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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June~~December 3031, 2023

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 001-41560

(ADAMAS ONE CORP LOGO)

ADAMAS ONE CORP.

(Exact Name of registrant as specified in its charter)

Nevada	83-1833607
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

17767 N. Perimeter Drive, Suite B115, Scottsdale, AZ	85255
(Address of principal executive offices)	(Zip Code)

(480) 356-8798

(Registrant’s telephone number, including area code)

Title of each class:		Trading Symbol(s)		Name of each exchange on which registered:
Common Stock, $0.001 par value		JEWL		The Nasdaq Stock market, LLC (Nasdaq Capital Market)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer o Accelerated filer o Non-accelerated ~~Filer~~filer x Smaller reporting company x Emerging growth company x

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

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

As of December 2931, 2023, the issuer had 2728,~~993~~569,~~966~~145 shares of Common Stock outstanding.

ADAMAS ONE CORP.

Table of Contents

		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Balance Sheets	3
	Condensed Statements of Operations	4
	Condensed Statements of Stockholders’ Equity (Deficit)	5
	Condensed Statements of Cash Flows	6
	Notes to Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1516
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1819
Item 4.	Controls and Procedures	1819
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	1920
Item 1A.	Risk Factors	1920
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1920
Item 3.	Defaults Upon Senior Securities	1920
Item 4.	Mine Safety Disclosures	1920
Item 5.	Other Information	1920
Item 6:	Exhibits	2021
SIGNATURES		2122

ADAMAS ONE CORP.

CONDENSED BALANCE SHEETS

	June 30,			September 30,
	At December 31,			At September 30,
	2023			~~2022~~2023
	(Unaudited)
ASSETS
Current Assets:
Cash	$	~~650~~340,~~781~~424		$	8826,~~235~~088
Accounts receivable, net of allowance		~~345~~8,~~770~~178			180,~~277,368~~347
Inventory		1,145,916			58,690
Inventory, net		1,456,093			1,555,222
Total Current Assets		2,142,467			1,424,293
Total current assets		1,804,695			1,661,657
Property and Equipment, net		1,~~862~~773,~~046~~982			~~640~~1,~~002~~785,753
Other Assets:
Non-Current Assets:
Goodwill		5,413,000			5,413,000
Other intangible assets, net		444,000			498,000
Intangible assets, net		408,000			426,000
Right of use assets - operating leases		1,~~349~~617,~~144~~725			-1,677,628
Investment		1,917,673			-1,917,673
Other		47,346			12,800
Other non-current assets		12,800			12,800
TOTAL ASSETS	$	13,175,676		$	7,988,095
Total non-current assets		11,143,180			11,232,854
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
TOTAL ASSETS	$	12,947,875		$	12,894,511
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accrued liabilities	$	3984,~~158,734~~795		$	~~442~~1,~~645~~015,050
Accrued interest		~~158~~231,~~687~~420			~~509~~95,~~620~~197
Payroll and related		2,169,097			2,924,172
Due to related party - payroll and related		1,456,156			1,130,074
Due to related party - notes payable		-			558,658
Assumed liabilities - asset purchase		457,912			457,912
Working capital deficit - asset purchase		457,912			457,912
Notes payable and convertible term notes, net		3,197,509			2,195,708
Notes payable and convertible term notes, net		2,082,550			7,882,500
Accrued warrant issuance		851,200			-
Current portion of operating lease liability		150,782			-
Warrant liability		-			298,839
Total Current Liabilities		8,177,762			12,775,507
Derivative liability		109,586			-
Long-Term Liabilities:
Current portion of operating lease liability		183,802			157,286
Operating lease liability, net of current portion		1,186,272			-
Contingent consideration for debt compliance related to notes payable		2,922,280			2,922,280
Total liabilities		9,364,034			12,775,507
Total current liabilities		10,394,661			8,272,346
Commitments and Contingencies (Note 6)
Non-Current Liabilities:
Stockholders’ Equity (Deficit)
Operating lease liability, net of current portion		1,412,253			1,498,674
Common stock, $0.001 par value, 100,000,000 shares authorized 26,017,818 and 16,369,423 shares issued and 25,667,818 and 16,369,423 shares outstanding at June 30, 2023 and September 30, 2022, respectively		26,016			16,369
Total non-current liabilities		1,412,253			1,498,674
Treasury stock 350,000 shares, at cost		(1,200,000	)		-
TOTAL LIABILITIES		11,806,914			9,771,020
Additional paid-in capital		64,763,400			36,511,950
Stockholders’ Equity
Accumulated deficit		(59,777,774	)		(41,315,731	)
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued or outstanding as of December 31, 2023 and September 30, 2023		-			-
Total Stockholders’ Equity (Deficit)		3,811,642			(4,787,412	)
Common stock, $0.001 par value, 100,000,000 shares authorized with 28,569,145 shares issued and outstanding at December 31, 2023 and 27,215,966 shares issued and outstanding at September 30, 2023		28,917			27,564
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	13,175,676		$	7,988,095
Treasury Stock 350,000 shares, at cost		(1,200,000	)		(1,200,000	)
Shares to be issued- strategic entity		1,347,312			1,527,312
Additional paid-in capital		67,597,287			66,372,882
Accumulated deficit		(66,632,555	)		(63,604,267	)
Total stockholders’ equity		1,140,961			3,123,491
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	12,947,875		$	12,894,511

The accompanying notes are an integral part of these condensed financial statements.

ADAMAS ONE CORP. CONDENSED STATEMENTS OF OPERATIONS For the Three Months Ended December 31, 2023 and 2022 (Unaudited)

	For The Three Months Ended						For The Nine Months Ended
	2023			2022
	June 30,						June 30,
Net Sales
	2023			2022			2023			2022
Diamond sales	$	219,804		$	726,125
Net Revenues
Cost of revenues		286,769			134,846
Diamond sales	$	290,938		$	617,075		$	1,130,994		$	1,101,594
Gross Profit		(66,965	)		591,279
Cost of Revenues		217,844			215,976			397,842			362,576
Operating Expenses
Gross Profit		73,094			401,099			733,152			739,018
Selling, general and administrative		1,236,285			2,561,479
Operating Expenses
Employee salaries and related expenses		527,256			4,664,815
Selling, general and administrative		4,253,748			1,372,895			10,099,194			2,661,678
Depreciation and amortization expense		29,771			98,852
Employee salaries and related expenses		196,295			55,891			6,465,885			3,884,427
Total operating expenses		1,793,312			7,325,146
Severance expenses		-			-			-			43,000
Loss from Operations		(1,860,278	)		(6,733,867	)
Depreciation and amortization expense		98,851			98,852			296,555			291,352
Other Expenses:
Total operating expenses		4,548,894			1,527,638			16,861,634			6,880,457
Interest expense		207,224			2,244,046
Loss from Operations		(4,475,800	)		(1,126,539	)		(16,128,482	)		(6,141,439	)
Warrant issuance expense		851,200			-
Other Expenses
Financing costs		106,062			-
Interest expense		(62,383	)		(610,491	)		(2,333,561	)		(809,805	)
Change in fair value of derivative liability		3,524			-
Total Other Expenses		~~(62~~1,~~383~~168,010	)		~~(610~~2,~~491~~244,046	)		~~(2,333,561~~	)		~~(809,805~~	)
Loss before income taxes		(43,~~538~~028,~~183~~288	)		(18,~~737~~977,~~030~~913	)		~~(18,462,043~~	)		~~(6,951,244~~	)
Provision for income taxes		-			-			-			-
Net Loss	$	(43,~~538~~028,~~183~~288	)	$	(18,~~737~~977,~~030~~913	)	$	~~(18,462,043~~	)	$	~~(6,951,244~~	)
Net Loss Per Share
Loss Per Share
Basic and diluted
Basic and fully diluted
Weighted average number of shares outstanding		2327,~~668~~986,~~106~~838			1917,~~686~~420,~~685~~365			~~20,966,902~~			~~19,223,436~~
Loss per share-basic and diluted	$	(0.1911	)	$	(0.0952	)	$	~~(0.88~~	)	$	~~(0.36~~	)

The accompanying notes are an integral part of these condensed financial statements.

ADAMAS ONE CORP. CONDENSED STATEMENTS OF STOCKHOLDERS ’ EQUITY (DEFICIT) For the Three Months Ended December 31, 2023 and 2022 (Unaudited)

