UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

~~1934~~ For The Quarterly Period Ended ~~September 30, 2021~~March 31, 2022

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

For the transition period from ~~________~~to

Commission File No. 001-41096

AeroClean Technologies, Inc.

(Exact name of ~~registrant~~Registrant as ~~specified~~Specified in ~~its charter)~~Its Charter)

~~Delaware~~	~~45-3213164~~
Delaware	45-3213164

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

10455 Riverside ~~Dr.~~Dr.

Palm Beach Gardens, FL33410

~~833-652-5326~~833-652-5326

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

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


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

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

☐

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

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


Large accelerated filer	¨ o	Accelerated filer¨	o

Non-accelerated filer	x ☒	Smaller reporting companyx	☒

		Emerging growth companyx	☒

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

☐

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

☒

The registrant has one class of common stock, $0.01 par value, of which 13,877,636 shares were outstanding as of ~~January 5,~~May 10, 2022.

Table of Contents

AEROCLEAN TECHNOLOGIES, ~~LLC~~
INC.

CONDENSED BALANCE SHEETS

September 30, 2021 December 31, 2020
(Unaudited)
ASSETS
Current assets:
Cash $ 655,780 $ 2,333,117
Accounts receivable 201,801
Prepaid expenses and other current assets 135,236 304,836
Subscription receivable - 100,543
Inventories 247,041 -
Total current assets 1,239,858 2,738,496
Property and equipment, net 2,284,418 454,679
Deferred offering costs 939,741 -
Other assets 21,667 -
Total assets $ 4,485,684 $ 3,193,175

LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable $ 769,739 $ 332,072
Accrued expenses and other current liabilities 872,808 333,236
Loan from related party 500,000 -
Total current liabilities 2,142,547 665,308
Commitments and contingencies (Note 7)
Members' equity 2,343,137 2,527,867
Total liabilities and members' equity $ 4,485,684 $ 3,193,175

~~See accompanying notes to unaudited condensed financial statements.~~

~~AEROCLEAN TECHNOLOGIES, LLC~~
~~CONDENSED STATEMENTS OF OPERATIONS~~

~~(Unaudited)~~

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Product revenues $ 261,299 $ - $ 261,299 $ -
Cost of sales 147,733 - 147,733 -
Gross profit 113,566 - 113,566 -
Operating Expenses:
General and administrative 685,079 484,442 2,678,689 625,812
Research and development 956,499 812,950 3,617,101 1,057,265
Total operating expenses 1,641,578 1,297,392 6,295,790 1,683,077
Net loss $ (1,528,012 ) $ (1,297,392 ) $ (6,182,224 ) $ (1,683,077 )
Net loss per share:
Basic and diluted $ (0.13 ) $ (0.36 ) $ (0.61 ) $ (0.67 )
Weighted-average common shares outstanding:
Basic and diluted 11,363,636 3,557,114 10,135,506 2,506,780

~~See accompanying notes to unaudited condensed financial statements.~~

~~AEROCLEAN TECHNOLOGIES, LLC~~

~~CONDENSED STATEMENTS OF CHANGES IN MEMBERS’ EQUITY (DEFICIT)~~


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

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	436,367	$	927,194
Accrued expenses and other current liabilities		811,283		583,885
Total current liabilities		1,247,650		1,511,079
Long-term liabilities:
Deferred tax liability		408,480		501,254
Total liabilities		1,656,130		2,012,333
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preference Shares, $0.01 par value; 11,000,000 shares authorized; NaN issued and outstanding		—		—
Common stock, $.01 par value per share; 110,000,000 shares authorized; 13,877,636 issued and outstanding as of March 31, 2022 and December 31, 2021		138,776		138,776
Additional paid-in capital		23,990,337		23,319,499
Accumulated deficit		(4,325,824)		(1,747,860)
Total stockholders' equity		19,803,289		21,710,415
Total liabilities and stockholders' equity	$	21,459,419	$	23,722,748

~~(Unaudited)~~

~~THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021:~~

Class A Accumulated Total Members'
Units Amount Deficit Equity
Balance, June 30, 2021 13,428,948 $ 16,748,768 $ (12,877,619 ) $ 3,871,149
Issuance of equity units - - - -
Net loss - - (1,528,012 ) (1,528,012 )
Balance, September 30, 2021 13,428,948 $ 16,748,768 $ (14,405,631 ) $ 2,343,137

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

~~THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020:~~

Class A Accumulated Total Members'
Units Amount Deficit Equity
Balance, June 30, 2020 4,000,000 $ 6,669,696 $ (5,286,011 ) $ 1,383,685
Issuance of equity units 2,081,578 2,081,578 - 2,081,578
Net loss - - (1,297,392 ) (1,297,392 )
Balance, September 30, 2020 6,081,578 $ 8,751,274 $ (6,583,403 ) $ 2,167,871

Class A Accumulated Total Members'
Units Amount Deficit Equity (Deficit)
Balance, December 31, 2019 2,000,000 $ 4,669,696 $ (4,900,326 ) $ (230,630 )
Issuance of equity units 4,081,578 4,081,578 - 4,081,578
Net loss - - (1,683,077 ) (1,683,077 )
Balance, September 30, 2020 6,081,578 $ 8,751,274 $ (6,583,403 ) $ 2,167,871

See accompanying notes to unaudited condensed financial statements.

Table of Contents

AEROCLEAN TECHNOLOGIES, ~~LLC~~INC.

CONDENSED STATEMENTS OF ~~CASH FLOWS~~OPERATIONS

(Unaudited)

Three Months Ended

March 31,

2022

2021
Product revenues

$
6,733

$
—
Cost of sales

3,764

—
Gross profit

2,969

—
Operating expenses:

Selling, general and administrative

1,471,386

380,002
Stock-based compensation

670,838

—
Research and development

531,483

1,589,690
Total operating expenses

2,673,707

1,969,692
Loss before income tax benefit

(2,670,738)

(1,969,692)
Income tax benefit

92,774

—
Net loss

$
(2,577,964)

$
(1,969,692)
Net loss per share:

Basic and diluted

$
(0.19)

$
(0.26)
Weighted-average common shares outstanding:

Basic and diluted

13,877,636

7,601,859
~~(Unaudited)~~
Nine Months Ended September 30,
2021 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (6,182,224 ) $ (1,683,077 )
Adjustments to reconcile net loss to net cash flows used in operating activities
Depreciation and amortization 43,818 -
Equity-based compensation 924,438 62,359
Changes in operating assets and liabilities:
Accounts receivable (201,801 ) -
Inventories (247,041 ) -
Other current and non-current assets (791,808 ) (133,077 )
Accounts payable 390,948 285,777
Accrued expenses and other current liabilities 539,572 212,569
Due to related parties - (25,000 )
Net cash flows used in operating activities (5,524,098 ) (1,280,449 )

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (1,826,838 ) (363,200 )
Net cash flows used in investing activities (1,826,838 ) (363,200 )

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of equity units 5,173,599 3,957,519
Proceeds from loan from related party 500,000 -
Net cash flows provided by financing activities 5,673,599 3,957,519
Net increase in cash (1,677,337 ) 2,313,870
Cash, beginning of period 2,333,117 796
Cash, end of period $ 655,780 $ 2,314,666

Supplemental schedule of non-cash activities:
Equity units issued to related party $ - $ 61,700
Purchases of property and equipment in accounts payable 46,716 -

See accompanying notes to unaudited condensed financial statements.

Table of Contents

AEROCLEAN TECHNOLOGIES, ~~LLC~~INC.
CONDENSED STATEMENTS OF CHANGES IN MEMBERS’/STOCKHOLDERS’ EQUITY
(Unaudited)
THREE MONTHS ENDED MARCH 31, 2022:

Class A

Common Stock

Additional Paid-in

Accumulated

Total


Units

Amount

Shares

Amount

Capital

Deficit

Stockholders’ Equity
Balance, December 31, 2021

—

$
—

13,877,636

$
138,776

$
23,319,499

$
(1,747,860)

$
21,710,415
Stock-based compensation

—

—

—

670,838

—

670,838
Net loss

—

—

—

—

(2,577,964)

(2,577,964)
Balance, March 31, 2022

—

$
—

13,877,636

$
138,776

$
23,990,337

$
(4,325,824)

$
19,803,289

THREE MONTHS ENDED MARCH 31, 2021:

Class A

Common Stock

Additional Paid-in

Accumulated

Total Members’


Units

Amount

Shares

Amount

Capital

Deficit

Equity
Balance, December 31, 2020

8,081,578

$
10,751,274

—

—

—

$
(8,223,407)

$
2,527,867
Issuance of equity units

5,073,058

5,073,056

—

—

—

—

5,073,056
Net loss

—

—

—

—

—

(1,969,692)

(1,969,692)
Balance, March 31, 2021

13,154,636

$
15,824,330

—

—

—

$
(10,193,099)

$
5,631,231

See accompanying notes to unaudited condensed financial statements.

