Company: CPMV
Filing Date: 2025-04-15
Form Type: 10-K
Source: 0001683168-25-002584
Chunk: 368

Company: Mosaic ImmunoEngineering Inc.
Filing Date: 2025-04-15
Form: 10-K
Item: Item 2
Chunk 368
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; 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 being accreted to their redemption value over the estimated conversion period
using the effective interest method.

 31 

2.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 carry forwards 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