What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-09-25 compared with 2022-09-28 · 285 added, 233 removed, 27 unchanged (95% of the section changed)

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

following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial

statements and the related notes included elsewhere in this filing.

should read the following discussion and analysis of our financial condition and results of operations together with our consolidated

financial statements and the related notes and other financial information included in this report.

Some of the information contained

in this discussion and analysis or set forth elsewhere in this report, including information with respect to our plans and strategy for

our business, includes forward-looking statements that involve risks and uncertainties as described under the heading “Forward-Looking

Statements” elsewhere in this report.

You should review the disclosure under the heading “Risk Factors” in other filings

we make with the SEC for a discussion of important factors that could cause actual results to differ materially from the results described

in or implied by the forward-looking statements contained in the following discussion and analysis.

June 22, 2021, the Company, Acquisition Sub and Biond Photonics entered into an Agreement and Plan of Merger and Reorganization (the

“Merger Agreement”).

Pursuant 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.

a result of the Merger, we acquired the business of Biond Photonics, a California corporation, doing business as Aeluma.

See “ Description

of Business ” above .

At the time the certificates of merger reflecting the Merger were filed with the

Secretaries of State of California and Delaware (the “Effective Time”), each of Biond Photonics’ shares of capital

stock issued and outstanding immediately prior to the closing of the Merger was converted into the right to receive (a) 1.299135853 shares

of our common stock (the “Common Share Conversion Ratio”), with the maximum number of shares of our common stock issuable

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 Parc Investments,

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

issuance of shares of our common stock to Biond Photonics’ former security holders are collectively referred to as the “Share

Merger Agreement contained customary representations and warranties and pre- and post-closing covenants of each party and customary closing

a condition to the Merger, we entered into an indemnity agreement with our former officer and directors (the “Pre-Merger Indemnity

Agreement”), pursuant to which we agreed to indemnify such former officer and directors for actions taken by them in their official

capacities relating to the consideration, approval and consummation of the Merger and certain related transactions.

Merger was treated as a recapitalization and reverse acquisition for us for financial reporting purposes.

Biond Photonics is considered

the acquirer for accounting purposes, and our historical financial statements before the Merger were replaced with the historical financial

statements of Biond Photonics before the Merger in filings with the SEC.

The Merger is intended to be treated as a tax-free reorganization

under Section 368(a) of the Internal Revenue Code of 1986, as amended.

issuance of securities pursuant to the Share 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.

These securities may not be offered or sold in the

absent registration or an applicable exemption from the registration requirement and are subject to further contractual restrictions

to the Merger, the sole business purpose of the Company was to seek the acquisition of or merger with, an existing company.

a result of the consummation of the Merger, on June 22, 2021, Biond Photonics, Inc.

became our wholly owned subsidiary and the business

of Biond Photonics, Inc.

became the business of the Company going forward.

Accordingly, at the closing, the Company ceased to be a shell

develop novel optoelectronic devices for sensing and communications applications.

Aeluma has pioneered a technique to manufacture devices

using high performance compound semiconductor materials on large diameter silicon wafers that are commonly used to manufacture mass market

microelectronics.

This enables cost effective manufacturing of high performance photodetector array circuits for imaging applications

in mobile devices.

These devices may be used as image sensors that generate an image by detecting light, in a manner similar to a digital

camera taking a picture.

Our devices may incorporate additional functionality and enhanced performance to enable 3D image capture when

integrated into various system architectures.

This technology has the potential to greatly enhance the performance and capability of

camera image sensors, LiDAR, augmented reality, facial recognition, and other applications.

Aeluma has acquired a key piece of manufacturing

equipment and has headquarters in Goleta, CA with a manufacturing cleanroom to house this equipment.

Private Placement Offering

following the Merger, we sold 3,482,500 shares of our common stock pursuant to an initial closing of a private placement offering at

a purchase price of $2.00 per share.

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.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations.

The following discussion of our financial

condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included

elsewhere in this filing.

You should read the following discussion and

analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes

and other financial information included in this report.

Some of the information contained in this discussion and analysis or set forth

elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements

that involve risks and uncertainties as described under the heading “Forward-Looking Statements” elsewhere in this report.

You should review the disclosure under the heading “Risk Factors” in other filings we make with the SEC for a discussion

of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking

statements contained in the following discussion and analysis.

