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Item 2. Management’s Discussion and Analysis

2022-05-16 compared with 2022-02-15 · 108 added, 110 removed, 166 unchanged (57% of the section changed)

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING INFORMATION

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financial statements and the notes thereto contained elsewhere in this report.

Information in this Item 2, “Management’s Discussion

and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Form 10-Q that does not consist of historical

facts, are “forward-looking statements.” Statements accompanied or qualified by, or containing words such as “may,”

“will,” “should,” “believes,” “expects,” “intends,” “plans,” “projects,”

“estimates,” “predicts,” “potential,” “outlook,” “forecast,” “anticipates,”

“presume,” and “assume” constitute forward-looking statements, and as such, are not a guarantee of future performance.

Information in this Item 2, “Management’s

Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Form 10-Q that does not consist

of historical facts, are “forward-looking statements.” Statements accompanied or qualified by, or containing words such as

“may,” “will,” “should,” “believes,” “expects,” “intends,” “plans,”

“projects,” “estimates,” “predicts,” “potential,” “outlook,” “forecast,”

“anticipates,” “presume,” and “assume” constitute forward-looking statements, and as such, are not

a guarantee of future performance.

Forward-looking statements are subject to risks

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the forward-looking statements in this report.

On June 22, 2021, the Company, Acquisition Sub

and Biond Photonics entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”).

the terms of the Merger Agreement, on June 22, 2021 (the “Closing Date”), Biond Photonics merged with and into Acquisition

On June 22, 2021, the Company, Acquisition

Sub and Biond Photonics entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”).

to the terms of the Merger Agreement, on June 22, 2021 (the “Closing Date”), Biond Photonics merged with and into Acquisition

Sub, with Acquisition Sub continuing as the surviving corporation and our wholly owned subsidiary.

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to the former holders of Biond Photonics’ capital stock equal to 4,100,002 after adjustments due to rounding for fractional shares.

Immediately prior to the Effective Time, an aggregate of 2,500,000 shares of our common stock owned by the stockholders of PUBCO prior

to the Merger were forfeited and cancelled (the “Stock Forfeiture”).

Immediately prior to the Effective Time, an aggregate of 2,500,000 shares of our common stock owned by our stockholders prior to the Merger

were forfeited and cancelled (the “Stock Forfeiture”).

The issuance of shares of our common stock to Biond Photonics’

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Conversion was not registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2)

of the Securities Act, which exempts transactions by an issuer not involving any public offering, and Rule 506 of Regulation D

promulgated by the SEC thereunder.

of the Securities Act, which exempts transactions by an issuer not involving any public offering, and Rule 506 of Regulation D promulgated

by the SEC thereunder.

These securities may not be offered or sold in the U.S.

absent registration or an applicable exemption

from the registration requirement and are subject to further contractual restrictions on transfer.

absent registration or an applicable exemption from the

registration requirement and are subject to further contractual restrictions on transfer.

We develop novel optoelectronic devices for sensing

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“Offering Price”).

We held a second closing on June 28, 2021 for an additional 402,500 shares of our common stock and a third

and final close on July 1, 2021 for an additional 115,000.

Accordingly, we sold a total of 4,000,000 shares of our common stock.

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

We held a second closing on June 28, 2021 for an additional 402,500 shares of our common stock and

a third and final close on July 1, 2021 for an additional 115,000.

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

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

The aggregate gross proceeds from the three closings

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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.

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.

In connection with the Offering and subject to

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approximately $265,000 of legal and other expenses incurred in connection with the Offering.

Subject to certain customary exceptions, we

have agreed to indemnify the Placement Agent to the fullest extent permitted by law against certain liabilities that may be incurred in

connection with the Offering, including certain civil liabilities under the Securities Act, and, where such indemnification is not available,

to contribute to the payments the Placement Agent and their sub-agents may be required to make in respect of such liabilities.

Subject to certain customary exceptions, we agreed

to indemnify the Placement Agent to the fullest extent permitted by law against certain liabilities that may be incurred in connection

with the Offering, including certain civil liabilities under the Securities Act, and, where such indemnification is not available, to

contribute to the payments the Placement Agent and their sub-agents may be required to make in respect of such liabilities.

Plan of Operations

During the next twelve months, we expect to take

the following steps in connection with the further development of our business and the implementation of our plan of operations.

currently preparing the facility for equipment installation, which includes the performance of minor HVAC (heating, ventilating, and air

conditioning) modifications in our cleanroom manufacturing area, electrical work in order to provide proper power to equipment and the

repositioning of some nonstructural walls to customize the space layout for equipment.

