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 September 30, 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 15,496,932 shares were outstanding as of November 10, 2022.

Table of Contents

AEROCLEAN TECHNOLOGIES, INC.

FORM 10-Q

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited)

Condensed Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021 (Audited)	1

Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	2

Condensed Statements of Changes in Members’/ Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	3

Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)	4

Notes to Condensed Financial Statements (Unaudited)	5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3. Quantitative and Qualitative Disclosures About Market Risk	24

Item 4. Controls and Procedures	24

PART II - OTHER INFORMATION	25

Item 1. Legal Proceedings	25

Item 1A. Risk Factors	25

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29

Item 3. Defaults Upon Senior Securities	29

Item 4. Mine Safety Disclosures	30

Item 5. Other Information	30

Item 6. Exhibits	30

SIGNATURES	31

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited)

AEROCLEAN TECHNOLOGIES, INC.

CONDENSED BALANCE SHEETS


	September 30, 2022		December 31, 2021
ASSETS		(Unaudited)
Current assets:
Cash	$	25,818,620	$	19,629,649
Accounts receivable		11,894		177,064
Prepaid expenses and other current assets		285,318		1,124,998
Inventories		1,310,275		645,942
Total current assets		27,426,107		21,577,653
Property and equipment, net		2,164,759		2,123,428
Other assets		21,667		21,667
Total assets	$	29,612,533	$	23,722,748

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	854,295	$	927,194
Accrued expenses and other current liabilities		1,835,057		583,885
Total current liabilities		2,689,352		1,511,079
Long-term liabilities:
Warrant liability		3,156,000		—
Deferred tax liability		74,573		501,254
Total liabilities		5,919,925		2,012,333
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preference Shares, $0.01 par value; 11,000,000 shares authorized; none issued and outstanding		—		—
Common stock, $0.01 par value per share; 110,000,000 shares authorized; 15,408,828 and 13,877,636 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		153,776		138,776
Additional paid-in capital		26,387,440		23,319,499
Accumulated deficit		(2,848,608)		(1,747,860)
Total stockholders’ equity		23,692,608		21,710,415
Total liabilities and stockholders’ equity	$	29,612,533	$	23,722,748

See accompanying notes to unaudited condensed financial statements.

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AEROCLEAN TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Product revenues	$	58,385	$	261,299	$	136,037	$	261,299
Cost of sales		30,834		147,733		70,724		147,733
Gross profit		27,551		113,566		65,313		113,566
Operating expenses:
Selling, general and administrative		4,440,645		685,079		10,687,936		2,678,689
Research and development		633,262		956,499		1,743,806		3,617,101
Total operating expenses		5,073,907		1,641,578		12,431,742		6,295,790
Income (loss) from operations		(5,046,356)		(1,528,012)		(12,366,429)		(6,182,224)
Change in fair value of warrant liability		(11,489,000)		—		(10,839,000)		—
Income (loss) before income tax benefit		6,442,644		(1,528,012)		(1,527,429)		(6,182,224)
Income tax benefit		(206,849)		—		(426,681)		—
Net income (loss)	$	6,649,493	$	(1,528,012)	$	(1,100,748)	$	(6,182,224)

Net income (loss) per share - basic:	$	0.43	$	(0.13)	$	(0.08)	$	(0.61)
Weighted-average common shares outstanding - basic:		15,377,636		11,363,636		14,388,625		10,135,506

Net income (loss) per share - diluted:	$	0.42	$	(0.13)	$	(0.08)	$	(0.61)
Weighted-average common shares outstanding diluted:		15,767,353		11,363,636		14,388,625		10,135,506

See accompanying notes to unaudited condensed financial statements.

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AEROCLEAN TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CHANGES IN MEMBERS’/STOCKHOLDERS’ EQUITY

(Unaudited)

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022:


	Class A			Common Stock			Additional Paid-In		Accumulated		Total Stockholders’
	Units	Amount		Shares	Amount		Capital		Deficit		Equity
Balance, June 30, 2022	—	$	—	15,408,828	$	153,776	$	25,593,647	$	(9,498,101)	$	16,249,322
Stock-based compensation	—		—	—		—		793,793		—		793,793
Net income	—		—	—		—		—		6,649,493		6,649,493
Balance, September 30, 2022	—	$	—	15,408,828	$	153,776	$	26,387,440	$	(2,848,608)	$	23,692,608


	Class A			Common Stock			Additional Paid-In		Accumulated		Total Stockholders’
	Units	Amount		Shares	Amount		Capital		Deficit		Equity
Balance, December 31, 2021	—	$	—	13,877,636	$	138,776	$	23,319,499	$	(1,747,860)	$	21,710,415
Issuance of common stock and warrants	—		—	1,531,192		15,000		894,770		—		909,770
Stock-based compensation	—		—	—		—		2,173,171		—		2,173,171
Net loss	—		—	—		—		—		(1,100,748)		(1,100,748)
Balance, September 30, 2022	—	$	—	15,408,828	$	153,776	$	26,387,440	$	(2,848,608)	$	23,692,608

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021:


	Class A			Common Stock			Additional Paid-In		Accumulated		Total Members’
	Units	Amount		Shares	Amount		Capital		Deficit		Equity
Balance, June 30, 2021	13,428,948	$	16,748,768	—	$	—	$	—	$	(12,877,619)	$	3,871,149
Net loss	—		—	—		—		—		(1,528,012)		(1,528,012)
Balance, September 30, 2021	13,428,948	$	16,748,768	—	$	—	$	—	$	(14,405,631)	$	2,343,137


	Class A			Common Stock			Additional Paid-In		Accumulated		Total Members’
	Units	Amount		Shares	Amount		Capital		Deficit		Equity
Balance, December 31, 2020	8,081,578	$	10,751,274	—	$	—	$	—	$	(8,223,407)	$	2,527,867
Issuance of equity units	5,347,370		5,997,494	—		—		—		—		5,997,494
Net loss	—		—	—		—		—		(6,182,224)		(6,182,224)
Balance, September 30, 2021	13,428,948	$	16,748,768	—	$	—	$	—	$	(14,405,631)	$	2,343,137

See accompanying notes to unaudited condensed financial statements.

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AEROCLEAN TECHNOLOGIES, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

SEC Form 10-Q filed by AeroClean Technologies Inc.