美國

證券交易委員會 及交易所

華盛頓特區，20549

表單 10-Q/A

（馬克 一）

截至年度季度結束 2024年6月30日

對於從 到的過渡期間

委員會檔案編號 001-41560

亞達馬斯壹公司

(依據公司章程指定之註冊人全稱)

(480)356-8798

（申報人的電話號碼，包括區號）

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截至2024年8月23日，發行人持有 38,047,648 股普通股已發行。

解說說明

ADAMAS ONE corp.

目 錄

附註為這些簡明基本報表的一部分。

附註為這些簡明基本報表的一部分。

附註為這些簡明基本報表的一部分。

附註為這些簡明基本報表的一部分。

亞達馬斯壹公司

未經審核的簡明財務報表附註

截至2024年6月30日和2023年止九個月

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This document contains certain “forward-looking statements”. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies, goals and objectives of management for future operations; any statements concerning proposed new products and services or developments thereof; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect,” or “anticipate,” or other similar words, or the negative thereof. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures and risk factors we included in the section titled Risk Factors contained herein.

Overview

We are a high-tech, laboratory grown, diamond company that uses our proprietary technology to produce high-quality, single crystal diamonds and diamond materials through a CVD process, which we refer to as our “Diamond Technology”. Lab-grown diamonds have the exact physical, chemical, and optical properties of the best mined diamonds. Lab-grown diamonds are composed of a pure carbon lattice, just like mined diamonds, and are not considered synthetic or simulant diamonds like cubic zirconia and moissanite. Simulants are other chemical compounds that resemble diamonds but do not possess the same hardness, thermal characteristics, band gap energy, and light reflectivity as diamond, whether mined or lab-grown.

We use our Diamond Technology to produce finished diamond gemstones that we intend to sell wholesale and retail for jewelry and rough unfinished diamond materials that we intend to sell wholesale and retail for industrial uses. We are in the initial phases of commercializing diamonds and diamond materials, and our primary mission is the development of a profitable and sustainable commercial production model for the manufacture and sale of diamonds and diamond materials, which are suitable for known, emerging, and anticipated industrial, technology, and consumer applications.

Since acquiring the Scio assets over three years ago, we have focused our efforts on research and development of improvements to the fundamental CVD process. Like most high-tech manufacturers, the philosophy of continuous improvement is at our core. Our development efforts have focused on commercialization of the diamonds and diamond materials we produce, improvements in our white diamond process, improvements in our diamond seed processes, automation in our machine operation, expansion of our capacity with our existing machines, and improvements in our laser cutting procedures. The guiding principle of these efforts is to provide the highest quality diamonds and diamond materials in a consistent and high-yield manner.

We currently have limited available commercial products and have to date sold minimal diamonds or diamond materials to consumers or commercial buyers. Our current operations, until just recently, have been dedicated to the research and development of our Diamond Technology and the exploration of markets that we may exploit in the future. While we are unable to predict the timing of our entry into any market in the future, we will strive to produce on a large scale high-quality finished and raw diamond materials and to pursue related commercial opportunities.

Results of Operations

The preceding table presents summarized financial information taken from our condensed statements of operations for the three and nine months ended June 30, 2024 and June 30, 2023 respectively.

Components of Results of Operations Net Sales

During the three and nine months ended June 30, 2024, we had net sales of $179,774 and $411,046 respectively, compared to $290,938 and $1,130,994 net sales for the three and nine months ended June 30, 2023. We anticipate deriving continuing future revenue from the following business lines:

Cost of Revenues

Cost of revenues includes direct costs (parts, material, and labor), indirect manufacturing costs (manufacturing overhead, depreciation, plant operating lease expense, and rent), shipping, lab services, and logistics costs.

Costs of revenues for the three and nine months ended June 30, 2024, were $161,273 and $461,753 respectively. Costs of revenues for the three and nine months ended June 30, 2023 were $217,844 and $397,842, respectively.

Gross Profit (Loss)

Gross Profit (Loss) for the three and nine months ended June 30, 2024, was $18,500 and $(50,707) respectively with a gross margin on diamond sales of 47% and (12.3)% for each of those periods, respectively. Gross Profit (Loss)for the three and nine months ended June 30, 2023, was $73,094 and $733,152, respectively with a gross profit margin on diamond sales of 25% and 65% for each of those periods, respectively.

Research and Development Expense

We conduct research and development activities to enhance existing processes and products and develop new processes and products at our facilities in Greenville, South Carolina, utilizing our personnel and strategic relationships. We expense all costs associated with our research and development efforts through either our cost of goods sold, as they are performed by the same employees who produce our finished product, or through our general and administrative expenses if the product has not been brought to market.

We expect our research and development expenses to increase for the foreseeable future as we continue to invest in research and development activities to achieve our operational and commercial goals.

Operating Expense

Operating expense includes selling, general and administrative expense, employee salaries and related expense and depreciation and amortization expense. Selling, general, and administrative expenses consist primarily of legal and professional, consulting services and all non-personnel-related expenses or depreciation and amortization. Personnel-related expenses consist of salaries, payroll taxes, benefits, and stock-based compensation. Depreciation and amortization expenses are related to the Company’s fixed assets and intangible assets.

Operating expense for the three and nine months ended June 30, 2024, included in the condensed statements of operations was $1.9 million and $7.5 million, respectively, compared to $4.5 million and $16.9 million in the prior period. These decreases in operating expenses for both the three- and nine-month periods were generally due to the lower stock compensation expense as a result of a lower valuation based on price of the stock at the time of grant.

We expect our future operating expense to increase for the foreseeable future as we scale headcount and expenses with the growth of our business, build out our manufacturing facilities, refine our production processes, drive for productivity improvements, acquire new and retain existing customers, and incur additional costs as a result of being a public company.

Other Expenses

Interest Expense and Other Costs of Financing

Interest expense consists of interest paid and accrued on our notes payable, promissory notes and the amortization of debt issue costs.

Interest and other expenses were $ 0.3 million and $2.6 million for the three and nine months ended June 30, 2024, respectively, compared to $.1 million and $2.3 million the three- and nine-month periods of the prior year. This was due primarily to the higher costs associated with new financings and lower overall borrowings for the nine months ended June 30, 2024, versus the nine months ended June 30, 2023.

Net Loss

Primarily as a result of the above factors we had a net loss of $2.2 million and $10.1 million compared to a net loss of $4.5 million and $18.5 million for the three and nine months ended June 30, 2024, and June 30, 2023, respectively.

Liquidity and Capital Resources

As of June 30, 2024, we had $16,102 of cash and cash equivalents compared to $26,088 at September 30, 2023.

Changes in cash flows are summarized as follows:

Operating Activities

For the nine months ended June 30, 2024, net cash used in operating activities totaled approximately $2.1 million. This was primarily the result of a net loss of approximately $10.1 million, increases to our period end accounts accrued liabilities of $1.2 million, an increase in our accrued interest of $0.5 million, a increase in derivative liability of $1.1 million, a decrease with an offset by the benefit of non-cash expenses for employee stock compensation and consultants compensation of $3.7 million and warrants issued for conversion of $0.9 million.

For the nine months ended June 30, 2023, net cash used in operating activities totaled approximately $6.1 million. This was primarily the result of net loss of approximately $18.5 million offset by the benefit of non-cash expenses for employee stock compensation of $9.9 million.

Investing Activities

During the nine months ended June 30, 2024, we used no cash for investing activities. During the nine months ended June 30, 2023, we used $1.5 million for investing activities related to purchase of property and equipment.

Financing Activities

During the nine months ended June 30, 2024, net cash provided by financing activities was approximately $2.1 million. This was primarily the result of additional borrowings.

During the nine months ended June 30, 2023, net cash provided by financing activities was $8.1 million. This was the net effect of $9.1 million we received as net proceeds from our IPO which closed on December 14, 2022 offset by $0.6 million used to reduce related party notes and $1.2 million to acquire treasury stock during the nine months ended June 30, 2023.

These conditions raise substantial doubt about our ability to continue as a going concern for the ensuing year. Our independent auditors have added an explanatory paragraph in their audit opinion in regard to this uncertainty and can be found in the Company’s Annual Form 10K filing with the Securities and Exchange Commission.

Satisfaction of our Cash Obligations for the Next 12 Months

Our IPO which closed on December 14, 2022, gave us gross proceeds of $11.0 million before direct IPO expenses and fees associated with underwriting. These funds along with the ability to obtain additional capital through additional equity and/or debt financing are anticipated to meet our operating needs. We are not currently generating sufficient revenue to meet operating needs. In the event we cannot obtain additional capital to pursue our strategic plan, however, this would materially impact our ability to continue as a going concern.

Since inception, we have financed cash flow requirements through debt financing and the private issuance of common stock for cash and services along with advances from our CEO as well as our CEO and CFO deferring significant compensation and benefits that were earned under their respective employment contracts. If we continue to experience cash flow deficiencies, we would be required to obtain additional financing to fund operations through private common stock offerings and debt borrowings to the extent necessary to provide working capital. However, there is no assurance we would be able to obtain such financing on commercially reasonable terms, if at all.

We intend to implement and successfully execute our business and marketing strategy, continue to develop, and upgrade technology and products, respond to competitive developments, and attract, retain, and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition, and results of operations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Critical Accounting Policies

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affected the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the condensed financial statements include the valuation of allowances for doubtful accounts, valuation of deferred tax assets, inventories, useful lives of assets, goodwill, intangible assets, and stock-based compensation. A summary of our critical accounting policies is included in our Annual Report on Form 10-K for the year ended September 30, 2023, under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” There have been no significant changes to these policies during the nine months ended June 30, 2024. For disclosure regarding recent accounting pronouncements and the anticipated impact they will have on our operations, please refer to Note 2 to the financial statements included in our Annual Report on Form 10-K for the year ended September 30, 2023.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2024. Based on the evaluation of these disclosure controls and procedures, our Chief Executive Officer and Chief Financial Officer concluded our disclosure controls and procedures were not effective. Our controls were ineffective due to the size of the Company and available resources. There are limited personnel to assist with the accounting and financial reporting function, which results in: (i) a lack of segregation of duties and (ii) controls that may not be adequately designed or operating effectively. Despite the existence of material weaknesses, the Company believes the financial information presented herein is materially correct and fairly presents the financial position and operating results of the nine months ended June 30, 2024, and 2023 in accordance with GAAP.

Changes in internal controls

There were no changes in our internal control over financial reporting, as defined in Rule 13a-15(f) promulgated under the Exchange Act, during the quarterly period from April 1, 2023 to June 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in or subject to, or may become involved in or subject to, routine litigation, claims, disputes, proceedings, and investigations in the ordinary course of business. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits are expected to have a material effect on our financial position, results of operations or cash flows. We record accruals for contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated.

On January 10, 2023, the Company was joined as a defendant to an existing lawsuit in the United States District Court for the District of Nevada (case no. 2:22-cv-00256) between Theodorus Strous, a shareholder of Scio Diamond Technology Corp. (“Scio”), and Scio executives, brought as a proposed derivative shareholder class action. The second amended complaint added the Company and John G. Grdina as defendants, expanding the claim to assert a proposed derivative shareholder class action against the Company as well as Scio.

The Company retained outside counsel and filed a motion to dismiss and joined in Scio’s motion to dismiss on February 17, 2023. Specifically, the Company believes it was mis-joined to the lawsuit and that no claims are adequately pled against it. The Company further contended the court lacked subject matter jurisdiction. The case was re-assigned to Hon. Cristina D. Silva. Judge Silva’s on July 5, 2023. On June 14, 2024, the court ordered additional briefing based on the Company’s motion to dismiss for lack of subject matter jurisdiction. The briefing was to commence on June 28, 2024, however, as a result of the court’s inclination to grant the Company’s motion to dismiss, the Plaintiff stipulated to dismiss the claims against the Company, Mr. Grdina, and Scio’s management and filed a voluntary dismissal of all of the claims as of June 28, 2024.

Please reference the Contingencies section of Note 3 of our Condensed Financial Statements for additional disclosure.

ITEM 1A. RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The authorized capital of the Company is 100,000,000 shares of Common Stock with a par value of $0.001 per share and 10,000,000 shares of Preferred Stock with a $0.001 par value per share.

There were no unregistered sales of the Company’s equity securities during the quarter ended June 30, 2024 that were not previously reported in a Current Report on Form 8-K except as follows:

2,540,000 shares were issued for consulting services valued at $957,685;

130,000 shares were issued for conversion of notes and accrued interest valued at $35,505;

120,000 shares valued at $63,200 were granted to board members for services; and

150,000 shares were issued for $41,450 for inducement to lenders.

The previously mentioned securities were issued in reliance on the exemptions from registration under the Securities Act in Section 4(a)(2) of the Securities Act and/or Regulation D thereunder.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

SIGNATURES

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

ADAMAS ONE CORP.

ADAMAS ONE CORP.