Soon thereafter, equipment will be installed and

then brought online, meaning power will be supplied to the equipment and various connections will be made including gas supply lines,

exhaust, and other connections.

Equipment installation will be performed by Company employees, and, in some cases, together with field

service engineers from the equipment manufacturers or consultants.

Some equipment was procured previously, and other equipment is being

procured through purchase orders with equipment manufactures.

The primary sources of funding for equipment procurement and installation

are the seed funding raised prior to becoming a public company and the funding raised from our alternative public offering.

installed, the equipment will be checked through various test operations to verify that the systems are performing to requirements and

we will begin to perform development runs to realize epitaxial wafers, which is the combination of the compound semiconductor materials

grown on the silicon wafer.

Thereafter, we plan to finalize the purchase agreements for epitaxial wafers with potential customers with

whom we currently have support letters, as mentioned elsewhere in this document, and then we will work to deliver on such orders.

also be performing internal research and development on materials and devices for our planned photodetector array products.

this effort, we will be engaging foundries to develop a path toward building engineering samples and future production.

In parallel, we

will continue to develop our manufacturing and product development strategy by further engaging customers and strategic partners.

We have been developing our materials and characterization

capabilities at our headquarters in Goleta, CA, in connection with the further development of our business and the implementation of our

plan of operations.

We have installed some key manufacturing equipment at our headquarters and will continue to develop relationships

with manufacturing partners to carry out certain steps of our manufacturing processes externally.

We have gained access to a rapid prototyping

facility and are leveraging this access to fabricate early-stage prototypes.

In the future, we intend to implement appropriate quality

and manufacturing controls.

Some equipment was procured previously, and other equipment is being procured through purchase orders

with equipment vendors.

Spare parts have also been procured to ensure minimal disruptive to our development.

The primary sources of funding

for equipment procurement and installation are the seed funding raised prior to becoming a public company and the funding raised from

our financing during June/July of 2021.

We have also leveraged funds to continue strengthening our intellectual property including patent

applications, trademarks, development of trade secrets and manufacturing process recipes.

Limited Operating History

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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.

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.

Results of Operations

Six months ended December 31, 2021 compared

to the six months ended December 31, 2020

Our results of operations for the six-month period

ended December 31, 2021, as compared to the six-month period ended December 31, 2020, were as follows (some balances on the prior period’s

combined financial statements have been reclassified to conform to the current period presentation):

Six Months Ended

Nine months ended March 31, 2022 compared

to the nine months ended March 31, 2021

Our results of operations for the nine-month period

ended March 31, 2022, as compared to the nine-month period ended March 31, 2021, were as follows (some balances on the prior

period’s combined financial statements have been reclassified to conform to the current period presentation):

Nine Months Ended

Operating Expenses:

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$ (2,140,722 )

$ (2,116,597 )

Net Revenues :

pre-revenue and, accordingly recorded no revenues for either the six months ended December 31, 2021 or December 31, 2020.

We are pre-revenue and, accordingly

recorded no revenues for either the nine months ended March 31, 2022 or 2021.

Operating Expenses :

During the six

months ended December 31, 2021 and 2020, we incurred $1,399,590 and $9,662 of operating expenses, respectively.

This increase was due

to the start-up of operations and stock compensation expenses related to advisor agreements

Sub-lease rental income

and other income:

During the six months ended December 31, 2021 and 2020, the Company recorded net rental and other income of

$173,245 and none, respectively.

During the nine months

ended March 31, 2022 and 2021, we incurred $2,370,006 and $23,325 of operating expenses, respectively.

This increase was due to the

start-up of operations and stock compensation expenses related to advisor agreements.

Sub-lease rental income and other income:

During the nine months ended March 31, 2022 and 2021, the Company recorded net rental and other income of $229,284 and $0, respectively.

The increase was due to the rental of our new facility and a related sub-lease to our tenant.

Provision for income tax :

The Company recorded no provision for income tax for either the six months ended December 31, 2021 or the six months ended December 31,

Net loss increased to $1,226,345 for the six months ended December

31, 2021, as compared to $9,662 for the six months ended December 31, 2020 for the reasons described above.

The Company recorded

no provision for income tax for the nine months ended March 31, 2022 and $800 for the nine months ended March 31, 2021.

Net loss increased to $2,140,722

for the nine months ended March 31,2022, as compared to $24,125 for the nine months ended March 31, 2021 for start-up of operations

and stock compensation expenses related to advisor agreements.

