As filed with the Securities and Exchange Commission on December 19, 2022.

No. 333-

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

AEROCLEAN TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware

(State or other jurisdiction of
incorporation or organization)

3841

(Primary Standard Industrial
Classification Code Number)

45-3213164

(I.R.S. Employer
Identification Number)

AeroClean Technologies, Inc.
10455 Riverside Drive
Palm Beach Gardens, FL 33410
(833) 652-5326

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

Jason DiBona
AeroClean Technologies, Inc.
10455 Riverside Drive Palm Beach Gardens, FL 33410
(833) 652-5326

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of all communications, including communications sent to agent for service, should be sent to:


	Valerie Ford Jacob, Esq. Paul K. Humphreys, Esq. Michael A. Levitt, Esq. Freshfields Bruckhaus Deringer US LLP 601 Lexington Ave. New York, New York 10022 (212) 277-4000		Cynthia C. Hess, Esq. Per B. Chilstrom, Esq. Ethan A. Skerry, Esq. Jeremy R. Delman, Esq. Fenwick & West LLP 902 Broadway New York, New York 10010 (212) 430-2600

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this Registration Statement is declared effective and upon completion of the merger described in the information statement/prospectus contained herein.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) ☐

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) ☐

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this information statement/prospectus is not complete and may be changed. A registration statement relating to the securities described in this information statement/ prospectus has been filed with the Securities and Exchange Commission. These securities may not be issued or sold until the registration statement filed with the Securities and Exchange Commission is effective. This information statement/prospectus does not constitute an offer to sell or the solicitation of offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

Table of Contents

PRELIMINARY — SUBJECT TO COMPLETION, DATED DECEMBER 19, 2022

AeroClean Technologies, Inc.

10455 Riverside Drive

Palm Beach Gardens, Florida 33410

NOTICE OF STOCKHOLDER ACTION BY WRITTEN CONSENT

WE ARE NOT ASKING YOU FOR A PROXY

AND YOU ARE REQUESTED NOT TO SEND US A PROXY

Dear AeroClean Stockholder:

NOTICE IS HEREBY GIVEN that the Board of Directors (the “AeroClean Board”) of AeroClean Technologies, Inc., a Delaware corporation (“AeroClean,” “we,” “us,” “our” or the “Company”), has approved, and the holders of approximately 52% of the outstanding shares of our common stock, par value $0.01 per share (the “AeroClean Common Stock”) entitled to vote (collectively, the “AeroClean Majority Stockholders”) have executed a written consent in lieu of a special meeting approving, the following actions:

the Merger (as defined below), the Transactions (as defined below) and the issuance of approximately 15.1 million shares of AeroClean Common Stock as Merger Consideration (as defined in the Merger Agreement) in accordance with the Agreement and Plan of Merger, dated October 3, 2022 (the “Merger Agreement”), among the Company, Air King Merger Sub Inc., a wholly owned subsidiary of AeroClean (“Merger Sub”), and Molekule, Inc. (“Molekule”), a Delaware corporation, pursuant to which Merger Sub will merge with and into Molekule, with Molekule as the surviving corporation and a wholly owned subsidiary of AeroClean (the “Merger”);

an amendment of our certificate of incorporation (1) to change the name of the Company from AeroClean Technologies, Inc. to Molekule Group, Inc. and (2) to add an officer exculpation provision with respect to violations of fiduciary duties in accordance with recent amendments to the General Corporation Law of the State of Delaware (the “DGCL”) (the “Charter Amendments”); and

an amendment of our 2021 Incentive Award Plan to increase the share reserve thereunder by 800,000 shares (the “Equity Plan Amendment”).

Pursuant to Section 228 of the DGCL, unless otherwise provided in a company’s certificate of incorporation, any action of a meeting of stockholders may be taken, without a meeting and prior notice, by signed consent of stockholders having the minimum number of votes that would be necessary to take such action at a meeting at which all shares entitled to vote thereon were present and voted. Pursuant to Article VII, Section 4, of the Company’s certificate of incorporation, stockholder action may be taken by written consent without a meeting of stockholders if such action and the taking of such action by written consent of stockholders in lieu of a meeting have each been expressly approved in advance by the AeroClean Board. On October 3, 2022, the AeroClean Board approved the foregoing actions and authorized the stockholders of the Company to approve the foregoing actions by written consent. On October 3, 2022, by written consent without a meeting, the AeroClean Majority Stockholders approved the Merger, the Transactions, the issuance of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, the Charter Amendments and the Equity Plan Amendment. This information statement/ prospectus is being furnished to all stockholders of the Company for the purpose of informing stockholders of these corporate actions before they take effect.

Please be advised that the AeroClean Majority Stockholders, collectively holding approximately 52% of the issued and outstanding shares of AeroClean Common Stock, have executed a written consent approving (a) the Merger, the Transactions and the issuance of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, (b) the Charter Amendments and (c) the Equity Plan Amendment. No other votes are required or necessary to consummate the Merger and the Transactions, issue AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, amend our certificate of incorporation or amend our 2021 Incentive Award Plan, and none is being solicited hereunder. Pursuant to Rule 14c-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), these corporate actions will not be effected until 20 calendar days after the filing and mailing of this information statement/prospectus to our stockholders or as soon as practicable thereafter. We will mail the Notice of Stockholder Action by Written Consent to our stockholders on or about December , 2022. We anticipate that the Merger, the issuance of AeroClean Common Stock as Merger Consideration, the

Table of Contents

Charter Amendments and the Equity Plan Amendment will become effective on or about . This information statement/prospectus also constitutes notice to you under Section 228 of the DGCL of the actions taken by written consent by the AeroClean Majority Stockholders without a meeting of stockholders.

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND A PROXY.

AeroClean, Merger Sub and Molekule have entered into the Merger Agreement pursuant to which Merger Sub will merge with and into Molekule, with Molekule as the surviving corporation and a wholly owned subsidiary of AeroClean. Following the completion of the Merger, the name of AeroClean will be changed to Molekule Group, Inc.

At the effective time of the merger (the “Effective Time”), each issued and outstanding share of common stock of Molekule, par value $0.0001 per share (“Molekule Common Stock”), will be converted into the right to receive shares of AeroClean Common Stock that will result in the Molekule stockholders in the aggregate, together with the holders of Closing Date Vested RSUs (as defined herein), holding 49.5% of the Outstanding Shares (as defined in the Merger Agreement). The number of shares of AeroClean Common Stock to be received by the Molekule stockholders will not be adjusted for changes in the market price of AeroClean Common Stock between the signing of the Merger Agreement and the Effective Time. AeroClean stockholders will continue to own and hold their existing shares of AeroClean Common Stock. AeroClean stockholders will own approximately 50.5% and Molekule stockholders (including the holders of Closing Date Vested RSUs) will own approximately 49.5% of the Outstanding Shares (as defined in the Merger Agreement) immediately following the Effective Time.

AeroClean Common Stock is currently quoted on the Nasdaq Capital Market (“Nasdaq”) under the symbol “AERC.” Upon the Closing Date, AeroClean will be renamed Molekule Group, Inc. and will trade under the symbol “MKUL.” On December , 2022, the last trading day before the date of this information statement/ prospectus, the closing sale price of AeroClean Common Stock on Nasdaq was $ per share.

Under the DGCL, AeroClean’s certificate of incorporation and bylaws and applicable Nasdaq rules, the approval of the issuance of AeroClean Common Stock as Merger Consideration, the Charter Amendments and the Equity Plan Amendment by the Company’s stockholders required the affirmative vote or written consent of the holders of a majority of the outstanding shares of AeroClean Common Stock. On October 3, 2022, the AeroClean Majority Stockholders, collectively holding approximately 52% of AeroClean Common Stock, executed a written consent approving (a) the Merger, the Transactions and the issuance of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, (b) the Charter Amendments and (c) the Equity Plan Amendment. No other votes of AeroClean stockholders are required or necessary to effectuate the foregoing actions, and none is being solicited hereunder. As a result, AeroClean has not solicited and will not be soliciting your vote for the approval of the Merger, the Transactions, the issuance of the shares of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, the Charter Amendments or the Equity Plan Amendment, and AeroClean does not intend to call a meeting of stockholders for purposes of voting on the approval of the foregoing actions.

This Notice of Stockholder Action by Written Consent shall constitute notice to you from the Company that the Merger, the Transactions, the issuance of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, the Charter Amendments and the Equity Plan Amendment have been approved by the holders of a majority of the outstanding shares of AeroClean Common Stock by written consent in lieu of a meeting in accordance with Section 228 of the DGCL.

Holders of AeroClean Common Stock do not have appraisal or dissenters’ rights under the DGCL in connection with the matters described in this information statement/prospectus and approved by the AeroClean Majority Stockholders.

This information statement/prospectus provides you with more specific information concerning the Merger, the other transactions contemplated by the Merger Agreement, the Charter Amendments and the Equity Plan Amendment. We encourage you to carefully read this information statement/prospectus and the copy of the Merger Agreement included as Annex A to this information statement/prospectus.

More information about AeroClean, Molekule, and the proposed transaction is contained in this information statement/prospectus. AeroClean urges you to read the accompanying information statement/ prospectus carefully and in its entirety. We encourage you to read the entire document carefully, in particular the “Risk Factors” section beginning on page 22 of this information statement/prospectus.

Table of Contents

QUESTIONS AND ANSWERS

The following are some questions that you, as a stockholder of AeroClean, may have regarding the Merger, and brief answers to those questions. You are urged to carefully read this information statement/ prospectus and the other documents referred to in this information statement/prospectus in their entirety. See the section entitled “Summary” for a summary of important information regarding the Merger Agreement, the Merger and related Transactions. Additional important information is contained in the annexes to this information statement/prospectus. You may obtain the information incorporated by reference into this information statement/prospectus without charge by following the instructions under the section titled “Where You Can Find Additional Information.”

Q:	Why am I receiving this information statement/prospectus?

A:	You are receiving this information statement/prospectus because AeroClean and Molekule have agreed to combine in an all-stock merger transaction, and you have been identified as a stockholder of AeroClean.

This information statement/prospectus serves as:

●

an information statement of AeroClean being furnished to you to notify you that the holders of a majority of the outstanding shares of AeroClean Common Stock have approved the Merger, the Transactions, the issuance of AeroClean Common Stock as Merger Consideration, the Charter Amendments and the Equity Plan Amendment; and

●

a prospectus of AeroClean used to offer shares of AeroClean Common Stock in exchange for shares of Molekule Common Stock in the Merger.

This information statement/prospectus, which you should carefully read in its entirety, contains important information about the Merger and other matters.

Q:	What is the Merger?

On October 3, 2022, AeroClean Technologies, Inc., a Delaware corporation, entered into an Agreement and Plan of Merger by and among the Company, Air King Merger Sub Inc., a Delaware corporation and direct wholly owned subsidiary of the Company, and Molekule, Inc., a Delaware corporation, providing for, among other things, and subject to the terms and conditions therein, an all-stock merger transaction pursuant to which Merger Sub will merge with and into Molekule, with Molekule continuing as the surviving entity and a wholly owned subsidiary of the Company.

Q:	What will happen in the Merger?

Pursuant to the Merger Agreement, at the Effective Time, the outstanding shares of Molekule Common Stock that are issued and outstanding immediately prior to the Effective Time of the Merger (including shares of Molekule Common Stock resulting from the conversion of Molekule’s Preferred Stock), will be converted automatically into, and the holders of such shares of Molekule Common Stock will be entitled to receive, by virtue of the Merger and upon the terms and subject to the conditions set forth in the Merger Agreement, fully paid and nonassessable shares of AeroClean Common Stock that will result in the Molekule stockholders in the aggregate, together with the holders of Closing Date Vested RSUs, holding 49.5% of the Outstanding Shares (as defined in the Merger Agreement).

At the Effective Time, each Molekule Preferred Stock Warrant will, by virtue of the Merger and without further action on the part of the holder thereof, be cancelled and converted into the right to receive, for each share of Molekule Common Stock issuable upon conversion of any Molekule Preferred Stock issuable upon exercise of any Molekule Preferred Stock Warrant, a portion of the Merger Consideration equal to the Merger Consideration that would have been payable in respect of such share had such Molekule Preferred Stock Warrant been exercised immediately prior to the Effective Time less the exercise price with respect to such Molekule Preferred Stock Warrant. Each Molekule Warrant issued and outstanding as of the Effective Time that is not a Molekule Preferred Stock Warrant will automatically be cancelled and terminated for no consideration immediately prior to the Effective Time.

At the Effective Time, each outstanding option to acquire Molekule Common Stock will be cancelled and terminated for no consideration. Any shares of Molekule Common Stock that remain available for issuance pursuant to Molekule’s 2015 Stock Plan

Table of Contents

(the “Residual Shares”) will be converted at the Effective Time into the number of shares of AeroClean Common Stock equal to the product of the number of such Residual Shares and the exchange ratio determined in accordance with the Merger Agreement (the “Assumed Shares”). At the Effective Time, AeroClean will assume the Molekule 2015 Stock Plan with the result that AeroClean may issue the Assumed Shares after the Effective Time pursuant to the settlement of any equity awards granted under the 2015 Stock Plan, the AeroClean Incentive Award Plan or any other AeroClean equity plan. As soon as reasonably practicable following the Effective Time, AeroClean will grant awards of restricted stock units to specified Molekule employees who continue in service.

The Merger Agreement is attached to this information statement/prospectus as Annex A. For a more complete discussion of the proposed Merger, its effects and the other Transactions contemplated by the Merger Agreement, please see “The Merger” elsewhere in this information statement/prospectus.

Q:	Why are the two companies proposing to merge?

AeroClean and Molekule believe that the combination of AeroClean, an air hygiene technology company, and Molekule, a market leader for premium air purifiers, will create (1) a combined company with a broad range of highly complementary, proprietary and patented, FDA-cleared air purification devices and (2) a company with powerful combined brand value and recognition with an installed base of over 350,000 air purification units, providing a foundation for a growing recurring revenue base from consumables. AeroClean and Molekule believe that the Combined Company’s solid balance sheet and access to capital will enhance their ability to invest in software and product development, engineering and sales resources required to compress the time-to-market to develop new devices, SaaS software solutions, advanced sensor technology and smart building integrations enabling enterprise-wide IAQ monitoring and control. In addition, following the Closing, each of AeroClean and Molekule expects to introduce its products into the other’s existing sales and distribution channels to accelerate B2B market penetration and to expand further into healthcare, government, hospitality and education verticals. The Combined Company will have the largest range of proprietary and patented, FDA-cleared air purification devices to address the estimated $15 billion, rapidly growing global air purification market. For a discussion of AeroClean’s and Molekule’s reasons for the Merger, please see the sections entitled “The Merger — AeroClean’s Reasons for the Merger” and “The Merger — Molekule’s Reasons for the Merger” in this information statement/prospectus.

Q:	Have the Merger and the Merger Agreement been approved by the boards of directors of both AeroClean and Molekule?

A:	Yes. The boards of directors of AeroClean and Molekule have approved the Merger and the Merger Agreement.

Q:	Did the AeroClean Board obtain a fairness opinion from an independent investment bank prior to approving the Merger and the Merger Agreement?

Yes. On October 3, 2022, The Benchmark Company LLC (“Benchmark”) delivered a fairness opinion to the AeroClean Board in which Benchmark stated its view that the Merger Consideration is fair to AeroClean’s stockholders from a financial point of view. Benchmark’s opinion is included as Annex B to this information statement/prospectus.

Q:	What have the holders of a majority of the outstanding shares of AeroClean Common Stock approved in connection with the Merger?

A:	On October 3, 2022, the holders of approximately 52% of the outstanding shares of AeroClean Common Stock approved:

the Merger, the Transactions and the issuance of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement;

the Charter Amendments, in which AeroClean’s certificate of incorporation will be amended and restated (1) to change the name of the company from AeroClean Technologies, Inc. to Molekule Group, Inc. and (2) to add an officer exculpation provision with respect to violations of fiduciary duties in accordance with recent amendments to Delaware corporate law; and

the Equity Plan Amendment, in which the share reserve in AeroClean’s 2021 Incentive Award Plan will be increased by 800,000 shares.

Table of Contents

Q:	Why am I not being asked to vote on the Merger, the issuance of shares of AeroClean Common Stock as Merger Consideration, the Charter Amendments or the Equity Plan Amendment?

In accordance with applicable Delaware law, the Nasdaq rules and the Merger Agreement, no vote of the stockholders of AeroClean is required to approve the adoption of the Merger Agreement, the issuance of shares of AeroClean Common Stock as Merger Consideration, the Charter Amendments or the Equity Plan Amendment.

Delaware law allows Delaware corporations to permit stockholders to act by written consent, AeroClean’s certificate of incorporation allows the holders of a majority of the shares of AeroClean Common Stock to act by written consent if authorized by the AeroClean Board, and the AeroClean Board has authorized AeroClean’s stockholders to act by written consent to approve the Merger, the Transactions, the issuance of shares of AeroClean Common Stock as Merger Consideration, the Charter Amendments and the Equity Plan Amendment.

Therefore, your vote is not required and is not being sought. We are not asking you for a proxy. The purpose of the Registration Statement of which this information statement/prospectus forms a part is (1) to notify stockholders of AeroClean about the Merger, the Transactions, the issuance of shares of AeroClean Common Stock as Merger Consideration, the Charter Amendments and the Equity Plan Amendment and (2) to register the shares of AeroClean Common Stock being issued as Merger Consideration.

Q:	Have the stockholders of Molekule approved the Merger and the Merger Agreement?

The holders of a majority of the shares of Molekule Series 1 Preferred Stock, and the holders of a majority of the shares of Molekule Common Stock and Molekule Series 1 Preferred Stock (on an as-converted basis) voting together as a single class, have executed support agreements in which they have agreed to execute a written consent in favor of the Merger and the Merger Agreement within two business days after the Registration Statement, of which this information statement/prospectus forms a part, is declared effective by the SEC.

Q:	What will AeroClean stockholders receive if the Merger is completed?

At the Effective Time, AeroClean’s stockholders will continue to own and hold their existing shares of AeroClean Common Stock and will not need to take any action related to the Merger. All outstanding warrants to purchase shares of AeroClean Common Stock will remain in effect pursuant to their terms, and all outstanding options to purchase shares of AeroClean Common Stock will remain in effect pursuant to their terms. Restricted stock units which have been granted pursuant to AeroClean’s 2021 Incentive Award Plan also will not be effected by the Merger.

Q:	What will Molekule stockholders receive if the Merger is completed?

If the Merger is completed, Molekule stockholders who own shares of Molekule Common Stock immediately prior to the Effective Time (including (1) shares of Molekule Series 1 Preferred Stock which will be cancelled and converted into shares of Molekule Common Stock and (2) Molekule Preferred Stock Warrants which will be cancelled and converted into the right to receive shares of Molekule Common Stock) will receive shares of AeroClean Common Stock which represent, together with the shares underlying Closing Date Vested RSUs, approximately 49.5% of the Outstanding Shares (as defined in the Merger Agreement) of AeroClean as of the Effective Time. Immediately prior to the Effective Time, all Molekule Series 2 Preferred Stock will be redeemed at a price per share of $0.0001 in accordance with Molekule’s restated certificate of incorporation and any Molekule Warrants that are not Molekule Preferred Stock Warrants will be automatically cancelled and terminated for no consideration.

No certificates or scrip representing a fractional share of AeroClean Common Stock will be issued to any of the Molekule common stockholders in connection with payment of the Merger Consideration, and to the extent a fractional share of AeroClean Common Stock is issuable as part of the Merger Consideration after aggregating all fractional shares of AeroClean Common Stock that otherwise would be received by such Molekule common stockholder, such fraction shall be rounded up to one whole share of AeroClean Common Stock.

For more information regarding the Merger Consideration to be received by Molekule stockholders in the Merger, please see “The Merger Agreement — Effects of the Merger; Merger Consideration.”

Table of Contents

Q:	Who will own the Combined Company immediately following the Merger?

Upon completion of the Merger, current AeroClean stockholders, collectively, will own approximately 50.5% of the Outstanding Shares of AeroClean Common Stock, and current Molekule stockholders, collectively, including the holders of Closing Date Vested RSUs, will own approximately 49.5% of the Outstanding Shares of AeroClean Common Stock, with such Outstanding Shares being calculated in accordance with the Merger Agreement. See “The Merger Agreement — Effects of the Merger; Merger Consideration” for more information.

Q:	How will AeroClean stockholders be affected by the Merger?

Upon completion of the Merger, each AeroClean stockholder will hold the same number of shares of AeroClean Common Stock that such stockholder held immediately prior to completion of the Merger. As a result of the Merger, AeroClean will be a larger company with a more diverse business. However, because AeroClean will issue additional shares of AeroClean Common Stock to Molekule stockholders in exchange for their shares of Molekule Common Stock, each share of AeroClean Common Stock outstanding prior to the Merger will represent a smaller percentage of the aggregate number of shares of AeroClean outstanding after the Merger.

Q:	Who will be the directors of the Combined Company following completion of the Merger?

The Merger Agreement provides that, as of the Effective Time, the board of directors of the Combined Company will be comprised of eight directors, consisting of (a) the seven current directors of AeroClean and (b) one director to be designated by Molekule. The individuals expected to serve on the board of directors of the Combined Company following the Effective Time include Amin J. Khoury, David Helfet, Michael Senft, Thomas P. McCaffrey, Heather Floyd, Timothy J. Scannell and Stephen M. Ward, Jr., who are the seven current directors of AeroClean, and Brad Feld, who has been designated by Molekule. Amin J. Khoury, currently the Chairman of the Board of AeroClean, will continue as Chairman of the Board of the Combined Company.

Q:	Who will be the management of the Combined Company following completion of the Merger?

At the Effective Time, (i) Jason DiBona, the current Chief Executive Officer of AeroClean, will remain Chief Executive Officer of the Combined Company, (ii) Ryan Tyler, the current Chief Financial Officer of AeroClean, will remain Chief Financial Officer of the Combined Company, (iii) Jonathan Harris, the current Chief Executive Officer of Molekule, will serve as Chief Commercial Officer of the Combined Company, and (iv) Ritankar “Ronti” Pal, the current Chief Operating Officer and Chief Financial Officer of Molekule, will serve as Chief Operating Officer of the Combined Company.

Q:	Where will the Combined Company be located following the completion of the Merger?

A:	The Combined Company will remain headquartered in Palm Beach Gardens, Florida, with significant operations in Lakeland, Florida and offices in San Francisco, California.

Q:	What will be the name of the Combined Company following completion of the Merger?

A:	The name of the Combined Company following completion of the Merger will be “Molekule Group, Inc.”

Q:	Are AeroClean or Molekule raising additional financing in connection with the Merger?

A:	AeroClean is not raising additional financing in connection with the Merger.

Molekule agreed in the Merger Agreement to use its reasonable best efforts to raise at least $5 million, and up to $7 million, in equity financing following the execution of the Merger Agreement. Foundry Group Next, L.P. (“Foundry”), which is currently Molekule’s largest stockholder, committed to purchase an amount in cash equal to $7 million less the amount purchased by other Molekule stockholders, provided that in no event was Foundry required to purchase and fund more than $5 million of this amount. On December 2, 2022, Molekule consummated the Rights Offering, with Foundry purchasing 16,553,000 shares of Molekule Series 1 Preferred Stock and 6,437,460 shares of Molekule Series 2 Preferred Stock for a purchase price of $6.4 million.

Table of Contents

Q:	Do AeroClean stockholders have appraisal rights or dissenters’ rights in connection with the Merger?

A:	No. AeroClean stockholders are not entitled to appraisal or dissenters’ rights in connection with the Merger.

Q:	When is the Merger expected to be completed?

AeroClean and Molekule hope to complete the Merger as soon as reasonably practicable. The completion of the Merger will occur only after all of the conditions to the Merger have been satisfied or waived. One of the conditions to closing is the mailing of this information statement/prospectus to the AeroClean stockholders at least 20 calendar days prior to Closing. However, neither AeroClean nor Molekule can predict the actual date on which the Merger will be completed, or if the Merger will be completed at all, because completion of the Merger is subject to conditions and factors beyond the control of both companies. For more information, please see the section entitled “The Merger Agreement — Conditions to Completion of the Merger” in this information statement/prospectus.

Q:	What are the conditions to completion of the Merger?

A:	The obligations of AeroClean and Molekule to consummate the Merger are subject to the satisfaction or waiver by the other party (to the extent permitted by applicable legal requirements), at or prior to the completion of the Merger, of the following conditions:

(i)

no governmental authority shall have enacted, issued, promulgated, enforced or entered any governmental order which is in effect and has the effect of making the Transactions illegal, and no law shall have been enacted, issued, promulgated, enforced or entered by any governmental authority that, in any case, prohibits or makes illegal the Merger and related Transactions;

(ii)

the AeroClean stockholder approval must remain valid and binding;

(iii)

the Molekule stockholder approval of the Transactions shall have been obtained (including approval by the holders of (a) a majority of the shares of Molekule Series 1 Preferred Stock and (b) a majority of the shares of Molekule Common Stock and Molekule Series 1 Preferred Stock on a converted basis voting together as a single class);

(iv)

the Registration Statement shall have become effective and be in effect;

(v)

this Information Statement shall have been disseminated to AeroClean stockholders at least twenty (20) calendar days prior to the Closing; and

(vi)

the AeroClean Common Stock to be issued in connection with the Transactions shall have been approved for listing on the Nasdaq Capital Market, subject only to official notice of issuance thereof.

The obligation of AeroClean to consummate the Merger is subject to the satisfaction or waiver by AeroClean (to the extent permitted by applicable legal requirements) of the following conditions, among others:

(i)

the accuracy of Molekule’s representations and warranties at the Closing;

(ii)

the performance or compliance in all material respects by Molekule of its covenants to be performed or complied with as of or prior to the Closing;

(iii)

delivery by Molekule of a customary officer’s certificate and a customary certificate regarding “U.S. real property interests”;

(iv)

employment agreements with certain key employees of Molekule must be in full force and effect and such key employees shall not have terminated their employment with Molekule or delivered any notice to Molekule of any intention to leave the employ of Molekule or AeroClean;

(v)

the consents from Silicon Valley Bank (“SVB”) and Trinity Capital Inc. (“Trinity”) must remain in full force and effect and must not have been amended, rescinded or otherwise terminated;

Table of Contents

(vi)

the Backstop Purchase Agreement executed by Foundry shall remain in full force and effect, and shall not have been amended, rescinded or otherwise terminated; and

(vii)

Molekule shall have commenced and consummated an equity financing and, in connection therewith, shall have received an amount in cash of not less than $5 million.

The obligation of Molekule to consummate the Merger is subject to the satisfaction or waiver by Molekule (to the extent permitted by applicable legal requirements) of the following conditions:

(i)

the accuracy of AeroClean’s representations and warranties at the Closing;

(ii)

the performance or compliance in all material respects by AeroClean of its covenants to be performed or complied with as of or prior to the Closing; and

(iii)

the delivery by AeroClean of a customary officer’s certificate.

For more information, please see “The Merger Agreement — Conditions to Completion of the Merger.”

Q:	What will happen to AeroClean if, for any reason, the Merger does not close?

