Securities.
Reference is made to the disclosure set forth in Item 1.01 of this Current
Report on Form 8-K, which disclosure is incorporated by reference into this Item
3.02.
Item 3.03 Material Modification to Rights of Security Holders.
On May 7, 2021, the Company entered into a convertible note purchase agreement
with five (5) accredited investors and issued unsecured convertible promissory
notes (each a "May Convertible Note" and collectively, the "May Convertible
Notes") in the aggregate principal amount of $575,000, of which, Dr. Baffi, Dr.
Garnick and Ms. Felcyn, members of the Board of the Directors, invested
$100,000, $100,000, and $25,000, respectively (collectively, the "May Note
Investors"). Pursuant to the Agreement, for each of the May Note Investors that
purchased a Convertible Note in the amount of (a) $50,000 or (b) an amount
equivalent to the principal amount of the May Convertible Note, the original
conversion price set forth in the May Convertible Notes was deleted in its
entirety and replaced with the definition of Conversion Price set forth in the
Agreement ("Eligible Purchaser").
Item 9.01 Financial Statements and Exhibits
(d) The following exhibits are being filed herewith:
Exhibit Description
4.1 Form of Convertible Note (included in Exhibit 10.1)
10.1 Form of Convertible Note Purchase Agreement
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