Table of Contents

AEROCLEAN TECHNOLOGIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended

March 31,


2022

2021
CASH FLOWS FROM OPERATING ACTIVITIES:




Net loss

$
(2,577,964)

$
(1,969,692)
Adjustments to reconcile net loss to net cash flows used in operating activities



Deferred tax benefit

(92,774)

—
Depreciation and amortization

35,827

—
Equity-based compensation

670,838

—
Changes in operating assets and liabilities:




Accounts receivable

170,879

—
Inventories

(72,824)

(11,658)
Other current and non-current assets

301,970

(15,025)
Accounts payable

(490,827)

162,018
Accrued expenses and other liabilities

227,398

11,802
Subscription receivable

—

100,543
Net cash flows used in operating activities

(1,827,477)

(1,722,012)

CASH FLOWS FROM INVESTING ACTIVITIES:




Purchases of property and equipment

(28,075)

(1,048,813)
Net cash flows used in investing activities

(28,075)

(1,048,813)

CASH FLOWS FROM FINANCING ACTIVITIES:




Proceeds from issuance of equity units

—

4,973,058
Net cash flows provided by financing activities

—

4,973,058
Net (decrease) increase in cash

(1,855,552)

2,202,233
Cash, beginning of period

19,629,649

2,333,117
Cash, end of period

$
17,774,097

$
4,535,350

Supplemental schedule of non-cash activities:

Subscription receivable

$
—

$
100,000

See accompanying notes to unaudited condensed financial statements.

Table of Contents

AEROCLEAN TECHNOLOGIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
~~(Unaudited)~~
1. ~~Description of Business~~

1.Description of Business

Description of Business

AeroClean Technologies, Inc. (“AeroClean” or the “Company”) was initially formed as CleanCo Bioscience Group LLC (“CBG”) in the State of Florida on September 2, 2011. Subsequent to its formation, CBG established a team of scientists, engineers and medical experts to provide solutions for the challenges posed by harmful airborne pathogens and resultant hospital acquired infections. On September 15, 2020, CBG converted into AeroClean Technologies, LLC as a Delaware limited liability company and is headquartered in Palm Beach Gardens, Florida. On November 23, 2021, AeroClean Technologies, LLC incorporated in the state of Delaware as AeroClean Technologies, Inc. See Note 3, Public Offering for a discussion of the Company’s recent initial public ~~offering.~~offering (the “Public Offering”). AeroClean is an interior space air purification technology company with an immediate objective of initiating full-scale commercialization of its high-performance interior air sterilization and disinfection products for the eradication of coronavirus and other harmful airborne pathogens. AeroClean was established to develop technology-driven, medical-grade air purification solutions for hospitals and other healthcare settings.

~~Going Concern~~Liquidity and ~~Liquidity Analysis~~Capital Resources

The provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic ~~205-40,~~ 205 40, Presentation of Financial Statements — Going Concern (ASC ~~205-40)~~205 40) require management to assess an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. In each reporting period (including interim periods), an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date. Substantial doubt about an entity’s ability to continue as a going concern exists when conditions and events, considered in the aggregate, indicate it is probable the entity will be unable to meet its financial obligations as they become due within one year after the date the financial statements are issued.

~~For the year ended December 31, 2020, the~~The Company incurred a net loss of ~~$3,323,081 and accumulated deficit of $8,223,407 and net cash used in operating activities was $3,069,976. The Company incurred net losses of $6,182,224~~$2,577,964 during the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 and had working capital of $18,074,427 and an accumulated deficit of ~~$902,689 and $14,405,631, respectively,~~$4,325,824 at ~~September 30, 2021.~~March 31, 2022. The Company’s net cash used in operating activities was ~~$5,524,098~~$1,827,477 for the ~~nine~~three months ended ~~September 30,~~March 31, 2022. For the three months ended March 31, 2021, the Company incurred a net loss of $1,969,692, and net cash used in operating activities was $1,722,012 for the three months ended March 31, 2021. ~~These factors raised substantial doubt about the Company’s ability to continue as a going concern. However, the~~The Company is an early-stage company and has begun generating revenues through the commercial production and sale of its Pūrgo air purification device. The Company first shipped units to customers in July 2021 and generated cumulative revenues of ~~$261,299~~$623,244 through ~~September 30, 2021.~~

March 31, 2022.

The Company’s ability to fund its operations is dependent upon management’s plans, which include generating sufficient revenues and controlling the Company’s expenses. A failure to generate sufficient revenues or control expenses, among other factors, will adversely impact the Company’s ability to meet its financial obligations as they become due and payable and to achieve its intended business objectives. ~~However, substantial doubt about the Company’s ability to continue as a going concern has been alleviated through an initial public offering (the “Public Offering”).~~ On November 29, 2021, the Company completed the Public Offering resulting in aggregate gross proceeds of $25,140,000 and net proceeds of ~~$22,000,000~~$21,640,000 after deducting underwriting fees and closing costs of approximately ~~$3,100,000.~~$3,500,000. See Note 3, Public Offering. The accumulated deficit from the inception of the Company through ~~September 30, 2021~~March 31, 2022 is substantially less than the amount raised through the Public Offering. Further, the Company’s investment into research and development, engineering and other product development costs has been decreasing following the product launch, and as discussed, the Company is now generating revenues and margins from the sale of its Pūrgo device. Operating costs associated with revenue generation can also be managed as the Company increases revenues. ~~Accordingly,~~

Based on the available cash balance and management’s plans as described above, management believes that it has ~~concluded there is no longer a substantial doubt as~~the ability to fund the Company’s ~~ability to continue as a going concern within~~operations for one year after the ~~date the~~ financial statements are ~~issued based on the Company’s operating history and outlook.~~issued.

Table of Contents

~~AEROCLEAN TECHNOLOGIES, LLC~~
~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~1.Description of Business (Continued)

~~(Unaudited)~~

~~Description of Business (Continued)~~

COVID-19 Pandemic

The Company continues to monitor the ~~outbreak of~~ongoing COVID-19 ~~and its variants,~~pandemic, including the ~~most recent Omicron~~emergence of variant strains, which continue to spread throughout the world and have adversely ~~impact~~impacted global commercial activity and ~~contribute~~contributed to significant declines and volatility in financial markets. The Company’s on-going research and development activities, including development of product prototypes and manufacturing activities, are all conducted in the United States, and as a result, the Company has been able to mitigate the adverse impact of the COVID-19 pandemic on its global supply chain. During ~~2020 and through~~ the ~~date these financial statements were available to be issued,~~year ended December 31, 2021, the Company ~~has~~did not ~~experienced~~experience any significant adverse impact on its operations as a result of the COVID-19 pandemic. However, across many industries, including the Company’s, COVID-19 - among other factors - has negatively impacted personnel and ~~does not expect any significant disruptions~~operations at third-party manufacturing and component part supplier facilities in the ~~near term.~~

United States and around the world. These disruptions have adversely impacted the availability and cost of raw materials and component parts. For example, various electronic components and semi-conductor chips have become increasingly difficult to source, and when available, may be subject to substantially longer lead times and higher costs than historically applicable. The continued shortages impacted the ability to manufacture units during the first quarter of 2022, the weekly and monthly production run rates the Company expected to achieve during the first quarter, and likely the run rates the Company expects to achieve for the remainder of this fiscal year. The Company does have line of sight to improvement on some long lead-time board and electronics components in the second half of 2022 but cannot predict the ever-changing global logistics and supply chain environment.

The Company continues to actively monitor the situation and may take further actions that impact operations as may be required by federal, state or local authorities or that ~~the Company determines~~we determine is in the best interests of ~~its~~our employees, customers, suppliers and stockholders. As of the date these financial statements were available to be issued, the pandemic presents uncertainty and risk as ~~the Company~~we cannot reasonably determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on its business, results of operations, liquidity or capital resources.

2.Summary of Significant Accounting Policies

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and potentially result in materially different results under different assumptions and conditions. The Company’s critical accounting policies are described in Note 2, Summary of Significant Accounting Policies, of the Company’s audited financial statements for the year ended December 31, ~~2020~~2021 included in its ~~offering circular~~Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) ~~pursuant to Rule 253(g)(1) promulgated under the Securities Act of 1933, as amended (the “Securities Act”),~~ on ~~November 24, 2021,~~April 1, 2022, except as noted below.

The Company is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to avail itself of this exemption from new or revised accounting standards and, therefore, the financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of the public company effective dates.