On June 22, 2021, we, Acquisition Sub and Biond

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

Pursuant to the terms

of the Merger Agreement, on June 22, 2021, Biond Photonics merged with and into Acquisition Sub, with Acquisition Sub continuing as the

surviving corporation and our wholly owned subsidiary.

As a result of the Merger, we acquired the business

of Biond Photonics, a California corporation, doing business as Aeluma.

See “ Description of Business ” above .

At the time the certificates of merger reflecting the Merger were filed with the Secretaries of State of California and Delaware,

each of Biond Photonics’ shares of capital stock issued and outstanding immediately prior to the closing of the Merger was converted

into the right to receive (a) 1.299135853 shares of our common stock (the “Common Share Conversion Ratio”), with the maximum

number of shares of our common stock issuable 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 effectiveness of the Merger, an aggregate of 2,500,000 shares

of our common stock owned by the stockholders of Parc Investments, Inc.

prior to the Merger were forfeited and cancelled (the “Stock

Forfeiture”).

The issuance of shares of our common stock to

Biond Photonics’ former security holders are collectively referred to as the “Share Conversion.”

The Merger Agreement contained customary representations

and warranties and pre- and post-closing covenants of each party and customary closing conditions.

As a condition to the Merger, we entered into

an indemnity agreement with our former officer and directors (the “Pre-Merger Indemnity Agreement”), pursuant to which we

agreed to indemnify such former officer and directors for actions taken by them in their official capacities relating to the consideration,

approval and consummation of the Merger and certain related transactions.

The Merger was treated as a recapitalization

and reverse acquisition for us for financial reporting purposes.

Biond Photonics is considered the acquirer for accounting purposes,

and our historical financial statements before the Merger were replaced with the historical financial statements of Biond Photonics before

the Merger in filings with the SEC.

The Merger is intended to be treated as a tax-free reorganization under Section 368(a) of the Internal

Revenue Code of 1986, as amended.

The issuance of securities pursuant to the Share

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.

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.

Prior to the Merger, our sole business purpose

was to seek the acquisition of or merger with, an existing company.

As a result of the consummation of the Merger,

on June 22, 2021, Biond Photonics, Inc.

became our wholly owned subsidiary and the business of Biond Photonics, Inc.

became our business

going forward.

Accordingly, at the closing, we ceased to be a shell company.

Aeluma develops novel optoelectronic devices

for sensing and communications applications.

Aeluma has pioneered a technique to manufacture devices using high performance compound

semiconductor materials on large diameter silicon wafers that are commonly used to manufacture mass market microelectronics.

cost effective manufacturing of high-performance photodetector array circuits for imaging applications in mobile devices.

These devices

may be used as image sensors that generate an image by detecting light, in a manner similar to a digital camera taking a picture.

devices may incorporate additional functionality and enhanced performance to enable 3D image capture when integrated into various system

architectures.

This technology has the potential to greatly enhance the performance and capability of camera image sensors, Lidar, augmented

reality, facial recognition, and other applications.

Aeluma has acquired a key piece of manufacturing equipment and has headquarter in

Goleta, California with a manufacturing cleanroom to house this equipment.

The Private Placement Following the Merger

Immediately following the Merger, we sold 3,482,500

shares of our common stock pursuant to an initial closing of a private placement offering at a purchase price of $2.00 per share (the

“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 closing on July 1, 2021 for an additional 115,000.

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

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

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

The aggregate gross proceeds from the three closings

of the Offering were $8,000,000 (before deducting placement agent fees and expenses of the Offering).

three closings of the Offering were 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,

of the Merger Offering were $8,000,000 (before deducting placement agent fees and expenses of the Merger Offering).

The three closings of the Merger Offering were

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

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

and was conducted on a “reasonable best efforts” basis.

connection with the Offering and subject to the closing of the Offering, we agreed to pay the placement agent, GP Nurmenkari Inc.

“Placement Agent”), a U.S.

registered broker-dealer, a cash placement fee of 10% of the gross proceeds raised from investors

in the Offering (other than the first $630,000 of common stock sold to pre-Merger Biond Photonics shareholders and their friends and

family, for which the Placement Agent received a 3% cash fee, and $170,000 of common stock sold to pre-Merger Biond Photonics friends

and family for which the Placement Agent received no cash fee) and to issue to it 50,000 shares of our common stock and warrants to purchase

a number of shares of our common stock equal to 10% of the number of shares of common stock sold in the Offering (other than the first

$800,000 of common stock sold to pre-Merger Biond Photonics shareholders and their friends and family), with a term of five years and

an exercise price of $2.00 per share (the “Placement Agent Warrants”).