If, for any reason, the Merger does not close, AeroClean will continue to operate its business as it has done before. If the Merger does not close, AeroClean will not issue shares of AeroClean Common Stock to the holders of Molekule Common Stock as Merger Consideration. However, AeroClean would still amend its charter to reflect the officer exculpation provision contained in the Charter Amendments and would still increase the share reserve under its 2021 Incentive Award Plan as contemplated by the Equity Plan Amendment, but AeroClean would not amend its charter to reflect the name change to Molekule Group, Inc. AeroClean would remain listed on the Nasdaq Capital Market under the name AeroClean Technologies, Inc., the size of the AeroClean Board would not be increased to eight members, and AeroClean’s management would remain the same. Whether or not the Merger closes, the AeroClean Board may seek to complete one or more other strategic transactions like the Merger.

Q:	If the Merger does not close, is either party to the Merger Agreement required to pay a termination fee or reimburse the other party for its expenses incurred in connection with the Merger?

No.

Q:	If I am an AeroClean stockholder, what should I do now?

A:	You should read this information statement/prospectus carefully and in its entirety, including the annexes.

Q:	Should I send in my shares of AeroClean Common Stock to AeroClean’s transfer agent or sign a proxy?

A:	No. You do no need to send your shares of AeroClean Common Stock to anyone and you do not need to sign a proxy.

Q:	What are the material U.S. Federal income tax consequences to AeroClean and AeroClean stockholders as a result of the Merger?

A:	AeroClean does not expect AeroClean or any AeroClean stockholder to recognize any gain for U.S. federal income tax purposes as a result of the Merger.

Q:	Are there any risks that I should consider in connection with the Merger?

A:	Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors” in this information statement/prospectus. You also should read and carefully consider the risk factors relating to AeroClean that are included in AeroClean’s filings with the SEC.

SUMMARY

For your convenience, provided below is a brief summary of certain information contained in this information statement/prospectus. This summary highlights selected information from this information statement/ prospectus and does not contain all of the information that may be important to you. To understand the Merger fully and for a more complete description of the terms of the Merger, you should read this entire information statement/prospectus carefully, including its annexes and the other documents to which you are referred. Items in this summary include a page reference directing you to a more complete description of those items. For more information, please see the section entitled “Where You Can Find Additional Information” in this information statement/prospectus.

Information About the Companies (See page 80)

AeroClean Technologies, Inc.

AeroClean is a pathogen elimination technology company on a mission to keep work, play and life going by improving IAQ. AeroClean’s air hygiene product, Pūrgo™ (pure-go), is an FDA 510(k) cleared, Class II medical device that provides continuous air filtration, sanitization and supplemental ventilation solutions with technology that can be applied in any indoor space — including in hospitals, offices, even in elevators. Pūrgo™ products feature SteriDuct™, a proprietary germicidal technology developed by AeroClean’s aerospace engineers, medical scientists and innovators that work to eradicate viral, fungal, and bacterial airborne microorganisms. AeroClean’s purpose is simple: to never stop innovating solutions that keep people healthy and safe, so life never stops.

Shares of AeroClean Common Stock are traded on Nasdaq under the symbol “AERC.” AeroClean’s principal executive offices are located at 10455 Riverside Drive, Palm Beach Gardens, Florida 33410 and its telephone number is (833) 652-5326.

Molekule, Inc.

Molekule is on a mission to provide clean indoor air to everyone, everywhere. Based on 25 years of research and development, the company’s patented photo electrochemical oxidation (“PECO”) technology destroys a wide range of pollutants, including VOCs, mold, bacteria, viruses, and allergens, when compared to conventional filters. Molekule’s range of air purification solutions have been reviewed and validated by third-party laboratories and its medical-grade products have been granted medical device clearance by the FDA.

Molekule is currently a private company. Its principal executive offices are located at 1301 Folsom Street, San Francisco, California 94103 and its telephone number is (855) 999-9069.

Air King Merger Sub Inc.

Air King Merger Sub Inc. is a direct wholly owned subsidiary of AeroClean. Merger Sub was formed by AeroClean solely in contemplation of the Merger, has not conducted any business and has no assets, liabilities or other obligations of any nature other than as set forth in the Merger Agreement. At the Effective Time, Merger Sub will merge with and into Molekule, with Molekule continuing as the surviving corporation and as a wholly owned subsidiary of AeroClean, and the separate existence of Merger Sub will cease. Merger Sub’s principal executive offices are located at 10455 Riverside Drive, Palm Beach Gardens, Florida 33410 and its telephone number is (833) 652-5326.

The Merger and the Merger Agreement (See pages 81 and 114)

The Merger Agreement provides that, subject to the terms and conditions of the Merger Agreement, Merger Sub will merge with and into Molekule, with Molekule continuing as the surviving corporation and as a wholly owned subsidiary of AeroClean.

The terms and conditions of the Merger are contained in the Merger Agreement, a copy of which is attached as Annex A hereto. You are encouraged to read the Merger Agreement carefully and in its entirety, as it is the legal document that governs the Merger.

Effects of the Merger; Merger Consideration (See page 115)

If the Merger is completed, the shares of Molekule Common Stock issued and outstanding immediately prior to the Effective Time (including shares of Molekule Common Stock resulting from the conversion of the Molekule Series 1 Preferred Stock that is issued and outstanding immediately prior to the Effective Time) (other than (i) the shares of Molekule Common Stock issued and outstanding immediately prior to the Effective Time held by a holder who has not voted in favor of adoption of the Merger Agreement or consented thereto in writing and who has properly exercised appraisal rights of such shares in accordance with Section 262 of the DGCL or (ii) Molekule treasury shares, which will be cancelled for no consideration) will be converted automatically into, and the holders of such shares of Molekule Common Stock will be entitled to receive, by virtue of the Merger and upon the terms and subject to the conditions set forth in the Merger Agreement, fully paid and nonassessable shares of AeroClean Common Stock to be paid to all Molekule common stockholders (the “Merger Consideration”) that shall result in such Molekule common stockholders, in the aggregate, together with the holders of Closing Date Vested RSUs, holding 49.5% of the Outstanding Shares (as defined in the Merger Agreement). The calculation of the Merger Consideration applicable at Closing will be as specified in the Merger Agreement. We expect the Merger Consideration will consist of approximately 15.1 million shares of AeroClean Common Stock.

As a result of the Merger, at the Effective Time, the shares of Molekule Common Stock will no longer be outstanding and will cease to exist and each Molekule common stockholder will cease to have any other rights as a stockholder of Molekule Common Stock with respect thereto, except the right to receive the Merger Consideration payable in respect of such shares of Molekule Common Stock. No certificates or scrip representing a fractional share of AeroClean Common Stock will be issued to any of the Molekule common stockholders in connection with payment of the Merger Consideration, and to the extent a fractional share of AeroClean Common Stock is issuable as part of the Merger Consideration after aggregating all fractional shares of AeroClean Common Stock that otherwise would be received by such Molekule common stockholder, such fraction shall be rounded up to one whole share of AeroClean Common Stock.

AeroClean stockholders will continue to own their existing shares of AeroClean Common Stock following the Merger.

Treatment of Molekule Warrants (See page 116)

At the Effective Time, each Molekule Preferred Stock Warrant will, by virtue of the Merger and without further action on the part of the holder thereof, be cancelled and converted into the right to receive, for each share of Molekule Common Stock issuable upon conversion of any Molekule Preferred Stock issuable upon exercise of any Molekule Preferred Stock Warrant, a portion of the Merger Consideration equal to (i) the Merger Consideration that would have been payable pursuant to the Merger Agreement in respect of such share had such Molekule Preferred Stock Warrant been exercised immediately prior to the Effective Time, less (ii) the exercise price with respect to such Molekule Preferred Stock Warrant (the resultant aggregate Merger Consideration due to a holder of a Molekule Preferred Stock Warrant, the “Warrant Merger Consideration”). Each Molekule Warrant issued and outstanding as of the Effective Time that is not a Molekule Preferred Stock Warrant will automatically and without further action by any party be cancelled and terminated for no consideration or payment immediately prior to the Effective Time. The Warrant Merger Consideration will be calculated in accordance with the terms of the applicable Molekule Preferred Stock Warrant.

Treatment of Molekule Equity Awards (See page 116)

At the Effective Time, each Molekule stock option will, by virtue of the Merger and without further action on the part of the holder thereof, be cancelled and terminated for no consideration or payment.

From and after the Effective Time, neither AeroClean nor Molekule will be required to deliver shares of Molekule Common Stock, other capital stock of Molekule, or other compensation of any kind to any person pursuant to or in settlement of any Molekule equity or equity-based awards under Molekule’s 2015 Stock Plan or otherwise.

Any shares of Molekule Common Stock that remain available for issuance pursuant to the Molekule 2015 Stock Plan as of the Effective Time (the “Residual Shares”) will, in accordance with the Molekule 2015 Stock Plan, be converted at the Effective Time into a number of shares of AeroClean Common Stock as determined in accordance with the Merger Agreement (such shares of AeroClean Common Stock, the “Assumed Shares”). At the Effective Time, by virtue of the Merger and without further action by any party, AeroClean will assume the Molekule 2015 Stock Plan with the result that AeroClean may, as permitted by applicable law, issue the Assumed Shares, if any, after the Effective Time pursuant to the settlement of any equity awards granted under the Molekule 2015 Stock Plan, AeroClean’s 2021 Incentive Award Plan, or any other plan of AeroClean or any of its affiliates.

As soon as reasonably practicable following the Effective Time, AeroClean has agreed to grant RSU awards under its 2021 Incentive Award Plan to specified Molekule employees consistent with the amounts and vesting schedules provided by Molekule to AeroClean prior to the date of the Merger Agreement.

AeroClean’s Reasons for the Merger (See page 88)

The AeroClean Board has unanimously approved the Merger Agreement and the Merger. For a description of factors considered by the AeroClean Board in reaching its decision to approve the Merger Agreement and the Merger and related Transactions, see the section entitled “The Merger — AeroClean’s Reasons for the Merger.”

Molekule’s Reasons for the Merger (See page 92)

The board of directors of Molekule has unanimously approved the Merger Agreement and the Merger. For a description of factors considered by the board of directors of Molekule in reaching its decision to approve the Merger Agreement and the Merger and related Transactions, see the section entitled “The Merger — Molekule’s Reasons for the Merger.”

Opinion of AeroClean’s Financial Advisor (See page 96 and Annex B)

AeroClean retained Benchmark as financial advisor to the AeroClean Board in connection with the Merger. In connection with this engagement, the AeroClean Board requested that Benchmark evaluate the fairness, from a financial point of view, to AeroClean’s stockholders of the Merger Consideration provided for pursuant to the Merger Agreement. On October 3, 2022, Benchmark rendered to the AeroClean Board its oral opinion, which was subsequently confirmed by delivery of a written opinion dated October 3, 2022, that, as of such date and based upon and subject to the assumptions made, procedures followed, and matters considered by Benchmark in preparing its opinion, the Merger Consideration provided for pursuant to the Merger Agreement is fair, from a financial point of view, to AeroClean’s stockholders.

The full text of Benchmark’s written opinion, dated October 3, 2022, which describes the assumptions made, procedures followed, and matters considered by Benchmark in preparing its opinion, is attached as Annex B to this information statement/prospectus and is incorporated herein by reference. Benchmark’s financial advisory services and opinion were provided for the information and assistance of the members of the AeroClean Board (in their capacity as directors and not in any other capacity) in connection with and for purposes of their consideration of the Merger, and Benchmark’s opinion addressed only the fairness, from a financial point of view, as of the date thereof, to AeroClean’s stockholders of the Merger Consideration provided for pursuant to the Merger Agreement. Benchmark’s opinion did not address any other term or aspect of the Merger Agreement or the Merger and does not constitute a recommendation to any stockholder of AeroClean or any other person with respect to the Merger or any other matter.

The full text of Benchmark’s written opinion, which is attached as Annex B to this information statement/ prospectus, should be read carefully in its entirety for a description of the assumptions made, procedures followed, and matters considered by Benchmark in preparing its opinion.

Interests of AeroClean’s Directors and Executive Officers in the Merger (See page 114)

AeroClean’s directors and executive officers may have interests in the Merger, including financial interests, that may be different from, or in addition to, the interests of AeroClean stockholders generally. The AeroClean Board was aware of and considered these interests, among other matters, in reaching its determination that the Merger is fair to and in the best interests of AeroClean and its stockholders and in approving and declaring advisable the Merger Agreement and related Transactions. These interests are discussed in more detail in the section entitled “Interests of AeroClean’s Directors and Executive Officers in the Merger.”

Interests of Molekule’s Directors and Executive Officers in the Merger (See page 112)

Molekule’s directors and executive officers may have interests in the Merger, including financial interests, that may be different from, or in addition to, the interests of Molekule stockholders generally. The Molekule Board was aware of and considered these interests, among other matters, in reaching its determination that the Merger is fair to and in the best interests of Molekule and its stockholders and in approving and declaring advisable the Merger Agreement and related Transactions. These interests are discussed in more detail in the section entitled “Interests of Molekule’s Directors and Executive Officers in the Merger.”

Molekule Support Agreements (See page 108)

In connection with the execution of the Merger Agreement, Molekule stockholders that hold (a) a majority of the Molekule Series 1 Preferred Stock and (b) a majority of the Molekule Common Stock and the Molekule Series 1 Preferred Stock on an as-converted basis, voting together as a single class, executed Support Agreements, dated October 3, 2022, pursuant to which such Molekule stockholders agreed to irrevocably and unconditionally vote or execute a written consent to adopt the Merger Agreement and approve the Merger on or as promptly as reasonably practicable (and in any event within two (2) business days) following the date the Registration Statement of which this information statement/prospectus forms a part is declared effective.

For more information, please see “Ancillary Agreements — Molekule Support Agreements.” For more information regarding the security ownership of the Molekule stockholders who executed support agreements, please see “Principal Stockholders of Molekule.”

AeroClean Stockholder Approval

AeroClean’s Certificate of Incorporation

AeroClean’s certificate of incorporation provides that the taking of any action that is required or permitted to be taken by the AeroClean stockholders at any annual or special meeting of AeroClean stockholders may be effected by written consent of stockholders in lieu of a meeting if such action and the taking of such action by written consent of stockholders in lieu of a meeting have each been expressly approved in advance by the AeroClean Board.

On October 3, 2022, the AeroClean Board approved the Merger, the Transactions and the issuance of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, approved the adoption of the Charter Amendments and approved the adoption of the Equity Plan Amendment. In addition, the AeroClean Board authorized the AeroClean stockholders to approve the foregoing by written consent in lieu of a meeting.

On October 3, 2022, the holders of 52% of the outstanding shares of AeroClean Common Stock executed a written consent in which they approved the Merger, the Transactions, the issuance of AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement, the adoption of the Charter Amendments and the adoption of the Equity Plan Amendment.

Nasdaq Listing Rules — Share Issuance

The issuance of AeroClean Common Stock as Merger Consideration required the approval of the holders of a majority of the shares of AeroClean Common Stock in accordance with Nasdaq Rules 5635(a), 5635(b) and 5635(d).

In accordance with Nasdaq Rule 5635(a), stockholder approval is required prior to the issuance of securities in connection with the acquisition of the stock or assets of another company if, where, due to the present or potential issuance of common stock, including shares issued pursuant to an earn-out provision or similar type of provision, or securities convertible into or exercisable for common stock, other than a public offering for cash, either (A) the common stock has or will have upon issuance voting power equal to or in excess of 20% of the voting power outstanding before the issuance of stock or securities convertible into or exercisable for common stock or (B) the number of shares of common stock to be issued is or will be equal to or in excess of 20% of the number of shares of common stock outstanding before the issuance of the stock or securities.

Stockholder approval of the issuance of the AeroClean Common Stock as Merger Consideration in accordance with the Merger Agreement was required in accordance with Nasdaq Rule 5635(a) because the shares of AeroClean Common Stock to be issued as Merger Consideration will have upon issuance voting power in excess of 20% of the voting power outstanding before such issuance and the number of shares of AeroClean Common Stock to be issued as Merger Consideration will be in excess of 20% of the number of shares of AeroClean Common Stock outstanding before the issuance of the Merger Consideration. The AeroClean Common Stock to be issued as Merger Consideration in accordance with the Merger Agreement will represent over 96% of the shares of AeroClean Common Stock outstanding before the issuance of the Merger Consideration.

In accordance with Nasdaq Rule 5635(b), stockholder approval is required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of the Company (which is defined by Nasdaq as the issuance of common stock where, as a result of the issuance, an investor or a group would own, or have the right to acquire, 20% or more of the outstanding shares of common stock or voting power and such ownership or voting power would be the largest ownership position).

Stockholder approval of the issuance of the AeroClean Common Stock as Merger Consideration was required pursuant to Nasdaq Rule 5635(b) because Foundry will acquire more than 20% of the outstanding shares of AeroClean Common Stock after giving effect to the Merger and Foundry will become the single largest stockholder of AeroClean following the Merger.

In accordance with Nasdaq Rule 5635(d), stockholder approval is required prior to a “20% Issuance” at a price that is less than the “Minimum Price,” where (A) “Minimum Price” means a price that is the lower of (i) the Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement or (ii) the average Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement; and (B) “20% Issuance” means a transaction, other than a public offering, involving the sale, issuance or potential issuance by the company of common stock (or securities convertible into or exercisable for common stock), which alone or together with sales by officers, directors or substantial stockholders of the company, equals 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance.

Stockholder approval of the issuance of AeroClean Common Stock as Merger Consideration was required pursuant to Nasdaq Rule 5635(d) because the issuance is a 20% Issuance at a price that is less than the Minimum Price.

Nasdaq Listing Rules — Equity Plan Amendment

The adoption of the Equity Plan Amendment — in which AeroClean’s 2021 Incentive Award Plan will be amended to increase the share reserve available thereunder by 800,000 shares — required the approval of the holders of a majority of the shares of AeroClean Common Stock in accordance with Nasdaq Rule 5635(c). Nasdaq Rule 5365(c) requires stockholder approval prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees or consultants.

Delaware Law — Charter Amendments

The adoption of the Charter Amendments required the approval of the holders of a majority of the shares of AeroClean Common Stock in accordance with Section 242 of the General Corporation Law of the state of Delaware.

Board of Directors of the Combined Company Following the Merger (See page 107)

At the Effective Time, the size of the AeroClean Board will be increased from seven directors to eight directors. The eight directors will consist of the seven current directors of AeroClean and one nominee of Molekule, who the parties have agreed will be Brad Feld. Mr. Feld is currently a Molekule director and co-founder of Foundry, Molekule’s largest stockholder.

In addition, the Merger Agreement provides that, upon the consummation of the Merger, AeroClean, certain stockholders of AeroClean and certain stockholders of Molekule will enter into a Stockholders Agreement. The Stockholders Agreement will provide that such stockholders will take all reasonable actions to nominate Brad Feld and the existing members of the AeroClean Board to be members of the board of directors of the Combined Company following the consummation of the Merger and until immediately after AeroClean’s 2024 annual meeting of stockholders. The stockholders who will execute the Stockholders Agreement will own a majority of the shares of AeroClean Common Stock after giving effect to the Merger.

In addition, Amin J. Khoury, currently the Chairman of the Board of AeroClean, will continue as Chairman of the Board of the Combined Company.

Management of the Combined Company After the Merger (See page 125)

Name of the Company

At the Effective Time, the name of the company will change from AeroClean Technologies, Inc. to Molekule Group, Inc.

Rights Offering and Backstop Purchase Agreement

In connection with the consummation of the Merger, Molekule agreed to commence and consummate an equity financing for cash of a minimum of $5 million and up to $7 million of securities of Molekule by no later than the date of effectiveness of the Registration Statement. In connection with the equity financing, Foundry delivered an executed Backstop Purchase Agreement to both Molekule and AeroClean irrevocably committing to both Molekule and AeroClean to purchase for cash up to $5 million of new equity to be issued by Molekule in connection with the equity financing. On December 2, 2022, Molekule consummated the Rights Offering. The securities issued in the Rights Offering were not registered under the Securities Act and were offered only to persons reasonably believed to be accredited investors (as defined in Rule 501 under the Securities Act).

Amended and Restated Registration Rights Agreement (See page 123)

The Merger Agreement provides that, upon the consummation of the Merger, AeroClean and certain stockholders of AeroClean and Molekule will enter into an Amended and Restated Registration Rights Agreement (the “Amended and Restated Registration Rights Agreement”). Under the Amended and Restated Registration Rights Agreement, following the consummation of the Merger, certain stockholder signatories thereto will have “demand” and “piggyback” registration rights. The Amended and Restated Registration Rights Agreement also provides that the Company will pay certain expenses relating to such registrations and indemnify the stockholder signatories thereto against (or make contributions in respect of) certain liabilities that may arise under the Securities Act of 1933, as amended.

Conditions to Completion of the Merger (See page 119)

(i)

(ii)

the AeroClean stockholder approval must remain valid and binding;

(iii)

(iv)

the Registration Statement shall have become effective and be in effect;

(v)

this Information Statement shall have been disseminated to AeroClean stockholders at least twenty (20) calendar days prior to the Closing; and

(vi)

the AeroClean Common Stock to be issued in connection with the Transactions shall have been approved for listing on the Nasdaq Capital Market, subject only to official notice of issuance thereof.

(i)

the accuracy of Molekule’s representations and warranties at the Closing;

(ii)

the performance or compliance in all material respects by Molekule of its covenants to be performed or complied with as of or prior to the Closing;

(iii)

delivery by Molekule of a customary officer’s certificate and a customary certificate regarding “U.S. real property interests”;

Listing of AeroClean Common Stock (See page 108)

AeroClean Common Stock is currently listed on the Nasdaq Capital Market. It is a condition to the Merger that the AeroClean Common Stock to be issued in connection with the Transactions shall have been approved for listing on the Nasdaq Capital Market, subject only to official notice of issuance thereof.

Restrictions on Sales of Shares of Common Stock (See page 109)

The Molekule stockholders will be prohibited from transferring the shares of AeroClean Common Stock which they receive as Merger Consideration, and Molekule employees will be prohibited from transferring any AeroClean restricted stock units, and related shares of AeroClean Common Stock, which they receive as equity compensation, in each case for six months after the Closing Date, subject to customary exceptions.

In addition, certain of AeroClean’s pre-merger officers, directors and stockholders, who collectively own 9,863,636 shares of AeroClean Common Stock, or approximately 63% of the issued and outstanding shares of AeroClean Common Stock prior to giving effect to the Merger, will be prohibited from transferring any shares of AeroClean Common Stock, or securities convertible into or exercisable for shares of AeroClean Common Stock, for six months after the Closing Date, subject to customary exceptions.

The board of directors of the Combined Company may release some or all of the shares from these provisions at any time in its discretion.

Post-Closing Dividend Policy (See page 108)

AeroClean has never paid any cash dividends on shares of AeroClean Common Stock. The payment of cash dividends in the future will be dependent upon AeroClean’s revenues and earnings, if any, capital requirements and general financial condition and will be declared at the discretion of the AeroClean Board. It is the current intention of the AeroClean Board to retain all earnings, if any, for use in its business operations, and accordingly, the AeroClean Board does not anticipate declaring any dividends in the foreseeable future.

Under Delaware law, dividends may be payable only out of surplus, which is calculated as net assets less liabilities and capital, or, if there is no surplus, out of net profits for the fiscal year in which the dividend is declared or the preceding fiscal year. There is no assurance that AeroClean will be able to satisfy these statutory requirements in the future.

Treatment of Indebtedness of Molekule (See page 106)

Molekule is a party to a senior loan agreement and a mezzanine loan agreement with SVB. As of September 30, 2022, an aggregate principal amount of approximately $34.4 million was outstanding under these agreements. SVB has consented to the Merger under both agreements, provided that AeroClean will be required to become a co-borrower under the agreements at and after Closing and grant SVB a first priority lien on all of AeroClean’s assets that constitute collateral as a condition to this consent. In addition, SVB’s consent is conditioned on AeroClean having unrestricted and unencumbered cash of at least $20.0 million at the closing of the Merger, provided that this amount will be reduced by $0.75 million on each of February 28, March 31, April 30, and May 31, 2023, if the Merger has not occurred on or prior to such dates. SVB’s consent will terminate if the Merger has not closed by June 2, 2023.

In addition, Molekule is a party to a master lease agreement with Trinity. As of September 30, 2022, an aggregate principal amount of approximately $2.2 million was owed under this agreement. Trinity has consented to the Merger, and AeroClean will be required to become a co-lessee under the agreement at and after Closing as a condition to this consent.

It is a condition to the closing of the Merger that both consents remain in full force and effect as of the Effective Time of the Merger.

Material U.S. Federal Income Tax Consequences (See page 186)

Current AeroClean stockholders should not experience any federal income tax consequences as a result of the execution of the Merger Agreement or the consummation of the Merger.

With respect to current Molekule stockholders, the parties intend the Merger to be treated as a tax-free reorganization for U.S. federal income tax purposes. Provided the Merger so qualifies, Molekule stockholders will generally not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their Molekule Common Stock for AeroClean Common Stock in the Merger. Notwithstanding the foregoing, the completion of the Merger is not conditioned upon the Merger qualifying for the intended tax treatment and no ruling from the Internal Revenue Service (the “IRS”) or opinion of counsel will be sought regarding the tax characterization of the Merger and no assurance can be made as to whether the Merger will be tax-free for U.S. federal income tax purposes.

The tax consequences to Molekule stockholders of the Merger may depend upon a particular stockholder’s own situation. In addition, Molekule stockholders may be subject to U.S. federal non-income, state, local or foreign tax laws that are not discussed in this information statement/prospectus. Molekule stockholders should therefore consult with their own tax advisors for a full understanding of the tax consequences of the Merger.

Accounting Treatment (See page 109)

AeroClean and Molekule prepare their respective financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). The Merger will be accounted for using the acquisition method of accounting. AeroClean will be treated as the acquirer for accounting purposes.

In identifying AeroClean as the acquiring entity for accounting purposes, AeroClean and Molekule took into account a number of factors as of the date of this information statement/prospectus, including which entity is issuing its equity interests, the expectation that following the Effective Time holders of shares of AeroClean Common Stock as of immediately prior to the Effective Time will hold, in the aggregate, more than 50% of the issued and outstanding shares of AeroClean Common Stock immediately following the Effective Time (both on a shares outstanding basis and on a fully diluted basis), the intended corporate governance structure of AeroClean following the Effective Time, the intended senior management of AeroClean following the Effective Time, and the terms of the share exchange. No single factor was the sole determinant in the overall conclusion that AeroClean is the acquirer for accounting purposes; rather, all factors were considered in arriving at such conclusion.

Appraisal Rights (See page 108)

Under the DGCL, AeroClean stockholders are not entitled to appraisal rights or dissenters’ rights in connection with the Merger.

Regulatory Approvals Required for the Merger (See page 108)

AeroClean and Molekule are not aware of any material U.S. federal, state or foreign regulatory requirements or approvals that are required for the execution of the Merger Agreement or the completion of the Merger, other than the filing of a Certificate of Merger with respect to the Merger with, and the acceptance of such Certificate of Merger by, the Secretary of State of the State of Delaware.

Comparison of Molekule Stockholder Rights Before and After the Merger (See page 191)

Upon completion of the Merger, Molekule stockholders receiving shares of AeroClean Common Stock will become stockholders of AeroClean, and their rights will be governed by Delaware law and the governing corporate documents of AeroClean in effect at the Effective Time. Molekule stockholders will have different rights once they become stockholders of AeroClean due to differences between the governing corporate documents of Molekule and AeroClean, as further described in “Comparison of Molekule Stockholder Rights Before and After the Merger.”

Summary Risk Factors (See page 23)

You should carefully consider all of the risk factors together with all of the other information included in this information statement/prospectus. Some of these risks include, but are not limited to, those described below and in more detail under the heading “Risk Factors.”