The Company has reviewed recent accounting pronouncements and, with the exception of the below, concluded they are either not applicable to the business, or no material effect is expected on the condensed financial statements as a result of future adoption.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses, whichwas subsequently amended by ASU No. 2018-19 and ASU No. 2019-10, and which requires the measurement of expected credit lossesfor financial instruments carried at amortized cost held at the reporting date based on historical experience, current conditions andreasonable forecasts. The updated guidance also amends the current other-than-temporary impairment model for available-for-sale debtsecurities by requiring the recognition of impairments relating to credit losses through an allowance account and limits the amount ofcredit loss to the difference between a security’s amortized cost basis and its fair value. In addition, the length of time a security hasbeen in an unrealized loss position will no longer impact the determination of whether a credit loss exists. The main objective of thisASU is to provide financial statement users with more decision-useful information about the expected credit losses on financialinstruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for thefiscal year beginning after December 15, ~~2022, or December 15, 2021 if the Company loses emerging growth company status in 2021.~~ 2022.The Company will continue to assess the possible impact of this standard, but it currently does not expect that the adoption of thisstandard will have a significant impact on its financial statements and its limited history of bad debt expense relating to trade accountsreceivable.

Table of Contents

~~AEROCLEAN TECHNOLOGIES, LLC~~
~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~2.Summary of Significant Accounting Policies (Continued)

~~(Unaudited)~~In February 2016, the FASB issued ASU 2016-02, Leases (“Topic 842”), which supersedes ASC Topic 840, Leases. Topic 842 requires lessees to recognize a lease liability and a lease asset for all leases, including operating leases, with a term greater than 12 months on its balance sheet. The update also expands the required quantitative and qualitative disclosures surrounding leases. Topic 842 will be applied using a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. In November 2019, FASB deferred the effective date for implementation of Topic 842 by one year and, in June 2020, FASB deferred the effective date by an additional year. The guidance under Topic 842 is effective for fiscal years beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Earlier adoption is permitted. The Company only has 1 operating lease in place as of March 31, 2022 related to its warehouse, distribution facility and corporate headquarters for a 10-year term. The Company’s remaining lease payments of approximately $2,610,000 will be discounted to record its lease liability using its incremental borrowing rate and to record the corresponding right of use asset.

~~Summary of Significant Accounting Policies (Continued)~~

Basis of Presentation

These unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC.

Accordingly,theydonotincludealloftheinformationandfootnotesrequiredby U.S. GAAPforcompletefinancialstatements.Thebalancesheet as of December 31, ~~2020~~2021 has been derived from audited financial statements at such date. All adjustments that, in the opinion ofthe Company’s management, are considered necessary for a fair presentation of the results of operations for the periods shown havebeen reflected in these unaudited condensed financial statements. The results of operations for the periods presented are not necessarily indicative of the results expected for the full fiscal year ~~2021~~2022 or for any future period. The information included in these unauditedcondensed financial statements should be read in conjunction with the Company’s audited financial statements and accompanying ~~notes.~~notes for the year ended December 31, 2021.

Use of Estimates

The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect thereported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Significant estimates inthese unaudited condensed financial statements include those related to the fair value of equity-based compensation, revenue recognition, the provision or benefit for income taxes and ~~management’s assessment of~~ the Company’s ability to continue as a going concern, which involves the estimation of the amount and timing of future cash inflows and outflows, specifically related to the Company’s ability to generate revenue and manage expenses. Management’s assessment of the Company’s ability to continue as a going concern involves the estimation of the amount and timing of future cash inflows and outflows.corresponding valuation allowance on deferred tax assets. On an ongoing basis, the Company evaluates its estimates, judgments and methodologies. The Company bases its estimatesonhistoricalexperienceandonvariousotherassumptionsbelievedtobe ~~reasonable. Due to the inherent uncertainty involved in making estimates, actual results could differ materially from those estimates.~~

Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported under different conditions or if different assumptions had been used. The Company evaluates its estimates and assumptions on a regular basis. The Company bases its estimates on historical experience, if applicable, and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. ~~Actual~~Due to the inherent uncertainty involved in making estimates, actual results could differ materially from ~~these estimates and assumptions used in preparation of the financial statements.~~those estimates.

Revenue Recognition

The Company recognizes revenues related to sales of products upon the customer obtaining control of promised goods, in an amount that reflects the consideration that is expected to be received in exchange for those goods. To determine revenue recognition for arrangements within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), the following five steps are performed: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. Revenue is recognized in the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. Revenues from product sales are recognized at a point in time, and revenue is recognized when title, and risk and rewards of ownership have transferred to the customer, which is generally upon shipment. In instances where title does not pass to the customer upon shipment, the Company recognizes revenue upon delivery or customer acceptance, depending on the terms of the arrangement.

~~AEROCLEAN TECHNOLOGIES, LLC~~
~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~Income Taxes

~~(Unaudited)~~Prior to the Public Offering, the Company was a limited liability company and was treated as a partnership for federal and state income tax purposes. Therefore, 0 provision for income taxes had been included in the financial statements since taxable income or loss was allocated to members, who were responsible for any taxes thereon, in accordance with the provisions of the operating agreement.

Table of Contents

On November 23, 2021 in conjunction with the Public Offering, the Company incorporated in the State of Delaware. The Company recognizes and measures its unrecognized tax benefit in accordance with FASB ASC 740, Income Taxes. The Company provides deferred income taxes for temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for income tax purposes. Deferred income taxes are computed using enacted tax rates that are expected to be in effect when the temporary differences reverse. Under that guidance, management assesses the likelihood that tax positions will be sustained upon examination based on the facts, circumstances and information available at the end of each period, including the technical merits of those positions. The measurement of unrecognized tax benefits is adjusted when new information is available or when an event occurs that requires a change. At March 31, 2022 and December 31, 2021, the Company did 0t identify any uncertain tax positions taken or expected to be taken in an income tax return that would require adjustment to, or disclosure in, its financial statements.

Research & Development Expenses

~~2. Summary~~Research and development expenses are expensed as incurred and consist principally of ~~Significant Accounting Policies (Continued)~~contract labor and third-party engineering, product development and testing costs related to the development of medical grade air purification devices and related components as well as concepts for future product development.

Share-based Payments

The Company accounts for share-based payments to employees and non-employees in accordance with the provisions of FASB ASC 718, Compensation — Stock Compensation (“ASC 718”). Under ASC 718, the Company measures the share-based compensation cost on the date of grant, based on the fair value of the award, and expense is recognized over the requisite service period. Compensation cost recognized during the three months ended March 31, 2022 related to grants of restricted stock units.

Accounts Receivable ~~Net~~

An allowance for uncollectible accounts receivable is recorded when management believes the collectability of the accounts receivable is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance is determined based on management’s review of the debtor’s ability to repay and repayment history, aging history and estimated value of collateral, if any.

Inventories

The Company values inventories at the lower of cost or net realizable value using the first-in, first-out or weighted average costmethod. Net realizable value is the estimated selling price in the ordinary course of business, less reasonable predictable costs ofcompletion,disposalandtransportation.InventoriesonhandatMarch 31,2022 and ~~transportation. Inventories on hand at September 30,~~December 31, 2021consistedprimarilyofspare ~~parts.~~parts and finished goods.

3.Public Offering

On November 29, 2021, the Company completed the Public Offering of 2,514,000 shares of its common stock, which included the partial exercise of the underwriters’ overallotment option, at a public offering price of $10.00 per share for aggregate gross proceeds of $25,140,000 and net proceeds of approximately ~~$22,000,000~~$21,640,000 after deducting underwriting fees of approximately $2,200,000 and ~~closing~~other offering costs of approximately ~~$3,100,000. Also, the~~$1,300,000. The Company issued a purchase ~~options~~option to the underwriters (“UPO”) exercisable within five years of the Public Offering for 5.0% of the shares of common stock issued, ~~as part~~or 125,700 shares of ~~the Public Offering~~common stock, at an exercise price of $12.50 per share. The Company’s common stock is listed on The Nasdaq Capital Market under the symbol ~~“AERC”.~~“AERC.” In connection with the Public Offering, on November 23, 2021, the Company converted from a Delaware limited liability company into a Delaware corporation (the “Corporate Conversion”) and changed its name to AeroClean Technologies, Inc. In connection with the Corporate Conversion, the outstanding member units of 13,428,948 were converted into 11,363,636 shares of common stock at a conversion ratio of 0.8462. The Corporate Conversion has been adjusted retroactively for the purposes of calculating basis and diluted earnings per share. The Company’s certificate of incorporation authorizes 110,000,000 shares of common stock and 11,000,000 of shares preferred stock.