We also agreed to pay certain expenses of the Placement

Agent in connection with the Offering.

of the foregoing, we paid the Placement Agent an aggregate commission of $725,900 during the six months ended June 30, 2021 and issued

to it 50,000 shares of our common stock and Placement Agent Warrants to purchase 348,500 shares of our common stock

in connection with the Offering during the six months ended June 30, 2021.

We have also reimbursed the Placement Agent and paid for legal

fees totaling $233,605 out of the proceeds from the capital raise in connection with the Offering.

A note payable

to an officer of Parc Investments, Inc.

in the amount of $50,000 was repaid directly from the proceeds from the Offering.

The aggregate gross proceeds from the Offering

during the twelve months ended June 30, 2022 were $206,930, which is net of offering placement agent fees and expenses of $23,070.

also paid additional offering costs totaling $45,000 during the twelve months ended June 30, 2022.

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.

of Operations

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

In connection with the Merger Offering and subject

to the closing of the Merger Offering, we agreed to pay the placement agent, GP Nurmenkari Inc.

(the “Placement Agent”),

registered broker-dealer, a cash placement fee of 10% of the gross proceeds raised from investors in the Merger Offering (other

than the first $630,000 of common stock sold to pre-Merger Biond Photonics shareholders and their friends and family, for which the Placement

Agent received a 3% cash fee, and $170,000 of common stock sold to pre-Merger Biond Photonics friends and family for which the Placement

Agent received no cash fee) and to issue to it 50,000 shares of our common stock and warrants to purchase a number of shares of our common

stock equal to 10% of the number of shares of common stock sold in the Merger Offering (other than the first $800,000 of common stock

sold to pre-Merger Biond Photonics shareholders and their friends and family), with a term of five years and an exercise price of $2.00

per share (the “Placement Agent Warrants”).

We also agreed to pay certain expenses of the Placement Agent in connection with

the Merger Offering.

As a result of the foregoing, we paid the Placement

Agent an aggregate commission of $748,900 and issued to it 50,000 shares of our common stock and Placement Agent Warrants to purchase

360,000 shares of our common stock in connection with the two closings of the Merger Offering.

We have also reimbursed the Placement

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

A note payable to an officer of Parc Investments,

in the amount of $50,000 was repaid directly from the proceeds from the Merger 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.

Recent Private Placement

Between December 2022 and May 2023, we entered

into subscription agreements (the “Subscription Agreement”) with certain accredited investors, pursuant to which we issued

an aggregate of 2,017,498 shares of our common stock, par value $0.0001 per share, at a per share purchase price of $3.00, for aggregate

gross proceeds of $6,052,500 (the “Offering”).

In connection with the Subscription Agreement,

we also entered into a Registration Rights Agreement with the Investors, pursuant to which we agreed to register all of the shares of

common stock issued in the Offering, including the shares of common stock underlying the warrant issued to the placement agent in this

registration statement.

(See, Description of Securities – Registration Rights Agreement)

Pursuant to the Offering, we paid a cash placement

agent fee and expenses in the amount of $411,015 and issued placement agent warrants (“Placement Agent Warrants”) to purchase

up to an aggregate of 85,653 shares of common stock at an exercise price of $3.00 per share.

The Subscription Agreement also contains customary

representation and warranties of us and the Investors, indemnification obligations of us, termination provisions, and other obligations

and rights of the parties.

The foregoing description of the Subscription

Agreement, Registration Rights Agreement and form of Placement Agent Warrants is qualified by reference to the full text of the forms

of Subscription Agreement, Registration Rights Agreement and form of Placement Agent Warrants, which are filed as Exhibits hereto and

incorporated herein by reference.

Departure and Appointment of Directors and Officers

Our board of directors is authorized to have

five members.

As of the effectiveness of the Merger, Mr.

Ian Jacobs and Mr.

Mark Tompkins resigned from our board of directors, and Mr.

Jonathan Klamkin, Mr.

Lee McCarthy and Mr.

Steven DenBaars were appointed to our board of directors.

DenBaars is a Class I director.

Also, as of the effectiveness of the Merger,

Jacobs resigned from all officer positions with us, and Jonathan Klamkin was appointed as our President and Chief Executive Officer,

Lee McCarthy was appointed as our interim Chief Financial Officer and Chief Operating Officer.