Risks Related to the Merger

●

The Merger may not be completed on the terms contemplated or at all.

SUMMARY HISTORICAL FINANCIAL DATA OF AEROCLEAN

The following table presents summary historical financial data for the periods indicated below. AeroClean derived the summary historical statement of operations data for the years ended December 31, 2021 and 2020 and the balance sheet data as of December 31, 2021 and 2020 from its audited consolidated financial statements, which are included elsewhere herein.

The statement of operations data for the nine months ended September 30, 2022 and 2021 and the balance sheet data as of September 30, 2022 have been derived from AeroClean’s unaudited condensed financial statements, which are included elsewhere herein. The unaudited condensed financial statements were prepared on the same basis as AeroClean’s audited financial statements. In AeroClean’s opinion, such financial statements include all adjustments, consisting of normal recurring adjustments, that AeroClean considers necessary for a fair presentation of the financial information for those periods. The summary historical financial data set forth below are not necessarily indicative of AeroClean’s future results.

The summary historical financial data should be read in conjunction with AeroClean’s financial statements and the accompanying notes, which are included elsewhere herein. In addition, the summary historical financial data should be read in conjunction with the section entitled “AeroClean Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere herein.


	Nine Months Ended September 30,					Year Ended December 31,
	2022			2021		2021		2020
Operating Data:
Product revenues	$	136,037		$	261,299	$	616,511	$	—
Cost of sales		70,724			147,733		(338,896)		—
Operating expenses		12,431,742			6,295,790		8,521,360		3,323,081
Net loss		(1,100,748)	⁽¹⁾		(6,182,224)		(7,923,607)		(3,323,081)

(1)	AeroClean recognized a non-cash gain of $10,839,000 for the nine months ended September 30, 2022, relating to the change in the fair value of the warrant liability which accounts for the significant change between loss from operations and net loss.


	As of September 30,		As of December 31,
	2022		2021		2020
Balance Sheet Data:
Cash	$	25,818,620	$	19,629,649	$	2,333,117
Total assets		29,612,533		23,722,748		3,193,175
Total liabilities		5,919,925		2,012,333		665,308
Total stockholders’/members’ equity		23,692,608		21,710,415		2,527,867

SUMMARY HISTORICAL CONSOLIDATED FINANCIAL DATA OF MOLEKULE

The following table presents summary historical financial data for the periods indicated below. Molekule derived the summary historical statement of operations data for the years ended December 31, 2021 and 2020 and the balance sheet data as of December 31, 2021 and 2020 from its audited consolidated financial statements, which are included elsewhere herein.

The statement of operations data for the nine months ended September 30, 2022 and 2021 and the balance sheet data as of September 30, 2022 have been derived from Molekule’s unaudited condensed consolidated financial statements, which are included elsewhere herein. The unaudited condensed consolidated financial statements were prepared on the same basis as Molekule’s audited consolidated financial statements. In Molekule’s opinion, such financial statements include all adjustments, consisting of normal recurring adjustments, that Molekule considers necessary for a fair presentation of the financial information for those periods. The summary historical financial data set forth below are not necessarily indicative of Molekule’s future results.

The summary historical financial data should be read in conjunction with Molekule’s financial statements and the accompanying notes, which are included elsewhere herein. In addition, the summary historical financial data should be read in conjunction with the section entitled “Molekule Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included elsewhere herein.


	Nine Months Ended September 30,				Years Ended December 31,
	2022		2021		2021		2020
Operating Data:
Net Revenue	$	35,313,235	$	52,027,911	$	76,052,125	$	93,729,540
Cost of Revenue		(22,840,257)		(33,359,405)		(51,508,445)		(54,906,156)
Total operating expenses		34,805,729		59,098,503		86,543,572		68,586,620
Total other income (expense)		32,157,376		(1,180,844)		(2,152,575)		(837,917)
Net income (loss)		9,824,625		(41,610,841)		(64,152,467)		(30,601,153)


	As of September 30,		As of December 31,
	2022		2021		2020
Balance Sheet Data:
Cash and cash equivalents	$	3,287,994	$	15,883,575	$	37,375,289
Total assets		47,508,119		62,018,459		73,978,704
Total liabilities		53,746,506		89,761,288		39,993,593
Total redeemable convertible preferred stock		9,953,154		133,864,901		133,814,901
Total stockholders’ deficit		(16,191,541)		(161,607,730)		(99,829,790)

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined statement of operations and balance sheet data as of and for the nine months ended September 30, 2022 and for the year ended December 31, 2021 are derived from the unaudited condensed combined pro forma financial statements of operations for the nine months ended September 30, 2022 and for the year ended December 31, 2021. The statements of operations data give effect to the Merger as if it had occurred on January 1, 2021 and balance sheet data give effect to the Merger as if it had occurred on September 30, 2022.

The unaudited pro forma condensed combined financial statements from which the summary pro forma data are derived have been prepared for illustrative purposes only and are not necessarily indicative of what the Combined Company’s financial position or results of operations actually would have been had the Merger occurred as of the dates indicated. In addition, the summary unaudited pro forma condensed combined financial statements from which the following selected data are derived do not purport to project the future financial position or operating results of AeroClean. Future results may vary significantly from the results reflected because of various factors, including those discussed in the section entitled “Risk Factors.” The following summary unaudited pro forma condensed combined financial data should be read in conjunction with the section entitled “Unaudited Pro Forma Condensed Combined Financial Statements” and the related notes.


	Nine Months Ended September 30, 2022		Year Ended December 31, 2021
Statement of Operations Data:
Product revenue	$	35,449,272	$	76,668,636
Cost of sales		22,910,981		51,847,341
Gross profit		12,538,291		24,821,295
Operating expenses:
Selling, general and administrative		45,375,610		88,770,631
Research and development		2,309,351		5,945,897
Restructuring and other impairment charges		—		4,745,057
Total operating expenses		47,684,961		99,461,585
Income (loss) before income tax benefit		7,849,706		(76,792,865)
Income tax benefit		426,681		320,138
Net income (loss)	$	8,276,387	$	(76,472,727)
Net income (loss) per share-basic	$	0.28	$	(3.01)
Weighted-average common shares outstanding-basic		29,841,708		26,128,848
Net income (loss) per share-diluted	$	0.27	$	(3.01)
Weighted average common shares outstanding-diluted		30,573,798		26,128,848


	As of September 30, 2022
Balance Sheet Data:
Cash	$	36,106,614
Total assets		133,736,090
Total liabilities		63,466,431
Total stockholders’ equity		70,269,659

Table of Contents

RISK FACTORS

Risks Related to the Merger

The Merger may not be completed on the terms contemplated or at all.

The Merger may not be consummated on the terms contemplated, on the timetable contemplated or at all. The terms of the Merger Agreement could be renegotiated due to market conditions or other factors, and closing could be delayed due to business needs, regulatory issues or other factors. In addition, the Merger might not close due to the failure to satisfy (or waive) one or more closing conditions — some of which are beyond the control of AeroClean and Molekule — or due to the termination of the Merger Agreement in accordance with its terms. Accordingly, there is no assurance that the Merger will be consummated on a timely basis or at all, or that the terms of the Merger may need to be modified due to market conditions, business needs, or otherwise.

A failure to satisfy one or more of the closing conditions contained in the Merger Agreement may prevent or delay completion of the Merger.

The Merger is subject to a number of conditions to closing as specified in the Merger Agreement. Some of these conditions are outside of AeroClean’s and Molekule’s control. If any one or more conditions to closing are not satisfied or waived, then the Merger might not close, or the closing might need to be delayed.

The obligations of AeroClean and Molekule to consummate the Merger are subject to the satisfaction or waiver by the other party (to the extent permitted by applicable legal requirements), at or prior to the completion of the Merger, of the following conditions: (i) no governmental authority shall have enacted, issued, promulgated, enforced or entered any governmental order which is in effect and has the effect of making the Transactions illegal, and no law shall have been enacted, issued, promulgated, enforced or entered by any governmental authority that, in any case, prohibits or makes illegal the Merger and related Transactions; (ii) the AeroClean stockholder approval must remain valid and binding; (iii) the Molekule stockholder approval of the Transactions shall have been obtained (including approval by the holders of (a) a majority of the shares of Molekule Series 1 Preferred Stock and (b) a majority of the shares of Molekule Common Stock and Molekule Series 1 Preferred Stock on a converted basis voting together as a single class); (iv) the Registration Statement shall have become effective and be in effect; (v) this Information Statement shall have been disseminated to AeroClean stockholders at least twenty (20) calendar days prior to the Closing; and (vi) the AeroClean Common Stock to be issued in connection with the Transactions shall have been approved for listing on the Nasdaq Capital Market, subject only to official notice of issuance thereof.

In addition, the obligation of AeroClean to consummate the Merger is subject to the satisfaction or waiver by AeroClean (to the extent permitted by applicable legal requirements) of the following conditions, among others: (i) the accuracy of Molekule’s representations and warranties at the Closing; (ii) the performance or compliance in all material respects by Molekule of its covenants to be performed or complied with as of or prior to the Closing; (iii) delivery by Molekule of a customary officer’s certificate and a customary certificate regarding “U.S. real property interests”; (iv) employment agreements with certain key employees of Molekule must be in full force and effect and such key employees shall not have terminated their employment with Molekule or delivered any notice to Molekule of any intention to leave the employ of Molekule or AeroClean; (v) the consents from SVB (as required pursuant to each of the senior loan agreement and the mezzanine loan agreement referred to herein) and Trinity (as required pursuant to the master lease agreement referred to herein) must remain in full force and effect and must not have been amended, rescinded or otherwise terminated; (vi) the Backstop Purchase Agreement executed by Foundry shall remain in full force and effect, and shall not have been amended, rescinded or otherwise terminated; and (vii) Molekule shall have commenced and consummated an equity financing and, in connection therewith, shall have received an amount in cash of not less than $5 million.

In addition, SVB has executed a consent to consummation of the Merger under the terms of its loan agreement and mezzanine loan agreement with Molekule, but this consent is subject to AeroClean having at least $20.0 million of unrestricted and unencumbered cash on the Closing Date of the Merger. This amount is reduced by $0.75 million on each of February 28, March 31, April 30, and May 31, 2023, if the Merger has not yet occurred on or prior to such dates. If this condition to SVB’s consent is not satisfied, the Merger may not be able to close unless SVB waives the condition or AeroClean is able to raise additional capital.

No assurance can be given that the required conditions to closing will be satisfied, and, if all required consents and approvals are obtained and the conditions are satisfied, no assurance can be given as to the terms, conditions and timing of such consents and approvals. Any delay in completing the Merger could cause AeroClean and Molekule not to realize, or to be delayed in realizing, some or all of the benefits that AeroClean and Molekule expect to achieve if the Merger is successfully completed within its expected

Table of Contents

time frame. For a more complete summary of the conditions that must be satisfied or waived prior to completion of the Merger, please see “The Merger Agreement — Conditions to Completion of the Merger.”

The Merger Agreement may be terminated in specified circumstances prior to Closing by AeroClean or Molekule.

The Merger Agreement provides that, in specified circumstances, either AeroClean or Molekule may terminate the Merger Agreement at any time prior to the date of the Closing, whether before or after the receipt of approval of the Merger Agreement from the Molekule stockholders.

In particular, the Merger Agreement may be terminated by (i) mutual written consent of AeroClean and Molekule; (ii) either AeroClean or Molekule if the Closing has not occurred on or before the eight month anniversary of the date of the Merger Agreement; (iii) either AeroClean or Molekule if a governmental authority shall have enacted, issued, promulgated, enforced or entered any law or governmental order which has become final and non-appealable, and which permanently restrains, enjoins or otherwise prohibits the Transactions; (iv) either AeroClean or Molekule, if the required stockholder approval of AeroClean’s stockholders is not in full force and effect as of the Outside Date; (v) AeroClean, at any time on or after the date that is two business days following the date that AeroClean receives, and notifies Molekule of AeroClean’s receipt of, SEC approval and effectiveness of the Registration Statement, if Molekule does not deliver to AeroClean on or prior to such date the Written Consent (as defined in the Merger Agreement); (vi) AeroClean, upon certain material and uncured breaches of the terms of the Merger Agreement by Molekule; or (vii) Molekule, upon certain material and uncured breaches of the terms of the Merger Agreement by AeroClean or Merger Sub.

If the Merger Agreement is validly terminated, all further obligations and liabilities of AeroClean, Merger Sub and Molekule under the Merger Agreement will terminate and become void and of no further force and effect, with certain limited exceptions, including liability for any intentional and willful breach of the Merger Agreement. For more information, see “The Merger Agreement — Termination of the Merger Agreement.”

The termination of the Merger Agreement could negatively impact AeroClean.

If the Merger is not completed for any reason, the ongoing businesses of AeroClean may be adversely affected and, without realizing any of the benefits of having completed the Merger, AeroClean may experience certain negative effects, including the following:

●

experiencing negative reactions from the financial markets, including negative impacts on its stock price;

●

experiencing negative reactions from its suppliers, customers and employees; and

●

being required to pay costs relating to the Merger, such as legal and accounting costs and associated fees and expenses, whether or not the Merger is completed.

In addition, the Merger Agreement places certain restrictions on the conduct of AeroClean’s and Molekule’s business prior to completion of the Merger and such restrictions, the waiver of which is subject to the consent of the other company (not to be unreasonably withheld, conditioned or delayed), may prevent AeroClean from taking certain specified actions during the pendency of the Merger which would have been beneficial for its business. This includes, for example, subject to exceptions, the issuance of securities, declaration of dividends, amendments to its organizational documents, repurchase of its capital stock, the incurrence of indebtedness, transfers or sales of assets, cancellation of debts, transfers or grants of exclusive licenses, capital investment, loans, amendments to material contracts, entrance into or renewal of material contracts, establishment of new benefit plans, execution of new employment agreements, acquisition of assets, and mergers or consolidations.

Matters relating to the Merger (including integration planning) will require substantial commitments of time and resources by AeroClean management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to AeroClean as an independent company.

Failure to complete the Merger could significantly harm the market price of AeroClean Common Stock and negatively affect the future business and operations of each of AeroClean and Molekule.

If the Merger is not completed and the Merger Agreement is terminated, each of AeroClean and Molekule will have incurred significant fees and expenses, which must be paid whether or not the Merger is completed. Further, if the Merger is not completed, it

Table of Contents

could significantly harm the market price of AeroClean Common Stock. In addition, if the Merger Agreement is terminated and the board of directors of AeroClean or Molekule determines to seek another business combination, there can be no assurance that either AeroClean or Molekule will be able to find a partner and close an alternative transaction on terms that are as favorable as, or more favorable than, the terms set forth in the Merger Agreement.

The market price for shares of AeroClean Common Stock following the completion of the Merger may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market price of shares of AeroClean Common Stock.

AeroClean’s business differs in some regards from Molekule’s business, and, accordingly, the results of operations of AeroClean following completion of the Merger will be affected by some factors that are different from those currently or historically affecting the results of operations of AeroClean. Therefore, AeroClean’s stock price following the Merger could be affected by factors different from those that have historically affected the market price of the AeroClean Common Stock. The results of operations of AeroClean following completion of the Merger may also be affected by factors different from those that currently affect or have historically affected either AeroClean or Molekule.

In addition, following completion of the Merger, AeroClean may seek to raise additional equity financing through one or more underwritten offerings, private placements and/or rights offerings, may award significant amounts of equity securities to its employees as equity compensation, or may issue significant amounts of equity securities as merger consideration in connection with additional acquisitions, which may result in downward pressure on the share price of AeroClean Common Stock. Such issuances would also further dilute the share ownership of existing holders of AeroClean Common Stock, who would therefore own a smaller percentage of the company with each additional equity issuance.

The Merger Consideration is not adjustable based on the market price of AeroClean Common Stock and, at the closing of the Merger, may have a greater or lesser value than at the time the Merger Agreement was signed.

The Merger Agreement provides that the Molekule stockholders immediately prior to the Effective Time will receive new shares of AeroClean Common Stock as Merger Consideration so that immediately following the Merger they, together with holders of Closing Date Vested RSUs, will own 49.5% of the Outstanding Shares, and the stockholders of AeroClean immediately before the Merger will continue to hold shares of AeroClean Common Stock which represent 50.5% of the Outstanding Shares of AeroClean immediately following the Merger. See “The Merger Agreement — Effects of the Merger; Merger Consideration” for more information regarding the calculation of Outstanding Shares.

Any changes in the market price of AeroClean Common Stock before the completion of the Merger will not affect the number of shares of AeroClean Common Stock issuable to Molekule’s stockholders pursuant to the Merger Agreement. Therefore, if before the completion of the Merger the market price of AeroClean Common Stock declines from the market price on the date of the Merger Agreement, then Molekule stockholders could receive merger consideration with substantially lower value than the value of such merger consideration on the date of the Merger Agreement. Similarly, if before the completion of the Merger the market price of AeroClean Common Stock increases from the market price of AeroClean Common Stock on the date of the Merger Agreement, then Molekule stockholders could receive merger consideration with substantially greater value than the value of such merger consideration on the date of the Merger Agreement. The Merger Agreement does not include a price-based termination right. Because the Merger Consideration does not adjust as a result of changes in the market price of AeroClean Common Stock, for each one percentage point change in the market price of AeroClean Common Stock, there is a corresponding one percentage point rise or decline, respectively, in the value of the total Merger Consideration payable to Molekule stockholders pursuant to the Merger Agreement.

The lack of a public market for Molekule Common Stock makes it difficult to evaluate the value of Molekule. The AeroClean Common Stock being issued as Merger Consideration in the Merger may have a value that is less than, or greater than, the fair market value of Molekule.

The outstanding capital stock of Molekule is privately held and is not traded in any public market. The lack of a public market makes it extremely difficult to determine the fair market value of Molekule. Because the percentage of AeroClean Common Stock to be issued to Molekule stockholders was determined based on negotiations between the parties, it is possible that the value of AeroClean Common Stock to be received by Molekule’s stockholders will be less than the fair market value of Molekule, or conversely AeroClean may pay more than the aggregate fair market value for Molekule.

Table of Contents

The opinion rendered to the AeroClean Board by Benchmark was necessarily based on economic, monetary, market and other conditions as in effect on, and the forecasts and other information made available to Benchmark as of, the date of the opinion. As a result, the opinion does not reflect changes in events or circumstances after the date of such opinion. The AeroClean Board has not requested, and does not expect to request, an updated opinion from Benchmark reflecting changes in circumstances that may have occurred since the date of the opinion.

The opinion rendered to the AeroClean Board by Benchmark was provided for the information and assistance of the AeroClean Board in connection with its consideration of the Merger. The opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Benchmark, as of the date of the opinion. The AeroClean Board has not requested an updated opinion as of the date of this information statement/prospectus from Benchmark, and the AeroClean Board does not expect to request an updated opinion prior to completion of the Merger. Changes in the operations and prospects of AeroClean or Molekule, general market and economic conditions and other factors that may be beyond the control of AeroClean, and on which the opinion was based, may have altered the value of Molekule or the prices of AeroClean Common Stock since the date of the opinion, or may alter such value and prices by the time the Merger is completed. The opinion does not speak as of any date other than the date of the opinion. For a description of the opinion that Benchmark rendered to the AeroClean Board, see “The Merger — Opinion of AeroClean’s Financial Advisor.”

AeroClean could be materially adversely affected by negative publicity related to the proposed Merger.

Negative publicity and adverse press coverage related to the Merger could have a material adverse effect on AeroClean. Adverse press coverage and other adverse statements, whether or not driven by political or public sentiment, may also result in investigations by regulators, legislators and law enforcement officials or in legal claims. Responding to negative publicity, adverse press coverage, or any such investigations and lawsuits, regardless of the ultimate outcome of the proceeding, can divert the time and effort of senior management from the management of AeroClean’s business. Addressing any adverse publicity, governmental scrutiny or enforcement or other legal proceedings is time consuming and expensive and, regardless of the factual basis for the assertions being made, can have a negative impact on the reputation of AeroClean, on the morale and performance of its employees and on AeroClean’s relationships with its business partners. It may also have a negative impact on AeroClean’s ability to take timely advantage of various business and market opportunities. The direct and indirect effects of negative publicity, and the demands of responding to and addressing it, may have a material adverse effect on AeroClean’s business, financial condition, results of operations and cash flows.

The directors and executive officers of AeroClean and Molekule have interests and arrangements that may be different from, or in addition to, those of AeroClean and Molekule stockholders generally.

Certain officers and directors of AeroClean and Molekule participate in arrangements that provide them with interests in the Merger that are different from the interests of the respective stockholders of AeroClean and Molekule, including, among others, the continued service as an officer or director of the Combined Company. For example, AeroClean’s chief executive officer and chief financial officer have negotiated new employment agreements in connection with the Merger, and Jonathan Harris, Chief Executive Officer at Molekule, and Ritankar “Ronti” Pal, Chief Operating Officer and Chief Financial Officer at Molekule, are also expected to become executive officers of AeroClean upon the closing of the Merger and have also negotiated and signed new employment agreements. One of Molekule’s directors is also going to join the AeroClean Board. These interests, among others, may have influenced the officers and directors of AeroClean and Molekule to support or approve the Merger. For more information concerning the interests of AeroClean’s and Molekule’s executive officers and directors, see the sections entitled “Interests of AeroClean’s Directors and Executive Officers in the Merger” and “Interests of Molekule’s Directors and Executive Officers in the Merger.”

AeroClean and Molekule will incur transaction and merger-related expenses in connection with the Merger.

AeroClean and Molekule have incurred and expect to incur a number of non-recurring costs associated with consummating the Merger and combining the operations of the two companies. These costs and expenses include fees paid to financial, legal and accounting advisors, employment-related costs, filing fees, printing expenses and other related charges. Some of these costs are payable by AeroClean and Molekule regardless of whether the Merger is completed.

Following completion of the Merger, AeroClean and Molekule will also incur integration costs related to the Merger. There are a large number of processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Merger and the integration of the two companies’ businesses. Although AeroClean and Molekule expect that the elimination of duplicative costs and the realization of other efficiencies related to the integration of the businesses may offset incremental transaction and merger-related costs over time, any net benefit may not be achieved in the near term or at all. Many of these costs will be borne by

Table of Contents

AeroClean and Molekule even if the Merger is not completed. While AeroClean and Molekule have assumed that certain expenses would be incurred in connection with the Merger and the other transactions contemplated by the Merger Agreement, there are many factors beyond their control that could affect the total amount or the timing of the integration and implementation expenses.

AeroClean and Molekule may be targets of securities class action and derivative lawsuits which could result in substantial costs and may delay or prevent the Merger from being completed.

Securities class action lawsuits and derivative lawsuits are often brought against companies that have entered into merger agreements. Defending against these claims can result in substantial costs and divert management time and resources, even if the lawsuits are without merit. An adverse judgment could result in monetary damages, which could have a negative impact on the Combined Company’s business, results of operations and financial condition. Additionally, if a plaintiff is successful in obtaining an injunction prohibiting completion of the Merger, the injunction may delay or prevent the Merger from being completed, which may adversely affect the respective businesses, results of operations and financial condition.

AeroClean stockholders and Molekule stockholders will each have reduced ownership and voting interests in and will exercise less influence over management of AeroClean following completion of the Merger.

AeroClean stockholders currently have the right to vote in the election of the AeroClean Board and on other matters affecting AeroClean, and Molekule stockholders currently have the right to vote in the election of the Molekule Board and on other matters affecting Molekule. Upon consummation of the Merger, each AeroClean stockholder and each Molekule stockholder will become a stockholder of AeroClean with a percentage ownership of AeroClean that is smaller than such stockholder’s percentage ownership of AeroClean or Molekule, as applicable, immediately prior to the Merger. The Merger Agreement provides that immediately following the consummation of the Merger, the former holders of AeroClean Common Stock will own 50.5% of the Outstanding Shares (as defined in the Merger Agreement) and the former holders of Molekule Common Stock (including holders of Closing Date Vested RSUs) will own 49.5% of the Outstanding Shares. See “The Merger Agreement — Effects of the Merger; Merger Consideration” for more information regarding the calculation of Outstanding Shares. Because of this, each share of AeroClean Common Stock and each share of Molekule Common Stock will represent a smaller percentage ownership of AeroClean than it represented in AeroClean and Molekule, respectively. Accordingly, each AeroClean stockholder and each Molekule stockholder will have less influence on the management and policies of AeroClean than such stockholder now has on the management and policies of AeroClean or Molekule, as applicable.

Risks Related to the Combined Company

The Combined Company may fail to realize the anticipated benefits of the Merger.

The success of the Merger will depend on, among other things, the Combined Company’s ability to combine the AeroClean and Molekule businesses in a manner that realizes anticipated synergies and meets or exceeds the forecasted revenue growth trends anticipated by each company. On a combined basis, the Combined Company expects to benefit from marketing each other’s products. If the Combined Company is not able to successfully achieve these objectives, then the anticipated benefits of the Merger may not be realized fully or at all or may take longer to realize than expected.

The failure to successfully integrate the businesses and operations of AeroClean and Molekule in the expected time frame may adversely affect the Combined Company’s future results.

AeroClean and Molekule have operated and, until the completion of the Merger, will continue to operate independently. There can be no assurances that their businesses can be integrated successfully. It is possible that the integration process could result in the loss of key AeroClean employees or key Molekule employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating the operations of AeroClean and Molekule in order to realize the anticipated benefits of the Merger so the Combined Company performs as expected:

●

combining the companies’ operations and corporate functions;

●

combining the businesses of AeroClean and Molekule in a manner that permits the Combined Company to achieve the anticipated double digit organic revenue growth and to enable gross profit to grow faster than revenue due to expanding

Table of Contents

margins, the failure of which would result in the anticipated benefits of the Merger not being realized in the time frame currently anticipated or at all;

●

reducing additional and unforeseen expenses such that integration does not cost more than anticipated;

●

avoiding delays in connection with the Merger or the integration process;

●

integrating personnel from the two companies and minimizing the loss of key employees;

●

integrating and unifying the offerings and services available to customers;

●

identifying and eliminating redundant and underperforming functions and assets;

●

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

●

maintaining existing agreements with customers, distributors, providers and vendors and avoiding delays in entering into new agreements with prospective customers, distributors, providers and vendors;

●

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

●

consolidating the companies’ administrative and information technology infrastructure and financial systems;

●

coordinating distribution and marketing efforts; and

●

establishing the Combined Company’s headquarters in Palm Beach Gardens, Florida.

In addition, at times the attention of certain members of either company’s or both companies’ management and resources may be focused on completion of the Merger and the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt each company’s ongoing business and the business of the Combined Company.

Furthermore, the executive leadership of the Combined Company will consist of executive officers from both AeroClean and Molekule. Combining the management teams of each company into a single management team could require the reconciliation of differing priorities and philosophies.

Failure to attract, motivate and retain executives and other key employees could diminish the anticipated benefits of the Merger.

The success of the Merger will depend in part on the retention of personnel critical to the business and operations of the Combined Company due to, for example, their technical skills or management expertise. Competition for qualified personnel can be intense.

Current and prospective employees of AeroClean and Molekule may experience uncertainty about their future role with AeroClean, Molekule or the Combined Company until strategies with regard to these employees are announced or executed, which may impair AeroClean’s and Molekule’s ability to attract, retain and motivate key management, sales, marketing, technical and field personnel, prior to and following the Merger. Employee retention may be particularly challenging during the pendency of the Merger, as employees of AeroClean and Molekule may experience uncertainty about their future roles with AeroClean. If AeroClean and Molekule are unable to retain personnel, including AeroClean’s and Molekule’s key management, who are critical to the successful integration and future operations of the companies, AeroClean and Molekule could face disruptions in their operations, loss of existing customers or loss of sales to existing customers, loss of key information, expertise or know-how, and unanticipated additional recruitment and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the Merger.