4.Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets ~~consist~~consisted primarily of prepaid insurance premiums and amounts paid to suppliers and vendors for inventories and retainers for engineering, product development, testing and other services to be performed. Prepaid expenses and other current assets were ~~$135,236~~$823,028 and ~~$304,836~~$1,124,998 at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Table of Contents

Inventories

Inventories consisted of the following:


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

6.Property and Equipment

Property and equipment consisted of the following:

	Useful Life	September 30,		December 31,
	(Years)	2021		2020

						Useful Life	March 31,		December 31,
						(Years)	2022		2021
Leasehold improvements	Lesser of useful life or lease term	$	847,217	$	-	Lesser of useful life or lease term	$	847,217	$	847,217
Machinery and tooling	7		1,249,031		454,679	7		1,145,541		1,123,391
Furniture and equipment	3 - 10		231,988		-	3 - 10		238,390		232,466
			2,328,236		454,679
								2,231,148		2,203,074
Less accumulated depreciation			43,818		-			115,473		79,646
		$	2,284,418	$	454,679
							$	2,115,675	$	2,123,428

Property and equipment are stated at cost and depreciated generally under the straight-line method over their estimated useful lives (or the lesser of the term of the lease for leasehold improvements, as appropriate), except for tooling, which is depreciated utilizing the units-of-production method. Depreciation expense was ~~$35,842 and $0 and $43,818 and $0~~$35,827 for the three ~~and nine~~ months ended ~~September 30, 2021 and 2020, respectively.~~March 31, 2022. There was 0 depreciation expense for three months ended March 31, 2021.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of:

	September 30,		December 31,
	2021		2020

					March 31,		December 31,
					2022		2021
Accrued wages and bonus					$	409,314	$	408,418
Research and development	$	62,343	$	271,800		59,233		35,708
Professional and consulting fees		42,036		33,345
Legal public offering fees		743,460		10,000
Customer advance deposits		-		6,000
Legal fees						242,105		29,512
Other accrued liabilities		24,969		12,091		100,631		110,247
Total accrued expenses and other current liabilities	$	872,808	$	333,236	$	811,283	$	583,885

Commitments and Contingencies

Lease Commitments – On February 1, 2021, the Company entered into a lease with Gardens Bio Science Partners, LLC, an entity under common control of the Company’s co-founder and Chairman of the Board. The leased premises consist of 20,000 square feet of office and warehouse space and has a lease term of 10 years at an annual base rent of $260,000 subject to escalation of 2.5% on an annual basis. As of ~~September 30, 2021,~~March 31, 2022, the future minimum lease payments under this arrangement approximated ~~$2,740,000.~~$2,610,000.

~~AEROCLEAN TECHNOLOGIES, LLC~~
~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Commitments and Contingencies (Continued)~~

Legal Proceedings – The Company is not a party to any litigation and does ~~not~~0t have contingency reserves established for any litigation liabilities.

Table of Contents

8.	Commitments and Contingencies (Continued)

Indemnities, Commitments and Guarantees – Effective November 1, 2020, the Company executed employment agreements with two key members of management that will continue until terminated by either party. In the event of termination without cause, the Company is obligated to pay the executive their base salary for a period of six months. Further, in the event of termination without cause or resignation for good reason, or a change of control, each as defined in the agreements, within twelve months of such termination or resignation, each of the executives is entitled to accelerated vesting of any outstanding time-based equity awards. The employment agreements provide for a base salary and a discretionary annual bonus to be determined at the sole discretion of the Company’s Board of Managers, for periods prior to the Corporate Conversion, and the Company’s Board of Directors (in either case, the “Board”), for periods following the Corporate Conversion. The Company’s employment agreements generally provide for certain protections in the event of a change of control. These protections generally include the payment of severance under certain circumstances in the event of a change of control. On May 1, 2021, the employment agreements were amended to provide for the eligibility of each executive to receive restricted stock units upon the conversion of the Company to a Delaware ~~corporation, which occurred subsequent to September 30, 2021.~~corporation. See Note 3, Public Offering. Accordingly, the executives were granted an aggregate of 443,269 restricted stock units contemporaneously with the Public Offering. The Company also had agreements in place with independent contractors whereby the Company was required to compensate the independent contractors ~~fifty~~50 percent in cash and ~~fifty~~50 percent in equity. The equity consideration was contingent upon future events, including the conversion to a Delaware corporation and a new round of equity financing from third party sources, which were not deemed to be probable at December 31, 2020. Subsequent to December 31, 2020, these agreements were amended so that the compensation will be in cash only for services provided subsequent to March 31, 2021. Effective April 1, 2021, the contractors were issued Class A Units to compensate them for the ~~fifty~~50 percent equity portion of their consideration earned. See Note ~~9, Members’~~10, Stockholders’ Equity.

9. Related Party Transactions

The Company had an accounts receivable balance of $5,625 and $63,290 for units sold to related parties as of March 31, 2022 and December 31, 2021, respectively.

10.

~~Related Party Transactions~~

Stockholders’ Equity

Long-term Incentive Plan

~~Bridge Loans –~~ ~~On each of September 30, 2021 and~~In conjunction with the Public Offering, on November 5,23, 2021, the Company ~~borrowed $500,000 pursuant~~adopted the Employee Stock Purchase Plan, the 2021 Incentive Award Plan (“Long-Term Incentive Plan” or “LTIP”) and the Non-Employee Directors Stock and Deferred Compensation Plan (collectively, the “Plans”). Accordingly, the Company reserved 1,802,273 shares, collectively, for issuance or sale under the Plans.

The Company maintains an LTIP under which the Company’s Compensation Committee has the authority to ~~bridge loan agreements (the “Bridge Loans”) from~~grant stock options; stock appreciation rights; restricted stock; restricted stock units; performance stock, performance units; and other forms of equity-based or equity-related awards. Compensation cost is generally recorded on a ~~related party at an interest rate~~straight-line basis over the vesting term of the ~~prime rate plus 3.0% per annum, which~~shares based on the grant date value using the closing trading price.

Stock-based compensation expense of $670,838 was ~~6.25%~~recorded in selling, general and administrative expense for the ~~life of~~three months ended March 31, 2022 (NaN in the ~~Bridge Loans, with the principal and accrued interest due upon demand. The Company used the proceeds from the Bridge Loans~~prior year period). Unrecognized compensation cost related to fund operations, including working capital requirements, continued product launch costs and other overhead costs until the proceeds from the Public Offering became available. Subsequent to September 30, 2021,restricted stock awards made by the Company ~~repaid the Bridge Loans, including unpaid accrued interest, with a portion of the net proceeds of the Public Offering. See Note 3, Public Offering.~~was $5,328,194 at March 31, 2022.

~~Members’ Equity~~

Members’ Units

Prior to the completion of the Public Offering (See Note 3, Public Offering), the Board was authorized to issue Class A Units (“Units”), which entitled unitholders to allocations of profits and losses and other items and distributions of cash and other property as was set forth in the Company’s operating agreement, as amended. The Board had the right at any time and from time to time to authorize and cause the Company to create and/or issue equity securities to any person, in which event, all units of a class, group or series would have been diluted in an equal manner as to the other units of such class, group or series, and the Board had the power to amend the operating agreement to allow for such additional issuances and dilution and to make any such other amendments necessary or desirable to reflect such issuances. The holder of each Unit had the right to ~~one~~1 vote per Unit on all matters to be voted on by the Members.

~~AEROCLEAN TECHNOLOGIES, LLC~~
~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Members’ Equity (Continued)~~

~~At December~~During the three months ended March 31, ~~2020, the Company recorded a subscription receivable for $100,543 relating to the purchase of Units in December 2020 for which cash was received in February of 2021.~~

In May 2020, the Board approved an action to effectuate a reverse stock split of the Units, which reduced each unit holder’s number of Units on a pro-rata basis. Each unit holder’s proportional voting power remained unchanged, and the rights and privileges of the holders of Units were substantially unaffected by the reverse stock split. The number of Units outstanding and footnotes have been adjusted to reflect the aforementioned reverse stock split.

~~Between January 1, 2021 and September 30,~~ 2021, the Company sold an additional 5,073,056 Units to existing members resulting in gross proceeds of ~~$5,073,056.~~$5,073,056 of which $100,000 was receivable at March 31, 2021.

Table of Contents

10.

Stockholders’ Equity (Continued)

Effective April 1, 2021, the Board approved the issuance of an aggregate of 274,314 Units, of which 140,085 Units were issued to independent contractors and 134,229 Units were issued to Board members as compensation for services provided. Certain of the Units were issued to independent contractors as consideration for services pursuant to existing agreements, which provided for payment of ~~fifty~~50 percent in cash and ~~fifty~~50 percent in equity (See Note 7,8, Commitments and Contingencies). The subscription agreements issued to the contractors included a provision that no payments for services rendered after March 31, 2021 will be in the form of equity.