						Additional
	Common Stock					Additional
	Common Stock					Paid-In			Treasury			Accumulated
	Shares					Paid-In			Shares			Treasury			Accumulated
	Shares Outstanding			Par Value		Capital			Stock			(Deficit)			Total
	Outstanding			Par Value		Capital			To Be Issued			Stock			(Deficit)			Total
Balance at September 30, 2021		18,651,750		$	18,652	$	23,870,976		$	-		$	(30,247,873	)	$	(6,358,245	)
Balance at September 30, 2022		16,369,423		$	16,369	$	36,511,950		$	-		$	-		$	(41,315,731	)	$	(4,787,412	)
Common stock issued to board members		20,000			20		79,980			-			-			80,000
Adjustment to opening balance		-			-		-			-			-			255,403			255,403
Common stock issued for incentive to lender		14,667			14		58,655			-			-			58,669
																-
Net loss		-			-		-			-			(1,104,161	)		(1,104,161	)
																-
Balance at December 31, 2021		18,686,417		$	18,686	$	24,009,611		$	-		$	(31,352,034	)	$	(7,323,737	)
Balance at October 01, 2022		16,369,423		$	16,369	$	36,511,950		$	-			-		$	(41,060,328	)	$	(4,532,009	)
Common stock issued to board members		20,000			20		79,980			-			-			80,000
																-
Common stock issued for cash at $4.00		25,000			25		99,975			-			-			100,000
																-
Common stock issued to employees		850,000			850		3,399,150			-			-			3,400,000
Common stock issued for conversion of notes and accrued interest		1,813,845			1,814	$	6,266,585			-			-			-			6,268,399
Common shares issued from converted interest		25,708			26		102,806			-			-			102,832
Common stock issued to employees		920,000			920		3,679,080			-			-			-			3,680,000
Net loss		-			-		-			-			(4,110,053	)		(4,110,053	)
Common stock issued for IPO		2,450,000			2,450		9,130,300			-			-			-			9,132,750
Balance at March 31, 2022		19,607,125		$	19,607	$	27,691,522		$	-		$	(35,462,087	)	$	(7,750,958	)
Warrants issued		-			-		2,038,000			-			-			-			2,038,000
Common stock issued to board members		20,000			20		79,980			-			-			80,000
Repurchase of stock		(350,000	)		-		-			-			(1,200,000	)		-			(1,200,000	)
Common stock issued to consultant		240,000			240		959,760			-			-			960,000
Net loss		-			-		-			-			-			(8,977,913	)		(8,977,913	)
Common shares returned from CEO		(4,000,000	)		-		(16,000,000	)		16,000,000			-			-
Balance at December 31, 2022		21,203,268		$	37,922	$	57,625,915		$	-		$	(1,200,000	)	$	(50,038,241	)	$	6,425,596
Net loss		-			-		-			-			(1,737,030	)		(1,737,030	)
Balance at September 30, 2023		27,215,966		$	27,564	$	66,372,882		$	1,527,312		$	(1,200,000	)	$	(63,604,267	)	$	3,123,491
Balance at June 30, 2022		15,867,125		$	19,867	$	12,731,262		$	16,000,000		$	(1,737,030	)	$	(6,710,958	)
Prior period reclassification on warrant liability		-			-		298,839			-			-			-			298,839
Balance at September 30, 2022		16,369,423		$	16,369	$	36,511,950			-		$	(41,315,731	)	$	(4,787,412	)
Balance at October 01, 2023		27,215,966			27,564	$	66,671,721		$	1,527,312		$	(1,200,000	)	$	(63,604,267	)	$	3,422,330
Common stock issued for conversion of notes and accrued interest		1,813,845			1,814		6,266,585			-			-			6,268,399
Common stock issued to employees		178,215			178		105,860			-			-			-			106,038
Common stock issued to employees		920,000			920		3,679,080			-			-			3,680,000
Common stock issued for consulting services		566,964			567		463,464			-			-			-			464,031
Common stock issued for IPO, net of costs of $1,892,250		2,450,000			2,450		9,130,300			-			-			9,132,750
Common stock issued to board members		80,000			80		43,620			-			-			-			43,700
Warrants issued		-			-		2,038,000			-			-			2,038,000
Common stock issued for inducement to lenders		180,000			180		91,020			-			-			-			91,200
Repurchase stock		(350,000	)		-		-			(1,200,000	)		-			(1,200,000	)
Common stock issued - strategic entity		300,000			300		179,700			(180,000	)		-			-			-
Net loss		-			-		-			-			(8,977,913	)		(8,977,913	)
Common stock issued for conversion of notes and accrued interest		30,000			30		16,920			-			-			-			16,950
Balance at December 31, 2022		21,203,268		$	21,553	$	57,625,915		$	(1,200,000	)	$	(50,293,644	)	$	6,153,824
Common stock issued from sale of treasury stock		18,000			18		24,982			-			-			-			25,000
Common stock issued to employees		225,000			225		772,775			-			-			773,000
Net loss		-			-		-			-			-			(3,028,288	)		(3,028,288	)
Common stock issued for consulting services		632,500			632		1,559,068			-			-			1,559,700
Balance at December 31, 2023		28,569,145		$	28,917	$	67,597,287		$	1,347,312		$	(1,200,000	)	$	(66,632,555	)	$	1,140,961
Common stock issued for conversion of note and accrued interest		95,758			95		279,305			-			-			279,400
Net loss		-			-		-			-			(4,945,947	)		(4,945,947	)
Balance at March 31, 2023		22,156,526		$	22,505	$	60,237,063		$	(1,200,000	)	$	(55,239,591	)	$	3,819,977
Common stock issued to employees		513,500			513		1,248,303			-			-			1,248,816
Common stock issued to board members		75,000			75		246,075			-			-			246,150
Common stock issued for consulting services		2,385,000			2385		2,421,444			-			-			2,423,829
Common stock issued for conversion of note and accrued interest		105,000			105		206,335			-			-			206,440
Common stock issued for ownership in strategic entity		207,792			208		163,699			-			-			163,907
Common stock issued for inducement to lenders		225,000			225		240,482			-			-			240,707
Net loss		-			-		-			-			(4,538,183	)		(4,538,183	)
Balance at June 30, 2023		25,667,818		$	26,016	$	64,763,400		$	(1,200,000	)	$	(59,777,774	)	$	3,811,642

The accompanying notes are an integral part of these condensed financial statements.

ADAMAS ONE CORP. CONDENSED STATEMENTS OF CASH FLOWS For the Three Months Ended December 31, 2023 and 2022 (Unaudited)

	For The Nine Months Ended
	June 30,
	2023			2022
OPERATING ACTIVITIES
Net loss	$	(183,~~462~~028,~~043~~288	)	$	(68,~~951~~977,~~244~~913	)
Adjustments to reconcile net loss to net cash used in operations:
Adjustments to reconcile net loss to net cash provided by operations:
Stock based compensation and expenditures		9,931,494			4,761,501
Stock issued to employees		106,038			3,680,000
Incentive warrants issued		2,038,000			-
Stock issued to board members		43,700			-
Stock issued for loan inducement		240,707			-
Stock issued to consultants		464,031			-
Depreciation and amortization		296,555			291,352
Stock issued for loan inducement		91,200			-
Allowance for doubtful accounts		1,300,000			-
Stock issued for interest		-			113,398
Changes in assets and liabilities:
Warrants issued for conversion		-			2,038,000
Accounts receivable		(368,402	)		(1,026,594	)
Inventory reserve		113,243			-
Inventory		(1,087,225	)		23,265
Depreciation and amortization		29,771			98,852
Other current assets		(34,546	)		10,714
Allowance for doubtful accounts		(8,111	)		72,600
Accrued liabilities		2,666,089			391,300
Derivative liability		106,062			-
Investment		(1,917,673	)		-
Change in fair value of derivative liability		3,524			-
Accrued interest		13,061	)		706,973
Warrant expense		851,200			-
Accrued payroll and related		(705,074	)		197,305
Changes in assets and liabilities
Severance obligation		-			43,000
Accounts receivable		80,280			(354,375	)
Right of use assets - operating leases, net		(12,089	)		-
Inventory		(14,115	)		(243,245	)
Net cash used in operating activities		(6,101,146	)		(1,552,428	)
Accrued liabilities		(30,255	)		1,398,638
Accrued interest		153,173			(353,757	)
Accrued payroll and related		326,082			819,729
Right of use assets- operating leases, net		-			1,946
Total Adjustments to reconcile net loss to net cash used in operations:		2,315,823			7,271,786
Net cash used in operating activities		(712,465	)		(1,706,127	)
INVESTING ACTIVITIES
Property and equipment		(1,464,600	)		-
Property & equipment		-			(1,300,000	)
Net cash used in investing activities		~~(1,464,600~~-	)		-(1,300,000	)
FINANCING ACTIVITIES
Notes payable proceeds		~~754~~1,~~200~~001,801			~~945,000~~-
Due to related party		(558,658	)		245,609
Payments on notes payable		-			(1,000,000	)
Purchase of treasury stock		(1,200,000	)		-
Due to related party		-			(558,658	)
Cash from stock sale, net of costs of $1,892,250		9,132,750			100,000
Purchase of treasury stock		-			(1,200,000	)
Net cash provided by financing activities		8,128,292			1,290,609
Cash from stock sale, net of costs		25,000			9,132,750
Net cash increase (decrease) for the period	$	562,546		$	(261,819	)
Net cash provided by financing activities		1,026,801			6,374,092
Cash, beginning of period		88,235			261,819
Net cash increase for the period	$	314,336		$	3,367,965
Cash, end of the period	$	650,781		$	-
Cash, beginning of period		26,088			88,235
Supplemental disclosure of cash flow information:
Cash, end of the period	$	340,424		$	3,456,200
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	-
Non-cash investing and financing activities are as follows:
Stock for interest	$	169,756		$	-
Stock for investment	$	180,000		$	-
Conversion of debt to equity	$	6,554,151		$	-
Warrants issued for conversion	$	-		$	2,038,000
Stock for conversion of debt to equity and accrued interest	$	16,950		$	6,268,398

The accompanying notes are an integral part of these condensed financial statements.

ADAMAS ONE CORP. NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED) For the ~~Nine~~Three Months Ended ~~June~~December 3031, 2023 and 2022

NOTE 1 – ORGANIZATION AND BUSINESS ACTIVITY

~~Adamas~~We were ~~One Corp. (the “Company”) was~~ incorporated on September 6, 2018, in the state of Nevada for the purpose of acquiring existing technology that would efficiently and effectively produce lab-grown, environmentally friendly, ethically sourced diamonds. On January 31, 2019, we entered into an Amended Asset Purchase Agreement with Scio Diamond Technology Corporation, or Scio, which was subsequently amended February 3, 2020, pursuant to which we acquired substantially all of the assets of Scio, which assets consisted primarily of proprietary diamond growing chemical reactors, which we refer to as diamond growing machines, patents, and all intellectual property related thereto, for an aggregate of 1,500,000 shares of our common stock and payment to certain lenders of Scio of an aggregate of $2.1 million in cash. In addition, we agreed to pay one-half of certain other unsecured operational liabilities of Scio. The transaction was approved by a majority of the Scio stockholders voting in person or by proxy at a special meeting of stockholders held commencing on ~~June~~July 712, 2019, and reconvening on August 6, 2019. The transaction closed on October 17, 2019. We recorded the ~~net~~fair value of the assets purchased and liabilities assumed at $8.657 million.

The assets and liabilities were valued using ASC 805, the fair value of assets acquired and liabilities assumed in a business combination, which requires the measurement of assets acquired and liabilities assumed to be recognized at their acquisition-date fair values.

Since acquiring the assets of Scio, we have continued to further develop the technologies acquired from Scio, and we have begun producing diamonds for fine jewelry and diamond material for industrial uses.

