| 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.
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.