Company: CPMV
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001683168-25-002584
Chunk: 688

Company: Mosaic ImmunoEngineering Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 6
Chunk 688
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 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.

     F-9 

    Mosaic ImmunoEngineering, Inc.

    Notes to Consolidated Financial Statements
    For the Years Ended December 31, 2024 and 2023 (continued)

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