NOTE 2 – GOING CONCERN

The accompanying condensed financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We incurred a net loss of $183.50 million and used approximately $60.17 million of cash in operations for the ~~nine~~three months ended ~~June~~December 3031, 2023. Further information related to a going concern may be obtained in the Going Concern Uncertainty paragraph in the Report of Independent Registered Public Accounting Firm, also contained in the above referenced condensed financial statements. ~~These~~ These conditions raise substantial doubt about our ability to continue as a going concern for the following year.

We will need additional financing to implement our full business plan and to service our ongoing operations. There can be no assurance that we will be able to secure any needed funding, or that if such funding is available, the terms or conditions would be acceptable to us. If we are unable to obtain additional financing when it is needed, we will need to restructure our operations and possibly divest all or a portion of our business. We may seek additional capital through a combination of equity offerings and debt financings. Debt financing, if obtained, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, and could increase our expenses and require that our assets secure such debt. Equity financing, if obtained, could result in dilution to our existing stockholders and/or require such stockholders to waive certain rights and preferences. The ~~accompanying~~ condensed financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustment that might be necessary should we be unable to continue as a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Preparation

The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for financial information and with the instructions to Form 10-K as promulgated by the Securities and Exchange Commission (the “SEC”). Accordingly, these financial statements include all of the disclosures required by generally accepted accounting principles for complete financial statements.

The Company’s fiscal year begins on October 1 and ends on September 30. Unless otherwise stated, references to particular years, quarters, months and periods refer to the Company’s fiscal years ended in September and the associated quarters, months and periods of those fiscal years.

Reclassification

Certain prior period amounts in the balance sheet, statement of cash flows and accompanying notes have been reclassified to conform to the current period’s presentation.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Presentation

The condensed financial statements included herein have been prepared by us without audit pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with our audited financial statements for the year ended September 30, 2022. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by the SEC, although we believe the disclosures that are made are adequate to make the information presented herein not misleading.

The accompanying condensed financial statements reflect, in our opinion, all normal recurring adjustments necessary to present fairly our financial position at June 30, 2023 and the results of our operations and cash flows for the periods presented.

Interim results are subject to seasonal variations, and the results of operations for the nine months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full year.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the accompanying condensed balance sheets and reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing the financial statements include, but are not limited to, the following: collectability of accounts receivable, the potential impairment of goodwill, valuation of deferred tax assets, carrying value of inventories, useful lives and recovery of equipment and other intangible assets, and valuation of stock-based compensation.

Cash and Cash Equivalents

For purposes of the ~~condensed~~ statements of cash flows, we consider highly liquid financial instruments purchased with a maturity of three months or less at the time of purchase to be cash equivalents.

Accounts Receivable

We follow the allowance method of recognizing uncollectible accounts receivable, which recognizes bad debt expense based on a review of the individual accounts outstanding and our prior history of uncollectible accounts receivable. We extend credit based on an evaluation of each customer’s financial condition, and our receivables are generally unsecured. Accounts receivable are stated net of an allowance for doubtful accounts in the balance sheet. We consider accounts past due if outstanding longer than contractual payment terms. We record an allowance based on consideration of a number of factors, including the length of time trade accounts are past due, our previous loss history, the creditworthiness of individual customers, economic conditions affecting specific customer industries, and economic conditions in general. We charge-off accounts receivable after all reasonable collection efforts have been exhausted. We credit payments subsequently received on such receivables to bad debt expense in the period we receive the payment.

As of ~~June~~December 3031, 2023, we had established an allowance of $1.6 2 million for potentially uncollectible accounts receivable. AsIn the prior period, as of September 30, ~~2022~~2023, we had established an allowance of approximately $01.~~3 million~~5 million for potentially uncollectible accounts receivable. We record delinquent finance charges on outstanding accounts receivable only if if they are collected.

Fair Value Measurement

ASC Topic 820, “Fair Value Measurement”, requires that certain financial instruments be recognized at their fair values at our balance sheet dates. However, other financial instruments, such as debt obligations, are not required to be recognized at their fair values, but GAAP provides an option to elect fair value accounting for these instruments. GAAP requires the disclosure of the fair values of all financial instruments, regardless of whether they are recognized at their fair values or carrying amounts in our balance sheets. For financial instruments recognized at fair value, GAAP requires the disclosure of their fair values by type of instrument, along with other information, including changes in the fair values of certain financial instruments recognized in income or other comprehensive income. For financial instruments not recognized at fair value, the disclosure of their fair values is provided below under “Financial Instruments.”

Nonfinancial assets, such as property, plant and equipment, and nonfinancial liabilities are recognized at their carrying amounts in the Company’s balance sheets. GAAP does not permit nonfinancial assets and liabilities to be remeasured at their fair values. However, GAAP requires the remeasurement of such assets and liabilities to their fair values upon the occurrence of certain events, such as the impairment of property, plant and equipment. In addition, if such an event occurs, GAAP requires the disclosure of the fair value of the asset or liability along with other information, including the gain or loss recognized in income in the period the remeasurement occurred.

Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities;

Level 2 - Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; or

Level 3 - Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company did not have any Level 1 or Level 2 assets and liabilities at December 31, 2023, or September 30, 2023. The Derivative liabilities are Level 3 fair value measurements.

The following is a summary of activity of Level 3 liabilities for the period ended December 31, 2023:


Balance - September 30, 2023	$	—
Additions		106,062
Settlements		—
Change in fair value		3,524
Balance - December 31, 2023	$	109,586

During 2023, the Company issued note payable agreements which contain conversion provisions meeting the definition of a derivative liability which therefore require bifurcation. Further, pursuant to the Company’s contract ordering policy, equity linked instruments subsequently issued resulted in derivative liabilities.

At December 31, 2023, the Company estimated the fair value of the conversion feature derivatives embedded in the notes payable based on assumptions used in the Cox-Ross-Rubinstein binomial pricing model using the following inputs: the price of the Company’s common stock of $0.61; risk-free interest rate of 5.50%; expected volatility of the Company’s common stock of 98% based on the historical volatility of the Company’s common stock; exercise price of $0.4659; and terms three months.

Property and Equipment

We recorded property and equipment purchased at cost. We compute depreciation, after equipment is placed in service, using the straight-line method at rates intended to depreciate the cost of assets over their estimated useful lives, which are generally four to ten years. Upon retirement or sale of property and equipment, we will remove the cost of the disposed assets and related accumulated depreciation from the accounts and any resulting gain or loss is credited or charged to ~~selling,~~income ~~general,~~ and ~~administrative~~other expenses. We charge expenditures for normal repairs and maintenance to expense as incurred. We capitalize additions and expenditures for improving or rebuilding existing assets that extend the useful life. Leasehold improvements made either at the inception of the lease or during the lease term will be amortized over the shorter of their economic lives or the lease term including any renewals that are reasonably assured.

Goodwill

~~Goodwill represents~~We ~~the~~evaluate ~~excess~~goodwill offor ~~fair~~impairment ~~value~~annually ~~over~~or ~~identifiable~~more frequently ~~tangible~~when ~~and~~an ~~intangible~~event ~~net~~occurs ~~assets~~or ~~acquired~~circumstances inchange ~~the~~that ~~Scio~~would ~~business~~more ~~combination.~~likely ~~Goodwill is~~than not ~~amortized,~~reduce ~~instead~~the ~~goodwill~~fair isvalue ~~reviewed~~of ~~for~~the ~~impairment~~reporting atunit ~~least~~below its ~~annually,~~carrying oramount. onIn antesting ~~interim~~for ~~basis~~goodwill ~~between~~impairment, ~~annual~~we ~~tests~~may ~~when~~elect ~~events or~~to ~~circumstances~~utilize ~~indicate~~a ~~that~~qualitative assessment to evaluate whether it is more likely than not that the fair value of a reporting unit is less than ~~it’s~~its carrying ~~value~~amount. If our qualitative assessment indicates that ~~The~~goodwill impairment is more likely than not, we perform a two-step impairment test. We test goodwill ~~that~~for ~~arose~~impairment ~~from~~under the ~~Scio~~two-step impairment ~~asset~~test ~~purchase~~by ~~agreement~~first ~~was~~comparing ~~independently~~the ~~valued~~book atvalue ~~$5,413,000~~of asnet assets to the fair value of ~~August~~the 7,reporting ~~2019~~unit. WeIf ~~completed~~the fair value is determined ~~our~~to ~~last~~be ~~annual~~less ~~goodwill~~than ~~impairment~~the ~~test~~book invalue ~~our~~or ~~fourth~~qualitative ~~quarter~~factors ~~for~~indicate ~~the~~that ~~fiscal~~it ~~year~~is ~~ended~~more ~~September~~likely ~~30,~~than ~~2022,~~not ~~and~~that asgoodwill is impaired, a ~~result~~second step is performed to compute the amount of impairment as the ~~annual test~~difference ~~management~~between ~~determined~~the ~~that~~estimated nofair ~~change~~value ~~was~~of ~~needed~~goodwill toand the carrying value. We estimate the fair value of ~~goodwill~~the atreporting ~~September~~units ~~30,~~using ~~2022~~discounted orcash asflows. Forecasts of ~~June~~future 30cash flows are based on our best estimate of future net sales and operating expenses, ~~2023~~based primarily on expected category expansion, pricing, market segment share, and general economic conditions.

8Goodwill represents the excess of fair value over identifiable tangible and intangible net assets acquired in the Scio business combination. Goodwill is not amortized, instead goodwill is reviewed for impairment at least annually, or on an interim basis between annual tests when events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than it’s carrying value. The goodwill that arose from the Scio asset purchase agreement was independently valued at $5,413,000 as of August 7, 2019. We completed our last annual goodwill impairment test in our fourth quarter for the fiscal year ended September 30, 2023, and as a result of the annual test management determined that no change was needed to the carrying value of goodwill at September 30, 2023 or as of December 31, 2023.

Impairment of Long-Lived Assets

We continually monitor events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell. No impairment expense was recognized for the ~~nine~~three months ended ~~June~~December 3031, 2023 and 2022.

