UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-41096

AeroClean Technologies, Inc.

(Exact name of Registrant as Specified in Its Charter)


Delaware	45-3213164

(State of Incorporation)	(I.R.S. Employer Identification No.)

10455 Riverside Dr.

Palm Beach Gardens, FL 33410

833-652-5326

(Address, including zip code, and telephone number, including area code, of principal executive offices of registrant)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	AERC	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The registrant has one class of common stock, $0.01 par value, of which 13,877,636 shares were outstanding as of May 10, 2022.


Part I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited)

Condensed Balance Sheets as of March 31, 2022 (Unaudited) and December 31, 2021	1

Condensed Statements of Operations for the Three Months Ended March 31, 2022 and 2021 (Unaudited)	2

Condensed Statements of Stockholders'/ Members’ Equity for the Three Months Ended March 31, 2022 and 2021 (Unaudited)	3

Condensed Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021 (Unaudited)	4

Notes to Unaudited Condensed Financial Statements	5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12

Item 3. Quantitative and Qualitative Disclosures About Market Risk	17

Item 4. Controls and Procedures	17

PART II - OTHER INFORMATION	19

Item 6. Exhibits	19

SIGNATURES	20


	March 31, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash	$	17,774,097	$	19,629,649
Accounts receivable		6,186		177,064
Prepaid expenses and other current assets		823,028		1,124,998
Inventories		718,766		645,942
Total current assets		19,322,077		21,577,653
Property and equipment, net		2,115,675		2,123,428
Other assets		21,667		21,667
Total assets	$	21,459,419	$	23,722,748

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	436,367	$	927,194
Accrued expenses and other current liabilities		811,283		583,885
Total current liabilities		1,247,650		1,511,079
Long-term liabilities:
Deferred tax liability		408,480		501,254
Total liabilities		1,656,130		2,012,333
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preference Shares, $0.01 par value; 11,000,000 shares authorized; none issued and outstanding		—		—
Common stock, $.01 par value per share; 110,000,000 shares authorized; 13,877,636 issued and outstanding as of March 31, 2022 and December 31, 2021		138,776		138,776
Additional paid-in capital		23,990,337		23,319,499
Accumulated deficit		(4,325,824)		(1,747,860)
Total stockholders' equity		19,803,289		21,710,415
Total liabilities and stockholders' equity	$	21,459,419	$	23,722,748


	Three Months Ended
	March 31,
	2022		2021
Product revenues	$	6,733	$	—
Cost of sales		3,764		—
Gross profit		2,969		—
Operating expenses:
Selling, general and administrative		1,471,386		380,002
Stock-based compensation		670,838		—
Research and development		531,483		1,589,690
Total operating expenses		2,673,707		1,969,692
Loss before income tax benefit		(2,670,738)		(1,969,692)
Income tax benefit		92,774		—
Net loss	$	(2,577,964)	$	(1,969,692)
Net loss per share:
Basic and diluted	$	(0.19)	$	(0.26)
Weighted-average common shares outstanding:
Basic and diluted		13,877,636		7,601,859


	Class A			Common Stock			Additional Paid-in		Accumulated		Total
	Units	Amount		Shares	Amount		Capital		Deficit		Stockholders’ Equity
Balance, December 31, 2021	—	$	—	13,877,636	$	138,776	$	23,319,499	$	(1,747,860)	$	21,710,415
Stock-based compensation			—	—		—		670,838		—		670,838
Net loss	—		—	—		—				(2,577,964)		(2,577,964)
Balance, March 31, 2022	—	$	—	13,877,636	$	138,776	$	23,990,337	$	(4,325,824)	$	19,803,289


	March 31,		December 31,
	2022		2021
Raw materials	$	505,903	$	475,767
Finished goods		212,863		170,175
Total inventories	$	718,766	$	645,942


	Useful Life	March 31,		December 31,
	(Years)	2022		2021
Leasehold improvements	Lesser of useful life or lease term	$	847,217	$	847,217
Machinery and tooling	7		1,145,541		1,123,391
Furniture and equipment	3 - 10		238,390		232,466
			2,231,148		2,203,074
Less accumulated depreciation			115,473		79,646
		$	2,115,675	$	2,123,428


	Three Months Ended March 31,
	2022		2021		Change
Product revenues	$	6,733	$	—	$	6,733
Cost of sales		3,764		—		3,764
Gross profit		2,969		—		2,969
Operating expenses:
Selling, general and administrative		1,471,386		380,002		1,091,384
Stock-based compensation		670,838		—		670,838
Research and development		531,483		1,589,690		(1,058,207)
Total operating expenses		2,673,707		1,969,692		704,015
Loss before income tax benefit		(2,670,738)		(1,969,692)		(701,046)
Income tax benefit		92,774		—		92,774
Net loss	$	(2,577,964)	$	(1,969,692)	$	(608,272)


3.1	Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (File No. 333-261395), filed with the SEC on November 29, 2021).

3.2	Bylaws (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-8 (File No. 333-261395), filed with the SEC on November 29, 2021).

31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS*	XBRL Instance Document

101.SCH*	Taxonomy Extension Schema Document

101.CAL*	Taxonomy Extension Calculation Linkbase Document

101.DEF*	Taxonomy Extension Definition Linkbase Document

101.LAB*	Taxonomy Extension Label Linkbase Document

101.PRE*	Taxonomy Extension Presentation Linkbase Document

104*	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)


	AEROCLEAN TECHNOLOGIES, INC.


	By:	/s/ Jason DiBona
		Jason DiBona
		Chief Executive Officer

	Date: May 12, 2022

	By:	/s/ Ryan Tyler
		Ryan Tyler
		Chief Financial Officer

	Date: May 12, 2022


	Three Months Ended
	March 31,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(2,577,964)	$	(1,969,692)
Adjustments to reconcile net loss to net cash flows used in operating activities
Deferred tax benefit		(92,774)		—
Depreciation and amortization		35,827		—
Equity-based compensation		670,838		—
Changes in operating assets and liabilities:
Accounts receivable		170,879		—
Inventories		(72,824)		(11,658)
Other current and non-current assets		301,970		(15,025)
Accounts payable		(490,827)		162,018
Accrued expenses and other liabilities		227,398		11,802
Subscription receivable		—		100,543
Net cash flows used in operating activities		(1,827,477)		(1,722,012)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(28,075)		(1,048,813)
Net cash flows used in investing activities		(28,075)		(1,048,813)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of equity units		—		4,973,058
Net cash flows provided by financing activities		—		4,973,058
Net (decrease) increase in cash		(1,855,552)		2,202,233
Cash, beginning of period		19,629,649		2,333,117
Cash, end of period	$	17,774,097	$	4,535,350


Supplemental schedule of non-cash activities:
Subscription receivable	$	—	$	100,000

SEC Form 10-Q filed by AeroClean Technologies Inc.