If key employees of AeroClean or Molekule depart, the integration of the companies may be more difficult and AeroClean’s business following the Merger may be harmed. Furthermore, AeroClean may have to incur significant costs in identifying, hiring and

Table of Contents

retaining replacements for departing employees and may lose significant expertise and talent relating to the business of each of AeroClean and Molekule, and the Combined Company’s ability to realize the anticipated benefits of the Merger may be adversely affected. In addition, there could be disruptions to or distractions for the workforce and management associated with integrating employees into AeroClean. No assurance can be given that, following completion of the Merger, AeroClean will be able to attract or retain key employees of AeroClean and Molekule to the same extent that those companies have been able to attract or retain their own employees in the past.

The Combined Company may not be able to retain customers or suppliers, and customers or suppliers may seek to modify contractual obligations with the Combined Company, either of which could have an adverse effect on AeroClean’s business and operations. Third parties may terminate or alter existing contracts or relationships with AeroClean or Molekule.

As a result of the Merger, the Combined Company may experience impacts on relationships with customers and suppliers that may harm the Combined Company’s business and results of operations. Certain customers or suppliers may seek to terminate or modify contractual obligations following the Merger whether or not contractual rights are triggered as a result of the Merger. There can be no guarantee that customers and suppliers will remain with or continue to have a relationship with the Combined Company or do so on the same or similar contractual terms following the Merger. If any customers or suppliers seek to terminate or modify contractual obligations or discontinue their relationships with the Combined Company, then the Combined Company’s business and results of operations may be harmed. Furthermore, the Combined Company will not have long-term arrangements with many of its significant suppliers. If the Combined Company’s suppliers were to seek to terminate or modify an arrangement with the Combined Company, then the Combined Company may be unable to procure necessary supplies from other suppliers in a timely and efficient manner and on acceptable terms, or at all.

AeroClean and Molekule also have contracts with vendors, landlords, licensors and other business partners which may require AeroClean or Molekule, as applicable, to obtain consent from some of these other parties in connection with the Merger. If these consents cannot be obtained, the Combined Company may suffer a loss of potential future revenue, incur costs, and lose rights that may be material to the business of the Combined Company. In addition, third parties with whom AeroClean or Molekule currently have relationships may terminate or otherwise reduce the scope of their relationship with either party in anticipation of the Merger. Any such disruptions could limit the Combined Company’s ability to achieve the anticipated benefits of the Merger. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the Merger or by a termination of the Merger Agreement.

The Combined Company will need additional capital to execute its business plan. If the Combined Company cannot raise additional funds when needed, its operations and prospects could be negatively affected.

The design, manufacture, sale, marketing and servicing of the Combined Company’s devices and other products will be capital-intensive. We expect that the Combined Company will have sufficient capital to fund planned operations for the next 12 months. However, after giving effect to the Merger, the Combined Company will require substantial additional capital to develop its products and services, conduct research and development and fund operations for the foreseeable future. The Combined Company will need to raise additional capital to scale its manufacturing, roll out Pūrgo Lift and other future products or services, and also to continue to offer its devices and any services relating to those products. In particular, AeroClean and Molekule are, and the Combined Company will be, especially focused on developing new devices, SaaS software solutions, advanced sensor technology and smart building integrations and IoT devices, which will require additional capital.

In addition, the Combined Company may need to raise funds to finance future capital needs, such as making repayments under its loan agreements. Following the Effective Time, under the senior loan agreement with SVB, the Combined Company will be required to pay interest monthly and repay the principal amount of the loans under the agreement in 36 equal monthly installments commencing May 1, 2023. In addition, under the mezzanine loan agreement with SVB, the Combined Company will be required to pay interest monthly and repay the loans under the agreement in monthly installments for two tranches beginning on April 1, 2024 and April 1, 2025, respectively. We cannot be certain that additional funds will be available to the Combined Company on favorable terms when required, or at all. Its success in raising additional capital may be significantly affected by general market conditions, the market price of the Combined Company’s common stock, its financial condition, uncertainty about the future commercial success of its current products and services, the development and commercial success of future products or services, regulatory developments, the status and scope of its intellectual property, any ongoing litigation, its compliance with applicable laws and regulations and other factors.

Table of Contents

If the Combined Company raises funds through the issuance of equity securities or equity-linked securities, such issuances of additional capital stock may cause stockholders to experience significant dilution of their ownership interests and the per share value of the Combined Company’s common stock to decline. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of its common stock. Sales of a substantial number of shares of the Combined Company’s common stock in the public market or the perception that these sales might occur could depress the market price of its common stock and could impair its ability to raise capital through the sale of additional equity securities. If the Combined Company raises funds through the issuance of debt securities or through bank borrowings or borrowings from other investors, the terms of debt securities issued or borrowings, if available, could impose significant restrictions on the Combined Company’s operations. If the Combined Company raises funds through collaborations and licensing arrangements, it might be required to relinquish significant rights to its technologies or products, or grant licenses on terms that are not favorable to it.

If the Combined Company cannot raise additional funds when needed, its financial condition, results of operations, business and prospects could be materially adversely affected. The Combined Company’s ability to obtain additional financing, if and when required, will depend on investor and lender demand, its operating performance, the condition of the capital markets and other factors, and we do not know whether additional financing will be available to the Combined Company on favorable terms when required, or at all.

In addition, inflation has increased as a result of, among other factors, supply constraints, federal stimulus funding, increases to household savings, and the sudden macroeconomic shift in activity levels arising from the loosening or removal of many government restrictions and the broader availability of COVID-19 vaccines. Increased inflation has had, and may continue to have, an effect on interest rates. Increased interest rates may adversely affect the Combined Company’s ability to obtain, or the terms under which it can obtain, any potential additional funding.

The Combined Company’s future operating results may fluctuate significantly if its investments in innovative technologies are not as profitable as anticipated.

On a regular basis, AeroClean and Molekule review the existing technologies available in the market and identify strategic new technologies to develop and invest in. AeroClean and Molekule have currently been, and the Combined Company will be, devoting significant resources and capital to new technologies in new devices, SaaS software solutions, advanced sensor technology, smart building integrations and IoT devices. AeroClean and Molekule are investing in research and development, developing relationships with customers and suppliers, and re-directing corporate and operational resources so that the Combined Company may grow within these innovative technologies. The Combined Company’s results could be harmed if it fails to expand its customer base, if demand for its solutions is lower than expected, or if income related to the innovative technologies is lower than anticipated.

In particular, the Combined Company will continue to devote considerable resources, including the allocation of capital expenditures, to growing the SaaS service offering revenue over the next several years. There can be no assurance that the Combined Company will meet revenue targets for this service and if it fails to achieve its revenue goals, its growth and operating results will be materially adversely affected.

Additionally, new or existing customers may choose to purchase the Combined Company’s SaaS services rather than its on-premise solutions. If the Combined Company’s customers’ purchases trend away from perpetual licenses toward its SaaS, or to the extent customers defer orders, the Combined Company’s product revenue, and its timing of revenue generally, may be adversely affected, which could adversely affect its results of operations and financial condition.

In addition, the IoT is a relatively new market and there are a significant number of competitors in the market. If the market does not expand as rapidly as we or others expect or if customers adopt competitive solutions rather than the Combined Company’s solutions, the Combined Company’s IoT business may not generate the revenues it expects. Further, customers and potential customers often begin the process of implementing IoT with a proof-of-concept evaluation, in some cases with multiple different technology vendors. The Combined Company’s success in this emerging market will depend on its ability to engage with customers to ensure that their investment moves beyond planning to broader deployment and yields value at their desired speed and expected costs.

In order to remain competitive, we expect the Combined Company will continue to make significant investments in technology. However, there is no guarantee that the capital and resources AeroClean and Molekule have invested, or the Combined Company will invest in the future, will allow the Combined Company to develop suitable SaaS platform enhancements or software applications or maintain and expand the SaaS platform and technology infrastructure including through IoT solutions as intended, which could have a

Table of Contents

material adverse effect on the Combined Company’s ability to compete or require it to purchase expensive software solutions from third-party developers.

The unaudited pro forma condensed combined financial information contained in this information statement/ prospectus is presented for illustrative purposes only and may not be indicative of the Combined Company’s results of operations or financial condition following the closing of the proposed Merger.

This information statement/prospectus includes unaudited pro forma condensed combined financial information for the Combined Company, which give effect to the Merger and should be read in conjunction with the financial statements and accompanying notes of AeroClean and Molekule, which are included in this information statement/prospectus. The unaudited pro forma condensed combined financial information contained in this information statement/prospectus is presented for illustrative purposes only and should not be considered to be an indication of the Combined Company’s results of operations or financial condition following the closing of the Merger. The unaudited pro forma condensed combined financial information has been derived from the historical financial statements of AeroClean and Molekule and adjustments, assumptions and preliminary estimates have been made in connection with the preparation of this information. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments, assumptions and estimates are subject to uncertainty.

Moreover, the unaudited pro forma condensed combined financial information does not reflect all costs that are expected to be incurred by the Combined Company in connection with the Merger. For example, the impact of any incremental costs incurred in coordinating the operations of AeroClean and Molekule are not reflected in the unaudited pro forma condensed combined financial information. In addition, the unaudited pro forma condensed combined financial information does not include, among other things, estimated cost synergies, adjustments related to integration activities, future acquisitions or disposals not yet known or probable, or impacts of merger-related change in control provisions because the management teams of AeroClean and Molekule do not believe any such adjustments would enhance an understanding of the pro forma effects of the Merger.

As a result, the actual results of operations and financial condition of the Combined Company following the closing of the Merger may not be consistent with, or evident from, this unaudited pro forma condensed combined financial information. The assumptions used in preparing the unaudited pro forma condensed combined financial information may not prove to be accurate, and other factors may affect the Combined Company’s results of operations or financial condition following the closing of the Merger. Any potential decline in the Combined Company’s financial condition or results of operations may cause significant variations in the price of the AeroClean Common Stock following the closing of the Merger.

The unaudited pro forma condensed combined financial information in this information statement/ prospectus is based on the best information available, which in part includes a number of estimates and assumptions. These estimates and assumptions may prove not to be accurate, and accordingly, the unaudited pro forma condensed combined financial information should not be assumed to be indicative of what the Combined Company’s financial condition, results of operations or cash flows actually would have been as a stand-alone company or to be a reliable indicator of what the Combined Company’s financial condition or results of operations may actually be in the future.

The financial analyses and forecasts considered by AeroClean, Molekule and Benchmark may not be realized, which may adversely affect the market price of the AeroClean Common Stock following the closing of the Merger.

This information statement/prospectus includes certain financial forecasts considered by AeroClean and Molekule in connection with their respective businesses. In addition, in performing its financial analysis and rendering its opinion regarding the fairness, from a financial point of view, of the merger consideration, Benchmark, AeroClean’s financial advisor, relied on, among other things, internal stand-alone financial analyses and forecasts provided by AeroClean and Molekule, respectively. None of these analyses or forecasts were prepared with a view towards public disclosure or compliance with the published guidelines of the SEC, U.S. GAAP or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial forecasts. These forecasts are inherently based on various estimates and assumptions that are subject to the judgment of those preparing them. These forecasts are also subject to significant economic, competitive, industry and other uncertainties and contingencies, all of which are difficult or impossible to predict and many of which are beyond the control of AeroClean and Molekule. Important factors that may affect the actual results of AeroClean and Molekule and cause the internal financial forecasts to not be achieved include risks and uncertainties relating to AeroClean’s and Molekule’s businesses, industry performance, the regulatory environment, general business and economic conditions and other factors described under the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in this information statement/prospectus.

Table of Contents

In addition, the financial forecasts also reflect assumptions that are subject to change and do not reflect updated prospects for AeroClean’s and Molekule’s businesses, changes in general business or economic conditions or any other transaction or event that has occurred or that may occur and that was not anticipated at the time the financial forecasts were prepared. In addition, since such financial forecasts cover multiple years, the information by its nature becomes less predictive with each successive year. There can be no assurance that AeroClean’s, Molekule’s, or the Combined Company’s financial condition or results of operations will be consistent with those set forth in such analyses and forecasts. For more information, please see “The Merger — Certain Unaudited Financial Forecasts.”

Any acquisitions, partnerships or joint ventures that the Combined Company enters into could disrupt its operations and have a material adverse effect on its business, financial condition and results of operations.

AeroClean’s strategy is to evaluate potential strategic acquisitions of businesses, including partnerships or joint ventures with third parties. AeroClean may not be successful in identifying acquisition, partnership and joint venture candidates. In addition, AeroClean may not be able to continue the operational success of such businesses or successfully finance or integrate any businesses that it acquires or with which it forms a partnership or joint venture. The process of integrating an acquired business may involve unforeseen costs and delays or other operational, technical and financial difficulties and may require a disproportionate amount of management attention and financial and other resources. Any acquisition, partnership or joint venture may not be successful, may reduce AeroClean’s cash reserves, may negatively affect its earnings and financial performance and, to the extent financed with the proceeds of debt, may increase its indebtedness. Any acquisition, partnership or joint venture may also involve the issuance of equity securities, either as merger consideration or in order to raise funds through an equity offering or private placement, which would dilute the interests of existing stockholders. AeroClean cannot ensure that any acquisition, partnership or joint venture it makes will not have a material adverse effect on its business, financial condition and results of operations.

Even if the Merger is successful, we expect to incur future losses and cannot be certain that the Combined Company will become profitable.

We have incurred operating losses each year since our inception and have only begun to recognize revenue starting in July 2021. Molekule has had declining revenue in the last two years and also sustained operating losses during 2021 and 2022 to date. These losses are expected to continue notwithstanding that we have begun to generate revenue. Even if the Merger is successful, we cannot be certain that the Combined Company will ever achieve or sustain profitability. If the Combined Company continues to incur operating losses for a period longer than expected, or in an amount greater than expected, we may be unable to continue our operations.

Combined Company stockholders may experience dilution in the future.

From time to time in the future, we may issue additional shares of AeroClean Common Stock or securities convertible into Combined Company common stock pursuant to a variety of transactions, including acquisitions. The issuance by us of additional shares of AeroClean Common Stock or securities convertible into AeroClean Common Stock would dilute your ownership and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of shares of AeroClean Common Stock.

In the future, we expect to obtain financing or to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including additional shares of common stock or warrants to purchase common stock, senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock. Issuing additional shares of our capital stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of shares of AeroClean Common Stock, or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors, which may adversely affect the amount, timing or nature of our future offerings. As a result, holders of AeroClean Common Stock bear the risk that our future offerings may reduce the market price of shares of AeroClean Common Stock and dilute their percentage ownership.

It is expected that certain employees of Molekule will be granted restricted stock units following the consummation of the Merger which will provide them with rights to receive shares of AeroClean Common Stock after the Merger and the expiration of a six-month post-closing lockup. These equity awards are described in further detail in the section entitled “The Merger Agreement — Treatment of

Table of Contents

Molekule Equity Awards.” The issuance of shares of AeroClean Common Stock pursuant to these awards will dilute the percentage ownership of Combined Company stockholders. It is also expected that, from time to time after the closing of the Merger, the Combined Company Compensation Committee will grant additional equity awards to employees and directors of the Combined Company under the Combined Company’s compensation and employee benefit plans. In connection with the Merger, AeroClean is increasing the share reserve under its 2021 Incentive Award Plan by 800,000 shares, which will allow the Combined Company to make additional awards. These additional equity awards will have a dilutive effect on the Combined Company’s earnings per share, which could adversely affect the market price of the AeroClean Common Stock.

AeroClean currently has an outstanding warrant to purchase 1,500,000 shares of AeroClean Common Stock. Any exercise or partial exercise of this warrant would dilute the holders of AeroClean Common Stock. The current exercise price of the warrant is $11.00 per share. Whether or not the warrant is exercised will depend on AeroClean’s stock price and any exercise is at the discretion of the holder of the warrant. We may issue other warrants, options and derivative securities in the future, which would also dilute the holders of AeroClean Common Stock.

In addition, the Combined Company’s amended and restated certificate of incorporation will authorize the Combined Company to issue, without the approval of stockholders, one or more classes or series of preferred stock having such designations, powers, preferences and relative, participating, optional and other special rights, including preferences over AeroClean Common Stock with respect to dividends and distributions, as the AeroClean Board generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of the AeroClean Common Stock. For example, the repurchase or redemption rights or liquidation preferences that could be assigned to holders of preferred stock could affect the residual value of the AeroClean Common Stock. For more information, see “Description of AeroClean Capital Stock.”

Certain provisions contained in the Amended and Restated Charter and the Amended and Restated Bylaws, and certain provisions of Delaware law, may prevent or delay an acquisition of the Combined Company or other strategic transactions, which could decrease the trading price of the AeroClean Common Stock.

The Amended and Restated Charter and the Amended and Restated Bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with the AeroClean Board rather than to attempt a hostile takeover.

In addition, because AeroClean has not chosen to be exempt from Section 203 of the DGCL, this provision could also delay or effectively prevent a change of control that some stockholders may favor. In general, Section 203 provides that, subject to limited exceptions, persons that, together with their affiliates and associates, acquire ownership of 15% or more of the outstanding voting stock of a Delaware corporation shall not engage in any “business combination” with that corporation or its subsidiaries, including any merger or various other transactions, for a three-year period following the date on which that person became the owner of 15% or more of the corporation’s outstanding voting stock.

AeroClean believes these provisions could help to protect its stockholders from coercive or otherwise unfair takeover tactics by requiring potential acquirers to negotiate with the AeroClean Board and by providing the AeroClean Board with more time to assess any acquisition proposal. These provisions are not intended to make the Combined Company immune from takeovers. However, these provisions will apply even if the offer may be considered beneficial by some stockholders and could delay or effectively prevent an acquisition that the AeroClean Board determines is not in the best interests of the Combined Company and its stockholders. These provisions may also prevent or discourage attempts to remove and replace incumbent directors.

The Amended and Restated Bylaws provide that the Court of Chancery in the State of Delaware is the sole and exclusive forum for substantially all disputes between the Combined Company and its stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with the Combined Company or its directors, officers or employees.

The Amended and Restated Bylaws contain a forum and venue selection provision, which provides that, unless the Combined Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of the Combined Company; (ii) any action asserting a claim for breach of a fiduciary duty owed by any director, officer, employee or agent of the Combined Company to the Combined Company or the Combined Company’s stockholders; or (iii) any action asserting a claim arising pursuant to any provision of the DGCL, the Amended and Restated Charter or the Amended and Restated Bylaws; or (iv) any action asserting a claim governed by the internal affairs doctrine, in each case subject to said court having personal jurisdiction over the indispensable parties named as defendants in such

Table of Contents

action. It further provides that, if any action the subject matter of which is within the scope of the forum and venue selection provision is filed in a court other than a court located within the State of Delaware in the name of any stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the forum and venue selection provision; and (y) having service of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the action as agent for such stockholder. It further provides that any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Combined Company shall be deemed to have notice of and consented to the provisions of the forum and venue selection provision.

For the avoidance of doubt, the forum and venue selection provision described above applies to any claim falling within the four categories of actions described above, regardless of whether such claim arises under the common law or under statute. However, in accordance with Section 27 of the Exchange Act, the federal courts shall have exclusive jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Moreover, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.

The choice of forum provision in the Amended and Restated Bylaws may limit stockholders’ ability to bring a claim in a judicial forum that they find favorable for disputes with the Combined Company or its directors, officers, employees or agents, which may discourage such lawsuits against the Combined Company and its directors, officers, employees and agents even though an action, if successful, might benefit stockholders. The applicable courts may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more or less favorable to the Combined Company than to its stockholders. With respect to the provision making the Court of Chancery of the State of Delaware (or, if such court lacks jurisdiction, any other state or federal court located within the State of Delaware) the sole and exclusive forum for certain types of actions, stockholders who do bring a claim in the Court of Chancery or a state or federal court located within the State of Delaware could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. Finally, if a court were to find this provision of the Amended and Restated Bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, the Combined Company may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on the Combined Company.

Covenants contained in the agreements governing the Molekule indebtedness which AeroClean is assuming in connection with the Merger will impose restrictions on AeroClean and certain of its subsidiaries that may affect their ability to operate their businesses.

Molekule is party to a senior loan agreement and a mezzanine loan agreement, each entered into with SVB. In addition, Molekule is party to a master lease agreement entered into with Trinity. SVB and Trinity have consented to the Merger but on the condition that AeroClean must become a co-borrower or co-lessor (as applicable) under these agreements. These agreements contain various affirmative and negative covenants, and future credit and/or lease agreements which the Combined Company may enter into also likely will contain affirmative and negative covenants.

The agreements governing Molekule’s indebtedness with SVB and Trinity contain covenants that will restrict the ability of the Combined Company to, among other things, incur liens, additional indebtedness, other than permitted indebtedness, enter into mergers or acquisitions, sell or otherwise dispose of assets, pay dividends, or repurchase stock, make loans or other investments, and engage in affiliate transactions, subject to customary exceptions. In addition, the agreements contain a financial covenant which, after the Closing Date, will require the co-borrowers to maintain, at all times, and be tested as of any day, unrestricted and unencumbered cash and cash equivalents of at least $2.0 million. In addition, the co-borrowers will be required to maintain an aggregate net revenue of (i) $50.0 million for the calendar year ending December 31, 2023 and (ii) with respect to future annual periods, net revenue levels reasonably agreed between Molekule and SVB prior to February 28 of each calendar year thereafter. The ability of AeroClean to comply with these provisions may be affected by events beyond its control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate AeroClean’s repayment obligations.

If securities or industry analysts do not publish research or reports about the Combined Company’s business, if they adversely change their recommendations regarding the Combined Company common stock or if the Combined Company’s operating results do not meet their expectations, the AeroClean Common Stock price and trading volume could decline.

The trading market for the AeroClean Common Stock will depend in part on the research and reports that securities or industry analysts publish about the Combined Company or its businesses. While securities and industry analysts currently cover AeroClean, securities and industry analysts may not publish research on the Combined Company. If no securities or industry analysts provide

Table of Contents

coverage of the Combined Company, the trading price for the AeroClean Common Stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover the Combined Company downgrade its securities or publish inaccurate or unfavorable research about its businesses, or if the Combined Company’s operating results do not meet analyst expectations, the AeroClean Common Stock price would likely decline. If one or more of these analysts cease coverage of the Combined Company or fail to publish reports on the Combined Company regularly, demand for AeroClean Common Stock could decrease, which might cause the AeroClean Common Stock price and trading volume to decline.

AeroClean has never paid dividends and does not currently intend to pay dividends to its stockholders.

AeroClean has never paid dividends and does not currently intend to pay dividends in the future. Whether any dividends are declared or paid to stockholders of AeroClean following the Merger, and the amounts of any such dividends that are declared or paid, will be subject to the discretion of the board of the Combined Company, which may be impacted by any of the following factors:

●

AeroClean may not have enough cash to pay such dividends or to repurchase shares due to its cash requirements, capital spending plans, cash flow or financial position;

●

decisions on whether, when and in which amounts to make any future distributions will remain at all times entirely at the discretion of the board of directors of the Combined Company, which could change its dividend practices at any time and for any reason;

●

AeroClean’s desire to maintain or improve the credit ratings on its debt; and

●

the amount of dividends that AeroClean may distribute to its stockholders is subject to restrictions under Delaware law and is limited by the negative covenants in Molekule’s loan agreements (which will be assumed by AeroClean at closing) and, potentially, the terms of any future indebtedness that AeroClean may incur.

Stockholders should be aware that they have no contractual or other legal right to dividends that have not been declared.

The Combined Company’s results of operations may fluctuate significantly, which will make its future results difficult to predict and could cause its results to fall below expectations.

The Combined Company’s quarterly and annual results of operations may fluctuate significantly, which will make it difficult for the Combined Company to predict future results. These fluctuations may occur due to a variety of factors, many of which are outside of the control of the Combined Company and may be difficult to predict, including, but not limited to:

●

the timing and cost of, and level of investment in, research, development and commercialization activities, which may change from time to time;

●

the timing and cost of, and level of investment in, research and development relating to the Combined Company’s technologies and current or future facilities;

●

expenditures that the Combined Company may incur to acquire, develop or commercialize additional products and technologies;

●

the level of demand for any future products, which may vary significantly over time;

●

customer mix and the varying lengths of sales cycles for different customer segments;

●

developments involving the Combined Company’s competitors;

●

the cost of servicing and maintaining the Combined Company’s products;

●

the cost of manufacturing, as well as building out the Combined Company’s supply chain, which may vary depending on the quantity of productions, and the terms of any agreements it enters into with third-party suppliers; and

Table of Contents

●

general market conditions and other factors, including factors unrelated to the Combined Company’s operating performance or the operating performance of the Combined Company’s competitors.

The cumulative effects of these factors could result in large fluctuations and unpredictability in the Combined Company’s quarterly and annual results of operations. As a result, comparing its results of operations on a period-to-period basis may not be meaningful. Investors should not rely on past results as an indication of the Combined Company’s future performance.

This variability and unpredictability could also result in the Combined Company’s failing to meet the expectations of industry or financial analysts or investors for any period. If the Combined Company’s revenue or results of operations fall below the expectations of analysts or investors or below any forecasts it may provide to the market, or if the forecasts the Combined Company provides to the market are below the expectations of analysts or investors, the price of the Combined Company’s common stock could decline substantially. Such a stock price decline could occur even when the Combined Company has met any previously publicly stated revenue or operating guidance it may provide.

Risks Related to AeroClean’s Business

If Pūrgo fails to perform as expected, our ability to develop, market and sell our products could be harmed.

In the year ended December 31, 2021, we launched our first commercial air purification unit, Pūrgo, for in-room applications, and in February 2022, we debuted a Pūrgo Lift prototype, an air purification device for elevators and other wall-mount applications. The successful commercialization of these products is highly uncertain and subject to a number of risks. These risks include, but are not limited to: (i) the possibility that our products will be found to be less effective than anticipated or fail to receive necessary regulatory clearances; (ii) that the products, even if effective, will be difficult to scale up or manufacture at commercial levels or uneconomical to market; (iii) that proprietary rights of third parties will preclude us from using such technologies or marketing such products; and (iv) that third parties will use or market superior or equivalent technologies or products.

Our products may contain defects in design and manufacture that may cause them to not perform as expected or that may require repairs, recalls and design changes. We have a limited frame of reference from which to evaluate the long-term performance of Pūrgo and Pūrgo Lift. If these devices, or additional devices or applications of our technology that we may develop in the future, fail to perform as expected, customers may delay deliveries or terminate further orders and we may need to initiate product recalls, each of which could adversely affect our sales and brand and could adversely affect our business, financial condition and results of operations.

Our future success will depend on our ability to implement our business strategy and to develop and introduce, on a timely basis, products that address the evolving needs of our customers. If we are unable to develop, validate and scale the technology necessary to compete successfully with existing or newly emerging technologies, or if we are unable to develop products based on these technologies, our business, financial condition and results of operations could be seriously harmed.

If we cannot develop adequate distribution, customer service and technical support networks, or navigate applicable global logistics and supply chain bottlenecks, then we may not be able to market and distribute our products effectively or customers may decide not to order our products. In either case, our sales and revenues will suffer.

