Mosaic ImmunoEngineering is a nanotechnology-based immunotherapy company developing therapeutics and vaccines to positively impact the lives of patients and their families.
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Our short-term investments consist of auction rate securities and are reported at cost, which approximate fair market value.
At February 29, 2008 we had short-term investments in auction rate securities of approximately $15.6 million. Auction rate securities generally have long-stated maturities of 20 to 40 years. These securities have certain economic characteristics of short-term investments due to a rate-setting mechanism and the ability to liquidate them through a Dutch auction process that occurs on pre-determined intervals of less than 90 days. Due to the frequent resetting of interest rates, the carrying value of auction rate securities approximates fair value.
During the quarter ended February 29, 2008, investment banks were reporting an inability to successfully obtain subscribers for high credit quality auction rate securities. As of February 29, 2008 we held such auction rate securities with a par value totaling $10.4 million that failed in February 2008 to sell at auction. The unsuccessful auctions have resulted in the interest rate on these securities resetting at a premium interest rate every 35 days or less. In the event we need to access funds invested in these auction rate securities we would not be able to liquidate these securities until: a future auction of these securities is successful, they are refinanced and redeemed by the issuers, or a buyer is found outside of the auction process. The investments consist of student loan auction rate preferred instruments issued by various state agencies pursuant to the Federal Family Educational Loan Program (FFELP). These investments are of high credit quality and the AAA credit ratings of the investments have been reaffirmed since February 2008. These instruments are collateralized in excess of the underlying obligations, are insured by the various state educational agencies, and are guaranteed by the Department of Education as an insurer of last resort. We have the intent and the ability to hold these investments until the anticipated recovery period which we believe will be less than twelve months.
| 2006 Stock Option Plan (right to buy) | $.45 | 9/17/2007 | A | 750000 | 9/17/2007 |
In connection with Mr. Flowers' appointment as Chief Financial Officer, and also commencing on September 17, 2007, the Company entered into an Employment Agreement (the “Agreement”) with Mr. Flowers for an initial 120-day term if not terminated pursuant to the Agreement, with an extension period of one year and on a day-to-day basis thereafter. Pursuant to the Agreement, Mr. Flowers is to receive a base salary of $225,000 per year and is eligible to receive an annual merit bonus of up to 50% of his base salary, as determined in the sole discretion of the Board of Directors. Also pursuant to the Agreement and on the date of the Agreement, Mr. Flowers received a grant of non-qualified stock options to purchase 150,000 shares of the Company’s common stock and a grant of non-qualified stock options to purchase 600,000 shares of the Company’s common stock. The Agreement also provides for Mr. Flowers to receive customary employee benefits, including health, life and disability insurance.
Pursuant to the Agreement, if Mr. Flowers is terminated without cause or resigns with good reason within the first two years of employment, he is entitled to receive an amount equal to his annual base salary for the greater of (i) 6 months or (ii) the period remaining in the extended one year term. If Mr. Flowers is terminated without cause or resigns with good reason any time after two years of continuous employment, he is entitled to receive an amount equal to 12 months of his annual base salary. Mr. Flowers is also entitled to certain payments upon a change of control of the Company if the surviving corporation does not retain him. All such payments are conditional upon the execution of a general release.
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