What changed in this filing

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Item 1. Financial Statements

2022-02-15 compared with 2021-11-15 · 314 added, 281 removed, 146 unchanged (80% of the section changed)

1 unchanged sentence

and Subsidiary

Consolidated Balance Sheets

Balance Sheets

Current Assets

3 unchanged sentences

Leasehold improvements

Accumulated depreciation

Net fixed assets

Intangible assets

12 unchanged sentences

Preferred Stock par value $ 0.0001 , 10,000,000 authorized, none issued and outstanding.

Common Stock par value $ 0.0001 , 50,000,000 shares authorized, 10,650,002 shares and 10,535,002 issued and outstanding at September 30, 2021 and June 30, 2021, respectively.

Common Stock par value $ 0.0001 , 50,000,000 shares authorized, 10,650,002 shares and 10,535,002 issued and outstanding at December 31, 2021 and June 30, 2021, respectively.

Additional Paid In Capital

Accumulated Deficit

( 1,457,267 )

Total Stockholders’ Equity

Total Liabilities and Stockholders’ Equity

The accompanying notes are an integral part of

these financials

accompanying notes are an integral part of these financials

and Subsidiary

Consolidated Statements of Operations

For the Three Months Ended September 30, 2021

Statements of Operations

the Three Months Ended December 31, 2021 and 2020

Operating Expenses

7 unchanged sentences

Weighted average common shares outstanding - basic and diluted

The accompanying notes are an integral part of

these financials

accompanying notes are an integral part of these financials

and Subsidiary

Consolidated Statement of Stockholders’

For the Three Months Ended September 30, 2021

Statements of Operations

the Six Months Ended December 31, 2021 and 2020

Operating Expenses

Sub-lease and other income

Interest income

Total Other Income

Loss Before Provision for Income Taxes

( 1,226,345 )

Provision for income tax

$ ( 1,226,345 )

Basic and Diluted Loss Per Share

Weighted average common shares outstanding - basic and diluted

and Subsidiary

Statement of Stockholders’ Equity

the Six Months Ended December 31, 2021

Stockholders’

3 unchanged sentences

Other offering costs

Net loss for three months ended September 30, 2021

Balance, September 30, 2021

$ ( 834,572 )

The accompanying notes are an integral part of

these financials

Net loss for three months ended December 31, 2021

Balance, December 31, 2021

$ ( 1,457,267 )

accompanying notes are an integral part of these financials

and Subsidiary

Consolidated Statements of Cash Flows

For the Three Months Ended September 30, 2021

Statements of Cash Flows

the Six Months Ended December 31, 2021 and 2020

Operating activities

Adjustments to reconcile net loss to net cash

used in operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of deferred compensation

1 unchanged sentence

Stock based compensation expense

Amortization of ROU asset

Depreciation and amortization expense

Change in prepaids & other current assets

Change in accounts payable

Change in lease liability

Change in accrued expenses

Net cash used in operating

Net cash used in operating activities

Investing activities

Purchase of equipment

Payments for Leasehold Improvements

Net cash used in investing

Payment for leasehold improvements

Net cash used in investing activities

Financing activities

Proceeds from Private Placement, net of offering

of other offering costs

Net cash provided by Financing

Proceeds from Founder Loans

Proceeds from advances

Proceeds from Private Placement, net of offering costs

Payment of other offering costs

Net cash provided by financing activities

Net change in cash

Cash, beginning of

Cash, beginning of period

Cash, end of period

1 unchanged sentence

Notes to Consolidated Financial Statements as

of September 30, 2021 and 2020

1 – THE COMPANY

headquartered in Goleta, California.

The Company is engaged in the research and development of infrared (IR) optical sensors to disrupt

the market for IR sensors, and using its proprietary technology aims to produce a much higher performance alternative to today’s

low-cost sensors at much lower prices than would otherwise be possible.

of December 31, 2021 and 2020

NOTE 1 – THE COMPANY

Aeluma is headquartered in Goleta, California.