McCarthy resigned from his position as interim

Chief Financial Officer on August 18, 2021 and from his directorship on December 1, 2021.

McCarthy’s vacancy on the

board, we appointed Ms.

Mehta is a Class II director.

On December 1, 2021, we also appointed Mr.

Paglia to the board of directors;

Paglia is a Class I director.

On November 8, 2022, Lee McCarthy provided notice

of his resignation as our Chief Operating Officer effective November 17, 2022.

McCarthy’s decision to resign was not the

result of any disagreements with us on any matter related to the operations, policies, or practices of us.

Plan of Operations

We have been developing our materials and characterization

capabilities at our headquarters in Goleta, California, 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

6 unchanged sentences

equipment vendors.

The COVID-19 pandemic has adversely disrupted, and may further disrupt, the operations at certain of our suppliers

and other third-party providers.

Lead times for certain materials and parts ordered have been longer than anticipated and on-site support

for equipment maintenance has been challenging to schedule.

Spare parts have been procured to minimize disruption to our development.

The rapid prototyping facility that we access for development was closed for a brief period of time at the start of the COVID-19 pandemic.

It has been open for unlimited access since Aeluma has first gained access.

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, and development of trade secrets and manufacturing process recipes.

We will continue

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

Operating History

cannot guarantee that the proceeds from the Offering will be sufficient to carry out all of our business plans.

Our business is subject

to risks inherent in growing an enterprise, including limited capital resources, risks inherent in the research and development process

and possible rejection of our products in development.

financing is not available on satisfactory terms, we may be unable to carry out all of our operations.

Equity financing will result in

dilution to existing stockholders.

of Fiscal Year

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, effective immediately.

Accordingly, we filed a Transition Report on Form 10-K/T on September

27, 2021, to include audited consolidated financial information for the transition period from January 1, 2021 through June 30, 2021.

of Operations

months ended June 30, 2022, the six months ended June 30, 2021, and twelve months ended December 31, 2020

results of operations for the twelve months ended June 30, 2022, as compared to the six months ended June 30, 2021, and twelve months

ended December 31, 2020, were as follows (some of the balances on the prior period’s combined financials statements have been reclassified

to conform to the current period presentation):

Twelve Months

Six Months Ended

Twelve Months

Change ’22 vs.

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 financings.

We have also leveraged funds to continue strengthening our intellectual property including patent applications, trademarks, and development

of trade secrets and manufacturing process recipes.

We will continue to develop our manufacturing and product development strategy by

further engaging customers and strategic partners.

Limited Operating History

We cannot guarantee that the proceeds from the

Offering will be sufficient to carry out all of our business plans.

Our business is subject to risks inherent in growing an enterprise,

including limited capital resources, risks inherent in the research and development process and possible rejection of our products in

If financing is not available on satisfactory

terms, we may be unable to carry out all of our operations.

Equity financing will result in dilution to existing stockholders.

Components of Results of Operations

Our revenue currently consists of commercial

product sales and government contracts.

For the year ended June 30, 2023, products are sold as samples and government contracts are primarily

for research and development.

Operating Expenses

Loss before provision for income tax

Provision for income tax

The cost of revenue consists of costs of materials,

as well as direct compensation and expenses incurred to provide deliverables that resulted in payment of our success fee and wafers delivered.

We anticipate that our cost of revenue will vary substantially depending on the nature of products and/or services delivered in each

customer engagement.

Research and development

expenses consist primarily of compensation and related costs for personnel, including stock-based compensation and employee benefits

as well as costs associated with design, fabrication, packaging and testing of our devices.

We expense research and development expenses

General and administrative expenses consist primarily

of compensation and related costs for personnel, including stock-based compensation and employee benefits.

In addition, general

and administrative expenses include third-party consulting, legal, audit and accounting services.

Facility expenses consist primarily of lease

and utility expenses at our headquarters in Goleta, California and insurance expenses consist mainly of directors and officers insurance.

Other income, net of other expenses, consists

primarily of income generated from subleasing a portion of our research and development facility.

Income Tax Expense

Income tax expense consists primarily of

income taxes in certain state jurisdictions in which we conduct business.