11.Loss Per Common Share

~~Equity-based compensation expense of $924,438 was recognized and~~Basic net loss per common share is ~~included in general and administrative expenses in the Company’s statement of operations for the nine-month period ended September 30, 2021.~~

The fair value of $3.37 for each Unit was determined utilizing the income-based approach, which relies on the discounted cash flow method and considers future cash flows discounted at an appropriate discount rate, or weighted average cost of capital. The discounted cash flow method is affected by assumptions regarding complex and subjective variables, including future levels of revenue growth, operating margins and working capital needs as well ascomputed using the weighted average ~~cost~~common shares outstanding during the year. Diluted net loss per common share reflects the potential dilution from assumed conversion of ~~capital, which~~all dilutive securities such as unvested restricted stock units and UPO using the treasury stock method. When the effects of the outstanding restricted stock units and UPO are anti-dilutive, they are not included in the calculation of diluted net loss per common share.

The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2022 and 2021:


	March 31,		March 31,
	2022		2021
Net loss	$	(2,577,964)	$	(1,969,692)

Basic weighted average common shares		13,877,636		7,601,859
Diluted weighted average common shares		13,877,636		7,601,859

Basic net loss per common share	$	(0.19)	$	(0.26)
Diluted net loss per common share	$	(0.19)	$	(0.26)

12.Income Taxes

Income tax benefit was ~~determined by evaluating~~$92,774 and $0 for the ~~rates of return required for other companies~~three months ended March 31, 2022 and 2021, respectively, and was comprised primarily of a ~~similar size~~federal income tax benefit by applying the U.S. federal income tax rate of 21% to the loss before tax and ~~stage~~adjusting for non-deductible expenses, tax credits generated, and utilization of ~~development.~~net operating loss carryforwards.

On November 23, 2021 in conjunction with the Public Offering, the Company incorporated in the State of Delaware. Prior to the Public Offering, the Company was a limited liability company and was treated as a partnership for federal and state income tax purposes. Therefore, 0 provision for income taxes had been included in the financial statements prior to the Public Offering. The Company expects to be in a net deferred tax asset position in the year ending December 31, 2022, which will be offset by a valuation allowance. Accordingly, a tax benefit is being realized to the extent of the net deferred tax liability that existed at December 31, 2021 based upon the estimated effective tax rate for the year ending December 31, 2022.

13.

~~10.~~

Subsequent Events

The Company has evaluated subsequent events through ~~January 7, 2022, which is~~ the date the financial statements were available to be issued and ~~except as otherwise noted herein,~~ has concluded there were no material subsequent events ~~except as disclosed below,~~ that required recognition or disclosure in the financial statements.

In conjunction with the Public Offering, on November 23, 2021, the Company adopted the Employee Stock Purchase Plan, the 2021 Incentive Award Plan (“Incentive Award Plan”) and the Non-Employee Directors Stock and Deferred Compensation Plan (collectively, the “Plans”). Accordingly, the Company reserved 1,802,273 shares, collectively, for issuance or sale under the Plans. On November 29, 2021, at the closing11

Table of the Public Offering, the Company granted 443,269 restricted stock units to members of management (See Note 7, Commitments and Contingencies) and 182,999 restricted stock units to members of the Board under the Incentive Award Plan.Contents

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

Thefollowingdiscussionandanalysisshouldbereadinconjunctionwiththehistoricalcondensedfinancialstatementsandrelatednotes included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”) as well as our audited financial statements forthe fiscal year ended December 31, ~~2020~~2021 included in our ~~offering circular~~Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC ~~pursuant to Rule 253(g)(1) promulgated under the Securities Act~~ on ~~November 24, 2021.~~ April 1, 2022.Thisdiscussioncontainsforward-lookingstatementsreflectingourcurrentexpectations and estimates and assumptions concerning events and financial trends that may affect our future operating results orfinancial position. Actual results and the timing of events may differ materially from those contained in these forward-lookingstatements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary StatementRegardingForward-LookingStatements”appearingelsewhereinthisQuarterlyReport.

Overview

AeroClean Technologies is an interior space air purification technology company. Our immediate objective is to initiate full-scale commercialization of our high-performance interior air sterilization and disinfection products for the eradication of harmful airborne pathogens, including COVID-19. We were established to develop unmatched, technology-driven medical-grade air purification solutions for hospitals and other healthcare settings. The onset of the COVID-19 global pandemic underscores the urgency of bringing to market air purification solutions to protect front-line healthcare workers, patients and the general population.

We incorporate our proprietary, patented UV-C LED technology in equipment and devices to protect the occupants of interior spaces. These spaces include hospital and non-hospital healthcare facilities (such as outpatient chemotherapy and other infusion facilities and senior living centers and nursing homes), schools and universities, commercial properties and other indoor spaces.

Our products are being designed and engineered to exceed the rigorous standards set by the ~~FDA~~Food and Drug Administration (“FDA”) for interior air sterilization and disinfection products. Our units can be currently marketed for use pursuant to the FDA Enforcement Policy for Sterilizers, Disinfectant Devices, and Air Purifiers during the Coronavirus Disease 2019 (COVID-19) Public Health ~~Emergency.~~

Emergency, referred to as the “Policy” elsewhere in this Quarterly Report.

We are currently seeking FDA ~~510K~~510(k) clearance for the use of our products in healthcare and other markets for which product performance is required to be validated by certified independent labs. Regulatory clearances and independent certifications serve as important product imprimaturs that also influence decision-making by non-healthcare market equipment purchasers. We expect to receive FDA ~~510K~~510(k) clearance for Pūrgo in the second half of 2022.

We ~~are currently initiating~~initiated the full-scale launch of our first product, Pū~~rgo.~~rgo, in the year ended December 31, 2021. Pūrgo is our proprietary, continuous air sanitization product for indoor spaces. Pūrgo’s launch also marks the debut of our go-to-market strategy for SteriDuct, the Company’s patented air purification technology. We intend to incorporate SteriDuct into a broad line of autonomous air treatment devices.

For example, we debuted a prototype of Pūrgo Lift, our air purification solution for elevators and other wall-mount applications, in February 2022.

Pūrgo has been well-received by our customers. Our success depends to a large extent on our ability to increase sales of our Pūrgo device during 2022 and beyond.

As part of our business strategy we continually evaluate a wide array of strategic opportunities, including the ~~market. We are fielding broad interest from healthcare organizations, particularly those that treat numerous immunocompromised patients, our initial targeted market, as well as from schools~~acquisition, disposition or licensing of intellectual property, mergers and ~~universities. We are also receiving urgent inquiries from owners and managers of commercial properties~~acquisitions, joint ventures and other ~~indoor spaces,~~strategic transactions. In connection with these activities we may enter into non-binding letters of intent as we assess the commercial appeal of potential strategic transactions. We may seek to acquire technologies, product lines and companies that operate in businesses similar to our own or that are ancillary, complementary or adjacent to our own or in which we ~~are developing solutions for public~~do not currently operate. Such businesses could operate in the air purification space or more generally in the health and ~~private transportation systems.~~

~~In July 2021, we completed the development stage~~wellness space or in other industries. We could also seek to merge with or into another company or sell all or substantially all of our ~~first device,~~assets to another company. Any transactions that we enter into could be material to our business, financial condition and operating results. Please see related risks described under the ~~Pūrgo room air purification unit, including design~~captions “We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to stockholders and ~~independent testing~~otherwise disrupt our operations, and ~~certification, as well as~~adversely affect our business, financial condition and results of operations” and “Our executive officers, directors and principal stockholders have the ~~scale-up of manufacturing, and began commercial production and sales.~~

~~To support~~ability to control all matters submitted to stockholders for approval” in the ~~transition to commercial operations, in July 2021, we also completed the build out~~“Risk Factors” section of our ~~corporate headquarters in Palm Beach Gardens, Florida, which includes our warehouse and distribution facility, as well as~~Annual Report on Form 10-K filed with the ~~site for our future service operations.~~SEC on April 1, 2022.

Table of Contents

COVID-19 Pandemic

We continue to monitor the ~~outbreak of~~ COVID-19 pandemic and its variants, including the ~~most recent Omicron~~emergence of variant strains, which continue to spread throughout the world and have adversely ~~impact~~impacted global commercial activity and ~~contribute~~contributed to significant declines and volatility in financial markets. ~~Our on-going research~~Across many industries, including our own, COVID-19 - among other factors - has negatively impacted personnel and ~~development activities, including development of product prototypes~~operations at third-party manufacturing and ~~manufacturing activities, are all conducted~~component part supplier facilities in the United States and ~~as a result,~~around the word. These disruptions have adversely impacted the availability and cost of raw materials and component parts. For example, various electronic components and semi-conductor chips have become increasingly difficult to source, and when available, may be subject to substantially longer lead times and higher costs than historically applicable. The continued shortages impacted the ability to manufacture units during the first quarter of 2022, the weekly and monthly production run rates we ~~have been able~~expected to ~~mitigate~~achieve during the ~~adverse impact of~~first quarter, and likely the ~~COVID-19 pandemic on our global supply chain. During 2020 and through~~run rates we expected to achieve for the remainder of this ~~Quarterly Report, we~~fiscal year. We do have ~~not experienced any significant adverse impact~~line of sight to improvement on ~~our operations~~some long lead-time board and ~~do not expect any significant disruptions~~electronics components in the ~~near term.~~

second half of 2022, but we cannot predict the ever-changing global logistics and supply chain environment.