The Company is engaged in the research and development of infrared (IR) optical sensors to disrupt the market for IR sensors, and using

its proprietary technology aims to produce a much higher performance alternative to today’s low-cost sensors at much lower prices

than would otherwise be possible.

The focus of the Company will be the image sensor market.

efforts hope to penetrate the 3D imaging and sensing (mobile & consumer, defense & aerospace, industrial, medical, auto) and lidar

(robotic vehicles, ADAS vehicles, topography, wind, industrial) markets.

originally incorporated as Parc Investments, Inc.

Initial efforts hope to penetrate the 3D imaging

and sensing (mobile & consumer, defense & aerospace, industrial, medical, auto) and lidar (robotic vehicles, ADAS vehicles, topography,

wind, industrial) markets.

We were originally incorporated as Parc Investments,

in the State of Delaware on August 21, 2020.

Prior to the Merger (as defined below),

we were a “shell company” (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange

22, 2021, our board of directors and all of our pre-Merger stockholders approved a restated certificate of incorporation, which was effective

upon its filing with the Secretary of State of the State of Delaware on June 22, 2021 and through which we changed our name to “Aeluma,

Inc.” On June 22, 2021, our board of directors also adopted restated bylaws.

22, 2021, Biond Photonics, Inc., a privately held California corporation (“Biond Photonics”) merged with and into our wholly-owned

subsidiary, Aeluma Operating Co., a corporation formed in the State of Delaware on June 22, 2021 (“Acquisition Sub”).

to this transaction (the “Merger”), Acquisition Sub was the surviving corporation and remained our wholly owned subsidiary,

and all of the outstanding stock of Biond Photonics was converted into shares of our common stock.

of the Merger, we acquired the business of Biond Photonics and continued the existing business operations of Biond Photonics as a public

reporting company under the name Aeluma, Inc.

Prior to the Merger (as defined below), we were a “shell company” (as defined

in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).

On June 22, 2021, our board of directors and all

of our pre-Merger stockholders approved a restated certificate of incorporation, which was effective upon its filing with the Secretary

of State of the State of Delaware on June 22, 2021 and through which we changed our name to “Aeluma, Inc.” On June 22, 2021,

our board of directors also adopted restated bylaws.

On June 22, 2021, Biond Photonics, Inc., a privately

held California corporation (“Biond Photonics”) merged with and into our wholly-owned subsidiary, Aeluma Operating Co., a

corporation formed in the State of Delaware on June 22, 2021 (“Acquisition Sub”).

Pursuant to this transaction (the “Merger”),

Acquisition Sub was the surviving corporation and remained our wholly owned subsidiary, and all of the outstanding stock of Biond Photonics

was converted into shares of our common stock.

As a result of the Merger, we acquired the business

of Biond Photonics and continued the existing business operations of Biond Photonics as a public reporting company under the name Aeluma,

In conjunction with the merger transaction, the company changed its year end to June 30.

29 unchanged sentences

of the Internal Revenue Code of 1986, as amended.

of Fiscal Year

30, 2021, we changed our fiscal year from the period beginning on January 1 and ending on December 31 to the period beginning on July

1 and ending on June 30 of each year, effective immediately.

NOTE 2 – SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

The accompanying unaudited interim consolidated financial statements

have been presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for

interim financial information and the instructions to Article 8 of Regulation S-X.

Change of Fiscal Year

On June 30, 2021, we changed our fiscal year from

the period beginning on January 1 and ending on December 31 to the period beginning on July 1 and ending on June 30 of each year.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated

financial statements have been presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”)

for interim financial information and the instructions to Article 8 of Regulation S-X.

Accordingly, the financial statements do not include

all of the information and notes required by GAAP for complete financial statements.

The consolidated financial statements as of September

The consolidated financial statements as of December

31, 2021, and 2020, are unaudited;

5 unchanged sentences

future interim periods or for the full year.

of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements.

financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity

and objectivity.

incurred a net loss of $ 603,650 for the three months ended September 30, 2021.

In addition, the Company is in the research and development

stage and has not generated revenue to date.