Revenue Recognition

We generate revenue from the production and sale of diamonds ~~that have been produced or purchased~~. We recognize revenue according to Accounting Standards Codification 606 – Revenue from Contracts with Customers (“ASC 606”). When the customer obtains control over the promised goods or services, we record revenue in the amount of consideration that we can expect to receive in exchange for those goods. We apply the following five-step model to determine revenue recognition:

●

identification of a contract with a customer;

●

identification of the performance obligations in the contact;

●

determination of the transaction price;

●

allocation of the transaction price to the separate performance obligations; and

●

recognition of revenue when performance obligations are satisfied.

We only apply the five-step model when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. Our contracts contain a single performance obligation (delivery of diamonds), and the entire transaction price is allocated to the single performance obligation. We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Accordingly, we recognize revenue when the customer obtains control of our product, which typically occurs upon delivery of the product. Currently, our credit terms are payment is due within 120 days.9

We only apply the five-step model when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception and once the contract is determined to be within the scope of ASC 606, we assess the goods or services promised within each contract and determine those that are performance obligations and assess whether each promised good or service is distinct. Our contracts contain a single performance obligation (delivery of diamonds), and the entire transaction price is allocated to the single performance obligation. We recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Accordingly, we recognize revenue when the customer obtains control of our product, which typically occurs upon delivery of the product. Our credit terms are currently that payment is due within 90 days.

Shipping costs consists of fees charged to customers for shipping of sold items by the Company. The performance obligation is to ship the item sold as initiated by the customer. The price is set based on the third-party service provider selected to be used by the customer as well as the speed and location of shipment. Revenue is recognized at a point in time when the shipping label is printed.

Disaggregated Revenue Information

We have no disaggregated revenue to report for the ~~nine~~three months ended ~~June~~December 3031, 2023 or 2022. We continue to have one ~~primary~~ wholesale customer.

Advertising Costs

We plan to expense advertising costs as they are incurred. We have incurred no advertising costs to date.

Inventories

WeInventories ~~state~~are ~~inventories~~stated at the lower of cost or net ~~realizable~~ realizable value, inand ~~the~~consist ~~following~~of ~~manners~~various diamond pieces, jewelry pieces, and work in process. WeWork-in-process ~~determine~~and ~~cost~~finished ~~using~~goods included the ~~average~~ cost ~~method~~of onmaterials, ~~all~~direct ~~inventory~~labor ~~generated~~and byoverhead. ~~our~~At ~~manufacturing~~the ~~operations upon~~closing ~~our~~of ~~transition~~each ~~from~~reporting ~~research~~period, ~~and~~the ~~development~~Company inevaluates ~~our~~its ~~manufacturing~~inventory ~~facility~~in order to adjust the ~~full~~inventory ~~production~~for ofobsolete ~~our~~and ~~products~~slow-moving ~~for sale~~items. We also purchase lab-grown diamonds from a vendor who cuts and polishes the majority of our manufactured diamonds as the vendor has access to other lab-grown diamonds that may supplement the inventory needed by the Company or which may be unique in nature which may appeal to our customers or be used in design of our proprietary jewelry line which is under development. We carry the value of these purchased diamonds at the lower of cost or net realizable value. Included in inventory is work in process which states the average cost method of these items at their state of completion at the ~~condensed~~ balance sheet date. At ~~June~~ September 30, 2023, ~~our inventory consisted of finished precious stones in various carat sizes, shapes,~~ and ~~colors that we produced or purchased and work in process. At~~ September 30, 2022, our inventory consisted ~~primarily~~ of finished precious stones in various carat sizes, shapes, and colors ~~which we~~that we produced or purchased and work in process.

Stock-Based Compensation

We account for stock-based compensation at ~~estimated~~ fair value in onaccordance with Accounting Standards Codification 718 – Compensation – Stock Compensation (“ASC 718”), which requires the ~~date~~measurement and recognition of ~~grant~~compensation expense for all share-based payment awards to employees and directors. ~~There~~On ~~were~~October 01, 12022,~~658~~ we adopted ASU 2022-03,~~500~~ ~~shares~~“Fair Value Measurement of ~~common~~Equity ~~stock~~Securities ~~granted~~ Subject to 11Contractual ~~employees~~Sale ~~for~~Restrictions.” Accordingly, ~~their~~stock ~~service~~based tocompensation ~~the~~is ~~Company~~valued ~~during~~using ~~the~~market ~~nine~~value ~~months~~of ~~ended~~our ~~June~~Common ~~30, 2023~~Stock. ~~Each~~Stock-based ~~employee’s~~compensation ~~shares~~is ~~were~~recognized ~~fully~~on a straight ~~vested~~line ~~upon~~basis ~~issuance~~over ~~and~~the ~~expensed~~vesting inperiods ~~full~~and ~~during~~forfeitures ~~the~~are ~~nine~~recognized ~~months~~in ~~ended~~the ~~June~~periods ~~30,~~they ~~2023~~occur. ~~These~~We ~~shares~~account ~~were~~for ~~valued~~common ~~between~~stock ~~$4.00~~purchase ~~and $.80~~option ~~per~~awards ~~share~~by anestimating ~~approximate~~the ~~average~~fair value of ~~$3.50~~each ~~per~~option ~~share,~~award oron anthe ~~aggregate~~grant ofdate ~~$5.7~~using ~~million~~the Black-Scholes option pricing model that uses assumption and estimates that we believe are reasonable.

9We account for stock-based compensation at estimated fair value on the date of grant. There were 178,215 shares of common stock granted to one employee for one year’s services and fully expensed during the three months ended December 31, 2023. These were valued at an aggregate of $106,038.

InThere ~~addition~~were 920,000 shares ~~the~~of ~~Company~~common ~~issued~~stock ~~666,413~~granted ~~warrants~~to ~~upon~~three ~~the~~employees ~~conversion~~for ofone ~~$4.1~~year’s ~~million~~services inof ~~debt.~~each ~~These~~employee ~~warrants~~and ~~were~~fully ~~valued~~expensed atduring ~~$2,038,000~~the ~~using~~three ~~Black-Scholes~~months ~~with~~ended ~~the~~December ~~following~~31, ~~significant terms~~2022. ~~Term~~These ~~5-year,~~were ~~volatility~~valued ~~80%,~~at ~~risk-free~~an ~~interest~~aggregate ~~rate~~of $3%, ~~expected dividend yield 0%~~680,000.

~~There~~The ~~were~~price ~~1,658,500~~per ~~shares~~share ~~granted~~was ~~for~~based ~~employees~~upon ~~valued~~the onmarket ~~average~~closing atprice ~~$3.44~~on ~~per~~the ~~share~~day ~~for~~of ~~which $5~~the grant.7 ~~million~~The ~~was~~grants are fully ~~expensed~~vested ~~during~~and ~~the~~are ~~nine~~recognized ~~months~~upon ~~ended~~the ~~June~~date ~~30,~~of ~~2023~~grant.

The price per share was based upon sales of our common stock near the date of grant. The grants are fully vested and are recognized upon the date of grant.

Concentrations of Credit Risk

Accounts at banks are insured by the Federal Deposit Insurance Corporation, or the FDIC, up to $250,000. As of ~~June~~December 3031, 2023, our bank account balance exceeded the federally insured limit. We mitigate this exposure by using a high credit financial institution. We have one wholesale customer, representing substantially all of our accounts receivable.

Income Taxes

We account for income taxes under the asset and liability method in accordance with Accounting Standards Codification 740 - Income Taxes, or ASC 740. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable amounts in years in which those temporary differences are expected to be recovered or settled. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. We reflect changes in recognition or measurement in the period in which the change in judgment occurs. We currently have substantial net operating loss carryforwards. We have recorded a valuation allowance equal to the net deferred tax assets due to the uncertainty of the ultimate realization of the deferred tax assets.

Contingencies

Certain conditions may exist as of the date the ~~condensed~~ financial statements are issued that may result in a loss to us but will only be resolved when one or more future events occur or fail to occur. We assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to potential unasserted claims that may result in legal proceedings against us, we evaluate the perceived merits of any claims and the perceived merits of the amount of relief sought or expected to be sought therein and determine if any loss is likely.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability is reasonably estimated, the estimated liability would be accrued in our condensed financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of range of possible loss if determinable and material, would be disclosed. There were no known loss contingencies identified as of ~~June~~September 30, 2023. ~~(See NOTE 6 below for additional information)~~

Loss Per Common Share

We calculate basic loss per share using the weighted average number of shares of common stock outstanding during each reporting period. Diluted loss per share includes potentially dilutive financial instruments, such as convertible term notes and related interest. We excluded ~~883~~1,~~132~~064,913 and 1903,~~994,979~~351 shares from the weighted average diluted common shares outstanding for ~~June~~December 3031, 2023 and 2022, respectively, ~~because~~ because their inclusion would have been antidilutive. These shares are what would have been issued if the convertible debt, plus accrued ~~interest~~ interest had converted for each of the ~~nine~~three months ended ~~June~~December 3031, 2023 and 2022.