Our strategy requires us to distribute our products and provide a significant amount of customer service and maintenance. To provide these services, we have begun, and will need to continue, to develop a network of distribution and a staff of employees and independent contractors in each of the areas in which we intend to operate. We cannot assure that we will be able to organize and manage this network on a cost-effective basis, if at all. If we cannot effectively organize and manage this network, then it may be difficult for us to provide competitive service and support to our customers, in which case customers may be unable, or decide not, to order our products, which could have a material adverse effect on our business, financial condition and results of operations.

In addition, governmental mandates related to the COVID-19 pandemic — among other dynamics — have negatively impacted, and may continue to impact, personnel and operations at third party manufacturing and component part supplier facilities in the United States and around the world, creating logistics and supply chain bottlenecks across many industries. 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.

Table of Contents

While we have achieved improvements in our third-party manufacturing output since our commercial launch of Pūrgo at the end of the third quarter in 2021, we expect these ongoing global logistics and supply chain bottlenecks and component shortages may adversely impact our ability to source component parts at favorable prices (if at all) and may result in delays in, or reduced output from, our third-party manufacturing activities. Higher component costs and/or delays in our ability to manufacture and distribute Pūrgo and Pūrgo Lift could have a material adverse effect on our sales, revenues, and results of operations.

We may not be successful in implementing our proposed business strategy to achieve our expected revenue growth or effectively manage growth.

The Company began recognizing revenues as of July 2021. In the future, even if our revenues increase, our rate of growth may decline. In any event, we will not be able to grow as rapidly or at all if we do not:

●

successfully establish our technology and brand;

●

establish a commercial footprint;

●

accelerate development of prototypes and market introduction of our devices and other novel applications of our proprietary SteriDuct technology;

●

capitalize on our collaboration with experts in aerospace;

●

explore opportunities for collaboration; or

●

identify opportunities to establish industry leadership domestically and internationally.

We cannot assure you that we will be able to meet these objectives. As we grow, we expect to invest substantial financial and other resources to:

●

expand into non-medical markets such as schools, long-term care facilities and the aviation and HVAC industries;

●

support the development of a team of senior sales associates;

●

accelerate our development of complementary devices; and

●

incur general administration, including legal, accounting and other compliance, expenses related to being a public company.

Our planned growth will place significant demands on our management and on our operational and financial resources. We have hired and expect to continue hiring additional personnel to support our planned growth. Our organizational structure will become more complex as we add staff, and we will need to improve our operational, legal, financial and management controls as well as our reporting systems and procedures. We will require significant capital expenditures and the investment of valuable management resources to grow and develop in these areas. A failure to manage our growth effectively could materially and adversely affect our ability to market our products, which could have a material adverse effect on our business, financial condition and results of operations.

AeroClean has historically depended on sales of a single product for future growth.

We are currently in the commercialization phase of our principal product, the Pūrgo device. We will depend for our growth on the success of this product. We cannot guarantee that our rollout of this product will be successful or that we will be able to increase sales of our Pūrgo device. In the year ended December 31, 2021, we generated sales of approximately $0.6 million of the Pūrgo device and, while we intend to promote sales of this product during 2022 and beyond, we cannot guarantee that we will succeed in these efforts. In addition, we may not be successful in developing or acquiring additional products. Any failure to expand sales of our Pūrgo device, or any failure to obtain market acceptance of our product, would have a material adverse effect on our business, financial condition, and results of operations.

Table of Contents

Our products have not been proven to reduce the risk of COVID-19 transmission.

We expect that much of the demand for our products will be based not only on their ability to reduce exposure of immunocompromised patients to airborne organisms that cause hospital acquired infections (“HAIs”) but also reduce the risk of COVID-19 transmission. Since the beginning of the COVID-19 pandemic, we have learned that the original SARS-CoV-2 strain can mutate rapidly, and these mutant strains, such as the Delta and Omicron variants, continue to spread throughout the global population. Accordingly, much is still unknown about the manner in which bacteria and viruses, including the novel coronavirus underlying COVID-19, and any mutation or variation thereof, are transmitted among human beings. Current studies have highlighted that COVID-19, like seasonal flu viruses and other pathogens (such as SARS and MERS), is transmitted by air predominantly through contact between an infected person and others. While we have proven that our devices can eliminate 99.99% (“4 Log”) of airborne pathogens in controlled laboratory environments, including the Omicron variant of SARS-CoV-2, we have not conducted any tests or studies regarding the ability of such devices to reduce the spread of COVID-19 and any mutation or variation thereof, and our devices may ultimately not succeed in reducing the spread of COVID-19 or any mutation or variation thereof. Further, additional research may determine that COVID-19 is transmitted among human beings in other ways not known or fully understood. We expect demand for our products would be significantly less than anticipated if our products are not perceived as being effective at reducing the risk of COVID-19 transmission or if COVID-19 is determined to spread in ways other than through airborne transmission.

We may face significant challenges in obtaining market acceptance of our products, which could adversely affect our potential sales and revenues.

We do not yet have an established market or customer base for our products. Acceptance of our products in the marketplace by both potential users and potential purchasers, including hospitals, schools, universities, commercial facilities, transportation systems and other healthcare and non-healthcare providers, is uncertain, and our failure to achieve sufficient market acceptance will significantly limit our ability to generate revenue and be profitable. Market acceptance will require substantial marketing efforts and the expenditure of significant funds by us to inform hospitals, schools, universities, commercial facilities, transportation systems, residential spaces and other health care and non-healthcare providers of the benefits of using our products. We may encounter significant clinical and market resistance to our products, and our products may never achieve market acceptance. We may not be able to build key relationships with physicians, education administrators and government agencies. Product orders may be cancelled or customers that are beginning to use our products may cease to do so and customers expected to begin using our products may not.

Factors that may affect our ability to achieve acceptance of our products in the marketplace include, but are not limited, to whether:

●

such products will be effective;

●

such products will be cost-effective; and

●

we will demonstrate product safety, efficacy and cost-effectiveness.

Acceptance of our products in the marketplace is also uncertain, and our failure to achieve sufficient market acceptance and any inability to sell such products at competitive prices will limit our ability to generate revenue and be profitable. Our products and technologies may not achieve expected reliability, performance and endurance standards. Our products and technologies may also not achieve market acceptance, including among hospitals, or may not be deemed suitable for other commercial applications.

We lack manufacturing experience and capabilities.

We do not have our own manufacturing facilities or capabilities. We have engaged Mack Molding, an FDA-regulated subsidiary of the privately held Mack Group, to manufacture the Pūrgo device. Although Mack Molding is an experienced contract manufacturer of medical devices, there can be no assurance that Mack Molding will be able to continue to manufacture our products successfully, including in a manner that complies with regulatory requirements, or at a scale to meet customer demand. There also can be no assurance that we would be able to secure another manufacturer for our products or do so on terms similar to those with Mack Molding. The inability to have our products manufactured in a timely manner could have a material adverse effect on our business, financial condition and results of operations.

Table of Contents

We receive a significant portion of our revenues from a small number of customers and the loss of, or nonperformance by, one or more of our significant customers could adversely affect our business.

During the year ended December 31, 2021, our largest and second largest customers accounted for approximately 45% and 12% of the Company’s revenues, respectively. Our largest customer in the 2021 fiscal year was a hospital deploying 100 units to address a variety of clinical and non-clinical spaces. As we roll out the Pūrgo device to a wider group of potential customers, we expect our largest customers may vary from period to period. However, as we continue to market our products and seek to develop and grow our customer base, our revenues and results of operations in any given period going forward may materially rely on one or a few significant customers. The failure of such customer or customers to fulfill their obligations under purchase commitments could result in a material reduction in our reported revenues and results of operations.

Our ability to expand our product offerings and introduce additional products and services may be limited, which could have a material adverse effect on our business, financial condition and results of operations.

In July 2021, we completed the development stage of our first commercial air purification unit, Pūrgo, for in-room applications and began commercial production and sales, and in February 2022, we debuted a prototype of Pūrgo Lift, an air purification device for elevators and other wall-mount applications. There can be no assurance that we will be successful in commercializing the Pūrgo or Pūrgo Lift devices or developing any other products or applications of our proprietary technology or that demand will develop for such in the future. Entry into new markets may require us to compete with new companies, cater to customer expectations and comply with new complex regulations, which may be unfamiliar. Accordingly, we could need to invest significant resources in market research, legal counsel and our organizational infrastructure, and a return on such investments may not be achieved for several years, if at all. Additionally, failure to comply with applicable regulations or to obtain required licenses could result in penalties or fines. Further, we may fail in demonstrating the value of any new value-added product to customers, which would compromise our ability to successfully create new revenue streams or receive returns in excess of investments. Any of these risks, if realized, could materially and adversely affect our business, financial condition and results of operations.

Quality problems with, and product liability claims in connection with, our products could lead to recalls or safety alerts, harm to our reputation, or adverse verdicts or costly settlements, and could have a material adverse effect on our business, financial condition and results of operations.

Quality is extremely important to us and our customers due to the serious and costly consequences of product failure, and our business exposes us to potential product liability risks that are inherent in the design, manufacture and marketing of medical devices and services. In addition, our products may be used in intensive care settings with immunocompromised and seriously ill patients. Component failures, manufacturing defects or design flaws could result in an unsafe condition or injury to, or death of, a patient or other user of our products. These problems could lead to the recall of, or issuance of a safety alert relating to, our products and could result in unfavorable judicial decisions or settlements arising out of product liability claims and lawsuits, including class actions, which could negatively affect our business, financial condition and results of operations. In particular, a material adverse event involving one of our products could result in reduced market acceptance and demand for all products offered under our brand and could harm our reputation and ability to market products in the future.

High quality products are critical to the success of our business. If we fail to meet the high standards we set for ourselves and that our customers expect, and if our products are the subject of recalls, safety alerts or other material adverse events, our reputation could be damaged, we could lose customers and our revenue could decline.

Any product liability claim brought against us, with or without merit, could be costly to defend and resolve. Any of the foregoing problems, including product liability claims or product recalls in the future, regardless of their ultimate outcome, could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

We have limited experience selling our products to healthcare facilities, and we might be unsuccessful in increasing our sales.

Our business strategy depends largely on our ability to sell our products to hospitals and other healthcare facilities. We have limited experience with respect to sales and marketing, and in particular marketing to hospitals and healthcare facilities. If we are unsuccessful at manufacturing, marketing and selling our products, our business, financial condition and results of operations will be materially adversely affected.

Table of Contents

Our results of operations could be negatively impacted if we are unable to capitalize on research and development spending.

We have and intend to continue to spend a significant amount of time and resources on research and development projects in order to develop and validate new and innovative products. We believe these projects will result in the commercialization of new products and will create additional future sales. However, factors including regulatory delays, safety concerns or patent disputes could delay the introduction or marketing of new products. We may experience an unfavorable impact on our business and financial condition if we are unable to capitalize on those efforts to successfully market new products.

Our success will depend partly on our ability to operate without infringing or misappropriating the proprietary rights of others.

We may be sued for infringing or misappropriating the proprietary rights of others. We may have to pay substantial damages, including treble damages, for past infringement if it is ultimately determined that our products or technology infringe a third party’s proprietary rights. Other companies may have filed patent applications on concepts similar to the concepts underlying our technologies and products. In addition, patents may be issued covering UV-C LED technology or other technologies or methods of air purification that could prevent us from developing our technologies or products, or that relate to certain other aspects of technology that we utilize or expect to utilize.

From time to time, we may receive invitations from third parties to license patents owned or controlled by such parties. We will evaluate these requests and may consider obtaining licenses that are compatible with our business objectives. However, we may not be able to obtain licenses on acceptable terms, if at all.

Our inability to operate without infringing upon the proprietary rights of others or a failure to obtain or maintain any necessary licenses could have a material adverse effect on our business, financial condition or results of operations.

We may collaborate with third parties to help develop certain technologies.

We may seek out collaboration opportunities to extend our UV-C LED air purification technology to the integrated air handling systems of large buildings, elevators and commercial aircraft. During the year ended December 31, 2021, we accelerated our development of air purification equipment utilizing our proprietary, patented SteriDuct technology for elevators in the Pūrgo Lift unit, and we have engaged a veteran of the elevator industry to continue to develop that product.

We also may create strategic alliances with aviation industry suppliers to provide both ground-based and in-flight air purification systems. There can be no assurances that we will enter into any such collaborations or that they will be successful. If our collaborations are not successful, it may impact our ability to develop new technologies and products, which could adversely impact our business, financial condition and results of operations. Further, such collaborations may introduce additional risk with respect to possible unauthorized use or infringement upon our intellectual property rights by the third-parties with whom, if any, we ultimately engage in strategic collaborations.

We may not be able to achieve or maintain satisfactory pricing and margins for our products, which could harm our business and results of operations.

We can give no assurance that we will be able to maintain satisfactory prices for our Pūrgo and Pūrgo Lift devices and other products we develop in the future. If we are forced to lower the price we charge for our Pūrgo and Pūrgo Lift devices, our gross margins will decrease, which will harm our ability to invest in and grow our business. If we are unable to maintain our prices, or if our costs increase due to inflation or otherwise and we are unable to offset such increase with an increase in our prices, our margins could erode, which could harm our business, financial condition and results of operations.

Risks Related to Molekule’s Business

Molekule is an early-stage company with a history of losses. Molekule has not been profitable historically and may not achieve or maintain profitability in the future.

Molekule had net losses from its inception until the year ended December 31, 2021, including net losses of $64.2 million and $30.6 million for the years ended December 31, 2021 and 2020, respectively. Molekule believes it will continue to incur operating losses and negative cash flow in the near-term as it continues to invest significantly in its business, in particular across its sales and marketing programs. These investments may not result in increased revenue or growth in Molekule’s business.

Table of Contents

As of September 30, 2022, December 31, 2021 and December 31, 2020, Molekule had $3.3 million, $15.9 million and $37.4 million, respectively, in unrestricted cash and cash equivalents. In connection with the preparation of Molekule’s financial statements for the year ended December 31, 2021, Molekule’s management team concluded that there was substantial doubt about Molekule’s ability to continue as a going concern. See Note 2 to Molekule’s audited consolidated financial statements for the year ended December 31, 2021, included elsewhere in this information statement/prospectus. Furthermore, in connection with the preparation of Molekule’s financial statements for the nine months ended September 30, 2022, Molekule’s management team also concluded that there was substantial doubt about Molekule’s ability to continue as a going concern. See Note 2 to Molekule’s unaudited condensed consolidated financial statements for the nine months ended September 30, 2022, included elsewhere in this information statement/prospectus. Molekule’s ability to continue as a going concern is dependent upon Molekule’s ability to increase revenues, improve operating cash flow and/or raise capital from financing transactions.

There can be no assurance that Molekule will be successful in accomplishing its objectives. Without such additional capital, Molekule may be required to curtail or cease operations.

Further, revenue growth and growth in Molekule’s customer base may not be sustainable, and Molekule may not achieve sufficient revenue to achieve or maintain profitability. Molekule may incur significant losses in the future for a number of reasons and may encounter unforeseen expenses, difficulties, complications and delays and other unknown events. As a result, Molekule’s losses may be larger than anticipated, it may incur significant losses for the foreseeable future, and it may not achieve profitability when expected, or at all. If Molekule achieves profitability, Molekule may not be able to maintain or increase profitability.

Molekule’s limited operating history and rapid growth makes evaluating its current business and future prospects difficult and may increase the risk of investment.

Between 2015 and 2020, Molekule has experienced substantial growth, and Molekule is attempting to continue to grow its business. Molekule’s limited operating history may make it difficult to evaluate its current business and future prospects, as Molekule continues to grow its business. Molekule’s ability to forecast its future revenue and operating results is subject to a number of uncertainties, including its ability to plan for and model future growth. Molekule has encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly evolving industries as it continues to grow its business. If Molekule’s assumptions regarding these uncertainties, which it uses to plan its business and budget for its expenses, are incorrect or change in reaction to changes in its markets, or if it does not address these risks successfully, its operating and financial results could differ materially from its expectations and its business could suffer.

Further, in connection with its substantial growth, Molekule has made, and expects to continue to make, significant investments in its business, including investments in its manufacturing, technology, marketing and sales efforts. These investments include an investment to expand the capabilities of Molekule’s facilities, increased staffing and further market expansion. If Molekule’s business does not generate the level of revenue required to support this investment, its net sales and profitability will be adversely affected.

Molekule may not manage its growth effectively. Its ability to effectively manage its anticipated growth and expansion of its operations will also require Molekule to enhance its operational, financial and management controls and infrastructure, human resources policies and reporting systems. This expansion will place a significant strain on Molekule’s management, as well as its operational and financial resources. To manage the growth of its operations and personnel, Molekule must establish appropriate and scalable operational and financial systems, procedures and controls and establish and maintain a qualified finance, administrative and operations staff. Molekule may be unable to hire, train, retain and manage the necessary personnel or to identify, manage and exploit potential strategic relationships and market opportunities, which will negatively impact its business, operating results, financial condition and prospects.

Molekule operates in an industry that is competitive and subject to technological change.

The air purification industry is characterized by intense competition and rapid technological change, and Molekule competes with other companies on a variety of factors, including price, product features and services. Molekule’s products compete broadly with other companies offering air purification technology, including large air purifier manufacturers, such as Blueair, a brand owned by Unilever PLC, Dyson and Levoit. Some of Molekule’s competitors have significantly greater financial and marketing resources than Molekule or are more specialized than Molekule is with respect to particular markets.

Many competitors have longer operating histories, larger customer bases, and greater financial, research and development, technical, marketing and sales, and personnel resources than Molekule. Given their capital resources, larger companies that compete

Table of Contents

or may compete with Molekule in the future, are better positioned relative to Molekule to substantially increase their manufacturing capacity, research, and development and marketing efforts or to withstand any significant reduction in orders by customers. Such larger companies typically have broader and more diverse product lines and market focus and thus are not as susceptible to downturns or seasonality in a particular market. In addition, some of Molekule’s competitors have been in operation much longer than it has been and therefore may have more longstanding and established relationships with current and potential customers, established sales and distribution networks, significant goodwill, and global name recognition.

Because Molekule is small and does not have a significant amount of capital, it must limit its activities. Molekule’s relative lack of capital and resources may adversely affect its ability to compete with large entities that produce and market air purifier products. Furthermore, it may become necessary for Molekule to reduce its prices in response to competition. A reduction in prices of Molekule’s products could adversely affect its revenues and profitability.

In addition, other entities not currently offering products similar to Molekule may enter the market. Any delays in the general market acceptance of Molekule’s products may harm its competitive position. Any such delay would allow its competitors additional time to improve their service or product offerings and provide time for new competitors to develop. Increased competition may result in pricing pressures, reduced operating margins and loss of market share, which could have an adverse effect on Molekule’s business, operating results, and financial condition.

If Molekule’s competition is better able to develop and market products or services that are cheaper, safer, more effective, or otherwise more appealing to consumers, it may be unable to effectively compete.

Molekule relies on third-party manufacturers and is dependent on their quality and effectiveness.

Molekule relies on certain third parties to manufacture Molekule’s products and product components. In particular, Molekule outsources the majority of the manufacture and assembly of its air purifiers to Inventec Appliances Corporation (“IAC”), and Molekule also outsources the production of its filters to Columbus Industries, Inc. (“Columbus Industries”). The failure to achieve and maintain high manufacturing standards, including failure to detect or control unexpected events or unanticipated manufacturing errors, or the frequent occurrence of such errors, could result in delays or failures in product testing or delivery, cost overruns, product recalls or withdrawals and other problems that could seriously hurt Molekule’s business. Third-party manufacturers can encounter difficulties involving manufacturing processes, facilities, operations, production yields, quality control, compliance, and shortages of qualified personnel.

The current term of Molekule’s agreement with IAC will end in July 2023, at which time the agreement will automatically renew for an additional one-year term, subject to a six-month notice by either party of its intent not to renew. The current term of Molekule’s agreement with Columbus Industries will expire in 2023 and is automatically renewable for an additional two-year term, subject to a 12-month notice by either party of its intent not to renew. If for any reason Molekule is unable to renew these agreements or if Molekule’s third-party manufacturers are unable or unwilling to perform, Molekule may not be able to terminate its agreements with them, and Molekule may not be able to locate alternative manufacturers or enter into favorable agreements with them, nor can Molekule be certain that any such third parties will have the manufacturing capacity to meet future requirements. If these manufacturers, or any alternate manufacturer, experience any significant difficulties in their respective manufacturing processes for Molekule’s products or product components, or should these manufacturers cease doing business with Molekule, Molekule could experience significant interruptions in the supply of its products or may not be able to create a supply of its products at all. Were Molekule to encounter manufacturing issues, Molekule’s ability to produce a sufficient supply of its products might be negatively affected. Molekule’s inability to coordinate the efforts of its third-party manufacturers, or the lack of capacity available at its third-party manufacturers, could impair Molekule’s ability to supply its products at required levels.

Molekule cannot guarantee its manufacturing and assembly partners will be able to manufacture Molekule’s products at commercial scale on a cost-effective basis. If the commercial-scale manufacturing costs of Molekule’s products are higher than expected, these costs may significantly impact Molekule’s operating results.

Disruption of Molekule’s supply chain could have an adverse impact on its business, financial condition, and results of operations.

Molekule’s ability to manufacture, assemble, transport, and sell its products is critical to its success. Damage or disruption to Molekule’s supply chain, including third-party manufacturing, assembly or transportation and distribution capabilities, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics (such as the ongoing COVID-19 pandemic), strikes, government action, or other reasons beyond Molekule’s control or the control of its suppliers,

Table of Contents

manufacturers and business partners, could impair Molekule’s ability to manufacture or sell its products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from or manufactured by a single supplier, manufacturer or location, could adversely affect Molekule’s business or financial results.

Molekule cannot provide assurances that its third-party suppliers will not experience delays in production, shipping or work shortages as a result of the ongoing COVID-19 pandemic, or that such third-party supplies will be able to dedicate sufficient resources to meet its scheduled delivery requirements or that its suppliers will have sufficient resources to satisfy its requirements during any period of sustained demand. Moreover, the global nature of the ongoing COVID-19 pandemic could result in there being fewer alternative suppliers. As a result of the ongoing COVID-19 pandemic, Molekule has experienced significant delays in receiving shipments of its air purifiers from Malaysia to its facility in Fremont, California, as shipping times have increased from approximately 47 days before March 2020, up to approximately 82 days during the first quarter of 2021, to approximately 60 days currently.

Failure of suppliers or manufacturers to supply or manufacture, or delays in supplying or manufacturing, Molekule’s raw materials, components or products, or allocations in the supply of certain high demand raw materials or components, for any reason, could materially adversely affect Molekule’s operations and its ability to meet its own delivery schedules on a timely and competitive basis. Additionally, Molekule’s third-party suppliers or manufacturers may provide Molekule with raw materials, components or products that fail to meet its expectations or the expectations of its customers, which could subject Molekule to product liability claims, other claims and litigation, which could have an adverse effect on Molekule’s business, operating results, and financial condition. In particular, disputes with significant suppliers and manufacturers, including disputes regarding pricing or performance, could adversely affect Molekule’s ability to supply products to its customers and could materially and adversely affect Molekule’s product sales, financial condition, and results of operations.

Molekule cannot accurately predict future revenues or profitability in the evolving market for air purification technology and products.

The market for air purification technology and products is rapidly evolving. As is typical for a rapidly evolving industry, demand for and market acceptance of recently introduced products are subject to a high level of uncertainty and may be influenced by uncertain economic conditions or the existence or absence of seasonal wildfires or health epidemics. For example, uncertain economic conditions may affect a prospective customer’s discretionary income and willingness to purchase Molekule’s air purifiers, and the absence of seasonal wildfires or health epidemics could negatively impact the demand for Molekule’s air purifiers. Moreover, since the market for Molekule’s products is evolving, it is difficult to predict the future growth rate, if any, and size of this market. Because of Molekule’s limited operating history and the emerging nature of the markets in which it competes, Molekule may be unable to accurately forecast its revenues or its profitability. The market for its products and the long-term acceptance of its products are uncertain, and Molekule’s ability to attract and retain qualified personnel with industry expertise, particularly sales and marketing personnel, is uncertain. To the extent Molekule is unsuccessful in increasing revenues, it may be required to appropriately adjust spending to compensate for any unexpected revenue shortfall, or to reduce its operating expenses, causing it to forego potential revenue generating activities, either of which could have a material adverse effect on Molekule’s business, operating results and financial condition.

If Molekule does not successfully anticipate market needs and develop products and services that meet those needs, or if those products and services do not gain market acceptance, its business, operating results and financial condition will be adversely impacted.

Molekule may not be able to anticipate future market needs or be able to improve its products or to develop new products and services to meet such needs on a timely basis, if at all. In addition, Molekule’s inability to diversify beyond its current offerings could adversely affect its business. Any new products and applications or product and application enhancements that Molekule introduces may not achieve any significant degree of market acceptance from current or potential customers, which would adversely affect Molekule’s business, operating results, financial condition and profitability. In addition, the introduction of new products or applications, or enhancements to existing products or applications, may decrease customer demand for Molekule’s products and services, including ongoing subscriptions for Molekule’s air filters, or future purchases of Molekule’s products, thereby offsetting the benefit of even a successful product or service introduction. Any of the foregoing could adversely impact Molekule’s business, operating results and financial condition.

Table of Contents

Molekule has invested and expects to continue to invest in research and development efforts that further enhance its products and technology. Such investments may affect its operating results and liquidity, and, if the return on these investments is lower or develops more slowly than Molekule expects, its revenue and operating results may suffer.

Molekule has invested and expects to continue to invest in research and development efforts that further enhance its products. These investments may involve significant time, risks and uncertainties, including the risk that the expenses associated with these investments may affect Molekule’s margins, operating results and liquidity and that such investments may not generate sufficient revenues to offset liabilities assumed and expenses associated with these new investments. The air purification industry changes rapidly as a result of technological and product developments, which may render Molekule’s products and technology, including its PECO technology, less effective. Molekule believes that it must continue to invest a significant amount of time and resources in its products and technology to maintain and improve its competitive position. If Molekule does not achieve the benefits anticipated from these investments or if the achievement of these benefits is delayed, Molekule’s business, operating results and prospects may be materially adversely affected.

If Molekule’s products fail to perform as expected, its ability to develop, market and sell its products could be harmed.

Molekule offers three air purifier products: the Air Mini+, the Air Pro and the Air Pro RX. The successful commercialization of these products and any future products is highly uncertain and subject to a number of risks. These risks include, but are not limited to: (i) the possibility that Molekule’s products will be found to be less effective than anticipated or fail to receive necessary regulatory clearances; (ii) that the products, even if effective, will be difficult to scale up or manufacture at commercial levels or uneconomical to market; (iii) that proprietary rights of third parties will preclude Molekule from using such technologies or marketing such products; and (iv) that third parties will use or market superior or equivalent technologies or products.

Molekule’s products may contain defects in design and manufacture that may cause them to not perform as expected or that may require repairs, recalls and design changes. Molekule has a limited frame of reference from which to evaluate the long-term performance of its products and, if its products or any additional products or applications of Molekule’s technology that it may develop in the future, fail to perform as expected, customers may return their products, cancel pending deliveries or terminate further orders and Molekule may need to initiate product recalls, each of which could adversely affect its sales and reputation and could adversely affect Molekule’s business, operating results and financial condition.