In order to support its operations, the Company will require additional infusions of cash

from the sale of equity instruments or the issuance of debt instruments, or the commencement of profitable revenue generating activities.

If adequate funds are not available or are not available on acceptable terms, the Company’s ability to fund its operations, develop

or enhance its sensors in the future or respond to competitive pressures would be significantly limited.

Such limitations could require

the Company to curtail, suspend or discontinue parts of its business plan.

These conditions

may raise doubt about the Company’s ability to continue as a going concern.

The accompanying financial statements have been prepared

in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company

as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded

asset amounts or the amounts and classification of liabilities that could result from the outcome of this uncertainty.

The summary of significant accounting policies

presented below is designed to assist in understanding the Company’s financial statements.

Such financial statements and accompanying

notes are the representations of the Company’s management, who is responsible for their integrity and objectivity.

Going Concern

The Company incurred a net loss of $ 1,226,345 for the six months

ended December 31, 2021.

In addition, the Company is in the research and development stage and has not generated revenue to date.

to support its operations, the Company will require additional infusions of cash from the sale of equity instruments or the issuance of

debt instruments, or the commencement of profitable revenue generating activities.

If adequate funds are not available or are not available

on acceptable terms, the Company’s ability to fund its operations, develop or enhance its sensors in the future or respond to competitive

pressures would be significantly limited.

Such limitations could require the Company to curtail, suspend or discontinue parts of its business

These conditions may raise doubt about the Company’s

ability to continue as a going concern.

The accompanying financial statements have been prepared in conformity with accounting principles

generally accepted in the United States of America, which contemplate continuation of the Company as a going concern.

The financial statements

do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

Net Loss Per Share

per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding

during the period.

The number of shares prior to the merger have been restated to consider the conversion into the share of the legal

do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification

of liabilities that could result from the outcome of this uncertainty.

The financial statements do not include any adjustments that might

be necessary should the Company be unable to continue as a going concern.

Basic Net Loss Per Share

Basic loss per share is computed by dividing net

loss available to common shareholders by the weighted average number of common shares outstanding during the period.

The number of shares

prior to the merger have been restated to consider the conversion into the share of the legal acquirer.

No shares were issued until October

Estimates and Assumptions

The preparation

of financial statements in conformity with U.S.

generally accepted accounting principles requires management to make estimates and assumptions

that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues

and expenses during the reporting period.

The Company bases its estimates and assumptions on current facts, historical experience and

various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments

about the carrying values of assets and liabilities.

The actual results experienced by the Company may differ materially and adversely

from the Company’s estimates.

To the extent there are material differences between the estimates and the actual results, future

results of operations will be affected.

Value of Financial Instruments

in Financial Accounting Standards Board (“FASB”) ASC Topic No.

820, “Fair Value Measurements and Disclosures”

(“ASC 820”), fair values is the price that would be received to sell an asset or paid to transfer the liability in an orderly

transaction between market participants at the measurement date.

Use of Estimates and Assumptions

The preparation of financial statements in conformity

generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts

of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting

The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes

to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets

and liabilities.

The actual results experienced by the Company may differ materially and adversely from the Company’s estimates.

To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Fair Value of Financial Instruments

As defined in Financial Accounting Standards Board

(“FASB”) ASC Topic No.

820, “Fair Value Measurements and Disclosures” (“ASC 820”), fair values is

the price that would be received to sell an asset or paid to transfer the liability in an orderly transaction between market participants

at the measurement date.

In determining fair value, the Company uses the market or income approach.

Based on this approach, the Company utilizes certain assumptions about the risk inherent in the inputs to the valuation technique.

inputs can be readily observable, market-corroborated or generally unobservable inputs.

The Company utilizes valuation techniques that

maximize the use of observable inputs and minimize the use of unobservable inputs.

Based on the observability of the inputs used in the

valuation techniques, the Company is required to provide the following information according to the fair value hierarchy.

The fair value

hierarchy ranks the quality and the reliability of the information used to determine fair values.

As a basis for considering these assumptions,

ASC 820 defines a three-tier value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value.