Recently Issued Accounting Pronouncement

Adopted

In ~~February~~ ~~2016~~August 2020, the FASB issued Accounting Standards Update (“~~ASC~~ASU”) ~~2016~~2020-0206, ~~Leases~~Debt ~~(Topic~~– ~~842).~~Debt ~~The~~with ~~update~~Conversion ~~improves financial~~and ~~reporting~~Other ~~about~~Options ~~leasing~~(Subtopic ~~transactions~~470-20) byand ~~requiring~~Derivatives ~~a lessee to record on the balance sheet the assets~~ and ~~liabilities for~~Hedging ~~the~~– ~~rights~~Contracts ~~and~~in ~~obligations~~Entity’s ~~created~~Own byEquity ~~lease~~(Subtopic ~~terms~~815 of– ~~more~~40) ~~than~~(“ASU ~~12 months~~2020-06”). ~~We adopted~~ ASU ~~2016~~2020-0206 insimplifies the ~~nine months ended June 30,~~accounting ~~2023.~~for Wecertain ~~completed~~financial ~~the~~instruments ~~process~~with characteristics of ~~aggregating~~liabilities and ~~evaluating~~equity, ~~lease~~including ~~arrangements~~convertible instruments and ~~implementing~~contracts ~~new processes during the nine~~on ~~months~~an ~~ended~~entity’s ~~June~~own ~~30, 2023~~equity. AsThe aASU ~~result~~is part of ~~evaluating~~ the ~~impact~~FASB’s ofsimplification ~~adoption~~initiative, ofwhich ~~the~~aims ~~ASC~~to onreduce ~~our~~unnecessary ~~condensed financial statements we~~complexity ~~recognized~~in aUS ~~right-of-use~~GAAP. ~~asset~~The ~~and~~ASU’s ~~lease~~amendments ~~liability~~are oneffective ~~our~~for ~~condensed~~fiscal ~~balance~~years ~~sheet~~beginning ~~for~~after ~~our~~December ~~real~~15, ~~estate~~2023, ~~operating~~and ~~leases.~~interim Atperiods ~~October~~within those 1,fiscal ~~2022~~years. weThe ~~recognized~~Company ais ~~right~~currently ofevaluating ~~use~~the ~~asset~~impact of ~~$1.4~~ASU ~~million,~~2020-06 ~~and~~on aits ~~lease~~financial ~~liability of $1~~statements.~~4 million.~~

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2023-09 (“ASU 2023-09”), Income Taxes, which enhances the transparency of income tax disclosures by expanding annual disclosure requirements related to the rate reconciliation and income taxes paid. The amendments are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The amendments should be applied on a prospective basis. Retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company's disclosures. The new guidance eliminates certain exceptions to the general approach to the income tax accounting model and adds new guidance to reduce the complexity in accounting for income taxes. The guidance will be effective for fiscal years beginning after December 15, 2024 and interim periods within those fiscal years. Early adoption of the amendments is permitted, including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued. We are currently evaluating the impact that the new guidance will have on our condensed financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326),” which replaces the current incurred loss impairment methodology for most financial assets with the current expected credit loss, or CECL, methodology. This guidance would have to be adopted by October 1, 2023. The series of new guidance amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. The guidance should be applied on either a prospective transition or modified-retrospective approach depending on the subtopic. The guidance is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact that the new guidance will have on our condensed financial statements, but since we have yet to recognize revenue, adoption is not anticipated to have a material effect.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The update improves financial reporting about leasing transactions by requiring a lessee to record on the balance sheet the assets and liabilities for the rights and obligations created by lease terms of more than 12 months. We adopted ASU 2016-02 in the three months ended December 31, 2023. We completed the process of aggregating and evaluating lease arrangements and implementing new processes during the three months ended December 31, 2023. As a result of evaluating the impact of adoption of the ASU on our condensed financial statements we recognized a right-of-use asset and lease liability on our balance sheet for our real estate operating leases as of December 31, 2023, we recognized a right of use asset of $1.6 million, and a lease liability of $1.6 million.

NOTE 4 – INVENTORIES

As of ~~June 30~~December 31, 2023 and September 30, ~~2022~~2023, the inventory balances were composed of purchased products carried at the lower of cost or net realizable value, finished products and work in process carried at the value of the costs associated with the manufacturing of the goods. As of ~~June~~December 3031, 2023, finished products and work in process were $~~608~~764,~~500~~986 and $~~537~~691,~~416, respectively~~106. As of ~~September~~December 3031, ~~2022~~2023, finished products and work in process were $26903,~~833~~409 and $651,813, respectively. There was no inventory obsolescence in the periods ended December 31,~~857~~ 2023 and September 30, 2022, respectively.

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment are listed net of the related accumulated depreciation as of ~~June~~December 3031, 2023 and September 30, ~~2022~~2023. As of ~~June~~December 3031, ~~2023.~~ ~~The~~2023, the Company has a deposit on equipment on order in the amount of $1.3 million, which represents approximately 50% of the total ~~purchase~~ purchase price. As the equipment is not yet in service, it is not being depreciated.

Depreciation expense for the ~~nine~~three months ended ~~June~~December 3031, 2023 and 2022 totaled $~~242~~11,~~556~~771 and $~~237~~80,~~352~~852, respectively.

~~Schedule of Property and Equipment~~11

	June 30, 2023			September 30, 2022
Property and equipment- in use	$	1,558,250		$	1,304,039
Less accumulated depreciation		(1,048,243	)		(970,287	)
Net property and equipment- in use		510,007			333,752
Property and equipment- in process		1,352,039			306,250
Total property and equipment, net	$	1,862,046		$	640,002

NOTE 6 – COMMITMENTS & CONTINGENCIES

NOTE 6 – COMMITMENTS AND CONTINGENCIES

Indemnifications

During the normal course of business, we make certain indemnities and commitments under which we may be required to make payments in relation to certain transactions. These may include (i) indemnities to vendors and service providers pertaining to claims based on negligence or willful misconduct; and (ii) indemnities involving the representations and warranties in certain contracts. In addition, under our bylaws we are committed to our directors and officers for providing for payments upon the occurrence of certain prescribed events. The majority of these indemnities and commitments do not provide for any limitation on the maximum potential for future payments that we could be obligated to make. We have not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the estimated fair value of these agreements is minimal. Accordingly, we had no liabilities recorded for these agreements as of ~~June~~December 3031, 2023 and September 30, ~~2022~~2023.

Contingent Consideration

The Company’s contingent consideration liabilities related to certain lenders compliance guidelines are included as a current liability on the Balance Sheet at December 31, 2023 and included herein.

Leases

WeAs ~~are~~the ~~obligated~~Company’s ~~under~~leases agenerally ~~triple-net~~do ~~operating~~not provide an implicit discount rate, the Company uses the estimated collateralized incremental borrowing rate based on information available at the lease commencement ~~for~~date ~~our~~in ~~6,475~~determining ~~square~~the ~~foot~~present ~~manufacturing~~value ~~facility~~of ~~located~~lease payments for use in ~~Greenville~~the calculation of the operating lease liabilities and right-of-use assets. This rate is determined using a portfolio approach based on the risk-adjusted rate of interest and requires estimates and assumptions including credit rating, ~~South~~credit ~~Carolina~~spread, ~~which~~and adjustments for the impact of collateral. The Company believes that this is ~~classified~~the asrate it would have to pay to borrow an ~~operating~~amount equal to the lease payments on a collateralized basis over a similar lease term. ~~The~~Operating lease liabilities ~~terms~~and corresponding right-of-use ~~the~~assets include options to extend lease ~~require~~terms athat ~~payment~~are reasonably certain of ~~approximately~~being ~~$10,000~~exercised. ~~per~~The ~~month,~~Company does ~~which~~not ~~includes~~record ana ~~estimate~~lease liability and corresponding right-of-use asset for ~~utilities,~~leases ~~taxes~~with terms of 12 months or less, and ~~repairs.~~accounts for lease ~~This~~and non-lease ~~expired~~components inas ~~August~~a ~~2023~~single ~~and~~lease ~~was~~component. ~~subsequently~~The ~~renewed~~Company's inlease ~~August~~portfolio ~~2023~~is ~~and~~comprised ~~has~~of operating leases with the lease cost recorded on a ~~new~~straight-line ~~expiration~~basis ~~date~~over ofthe ~~August~~lease ~~2028~~term.

We ~~believe~~are ~~this~~obligated ~~facility~~under ~~will~~a betriple-net ~~adequate~~operating tolease ~~meet~~for our ~~current needs based on the property and equipment currently owned. However~~6,475 our business plan will require additional space, and we will be making plans to expand our building footprint at possible new or additional locations to accommodate additional manufacturing equipment. As part of the initial expansion discussed above, we have entered into a lease for 23,485 square ~~feet~~foot ~~of additional~~ manufacturing ~~space~~facility located in Greenville, South Carolina, ~~expiring in July 2036. In addition, we have a lease~~ ~~for~~which ~~3,414~~is ~~square~~classified ~~feet~~as ofan ~~office~~operating ~~space in Scottsdale, Arizona, expiring in September 2024~~lease. The ~~office~~terms ~~is to facilitate the administration and marketing~~ of ~~expanding~~ the ~~manufacturing~~lease ~~aspect~~require ofa ~~our~~payment ~~Company as well as to administer increased management anticipated in areas~~ of ~~human~~approximately ~~resources~~$10,000 ~~finance,~~per ~~accounting~~month, ~~and~~which ~~financial analysis as well as sales and marketing to manage the growth in the production~~includes ~~output~~an asestimate afor ~~result~~utilities, ~~of the second facility in Greenville~~taxes, ~~South~~and ~~Carolina~~repairs. WeThis ~~intend~~lease toexpires ~~pay~~in ~~for~~August ~~these improvements using a combination of working capital, new debt financing, and equity offerings~~2028.

~~The weighted~~Our ~~average~~business ~~remaining~~plan ~~lease~~will ~~term~~require additional space, and ~~weighted~~we ~~average~~will ~~discount~~be ~~rate~~making plans to expand our building footprint at possible new or additional locations to accommodate additional manufacturing equipment. As part of the initial expansion discussed above, we have entered into a lease for ~~operating~~23,485 ~~leases~~square ~~were~~feet of additional manufacturing space in Greenville, South Carolina, expiring in July 2036. In addition, we have a lease for 3,414 square feet of office space in Scottsdale, Arizona, expiring in September 2024.8 ~~years~~The office is to facilitate the administration and ~~5.0%~~marketing of expanding the manufacturing aspect of our company as well as to administer increased management anticipated in areas of human resources, ~~respectively.~~finance, accounting, and financial ~~The~~analysis ~~operating~~as ~~lease~~well ~~cost~~as ~~for~~sales and marketing to manage the ~~nine~~growth ~~months~~in ~~ended~~the ~~June~~production 30output as a result of the second facility in Greenville, South ~~2023~~Carolina. ~~was~~We ~~approximately~~intend ~~$318~~to pay for these improvements using a combination of working capital,~~587~~ new debt financing, and equity offerings.

The ~~future~~ ~~minimum~~weighted average remaining lease ~~payment~~term ~~required~~and ~~under~~weighted average ~~our~~discount rate for operating leases aswere of4.9 ~~June~~years 30and 80%, respectively. The operating lease cost for the three months ended December 31, 2023 ~~are~~was asapproximately ~~follows:~~$91,000.