Molekule’s future success will depend on its ability to implement its business strategy and to develop and introduce, on a timely basis, products that address the evolving needs of its customers. If Molekule is unable to develop, validate and scale the technology necessary to compete successfully with existing or newly emerging technologies, or if it is unable to develop products based on these technologies, its business, operating results, and financial condition could be seriously harmed.

Molekule’s business activities have been, and may continue to be, disrupted due to the ongoing global COVID-19 pandemic.

Molekule faces various risks and uncertainties related to the ongoing global COVID-19 pandemic. Since the first quarter of 2020, the pandemic has led to periods of disruption and volatility in the global economy and capital markets, which has increased the cost of capital and adversely impacted access to capital. During 2020 and, to a lesser extent, 2021 and 2022, the government-enforced travel restrictions, quarantines and business closures around the world that occurred periodically in response to the pandemic have significantly impacted Molekule’s ability to manufacture, sell and distribute its products to customers around the world. For example, as a result of the global COVID-19 pandemic, Molekule temporarily closed all its offices, and has continued to incur additional lease expenses for a lease that could not be terminated. The pandemic has, and may continue to, disrupt Molekule’s third-party manufacturers and supply chain, and its ability to fulfill orders for its products. Furthermore, if significant portions of Molekule’s workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures, remote working or other restrictions in connection with the ongoing global COVID-19 pandemic, Molekule’s operations will likely be adversely impacted.

It is not currently possible to reliably project the direct impact of the ongoing COVID-19 pandemic on Molekule’s operations. For example, governmental mandates related to the ongoing global COVID-19 pandemic, among other factors, have negatively impacted, and may continue to impact, personnel and operations at third-party manufacturing and component part supplier facilities in the United States and around the world, creating logistics and supply chain bottlenecks across many industries. 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. Molekule expects these ongoing global logistics and supply chain bottlenecks and

Table of Contents

component shortages may adversely impact its ability to source component parts at favorable prices (if at all) and may result in delays in, or reduced output from, Molekule’s third-party manufacturing activities. Higher component costs and/or delays in Molekule’s ability to manufacture and distribute its products could have a material adverse effect on its sales, revenues, and operating results.

To the extent the ongoing COVID-19 pandemic adversely affects Molekule’s business, operating results, and financial condition, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including but not limited to those relating to cyber-attacks and security vulnerabilities or interruptions or delays due to third parties.

Changes in Molekule’s product and channel mix may impact its gross margins and financial performance.

Molekule’s financial performance may be affected by the mix of products — Air Mini+, Air Pro, Air Pro RX and corresponding filters and filter subscriptions — it sells during a given period. Different products as well as different methods of distribution have different margins and therefore Molekule’s gross margins may fluctuate based on the mix of products sold or sales channels through which products are sold in a given period. If Molekule’s product or channel mix shifts too far into lower gross margin products or sales in a given period and it is not able to sufficiently reduce the production and other costs associated with those products or sales or substantially increase the sales of its higher gross margin products, Molekule’s profitability could be reduced. Additionally, the introduction of new products or services may further heighten quarterly fluctuations in gross profit and gross profit margins due to manufacturing ramp-up and start-up costs as well as new product introduction pricing strategies. Other factors that may negatively affect Molekule’s gross profit include increases in freight and material costs, as well as increased promotional discounting. Molekule may experience significant quarterly fluctuations in gross profit margins or operating income or loss due to the impact of the mix of products, channels or geographic areas in which it sells its products from period to period.

Changes in Molekule’s pricing model, including due to price competition, could negatively impact Molekule’s business, including its gross margins and operating results.

Molekule has limited experience with respect to determining the optimal prices for its products and subscription models and, as a result, Molekule has in the past, and expects that it may in the future, need to change its pricing model from time to time, which could impact its financial results. Further, Molekule can give no assurance that it will be able to maintain satisfactory prices for its Air Mini+, Air Pro and the Air Pro RX and other products it may develop in the future. If Molekule is forced to lower the price it charges for its products, including due to the prices of its competitors, its gross margins will decrease, which may harm Molekule’s ability to invest in and grow its business. If Molekule is unable to maintain its prices, or if its costs increase and it is unable to offset such increase with an increase in its prices, Molekule’s margins could erode.

In addition, as the market for Molekule’s products grows, as new competitors introduce competitive products, or as Molekule introduces new products or enters into new markets, Molekule may be unable to attract new customers at the same price or based on the same pricing models it has historically used. Pricing decisions may also impact the mix of adoption among Molekule’s product offerings and negatively impact its overall revenue. Moreover, competition may require Molekule to make substantial price concessions. Molekule’s business, operating results and financial condition may be adversely affected by any of the foregoing, and Molekule may have increased difficulty achieving profitability.

Molekule has limited experience selling its products to healthcare, hospitality and education and government facilities, and it might be unsuccessful in increasing its sales.

Molekule’s business-to-business channel strategy depends in part on its ability to sell its products to healthcare, hospitality and education and government facilities. Molekule launched the Molekule Air Platform specifically to address the needs of companies returning to in-person office and work arrangements, and Molekule has limited information to-date in order to fully understand if the needs of its customers will support this business channel strategy. If Molekule is unsuccessful at manufacturing, marketing and selling its products and services, its business, operating results and financial condition will be materially adversely affected.

Increasing costs for manufactured components, raw materials, transportation, health care and energy prices may adversely affect Molekule’s profitability.

Molekule uses a broad range of manufactured components and raw materials in its products, including aluminum, semiconductors, resin, filtration media and equipment such as fans and motors. Materials, wages and subcontracting costs comprise a significant portion of Molekule’s total costs. The current economic environment, including increasing interest rates and inflation, has resulted, and may continue to result, in price volatility and an increase of these costs. Further increases in the price of these items

Table of Contents

could further materially increase Molekule’s operating costs and materially adversely affect its profit margins. Similarly, transportation, steel and health care costs have risen steadily over the past few years and represent an increasing burden for Molekule. Although Molekule tries to contain these costs whenever possible, and although it tries to pass along increased costs in the form of price increases to its customers, Molekule may be unsuccessful in doing so, and even when successful, the timing of such price increases may lag significantly behind its incurrence of higher costs.

Customers may cancel, delay or return their orders of Molekule’s products. As a result, Molekule’s backlog may not be indicative of Molekule’s future revenue.

Customers may cancel, delay or return their orders of Molekule’s products for reasons beyond Molekule’s control, including for reasons related to and exacerbated by the ongoing global COVID-19 pandemic.

Molekule offers a 30-day trial to its retail customers, pursuant to which, subject to certain conditions, customers may return their ordered product in exchange for a full refund, including any shipping charges associated with that order. If a retail customer elects to return their product, Molekule may not be able to refurbish such unit for a subsequent sale and may ultimately be unable to realize a profit for that unit.

If orders are delayed, the timing of Molekule’s revenues could be affected and orders may remain in Molekule’s backlog for extended periods of time. Revenue recognition occurs at time of product shipment and is subject to unanticipated delays. If Molekule receives relatively large orders in any given quarter, fluctuations in the levels of its quarterly backlog can result because the backlog in that quarter may reach levels that may not be sustained in subsequent quarters. As a result, Molekule’s backlog may not be indicative of its future revenues.

Molekule’s business is subject to seasonal sales which could result in volatility in Molekule’s operating results, some of which may not be immediately reflected in its financial position and results of operations.

Molekule’s business may be affected by the general seasonal trends common to the retail and air purification markets. These include, but are not limited to:

●

seasonal demand associated with the holiday season in the fourth quarter of each year; and

●

increased interest in air purification products associated during periods of increased natural disasters, such as seasonal wildfires in California and the Pacific Northwest which typically take place in late summer.

This seasonality may adversely affect Molekule’s business and cause its results of operations to fluctuate.

Defects in the manufacturing of Molekule’s products that give rise to part or product failures for its customers, may result in product liability or warranty or other claims that could lead to material expenses, diversion of management time and attention and damage to Molekule’s reputation.

Molekule’s products and technology are complex and may contain undetected defects or errors that, despite testing, are not discovered until after such product and technology has been used. This could result in claims from customers or others, which may result in litigation, increased end user warranty, support and repair or replacement costs, damage to Molekule’s reputation and business, or significant costs and diversion of support and engineering personnel to correct the defect or error. Molekule may from time to time become subject to warranty or product liability claims related to product quality issues that could lead it to incur significant expenses.

Molekule attempts to include provisions in its agreements and purchase orders with customers that are designed to limit its exposure to potential liability for damages arising from defects or errors in its products. However, it is possible that these limitations may not be effective as a result of unfavorable judicial decisions or laws enacted in the future.

The sale and support of Molekule’s products entails the risk of product liability claims. Any product liability claim brought against Molekule, regardless of its merit, could result in material expense, diversion of management time and attention, damage to its business and reputation and brand, and could cause Molekule to fail to retain existing customers or to fail to attract new customers.

Table of Contents

Molekule’s facilities, as well as the facilities of its third-party manufacturers, are vulnerable to disruption due to natural or other disasters, strikes and other events beyond Molekule’s or its manufacturers’ control.

A major earthquake, fire, tsunami, hurricane, cyclone or other disaster, such as a pandemic, major flood, seasonal storms, nuclear event or terrorist attack affecting Molekule’s facilities or the area in which it is located, or affecting those of its third-party manufacturers, could significantly disrupt Molekule’s or their operations and delay or prevent product production and distribution during the time required to repair, rebuild or replace Molekule’s or its third-party manufacturers’ damaged facilities. These delays could be lengthy and costly. If any of its third-party manufacturers’ facilities are negatively impacted by such a disaster, production and distribution of Molekule’s products could be delayed, which can impact the period in which Molekule recognizes the revenue related to the sale of those products. Additionally, customers may delay purchases of Molekule’s products until operations return to normal. Even if Molekule is able to respond quickly to a disaster, the continued effects of the disaster could create uncertainty in its business operations. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, labor strikes, war (including the war in Ukraine) or the outbreak of epidemic diseases (including the outbreak of COVID-19 and variants) could have a negative effect on Molekule’s operations and sales.

If Molekule is unable to complete and implement its plan to manufacture, fulfill and ship some of its products from its in-house facility, its profitability may suffer.

Molekule has not yet fully implemented its business plans to manufacture, fulfill and ship some of its products entirely from its in-house facility. In particular, Molekule has been coating filter media with its proprietary blend of chemicals using a company called TSG Finishing, and it continues to rely on third-party manufacturers, such as Columbus Industries, for all of the supply in its filter product lines. Molekule has established a manufacturing line to coat its filter media with chemicals at the Peco-Zero facility in Lakeland, Florida, which has been operational since September 2022. Both product improvement and incremental profits in Molekule’s business are expected from successfully coating filter media in-house. While having the capability to meet a portion of the demand for filters from manufacturing lines set up in the Peco-Zero facility is expected to improve Molekule’s margins and lower dependency on suppliers, to the extent these efforts are unsuccessful, Molekule may need to write down certain of its investments, and its profitability could suffer as a result.

Maintenance, expansion and refurbishment of Molekule’s in-house manufacturing facilities, the construction of new facilities and the development and implementation of new manufacturing processes involve significant risks.

Molekule’s existing facilities and any of its future facilities may require regular or periodic maintenance, upgrading, expansion, refurbishment or improvement. Any unexpected operational or mechanical failure, including failure associated with breakdowns and forced outages, could reduce its facilities’ production capacity below expected levels, which would reduce Molekule’s production capabilities and ultimately its revenues. Unanticipated capital expenditures associated with maintaining, upgrading, expanding, repairing, refurbishing or improving Molekule’s facilities may also reduce its profitability. Molekule’s facilities also may be subject to unanticipated damage as a result of natural disasters, terrorist attacks or other events.

Any major modifications Molekule makes to its facilities likely would result in substantial additional capital expenditures and could prolong the time necessary to bring the facility online. Molekule also may choose to refurbish or upgrade its facilities based on its assessment that such activity will provide adequate financial returns. However, such activities require time for development and capital expenditures before commencement of commercial operations, and key assumptions underpinning a decision to make such an investment may prove incorrect, including assumptions regarding construction costs and timing, which could harm Molekule’s business, operating results, financial condition and cash flows.

Finally, Molekule may not be successful or efficient in developing or implementing new production processes. Innovation in production processes involves significant expense and carries inherent risks, including difficulties in designing and developing new process technologies, development and production timing delays, and product defects. Disruptions in the production process can also result from errors, defects in materials, delays in obtaining or revising operating permits and licenses, returns of product from customers, interruption in Molekule’s supply of materials or resources and disruptions at Molekule’s facilities due to accidents, maintenance issues or unsafe working conditions, all of which could affect the timing of production ramps.

Table of Contents

Molekule is dependent on management and key personnel, and its business would suffer if it fails to retain its key personnel and attract additional highly skilled employees.

Molekule’s success depends on the specialized skills of its management team and key operating personnel, particularly those of its Chief Executive Officer, Jonathan Harris, and its Chief Operating Officer and Chief Financial Officer, Ritankar “Ronti” Pal. This may present particular challenges as Molekule operates in a specialized industry, which may make replacement of its management team and key operating personnel difficult. A loss of any of Molekule’s managers or key employees, or their failure to satisfactorily perform their responsibilities, could have an adverse effect on its business, operating results, financial condition and prospects.

Molekule’s success has been dependent, and will continue to depend, on its ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of its organization, particularly research and development and marketing and sales. Trained and experienced personnel are in high demand and may be in short supply. Many of the companies with which Molekule competes for experienced employees have greater resources than it and may be able to offer more attractive terms of employment. In addition, Molekule invests significant time and expense in training employees, which increases their value to competitors that may seek to recruit them. Molekule may not be able to attract, develop and maintain the skilled workforce necessary to operate its business, and labor expenses may increase as a result of a shortage in the supply of qualified personnel, which will negatively impact its business, operating results, financial condition and prospects. Each member of senior management, as well as Molekule’s key employees, may terminate employment without notice and without cause or good reason. The members of Molekule’s senior management, except for Mr. Harris and Mr. Pal, are not subject to non-competition agreements. Accordingly, the adverse effect resulting from the loss of certain members of senior management could be compounded by Molekule’s inability to prevent them from competing with it.

Molekule relies on its information technology systems to manage numerous aspects of its business and a disruption of these systems could adversely affect its business.

Molekule relies on its information technology systems to manage numerous aspects of its business, including to efficiently purchase materials, components and products from its suppliers and manufacturers, provide procurement and logistic services, ship products to its customers, manage its accounting and financial functions, including its internal controls, and maintain its research and development data. Molekule’s information technology systems are an essential component of its business and any disruption could significantly limit its ability to manage and operate its business efficiently. A failure of Molekule’s information technology systems to perform properly could disrupt its supply chain, product development and customer experience, which may lead to increased overhead costs and decreased sales and have an adverse effect on its reputation and financial condition. In addition, during the ongoing global COVID-19 pandemic, a substantial portion of Molekule’s employees have conducted work remotely, making Molekule more dependent on potentially vulnerable communications systems and making it more vulnerable to cyberattacks.

Although Molekule takes steps and incurs significant costs to secure its information technology systems, including its computer systems, internet sites, email and other telecommunications and data networks, Molekule’s security measures may not be effective and its systems may be vulnerable to damage or interruption. The failure of any such systems or the failure of such systems to scale as Molekule’s business grows could adversely affect its results of operations. Disruption to Molekule’s information technology systems could result from power outages, computer and telecommunications failures, computer viruses, cyber-attacks or other security breaches, catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, acts of war or terrorism and usage errors by its employees.

Molekule’s reputation and financial condition could be adversely affected if, as a result of a significant cyber-event or otherwise:

●

its operations are disrupted or shut down;

●

Molekule’s or its customers’ or employees’ confidential, proprietary information is stolen or disclosed;

●

it incurs costs or is required to pay fines in connection with stolen customer, employee or other confidential information;

●

it must dedicate significant resources to system repairs or increase cyber security protection; or

●

it otherwise incurs significant litigation or other costs.

Table of Contents

If Molekule’s computer systems are damaged or cease to function properly, or if Molekule does not replace or upgrade certain systems, it may incur substantial costs to repair or replace them and may experience an interruption of its normal business activities or loss of critical data. Any such disruption could adversely affect Molekule’s reputation and financial condition.

Molekule also relies on information technology systems maintained by third parties, including third-party cloud computing services and the computer systems of its suppliers, manufacturers, retailers and resellers for both its internal operations and its customer-facing infrastructure. These systems are also vulnerable to the types of interruption and damage described above but Molekule has less ability to take measures to protect against such disruptions or to resolve them if they were to occur. Information technology problems faced by third parties on which Molekule relies could adversely impact its business and financial condition as well as negatively impact its brand reputation.

Molekule’s digital marketing and social media efforts may expose it to certain risks.

Molekule’s marketing efforts currently include various initiatives, including digital marketing on a variety of social media channels, such as Meta Platforms, search engine optimization on websites, such as Google, Bing, and Yahoo!, various branding strategies, and mobile “push” notifications and email. Molekule anticipates that sales and marketing expenses will continue to represent a significant percentage of its overall operating costs for the foreseeable future. Molekule has historically acquired a significant number of its customers through digital advertising on platforms and websites owned by Meta and Google. Molekule’s investments in sales and marketing may not effectively reach potential customers, potential customers may decide not to buy Molekule’s products, or customer spend for Molekule’s products may not yield the intended return on investment, any of which could negatively affect Molekule’s financial results.

Many factors, several of which are beyond Molekule’s control, may reduce its ability to acquire, maintain and further engage with customers, including:

●

system updates to app stores and advertising platforms such as Instagram and Google, including adjustments to algorithms that may decrease user engagement or negatively affect Molekule’s ability to reach a broad audience;

●

consumers opting out of the collection of certain personal information, including opting out of cookies, for marketing purposes;

●

consumers opting out of the receipt of promotional emails or text messages;

●

federal and state laws governing the use of personal information in marketing to potential or existing customers and patients, and the regulation of the use of discounts, promotions, and other marketing strategies in the healthcare industry;

●

changes in advertising platforms’ pricing, which could result in higher advertising costs;

●

changes in digital advertising platforms’ policies, such as those of Instagram and Google, that may delay or prevent Molekule from advertising through these channels, which could result in reduced traffic to and sales on Molekule’s website and the websites or stores of Molekule’s third-party resellers, or that may increase the cost of advertising through these channels;

●

changes in search algorithms by search engines;

●

ineffectiveness of Molekule’s marketing efforts and other spend to continue to acquire new customers;

●

decline in popularity of, or governmental restrictions on, social media platforms where Molekule advertises;

●

the development of new search engines or social media sites that reduce traffic on existing search engines and social media sites; and

●

consumer behavior changes as a result of the ongoing global COVID-19 pandemic.

Table of Contents

In addition, Molekule believes that many of its new customers originate from word-of-mouth and other non-paid referrals from existing customers, so Molekule must ensure that its existing customers are satisfied with and continue to derive value from its products and services in order to continue receiving those referrals. If Molekule’s efforts to satisfy its existing customers are not successful, it may not be able to attract new customers. Further, if its customer base does not continue to grow, Molekule may be required to incur significantly higher marketing expenses than it currently anticipates to attract new customers. A significant decline in Molekule’s customer base would have an adverse effect on its business, operating results and financial condition.

Global economic disruptions and inflation or stagflation could seriously harm Molekule’s business.

Broad-based business or economic disruptions could adversely affect Molekule’s business. For example, Russia’s invasion of Ukraine has prompted the United States and other countries to announce sanctions against Russia. The full effect of this military conflict and related sanctions on the global economy and Molekule’s existing and prospective customers, and as a result, Molekule’s business, remains uncertain. While the onset of the ongoing global COVID-19 pandemic underscored the urgency of bringing to market air purification solutions to help protect front-line healthcare workers, patients and the general population, associated business shutdowns or disruptions could impair Molekule’s ability to manufacture or sell its products, which would adversely affect its business, financial condition and results of operations.

Further, inflation or possible stagflation in the United States and other regions has the potential to adversely affect Molekule’s liquidity, business, financial condition and operating results by increasing its overall product cost structure, and which would negatively impact its business, particularly if it is unable to achieve the increases in product prices necessary to appropriately offset the additional costs sufficient to maintain margins. The existence of inflation in certain economies has resulted in, and may continue to result in, higher interest rates and capital costs, energy and shipping costs, increased costs of labor, weakening exchange rates and other similar effects. Although Molekule may take measures to mitigate the impact of this inflation, if these measures are not effective, Molekule’s business, financial condition, operating results and liquidity will be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact Molekule’s operating results and when the cost of inflation is incurred. Inflation and any economic challenges may also adversely impact spending patterns by Molekule’s customers. For example, the sale of Molekule’s products depends in part upon customer discretionary spending and economic conditions that adversely impact consumers’ ability and desire to spend discretionary income may reduce overall levels of spending on Molekule’s products. In particular, during the nine months ended September 30, 2022, Molekule observed a slowdown in purifier sales on its direct-to-consumer website, which Molekule believes was a result of macroeconomic conditions negatively impacting prospective customers’ willingness to purchase its air purifiers.

Molekule could be materially adversely affected by negative publicity related to the proposed Merger.

Negative publicity and adverse press coverage related to the Merger could have a material adverse effect on Molekule. Adverse press coverage and other adverse statements, whether or not driven by political or public sentiment, may also result in investigations by regulators, legislators and law enforcement officials or in legal claims. Responding to negative publicity, adverse press coverage, or any such investigations and lawsuits, regardless of the ultimate outcome of the proceeding, can divert the time and effort of senior management from the management of Molekule’s business. Addressing any adverse publicity, governmental scrutiny or enforcement or other legal proceedings is time consuming and expensive and, regardless of the factual basis for the assertions being made, can have a negative impact on the reputation of Molekule, on the morale and performance of its employees and on Molekule’s relationships with its business partners. It may also have a negative impact on Molekule’s ability to take timely advantage of various business and market opportunities. The direct and indirect effects of negative publicity, and the demands of responding to and addressing it, may have a material adverse effect on Molekule’s business, financial condition, results of operations and cash flows.

Risks Related to Regulation for AeroClean and Molekule

AeroClean and Molekule are subject to continuing regulation by the FDA, and if AeroClean and Molekule fail to comply with regulations, including FDA and other state regulations, their businesses could suffer.

AeroClean, Molekule and the third-party suppliers and manufacturers they engage with to produce their air purifiers and filters are subject to FDA regulatory requirements, which include quality system regulations related to the manufacture of AeroClean’s and Molekule’s products, labeling regulations and medical device reporting (“MDR”) regulations. For example, MDR regulations require AeroClean and Molekule to report to the FDA if they become aware of information that reasonably suggests their air purifiers or component products may have caused or contributed to a death or serious injury, or have malfunctioned and the products or a similar product AeroClean or Molekule market would likely cause or contribute to a death or serious injury if the malfunction were to recur.

Table of Contents

AeroClean and Molekule are also required to report corrections and removals to the FDA where the correction or removal was initiated to reduce a risk to health posed by AeroClean’s or Molekule’s products or to remedy a violation of the Federal Food, Drug, and Cosmetic Act (the “FDCA”) caused by any AeroClean or Molekule product that may present a risk to health, and maintain records of other corrections or removals.

The manufacturing process for a product cleared as a medical device, such as Pūrgo, the Air Mini+, Air Pro and the Air Pro RX, is subject to FDA regulations. Suppliers and manufacturers must meet applicable manufacturing requirements and undergo rigorous facility and process validation tests required by regulatory authorities in order to comply with regulatory standards, such as the FDA’s quality system regulations. Although AeroClean’s and Molekule’s agreements with their contract manufacturers require them to perform according to FDA quality system requirements, any of AeroClean’s or Molekule’s suppliers or manufacturers could fail to comply with such requirements or to perform their obligations to AeroClean or Molekule in relation to quality or otherwise. Under such circumstances, AeroClean or Molekule may choose or be forced to enter into an agreement with another third-party manufacturer, which AeroClean or Molekule may not be able to do on reasonable terms, if at all. If AeroClean or Molekule are required to change manufacturers for any reason, they must verify that the new manufacturer maintains facilities and procedures that comply with applicable quality standards and regulations. The delays associated with the qualification of a new contract manufacturer could negatively affect AeroClean’s or Molekule’s ability to produce their products in a timely manner or within budget.

The FDA regulates promotion, advertising and claims made with respect to FDA-regulated medical devices, including AeroClean’s Pūrgo device as well as Molekule’s Air Mini+, Air Pro and the Air Pro RX products. Failure to comply with these requirements can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties.

The FDA and state authorities have broad enforcement powers. AeroClean, Molekule and their third-party suppliers and manufacturers are subject to ongoing inspection by regulatory authorities from time to time. Any failure by AeroClean or Molekule or their third-party suppliers or manufacturers to comply with applicable regulatory requirements could result in enforcement actions by the FDA or state agencies, which may include any of the following sanctions:

●

untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

●

recall, termination of distribution, administrative detention, injunction or seizure of AeroClean’s or Molekule’s products;

●

customer notifications or repair, replacement or refunds;

●

operating restrictions or partial suspension or total shutdown of production;

●

refusing or delaying AeroClean’s or Molekule’s requests for modifications to their air purifier devices, including Pūrgo, the Air Mini+, Air Pro and the Air Pro RX;

●

withdrawing or suspending clearance that has already been granted;

●

FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and

●

criminal prosecution.

Any corrective action, whether voluntary or involuntary, as well as potentially defending themselves in a lawsuit, will require the dedication of AeroClean’s and Molekule’s time and capital, distract management from operating their business and may harm their reputation and financial results.

AeroClean and Molekule are subject to certain advertising and promotional regulations.

In addition to the laws and regulations enforced by the FDA, advertising for various services and for non-restricted medical devices is subject to federal truth-in-advertising laws enforced by the Federal Trade Commission (“FTC”), as well as comparable state consumer protection laws. AeroClean’s and Molekule’s efforts to promote medical device products via social media initiatives may subject them to additional scrutiny of their practices. For example, the FTC and other consumer protection agencies scrutinize all forms of advertising (whether in digital or traditional formats) for business services, consumer-directed products, and non-restricted

Table of Contents

medical devices to ensure that advertisers are not making false, misleading or unsubstantiated claims or failing to disclose material relationships between the advertiser and its products’ endorsers, among other potential issues. The FDA oversees the advertising and promotional labeling for restricted medical devices and ensures, among other things, that there is effective communication of, and a fair and balanced presentation of, the risks and benefits of such high-risk medical devices.

Under the Federal Trade Commission Act (“FTC Act”), the FTC is empowered, among other things, to (a) prevent unfair methods of competition and unfair or deceptive acts or practices in or affecting commerce; (b) seek monetary redress and other relief for conduct injurious to consumers; and (c) gather and compile information and conduct investigations relating to the organization, business, practices, and management of entities engaged in commerce. The FTC has very broad enforcement authority, and failure to abide by the substantive requirements of the FTC Act and other consumer protection laws can result in administrative or judicial penalties, including injunctions affecting the manner in which AeroClean or Molekule would be able to market their products in the future, or criminal prosecution. Molekule is planning to increase, and AeroClean may increase, their respective advertising activities that may be subject to these federal and state truth-in-advertising laws. Any actual or perceived non-compliance with those laws could lead to an investigation by the FTC or a comparable state agency, or could lead to allegations of misleading advertising by private plaintiffs. Any such action against AeroClean or Molekule could disrupt their respective business operations, cause damage to their reputation, and result in a material adverse effect on their businesses.