1 – Unadjusted quoted prices in active, accessible market for identical assets or liabilities

2 – Other inputs that are directly or indirectly observable in the marketplace

3 – Unobservable inputs which are supported by little or no market activity

value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring

values of the Company’s cash, accounts payable, accrued expenses and advances from officers approximate their fair value due to

the relatively short maturity of these items.

The carrying amounts reported for debt obligations approximate fair value due to the effective

interest rate of these obligations reflecting the Company’s current borrowing rate.

Concentration

maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits.

The Company has not experienced any

losses in such accounts.

and Equipment

equipment and leasehold improvements are reported at historical cost, net of accumulated depreciation and amortization.

Depreciation is

computed using the straight-line method over the estimated useful lives of the assets.

Repairs and maintenance to these assets are charged

to expense as incurred;

major improvements enhancing the function and/or the asset’s useful life are capitalized.

When items are

sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gains or losses arising from such

transactions are recognized.

As of September

30, 2021, the Company has capitalized equipment assets which will be used for the development and production of their sensors.

are not currently in use and will continue to receive capitalized improvements until ready to use.

Once commissioned and properly setup,

the property and equipment will be depreciated using the straight-line method over their estimated useful life.

and Cash Equivalents

considers cash in banks, deposits in transit, and highly liquid debt instruments purchased with original maturities of three months or

less to be cash and cash equivalents.

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured

Based on this approach, the Company

utilizes certain assumptions about the risk inherent in the inputs to the valuation technique.

These inputs can be readily observable,

market-corroborated or generally unobservable inputs.

The Company utilizes valuation techniques that maximize the use of observable inputs

and minimize the use of unobservable inputs.

Based on the observability of the inputs used in the valuation techniques, the Company is

required to provide the following information according to the fair value hierarchy.

The fair value hierarchy ranks the quality and the

reliability of the information used to determine fair values.

As a basis for considering these assumptions, ASC 820 defines a three-tier

value hierarchy that prioritizes the inputs used in the valuation methodologies in measuring fair value.

Level 1 – Unadjusted

quoted prices in active, accessible market for identical assets or liabilities

Level 2 – Other inputs

that are directly or indirectly observable in the marketplace

Level 3 – Unobservable

inputs which are supported by little or no market activity

The fair value hierarchy also requires an entity

to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The carrying values of the Company’s cash,

accounts payable, accrued expenses and advances from officers approximate their fair value due to the relatively short maturity of these

The carrying amounts reported for debt obligations approximate fair value due to the effective interest rate of these obligations

reflecting the Company’s current borrowing rate.

Concentration of Risk

The Company maintains its cash in bank deposit

accounts which, at times, may exceed federally insured limits.

The Company has not experienced any losses in such accounts.

The Company’s accounts are insured by the FDIC but at times

may exceed federally insured limits.

is expected to have net operating loss carryforwards that it can use to offset a certain amount of taxable income in the future.

is currently analyzing the amount of loss carryforwards that will be available to reduce future taxable income.

The resulting deferred

tax assets will be offset by a valuation allowance due to the uncertainty of its realization.

The primary difference between income tax

expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory

rates to income before income taxes relates to the recognition of a valuation allowance for deferred income tax assets.

has adopted FASB ASC 740-10, “ Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized

in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not as a measurement process

for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

In making this assessment,

a Company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the

technical merits of the position and must assume that the tax position will be examined by taxing authorities.

The Company’s policy

is to include interest and penalties related to unrecognized tax benefits in income tax expense.

Interest and penalties totaled $ 0 for

periods presented.

The Company’s net operating loss carryforwards are subject to IRS examination until they are fully utilized,

and such tax years are closed.

Company will file tax returns in the U.S.

Property and Equipment

Property, equipment and leasehold improvements

are reported at historical cost, net of accumulated depreciation and amortization.

Depreciation is computed using the straight-line method

over the estimated useful lives of the assets.

Repairs and maintenance to these assets are charged to expense as incurred;

major improvements

enhancing the function and/or the asset’s useful life are capitalized.