Results of Operations

Year ended June 30, 2023 compared to the

year ended June 30, 2022

Our results of operations for the year ended

June 30, 2023, as compared to the same period of 2022, were as follows (some of the balances on the prior period’s combined financials

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

Year Ended June 30,

Operating expenses

Loss before income tax expense

Income tax expense

$ (5,379,582 )

1 unchanged sentence

$ (1,927,883 )

We are pre-revenue and, accordingly recorded no revenues for the twelve months ended June 30, 2022, the six months ended

June 30, 2021, or the twelve months ended December 31, 2020.

During the twelve months ended June 30, 2022, the six months ended June 30, 2021, and the twelve months ended December

31, 2020, we incurred $3,733,522, $255,853 and $11,670 of operating expenses, respectively.

This increase was due to the start-up of

operations and stock compensation expenses related to advisor and consulting agreements.

rental income and other income :

During the twelve months ended June 30, 2022, the six months ended June 30, 2021, and the twelve

months ended December 31, 2020, the company recorded $281,823, $39,450, and $1,000 of rental and other income, respectively.

over year increases were due to the rental of our new facility and a related sub-lease to our tenant.

for income tax :

The Company recorded no provision for income tax for the twelve months ended June 30, 2022, $800 for the six months

ended June 30, 2021, and the twelve months ended December 31, 2020.

Net loss increased to $3,451,699 for the twelve months ended June 30, 2022, as compared to $217,203 for the six months ending

June 30, 2021 and $13,470 for the twelve months ended December 31, 2020.

The year over year increase was due to the start-up of operations

and stock-based compensation expenses related to advisor and consulting agreements.

Resources and Liquidity

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.

As presented in the financial statements, we incurred a net loss of $3,451,699, $217,203

and $13,470 for the twelve months ended June 30, 2022, the six months ended June 30, 2021 and the twelve months ended December 31, 2020,

respectively, and losses are expected to continue in the near term.

The company recognized its first

revenue of $193,339, consisting of $15,000 from product sales and $178,339 from a government contract.

Operating Expenses :

During the years ended

June 30, 2023 and 2022, we incurred operating expenses of $5,703,024 and $3,733,522, respectively.

This increase was mainly due to increased

salaries and stock-based compensation resulting from additional employees hired to support our growth and increased costs related to

research and development activities.

Other income :

During the years ended June

30, 2023 and 2022, we recorded other income of $130,103 and $281,823, respectively.

The decrease was primarily due to a decrease in sub-lease

rental income.

The sub-lease ended in March 2023.

Income tax expense :

We recorded no income

tax expense for the years ended June 30, 2023 and 2022.

Net loss increased to $5,379,582

for the year ended June 30, 2023, as compared to $3,451,699 for the same period of 2022.

The increase was primarily due to increases

in operating expenses resulting increased salaries and stock-based compensation, and research and development activities.

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

As presented in the financial statements, we incurred a net loss of $5,379,582 and $3,451,699 for the years ended June 30,

2023 and 2022, respectively, and losses are expected to continue in the near term.

The accumulated deficit was $9,062,066 at June 30,

been funding our operations through private loans and the sale of common stock in private placement transactions.

Refer to Notes 4 through

6 in the financial statements for our discussion of notes payable and shares issued.

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 operations.

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 June 30, 2023, we had $5,071,690 of cash on hand.

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.

has undertaken steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and

These steps include (a) raising additional capital and/or obtaining financing;

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 to improve operations with the goal of sustaining our operations for the next twelve months and beyond.

These steps include (a)

raising additional capital and/or obtaining financing;

(b) controlling overhead and expenses;

executing material sales or research contracts.

There can be no assurance that the Company can successfully accomplish these steps and

it is uncertain that the Company will achieve a profitable level of operations and obtain additional financing.

There can be no assurance

that any additional financing will be available to the Company on satisfactory terms and conditions, if at all.

As of the date of this

Report, we have not entered into any formal agreements regarding the above.

the event the Company is unable to continue as a going concern, the Company may elect or be required to seek protection from its creditors

by filing a voluntary petition in bankruptcy or may be subject to an involuntary petition in bankruptcy.

To date, management has not

considered this alternative, nor does management view it as a likely occurrence.

total current assets, total assets, total current liabilities and total liabilities as of June 30, 2022, June 30, 2021 and December 31,

2020, were as follows:

had working capital (deficit) of $4,058,409, $7,185,135 and ($109,607) at June 30, 2022, June 30, 2021 and December 31, 2020, respectively.