For example, in November 2020, Molekule was named as a defendant in a class action lawsuit which alleged, among other things, that Molekule misrepresented the capabilities of its products. Molekule entered into a class-wide settlement of this matter, which required the dismissal of all remaining class action claims against the company, and the settlement was finalized on January 25, 2022. As a result of the settlement, as of the year ended December 31, 2021 and 2020, Molekule accrued a loss liability of $2.7 million. Any future litigation or actions against AeroClean or Molekule in the future could disrupt their business operations, cause damage to their reputation, and result in a material adverse effect on their businesses.

Significant additional governmental regulation could subject AeroClean or Molekule to unanticipated delays, which would adversely affect their sales and revenues.

AeroClean’s and Molekule’s business strategies depend in part on their ability to get their products into the market as quickly as possible. Additional laws and regulations, or changes to existing laws and regulations that are applicable to AeroClean’s and Molekule’s businesses, may be enacted or promulgated, and the interpretation, application or enforcement of existing laws and regulations may change. AeroClean and Molekule cannot predict the nature of any future laws, regulations, interpretations, applications or enforcement or the specific effects any of these might have on their businesses.

Any future laws, regulations, interpretations, applications or enforcement could delay or prevent regulatory clearance of AeroClean’s or Molekule’s products and their ability to market their products. Moreover, changes that result in AeroClean’s or Molekule’s failure to comply with the requirements of applicable laws and regulations could result in the types of enforcement actions by the FDA or other agencies as described above, all of which could impair their ability to have manufactured and to sell the affected products.

Molekule’s international operations subject it to a variety of risks and uncertainties that could adversely affect its business and operating results. Molekule’s business is subject to risks associated with manufacturing and selling its products in locations outside of the United States.

Molekule’s products and components are manufactured in facilities located in Malaysia, China and Mexico and its products are distributed in more than 10 countries around the world. Accordingly, Molekule faces significant operational risks from doing business internationally. For current and potential international customers whose contracts are denominated in U.S. dollars, the relative change in local currency values creates relative fluctuations in Molekule’s product pricing. These changes in international end-user costs may result in lost orders and reduce the competitiveness of Molekule’s products in certain foreign markets.

Other risks and uncertainties Molekule faces from global operations include:

●

limited protection for the enforcement of contract and intellectual property rights in certain countries where Molekule may sell its products or work with suppliers, manufacturers, retailers, resellers or other third parties;

●

potentially longer sales and payment cycles and potentially greater difficulties in collecting accounts receivable;

Table of Contents

●

costs and difficulties of customizing products for foreign countries;

●

challenges in providing solutions across a significant distance, in different languages and among different cultures;

●

laws and business practices favoring local competition;

●

being subject to a wide variety of complex foreign laws, treaties and regulations and adjusting to any unexpected changes in such laws, treaties and regulations;

●

compliance with U.S. laws affecting activities of U.S. companies abroad, including the U.S. Foreign Corrupt Practices Act (“FCPA”), and compliance with anti-corruption laws in other countries, such as the UK Bribery Act (“Bribery Act”);

●

tariffs, trade barriers and other regulatory or contractual limitations on Molekule’s ability to sell or develop its products in certain foreign markets;

●

operating in countries with a higher incidence of corruption and fraudulent business practices;

●

changes in regulatory requirements, including export controls, tariffs and embargoes, other trade restrictions, competition, corporate practices and data privacy concerns;

●

potential adverse tax consequences arising from global operations;

●

rapid changes in government, economic and political policies and conditions; and

●

political or civil unrest or instability, terrorism or epidemics and other similar outbreaks or events.

Molekule’s failure to effectively manage the risks and uncertainties associated with global operations could limit future growth of its business and adversely affect its business and operating results.

In particular, the majority of Molekule’s products are manufactured by IAC in facilities in Malaysia and China. In each of these countries, the government may exercise substantial control over certain sectors of the economy through regulation and state ownership. Changes in the laws and regulations of Malaysia or China, or in their interpretation or enforcement, including with respect to IAC’s operations, may significantly impact us. Further, tensions between the United States and China have led to a series of tariffs being imposed by the United States on imports from China mainland, as well as other business restrictions.

Changes in tax laws or tax rulings could materially affect AeroClean’s or Molekule’s financial position, operating results and cash flows.

The tax regimes AeroClean and Molekule are subject to or operate under, including income and non-income taxes, are unsettled and may be subject to significant change. Changes in tax laws, regulations, or rulings, or changes in interpretations of existing laws and regulations, could materially affect AeroClean’s and Molekule’s financial position and results of operations. For example, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) made broad and complex changes to the U.S. tax code, including changes to U.S. federal tax rates, additional limitations on the deductibility of interest, both positive and negative changes to the utilization of future net operating loss (“NOL”) carryforwards, allowing for the expensing of certain capital expenditures, and putting into effect the migration from a “worldwide” system of taxation to a more territorial system. Future guidance from the IRS with respect to the Tax Act may affect AeroClean and Molekule, and certain aspects of the Tax Act could be repealed or modified in future legislation. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) has already modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act or any newly enacted federal tax legislation. The issuance of additional regulatory or accounting guidance related to the Tax Act could materially affect AeroClean’s and Molekule’s tax obligations and effective tax rate in the period issued. Molekule’s international operations are, and to the extent AeroClean expands internationally, its operations will be, subject to other jurisdictions with complex tax laws, the application of which can be uncertain. The amount of taxes AeroClean and Molekule pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse impact on AeroClean’s or Molekule’s liquidity and

Table of Contents

operating results. In addition, the authorities in several jurisdictions could review AeroClean’s or Molekule’s tax returns and impose additional tax, interest and penalties, which could have an impact on AeroClean or Molekule and on their operating results. In addition, many countries in Europe and a number of other countries and organizations, have recently proposed or recommended changes to existing tax laws or have enacted new laws that could significantly increase AeroClean or Molekule’s tax obligations in the countries where they do business or require AeroClean or Molekule to change the manner in which they operate their businesses.

AeroClean and Molekule are subject to environmental, health and safety laws and regulations related to their operations, which could subject them to compliance costs and/or potential liability in the event of non-compliance.

AeroClean and Molekule are subject to various environmental laws and regulations governing their operations, including, but not limited to, emissions into the air and water and the use, handling, disposal and remediation of hazardous substances. A certain risk of environmental liability is inherent in AeroClean’s and Molekule’s production activities. These laws and regulations govern, among other things, the generation, use, storage, registration, handling and disposal of chemicals and waste materials, the presence of specified substances in electrical products, the emission and discharge of hazardous materials into the ground, air or water, the cleanup of contaminated sites, including any contamination that results from spills due to AeroClean’s or Molekule’s failure to properly dispose of chemicals and other waste materials and the health and safety of their employees. Under these laws, regulations and requirements, AeroClean and Molekule also could be subject to liability for improper disposal of chemicals and waste materials, including those resulting from the use of their products and accompanying materials by end-users. Accidents or other incidents that occur at AeroClean’s or Molekule’s facilities or involve their personnel or operations could result in claims for damages against them. Compliance with extensive environmental, health and safety laws could require material expenditures, changes in AeroClean’s or Molekule’s operations or site remediation. In addition, AeroClean and Molekule use hazardous materials in their businesses, and they must comply with environmental laws and regulations associated therewith. Any claims relating to improper handling, storage or disposal of these materials or noncompliance with applicable laws and regulations could be time consuming and costly and could adversely affect their business and operating results.

In the event AeroClean or Molekule are found to be financially responsible, as a result of environmental or other laws or by court order, for environmental damages alleged to have been caused by them or occurring on their premises, AeroClean or Molekule could be required to pay substantial monetary damages or undertake expensive remedial obligations. If AeroClean’s or Molekule’s operations fail to comply with such laws or regulations, they may be subject to fines and other civil, administrative or criminal sanctions, including the revocation of permits and licenses necessary to continue their business activities. In addition, AeroClean or Molekule may be required to pay damages or civil judgments in respect of third-party claims, including those relating to personal injury (including exposure to hazardous substances that AeroClean or Molekule may generate, use, store, handle, transport, manufacture or dispose of), property damage or contribution claims. Some environmental laws allow for strict, joint and several liabilities for remediation costs, regardless of fault. AeroClean or Molekule may be identified as a potentially responsible party under such laws. The amount of any costs, including fines or damages payments that AeroClean or Molekule might incur under such circumstances could substantially exceed any insurance they have to cover such losses. Any of these events, alone or in combination, could have a material adverse effect on AeroClean’s or Molekule’s business, operating results and financial condition and could adversely affect their reputation.

In addition, the export of Molekule’s products internationally from its or its manufacturers’ production facilities subjects Molekule to environmental laws and regulations concerning the import and export of chemicals and hazardous substances such as the United States Toxic Substances Control Act and the Registration, Evaluation, Authorization and Restriction of Chemical Substances. These laws and regulations require the testing and registration of some chemicals that Molekule ships along with, or that form a part of, its products. If Molekule fails to comply with these or similar laws and regulations, it may be required to make significant expenditures to reformulate the chemicals that it uses in its products or incur costs to register such chemicals to gain and/or regain compliance. Additionally, Molekule could be subject to significant fines or other civil and criminal penalties should it not achieve such compliance.

The cost of complying with current and future environmental, health and safety laws applicable to AeroClean’s or Molekule’s operations, or the liabilities arising from past releases of, or exposure to, hazardous substances, may result in future expenditures. Any of these developments, alone or in combination, could have an adverse effect on AeroClean’s or Molekule’s business, operating results and financial condition.

Table of Contents

Aspects of AeroClean’s and Molekule’s businesses are subject to privacy, data use and data security regulations, which could increase their costs.

AeroClean and Molekule collect personally identifiable information from its employees, prospects, and their customers. Privacy and security laws and regulations may limit the use and disclosure of certain information and require AeroClean and Molekule to adopt certain cybersecurity and data handling practices that may affect its ability to effectively market its products to current, past or prospective customers. AeroClean and Molekule must comply with privacy laws in the United States, Europe and elsewhere (to the extent of their respective operations in such jurisdictions), including the General Data Protection Regulations (“GDPR”) in the European Union (“EU”), which became effective May 25, 2018, and the California Consumer Privacy Act of 2018, which was enacted on June 28, 2018 and became effective on January 1, 2020. Further, in connection with its withdrawal from the EU, the United Kingdom has implemented the GDPR as of January 1, 2021 (as it existed on December 31, 2020 but subject to certain UK-specific amendments). These laws create new individual privacy rights and impose increased obligations, including disclosure obligations, on companies handling personal data. In many jurisdictions, consumers must be notified in the event of a data security breach, and such notification requirements continue to increase in scope and cost. Privacy and security laws and regulations may limit the use and disclosure of certain information and require AeroClean and Molekule to adopt certain cybersecurity and data handling practices that may affect its ability to effectively market its products to current, past or prospective customers. While AeroClean and Molekule have invested in, and intend to continue to invest in, resources to comply with these standards, they may not be successful in doing so, and any such failure could have an adverse effect on their business, operating results and reputation.

As privacy, data use and data security laws are interpreted and applied, compliance costs may increase, particularly in the context of ensuring that adequate data protection and data transfer mechanisms are in place. In recent years, there has been increasing regulatory enforcement and litigation activity in this area in the United States and in various other countries in which AeroClean and Molekule operate.

Risks Related to AeroClean’s and Molekule’s Intellectual Property

If AeroClean and Molekule are unable to adequately protect or enforce their respective intellectual property rights, such information may be used by others to compete against them.

AeroClean and Molekule have devoted substantial resources to the development of their respective technology, including with respect to Molekule, its PECO technology, and related intellectual property rights. AeroClean’s and Molekule’s success and future revenue growth will depend, in part, on their ability to protect the various facets of their intellectual property. AeroClean and Molekule rely on a combination of registered and unregistered intellectual property and protects its rights using patents, trademarks, trade secrets, confidentiality agreements, and invention assignment agreements, along with other methods. Moreover, Molekule relies on an exclusive worldwide license from the University of Florida Research Foundation, Inc. (“UFRF”) for use of PECO technology in certain products and processes.

Despite AeroClean’s and Molekule’s efforts to protect their respective intellectual property and proprietary rights, it is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose their technologies, including Molekule’s PECO technology, inventions, processes, improvements, or any other intellectual property. AeroClean and Molekule cannot assure that any of their existing or future patents or other intellectual property rights will not be challenged, invalidated, circumvented, or will otherwise provide AeroClean or Molekule with meaningful protection. Any of AeroClean’s and Molekule’s pending patent applications may not be granted, and they may not be able to obtain foreign patents or pending applications corresponding to their respective U.S. patents. Even if foreign patents are granted, effective enforcement in foreign countries may not be available. Once the patents have expired, it is possible that competitors and other third parties may commercialize products that utilize AeroClean’s and Molekule’s proprietary processes, which could materially reduce or eliminate any competitive advantage that AeroClean or Molekule (as applicable) may have over its competitors.

There may be circumstances where AeroClean and Molekule may not have the right to control the preparation, filing and prosecution of all patent applications that they license from third parties, or to maintain and/or enforce the rights to patents licensed from third parties, in which case, AeroClean and Molekule will be dependent on their licensors to obtain, maintain and enforce patent protection for AeroClean’s and Molekule’s licensed intellectual property. AeroClean’s and Molekule’s licensors may not successfully prosecute the patent applications that are licensed to them and even if patents are issued in respect of these patent applications, their licensors may fail to maintain these patents or may determine not to pursue litigation against other companies that are infringing these patents. In other words, such licensed patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of AeroClean’s or Molekule’s business. Further, AeroClean and Molekule cannot be certain that such activities

Table of Contents

related to the preparation, filing, prosecution, maintenance and/or enforcement of the licensed patent rights by licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patent rights. AeroClean and Molekule may have limited control over the manner in which their respective licensors initiate an infringement proceeding against a third-party infringer of the licensed patent rights, or defend certain of the licensed patent rights. It is possible that the licensor’s infringement proceeding or defense activities with respect to the licensed patent rights may be less vigorous than had AeroClean or Molekule conducted them. In the event that AeroClean’s or Molekule’s licensors fail to adequately pursue and maintain patent protection for the licensed patents and patent applications they control, and to timely cede control of such prosecution and/or enforcement to AeroClean or Molekule, their competitors might be able to enter the market, which would have a material adverse effect on AeroClean’s or Molekule’s businesses (as applicable).

AeroClean’s and Molekule’s trade secrets, know-how and other unregistered proprietary rights are a key aspect of their intellectual property portfolio. While AeroClean and Molekule take reasonable steps to protect their proprietary information and intellectual property in trade secrets and other forms of confidential information protection, and enter into confidentiality agreements and invention assignment agreements intended to protect such rights, such agreements can be difficult and costly to enforce or may not provide adequate remedies if violated, and AeroClean or Molekule may have inadvertently not have entered into such agreements with all relevant parties, or some of the agreements may prove invalid in some or all jurisdictions. Such agreements may be breached, and trade secrets or confidential information may be willfully or unintentionally disclosed, including by employees who may leave the company and join its competitors, or AeroClean’s or Molekule’s competitors or other parties may learn of the information in some other way. The disclosure to, or independent development by, a competitor of AeroClean’s or Molekule’s proprietary information and intellectual property, including Molekule’s PECO technology, trade secrets, know-how or other technology-related information not protected by a patent or other intellectual property right could materially reduce or eliminate any competitive advantage that AeroClean or Molekule (as applicable) may have over such competitor.

If AeroClean’s or Molekule’s patents and other intellectual property rights do not adequately protect their respective technology, their competitors may be able to offer competitive or similar products. AeroClean’s and Molekule’s competitors may also be able to develop similar technology independently, reverse engineer their technology, or design around their patents and other intellectual property rights. Any of the foregoing events would lead to increased competition and reduce AeroClean’s or Molekule’s (as applicable) revenue or gross margins, which would adversely affect their respective operating results.

If AeroClean or Molekule attempt to enforce their respective intellectual property rights, they may be subject or party to claims, negotiations or complex, protracted litigation. Intellectual property disputes and litigation, regardless of merit, can be costly, lengthy and substantially disruptive to business operations, including, for example, by diverting attention and energies of management and key technical personnel and by increasing costs of doing business. Even if AeroClean and Molekule are ultimately able to enforce their intellectual property rights against third-party infringers, AeroClean or Molekule (as applicable) may not be able to enjoin such infringers from continuing their infringing activity while the dispute or litigation is ongoing. Any of the foregoing could adversely affect AeroClean’s and Molekule’s businesses and financial condition.

As part of any settlement or other compromise to avoid complex, protracted litigation, AeroClean or Molekule may agree not to pursue future claims against a third party, including related to alleged infringement of their intellectual property rights. Part of any settlement or other compromise with another party may resolve a potentially costly dispute but may also have future repercussions on AeroClean’s or Molekule’s ability to defend and protect their intellectual property rights, which in turn could adversely affect their businesses.

If AeroClean or Molekule breach applicable license agreements, it could have a material adverse effect on their businesses, operating results and financial condition.

Molekule is party to a license agreement, the PECO License, that grants Molekule an exclusive worldwide license for use of PECO technology in certain licensed products and processes, and Molekule has and may, in the future, enter into future license agreements with third parties under which Molekule may license the use improved PECO or other technology in its current or future products. AeroClean may similarly from time to time be party to license agreements with third parties.

These intellectual property license agreements may require AeroClean or Molekule to comply with various obligations, as well as potential royalty and milestone payments and other obligations. If AeroClean or Molekule fail to comply with their respective obligations under any of these or future license agreements, use the licensed intellectual property in an unauthorized manner, or if AeroClean or Molekule becomes subject to bankruptcy-related proceedings or otherwise materially breach any license agreements, the terms of the license granted may be materially modified, such as, in the case of Molekule, by rendering currently exclusive licenses

Table of Contents

non-exclusive, or it may give Molekule’s licensors the right to terminate the applicable license agreement, in whole or in part. Generally, the loss of or termination of Molekule’s rights under the PECO License, or any other licenses that it or AeroClean may acquire in the future, could harm Molekule’s and AeroClean’s businesses, financial condition, results of operations and prospects.

AeroClean and Molekule may also, in the future, enter into license agreements with third parties under which they are sublicensees. If a sublicensor fails to comply with its obligations under its upstream license agreement with its licensor, the licensor may have the right to terminate the upstream license, which may result in termination of AeroClean’s or Molekule’s sublicense. If this were to occur, AeroClean and Molekule would no longer have rights to the applicable intellectual property unless they are able to secure their own direct license with the owner of the relevant rights, which may not be achievable on reasonable terms, or at all, which may impact their ability to continue to develop and commercialize their respective products that incorporate the relevant intellectual property.

Licensing of intellectual property is of critical importance to Molekule’s business and involves complex legal, business and scientific issues. Disputes may arise between Molekule and its licensors regarding intellectual property subject to a license agreement, including:

●

the scope of rights granted under the license agreement and other interpretation-related issues;

●

whether and the extent to which Molekule’s technology and processes infringe on intellectual property of the licensor that is not subject to the licensing agreement;

●

Molekule’s right to sublicense patent and other intellectual property rights to third parties;

●

Molekule’s diligence obligations with respect to the use of the licensed technology, and what activities satisfy those diligence obligations;

●

Molekule’s right to transfer or assign the license;

●

the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by Molekule’s licensors and Molekule and its partners; and

●

whether and the extent to which inventors are able to contest the assignment of their rights to Molekule’s licensors.

If disputes over intellectual property that Molekule or AeroClean have licensed or license in the future prevent or impair their ability to maintain their current licensing arrangements on acceptable terms or at all, they may be unable to successfully develop and commercialize their respective current or future products, which could have material adverse effect on their business. In addition, if disputes arise as to ownership of licensed intellectual property, AeroClean’s and Molekule’s ability to pursue or enforce the licensed patent rights may be jeopardized. If AeroClean, Molekule or their licensors fail to adequately protect this intellectual property, AeroClean’s and Molekule’s ability to commercialize their products could suffer. Further, certain of AeroClean’s or Molekule’s future license agreements with third parties may limit or delay its ability to consummate certain transactions, may impact the value of those transactions or may limit our ability to pursue certain activities.

AeroClean’s or Molekule’s intellectual property licensed from various third parties may be subject to retained rights.

Licensors often retain certain rights under license agreements, including the right to use the underlying licensed intellectual property for non-commercial academic and research use, to publish general scientific findings from research related to the licensed intellectual property, and to make customary scientific and scholarly disclosures of information relating to the licensed intellectual property. It is difficult to monitor whether licensors limit their use of the licensed intellectual property to these uses, and AeroClean and Molekule could incur substantial expenses to enforce their rights to licensed intellectual property in the event of misuse.

In addition, the United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act, or the Bayh-Dole Act. The federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit. The Bayh Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner

Table of Contents

refuses to do so, the government may grant the license itself. In addition, a number of other countries have similar regimes regarding “march-in” rights. AeroClean and Molekule have collaborated with academic institutions to accelerate their research or development efforts and may need to do so again in the future. While AeroClean and Molekule try to avoid engaging with university partners in projects in which there is a risk that government funds may be commingled, AeroClean and Molekule cannot guarantee that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act or similar legislation. If, in the future, AeroClean or Molekule co-owns or licenses intellectual property which is critical to its business that is developed in whole or in part with government funds subject to the Bayh Dole Act or other similar legislation, their ability to enforce or otherwise exploit such licensed intellectual property may be adversely affected.

Molekule’s strategy of obtaining rights to key technologies through in-licenses may not be successful.

Molekule may seek to expand its technology and product offerings in part by in-licensing the rights to key technologies. The future growth of Molekule’s business will depend in part on its ability to in-license or otherwise acquire the rights to additional technologies. Molekule cannot assure you that it will be able to in-license or acquire the rights to any technologies from third parties on acceptable terms or at all. Even if Molekule is able to obtain a license, it may be non-exclusive, thereby giving Molekule’s competitors access to the same technologies. In that event, Molekule may be required to expend significant time and resources to develop or license replacement technology.

The in-licensing and acquisition of these technologies is a competitive area, and a number of more established companies are or may also pursue strategies to license or acquire technologies that Molekule may consider attractive. These established companies may have a competitive advantage over Molekule due to their size, cash resources and greater capabilities. In addition, companies that perceive Molekule to be a competitor may be unwilling to license rights to Molekule. Furthermore, Molekule may be unable to identify suitable technologies within its area of focus. If Molekule is unable to successfully obtain rights to suitable technologies, its business, financial condition, results of operations and prospects could suffer.

Third-party lawsuits and assertions that AeroClean, Molekule or their licensors have infringed upon patents, trade secrets or other intellectual property rights of third parties may have a significant adverse effect on AeroClean’s and Molekule’s financial condition.

Third parties may own issued patents and pending patent applications that exist in fields relevant to air purification processes, PECO technology or any other technology related to or underlying AeroClean’s or Molekule’s products. Some of these third parties may assert that AeroClean, Molekule or their respective licensors are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims related to air purification processes, PECO technology or any other technology related to or underlying AeroClean’s or Molekule’s products. Because patent applications can take many years to issue as patents, there may be currently pending patent applications which may later result in issued patents that AeroClean’s or Molekule’s respective products and technology may potentially infringe. In addition, third parties may obtain patents in the future and claim that AeroClean’s, Molekule’s or their respective licensors’ products and/or technology infringe upon these obtained patents. Any third-party lawsuits or other assertion to which AeroClean, Molekule or their respective licensors are subject alleging their infringement of patents, trade secrets or any other intellectual property rights may have a significant adverse effect on their financial condition.

AeroClean’s and Molekule’s businesses rely on technological and other innovations embodied in various forms of proprietary information and other intellectual property related information. Any failure to protect their intellectual property rights could potentially harm their respective competitive advantages to an extent, which may have an adverse effect on their respective operating results and financial condition.

AeroClean and Molekule may be required to make significant capital investments into the research and development of proprietary information and other intellectual property as they develop, improve and scale their respective processes, technologies and products, and failure to fund and make such investments, or underperformance of the technology funded by those investments, could severely impact their respective businesses, financial condition, operating results and prospects. From time to time, AeroClean and Molekule collaborate with partners on certain research and development activities and the success of such research and development activities is aided by the cooperation of such partners.

In addition, AeroClean’s or Molekule’s failure to adequately protect their intellectual property rights could result in the reduction or loss of their competitive advantages. AeroClean and/or Molekule may be unable to prevent third parties from using their respective proprietary information and other intellectual property without their authorization or from independently developing proprietary information and other intellectual property that is similar to AeroClean’s or Molekule’s, particularly in those countries where the laws

Table of Contents

do not protect their proprietary rights to the same degree as in the United States or those countries where they do not have intellectual property rights protection. The use of AeroClean’s or Molekule’s proprietary information and other intellectual property, including Molekule’s PECO technology, by others could reduce or eliminate competitive advantages that they have developed, potentially causing AeroClean or Molekule to lose sales, licensing opportunities, actual or potential customers, or otherwise harm their businesses. If it becomes necessary for AeroClean or Molekule to litigate to protect these intellectual property rights, any proceedings could be burdensome, lengthy and costly, could result in counterclaims challenging AeroClean’s or Molekule’s intellectual property (including validity or enforceability) or accusing them of infringement, and AeroClean or Molekule (as applicable) may not prevail.

AeroClean’s and Molekule’s patent applications and issued patents may be practiced by third parties without their knowledge. Their competitors may also attempt to design around their patents or copy or otherwise obtain and use their proprietary information and other intellectual property, including its PECO technology. Moreover, AeroClean’s and Molekule’s competitors may already hold or have applied for patents in the United States or abroad that, if enforced, could possibly prevail over AeroClean’s or Molekule’s patent rights or otherwise limit their ability to manufacture, sell or otherwise commercialize one or more of their products in the United States or abroad. With respect to pending patent applications, AeroClean and Molekule may not be successful in securing issued patents, or the claims of such patents may be narrowed, any of which may limit their ability to protect inventions that these applications were intended to cover, which could harm AeroClean’s and Molekule’s ability to prevent others from exploiting their respective technologies and commercializing products similar to their products. In addition, the expiration of a patent can result in increased competition with consequent erosion of profit margins.

AeroClean’s and Molekule’s confidentiality agreements could be breached or may not provide meaningful protection for at least a portion of their trade secrets or proprietary technology. Adequate remedies may not be available in the event of an unauthorized use or disclosure of AeroClean’s or Molekule’s respective trade secrets and proprietary technology, including Molekule’s PECO technology. Violations by others of AeroClean’s or Molekule’s confidentiality agreements and the loss of employees who have specialized knowledge and expertise could harm their competitive position resulting from the exclusive nature of such knowledge and expertise and cause their respective sales and operating results to decline as a result of increased competition. In addition, others may obtain knowledge of AeroClean’s or Molekule’s trade secrets through independent development or other access by legal means.

The applicable governmental authorities may not approve any of AeroClean’s or Molekule’s pending trademark applications. A failure to obtain trademark registrations in the United States and in other countries could limit AeroClean’s and Molekule’s ability to obtain and retain use of their trademarks in those jurisdictions. Moreover, third parties may seek to oppose AeroClean’s and Molekule’s applications or otherwise challenge the resulting registrations. In the event that their trademarks are not approved or are successfully challenged by third parties, AeroClean and Molekule could be forced to rebrand their products, which could result in loss of brand recognition and could require AeroClean or Molekule to devote significant resources to rebranding and advertising and marketing new brands. AeroClean and Molekule could be sued by third parties who, unbeknown to them, have pre-existing rights to such marks or brands in their respective markets or industries.

The failure of any of AeroClean’s or Molekule’s patents, trademarks, trade names, trade secrets, other intellectual property rights, intellectual property right assignments or confidentiality agreements to protect their proprietary information and other intellectual property, including Molekule’s PECO technology and product design, their other proprietary technology and any other technology and know-how, could have a material adverse effect on their businesses and operating results.