We continue to actively monitor the situation and may take further actions that impact operations as may be required by federal, state or local authorities or that we determine is in the best interests of our employees, customers, suppliers and stockholders. As of the date of this Quarterly Report, the pandemic presents uncertainty and risk as we cannot reasonably determine or predict the nature, duration or scope of the overall impact the COVID-19 pandemic will have on our business, results of operations, liquidity or capital resources.

Results of Operations

The following table summarizes our results of operations for the periods indicated:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 Change 2021 2020 Change
Product revenues $ 261,299 $ - $ 261,299 $ 261,299 $ - $ 261,299
Cost of sales 147,733 - 147,733 147,733 - 147,733
Gross profit 113,566 - 113,566 113,566 - 113,566
Operating Expenses:
General and administrative 685,079 484,442 200,637 2,678,689 625,812 2,052,877
Research and development 956,499 812,950 143,549 3,617,101 1,057,265 2,559,836
Total operating expenses 1,641,578 1,297,392 344,186 6,295,790 1,683,077 4,612,713
Net Loss $ (1,528,012 ) $ (1,297,392 ) $ (230,620 ) $ (6,182,224 ) $ (1,683,077 ) $ (4,499,147 )

Comparison of the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~


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

RevenuesandCostofSales

The Company began the production and sale of its first commercial product, Pūrgo, in July 2021, ~~generating $261,299~~ and therefore, did not have anyrevenuein ~~product revenues~~theprioryearperiod. Revenues for the three ~~and nine~~ months ended ~~September 30, 2021 on sales~~March 31, 2022 were $6,733. Sales declined as compared to the run rate from the second half of ~~over 100 Pūrgo devices.~~fiscal 2021. To increase efficiencies and reduce the impact of future supply chain disruptions, the Company eliminated unnecessary elements from the bill of materials, which will further reduce assembly time but required additional testing to be conducted. The Company ~~did not have any revenue~~paused production and sales activities while the testing was being conducted. Testing has been completed, production has resumed and the sales team is engaged in ~~the prior year periods. Cost~~discussions for direct sales and distribution opportunities.

Table of ~~sales increased in conjunction with the increase in revenues.~~Contents

~~Operating Expenses~~

~~General and Administrative~~ OperatingExpenses

Selling, GeneralandAdministrativeExpenses

~~General~~Selling, general and administrative expenses (“SG&A”) consist primarily of costs related to our employees, independent contractors and consultants.Othersignificantgeneralandadministrativeexpensesincludeaccountingandlegalservicesandexpensesassociatedwithobtainingandmaintaining patents as well as marketing and advertising services and expenses associated with establishing our brand and developingourwebsite,marketingmaterialsandcallcenter.

For the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ we incurred ~~$685,079~~$2,142,224 and ~~$448,442,~~$380,002, respectively, of ~~general~~SG&A and ~~administrative~~stock-based compensation expenses. We attribute the increase of ~~$200,637~~$1,762,222 primarily to the increase in costs required to be a public company as well as a greater level of business activities being conducted in thethree months ended ~~September 30, 2021~~March 31, 2022 as compared to the same period in ~~2020, including~~2021. Public company costs include: audit and legal fees; costs required to establish investor relations, financial reporting and public relations functions; increased insurance costs; public company filing and registration fees and related ~~to the hiring of additional personnel and increased fees for outside consultants, and~~costs. These public company costs drove an increase in ~~rent expense~~SG&A of ~~over $100,000.~~

For the nine months ended September 30, 2021 and 2020, we incurred $2,678,689 and $625,812, respectively, of general and administrative expenses. We attribute the increase of $2,052,877 primarily to a greater level of business activities being conductedapproximately $730,000 in the ~~nine months ended September 30, 2021~~first quarter of 2022 as compared to the ~~same period in 2020, including~~first quarter of 2021. The balance of the increase was primarily due to stock-based compensation expense of approximately $670,000 and increased rent and personnel costs ~~related to the hiring~~ of ~~additional personnel (increase of over $350,000), increased fees for outside consultants (over $900,000) and rent expense (increase of almost $300,000).~~approximately $150,000.

ResearchandDevelopmentExpenses

Since our inception, we have focused our resources on our research and development activities. We expense research anddevelopment costs as they are incurred. Our research and development expenses primarily consist of outsourced engineering, productdevelopmentandmanufacturingdesigncosts.ForthethreemonthsendedMarch 31, 2022 and 2021,weincurred$531,483and $1,589,690,respectively,inresearchanddevelopmentcosts.Research and development ~~and manufacturing design costs. For~~expenses decreased by $1,058,207 for the three months ended September 30, 2021 and 2020, we incurred $956,499 and $812,950, respectively, in research and development costs. For the nine months ended September 30, 2021 and 2020, we incurred $3,617,101 and $1,057,265, respectively, in research and development costs. Research and development expenses were relatively flat for three months ended September 30, 2021 as compared to the prior year period while they increased $2,559,836 for the nine months ended September 30, 2021March 31, 2022 as compared to the prior year period. ~~We began to ramp up research~~Research and development activities ~~in May of 2020 resulting in a lower rate of expenditures~~were higher in the ~~nine month September 30, 2020 period~~first quarter of 2021 as compared to the current ~~year period. The three month periods were relatively flat as we had reached a normalized run rate of expenditures by the third~~ quarter ~~of fiscal 2020.~~due to product development, engineering, testing and regulatory costs incurred to prepare our Pūrgo device for launch in July 2021.

NetLosses

Our net losses were ~~$1,528,012~~$2,577,964 and ~~$1,297,392~~$1,969,692 for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively. Our net losses were $6,182,224 and $1,683,077 for the nine months ended September 30, 2021 and 2020,~~ respectively. Lossesincreasedin ~~fiscal~~the first quarter of 2022 ascomparedtothe first quarter of 2021 ~~as compared to fiscal 2020~~ forthereasonssetforthabove.

LiquidityandCapitalResources

~~Sources of Liquidity~~

SourcesofLiquidity

As of ~~September 30, 2021,~~March 31, 2022, we had cash of ~~$655,780~~$17,774,097 compared to cash of ~~$2,333,117~~$19,629,649 as of December 31, 2020. From January 1, 2021 through September 30, 2021, we raised an additional approximately $5,100,000 in gross proceeds from the sale of our Class A units and we issued an additional approximately $900,000 of our Class A units to our independent contractors and Board members for services rendered. On September 30, 2021, we borrowed $500,000, and on November 5, 2021, we borrowed an additional $500,000 pursuant to bridge loans (collectively, the “Bridge Loans”) from our Chairman at an interest rate of the prime rate plus 3.0% per annum, 6.25% for the life of the Bridge Loans, with the principal and accrued interest due upon demand.2021. On November 29, 2021, ~~the Company~~we completed aour initial public offering ~~(the “Public Offering”~~(“IPO”) of 2,514,000 shares of ~~its~~our common stock, which included the partial exercise of the underwriters’ overallotment option, at a public offering price of $10.00 per share for aggregate gross proceeds of $25,140,000 and net proceeds of approximately ~~$22,000,000~~$21,640,000, after deducting underwriting fees and closing costs of approximately ~~$3,100,000. We repaid the Bridge Loans and accrued interest on December 1, 2021 with a portion of the net proceeds from the Public Offering.~~

$3,500,000.

Prior to ~~the Public Offering, we~~our IPO, AeroClean Technologies, LLC, our predecessor, funded ~~our~~its operations principally with approximately ~~$15 million~~$15,000,000 in gross proceeds from the sale of Class A units. As of ~~September 30, 2021,~~March 31, 2022, we had an accumulated deficit of ~~$14,405,631.~~$4,325,824. The Company’s net cash used in operating activities was ~~$5,524,098~~$1,827,477 for the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as compared to ~~$1,280,449~~$1,722,012 used in operating activities for the prior year period.

We have incurred operating losses since our inception. While the Company began producing and selling its Pūrgo device in July 2021, these losses are expected to continue through at least the end of 2022 as we continue to make significant investments to develop and market our products and to establish our consumables and service business.