The future minimum lease payment required under our leases as of December 31, 2023 are as follows:

2023	$	37,635
2024	$	285,732
2024		157,305
2025		296,032
2025		164,395
2026		299,323
2026		164,395
2027		302,696
2027		164,395
2028		295,988
Thereafter		~~954~~789,~~826~~939
Total undiscounted cash flows		12,~~642~~268,~~951~~288
Less: present value discount (5% per annum)		(305,897	)
Less: present value discount (8% per annum)		672,233
Total lease liabilities	$	1,~~337~~596,~~054~~055

Employment Agreements

We have entered into five separate employment agreements that provide for stock to be issued annually in varying amounts through fiscal 2025. The price per share to be included in employee stock compensation expense will be based upon the fair market value of the stock on the date of grant. The grants are fully vested, pending the service requirement of continued employment.

We also have salary commitments contained in our various employment agreements through fiscal year 2025.

After 2025, one salary continues to increase at 9% per year from its approximately $280,000 2025 base salary.

Additional Compensation

In addition to the above stock commitments, we have agreed to provide certain executive officers with compensation paid in diamonds. These commitments amount to issuing 9.5 carats of diamonds per month through September 2024 and 2.5 carats of diamonds per month through October 2025. For the ~~nine~~three months ended ~~June~~December 3031, 2023 and 2022 this obligation has been accrued at a valuation of $1,000 per carat, which is is based on management’s estimate of the market value of the diamonds.

Litigation

During December 2022, we became a party to a class action filing previously between Scio and a class action investor. We have retained outside counsel specifically for this matter and are working with other defendants named in this matter to increase our chance of prevailing. On February 17, ~~2023~~2022 the Company filed a motion to dismiss the class action in concert with Scio which filed a separate motion to dismiss this class action. Our approach will continue to seek a dismissal on all items related to this legal action. We believe the case is without merit and will defend our position vigorously. Based on the Company’s assessment of a favorable decision by the court no liability has been recorded on our ~~condensed~~ balance sheet at ~~June~~December 3031, 2023.

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.

NOTE 7 – NOTES PAYABLE AND CONVERTIBLE TERM NOTES

~~From~~ On December 15, ~~2022~~2023, ~~through~~we ~~June~~entered ~~30,~~into ~~2023~~a ~~the~~promissory ~~Company converted~~note ~~five~~with ~~notes~~a ofprivate ~~$50,000,~~lender ~~$150,000,~~with ~~$100,000,~~the ~~$100,000~~original ~~and~~balance of $50750,000 ~~out~~plus ofa ~~the~~loan ~~seven separate investor notes totaling an aggregate~~origination fee of $~~850~~50,000 ~~which~~with ~~had~~a ~~origination~~maturity ~~dates~~date ~~ranging~~of ~~from~~June ~~May~~15, to2024. ~~September~~The ~~2019~~Note ~~which~~has ~~contain~~a anfixed interest ~~rate~~payment ofat 7%$9,500 ~~and~~per ~~mature~~month onwith the ~~second~~principal balance ~~anniversary~~due ~~date~~maturity ~~of the respective notes~~date. The ~~notes~~Note ~~were~~has ~~converted~~a ~~into~~stock ~~175,712~~origination ~~shares~~fee of ~~common stock and 18~~150,~~935~~000 shares of common stock ~~for accrued interest~~. The ~~remaining~~principal ~~balances~~balance outstanding on the note at ~~June~~December 3031, 2023, ~~on these convertible term notes~~ was $~~250~~750,000.

WeOn October ~~have~~18, 2023, we entered into a promissory note with a private lender, ~~dated~~for ~~May 14, 2019,~~ with anthe original principal balance of $~~100~~150,000 ~~and~~with ~~an original~~ a maturity date of ~~September~~January 518, ~~2019~~2024. The ~~note~~Note ~~has~~bears ~~been~~a ~~re-negotiated on~~fixed ~~several~~interest ~~occasions~~rate ~~and~~of ~~has~~30,000 ashares ~~current maturity date~~ of ~~December~~common ~~31,~~stock ~~2023.~~with ~~Accrued~~a default interest ~~was~~rate of ~~capped at 46~~50,~~500~~000 shares of ~~the Company’s~~ common stock ~~which~~per ~~were~~month ~~issued~~after toJanuary ~~the private lender on November 29~~18, ~~2023~~2024. The principal ~~balance~~ outstanding onbalance ~~the~~as ~~note~~of atDecember ~~June 30~~31, 2023 ~~and~~ ~~September 30, 2022~~ was $72165,~~500~~443. ~~The note is unsecured~~48.

On ~~May~~September 1814, 2023, we entered into a ~~note~~securities purchase agreement with a ~~private~~ lender with an original principal balance of approximately $~~200~~272,000 and an original maturity date 3012 ~~days~~ months after the effective date. The note contains an interest rate of 108% which is payable according to a schedule of seven monthly amortization payments beginning on March 14, 2024 with final payment and accrued interest due on at maturity along with the outstanding principal balance due on September 14, 2024. The securities purchase agreement contained an original issue discount of approximately $21,800 which is being amortized as interest expense over the turn of the agreement. As an inducement to enter into the note 1033,~~000~~240 shares of the Company’s common stock was issued upon the ~~acceptance~~effective date of this note byto the ~~private~~ lender. The ~~principal~~note also included a 5 year warrant to purchase 16,620 ~~balance~~shares ~~outstanding~~of onthe Company’s common stock at a price of $2.50 per share (“First Warrant”). The Company determined that the fair ~~note~~value of these warrants at the time the agreement was executed to be $9,018 which is being amortized as interest expense over the term of the agreement. A second 5 year warrant to purchase 2,500,000 shares of the Company’s common stock at a price of $.01 per share (“Second Warrant”) was issued to the lender and was viable in the event the Company did not file their quarterly report for the period ending June 30, 2023 by September 13, 2023. The Company determined that the fair value of these warrants at the time the agreement was executed to be $~~200~~2,025,000 which is being amortized as interest expense over the term of the agreement. ~~This~~The note does not provide for prepayment or repayment of the principal balance and ~~accrued~~is ~~interest~~required ~~was~~to ~~paid~~be repaid according to an agreed upon amortization schedule. The note is convertible in full or part at a rate of $2.00 per share. The note is also convertible in ~~July~~part ~~2023~~or in total into common shares of the Company at $2.00 per share. The agreement contains an escrow agreement for 3,500,000 shares of the Company’s common stock to be reserved by the Company’s transfer agent as collateral for the security of the note. The Company has also pledged the majority of its assets as additional security and as part of a security agreement entered into in conjunction with this securities purchase agreement. The principal balance outstanding on the note at December 31, 2024 was $271,739.

On ~~June~~July 231, 2023, we entered into a note with a private lender with an original principal balance of $50250,000 and an original maturity date 3045 days after the effective date. The note contains ana fixed interest rate of ~~15%~~5,000 shares of common stock which is payable at maturity along with the outstanding principal balance. As an inducement to enter into the note 2025,000 shares of the Company’s common stock was issued upon the acceptance of this note by the private lender. On March 22, 2024, an extension was granted effective as of September 30, 2023, with an extension until December 31, 2024 in return for an interest rate of 5,000 shares of common stock per week. The principal balance outstanding on the note at ~~June~~December 3031, 2023 was $50250,000, and as of December 31, 2023, all interest shares have been issued.

On June 69, 2023, we entered into a securities purchase agreement with a lender with an original principal balance of $1,635,000 and an original maturity date of June 9, 2024 (12 months) after the effective date. The note contains an interest rate of 8% which is payable according to a schedule of seven monthly amortization payments beginning on December 9, 2023 with final payment and accrued interest due on at maturity along with the outstanding principal balance due on June 9, 2024. The securities purchase agreement contained an original issue discount of $180,300 which is being amortized as interest expense over the turn of the agreement. As an inducement to enter into the note 200,000 shares of the Company’s common stock was issued upon the effective date of this note to the lender. The note also included a 5 year warrant to purchase 100,000 shares of the Company’s common stock at a price of $2.50 per share. The Company determined that the fair value of these warrants at the time the agreement was executed to be $7680,~~403~~491 which is being amortized as interest expense over the term of the agreement. The note does not provide for prepayment or repayment of the principal balance and is required to be repaid according to an agreed upon amortization schedule. The note is convertible in full or part at a rate of $2.00 per share. The note is also convertible in part or in total into common shares of the Company at $2.00 per share. The agreement contains an escrow agreement for 2,752,000 shares of the Company’s common stock to be reserved by the Company’s transfer agent as collateral for the security of the note. The Company has also pledged the majority of its assets as additional security and as part of a security agreement entered into in conjunction with this securities purchase agreement. The principal balance outstanding on the note at ~~June~~December 3031, 2023 was $1,635,000.

1213

On June 2, 2023, we entered into a note with a private lender with an original principal balance of $50,000 and an original maturity date 30 days after the effective date. The note has been re-negotiated and has a current maturity date of December 31, 2025. The note contains an interest rate of 15% which is payable at maturity along with the outstanding principal balance. As an inducement to enter into the note 20,000 shares of the Company’s common stock was issued upon the acceptance of this note by the private lender. The principal balance outstanding on the note at December 31, 2023 was $55,100.

We have a note with a private lender, dated May 14, 2019, with an original principal balance of $100,000 and an original maturity date of September 5, 2019. The note has been re-negotiated on several occasions with the most recent extension executed December 1, 2022 with a maturity date of December 31, 2024. Accrued interest was capped at 46,500 shares of the Company’s common stock which were issued to the private lender on November 29, 2023. The principal balance outstanding on the note at December 31, 2023 was $72,500. The note is unsecured.

NOTE 8 – CAPITAL STOCK

Our authorized capital consists of ~~100~~110,000,000 shares of common stock with a par value of $0.001 per share and 10,000,000 shares of preferred stock with a par value of $0.001 per share.

As of ~~June~~December 3031, 2023, and ~~2022~~September 30, 2023, we had no shares of preferred stock issued or outstanding.