AeroClean and Molekule may incur substantial costs enforcing and defending their intellectual property rights.

AeroClean and Molekule may incur substantial expense and costs in protecting, enforcing and defending their intellectual property rights against third parties. Intellectual property disputes may be costly, lengthy and substantially disruptive to AeroClean’s and Molekule’s business operations by diverting attention and energies of management and key technical personnel and by increasing their costs of doing business. Third-party intellectual property claims asserted against AeroClean or Molekule could subject them to significant liabilities, require them to enter into royalty and licensing arrangements on unfavorable terms, prevent them from assembling or licensing certain of their products, subject them to injunctions restricting their sale of products, cause severe disruptions to their operations or the marketplaces in which they compete or require it to satisfy indemnification commitments with their customers, including contractual provisions under various license arrangements. In addition, AeroClean and Molekule may incur significant costs in acquiring the necessary third-party intellectual property rights for use in their respective products. Any and all of these could have an adverse effect on AeroClean’s and Molekule’s business and financial condition.

Table of Contents

Risks Related to our Common Stock

AeroClean and Molekule’s largest stockholders, if they choose to act together, will have the ability to control all matters submitted to stockholders for approval.

After giving effect to the Merger, AeroClean’s three largest stockholders, together with Molekule’s three largest stockholders, will beneficially own shares, in the aggregate, representing approximately 60% of the Combined Company’s outstanding shares on a pro forma basis. As a result, if these stockholders were to choose to act together, they would be able to control all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act collectively, would control the election of directors and approval of any charter amendment, merger, consolidation or sale of all or substantially all of our assets. These stockholders could cause the Combined Company to take actions that these stockholders believe to be in their best interests but with which the remainder of our stockholders disagree. For example, they could cause the Combined Company to enter into mergers with companies that operate in different businesses, or they could elect to cause the Combined Company to sell all or substantially all of its assets.

This concentration of voting power may have the effect of deterring hostile takeovers, delaying or preventing changes in control, or limiting the ability of the Combined Company’s other stockholders to approve transactions that they may deem to be in the best interests of the Combined Company. Moreover, the concentration of stock ownership may adversely affect the trading price of the AeroClean Common Stock by reducing the number of shares trading in the market or to the extent investors perceive a disadvantage in owning stock of a company with significant stockholders.

While the AeroClean Common Stock is listed on Nasdaq, if we do not meet Nasdaq’s continuing listing requirements we could be delisted and there can be no assurance that an active and liquid public market will fully develop or be sustained.

The AeroClean Common Stock is listed on Nasdaq. Notwithstanding such listing, there can be no assurance that an active or liquid public market will fully develop or be sustained. In addition, if we do not meet Nasdaq’s continuing listing requirements, including Nasdaq requirements related to maintenance of a minimum stock price, the aggregate market value of AeroClean Common Stock, and the number of public holders of AeroClean Common Stock, we could be delisted by Nasdaq. In the absence of an active or liquid public market:

●

investors may have difficulty buying and selling or obtaining market quotations;

●

market visibility for our securities may be limited; and

●

a lack of visibility for our securities may have a depressive effect on any market price for our securities.

Moreover, there can be no assurance that securities analysts of brokerage firms will provide coverage of the Company, if at all. In the event there is no active or liquid public market for the AeroClean Common Stock or coverage of the Company by securities analysts of brokerage firms, you may be unable to dispose of AeroClean Common Stock at desirable prices or at all. Moreover, there is a risk that the AeroClean Common Stock could be delisted from Nasdaq or any other trading market on which it may be listed or quoted.

The lack of an active trading or liquid public market may impair our ability to raise capital to continue to fund operations by selling securities and may impair our ability to use our securities as consideration for future acquisitions.

The trading price and volume of the AeroClean Common Stock may be volatile following the Merger.

The trading price and volume of the AeroClean Common Stock may be volatile following completion of the Merger. The stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of the AeroClean Common Stock. As a result, you may suffer a loss on your investment.

The market for AeroClean Common Stock will depend on a number of factors, most of which the Combined Company cannot control, including:

●

general economic conditions within the U.S. and internationally, including changes in interest rates;

Table of Contents

substantially, which may negatively affect the price and liquidity of the AeroClean Common Stock. Many of these factors and conditions are beyond the control of the Combined Company or the Combined Company stockholders.

Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. Such litigation, if instituted against the Combined Company, could result in very substantial costs, divert management’s attention and resources and harm the Combined Company’s business, operating results and financial condition.

If our shares become subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions, and trading activity in our shares may be adversely affected.

If we fail to meet certain criteria specified in the federal securities laws, including with respect to our reported net tangible assets, transactions in our shares may become subject to the “penny stock” rules promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under these rules, broker-dealers who recommend such shares to persons other than institutional accredited investors must:

●

make a special written suitability determination for the purchaser;

●

receive the purchaser’s written agreement to the transaction prior to sale;

●

provide the purchaser with risk disclosure documents that identify certain risks associated with investing in “penny stocks” and that describe the market for these “penny stocks” as well as a purchaser’s legal remedies; and

●

obtain a signed and dated acknowledgment from the purchaser demonstrating that the purchaser has actually received the required risk disclosure document before a transaction in a “penny stock” can be completed.

If our shares become subject to these rules, broker-dealers may find it difficult to effectuate customer transactions, and trading activity in our shares may be adversely affected. As a result, the market price of our shares may be depressed, and you may find it more difficult to sell our shares. We believe that we are currently not subject to the “penny stock” rules, but that could change in the future.

We are an “emerging growth company” under the JOBS Act and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make the AeroClean Common Stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find the AeroClean Common Stock less attractive because we may rely on these exemptions. If some investors find the AeroClean Common Stock less attractive as a result, there may be a less active trading market for AeroClean Common Stock, and our stock price may be more volatile.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates, and we will incur additional costs in connection with complying with the accounting standards applicable to public companies at such time or times as they become applicable to us.

Table of Contents

We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenue exceeds $1.235 billion, if we issue more than $1.0 billion in non-convertible debt in a three-year period or if the market value of AeroClean Common Stock that is held by non-affiliates exceeds $700 million as of June 30 of any year.

Our status as an “emerging growth company” under the JOBS Act may make it more difficult to raise capital as and when we need it.

Because of the exemptions from various reporting requirements provided to us as an “emerging growth company” and because we will have an extended transition period for complying with new or revised financial accounting standards, we may be less attractive to investors, and it may be difficult for us to raise additional capital as and when we need it. Investors may be unable to compare our business with other companies in our industry if they believe that our financial accounting is not as transparent as other companies in our industry. Any inability to raise additional capital as and when we need it could have a material adverse effect on our business, financial condition, results of operations, liquidity and prospects.

The sale of significant amounts of shares in the market, or the perception that such sales could occur, would have a material adverse effect on the market price of our shares.

Any sale of significant amounts of shares in the market, or the prospect of any such sale, would have a material adverse effect on the future market price for our shares or on our ability to obtain future financing. Any of the foregoing may have a depressive effect on the price of our shares.

The Company’s officers, directors and pre-Merger stockholders — who collectively own 9,863,636 shares of AeroClean Common Stock, or approximately 63% of the outstanding shares of AeroClean Common Stock prior to giving effect to the Merger — have agreed that they will not offer, sell or otherwise transfer any shares of AeroClean Common Stock until six months after the consummation of the Merger without the prior approval of AeroClean, subject to limited exceptions. In addition, all of Molekule’s stockholders — who will receive approximately 15.1 million shares as Merger Consideration and certain of whom are expected to receive grants of approximately 3 million RSUs in the aggregate following the completion of the Merger — have agreed that they will not offer, sell or otherwise transfer any shares of AeroClean Common Stock received as Merger Consideration or in settlement of grants of restricted stock units until six months after the consummation of the Merger without the prior approval of the board of directors of the Combined Company, subject to limited exceptions.

Any release of shares under these lockup agreements, or the perception that such release could occur, would have a negative effect on the trading price of the AeroClean Common Stock. In addition, a significant number of shares will be eligible for sale in the public market upon the expiration of these lockup agreements six months after the consummation of the Merger. The trading price of AeroClean Common Stock may decline as this lockup expiration date approaches and following the expiration of these lockup agreements.

In addition, in connection with the Merger we will be entering into an Amended and Restated Registration Rights Agreement with two of AeroClean’s largest stockholders and two of Molekule’s largest stockholders. This agreement provides certain demand and piggyback registration rights to these holders. The exercise of registration rights by these stockholders, or the perception that they might be utilized, could have an adverse effect on the trading price of the AeroClean Common Stock.

We have and expect to continue to incur significant increased costs as a result of operating as a public company, and our management is now required to devote substantial time to new compliance initiatives.

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company. We are subject to reporting requirements under the Exchange Act, the other rules and regulations of the SEC, and the rules and regulations of Nasdaq.

The expenses required to adequately report as a public company are material, and compliance with the various reporting and other requirements applicable to public companies requires considerable time and attention of management. For example, the Sarbanes-Oxley Act and the rules of the SEC and national securities exchanges impose various requirements on public companies, including requiring the establishment and maintenance of effective disclosure and internal controls. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives.

Table of Contents

These rules and regulations have and will continue to increase our legal and financial compliance costs and have and will continue to make some activities more time consuming and costly. For example, we expect these rules and regulations will make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits on coverage or incur substantial costs to maintain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified personnel to serve on our board, our board committees or as executive officers.

If we fail to implement and maintain an effective system of internal control to remediate our material weakness over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations as a public company or prevent fraud, and investor confidence and the trading prices of our securities may be materially and adversely affected.

Prior to the completion of our IPO, the Company 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 for the two years 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 or detected on a timely basis.

Management identified the following deficiencies, which in the aggregate are material weaknesses, in its assessment of the effectiveness of internal control over financial reporting as of December 31, 2021. Management noted we do not have 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.

In addition, as a privately-held company, Molekule was not required to evaluate its internal control over financial reporting in a manner that meets the standard of publicly traded companies required by Sections 404(a) of the Sarbanes-Oxley Act of 2002. In the course of preparing the financial statements that are included in this information statement/prospectus, Molekule’s management determined that a material weakness existed within Molekule’s internal control over financial reporting. Specifically, Molekule’s management determined that it did not maintain a sufficient complement of accounting personnel to perform certain financial reporting requirements, including the identification of and accounting for non-routine, unusual or complex transactions.

We are in the process of implementing a number of measures to address this material weakness. However, we cannot assure you that these measures will fully address the material weakness and deficiencies in our internal control over financial reporting or that we may conclude that they have been fully remediated.

We are subject to the Sarbanes-Oxley Act of 2002, and specifically to Section 404 thereof, which will require that we include a certification from management on the effectiveness of our internal controls in our annual reports on Form 10-K, beginning with the Form 10-K filed for the year ending December 31, 2022. In addition, once we cease to be both an “emerging growth company” as such term is defined in the JOBS Act and a non-accelerated filer in accordance with Rule 12b-2 under the Exchange Act, our independent registered public accounting firm must attest to and report on the effectiveness of our internal control over financial reporting. Moreover, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, our continuing reporting obligations have and may continue to place a significant strain on our management, operational and financial resources and systems. We may be unable to complete our evaluation testing and any required remediation on a timely basis or at all.

During the course of documenting and testing our internal control procedures, in order to satisfy the requirements of Section 404, we may identify other weaknesses and deficiencies in our internal control over financial reporting. If we fail to maintain the adequacy of our internal control over financial reporting, as these standards are modified, supplemented or audited from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Generally speaking, if we fail to achieve and maintain an effective internal control environment, it could result in material misstatements in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our reputation, business, financial condition and results of operations may be materially and adversely affected. Additionally, ineffective internal control over financial reporting could expose us

Table of Contents

to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from Nasdaq, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

Financial Industry Regulatory Authority sales practice requirements may also limit your ability to buy and sell AeroClean Common Stock, which could depress the price of our shares.

Financial Industry Regulatory Authority (“FINRA”) rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy AeroClean Common Stock, which may limit your ability to buy and sell our shares once publicly traded, have an adverse effect on the market for AeroClean Common Stock and thereby depress our share price.

The forward-looking statements contained in this information statement/prospectus are subject to several known and unknown risks that could have a material impact on our performance.

This information statement/prospectus contains forward-looking statements, including forecasts of future performance as well as other statements regarding, among other items, our business strategies and anticipated demand for our products. These forecasts and other forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, risks related to our new and uncertain technology and business, the early stage of commercialization and development of our products, our limited operating history, competition, the uncertainty of obtaining regulatory clearance to market our products, the uncertainty of intellectual property protection and other risks discussed in this section as well as other factors referenced herein.

Our stockholders will experience dilution in the future as a result of the exercise of our outstanding warrant and the grant of restricted stock units to employees.

In June 2022, we issued a warrant to purchase 1,500,000 shares of AeroClean Common Stock to an institutional investor. The warrant is exercisable at a price of $11.00 per share. The shares of AeroClean Common Stock issuable upon exercise of the warrant have been registered with the SEC on a registration statement. If the warrant is exercised in full, stockholders of AeroClean will experience substantial dilution.

In addition, after giving effect to the Merger, AeroClean will have outstanding (i) 1,786,203 RSUs, which have been granted to officers and employees of AeroClean (which includes RSU awards issued and outstanding as of the date hereof and 732,090 RSUs to be granted to AeroClean’s Chief Executive Officer and Chief Financial Officer in connection with the Merger) and (ii) approximately 3 million RSUs which are expected to be granted to officers and employees of Molekule. All of these RSUs will be settled for shares of AeroClean Common Stock, a one-for-one basis, when such RSUs vest. As the RSUs vest and shares of AeroClean Common Stock are issued in settlement thereof, AeroClean stockholders will experience substantial dilution.

General Risk Factors

Business or economic disruptions could seriously harm our business.

Broad-based business or economic disruptions could adversely affect our business. Adverse changes in global or regional economic conditions periodically occur, including recession or slowing growth, changes, or uncertainty in fiscal, monetary or trade policy, higher interest rates, tighter credit, inflation, lower capital expenditures by businesses, increases in unemployment and lower consumer confidence and spending. Such adverse changes could result from geopolitical and security issues, such as armed conflict and civil or military unrest, political instability, human rights concerns and terrorist activity, catastrophic events such as natural disasters and public health issues (including the COVID-19 pandemic), supply chain interruptions, new or revised export, import or doing business regulations, including trade sanctions and tariffs or other global or regional occurrences.

For example, Russia’s invasion of Ukraine has prompted the U.S. and other countries to announce sanctions against Russia, which could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets,

Table of Contents

particularly if current or new sanctions continue for an extended period of time or if geopolitical tensions result in expanded military operations on a global scale. In addition, the recent invasion of Ukraine by Russia, and the impact of sanctions against Russia and the potential for retaliatory acts from Russia, could result in increased cyberattacks against U.S. companies. The full effect of this military conflict and related sanctions on the global economy and our existing and prospective customers, and as a result, our business, remains uncertain.

While the onset of the COVID-19 global pandemic underscored the urgency of bringing to market air purification solutions to help protect front-line healthcare workers, patients and the general population, associated business shutdowns or disruptions could impair our ability to manufacture or sell our products, which would adversely affect our business, financial condition and results of operations.

If we lose key personnel or are unable to attract and retain qualified personnel, our business could be harmed, and our ability to compete could be impaired.

Our success depends, to a significant degree, upon the continued contributions of the members of our senior management and highly credentialed scientists. If we lose the services of one or more of these people, we may be unable to achieve our business objectives. We may be unable to attract and retain personnel with the advanced technical qualifications or managerial experience necessary for the development of our business and products or commercialization of our products. In addition, our current employees are at-will employees, which means that either we or the employee may terminate the employment relationship at any time, and our agreements with our independent contractors generally extend only on a monthly basis after an initial term, with the ability of either party to terminate the agreement upon prior notice to the other party.

We face intense competition.

We face, and will continue to face, intense competition from organizations such as large, diverse companies with extensive product development and manufacturing capabilities, as well as smaller specialized companies, that have developed and are attempting to develop air filtration and purification systems. We believe that the COVID-19 pandemic and recently discovered new more virulent and infectious strains of the coronavirus have increased, and will continue to increase, this competition. Further, the FDA Enforcement Policy for Sterilizers, Disinfectant Devices, and Air Purifiers during the Coronavirus Disease 2019 (COVID-19) Public Health Emergency and other temporary accommodations implemented by the FDA as a result of the COVID-19 pandemic to enable disinfectant devices, sterilizers, air purifiers, and other medical equipment to be brought to market in an expedited manner has made it easier for new entrants to enter into our market.

Although we believe that we have significant competitive advantages over other organizations, our competitors may develop and commercialize products and technologies that compete with our products and technologies. Organizations that compete with us may have substantially greater financial resources than we do and may be able to: (i) provide broader services and product lines; (ii) make greater investments in research and development; (iii) carry on larger research and development initiatives; (iv) undertake more extensive marketing campaigns; and (v) adopt more aggressive pricing policies than we can. Our competitors may also have greater name recognition and better access to customers than we do. We also expect to continue to face competition from alternative technologies. Our technology and products may be rendered obsolete or uneconomical by advances in existing technological approaches or products or the development of different approaches or products by one or more of our competitors.

We may acquire other companies or technologies, which could divert our management’s attention, result in additional dilution to stockholders and otherwise disrupt our operations and adversely affect our business, financial condition and results of operations.

Our success will depend, in part, on our ability to grow our business, which can include acquisitions. We may identify opportunities to establish industry leadership domestically and internationally through selective joint ventures and acquisitions that further capitalize on our differentiated technology. In some circumstances, we may determine to do so through the acquisition of complementary businesses and technologies rather than through internal development. We may also seek to acquire businesses in industries in which we do not currently operate. Some of these acquisitions or other transactions may be material. The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions. The risks we face in connection with acquisitions include:

●

diversion of management’s time and focus from operating our business to addressing acquisition integration challenges;

●

coordination of technology, research and development and sales and marketing functions;

Table of Contents

●

retention of employees from the acquired company;

●

cultural challenges associated with integrating employees from the acquired company into our organization;

●

integration of the acquired company’s accounting, management information, human resources and other administrative systems;

●

the need to implement or improve controls, policies and procedures at a business that prior to the acquisition may have lacked effective controls, policies and procedures;

●

potential write-offs of intangibles or other assets acquired in such transactions that may have an adverse effect on our results of operations;

●

liability for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities; and

●

litigation or other claims in connection with the acquired company, including claims from terminated employees, consumers, former stockholders or other third parties.

Our failure to address these risks or other problems encountered in connection with acquisitions and investments could result in our failure to realize the anticipated benefits of these acquisitions or investments, cause us to incur unanticipated liabilities and otherwise harm our business. Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses or the write-off of goodwill, any of which could harm our financial condition. Also, the anticipated benefits of any acquisitions may not materialize. Any of these risks, if realized, could materially and adversely affect our business, financial condition and results of operations.

Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation.

We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities. As the use of digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data, all of which are vital to our operations and business strategy. There can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigating their effects.

Despite the implementation of security measures, our computer systems and those of our current and future third-party service providers are vulnerable to damage or disruption from hacking, computer viruses, software bugs, unauthorized access or disclosure, natural disasters, terrorism, war and telecommunication, equipment and electrical failures. In addition, there can be no assurance that we will promptly detect any such disruption or security breach, if at all. Unauthorized access, loss or dissemination could disrupt our operations, including our ability to conduct research and development activities, process and prepare company financial information and manage various general and administrative aspects of our business. To the extent that any such disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure or theft of confidential, proprietary or personal information, we could incur liability, suffer reputational damage or poor financial performance or become the subject of regulatory actions by federal, state or non-U.S. authorities, any of which could adversely affect our business.

We may need to initiate lawsuits to protect or enforce our patents or other proprietary rights, which would be expensive and, if unsuccessful, may cause us to lose some of our intellectual property rights.

In order to protect or enforce our patent and other intellectual property rights, it may be necessary for us to initiate patent or other intellectual property litigation proceedings against third parties, such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time and could divert management’s attention from other business concerns. These lawsuits could put our patents at risk of being invalidated or interpreted narrowly and our patent applications at a risk of not being issued. Further, these lawsuits may also provoke the defendants to assert claims against us. The patent position of medical device firms is highly uncertain, involves complex legal and factual questions and has recently been the subject of much litigation. There can be no

Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On October 3, 2022, AeroClean Technologies, Inc., a Delaware corporation (“AeroClean”), Molekule, Inc., a Delaware corporation (“Molekule”), and Air King Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of AeroClean (“Merger Sub”), entered into the Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which they agreed to combine in an all-stock merger transaction (the “Merger”). Pursuant to the Merger Agreement, Merger Sub will merge with and into Molekule, with Molekule as the surviving corporation and a wholly owned subsidiary of AeroClean. Upon successful completion of the Merger, the issued and outstanding shares of Molekule common stock, par value $0.0001 per share (the “Molekule Common Stock”), will be converted into the right to receive shares of AeroClean common stock, par value $0.01 per share (the “AeroClean Common Stock”), which, when taken together with the shares underlying the Closing Date Vested RSUs (as defined herein), will equal 49.5% of the Outstanding Shares (as defined in the Merger Agreement).

The unaudited pro forma condensed combined financial statements should be read in conjunction with the separate historical financial statements, accompanying notes and AeroClean’s and Molekule’s Management’s Discussion and Analysis of Financial Condition and Results of Operations, each included elsewhere in this information statement/prospectus.

The unaudited pro forma condensed combined financial statements are based on and have been derived from AeroClean’s and Molekule’s audited historical financial statements for the year ended December 31, 2021 and AeroClean’s and Molekule’s unaudited condensed financial statements as of and for the nine months ended September 30, 2022. The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X using the assumptions set forth in the notes hereto and Transaction accounting adjustments that reflect the application of accounting required by GAAP, including the effects of the Merger. The unaudited pro forma condensed combined financial statements have been prepared on the basis that AeroClean is the acquirer for accounting purposes.

The unaudited pro forma condensed combined statements of operations for the fiscal year ended December 31, 2021 and the nine months ended September 30, 2022 give effect to the Merger as if it had occurred on January 1, 2021, and the unaudited pro forma condensed combined balance sheet as of September 30, 2022 gives effect to the Merger as if it had occurred on September 30, 2022. The unaudited pro forma condensed combined financial statements are for illustrative and informational purposes only and are not intended to represent what AeroClean’s results of operations or financial position would have been had the Merger occurred on the dates indicated. The following unaudited pro forma condensed combined financial information and related notes have been derived from and should be read in conjunction with (i) the historical financial statements of AeroClean and the related notes included elsewhere herein and (ii) the historical financial statements of Molekule and the related notes included elsewhere herein.

The unaudited pro forma condensed combined statements of operations and the unaudited pro forma condensed combined balance sheet give pro forma effect to the consummation of the Merger on the terms provided for in the Merger Agreement and the unaudited pro forma adjustments reflect adjustments related to (1) the application of the acquisition method of accounting in connection with the Merger and (2) the preliminary fair value estimate of assets to be acquired and liabilities to be assumed. The Merger is subject to closing adjustments that represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and which are subject to change as additional information becomes available and analyses are performed. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial statements as required by the SEC rules. Differences between these preliminary estimates and the final merger accounting may be material. The pro forma financial information does not give effect to the potential impact of current financial conditions or any anticipated revenue enhancements, cost savings or operating synergies that may result from the Merger.

The pro forma financial statements give effect to the rights offering Molekule consummated on December 2, 2022 to its existing stockholders, resulting in the sale of 17,999,484 shares of Molekule Series 1 Preferred Stock and 6,937,459 shares of Molekule Series 2 Preferred Stock, for aggregate proceeds of approximately $7.0 million to Molekule (the “Rights Offering”).

Table of Contents

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 2022


	Historical AeroClean^(a)		Historical Molekule^(b)		Reclassification Adjustments			Transaction Accounting Adjustments			Pro Forma Condensed Combined
ASSETS
Current assets:
Cash	$	25,818,620	$	3,287,994				$	7,000,000	^(e)	$	36,106,614
Restricted cash		—		1,115,899								1,115,899
Accounts receivable, net		11,894		1,469,646								1,481,540
Prepaid expenses and other current asset		285,318		839,381								1,124,699
Inventories, net		1,310,275		28,613,102								29,923,377
Total current assets		27,426,107		35,326,022					7,000,000	^(e)		69,752,129

Property and equipment, net		2,164,759		9,749,515								11,914,274
Security deposits		—		169,173		(169,173)	^(c)					—
Goodwill and intangible assets, net		—		2,263,409					49,615,438	^(f)		51,878,847
Other assets		21,667		—		169,173	^(c)					190,840
Total assets		29,612,533		47,508,119					56,615,438			133,736,090
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		854,295		10,338,253								11,192,548
Accrued expenses and other current liabilities		1,835,057		4,675,152		707,825	^(d)		3,800,000	^(g)		11,018,034
Legal settlement liability		—		1,400,000								1,400,000
Accrued sales tax		—		707,825		(707,825)	^(d)					—
Contract liabilities		—		52,325								52,325
Notes payable, current portion		—		1,699,583								1,699,583
Total current liabilities		2,689,352		18,873,138					3,800,000	^(g)		25,362,490
Long-term liabilities:


	Page
	Number
ABOUT THIS INFORMATION STATEMENT/PROSPECTUS	ii
MARKET AND INDUSTRY DATA	iii
TRADEMARKS AND TRADE NAMES	iii
FREQUENTLY USED TERMS	iv
QUESTIONS AND ANSWERS	1
SUMMARY	8
RISK FACTORS	22
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS	68
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS	70
COMPARATIVE MARKET PRICE AND DIVIDEND INFORMATION FOR AEROCLEAN AND MOLEKULE	78
INFORMATION ABOUT THE COMPANIES	80
THE MERGER	81
INTERESTS OF AEROCLEAN’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER	110
INTERESTS OF MOLEKULE’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER	112
THE MERGER AGREEMENT	114
ANCILLARY AGREEMENTS	123
MANAGEMENT OF THE COMBINED COMPANY AFTER THE MERGER	125
COMBINED COMPANY COMPENSATION INFORMATION	130
BUSINESS OF AEROCLEAN	137
AEROCLEAN MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	152
BUSINESS OF MOLEKULE	158
MOLEKULE MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	168
PRINCIPAL STOCKHOLDERS OF AEROCLEAN	178
PRINCIPAL STOCKHOLDERS OF MOLEKULE	180
PRO FORMA PRINCIPAL STOCKHOLDERS OF THE COMBINED COMPANY	182
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	185
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES	186
DESCRIPTION OF AEROCLEAN CAPITAL STOCK	188
COMPARISON OF MOLEKULE STOCKHOLDER RIGHTS BEFORE AND AFTER THE MERGER	191
LEGAL MATTERS	199
EXPERTS	199
WHERE YOU CAN FIND ADDITIONAL INFORMATION	200
INDEX TO FINANCIAL STATEMENTS	F-1
ANNEX A: Merger Agreement	A-1
ANNEX B: Opinion of The Benchmark Company LLC	B-1
ANNEX C: Form of Amended and Restated Certificate of Incorporation of AeroClean	C-1
ANNEX D: Form of Amended and Restated Bylaws of AeroClean	D-1
ANNEX E: Form of Molekule Support Agreement	E-1
ANNEX F: Amendment to AeroClean Technologies, Inc. 2021 Incentive Equity Plan	F-1