Capital Resources and Liquidity

Our financial statements have been presented on the basis that are

a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

in the financial statements, we incurred a net loss of $1,226,345 for the six months ended December 31, 2021 and losses are expected to

continue in the near term.

Our financial statements have been presented on

the basis that are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course

As presented in the financial statements, we incurred a net loss of $2,140,722 for the nine months ended March 31, 2022

and losses are expected to continue in the near term.

The accumulated deficit was $2,371,507.

We have been funding our operations through private loans and the sale

of common stock in private placement transactions.

Management anticipates that significant additional expenditures will

be necessary to develop and expand our business before significant positive operating cash flows can be achieved.

Our ability to continue

as a going concern is dependent upon our ability to raise additional capital and to ultimately achieve sustainable revenues and profitable

At December 31, 2021, we had $5,483,748 of cash on hand.

These funds are insufficient to complete our business plan and, as

a consequence, we will need to seek additional funds, primarily through the issuance of debt or equity securities for cash to operate

our business.

No assurance can be given that any future financing will be available or, if available, that it will be on terms that are

satisfactory to us.

Even if we are able to obtain additional financing, it may contain undue restrictions on our operations, in the case

of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.

We have been funding our operations through

private loans and the sale of common stock in private placement transactions.

Management anticipates that significant additional

expenditures will be necessary to develop and expand our business before significant positive operating cash flows can be achieved.

ability to continue as a going concern is dependent upon our ability to raise additional capital and to ultimately achieve sustainable

revenues and profitable operations.

At March 31, 2022, we had $4,815,842 of cash on hand.

These funds are insufficient to complete

our business plan and, as a consequence, we will need to seek additional funds, primarily through the issuance of debt or equity securities

for cash to operate our business.

No assurance can be given that any future financing will be available or, if available, that it will

be on terms that are satisfactory to us.

Even if we are able to obtain additional financing, it may contain undue restrictions on our

operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.

Management has undertaken steps as part of a plan

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Cash, total current assets, total assets, total

current liabilities and total liabilities as of December 31, 2021 as compared to June 30, 2021, were as follows:

current liabilities and total liabilities as of March 31, 2022 as compared to June 30, 2021, were as follows:

Total current assets

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Total liabilities

At December 31, 2021, we had working capital of $5,987,614

compared to working capital of $7,185,135 at June 30, 2021.

Current assets decreased to $6,387,000 at December 31, 2021 from $7,472,235

at June 30, 2021, primarily as a result of the start-up of operations.

Current liabilities increased to $399,386 at December 31, 2021

from $287,100 at June 30, 2021, primarily as a result of the timing of accounts payable.

For the six months ended December 31, 2021, net cash used by operations

was $895,185 and was the result of the net loss from operations with a change in prepaids, offset by a change in accounts payable and

accrued expenses and non-cash expenses.

For the six months ended December 31, 2020, net cash provided by operations was $2,431.

Net cash used in our investing activities were $570,248 and none for

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

Investing activity for the 2021 period related to the setup of our new

Our financing activities generated a cash inflow of $161,930 for the

six months ended December 31, 2021, due to the offering described above.

In the six months ended December 31, 2020, financing activities

netted $139,200 from Founder loans and a small private placement.

At March 31, 2022, we had working capital

of $5,166,427 compared to working capital of $7,185,135 at June 30, 2021.

Current assets decreased to $5,584,921 at March 31,

2022 from $7,472,235 at June 30, 2021, primarily as a result of the start-up of operations.

Current liabilities increased to $418,494

at March 31, 2022 from $287,100 at June 30, 2021, primarily as a result of the timing of accounts payable.

For the nine months ended March 31, 2022,

net cash used by operations was $1,416,839 and was the result of the net loss from operations, and changes in accounts payable, offset

by changes in other current assets.

For the nine months ended March 31, 2021 net cash used in operations was $79,163.

Net cash used in our investing activities was

$716,499 and $109,684 for the nine months ended March 31,2022 and 2021, respectively.

Investing activity for the 2022 period related

to the setup of our new facility.

Our financing activities generated a cash inflow

of $161,930 for the nine months ended March 31, 2022, due to the offering described above.

In the nine months ended March 31,

2021, financing activities netted $344,402 from Founder loans and SAFE Notes.

Critical Accounting Policies

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Report on Form 10-KT for the period ended June 30, 2021.

During the six months ended December 31, 2021, there were no significant changes

in our critical accounting policies.

During the nine months ended March 31,2022, there were no significant

changes in our critical accounting policies.

Off-Balance Sheet Arrangements

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financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities”

Quantitative and

Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

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 2. Management’s Discussion and Analysis