~~We believe that our cash balances as~~Table of ~~September 30, 2021 as well as the proceeds from the Public Offering will be sufficient to meet our cash needs for at least 12 months following the issuance date of this Quarterly Report.~~Contents

FutureFundingRequirementsandOutlook

We have incurred operating losses each year since our inception. These losses are expected to continue through at least the end of 2022 because we plan to continue to make ~~significant~~ investments to develop and market our products and to establish our consumables and service business. We also expect to continue to incur increased costs to comply with corporate governance, internal controls and similar requirements applicable to public companies.

On ~~September 30,~~February 1, 2021, we ~~borrowed $500,000, and on November 5, 2021, we borrowed~~entered into a lease with Garden Bio Science Partners, LLC, an ~~additional $500,000 pursuant to~~entity controlled by the ~~Bridge Loans from~~chair of our ~~Chairman~~board of directors, with a term of ten years at an ~~interest rate~~annual base rent of $260,000, subject to escalation of 2.5% on an annual basis. As of March 31, 2022, the prime rate plus 3.0% per annum, 6.25% for the life of the Bridge Loans, with the principal and accrued interest due upon demand. We repaid the Bridge Loans and accrued interest on December 1, 2021 with a portion of the net proceeds from the Public Offering.

future minimum lease payments under this arrangement approximated $2,610,000.

Based on our current financial resources, our expected revenues and our expected level of operating expenditures, we believe that we will be able to fund our projected operating requirements for at least the next 12 ~~months. We~~months from the date of issuance of this Quarterly Report.

Over the long-term, the Company will continue to have capital requirements, and expects to devote resources to grow its operations. Moreover, if the Company pursues an acquisition strategy, it may ~~also~~need to raise incremental capital in order to finance ~~our cash needs through~~the purchase price to be paid to target stockholders. As a result of these funding requirements, we will likely need to obtain additional financing by engaging in debt ~~and~~and/or equity ~~offerings.~~offerings or seeking additional borrowings. To the extent that we raise additional capital through the sale of ~~equity or~~ convertible debt or equity securities, the ownership interests of our common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.

~~Off-Balance Sheet Arrangements~~

~~Lease Commitments –~~ ~~On February 1, 2021, the Company entered into a lease with Gardens Bio Science Partners, LLC, an entity under common control~~ The availability of debt financing or equity capital will depend upon the Company’s ~~co-founder~~financial condition and ~~Chairman~~results of the Board. The leased premises consist of 20,000 square feet of office and warehouse space and has a lease term of 10 years at an annual base rent of $260,000 subject to escalation of 2.5% on an annual basis. As of September 30, 2021, the future minimum lease payments under this arrangement approximated $2,740,000.

operations as well as prevailing market conditions.

~~Indemnities, Commitments~~Inflation

Inflation has adversely affected our business and ~~Guarantees –~~ ~~Effective November 1, 2020,~~we expect this to continue through the ~~Company executed employment agreements with two key members~~end of ~~management that will~~2022. We have been and expect to continue until terminated by either party. In the event of termination without cause, the Company is obligated to pay the executive their base salary for a period of six months. Further, in the event of termination without cause or resignation for good reason, or a change of control, each as defined in the agreements, within twelve months of such termination or resignation, each of the executives is entitled to accelerated vesting of any outstanding time-based equity awards. The employment agreements provide for a base salary and a discretionary annual bonus to be ~~determined at~~negatively impacted by increased component and logistics costs. In addition, our cost of labor and materials may increase, which would negatively impact our business and financial results. Alternatively, deflation may cause a deterioration of global and regional economic conditions, which could impact unemployment rates and consumer discretionary spending. These, and other factors that may increase the ~~sole discretion~~risk of ~~the Board. The Company’s employment agreements generally provide for certain protections in the event~~significant deflation, could negatively impact our business and results of a change of control. These protections generally include the payment of severance under certain circumstances in the event of a change of control. On May 1, 2021, the employment agreements were amended to provide for the eligibility of each executive to receive restricted stock units upon the conversion of the Company to a Delaware corporation, which occurred in connection with the consummation of the Public Offering. The Company also had agreements in place with independent contractors whereby the Company was required to compensate the independent contractors fifty percent in cash and fifty percent in equity. The equity consideration was contingent upon future events, including the conversion to a Delaware corporation and a new round of equity financing from third party sources, which were not deemed to be probable at December 31, 2020. Subsequent to December 31, 2020, these agreements were amended so that the compensation will be in cash only for services provided subsequent to March 31, 2021. Effective April 1, 2021, the contractors were issued Class A Units to compensate them for the fifty percent equity portion of their consideration earned. See Note 9, Members’ Equity to the condensed financial statements.operations.

~~Inflation~~

~~We do not believe that inflation or changes in prices will have a material effect on our business.~~

CriticalAccountingPoliciesandEstimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed financialstatements, which we have prepared in accordance with accounting principles generally accepted in the United States of America ~~(GAAP)~~(“U.S. GAAP”). The preparation of the financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions thataffect the reported amounts and related disclosures. We evaluate these estimates, judgments and methodologies on an ongoing basis.We base our estimates on historical experience and on various other assumptions that we believe are reasonable. Our actual resultscoulddifferfromthoseestimates.

Our significant accounting policies are more fully described in Note 2, Summary of Significant Accounting Policies to our audited financial statements included in our ~~offering circular~~Annual Report on Form 10-K filed with the SEC ~~pursuant to Rule 253(g)(1) promulgated under the Securities Act~~ on ~~November 24, 2021.~~April 1, 2022. We believe that the accounting policies are critical for fully understanding and evaluating our financialconditionandresultsofoperations.

JOBS Act

On April 5, 2012, the JOBS Act was enacted. Under the JOBS Act, emerging growth companies can delay adopting new orrevised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to privatecompanies. We have irrevocably elected to avail ourselves of this exemption from new or revised accounting standards and, therefore,will not be subject to the same new or revised accounting standards as public companies that are not emerging growth companies. As aresultofthiselection,ourfinancialstatementsmaynotbecomparabletocompaniesthatarenotemerginggrowthcompanies.

Table of ~~this election, our financial statements may not be comparable to companies that are not emerging growth companies.~~Contents

We are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided bythe JOBS Act. Subject to certain conditions set forth in the JOBS Act, as an “emerging growth company,” we intend to rely on certainof these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls overfinancial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adoptedby the ~~PCAOB~~Public Company Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information aboutthe audit and the financial statements, known as the auditor discussion and analysis. We will remain an “emerging growth company”until the earliest of: (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) the lastday of our fiscal year following the fifth anniversary of the date of the completion of the Public Offering; (iii) the date on which wehave issued more than $1 billion in non-convertible debt during the previous three years; or (iv) the date on which we are deemed to bealargeacceleratedfilerundertherulesoftheSEC.

CAUTIONARYSTATEMENTREGARDINGFORWARD-LOOKINGSTATEMENTS

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements to encouragecompanies to provide prospective information to investors. This Quarterly Report includes forward-looking statements that reflect ourcurrent expectations and projections about our future results, performance and prospects. Forward-looking statements include allstatements that are not historical in nature or are not current facts. When used in this Quarterly Report, the words “believe,” “expect,” ~~“plan,~~“plan,” “project,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “likely,” “should,” “could,” ~~“will”~~“will,” “target” or the negativeof these terms or similar expressions are intended to identify forward-looking statements, although not all forward-looking statementscontain such identifying words. These forward-looking statements are based on our current expectations and assumptions about futureeventsandarebasedoncurrentlyavailableinformationastotheoutcomeandtimingoffutureevents.

These forward-looking statements are subject to a number of risks, uncertainties, assumptions and other factors that could causeour actual results, performance and prospects to differ materially from those expressed in, or implied by, these forward-lookingstatements. Factors that might cause such a difference include, but are not limited to, those discussed in our filings with the SEC, in particular those discussedunder the heading “Risk Factors” in our ~~offering circular~~Annual Report on Form 10-K for the fiscal year ended December 31, 2021 filed with the SEC on ~~November 24, 2021~~April 1, 2022,includingthefollowingfactors:

●general economic conditions in the markets where we operate;

●the impact of the COVID-19 pandemic and ~~in this Quarterly Report, including the following factors:~~

• related prophylactic measures;

●expectedtimingof regulatory approvals and productlaunches;

●non-performance of ~~product launches;~~

~~• expectations regarding the potential market reception~~third-party vendors and contractors;

●risks related to ~~and performance of~~ our ~~products;~~

~~• limited operating history;~~

• ability to successfully sell our products and the marketreceptiontoandperformanceofourproducts;

●compliance with, and changes to, applicable laws and regulations;

●our limitedoperatinghistory;

●abilitytomanagegrowth;

•

●abilitytoobtainadditionalfinancingwhenandifneeded;

●abilitytoexpandproductofferings;

●abilitytocompetewithothersinourindustry;

●abilitytoprotectourintellectualproperty;

●the ability of certain existing stockholders to ~~obtain additional financing when~~determine the outcome of matters which require stockholder approval;

Table of Contents

●abilitytodefendagainstlegalproceedings;and

●successinretainingorrecruiting,orchangesrequiredin,ourofficers,keyemployeesordirectors.