When items are sold or retired, the related cost and accumulated

depreciation are removed from the accounts and any gains or losses arising from such transactions are recognized.

Cash and Cash Equivalents

The Company considers cash in banks, deposits

in transit, and highly liquid debt instruments purchased with original maturities of three months or less to be cash and cash equivalents.

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits.

The Company has not experienced

any losses in such accounts.

The Company’s accounts are insured by the FDIC but at times may exceed federally insured limits.

The Company is expected to have net operating

loss carryforwards that it can use to offset a certain amount of taxable income in the future.

The Company is currently analyzing the

amount of loss carryforwards that will be available to reduce future taxable income.

The resulting deferred tax assets will be offset

by a valuation allowance due to the uncertainty of its realization.

The primary difference between income tax expense attributable to

continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to income

before income taxes relates to the recognition of a valuation allowance for deferred income tax assets.

The Company has adopted FASB ASC 740-10, “ Income

Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements

and prescribes a recognition threshold of more likely than not as a measurement process for financial statement recognition and measurement

of a tax position taken or expected to be taken in a tax return.

In making this assessment, a Company must determine whether it is more

likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must

assume that the tax position will be examined by taxing authorities.

The Company’s policy is to include interest and penalties related

to unrecognized tax benefits in income tax expense.

Interest and penalties totaled $ 0 for periods presented.

The Company’s

net operating loss carryforwards are subject to IRS examination until they are fully utilized, and such tax years are closed.

The Company will file tax returns in the U.S.

federal jurisdiction and the state of California.

The Company’s federal and state return

form are subject to review by the taxing authorities.

The Company is not currently under examination by any taxing authority, nor has

it been notified of an impending examination.

The Company’s federal and state return form are subject to review by the taxing

The Company is not currently under examination by any taxing authority, nor has it been notified of an impending examination.

Stock-Based Compensation

The Company accounts for stock-based

compensation arrangements in accordance with guidance issued by the FASB, which requires the measurement and recognition of compensation

expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values.

The Company estimates the

fair value of stock-based compensation awards on the date of grant using an option-pricing model.

The value of the portion of the award

that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s statements of

The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model.

This model requires

the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which

are highly complex and subjective variables.

For employees and directors, the expected life was calculated based on the simplified method

as described by the SEC Staff Accounting Bulletin No.

The Company accounts for stock-based compensation

arrangements in accordance with guidance issued by the FASB, which requires the measurement and recognition of compensation expense for

all share-based payment awards made to employees, consultants, and directors based on estimated fair values.

The Company estimates the fair value of stock-based

compensation awards on the date of grant using an option-pricing model.

The value of the portion of the award that is ultimately expected

to vest is recognized as an expense over the requisite service periods in the Company’s statements of operations.

The Company estimates

the fair value of stock-based compensation awards using the Black-Scholes model.

This model requires the Company to estimate the expected

volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and subjective variables.

For employees and directors, the expected life was calculated based on the simplified method as described by the SEC Staff Accounting

110, Share-Based Payment.

For other service providers, the expected life

was calculated using the contractual term of the award.

For other service providers, the expected life was calculated using the contractual term

of the award.

The Company’s estimate of expected volatility was based on the volatility of peers.

The Company has selected a risk-free rate based on the implied yield available on U.S.

Treasury securities with a maturity equivalent

to the expected term of the options.

The Company has selected a risk-free

rate based on the implied yield available on U.S.

Treasury securities with a maturity equivalent to the expected term of the options.

We account for forfeitures upon occurrence.

Accounting Pronouncements

2016, the FASB issued ASU 2016-02, Leases (Topic 842), which supersedes existing guidance on accounting for leases in “Leases

(Topic 840)” and generally requires all leases to be recognized in the balance sheet.

The Company entered into a lease agreement

during the six months ended June 30, 2021.

Recent Accounting Pronouncements

In February 2016, the FASB issued ASU 2016-02, Leases

(Topic 842), which supersedes existing guidance on accounting for leases in “Leases (Topic 840)” and generally requires

all leases to be recognized in the balance sheet.