Current assets decreased $3,041,387 to $4,430,848 at June 30, 2022 from $7,472,235 at June 30, 2021, primarily due to $3,451,699 net

loss for the twelve months ended June 30, 2022.

Current assets increased $7,433,933 to $7,472,235 at June 30, 2021 from $38,302 at December

31, 2020, primarily as a result of the private placement described above.

Current liabilities increased $85,339 to $372,439 at June 30,

2022 from $287,100 at June 30, 2021, due to increases in accounts payable and accrued expenses.

Current liabilities increased $139,191

to $287,100 at June 30, 2021 from $147,909 at December 31, 2020, primarily as a result of the facility lease agreement the Company entered

Twelve Months Ended

Six Months Ended

Twelve Months Ended

Change ’22 vs.

and (c) executing material sales or research

There can be no assurance that we can successfully accomplish these steps and it is uncertain that we will achieve a profitable

level of operations and obtain additional financing.

There can be no assurance that any additional financing will be available to us

on satisfactory terms and conditions, if at all.

As of the date of this Report, we have not entered into any formal agreements regarding

In the event we are unable to continue as a going

concern, the Company may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may

be subject to an involuntary petition in bankruptcy.

To date, management has not considered this alternative, nor does management view

it as a likely occurrence.

We had working capital of $4,576,807 and $4,058,409

at June 30, 2023 and 2022, respectively.

Current assets increased $903,058 to $5,333,906 at June 30, 2023 from $4,430,848 at June 30,

2022, primarily due to the private placement described above.

Current liabilities increased $384,660 to $757,099 at June 30, 2023 from

$372,439 at June 30, 2022, due to increases in accounts payable.

The following table shows a summary of our cash

flows for the periods presented:

Year Ended June 30,

Net cash (used in) provided by:

5 unchanged sentences

Financing activities

Decrease in cash

$ (3,046,528 )

$ (9,795,476 )

Increase (decrease) in cash

$ (3,046,528 )

cash used in our operating activities were $2,252,791, $68,394 and $1,377 for the twelve months ended June 30, 2022, the six months ended

June 30, 2021 and the twelve months ended December 31, 2020, respectively, primarily due to net losses of $3,451,699, $217,203 and $13,470

for the twelve months ended June 30, 2022, the six months ended June 30, 2021 and the twelve months ended December 31, 2020, respectively,

cash used in our investing activities were $955,667, $27,253 and $106,228 for the twelve months ended June 30, 2022, the six months ended

June 30, 2021 and the twelve months ended December 31, 2020, respectively.

Investing activity for the periods presented related to the

setup of our new facility.

financing activities resulted in a cash inflow of $161,930, $6,844,595 and $145,701 for the twelve months ended June 30, 2022, the six

months ended June 30, 2021 and the twelve months ended December 31, 2020, respectively.

Financing activities for the twelve months ended

June 30, 2022 and the six months ended June 30, 2021 are primarily from Offering described above.

Financing activities for the twelve

months ended December 31, 2020 are proceeds from advances and sale of common stock.

Accounting Pronouncements

to accounting principles are established by the FASB in the form of ASU’s to the FASB’s Codification.

We consider the applicability

and impact of all ASU’s on our consolidated financial position, results of operations, stockholders’ deficit, cash flows,

or presentation thereof.

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.

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.

other newly issued accounting pronouncements but not yet effective have been deemed either immaterial or not applicable.

Quantitative and Qualitative Disclosures About Market Risk.

Net cash used in our operating activities increased

$1,385,181 to $3,637,972 for the year ended June 30, 2023, compared to $2,252,791 for the same period in 2022, primarily due to a $1,927,883

increase in net loss.

The decrease was reduced mainly by non-cash expense increases of $258,000 in consultant expense, $244,433 in stock-based

compensation expense, and $302,172 in accounts payable.

Net cash used in our investing activities were

$672,545 and $955,667 for the years ended June 30, 2023 and 2022, respectively.

Investing activities for the periods presented are related

to the equipment purchases and the setup of our facility.

Our financing activities resulted in a cash inflow

of $5,641,485 and 161,930 for the years ended June 30, 2023 and 2022, respectively.

Financing activities for the periods presented are

proceeds from the sale of common stock in private placements.

Recent Accounting Pronouncements

The Company has evaluated all issued but not yet effective accounting

pronouncements and determined that they are either immaterial or not relevant to the Company.

Quantitative and Qualitative Disclosures About Market

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-K

Item 7. Management’s Discussion and Analysis