Inlightoftheserisks,uncertainties and ~~if needed;~~

~~• ability~~ assumptions,youarecautionednotto ~~expand product offerings;~~

~~• ability to compete with others~~ putunduerelianceonanyforward-lookingstatementsin ~~our industry;~~

~~• results of operations;~~

~~• ability to protect our intellectual property;~~

~~• ability to defend against legal proceedings; and~~

~~• success in retaining or recruiting, or changes required in, our officers, key employees or directors.~~

~~In light of these risks and uncertainties, you are cautioned not to put undue reliance on any forward-looking statements in~~ thisQuarterly Report. These statements should be considered only after carefully reading this entire Quarterly Report. Except as requiredunder the federal securities laws and rules and regulations of the SEC, we undertake no obligation to publicly update or revise anyforward-looking statements, whether as a result of new information, future events or otherwise. Additional risks that we may currentlydeem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Quarterly Reportnottooccur.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Asasmallerreportingcompany,wearenotrequiredtoprovidetheinformationrequiredbyItem305ofRegulationS-K.

Item 4. Controls and Procedures.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers (who are our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), respectively), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.

In connection with the preparation of this Quarterly Report on Form 10-Q for the ~~quarterly period~~quarter ended ~~September 30, 2021,~~March 31, 2022, an evaluation was performed under the supervision of and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures. Based on that evaluation, ~~the Chief Executive Officer~~our CEO and ~~Chief Financial Officer~~CFO have concluded that our disclosure controls and procedures were not effective as of ~~September 30, 2021~~March 31, 2022 due to the existence of a material weakness in internal control over financial reporting that was identified in connection with the audits of our financial statements as of December 31, 2021 and 2020 and ~~2019 and~~ for each of the years in the ~~two year~~two-year period ended December 31, 2021 and 2020, and which ~~is still being remediated.~~we are currently remediating.

~~Notwitstanding~~Notwithstanding the existence of the material weaknesses discussed below, our management, including our CEO and CFO, has concluded that the financial statements included in this Quarterly Report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in this Quarterly Report in conformity with U.S. GAAP.

Prior to the completion of ~~the Public Offering,~~our IPO, the Company has had limited accounting personnel and other resources to address internal controls over financial reporting. In connection with the audits of our financial statements as of December 31, 2021 and 2020 and ~~2019 and~~ for each of the years in the two-year period ended December 31, 2021 and 2020, we identified a material weakness in our internal control over financial reporting. As defined in the standards established by the PCAOB, a “material weakness” is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented on a timely basis.

The material weakness identified related to a lack of sufficient segregation of duties within the accounting function, a lack of timely reconciliation of accounts and review of the Company’s financial statements at each reporting period, a lack of appropriate contemporaneous documentation and/or valuation for certain equity transactions and execution of significant agreements containing inaccurate terms and errors.

Table of Contents

Due to the size and nature of the accounting function, segregation of all conflicting duties may not always be possible and has also limited its ability to perform timely reconciliations of accounts and reviews of the Company’s financial statements as well as other documentation required to timely and accurately account for significant transactions. In order to remediate the material weaknesses described above, we will need to hire additional accounting qualified personnel with appropriate knowledge and expertise in accounting and U.S. GAAP to assist us in timely maintaining support for our financial statements as well as to allow for appropriate segregation of duties. Management plans to increase the number of personnel dedicated to the accounting and reporting function and may, on an as needed basis, utilize experts in ~~connection with~~technical accounting matters to assist in the review and ~~following our product launch and resulting revenue generation.~~analysis of complex transactions. In light of the material weaknesses, management also performed additional procedures in connection with the preparation of our financial statements.

InherentLimitationsonEffectivenessofControls

The design of any system of control is based upon certain assumptions about the likelihood of future events. There can be noassurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, or that thedegree of compliance with the policies or procedures may not deteriorate. Because of its inherent limitations, disclosure controls andprocedures may not prevent or detect all misstatements. Accordingly, even effective disclosure controls and procedures can provideonly reasonable assurance of achieving their control objectives. In addition, the design of disclosure controls and procedures mustreflectthefactthatthereareresourceconstraintsandthatmanagementisrequiredtoapplyitsjudgmentinevaluatingthebenefitsof possible controls and procedures relative to their costs. Also, projections of any evaluation of effectiveness to future periods are subjectto the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies andproceduresmaydeteriorate.

ChangesinInternalControloverFinancialReporting

~~Changes in Internal Control over Financial Reporting~~

~~Except as disclosed above, there~~There were no changes in our internal control over financial reporting during the period covered by thisQuarterlyReportthathavemateriallyaffectedor,arereasonablylikelytomateriallyaffect,ourinternalcontroloverfinancialreporting; however, we expect to make changes to our internal control over financial reporting in the future to remediate the materialweaknessesidentifiedabove.

Table of Contents

PART II – OTHER INFORMATION

Item 6. Exhibits.

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

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

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

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

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

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

~~101.INS~~ 101.INS*	XBRL Instance Document^#

~~101.SCH~~ 101.SCH*	Taxonomy Extension Schema Document^#

~~101.CAL~~ 101.CAL*	Taxonomy Extension Calculation Linkbase Document^#

~~101.DEF~~ 101.DEF*	Taxonomy Extension Definition Linkbase Document^#

~~101.LAB~~ 101.LAB*	Taxonomy Extension Label Linkbase Document^#

~~101.PRE~~ 101.PRE*	Taxonomy Extension Presentation Linkbase Document^#

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

Filed herewith

Furnished herewith

~~To be filed by amendment~~

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	AEROCLEAN TECHNOLOGIES, INC.


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

	Date: ~~January 7,~~May 12, 2022

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

	Date: ~~January 7,~~May 12, 2022


Part I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements (Unaudited)

	Condensed Balance Sheets as of ~~September 30, 2021~~March 31, 2022 (Unaudited) and December 31, ~~2020~~2021	1

	Condensed Statements of Operations for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (Unaudited)	2

	Condensed Statements of ~~Members'~~Stockholders'/ Members’ Equity for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (Unaudited)	3

	Condensed Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (Unaudited)	4

	Notes to Unaudited Condensed Financial Statements	5

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk	16 17

Item 4. Controls and Procedures	16 17

PART II - OTHER INFORMATION	17 19

Item 6. Exhibits	17 19

SIGNATURES	18 20

	September 30, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash	$	655,780	$	2,333,117
Accounts receivable		201,801
Prepaid expenses and other current assets		135,236		304,836
Subscription receivable		-		100,543
Inventories		247,041		-
Total current assets		1,239,858		2,738,496
Property and equipment, net		2,284,418		454,679
Deferred offering costs		939,741		-
Other assets		21,667		-
Total assets	$	4,485,684	$	3,193,175

LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable	$	769,739	$	332,072
Accrued expenses and other current liabilities		872,808		333,236
Loan from related party		500,000		-
Total current liabilities		2,142,547		665,308
Commitments and contingencies (Note 7)
Members' equity		2,343,137		2,527,867
Total liabilities and members' equity	$	4,485,684	$	3,193,175

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Product revenues	$	261,299		$	-		$	261,299		$	-
Cost of sales		147,733			-			147,733			-
Gross profit		113,566			-			113,566			-
Operating Expenses:
General and administrative		685,079			484,442			2,678,689			625,812
Research and development		956,499			812,950			3,617,101			1,057,265
Total operating expenses		1,641,578			1,297,392			6,295,790			1,683,077
Net loss	$	(1,528,012	)	$	(1,297,392	)	$	(6,182,224	)	$	(1,683,077	)
Net loss per share:
Basic and diluted	$	(0.13	)	$	(0.36	)	$	(0.61	)	$	(0.67	)
Weighted-average common shares outstanding:
Basic and diluted		11,363,636			3,557,114			10,135,506			2,506,780

	Class A				Accumulated			Total Members'
	Units		Amount		Deficit			Equity
Balance, June 30, 2021		13,428,948	$	16,748,768	$	(12,877,619	)	$	3,871,149
Issuance of equity units		-		-		-			-
Net loss		-		-		(1,528,012	)		(1,528,012	)
Balance, September 30, 2021		13,428,948	$	16,748,768	$	(14,405,631	)	$	2,343,137


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


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