The Company entered into a lease agreement during the six months ended June 30, 2021.

The Company adopted ASU 2016-02 on January 1, 2021.

2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606), which amends certain aspects of the Board’s

new revenue standard, ASU 2014-09, Revenue from Contracts with Customers.

In April 2016, the FASB issued ASU 2016-10, Revenue

from Contracts with Customers (Topic 606), which amends certain aspects of the Board’s new revenue standard, ASU 2014-09, Revenue

from Contracts with Customers.

The Company does not currently generate revenue.

3 – STOCKHOLDERS EQUITY

The Company’s

Articles of Incorporation authorize the issuance of two classes of shares of stock.

The total number of shares which this corporation

is authorized to issue is 50,000,000 shares of $ 0.0001 par value common stock and 10,000,000 of $ 0.0001 par

value preferred stock.

No preferred shares were issued at September 30, 2021.

Stock Offering

following the Effective Time of the Merger, we sold 3,482,500 shares of our common stock pursuant to an initial closing of a

private placement offering (the “Offering”) at a purchase price of $ 2.00 per share (the “Offering Price”).

We held a second and third closing on June 28 and July 1 2021, for an additional 402,500 and 115,000 , respectively, of shares

of common stock.

Accordingly, we sold a total of 4,000,000 shares of our common stock through September 30, 2021.

placement offering is referred to herein as the “Offering.”

The aggregate

gross proceeds from the Offering during the three months ended September 30, 2021were $ 230,000 (before deducting placement agent

fees and expenses of the Offering of $ 23,070 ).

We also paid additional offering costs totaling $ 45,000 during the three month period ended

September 30, 2021.

was exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated by the

SEC thereunder.

The common stock in the Offering was sold to “accredited investors,” as defined in Regulation D, and

was conducted on a “reasonable best efforts” basis.

and Vested Shares to Officers

27 th , 2020, the Company issued 1,623,920 shares of common stock to Director and CEO Jonathan Klamkin and 1,623,920 shares

of common stock to Director, interim CFO and COO, Lee McCarthy for an aggregate sum of $10,000 each.

The stock purchase agreement contains

a repurchase option whereby unvested shares may be repurchased by the Company, at the Company’s option, within 90 days after employee

324,784 shares vested on October 27 th , 2020 and the remaining 1,299,136 shares vest in equal amounts, monthly

over the subsequent 4 years.

At September 30, 2021, each of these officers had 622,503 vested shares, and 1,001,417 unvested

NOTE 3 – STOCKHOLDERS EQUITY

Authorized Shares

The Company’s Articles of Incorporation

authorize the issuance of two classes of shares of stock.

The total number of shares which this corporation is authorized to issue is 50,000,000 shares

of $ 0.0001 par value common stock and 10,000,000 of $ 0.0001 par value preferred stock.

No preferred shares were issued

at December 31, 2021.

Common Stock Offering

Immediately following the Effective Time of the

Merger, we sold 3,482,500 shares of our common stock pursuant to an initial closing of a private placement offering (the “Offering”)

at a purchase price of $ 2.00 per share (the “Offering Price”).

We held a second and third closing on June 28 and July

1 2021, for an additional 402,500 and 115,000 , respectively, of shares of common stock.

Accordingly, we sold a total of 4,000,000 shares

of our common stock through December 31, 2021.

The private placement offering is referred to herein as the “Offering.”

The aggregate gross proceeds from the Offering

during the six months ended December 31, 2021 were $ 230,000 (before deducting placement agent fees and expenses of the Offering of

We also paid additional offering costs totaling $ 45,000 during the six-month period ended December 31, 2021.

The Offering was exempt from registration under

Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated by the SEC thereunder.

The common stock

in the Offering was sold to “accredited investors,” as defined in Regulation D, and was conducted on a “reasonable

best efforts” basis.

Issued and Vested Shares to Officers

On October 27 th , 2020, the Company

issued 1,623,920 shares of common stock to Director and CEO Jonathan Klamkin and 1,623,920 shares of common stock to Director, interim

CFO and COO, Lee McCarthy for an aggregate sum of $10,000 each.

