Item 1.01. Entry into a Material Definitive Agreement.
Stock Purchase Agreement
On August 19, 2020, Patriot Scientific Corporation (referred to as "Patriot" or
"Parent" in the transaction), entered into a stock purchase agreement (the
"Stock Purchase Agreement") among Parent, PTSC Sub One Inc., a Delaware
corporation ( "Buyer" and together with the Parent, the "Buyer Parties"), Mosaic
ImmunoEngineering Inc., a Delaware corporation (the "Target" or "Company"),
certain stockholders of the Target set for therein (as "Sellers"), and Steven
King (as the "Sellers' Representative" and together with the Target and Sellers,
the "Seller Parties") pursuant to which, Buyer will buy from Sellers 630,000
shares of its Class A common stock ("Class A Stock"), par value $0.0001 per
share, and 70,000 shares of its Class B common stock ("Class B Stock"), par
value $0.0001 per share, together the Class A Stock and Class B Stock shall
collectively be referred to as "Target Common Stock", representing 100% of the
issued and outstanding common stock of the Target as of August 19, 2020. Upon
closing, in exchange for the Target Common Stock, the holders of the Class A
Stock shall receive 630,000 shares of the Parent's preferred stock to be
designated Series A Convertible Preferred Stock ("Series A Preferred") and
holders of the Class B Stock shall receive 70,000 shares of the Parent's
preferred stock to be designated Series B Convertible Preferred Stock ("Series B
Preferred"). Each share of the Series A Preferred; shall (a) convert into
5,097.053 shares of common stock of the Parent, (b) possess full voting rights,
on an as-converted basis, as the common stock of the Parent, and (c) have no
dividend rate. Each share of the Series B Preferred; shall (a) convert into
5,734.185 shares of common stock of the Parent, (b) possess full voting rights,
on an as-converted basis, as the common stock of the Parent, (c) have no
dividend rate, and (d) shall possess certain anti-dilution protections as
defined in the Series B Certificate of Designations. On a fully diluted, as
converted basis, the Sellers shall own 90% of the issued and outstanding common
stock of the Parent.
The Board of Directors of Parent and the Board of Directors of the Company have
each approved execution of the Stock Purchase Agreement.
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The Board of Directors of Patriot Scientific Corporation believe that entering
into this transaction is in the best interests of its shareholders based on the
potential of the Target's immunotherapy pipeline of products for the potential
treatment of cancer and infectious diseases. The Target has secured broad rights
through a two-year option agreement granting the Target the exclusive right to
license certain technology for the treatment of cancer and infectious diseases,
which is supported by numerous publications and university grant funding. In
addition, the financial and scientific acumen of Patriot's new president and
chief executive officer, Steven King, who is currently the chief executive
officer of the Company has extensive experience in product development, managing
publicly traded companies, and raising capital in the public and private
. . .
Item 2.01 Completion of Acquisition or Disposition of Assets
On August 21, 2020, the Parent completed the purchase from Sellers of 630,000
shares of its Class A Stock and 70,000 shares of its Class B Stock, representing
100% of the issued and outstanding common stock of the Target as of August 21,
2020 ("Target Common Stock"). In exchange for the Target Common Stock, the
holders of the Class A Stock received 630,000 shares of the Parent's preferred
stock designated Series A Convertible Preferred Stock ("Series A Preferred") and
holders of the Class B Stock received 70,000 shares of the Parent's preferred
stock designated Series B Convertible Preferred Stock ("Series B Preferred").
Each share of the Series A Preferred; will (a) convert into 5,097.053 shares of
common stock of the Parent, (b) possess full voting rights, on an as-converted
basis, as the common stock of the Parent, and (c) have no dividend rate, as
defined in the Series A Certificate of Designations. Each share of the Series B
Preferred; will (a) convert into 5,734.185 shares of common stock of the Parent,
(b) possess full voting rights, on an as-converted basis, as the common stock of
the Parent, (c) have no dividend rate, and (d) shall possess certain
anti-dilution protections as defined in the Series B Certificate of
Designations. As of closing, on a fully diluted, as converted basis, the Sellers
own 90% of the issued and outstanding common stock of the Parent.
Item 3.02 Unregistered Sales of Equity Securities.
The 630,000 shares of the Series A Preferred and 70,000 shares of Series B
Preferred that were issued to the Sellers in connection with the transaction
were issued with a restrictive legend indicating that the shares had not been
registered under the Securities Act of 1933 (the "Securities Act"). For more
information, see Item 2.01 - Completion of Acquisition or Disposition of Assets.
The issuance of the Series A Preferred and Series B Preferred in conjunction
with the acquisition of the Target Common Stock was exempt from registration
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act"), together with regulations promulgated thereunder by the U.S.
Securities and Exchange Commission, based upon the following: (a) there was no
public offering or general solicitation with respect to the offering of such
shares, (b) each Seller was provided with certain disclosure materials and all
other information requested with respect to the Company, (c) each Seller
acknowledged that the Series A Preferred and Series B Preferred was being
acquired for investment and not with a view to distribution and constitutes
"restricted securities" for purposes of the Securities Act, and agreed to
transfer such securities only in a transaction registered under the Securities
Act or exempt from registration under the Securities Act, (d) each Seller
represented and warranted that he is an "accredited investor" as defined in Rule
501(a) under the Securities Act, and (e) a legend has been, or will be, placed
on the certificates representing each such security stating that it was
restricted and could only be transferred if subsequently registered under
the Securities Act or transferred in a transaction exempt from registration
under the Securities Act.
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Item 3.03 Material Modification to Rights of Security Holders.
To the extent required by Item 3.03 of Form 8-K, the information contained in
Items 2.01, 3.02, and 5.03 of this Current Report on Form 8-K is incorporated
herein by reference.
Item 5.01 Changes in Control of Registrant.
The information regarding the Acquisition set forth in Item 2.01 - Completion of
Acquisition or Disposition of Assets and the information set forth in Item 5.02
are incorporated herein by reference.
At the closing, the Sellers received 630,000 shares of the Series A Preferred
and 70,000 shares of Series B Preferred. Each share of the Series A Preferred;
will (a) convert into 5,097.053 shares of common stock of the Parent, (b)
possess full voting rights, on an as-converted basis, as the common stock of the
Parent, and (c) have no dividend rate, as defined in the Series A Certificate of
Designations. Each share of the Series B Preferred; will (a) convert into
5,734.185 shares of common stock of the Parent, (b) possess full voting rights,
on an as-converted basis, as the common stock of the Parent, (c) have no
dividend rate, and (d) shall possess certain anti-dilution protections as
defined in the Series B Certificate of Designations. As of closing, on a fully
diluted, as converted basis, the Sellers own 90% of the issued and outstanding
common stock of the Parent.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
In conjunction with the Stock Purchase Agreement, Mr. Johnson will resign from
his role as Interim Executive Officer, Interim Chief Financial Officer, and
Secretary of the Parent effective August 28, 2020. There were no disagreements
with Mr. Johnson on any matters. Mr. Johnson will continue to serve as a member
of the Board of Directors. Upon the resignation of Mr. Johnson, Mr. Steven King
will be appointed President and Chief Executive Officer of the Parent, Mr. Paul
Lytle will be appointed Executive Vice President, Chief Financial Officer, and
Secretary of the Parent, and Nicole Steinmetz, Ph.D, will be appointed Chief
Scientific Officer of the Parent.
Also in conjunction with the Stock Purchase Agreement, Mr. Steven King, Mr. Paul
Lytle, Dr. Nicole Steinmetz, and Dr. Robert Garnick, were appointed to serve as
members of the Board of Directors of Parent. Ms. Gloria Felcyn and Mr. Carlton
Johnson will continue to serve as members of the Board of Directors.
At this time, we do not have written employment agreements or other formal
compensation agreements with any of our new officers and new and existing
directors.
Item 5.03 Amendments to Certificate of Incorporation or Bylaws
Series A and Series B Preferred Stock Certificate of Designations:
In connection with the issuance of the Series A Preferred and Series B Preferred
as described in this Current Report, we filed the Series A Certificate of
Designation and Series B Certificate of Designation with the Secretary of State
of the State of Delaware. The summary of the rights, privileges and preferences
of the Series A Preferred and Series B Preferred set forth above in Item 2.01 of
the Current Report are qualified in their entirety by reference to the Series A
Certificate of Designation and Series B Certificate of Designation, which is
attached hereto as Exhibit 3.3.9 and 3.3.10, respectively, and is incorporated
herein by reference.
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Item 7.01 Regulation FD Disclosure.
On August 24, 2020, the Company issued a press release announcing the
transaction. A copy of the press release is attached hereto as Exhibit 99.1 and
is incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of businesses acquired.
Financial statements as required for the periods specified in
Rule 8-04(b) of Regulation S-X, and meeting the requirements of Regulation S-X,
are not included in this Report. The Company will provide the required financial
statements by amendment of this Current Report within 71 calendar days from the
date on which this Current Report on Form 8-K is required to be filed.
(b) Pro forma financial information.
Pro forma financial information, if and as required by Rule 8-05 of Regulation
S-X, and meeting the requirements of Regulation S-X, are not included in this
Report. If pro forma financial information is required with respect to the
transaction described above, the Company will provide such required pro forma
financial information by amendment of this Current Report within 71 calendar
days from the date on which this Current Report on Form 8-K is required to be
filed.
(d) Exhibits
Exhibit No. Description of Exhibit
3.3.9 Series A Certificate of Designation
3.3.10 Series B Certificate of Designation
3.3.11 Investor Rights Agreement dated August 19, 2020, among Patriot
Scientific Corporation and holders of Series A and Series B
Preferred Stock.
3.3.12 Voting Agreement dated August 19, 2020, among Patriot
Scientific Corporation and holders of Series A and Series B
Preferred Stock.
10.13 Stock Purchase Agreement, dated August 19, 2020, among Patriot
Scientific Corporation, PTSC Sub One Inc., Mosaic
ImmunoEngineering Inc. (the "Company"), certain stockholders of
the Company set forth therein, and Steven King.
99.1 Press release issued August 24, 2020
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PATRIOT SCIENTIFIC CORPORATION