As of ~~June~~December 3031, 2023, there were 2628,~~017~~569,~~818~~145 shares of common stock issued and ~~25,667,818 shares~~ outstanding. During the ~~nine~~three months ended ~~June~~ ~~30,~~December 31, 2023, we issued 1,353,179 shares of common stock as follows:

2178,~~450,000~~215 shares ~~were~~valued ~~sold~~at ~~to investors for~~ $11106,~~025,000,~~038 ~~before~~were ~~expenses~~granted ofto ~~the~~employees ~~offering~~as ~~in the Company’s IPO~~compensation;

1180,~~332,825~~000 shares were issued tofor ~~note~~$91,200 ~~holder~~for ~~electing~~incentive to ~~convert upon IPO valued at $4,198,399;~~lenders:

~~920~~566,~~000~~964 shares valued at $3464,~~680,000~~031 were ~~granted~~issued tofor ~~employees~~consulting ~~as compensation~~services;

~~481~~30,~~020~~000 shares valued at $16,950 were issued for ~~$2,070,000~~the ~~for~~conversion ~~incentive~~of tonotes ~~lenders~~and accrued interest;

~~350~~18,000 shares ofvalued ~~treasury~~at ~~stock~~$25,000 were ~~purchased~~issued ~~for~~from ~~$1,200,000;~~the sale of stock

~~225~~80,000 ~~shares~~ valued at $~~773~~43,~~000~~700 shares were issued ~~granted~~ to ~~employees~~our board of directors as ~~compensation~~fees; and

~~632~~300,~~500~~000 shares ~~were~~valued ~~issued~~at to$180,000 ~~consultants~~were issued for ~~services~~ownership ~~valued~~in ata ~~$1,559,700;~~strategic entity.

95,758 shares were issued for conversion of notes and accrued interest valued at $279,400;

513,500 shares valued at $1,248,816 were granted to employee as compensation;

75,000 shares valued at $246,150 were granted to board members for services;

2,385,000 shares valued at $2,423,829 were granted to consultants for services;

105,000 shares were issued for conversion of notes and accrued interest valued at $206,440; and

225,000 shares were issued for $240,707 for incentive to lenders.

NOTE 9 – RELATED PARTY

~~Amounts~~We ~~due~~have ~~related~~various ~~parties~~employment oncontracts ~~June 30, 2023 were $0~~ and ~~amounts~~additional ~~due~~compensation toagreements ~~related~~with ~~parties~~members onof ~~September~~the ~~30,~~executive ~~2022 were $558~~team,~~658~~ ~~primarily for~~which ~~non-interest~~are ~~bearing,~~discussed ~~due~~in ~~on demand advances to and from our Company to and from our President and Chief Executive Officer or entities~~Note ~~controlled~~6 by– ~~him~~Commitments.

InWe ~~addition,~~also we have ~~various~~payroll ~~employment~~and ~~contracts~~related ~~and~~liabilities ~~additional~~outstanding ~~compensation~~as ~~agreements~~of ~~with~~December ~~members~~31, of2023 ~~the~~and ~~executive~~September ~~team~~30, ~~which~~2023 that are ~~discussed in~~primarily ~~Note~~owed 6to –our ~~Commitments and Contingencies~~principal officers.

~~We also~~Schedule ~~have~~of ~~payroll~~Related ~~and~~party ~~related~~ liabilities outstanding ~~as of June 30, 2023 and September 30, 2022 that are primarily owed to our principal officers.~~

	December 31, 2023		September 30, 2023
CEO- Payroll and related	$	649,889	$	440,254
CFO- Payroll and related		792,423		675,974
COO- Payroll and related		13,846		13,846
Total Due to related Party - payroll and related	$	1,456,156	$	1,130,074

NOTE 10 – INCOME TAXES

We compute income taxes using the asset and liability method in accordance with FASB ASC Topic 740, Income Taxes. Under the asset and liability method, we determine deferred income tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities and measure them using currently enacted tax rates and laws. We provide a valuation allowance for the amount of deferred tax assets that, based on available evidence, are more likely than not to be realized. Realization of our net operating loss carryforward was not reasonably assured as of ~~June~~December 3031, 2023 and September 30, ~~2022,~~ 2023, and we have recorded a related valuation allowance against deferred tax assets in excess of deferred tax liabilities in the accompanying condensed financial statements.

As of ~~June~~December 3031, 2023 and September 30, ~~2022~~2023, we had federal income tax net operating loss carryforwards. We are subject to limitations ~~existing~~ existing under Internal Revenue Code Section 382 (Change of Control) relating to the availability of the operating loss, therefore utilization of a portion of our net operating loss may be limited in future years.

As of ~~June~~December 3031, 2023 and September 30, ~~2022~~2023 we had no Internal Revenue Service or state tax examinations. Therefore, all periods since ~~inception~~ inception are subject to audit.

NOTE 11 – SUBSEQUENT EVENTS

The Company has issued 2,701,148 shares if it’s common stock from June 30, 2023 through December 29, 2023 the date at which the latest shareholder report was available to consultants for services, employees for services and for the investment in a strategic entity.

On September 14, 2023 we entered into a note with a lender with an original principal balance of $271,739 of which $250,000 is the amount of actual purchase price plus an original issue discount in the amount of $21,739 and to pay interest on the unpaid principal amount at an interest rate of 8% per annum until paid in full. The maturity date is twelve months from the issue date at which time the principal amount and any accrued and unpaid interest and other fees shall be due and payable. The lender has the right at any time to convert all or any portion of the then outstanding principal balance and interest into shares of common stock of the Company at a conversion price of $2.00 per share.

On September 26, 2023 we entered into a note with a lender with an original principal balance of $50,000 and an original maturity date 30 days after the effective date. The note contains interest at a fixed rate of $5,000 until paid in full. In the event of default the note shall bear interest at 5,000 shares of the Company’s common stock per week until paid in full. As an inducement to enter into the note 25,000 shares of the company’s common stock was issued upon the acceptance of this note by the lender. The lender has been granted a continuing security interest in 200,000 shares of common stock of the Company.

We have analyzed our operations subsequent to the condensed balance sheet and determined that there were no other significant subsequent events or transactions that would require recognition or disclosure in the condensed financial statements for the nine months ended June 30, 2023.

NOTE 11 – SUBSEQUENT EVENTS

On July 01, 2024, we entered into a promissory note with a private lender with the original balance of $50,000 with a maturity date of June 30, 2025. The Note has an interest rate of 10% with the principal balance and interest due maturity date. The Note has a stock origination fee of 75,000 shares of common stock.

On June 27, 2024, we entered into a promissory note with a private lender with the original balance of $50,000 with a maturity date of June 27, 2025. The Note has an interest rate of 10% with the principal balance and interest due maturity date. The Note has a stock origination fee of 50,000 shares of common stock.

On May 17, 2024, we entered into a promissory note with a private lender with the original balance of $100,000 with a maturity date of September 17, 2024. The Note has an interest rate of 12% with the principal balance and interest due maturity date. The Note has a stock origination fee of 100,000 shares of common stock.

NOTE 12 – ADJUSTMENT TO OPENING BALANCE – STATEMENT OF STOCKHOLDERS EQUITY

At September 30, 2023, the warrant fair value allocation of $298,839, arising from debt issuance should had been classified as Additional paid-in capital but was recorded as a warrant liability. This adjustment is to correctly reclassify the amount to Additional paid-in capital at October 1, 2023. The Statement of Stockholders Equity includes an adjustment to the opening balance of $298,839 for October 1, 2023.

Management determined the prior period financial statements were not materially misstated; therefore, the Company is not required to notify users that they can no longer rely on the prior period financial statements.

Opening Balance, additional paid-in capital	$	66,372,882
Adjustment		298,839
Adjusted opening balance as of October 1, 2023	$	66,671,721

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~~diamonds ~~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

	For The Three Months Ended						For The Nine Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net Sales	$	290,938		$	617,075		$	1,1,130,994		$	1,101,594
Cost of Revenues		217,844			215,976			397,842			362,576
Gross Margin		73,094			401,099			733,152			739,018
Total Operating Expenses		4,548,894			1,527,638			16,861,634			6,880,457
Loss From Operations		(4,475,800	)		(1,126,539	)		16,128,482	)		(6,141,439	)
Other Expenses		(62,383	)		(610,491	)		(2,333,561	)		(809,805	)
Loss Before Income Taxes	$	(4,538,183	)	$	(1,737,030	)	$	(18,462,043	)	$	(6,951,244	)

The following table presents summarized financial information taken from our statements of operations for the three months ended December 31, 2023 compared with the three months ended December 31, 2022:

The following table presents summarized financial information taken from our condensed statements of operations for the three and nine months ended June 30, 2023 compared to the same period in 2022.

	For the Years Ended December 31,
	2023			2022
Net Sales	$	219,804		$	726,125
Cost of Revenues		286,769			134,846
Gross Profit (Loss)		(66,965	)		591,279

Total operating expenses		1,793,312			7,325,146
Loss from Operations		(1,860,278	)		(6,733,867	)
Other expenses
Interest expense, warrant issuance expense, finance costs- change in derivative		1,168,010			(2,244,046	)
Loss before income taxes	$	(3,028,288	)	$	(8,977,913	)

~~Components of Results of Operations~~16

Net Sales

During the three ~~and nine~~ months ended ~~June~~December 3031, 2023, we had net sales of $~~290~~219,~~938~~804 ~~and $1,130,994 respectively,~~ compared to ~~$617,075~~net ~~and~~sales of $1726,~~101,594 net~~125 ~~sales~~ for the three ~~and nine~~ months ended ~~June 30~~December 31, 2022. We anticipate deriving continuing future revenue from the following business lines:

●

Direct Sales of Diamonds: The sale of diamond gemstones direct to the consumer through our website and the sale of industrial grade diamonds direct to industrial manufacturing companies.

●

Wholesale of Diamonds: The sale of diamonds to wholesalers, distributors, and jewelers.

Cost of ~~Revenues~~Goods Sold

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

Costs of revenues for the three ~~and nine~~ months ended ~~June~~December 3031, 2023, ~~were $217,844~~ and ~~$397,842~~December ~~respectively. Costs of revenues for the three and nine months ended June 30~~31, 2022 were $~~215~~286,~~976~~769 and $~~362~~134,~~576~~846 respectively.

Gross ~~Margin~~loss for the three months ended December 31, 2023, was $66,965 or a gross loss margin on diamond sales of 30.4% for the three months ended December 31, 2023.

Gross profit ~~margin~~ for the three ~~and nine~~ months ended ~~June 30~~December 31, ~~2023~~2022, was $73591,~~094~~279 ~~and~~or ~~$733,152 respectively with~~ a gross profit margin on diamond sales of 2581.14% ~~and 65%~~ for ~~each of those periods, respectively. Gross margin for~~ the three ~~and nine~~ months ended ~~June~~December 3031, 2022~~, was $401,099 and $739,018, respectively with a gross profit margin on diamond sales of 65% and 67% 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.

16Operating expense for the three months ended December 31, 2023, included in the statement of operations was $2.3 million compared to $7.3 million in the comparison to the comparable prior period.

Operating expense for the three and nine months ended June 30, 2023, included in the condensed statements of operations was approximately $4.5 million and $16.9 million, respectively, compared to $1.5 million and $6.9 million in the prior period. These increases in operating expenses for both the three and nine month periods were generally due to the ramping up of its diamond manufacturing operations subsequent to completing its initial public offering in December 2022.

We expect our 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

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

Interest expense was $62207,~~383~~224 ~~and $2,333,561~~ for the three ~~and nine~~ months ended ~~June~~December 3031, 2023, ~~respectively,~~ compared to $~~610,491~~2.2 ~~and~~million ~~$809,805~~ for the three ~~and~~months ~~nine~~ended ~~month~~December ~~periods~~31, ~~of the prior year~~2022. This ~~increase~~decrease in interest expense was due primarily to the ~~warrants~~conversion ~~issued~~of ~~for~~debt ~~notes~~into ~~converted~~common ~~and~~shares ~~partly~~of tostock ~~higher~~during ~~net borrowings and outstanding indebtedness for~~ the ~~nine~~fiscal ~~months~~year ended ~~June~~September 30, 2023, versus the ~~nine~~three months ended ~~June~~December 3031, 2022. ~~The Company had lower interest expense as a result of significantly lower borrowings during the three month period ended June 30, 2023 compared with the three month period in the prior year.~~

Net Loss

Primarily as a result of the above factors we had a net loss of $43.50 million ~~and $18.5 million~~ compared to a net loss of $~~1.7~~9 million ~~and $7.0 million~~ for the three ~~and nine~~ months ended ~~June~~December 3031, 2023, and ~~June~~December 3031, 2022, respectively.

Liquidity and Capital Resources

As of ~~June~~December 3031, 2023, we had $~~0.7~~340,424 ~~million~~ of cash and cash equivalents, ana ~~increase~~decrease of $~~0.6~~3 million from ~~September~~the ~~30,~~prior ~~2022. Changes in cash~~year ~~flows~~comparable ~~are summarized as follows:~~period.

Changes in cash flows are summarized as follows:

Operating Activities

For the ~~nine~~three months ended ~~June~~December 3031, 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, increases to our period end accounts receivable of $~~0.~~5 million, an increase in our inventories of $1.1 million, a decrease in accrued payroll and related of $0.~~7 million ~~along with an offset by the benefit of non-cash expenses for employee stock compensation of $9~~.~~7 million and warrants issued for conversion of $2.0 million.~~

For the ~~nine~~three months ended ~~June~~December 3031, 2022, net cash used in operating activities totaled approximately $1.67 million. This was primarily ~~the~~ the result of net loss of approximately $~~7.0~~9 million ~~offset by the benefit of non-cash expenses for employee stock compensation of $4~~.~~8 million.~~

Investing Activities

During the ~~nine~~three months ended ~~June~~December 3031, 2023, we ~~used~~had ~~$1.5~~no ~~million for~~ investing activities related to purchase of ~~property~~machinery and equipment. ~~During~~ During the ~~nine~~three months ended ~~June~~December 3031, 2022, we used no$1.3 ~~cash~~million for investing activities.

Financing Activities

During the ~~nine~~three months ended ~~June~~December 3031, 2023, net cash provided by financing activities was approximately $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.

During the ~~nine~~three months ended ~~June~~December 3031, 2022, net cash provided by financing activities was approximately $16.34 million. This was primarily the net effect of sale of stock from our IPO.

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 recent 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, ~~2022~~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~~three months ended ~~June~~December 3031, 2023. For disclosure regarding recent accounting pronouncements and the anticipated impact ~~they~~ they will have on our operations, please refer to Note 2 to the ~~condensed~~ financial statements included in our Annual Report on Form 10-K for the year ended September 30, ~~2022~~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~~December 3031, 2023. Based on the evaluation of these disclosure controls ~~and~~ 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~~three months ended ~~June~~December 3031, 2023, and 2022 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~~ during the quarterly period from ~~April~~October 1, 2023 to ~~June~~December 3031, 2023, that have materially affected, or are reasonably likely to ~~materially~~ materially affect, our internal control over financial reporting.

1819

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~During~~We ~~December~~are ~~2022,~~involved wein ~~became~~or asubject ~~party~~ to, aor ~~class~~may ~~action~~become ~~filing~~involved ~~previously~~in ~~between~~or ~~Scio~~subject ~~and~~to, aroutine ~~class~~litigation, ~~action~~claims, ~~investor.~~disputes, Weproceedings, ~~have retained outside counsel specifically for this matter~~ and ~~are working with other defendants named~~ investigations in ~~this~~the ~~matter~~ordinary tocourse ~~increase our chance~~ of ~~prevailing~~business. On ~~February~~While ~~17, 2023~~ the ~~Company~~outcome ~~filed~~of alawsuits ~~motion~~and toother ~~dismiss~~proceedings ~~the~~against ~~class~~us ~~action~~cannot inbe ~~concert~~predicted with ~~Scio which filed a separate motion to dismiss~~certainty, ~~this~~in ~~class~~the ~~action.~~opinion ~~Our~~of ~~approach~~management, ~~will~~individually ~~continue~~or toin ~~seek~~the ~~dismissal~~aggregate, onno ~~all~~such ~~items~~lawsuits ~~related~~are expected to ~~this~~have ~~legal~~a ~~action.~~material Weeffect ~~believe~~on ~~the~~our ~~case is without~~financial ~~merit~~position, ~~and~~results ~~will~~of ~~defend~~operations ~~our~~or ~~position~~cash ~~vigorously~~flows. ~~Based~~We onrecord ~~the~~accruals ~~Company’s~~for ~~assessment~~contingencies ofwhen ait ~~favorable~~is ~~decision~~probable bythat ~~the~~a ~~court no~~ liability ~~has~~ ~~been~~will ~~recorded~~be onincurred, and ~~our~~the ~~balance~~amount ~~sheet~~of atloss ~~June~~can ~~30,~~be ~~2023~~reasonably estimated.

~~Please~~On January 10, 2023, the Company was joined as a defendant to an existing lawsuit ~~reference~~in the ~~Contingencies~~United ~~section~~States District Court for the District of ~~Note~~Nevada 3(case no. 2:22-cv-00256) between Theodorus Strous, a shareholder of ~~our~~Scio Diamond ~~Financial~~Technology ~~Statements~~Corp. ~~for~~(“Scio”), ~~additional~~and ~~disclosure~~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.

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~~110,000,000 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~~December 3031, 2023 that were not previously ~~reported~~ reported in a Current Report on Form 8-K ~~except~~ as follows:

~~We issued 2~~178,~~385,000~~ 215 shares ofvalued ~~our~~at ~~Common~~$106,038 ~~Stock~~were ~~for~~granted ~~consulting~~to ~~services~~employees ~~valued~~as ~~at $2,423,829.~~compensation;

~~We issued 105~~180,000 shares ofwere ~~our~~issued ~~Common~~for ~~Stock~~$91,200 for ~~conversion~~incentive ofto ~~notes and accrued interest with a total value of $206,440.~~lenders:

~~We issued 513~~566,~~500~~ 964 shares ofvalued ~~our~~at ~~Common~~$461,331 ~~Stock~~were issued for ~~employee~~consulting ~~stock grants with a total value of $1,248,816.~~services;

~~We issued 75~~30,000 shares ofvalued ~~our~~at ~~Common~~$16,950 ~~Stock~~were issued for ~~board~~the ~~member~~conversion ~~services~~of ~~with~~notes aand ~~total~~accrued ~~value of $246,150.~~interest;

~~We issued 207~~18,~~792~~ 000 shares ofvalued ~~our~~at ~~Common~~$25,000 ~~Stock~~were ~~for~~issued ~~ownership~~from inthe ~~strategic~~sale ~~entity with a total value~~ of ~~$163,907,234.~~stock

We80,000 ~~issued~~valued ~~225~~at $43,~~000~~700 shares ofwere ~~our~~issued ~~Common Stock as inducement~~ to ~~lenders~~our ~~with~~board aof ~~total~~directors ~~value~~as offees; ~~$240,70.~~and

300,000 shares valued at $180,000 were issued for ownership in a strategic entity.

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

1920

ITEM 6. EXHIBITS

Exhibit No.		Exhibit
31.1*		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for John G. Grdina.
31.2*		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Steven Staehr.
32.1**		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for John G. Grdina.
32.2**		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Steven Staehr.
101.INS*		Inline XBRL Instance Document
99.1*		Temporary Hardship Exemption
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.INS***		Inline XBRL Instance Document
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.SCH***		Inline XBRL Taxonomy Extension Schema Document
101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.CAL***		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.LAB***		Inline XBRL Taxonomy Extension Labels Linkbase Document
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.PRE***		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
101.DEF***		Inline XBRL Taxonomy Extension Definition Linkbase Document
104***		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Filed Herewith.

** Furnished Herewith. *** To be furnished by amendment per Temporary Hardship Exemption under Regulation S-T.

2021

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.

December 29, 2023	By:	/s/ John G. Grdina
August 21, 2024	By:	/s/ John G. Grdina
		John G. Grdina
		Chief Executive Officer

ADAMAS ONE CORP.

December 29, 2023	By:	/s/ Steven Staehr
August 21, 2024	By:	/s/ Steven Staehr
		Steven Staehr
		Chief Financial Officer

2122

Filing Compare · Adamas One Corp.