The stock purchase agreement contains a repurchase option whereby unvested

shares may be repurchased by the Company, at the Company’s option, within 90 days after employee termination.

324,784 shares vested

on October 27 th , 2020 and the remaining 1,299,136 shares vest in equal amounts, monthly over the subsequent 4 years.

December 31, 2021, each of these officers had 703,699 vested shares, and 920,221 unvested shares.

Registration Rights Agreement

21 unchanged sentences

therefore, no liability has been recorded.

4 – STOCK-BASED COMPENSATION

During fiscal

2021, the Company sold 723,008 shares of common stock to certain individuals in exchange for future management advisory services,

for discounted prices price ranging from $.

NOTE 4 – STOCK-BASED COMPENSATION

During fiscal 2021, the Company sold 723,008 shares

of common stock to certain individuals in exchange for future management advisory services, for discounted prices price ranging from $.0104 to

$.0195 per share.

The shares are subject to restrictions that allow for repurchase

of the shares by the Company due to a termination of the service agreement or other certain provisions.

This repurchase right declines

on a pro-rata basis over vesting periods (corresponding to the service period) ranging from 2 - 4 years.

Related to these issuances, the Company has recorded deferred stock-based compensation of $ 1,372,435 for the value of the shares

in excess of the purchase price paid by the advisors.

The stock-based compensation will be expensed over the service period.

For the three

months ended September 30, 2021, $ 165,162 has been amortized in the Statement of Operations, and $ 1,170,800 is presented as

deferred compensation on the balance sheet at September 30, 2021, of which $ 662,464 is expected to be expensed in the next twelve

During the three months ended

September 30, 2021, the Company issued an option to purchase 10,000 shares of common stock to a director at a price of $2 per share, expiring

in 10 years, and an option to purchase 10,000 shares of common stock to an advisor at a price of $2.00 per share expiring in 5 years.

The shares are subject to restrictions that allow for repurchase of the shares by the Company due to a termination

of the service agreement or other certain provisions.

This repurchase right declines on a pro-rata basis over vesting periods (corresponding

to the service period) ranging from 2 - 4 years.

Related to these issuances, the Company has recorded deferred stock-based compensation

of $ 1,372,435 for the value of the shares in excess of the purchase price paid by the advisors.

The stock-based compensation will

be expensed over the service period.

For the six months ended December 31, 2021, $ 333,955 has been amortized in the Statement of

Operations, and $ 1,002,007 is presented as deferred compensation on the balance sheet at December 31, 2021, of which $ 662,464 is

expected to be expensed in the next twelve months.

In July of 2021, the Company issued an option to purchase 10,000 shares

of common stock to a director at a price of $2 per share, expiring in 10 years, and an option to purchase 10,000 shares of common stock

to an advisor at a price of $2.00 per share expiring in 5 years.

These options vested over periods ranging from one month to three months.

The estimated weighted average

fair value of the options granted during the three months ended September 30, 2021 were approximately $1.50 per share.

The Company estimates the

fair value of each option award using the Black-Scholes option-pricing model.

The Company used the following assumptions to estimate the

fair value of stock options issued in the three months ended September 30, 2021:

September 30,

In December of 2021, the Company issued options

to purchase common stock to two directors in increments of 125,000 each.

The options have an exercise price of $2.00, expire in 10 years,

vest 12,500 options per quarter in the first year and 9,375 per quarter for the following two years.

The estimated weighted average fair value of the

options granted during the six months ended December 31, 2021 were approximately $1.50 per share.

The Company estimates the fair value of each option

award using the Black-Scholes option-pricing model.

The Company used the following assumptions to estimate the fair value of stock options

issued in the six months ended December 31, 2021:

Expected volatility

2 unchanged sentences

Risk-free interest rates

The following is a schedule

summarizing employee and non-employee stock option activity for the period ended September 30, 2021:

Weighted Average

Exercise Price

Intrinsic Value

The following is a schedule summarizing employee

and non-employee stock option activity for the period ended December 31, 2021:

Outstanding at June 30, 2021

Expired/Cancelled

Outstanding at September 30, 2021

Exercisable at September 30, 2021

The aggregate intrinsic value

represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock for

each of the respective periods.

5 – FACILITY OPERATING LEASE

1, 2021, the Company commenced an 5yr operating lease for a facility in Santa Barbara, California with total lease payments of $781,813.

addition to these lease payments, the Company is also responsible for its shares of common area operating expenses and electricity.

expenses are considered variable costs and are not included in the measurement of the lease liability.

The lease agreement also provides

for the option to extend the lease for two additional sixty-month periods.

The lease payments for these additional periods are not included

in the lease liability amount presented on the balance sheet.

The Company determined the lease constitutes a Right of Use (ROU) asset

and has recorded the present value of the lease payments as an asset and liability.

The value of the asset will be amortized on a straight-line

basis over the 60 month period.

The following

table presents maturities of operating lease liabilities on an undiscounted basis as of September 30, 2021:

Outstanding at December 31, 2021

Exercisable at December 31, 2021

The aggregate intrinsic value represents the difference

between the exercise price of the options and the estimated fair value of the Company’s common stock for each of the respective

NOTE 5 – FACILITY OPERATING LEASE

On April 1, 2021, the Company commenced an 5yr

operating lease for a facility in Santa Barbara, California with total lease payments of $781,813.

In addition to these lease payments,

the Company is also responsible for its shares of common area operating expenses and electricity.

Such expenses are considered variable

costs and are not included in the measurement of the lease liability.

The lease agreement also provides for the option to extend the lease

for two additional sixty-month periods.

The lease payments for these additional periods are not included in the lease liability amount

presented on the balance sheet.

The Company determined the lease constitutes a Right of Use (ROU) asset and has recorded the present value

of the lease payments as an asset and liability.

The value of the asset will be amortized on a straight-line basis over the 60 month period.

The following table presents maturities of operating

lease liabilities on an undiscounted basis as of December 31, 2021:

Less imputed interest

2 unchanged sentences

Lease liability, long term

term and the discount rate for the lease at September 30, 2021 is 4.5 years and 0.75 %, respectively.

The total lease payments

were $ 31,593 , and $ 0 for the three months ended September 30, 2021 and 2020, respectively.

The variable costs for common area operating

expenses and electricity were $ 56,803 , and $ 0 for the three months ended September 30, 2021 and 2020 , respectively.

April 1, 2021, the Company began subleasing a portion of their facility.

The sub-lease provides for base monthly rent of $13,013

through May 31, 2021 and $8,400 starting June 1, 2021 plus common area operating and utility costs.

During the three months ended

September 30, 2021 the Company recognized $ 90,352 of rental income, including reimbursement of common areaoperating and utility costs.

6 – WARRANTS TO PURCHASE COMMON STOCK

In connection

with the Offering, the Company issued 360,000 warrants to purchase common stock to the Placement Agents.

The warrants carry a term

of 5 years and an exercise price of $2.00 .

The lease term and the discount rate for the lease

at December 31, 2021 is 4.25 years and 0.75 %, respectively.

The total lease payments were $ 78,083 , and $ 0 for the

six months ended December 31, 2021 and 2020, respectively.

The variable costs for common area operating expenses and electricity were

$ 117,972 , and $ 0 for the six months ended December 31, 2021 and 2020, respectively.

Beginning April 1, 2021, the Company began subleasing

a portion of their facility.

The sub-lease provides for base monthly rent of $13,013 through May 31, 2021 and $8,400 starting June

1, 2021 plus common area operating and utility costs.

During the six months ended December 31, 2021 the Company recognized $ 171,900 of

rental income, including reimbursement of common area operating and utility costs.

NOTE 6 – WARRANTS TO PURCHASE COMMON

In connection with the Offering, the Company

issued 360,000 warrants to purchase common stock to the Placement Agents.

The warrants carry a term of 5 years and an exercise price of

7 – SUBSEQUENT EVENTS

evaluated subsequent events up to February 14, 2022, the date the financial statements

None were noted.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements