SEC Filing | Molekule, Inc.

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Filed Pursuant to Rule 424(b)(3)

Registration No. 333-272644

Molekule Group, Inc.

3,519,105 SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE, TO BE ISSUED IN CONNECTION WITH THE PROPOSED MERGER OF AURA SMART AIR LTD. WITH AVATAR MERGER SUB LTD., A WHOLLY OWNED SUBSIDIARY OF MOLEKULE GROUP, INC.

THIS IS NOT A PROXY STATEMENT OR NOTICE OF MEETING.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.

This prospectus of Molekule Group Inc., a Delaware corporation (“Molekule,” “we,” “us,” “our” or the “Company”), relates to shares of Molekule common stock, par value $0.01 per share (“Molekule Common Stock”), to be issued to the holders of ordinary shares, no par value (“Aura Ordinary Shares”), of Aura Smart Air Ltd., a company organized under the laws of the State of Israel (“Aura”), as provided for in the Agreement and Plan of Merger, dated as of February 26, 2023 (the “Merger Agreement”), by and among Molekule, Aura and Avatar Merger Sub Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of Molekule (“Merger Sub”). A copy of the Merger Agreement is attached as Annex A to this prospectus.

Upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the Companies Law 5759-1999 of the State of Israel (together with the rules and regulations thereunder, the “ICL”), at the effective time of the merger contemplated by the Merger Agreement, Merger Sub (as the target company, or Chevrat Ha’Ya’ad) will be merged with and into Aura (as the absorbing company, or HaChevra Ha’Koletet), which shall continue as the surviving corporation of the merger, with Aura thereby becoming a wholly owned subsidiary of Molekule (the “Merger”).

At the effective time of the Merger, upon the terms and subject to the conditions set forth in the Merger Agreement, each Aura Ordinary Share issued and outstanding immediately prior to the effective time of the Merger (other than Aura Ordinary Shares owned by Aura or its subsidiaries (dormant or otherwise)) shall be converted into the right to receive a number of validly issued, fully paid and nonassessable shares of Molekule Common Stock equal to (A) 3,519,105 divided by (B) the aggregate number of issued and outstanding Aura Ordinary Shares as of the closing of the Merger (the “Closing”), in each case without interest (the “Merger Consideration”).

All fractional shares of Molekule Common Stock that would otherwise be issued as part of the Merger Consideration will be rounded down to the nearest whole share of Molekule Common Stock (after aggregating all fractional shares of Molekule Common Stock issuable to such holder).

As of July 11, 2023, the 3,519,105 shares of Molekule Common Stock issuable to the Aura shareholders as Merger Consideration represented approximately 10.35% of the outstanding shares of Molekule Common Stock.

Molekule Common Stock is publicly traded on the Nasdaq Capital Market (“Nasdaq”) under the ticker symbol “MKUL.” Following the effectiveness of the Merger, Molekule Common Stock will also be listed on the Tel Aviv Stock Exchange (the “TASE”), subject to obtaining applicable permits and approvals. We urge you to obtain current market quotations for the Molekule Common Stock.

The Merger Agreement provides that the effective time of the Merger will be upon the issuance by the Registrar of Companies of the State of Israel (the “Companies Registrar”) of a certificate evidencing the Merger in accordance with Section 323(5) of the ICL (such certificate, the “Certificate of Merger” and, such time, the “Effective Time”). The Merger is subject to approval by the holders of Aura Ordinary Shares at a shareholder meeting. The special meeting of the holders of Aura Ordinary Shares will be held five business days after the Registration Statement on Form S-4 (the “Registration Statement”) has been issued a permit by the Israel Securities Authority (“ISA”), at the offices of Aura at 86 Yigal Alon St., Tel Aviv (the special meeting and any adjournments or postponements thereof, the “Aura Special Meeting”). These matters are discussed in greater detail in the notice of shareholders meeting that was issued to Aura shareholders by Aura in accordance with the rules and regulations of the ISA. At the time of the Aura Special Meeting, holders of Aura Ordinary Shares will not know the exact value of the Merger Consideration that they will receive upon the closing of the Merger.

We urge you to read the accompanying prospectus, including Annex A, carefully and in its entirety. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page 17. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger or the other transactions described in this prospectus or the securities to be issued in connection with the Merger or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

The date of this prospectus is July 13, 2023.

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	Page Number
EXPLANATORY NOTE		ii
ABOUT THIS PROSPECTUS		ii
MARKET AND INDUSTRY DATA		iii
TRADEMARKS AND TRADE NAMES		iii
QUESTIONS AND ANSWERS		1
SUMMARY		4
RISK FACTORS		17
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		61
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS GIVING EFFECT TO THE MOLEKULE MERGER		63
INFORMATION ABOUT THE COMPANIES		68
THE MERGER		69
INTERESTS OF MOLEKULE’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER		86
INTERESTS OF AURA’S DIRECTORS AND EXECUTIVE OFFICERS IN THE MERGER		87
THE MERGER AGREEMENT		88
MANAGEMENT OF MOLEKULE		98
COMBINED COMPANY COMPENSATION INFORMATION		103
BUSINESS OF MOLEKULE		108
MOLEKULE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		116
LEGACY MOLEKULE’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		124
PRINCIPAL STOCKHOLDERS OF MOLEKULE		131
PRINCIPAL SHAREHOLDERS OF AURA		134
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		136
DESCRIPTION OF MOLEKULE CAPITAL STOCK		138
COMPARISON OF AURA SHAREHOLDER RIGHTS BEFORE AND AFTER THE MERGER		141
APPRAISAL RIGHTS		149
LEGAL MATTERS		149
EXPERTS		149
WHERE YOU CAN FIND ADDITIONAL INFORMATION		150
INDEX TO FINANCIAL STATEMENTS		F-1
ANNEX A: MERGER AGREEMENT		A-1

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EXPLANATORY NOTE

On January 12, 2023, the Company completed its previously announced acquisition of Molekule, Inc., a Delaware corporation (“Legacy Molekule”), pursuant to the Agreement and Plan of Merger dated as of October 3, 2022 (the “Molekule Merger Agreement”) by and among the Company, Air King Merger Sub Inc. (“Molekule Merger Sub”), a Delaware corporation and direct wholly owned subsidiary of the Company, and Legacy Molekule. Pursuant to the Molekule Merger Agreement, Molekule Merger Sub merged with and into Legacy Molekule, with Legacy Molekule continuing as the surviving entity and a wholly owned subsidiary of the Company (the “Molekule Merger”). In connection with the closing of the Molekule Merger, the Company changed its name from “AeroClean Technologies, Inc.” to “Molekule Group, Inc.”

This prospectus includes certain business and financial information relating to the Company and Legacy Molekule prior to the Molekule Merger, including historical financial statements and results of operations of the Company and Legacy Molekule as of and for each of the two years in the period ended December 31, 2022 and an unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 that gives effect to the Molekule Merger as if it had occurred on January 1, 2022.

All dollar amounts are stated in U.S. dollars unless otherwise stated.

ABOUT THIS PROSPECTUS

This document, which forms part of the Registration Statement filed with the Securities and Exchange Commission (the “SEC”) by Molekule, constitutes a prospectus of Molekule under Section 5 of the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of Molekule Common Stock to be issued to Aura shareholders pursuant to the Merger Agreement.

References to “we,” “us,” “our,” “Molekule” and the “Company” refer to Molekule Group, Inc. (f/k/a AeroClean Technologies, Inc.) together with its subsidiaries prior to or following the Molekule Merger depending on the context. References to “Legacy Molekule” refer to Molekule, Inc. together with its subsidiaries for periods prior to the Molekule Merger. References to “Aura” refer to Aura Smart Air Ltd., a company organized under the laws of the State of Israel, together with its subsidiaries. References to “Merger Sub” refer to Avatar Merger Sub Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of Molekule.

You should rely only on the information contained in this prospectus. Molekule and Aura have not authorized anyone to provide you with information that is different from that contained in this prospectus. This prospectus is dated July 13, 2023, and you should not assume that the information contained in this prospectus is accurate as of any date other than such date unless otherwise specifically provided herein. Neither the delivery of this prospectus to Aura shareholders nor the issuance by Molekule of Molekule Common Stock pursuant to the Merger Agreement will create any implication to the contrary.

This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any securities in any jurisdiction in which or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction. Molekule has supplied all information contained in this prospectus relating to Molekule and Merger Sub, and Aura has supplied all information contained in this prospectus relating to Aura. Molekule and Aura have both contributed to the information related to the Merger contained in this prospectus.

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MARKET AND INDUSTRY DATA

Unless otherwise indicated, information contained in this prospectus concerning the industry and the markets in which Molekule and Aura operate, including their respective general expectations and market position, market opportunity and market size, are based on reports from various sources. In some cases, this prospectus does not expressly refer to the sources from which this data is derived. In that regard, when this prospectus refers to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

Because this information involves a number of assumptions and limitations, you are cautioned not to give undue weight to such information. While we have not independently verified market data and industry forecasts provided by any of these or any other third-party sources referred to in this prospectus, we believe such sources to be reliable and are not aware of any misstatements in such information.

In addition, projections, assumptions and estimates of our future performance and the future performance of the industry in which Molekule and Aura operate are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors” and elsewhere in this prospectus. These and other factors could cause results to differ materially from those expressed in the estimates made by third parties and by us.

TRADEMARKS AND TRADE NAMES

“Pūrgo™,” “SteriDuct™,” “Air Mini+™,” “Air Pro™,” “Air Pro RX™” and related names are trademarks that are owned by Molekule, and “Aura™,” “Ray™” and related names are trademarks that are owned by Aura. Solely for our convenience, trademarks and trade names referred to in this prospectus may appear without the “®” or “™” symbols, but such references are not intended to indicate, in any way, that we or Aura will not assert, to the fullest extent possible under applicable law, our or Aura’s rights or the rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies. Each trademark, trade name or service mark of any other company appearing in this prospectus is the property of its respective holder.

iii

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QUESTIONS AND ANSWERS

The following questions and answers briefly address some of the questions you may have about the Merger, the Merger Agreement and the Aura Special Meeting. They may not include all the information that is important to Aura shareholders. Aura shareholders should carefully read this entire prospectus, including Annex A. Aura shareholders should pay special attention to the sections entitled “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

What is the Merger?

Molekule, Aura and Merger Sub have entered into an Agreement and Plan of Merger, dated as of February 26, 2023 (as the same may be amended from time to time). A copy of the Merger Agreement is attached as Annex A to this prospectus. Under the Merger Agreement, subject to satisfaction or waiver of the conditions set forth in the Merger Agreement and described hereinafter and in accordance with the ICL, Merger Sub will merge with and into Aura, with Aura continuing as the surviving corporation and a wholly owned subsidiary of Molekule. As a result of the Merger, Aura will no longer be a publicly-held company in the State of Israel. Following the Merger, Aura Ordinary Shares will be delisted from the TASE, in accordance with applicable rules and policies of the TASE.

Why am I receiving these materials?

Aura has agreed, subject to approval of the Aura shareholders, to be acquired by Molekule under the terms of the Merger Agreement that are described in this prospectus. At the Aura Special Meeting, Aura will ask its shareholders to consider and vote upon a proposal to approve the Merger Agreement and the transactions contemplated thereby (the “Transactions”), including the Merger (the “Merger Proposal”).

Each Aura Ordinary Share is entitled to one vote on the Merger Proposal. On the record date of the Aura Special Meeting (the close of business in Israel on June 22, 2023) (the “Record Date”), there were 25,227,165 Aura Ordinary Shares issued and outstanding. Approval of the Merger Proposal requires an affirmative vote of a majority of the votes cast by holders of Aura Ordinary Shares, whether cast in person or by proxy (the “Aura Shareholder Approval”).

If the Merger Proposal is approved at the Aura Special Meeting and the other conditions to the consummation of the Merger are satisfied or waived, then, at the consummation of the Merger, Merger Sub will be merged with and into Aura, with Aura surviving the Merger and becoming a wholly owned subsidiary of Molekule. As a result of the Merger, Aura shareholders will receive shares of Molekule Common Stock in exchange for their Aura Ordinary Shares as described below. You are receiving this prospectus because Molekule is registering under the Securities Act the shares of Molekule Common Stock that are the Merger Consideration that will be issued to you upon completion of the Merger.

This prospectus includes important information about the Merger, the Merger Agreement (a copy of which is attached as Annex A to this prospectus) and the shares of Molekule Common Stock to be issued pursuant to the Merger. You should read this information carefully and in its entirety.

However, please be aware that this prospectus is not a proxy statement or notice of meeting and that we are not asking you for a proxy and you are requested not to send us a proxy. Aura will issue to you a notice of the Aura Special Meeting, which will contain important information about the Aura Special Meeting in accordance with the rules and regulations of the ISA.

What will Aura shareholders receive in the Merger?

If the Merger is completed, each Aura Ordinary Share issued and outstanding immediately prior to the Companies Registrar issuing a certificate in accordance with Section 323(5) of the ICL (other than Aura Ordinary Shares owned by Aura or its subsidiaries (dormant or otherwise)) shall be converted into the right to receive a number of validly issued, fully paid and nonassessable shares of Molekule Common Stock equal to (A) 3,519,105 divided by (B) the aggregate number of issued and outstanding Aura Ordinary Shares as of the Closing, in each case without interest.

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What equity stake will former Aura shareholders collectively hold in Molekule immediately following the Merger?

When do Molekule and Aura expect to complete the Merger?

Molekule and Aura are working to complete the Merger as soon as practicable. The Merger is expected to close early in the second half of 2023. Neither Molekule nor Aura can predict, however, the actual date on which the Merger will be completed because it is subject to conditions beyond each company’s control, including obtaining the necessary regulatory approvals.

What are the conditions to completion of the Merger?

The completion of the Merger is subject to various closing conditions as set forth in the Merger Agreement, including Aura obtaining the Aura Shareholder Approval and an Israeli tax ruling regarding withholding tax, the Registration Statement being declared effective by the SEC (and the absence of any stop order by the SEC) and the listing of the Molekule Common Stock on the TASE. In addition, on June 29, 2023, Molekule agreed to waive the satisfaction of its condition to Closing that would have required Aura to have an aggregate cash balance of at least $400,000 at Closing. The Merger Agreement contains customary termination rights for both Molekule and Aura. For more information, please see the section entitled “The Merger Agreement — Conditions to Completion of the Merger.”

What happens if I sell my Aura Ordinary Shares after the Record Date but before the Aura Special Meeting?

The Record Date is earlier than the date of the Aura Special Meeting and earlier than the date that the Merger is expected to be completed. If you sell or otherwise transfer your Aura Ordinary Shares after the Record Date but before the date of the Aura Special Meeting, you will retain your right to vote at the Aura Special Meeting. However, you will not have the right to receive the Merger Consideration to be received by the Aura shareholders in the Merger. In order to receive the Merger Consideration, you must hold your Aura Ordinary Shares through the Effective Time, which occurs upon the issuance of the Certificate of Merger by the Companies Registrar.

Why are Molekule and Aura proposing the Merger?

For information regarding the reasons of the board of directors of Molekule (the “Molekule Board”) for approving the Merger Agreement and the Transactions, see the section entitled “The Merger — Background of the Merger.” For information regarding the reasons of the board of directors of Aura (the “Aura Board”) for approving and recommending approval of the Merger Agreement and the Transactions, see the section entitled “The Merger — Aura’s Reasons for the Merger.”

When and where is the Aura Special Meeting?

The Aura Special Meeting will be held at the offices of Aura five business days after the Registration Statement has been issued a permit by the ISA, at 86 Yigal Alon St., Tel Aviv, 6789116, Israel, subject to any adjournments or postponements thereof.

What are the material U.S. federal income tax consequences of the Merger?

For information regarding the material U.S. federal income tax consequences of the Merger, see the section entitled “The Merger — Material U.S. Federal Income Tax Consequences.”

What are the Israeli tax consequences as a result of the Merger?

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For information regarding the Israeli tax consequences of the Merger, see the section entitled “The Merger — Certain Israeli Tax Consequences of the Merger.”

If I am an Aura shareholder, how will I receive the Merger Consideration to which I will become entitled?

Substantially concurrent with the Effective Time, Molekule will instruct its transfer agent to issue book-entry shares representing the Merger Consideration to the Depositary Trust Company for the account of the Tel Aviv Stock Exchange Clearinghouse (the “TASE CH”). Within approximately two trading days, TASE CH will credit the accounts of its members that hold Aura Ordinary Shares as of the Effective Time with the applicable number of whole shares of Molekule Common Stock. Such members will, in turn, credit the accounts of their respective clients that beneficially own Aura Ordinary Shares as of the Effective Time with the applicable number of shares of Molekule Common Stock.

What happens if the Merger is not completed?

If the Merger is not completed for any reason, Aura shareholders will not receive any consideration for their Aura securities, and Aura will not be acquired by Molekule. If the Merger Agreement is terminated under certain circumstances, Aura may be required to pay Molekule a termination fee as described under the section entitled “The Merger Agreement — Termination of the Merger Agreement; Termination Fee.”

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

Yes. You should read and carefully consider the risk factors set forth in the section entitled “Risk Factors.”

Do I have dissenters’ rights in connection with the Transactions?

No. The ICL does not provide for any statutory dissenters’ rights for a statutory merger.

What will happen to my Aura share-based awards?

Each option to purchase Aura Ordinary Shares under the Aura Smart Air Ltd. Global Share Incentive Plan (2021) and the Israeli and U.S. addendums attached to such plan (the “Aura Incentive Plan” and, each option, an “Aura Stock Option”) that is outstanding and unexercised immediately prior to the Effective Time will be canceled and terminated for no consideration or payment. From and after the Effective Time, neither Molekule nor Aura will be required to deliver Aura Ordinary Shares, other share capital of Aura or other compensation of any kind to any person pursuant to or in settlement of any Aura equity or equity-based awards under the Aura Incentive Plan or otherwise, and the Aura Incentive Plan will thereupon terminate. Notwithstanding the foregoing, Molekule may, in its sole discretion from time to time following the Effective Time, grant the right to receive an award of restricted stock units (“Molekule RSUs” and, each such award, a “Molekule RSU Award”) under the Molekule Group, Inc. 2021 Incentive Award Plan (the “Molekule Incentive Plan”) relating to shares of Molekule Common Stock to certain affiliates of Aura on terms set forth in the definitive documents relating to each such Molekule RSU Award.

Whom do I contact if I have any other questions?

If you have additional questions about the Merger or need additional copies of the prospectus, please contact Molekule at Molekule Group, Inc., 10455 Riverside Drive, Palm Beach Gardens, FL 33410 or by calling (833) 652-5326.

Where can I find more information about Molekule and Aura?

You can find more information about Molekule and Aura from the various sources described under the section entitled “Where You Can Find Additional Information.”

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SUMMARY

This summary highlights selected information contained in this prospectus and does not contain all the information that may be important to you. We urge you to read carefully this prospectus in its entirety, including Annex A.

The Parties

Molekule Group, Inc.

Molekule is a pathogen elimination technology company on a mission to keep work, play and life going by improving indoor air quality (“IAQ”). We have the largest range of proprietary and patented, U.S. Food & Drug Administration (“FDA”)-cleared air purification devices to address the rapidly growing global air purification market. Our air hygiene product, Pūrgo™ (pure-go), is an FDA 510(k) cleared, Class II medical device that provides continuous air filtration, sanitization and supplemental ventilation solutions with technology that can be applied in any indoor space, including in hospitals, offices and even in elevators. Pūrgo™ products feature SteriDuct™, a proprietary germicidal UV-C technology. In addition, our Air Pro and Air Mini+ air purifiers leverage a photoelectrochemical oxidation (“PECO”) technology that can destroy viruses, bacteria, mold, allergens, volatile organic compounds (“VOCs”), chemicals and more from the air. Our purpose is simple: to never stop innovating solutions that keep people healthy and safe, so life never stops. Shares of Molekule Common Stock are traded on Nasdaq under the symbol “MKUL.” Molekule’s principal executive offices are located at 10455 Riverside Drive, Palm Beach Gardens, Florida 33410, and its telephone number is (833) 652-5326.

Aura Smart Air Ltd.

Aura’s award-winning patented smart air technology platform monitors and purifies the air in hospitals, schools, businesses, hotels, restaurants, buses and nursing homes in more than 87 countries around the world. Its unique four-stage purification process is scientifically proven to capture and kill 99.9% of viruses, bacteria, germs and allergens. With offices in Israel, India and the United States, Aura’s clients and partners include leading global organizations such as the Detroit Pistons, Florida Agricultural and Mechanical University, Delos and the New Jersey Hospital Association. It also counts some of the largest school districts in the United States as clients. Aura is an Israeli public company. For the year ended December 31, 2022, Aura had revenue of $5.6 million. Aura Ordinary Shares are listed on the TASE. Aura’s principal executive offices are located at 86 Yigal Alon St., Tel Aviv, 6789116, Israel, and its telephone number is +972-52-583-1126.

Avatar Merger Sub Ltd.

Merger Sub, a wholly owned subsidiary of Molekule, is a company organized under the laws of the State of Israel that was formed on February 13, 2023 for the sole purpose of effecting the Merger. Merger Sub has not conducted any activities other than those incidental to its formation and the matters contemplated by the Merger Agreement. In the Merger, Merger Sub will be merged with and into Aura, with Aura surviving as a wholly owned subsidiary of Molekule, and the separate existence of Merger Sub will cease. Merger Sub’s principal executive offices are located at 10455 Riverside Drive, Palm Beach Gardens, Florida 33410, and its telephone number is (833) 652-5326.

The Merger

The terms and conditions of the Merger are contained in the Merger Agreement, a copy of which is attached as Annex A to this prospectus and is incorporated by reference into this prospectus. We encourage you to read the Merger Agreement carefully and in its entirety, as it is the legal document that governs the Merger. The description of the Merger Agreement in this section and elsewhere in this prospectus is qualified in its entirety by reference to the complete text of the Merger Agreement.

On February 26, 2023, Molekule, Aura and Merger Sub entered into the Merger Agreement, which provides that, subject to the terms and conditions of the Merger Agreement and in accordance with the

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ICL, Merger Sub will merge with and into Aura, with Aura continuing as the surviving corporation and a wholly owned subsidiary of Molekule.

In addition, in connection with entering into the Merger Agreement, Molekule and Aura entered into a Technology Collaboration Agreement, dated February 26, 2023 (the “Technology Collaboration Agreement”) and a Co-Distribution Agreement, dated February 26, 2023 (the “Co-Distribution Agreement”). Under the Technology Collaboration Agreement, Molekule paid $250,000 to Aura for a perpetual license to Aura’s Background Intellectual Property (Background IP) and other Intellectual Property (each as defined in the Technology Collaboration Agreement) owned or controlled by Aura for use in, amongst other items, selling Molekule products and services. Additionally, under the Technology Collaboration Agreement, which became effective in February 2023 upon signing, Molekule agreed to pay Aura $68,182 each month for 12 months after the effective date of the agreement, for services as part of Molekule’s collaboration with Aura on the statement of work specified in the agreement. The objectives of the statement of work include onboarding Molekule devices onto the Aura platform, sending and receiving data to the platform and implementing various internet of things and other Aura technologies into the Company’s devices and software.

Merger Consideration

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

Treatment of Aura Equity Awards

Each Aura Stock Option that is outstanding and unexercised immediately prior to the Effective Time will be canceled and terminated for no consideration or payment. From and after the Effective Time, neither Molekule nor Aura will be required to deliver Aura Ordinary Shares, other share capital of Aura or other compensation of any kind to any person pursuant to or in settlement of any Aura equity or equity-based awards under the Aura Incentive Plan or otherwise, and the Aura Incentive Plan will thereupon terminate. Notwithstanding the foregoing, Molekule may, in its sole discretion from time to time following the Effective Time, grant the right to receive Molekule RSU Awards relating to shares of Molekule Common Stock to certain affiliates of Aura on terms set forth in the definitive documents relating to each such Molekule RSU Award. See the section entitled “The Merger Agreement — Treatment of Aura Equity Awards.”

Aura’s Reasons for the Merger

The Aura Board recommends that Aura shareholders vote in favor of the Merger Agreement, the Merger and the Transactions. For a discussion of the factors that the Aura Board considered in determining to recommend the approval of the Merger Agreement, the Merger and the Transactions, see the section entitled “The Merger — Aura’s Reasons for the Merger.”

Conditions to Completion of the Merger

In addition to the approval of the Merger Proposal by Aura shareholders, each party’s obligation to complete the Merger is also subject to the satisfaction or waiver (if legally permitted in writing) of certain

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other conditions, including the effectiveness of the Registration Statement (and the absence of any stop order by the SEC), approval of the listing on Nasdaq of the Molekule Common Stock to be used for the Merger Consideration, the absence of an injunction or law prohibiting the consummation of the Merger, at least 50 days having elapsed after the filing of the Merger Proposal with the Companies Registrar and at least 30 days having elapsed after the Aura Special Meeting, the approval of the ISA and the TASE for the dual listing of Molekule Common Stock on the TASE having been obtained, an Israeli tax ruling having been issued and in full force and effect, a FIRPTA certificate having been obtained from Molekule, the lock-up agreements being in full force and effect, the approval of the Israel Innovation Authority (the “IIA”) having been obtained, the accuracy of the representations and warranties of the parties under the Merger Agreement (subject to the material adverse effect and other materiality standards set forth in the Merger Agreement), the performance by the parties of their respective covenants and obligations under the Merger Agreement in all material respects and delivery of officer’s certificates by the parties certifying satisfaction of certain of the conditions described above.

In addition, Silicon Valley Bank (“SVB”) shall have delivered to Molekule a written consent to the Transactions with respect to Molekule’s debt agreements with SVB (the “Molekule Lender Consent”) and Bank Mizrahi-Tefahot Ltd. (“Bank Mizrahi”) shall have delivered to Aura a written consent to the Transactions with respect to Aura’s loan agreement with Bank Mizrahi (the “Aura Lender Consent” and, together with the Molekule Lender Consent, the “Lender Consents”), and each of the Lender Consents shall be in full force and effect without any amendments having been made.

On June 29, 2023, Molekule agreed to waive the satisfaction of its condition to Closing contained in the Merger Agreement which would have required Aura to have an aggregate cash balance of at least $400,000 on the date of the Closing (the “Closing Date”).

The parties expect to complete the Merger after all of the conditions to the Merger in the Merger Agreement are satisfied or waived, including after Aura receives the Aura Shareholder Approval. For a more complete description of the conditions to the Merger, see the section entitled “The Merger Agreement — Conditions to Completion of the Merger.”

Timing of the Merger

The Merger is expected to close early in the second half of 2023. Neither Molekule nor Aura can predict when the Merger will be completed because it is subject to conditions beyond each company’s control. For a more complete description of the conditions to the Merger, see the section entitled “The Merger Agreement — Conditions to Completion of the Merger.”

Termination of the Merger Agreement; Termination Fee

The Merger Agreement may be terminated at any time prior to the Effective Time as follows:

(a)

by mutual written consent of Molekule and Aura;

(b)

by either Molekule or Aura:

(i)

if the Closing has not occurred on or before 5:00 p.m. Israel Standard Time on September 30, 2023 (the “Outside Date”);

(ii)

if a governmental authority shall have enacted, issued, promulgated, enforced or entered any law or governmental order that has become final and non-appealable, and that permanently restrains, enjoins or otherwise prohibits the Transactions; or

(iii)

if the Aura Shareholder Approval shall not have been obtained upon a vote taken thereon at the Aura Special Meeting duly convened therefor or at any adjournment or postponement thereof;

(c)

by Molekule:

(i)

upon certain material and uncured breaches of the terms of the Merger Agreement by Aura;

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(ii)

at any time prior to the receipt of the Aura Shareholder Approval, if Aura has breached its obligations described under “The Merger Agreement — No Solicitation” or “— Aura Board Recommendation” (this termination right being referred to as the “No Solicitation Termination Right”); or

(iii)

at any time prior to the Aura Shareholder Approval, if (A) the Aura Board makes an Adverse Recommendation Change (as defined under “The Merger Agreement — Aura Board Recommendation”) or (2) at any time after an Aura acquisition proposal is publicly announced or becomes generally known to the public, Aura shall have failed to publicly reaffirm the Aura Board’s recommendation in favor of the Merger within 10 business days after receipt of a written request from Molekule to do so (this termination right being referred to as the “Recommendation Change Termination Right”); or

(d)

by Aura:

(i)

upon certain material and uncured breaches of the terms of the Merger Agreement by Molekule or Merger Sub; or

(ii)

prior to the Aura Shareholder Approval in order for Aura to enter into a definitive agreement with respect to a superior proposal, as described in the section entitled “The Merger Agreement — Aura Board Recommendation”; provided that, as a condition to the effectiveness of such termination, Aura pays to Molekule the Termination Fee (as defined below) (this termination right is referred to as the “Superior Proposal Termination Right”).

In the event of termination of the Merger Agreement under certain circumstances, a termination fee in the amount of $330,000 may be payable by Aura to Molekule (the “Termination Fee”). For a more complete description of each party’s termination rights and the related Termination Fee obligations, see the section entitled “The Merger Agreement — Termination of the Merger Agreement; Termination Fee.”

No Appraisal Rights for Aura Shareholders

Under Israeli law, Aura shareholders are not entitled to statutory appraisal rights in connection with the Merger. For more information, see the section entitled “Appraisal Rights.”

Restrictions on Sales of Shares of Molekule Common Stock

The Aura shareholders will be prohibited from transferring the shares of Molekule Common Stock that they receive as Merger Consideration for one year following the Closing Date, subject to customary exceptions. The Molekule Board may release some or all of the shares from these provisions at any time in its discretion.

Treatment of Indebtedness of Aura

Aura is party to a loan agreement with Bank Mizrahi consisting of a short-term line of credit and a term loan. As a condition to the Aura Lender Consent, the short-term line of credit was reduced from a maximum of $2.0 million to $1.0 million and $1.3 million of the term loan was repaid by Aura, reducing the principal amount of the term loan to $2.7 million. As a further condition to the Aura Lender Consent, Molekule agreed to provide an unsecured guarantee of Aura’s repayment obligations under the loan agreement up to a maximum amount of $3.38 million, to be effective upon the Closing. Effective upon the Closing, the term loan will be designated as a new term loan bearing interest at the monthly Term rate based on the Secured Overnight Financing Rate (“Term SOFR”) plus 7.75%, but insofar as there are changes in Bank Mizrahi’s borrowing costs, Bank Mizrahi will have the right to increase such interest rate. Principal on the new term loan will be payable in 24 equal monthly installments commencing at the end of the 36-month period following the Closing. Interest on the new term loan is payable monthly commencing one month from the Closing. Molekule’s guarantee of Aura’s obligations under the loan agreement will be subordinate to Molekule’s payment obligations under its debt agreements with SVB.

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Material U.S. Federal Income Tax Consequences

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

With respect to current Aura shareholders, the parties intend the Merger to be treated as a tax-free reorganization for U.S. federal income tax purposes. Provided the Merger so qualifies, subject to the application of the “passive foreign investment company” (“PFIC”) rules, Aura shareholders will generally not recognize any gain or loss for U.S. federal income tax purposes on the exchange of their Aura Ordinary Shares for shares of Molekule Common Stock in the Merger. Notwithstanding the foregoing, the completion of the Merger is not conditioned upon the Merger qualifying for the intended tax treatment, and no ruling from the Internal Revenue Service (the “IRS”) or opinion of counsel will be sought regarding the U.S. federal income tax characterization of the Merger, and no assurance can be made as to whether the Merger will be tax-free for U.S. federal income tax purposes. In addition, if Aura is or was a PFIC for any taxable year in which an Aura shareholder that is a U.S. Holder (as defined herein) owned Aura Ordinary Shares, such Aura shareholder would generally be required to recognize gain (but not loss) in respect of its exchange of its Aura Ordinary Shares for shares of Molekule Common Stock regardless of whether the Merger is treated as a reorganization for U.S. federal income tax purposes, and the taxation of such gain would generally be subject certain adverse rules. See the section entitled “The Merger — Material U.S. Federal Income Tax Consequences — U.S. Federal Income Tax Characterization of the Merger — Passive Foreign Investment Company Rules.”

The U.S federal income tax consequences to Aura shareholders of the Merger may depend upon a particular Aura shareholder’s own situation. In addition, Aura shareholders may be subject to U.S. federal non-income, state, local or foreign tax laws that are not discussed in this prospectus. Aura shareholders should therefore consult with their own tax advisors for a full understanding of the tax consequences of the Merger. See the section entitled “The Merger — Material U.S. Federal Income Tax Consequences” for further discussion.

Certain Israeli Tax Consequences of the Merger

The following description is not intended to constitute a complete analysis of all Israeli tax consequences to Aura shareholders relating to the Merger. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular person in light of his or her personal circumstances. The discussion should not be construed as legal or professional tax advice and does not cover all possible tax considerations.

Generally, the exchange of Aura Ordinary Shares for the Merger Consideration would be treated as a sale and subject to Israeli tax both for Israeli and non-Israeli resident Aura shareholders. However, certain relief or exemptions may be available under Israeli law. Israeli law generally imposes capital gains tax on the real capital gain from the sale of any capital assets by residents of Israel, as defined for Israeli tax purposes, and on the sale of capital assets located in Israel, including shares of Israeli companies by non-residents of Israel, unless a specific exemption is available or a tax treaty between Israel and the shareholder’s country of residence provides otherwise. Israeli law distinguishes between real capital gain and inflationary surplus. The real capital gain is the excess of the total capital gain over the inflationary surplus. You should consult your own tax advisor as to the method you should use to determine the inflationary surplus.

Generally, the capital gains tax rate applicable to the real capital gain is 25% for individuals. If such individual is holding or is entitled to purchase, directly or indirectly, alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, at least 10% of (i) the voting rights of Aura, (ii) the rights to receive Aura’s profits or its assets upon liquidation, (iii) the rights to appoint managers or directors or (iv) the rights to instruct any other person to do any of the foregoing (a “Major Shareholder”) on the date of sale or on any date falling within the 12-month period preceding that date of sale, such Major Shareholder would be subject to Israeli capital gains tax at the rate of 30%. The actual capital gains tax rates that may apply to individual Aura shareholders on the sale of Aura Ordinary Shares (which may be effectively higher or lower than the rates mentioned above) are subject also to various factors, including inter alia, the date on which the shares were purchased, whether the shares are held through a nominee company or by the shareholder, the identity of the shareholder and certain tax elections that may have been made in the past by the shareholder. In general, companies are subject to the corporate tax rate on

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real capital gains derived from the sale of shares at the rate of 23% in 2023. Due to certain provisions of the Israeli Tax Ordinance (the “ITO”), the actual effective capital gains tax applicable to certain companies may be different than that specified above.

Individual and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable to “business income,” currently 23% for companies and a marginal tax rate of up to 47% for individuals, plus an additional tax of 3% that is imposed on individuals whose annual taxable income exceeds a certain threshold (NIS 698,280 for 2023), which will be referred to as “excess tax.”

Pursuant to Israeli tax law, and subject to certain provisions of the ITO, non-Israeli residents (individuals or corporations) will generally be exempt from Israeli capital gains tax on the sale of Aura Ordinary Shares that were acquired in or after Aura’s initial public offering on the TASE. However, non-Israeli corporations will not be entitled to the foregoing exemption if Israeli residents: (i) have a controlling interest of more than 25% in such non-Israeli corporation; or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.

Aura is seeking a tax ruling from the ITA with respect to: (i) a full deferral of the obligation of Aura shareholders that generally hold less than 5% of the outstanding Aura Ordinary Shares to pay Israeli tax on the Merger Consideration; and (ii) a limited deferral of the obligation of Aura shareholders that hold 5% or more of the outstanding Aura Ordinary Shares (and elect to participate in such ruling), viz., a deferral in respect of 50% of their Merger Consideration for a period of two years and in respect of the remaining 50% of their Merger Consideration for a period of four years, all subject to the conditions to be set forth in such ruling. The application for the tax ruling includes a request for an arrangement to be applied with respect to shares and equity awards granted to employees or services providers that are subject to tax pursuant to Section 102 or 3(i) of the ITO, all subject to statutory or other customary conditions, obligations and restrictions regularly associated with such a ruling to be included within the ruling. Obtaining an Israeli tax ruling is a closing condition to the consummation of the Merger. There can be no assurance that such tax ruling will be granted before the Closing or at all or that, if obtained, such tax ruling will be granted under the conditions requested by Aura.

Absent receipt by Aura of an applicable tax ruling from the ITA prior to the Closing, if the parties elect to proceed with the Merger, the holders of Aura Ordinary Shares (excluding shares subject to Section 102 of the ITO) will be subject to Israeli capital gains tax in connection with the Merger, the Aura shareholders will be subject to Israeli withholding tax at the rate of 25% (for individuals) and 23% (for corporations) on the Merger Consideration (unless the shareholder obtains an individual certificate of exemption or a reduced tax rate from the ITA, as described below) and, since there is no cash payment as part of the Merger, Molekule (or an exchange agent) will make any payments only after (i) the payment recipient has satisfied its Israeli tax obligation to the sole satisfaction of Molekule (or the exchange agent) or (ii) shares of Molekule Common Stock (out of the Merger Consideration) are sold to the extent necessary to satisfy the full amount of Israeli tax due.

Regardless of whether Aura obtains the requested tax ruling from the ITA, any Aura shareholder who believes that it is entitled to an exemption from withholding tax (or entitled to a reduced tax rate) may separately apply to the ITA to obtain a certificate of exemption from withholding or an individual tax ruling providing for no withholding or withholding at a reduced tax rate and submit such certificate of exemption or ruling to Molekule prior to receiving the Merger Consideration and at least five business days prior to the date that is 180 days following the Closing Date. If Molekule (or an exchange agent) does not receive a valid exemption certificate or tax ruling providing for a full exemption from withholding tax (in form and substance reasonably acceptable to Molekule) prior to delivering the Merger Consideration and at least five business days prior to the date that is 180 days following the Closing Date, since there is no cash component in the Merger Consideration, Molekule (or the exchange agent) will make any payments only after (i) the payment recipient has satisfied its Israeli tax obligation to the sole satisfaction of Molekule (or the

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exchange agent) or (ii) shares of Molekule Common Stock (out of the Merger Consideration) are sold to the extent necessary to satisfy the full amount of Israeli tax due.

For a more complete description of the Israeli tax consequences of the Merger, see the section entitled “The Merger — Certain Israeli Tax Consequences of the Merger.”

Accounting Treatment

Molekule prepares its financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Merger will be accounted for using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Molekule will be treated as the acquiror for accounting purposes.

Summary Risk Factors

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

Risks Related to the Merger

•

If Molekule and Aura are unable to complete the Merger, in a timely manner or at all, each company’s business and share price may be adversely affected.

•

The regulatory approvals required in connection with the Merger may not be obtained or may contain materially burdensome conditions.

•

Market prices for shares of Molekule Common Stock following the completion of the Merger may be affected by factors different from, or in addition to, those that historically have affected or currently affect the market prices of shares of Molekule Common Stock or the Aura Ordinary Shares.

•

Following the Merger, the Molekule Common Stock will be listed for trading on more than one stock exchange, and this may result in price variations.

•

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

•

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

•

Molekule, Aura and the combined company may be subject to litigation in connection with the Merger.

•

The rights of holders of Aura Ordinary Shares will change as a result of the Merger.

•

If it is determined the Merger does not qualify as a tax-free “reorganization” for U.S. federal income tax purposes, U.S. Holders of Aura Ordinary Shares will generally recognize capital gain or loss as a result of the Merger.

•

Even if the Merger qualifies as a “reorganization” under Section 368(a) of the Code, a U.S. Holder may still recognize gain as a result of the Merger if Aura is or was classified as a “passive foreign investment company” for any taxable year during which a U.S. Holder held Aura Ordinary Shares.

Risks Related to the Combined Company

•

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

•

Molekule’s audited consolidated financial statements include a note regarding substantial doubt about its ability to continue as a going concern.

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•

The combined company’s significant indebtedness will expose the combined company to increased costs from rising interest rates and require substantial cash to service.

•

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

•

The combined company may fail to realize the anticipated benefits of the Merger and the Molekule Merger.

•

The failure to successfully integrate the businesses and operations of Molekule, Legacy Molekule and Aura in the expected time frame may adversely affect the combined company’s future results.

•

Covenants contained in the agreements that will govern the combined company’s indebtedness impose restrictions on us and certain of our subsidiaries that may affect their ability to operate their businesses.

•

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

•

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

•

Combined company stockholders may experience dilution in the future.

•

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

•

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

•

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

•

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

•

Following the completion of the Merger, our exposure to fluctuations in foreign currency exchange rates will be increased.

In addition, Molekule and Aura face other business, financial, operational and legal risks and uncertainties, which are disclosed in the section entitled “Risk Factors.”

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SUMMARY HISTORICAL FINANCIAL DATA

Molekule

The following table presents summary historical financial data for the periods indicated below. Molekule derived the summary historical statement of operations data for the years ended December 31, 2022 and 2021 and the balance sheet data as of December 31, 2022 from its audited consolidated financial statements, which are included elsewhere herein.

The statement of operations data for the three months ended March 31, 2023 and 2022 and the balance sheet data as of March 31, 2023 have been derived from Molekule’s unaudited condensed consolidated financial statements, which are included elsewhere herein. The unaudited condensed consolidated financial statements were prepared on the same basis as Molekule’s audited consolidated financial statements. In Molekule’s opinion, such financial statements include all adjustments, consisting of normal recurring adjustments, that Molekule considers necessary for a fair presentation of the financial information for those periods. The Molekule summary historical financial data set forth below are not necessarily indicative of Molekule’s future results.

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

	Three Months Ended March 31,						Year Ended December 31,
	2023			2022			2022			2021
Operating Data:
Product revenues		$	8,349,422		$	6,733		$	227,186		$	616,511
Cost of sales			(4,674,259)			(3,764)			(112,559)			(338,896)
Total operating expenses			13,909,393			2,673,707			17,407,813			8,521,360
Net loss			(9,933,406)			(2,577,964)			(6,168,931)			(7,923,607)

	As of March 31, 2023			As of December 31, 2022
Balance Sheet Data:
Cash		$	7,285,691		$	22,062,657
Total assets			128,483,883			29,158,886
Total liabilities			64,745,290			9,455,684
Total stockholders’ equity			63,738,593			19,703,202

Legacy Molekule

The following table presents summary historical financial data for the periods indicated below. We derived the summary historical statement of operations data for the years ended December 31, 2022 and 2021 and the balance sheet data as of December 31, 2022 from Legacy Molekule’s audited consolidated financial statements, which are included elsewhere herein. The Legacy Molekule summary historical financial data set forth below are not necessarily indicative of Molekule’s future results.

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

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	Years Ended December 31,
	2022			2021
Operating Data:
Net revenue		$	48,028,194		$	76,052,125
Cost of revenue			(32,476,891)			(51,508,445)
Total operating expenses			48,337,571			86,543,572
Total other income (expense)			31,234,037			(2,152,575)
Net loss			(1,552,231)			(64,152,467)

	As of December 31, 2022
Balance Sheet Data:
Cash and cash equivalents		$	2,371,556
Total assets			52,324,757
Total liabilities			62,585,923
Total redeemable convertible preferred stock			16,952,459
Total stockholders’ deficit			(27,213,625)

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION GIVING EFFECT TO THE MOLEKULE MERGER

The following summary unaudited pro forma condensed combined statement of operations for the year ended December 31, 2022 is derived from Molekule’s and Legacy Molekule’s audited historical financial statements as of and for the year ended December 31, 2022. The unaudited pro forma condensed combined statement of operations data give effect to the Molekule Merger as if it had occurred on January 1, 2022. The unaudited pro forma condensed combined statement of operations below does not give effect to the Merger with Aura.

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

	Year Ended December 31, 2022
Statement of Operations Data:
Product revenue		$	48,255,380
Cost of sales			32,589,450
Gross profit			15,665,931
Operating expenses:
Selling, general and administrative			64,079,328
Research and development			2,655,758
Total operating expenses			66,735,086
Operating loss			(51,069,155)
Change in fair value of warrant liability			(10,623,000)
Other income (expense):
Other income			35,510,107
Other expense			(159,645)
Interest expense			(4,116,425)
Total other income (expense)			31,234,037
Loss before income tax benefit			(9,212,118)
Income tax benefit			(501,254)
Net loss		$	(8,710,864)
Net loss per share-basic		$	(0.29)
Weighted-average common shares outstanding-basic and diluted			30,107,567

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COMPARATIVE MARKET PRICE AND DIVIDEND
INFORMATION FOR MOLEKULE AND AURA

Molekule Market Price and Dividend Information

Molekule Common Stock is currently listed on Nasdaq under the ticker symbol “MKUL.” The following table sets forth, for the calendar quarters indicated, the quarterly high and low bid information for Molekule Common Stock on Nasdaq. Molekule’s fiscal year ends on December 31.

	High ($)		Low ($)		Dividend ($)
2023
Second Quarter (through July 11, 2023)		2.78		1.29		N/A
First Quarter		3.55		1.38		N/A
2022
Fourth Quarter		5.98		2.47		N/A
Third Quarter		16.18		2.44		N/A
Second Quarter		23.70		1.76		N/A
First Quarter		11.57		3.35		N/A
2021
Fourth Quarter (commencing November 24, 2021)		117.35		8.22		N/A

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

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

Aura Market Price and Dividend Information

Aura Ordinary Shares are listed on the TASE under the symbol “AUSA.” The following table sets forth the high and low prices per share in New Israel Shekels (“NIS”) for Aura Ordinary Shares and cash dividends declared in the periods indicated, each rounded to the nearest whole agora (NIS 0.01). Aura’s fiscal year ends on December 31.

	High (NIS)		Low (NIS)		Dividend (NIS)
2023
Second Quarter (through July 11, 2023)		0.8300		0.3920		N/A
First Quarter		0.9500		0.3600		N/A
2022
Fourth Quarter		0.9590		0.3260		N/A
Third Quarter		2.9800		0.7740		N/A
Second Quarter		4.6970		2.3300		N/A
First Quarter		8.3400		3.8200		N/A
2021
Fourth Quarter		9.9570		6.6670		N/A
Third Quarter		10.8500		6.8420		N/A
Second Quarter		9.8990		7.5500		N/A

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Under the terms of the Merger Agreement, prior to the completion of the Merger, Aura is not permitted to declare, set aside, authorize, make or pay any dividend or other distribution without the consent in writing of Molekule, except as described in the Merger Agreement.

Comparison of Molekule and Aura Market Prices

The following table sets forth the closing sale price per share of Molekule Common Stock reported on Nasdaq as of February 24, 2023 and of Aura Ordinary Shares reported on the TASE as of February 26, 2023, in each case the last trading day prior to the public announcement of the Merger, and on July 11, 2023, the last practicable trading day before the filing of this prospectus with the SEC. The market value of Aura Ordinary Shares on these days was converted to U.S. dollars in the table below using the NIS/U.S. dollar exchange rate as last published by the Bank of Israel as of the close of business on each such date. The market prices of Molekule Common Stock and Aura Ordinary Shares, as well as the NIS/U.S. dollar exchange rate, have fluctuated since the date of the announcement of the Merger and will continue to fluctuate from the date of this prospectus to the date of the Aura Special Meeting and the date the Merger is completed and thereafter (in the case of Molekule Common Stock). Consequently, the value of the Merger Consideration to be received in exchange for each Aura Ordinary Share will fluctuate with changes in the market value of Molekule Common Stock and changes in the NIS/U.S. dollar exchange rate until the last trading day before the Merger is complete.

	Molekule Common Stock			Aura Ordinary Shares
February 24, 2023 / February 26, 2023		$	2.45		$	0.1345(1)
July 11, 2023			2.20			0.2001(2)

(1)

The market value of Aura Ordinary Shares on February 26, 2023 was converted to U.S. dollars using the NIS/U.S. dollar exchange rate of 3.6730, published by the Bank of Israel on the close of business on February 26, 2023.

(2)

The market value of Aura Ordinary Shares on July 11, 2023 was converted to U.S. dollars using the NIS/U.S. dollar exchange rate of 3.7090, published by the Bank of Israel on the close of business on July 11, 2023.

No assurance can be given concerning the market prices of Molekule Common Stock or Aura Ordinary Shares or the NIS/U.S. dollar exchange rate before completion of the Merger or Molekule Common Stock after completion of the Merger. The value of the Merger Consideration to be received in exchange for each Aura Ordinary Share when received by Aura shareholders after the Merger is completed could be greater than, less than or the same as shown in the table above. Accordingly, shareholders are advised to obtain current market quotations for Molekule Common Stock, Aura Ordinary Shares and the NIS/U.S. dollar exchange rate.

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RISK FACTORS

Risks Related to the Merger

If Molekule and Aura are unable to complete the Merger, in a timely manner or at all, each company’s business and share price may be adversely affected.

The obligations of Molekule and Aura to consummate the Merger are subject to the satisfaction or waiver of the conditions described in the section entitled “The Merger Agreement — Conditions to Completion of the Merger.”

The required satisfaction of the closing conditions could delay the completion of the Merger for a significant period of time or prevent it from occurring. Any delay in completing the Merger could cause Molekule not to realize some or all of the benefits that the parties expect Molekule to achieve following the Merger.

If the Merger is not completed or is delayed, each company’s share price could fall to the extent that each company’s current price reflects an assumption that the Merger will be completed on the expected timeline. Furthermore, if the Merger is delayed or is not completed and the Merger Agreement is terminated, Molekule and Aura may suffer other consequences that could adversely affect each of their businesses, results of operations and share price, including the following:

•

each has incurred and will continue to incur costs relating to the Merger (including significant legal and advisory fees), and many of these costs are payable whether or not the Merger is completed;

•

matters relating to the Merger (including integration planning) may require substantial commitments of time and resources by Molekule’s and Aura’s management teams, which could otherwise have been devoted to conducting their respective businesses or other opportunities that may have been beneficial to either company;

•

Molekule and Aura may be subject to legal proceedings related to the Merger or the failure to complete the Merger;

•

a delay in completing the Merger, failure to complete the Merger, negative perceptions about the Merger or other factors beyond Molekule’s and Aura’s control may result in negative publicity and a negative perception in the investment community; and

•

any disruptions to Molekule’s and Aura’s businesses resulting from the announcement and pendency of the Merger.

Uncertainty about the Merger may adversely affect each company’s relationships with its customers, suppliers and employees, which could negatively affect Molekule’s and Aura’s businesses, whether or not the Merger is completed.

The announcement of the Merger may cause uncertainties in Molekule’s and Aura’s relationships with their respective customers and suppliers, which could impair each company’s ability to maintain or expand its business. Furthermore, uncertainties about the Merger may cause current and prospective employees of Molekule and Aura to experience uncertainty about their future with their respective companies. These uncertainties may impair the ability of Molekule and Aura to retain, recruit or motivate key employees, which could affect their respective businesses.

The regulatory approvals required in connection with the Merger may not be obtained or may contain materially burdensome conditions.

Completion of the Merger is conditioned upon the receipt of certain regulatory approvals, and neither Molekule and Aura can provide assurance that these approvals will be obtained. If any conditions or changes to the proposed structure of the Merger are required to obtain these regulatory approvals, they may have the effect of jeopardizing or delaying completion of the Merger or reducing the anticipated benefits of the Merger. If Molekule agrees to any material conditions in order to obtain any approvals required to complete the Merger, the business and results of operations of the combined company may be adversely affected.

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

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

Following the Merger, the Molekule Common Stock will be listed for trading on more than one stock exchange, and this may result in price variations.

Following the Merger, the Molekule Common Stock will be listed for trading on Nasdaq and on the TASE. This may result in price variations. The Molekule Common Stock will be traded on these markets in different currencies, U.S. dollars on Nasdaq and NIS on the TASE. These markets have different opening times and close on different days. For example, the TASE opens generally during Israeli business hours, Sunday through Thursday, while Nasdaq opens generally during New York business hours, Monday through Friday. The two exchanges also observe different public holidays. In addition, actual trading volume on the TASE is generally lower than trading volume on Nasdaq and as such could be subject to higher volatility. Different trading times and differences in exchange rates, among other factors, may result in shares of Molekule Common Stock being traded at a price differential on these two markets. In addition, market influences in one market may influence the price at which shares of Molekule Common Stock are traded on the other.

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

The Merger Agreement provides that the Aura shareholders immediately prior to the Effective Time will receive 3,519,105 new shares of Molekule Common Stock as Merger Consideration. See the section entitled “The Merger Agreement — Effects of the Merger; Merger Consideration.”

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

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Certain directors and executive officers of Molekule and Aura participate in arrangements that provide them with interests in the Merger that are different from the interests of the respective Molekule stockholders and Aura shareholders, including, among others, the continued service as a director or executive officer of the combined company. These interests, among others, may have influenced the directors and executive officers of Molekule and Aura to support or approve the Merger. For more information concerning the interests of Molekule’s and Aura’s directors and executive officers in the Merger, see the sections entitled “Interests of Molekule’s Directors and Executive Officers in the Merger” and “Interests of Aura’s Directors and Executive Officers in the Merger.”

Molekule, Aura and the combined company may be subject to litigation in connection with the Merger.

Lawsuits may be filed against Molekule and Aura, their respective subsidiaries or their respective directors or executive officers in connection with the Merger or the Transactions. In addition, lawsuits may be filed against the combined company following the Merger. If any such lawsuit is filed, it could result in a reduction in the share price of Molekule, Aura or the combined company following the Merger, substantial costs and diversion of management’s attention and resources, which could adversely affect the business, financial condition or results of operations of Molekule, Aura and the combined company whether or not a settlement or other resolution is achieved.

The rights of holders of Aura Ordinary Shares will change as a result of the Merger.

Upon completion of the Merger, Aura shareholders will become Molekule stockholders, and their rights as Molekule stockholders will be governed by Molekule’s Amended and Restated Articles of Incorporation (the “Molekule Charter”), Molekule’s Amended and Restated Bylaws (the “Molekule Bylaws”) and Delaware law. The terms of the Molekule Charter, the Molekule Bylaws and Delaware law are, in some respects, different than the terms of Aura’s articles of association and Israeli corporate law, which currently govern the rights of Aura shareholders. For more information, see the section entitled “Comparison of Aura Shareholder Rights Before and After the Merger.”

As further described below in the section entitled “The Merger — Material U.S. Federal Income Tax Consequences,” the Merger is structured to qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). However, there is no assurance that the IRS will not take a contrary position regarding the tax treatment of the Merger or that any such contrary position would not be sustained, nor is the receipt of any tax opinion a condition to the Closing. If it is determined that the Merger does not qualify as a tax-free “reorganization,” the Merger would be a taxable transaction to Aura shareholders for U.S. federal income tax purposes. In that case, a U.S. Holder (as defined below in the section entitled “The Merger — Material U.S. Federal Income Tax Consequences”) would generally recognize capital gain or loss measured by reference to the fair market value of Molekule Common Stock received in exchange for such U.S. Holder’s Aura Ordinary Shares. For more information about the tax consequences related to the Merger, see the section entitled “The Merger — Material U.S. Federal Income Tax Consequences — Tax Consequences to U.S. Holders of the Merger.”

Even if the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, if Aura was a PFIC for any taxable year during which a U.S. Holder (as defined below in the section entitled “The Merger — Material U.S. Federal Income Tax Consequences”) owned Aura Ordinary Shares, certain adverse U.S. federal income tax consequences, including recognition of gain, could apply to such U.S.

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Holder as a result of the Merger. U.S. Holders of Aura Ordinary Shares should consult their tax advisors regarding the possible classification of Aura as a PFIC and the resulting U.S. federal income tax considerations. See the section entitled “The Merger — Material U.S. Federal Income Tax Consequences — Tax Consequences to U.S. Holders of the Merger — Passive Foreign Investment Company Rules.”

Risks Related to the Combined Company

The design, manufacture, sale, marketing and servicing of the combined company’s devices and other products will be capital-intensive. The combined company will require substantial additional capital to develop its products and services, conduct research and development and fund operations for the foreseeable future. The combined company will need to raise additional capital to scale its manufacturing, roll out other future products or services and also to continue to offer its devices and any services relating to those products. In particular, Molekule is, and the combined company will be, especially focused on developing new devices, SaaS software solutions, advanced sensor technology and smart building integrations and IoT devices, which will require additional capital.

In addition, the combined company may need to raise funds to finance future capital needs, such as making principal and interest payments under its loan agreements. Under our senior loan agreement with SVB, we are required to pay interest monthly and repay the principal amount of the loans under the agreement in 36 equal monthly installments commencing May 1, 2023, and under our mezzanine loan agreement with SVB, which was recently amended, we are required to pay interest monthly and repay the loans under the agreement in 36 equal monthly installments for two tranches beginning April 1, 2025. Under the facility term loan with Trinity Capital Inc. (“Trinity”), we are required to pay principal and interest monthly with the principal being paid in equal monthly installments from the month after the amount was drawn until April 1, 2026. Further, following the Closing, the combined company will guarantee Aura’s payment obligations to Bank Mizrahi, under which Aura will be required to pay interest monthly and repay the term loan in monthly installments beginning 36 months after the Closing.

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. At the time of the closure and as of the date of this prospectus, we held assets in securities in sweep accounts purchased through SVB but managed in segregated custodial accounts by a third-party asset manager. On March 13, 2023, the FDIC announced that all of SVB’s deposits and substantially all of its assets had been transferred to a newly created, full-service FDIC-operated bridge bank, Silicon Valley Bridge Bank, N.A. (“SVBB”). SVBB assumed all loans that were previously held by SVB. On March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVBB’s customer deposits and certain other liabilities and acquired substantially all of SVBB’s loans and certain other assets from the FDIC.

Under the terms of our senior loan agreement and mezzanine loan agreement with SVB, we are required to keep substantially all of our cash and investments with SVB. While we have had full access to the assets in our sweep accounts since March 13, 2023, we may be impacted by other disruptions to the U.S. banking system caused by the recent developments involving SVB, including potential delays in our ability to transfer funds and potential delays in making payments to vendors while new banking relationships are established.

For these reasons, among others, we cannot be certain that additional financing will be available to the combined company when and as needed or, if available, that it will be available on acceptable terms. If financing is available, it may be on terms that adversely affect the interests of existing stockholders.

We cannot be certain that additional funds will be available us on favorable terms when required, or at all. Our success in raising additional capital may be significantly affected by general market conditions, the market price of Molekule Common Stock, our financial condition, uncertainty about the future commercial success of our current products and services, the development and commercial success of future products or services, regulatory developments, the status and scope of our intellectual property, any ongoing litigation, our compliance with applicable laws and regulations and other factors.

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

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

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

Molekule’s financial statements include a note regarding substantial doubt about its ability to continue as a going concern.

As set forth in Note 1 of Molekule’s audited consolidated financial statements and unaudited condensed consolidated financial statements included elsewhere in this prospectus, Molekule has concluded that its recurring losses from operations, recurring cash used in operating activities, accumulated deficit, expected working capital needs to fund its combined operations and new debt obligations as a result of the Molekule Merger in January 2023 raise substantial doubt about Molekule’s ability to continue as a going concern, due to the risk that Molekule may not have sufficient cash and liquid assets at March 31, 2023 to cover its operating and capital requirements for the period through May 15, 2024; and if sufficient cash cannot be obtained, Molekule would have to substantially alter, or possibly even discontinue, operations.

For the year ended December 31, 2022, Molekule incurred a net loss of $6,168,931 and its net cash used in operating activities was $10,638,912. For the three months ended March 31, 2023, Molekule incurred a net loss of $9,933,406 and its net cash used in operating activities was $16,044,027. In addition, at December 31, 2022, Molekule’s accumulated deficit was $7,916,791 and it had cash of $22,062,657. At March 31, 2023, Molekule’s accumulated deficit was $17,850,199 and it had cash of $7,285,691. Molekule management’s plans to fund the combined company’s operations include raising capital, managing costs and generating sufficient revenues to offset costs.

There can be no assurances that the combined company will be able to secure any such additional financing on acceptable terms and conditions, which could have a material adverse effect on its business, financial condition and results of operations. If the combined company cannot successfully continue as a going concern, its investors may lose a large proportion of or even their entire investment.

The combined company’s significant indebtedness will expose the combined company to increased costs from rising interest rates and require substantial cash to service.

Upon closing of the Molekule Merger, we assumed approximately $36.5 million of indebtedness under the senior loan agreement and mezzanine loan agreement with SVB and the facility term loan agreement with Trinity. As of the signing of the Merger Agreement, Aura had an aggregate of approximately $3.3 million principal of indebtedness under its term loan and line of credit with Bank Mizrahi. The combined company may incur additional indebtedness in the future as well. The interest rates on the loans with SVB and on

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the term loan and amounts drawn on the line of credit with Bank Mizrahi are variable and have therefore increased significantly over the past year and expose us, and will expose the combined company, to the risk of higher costs upon further increases in rates. After giving pro forma effect to our assumption of Aura’s indebtedness upon the Closing, a 1% increase or decrease in interest rates would correspondingly increase or decrease the combined company’s annual interest expense by approximately $0.4 million.

Our ability to make scheduled payments on our indebtedness will depend on our future performance and ability to raise additional capital, which is subject to economic, financial, competitive and other factors, some of which are beyond our control. If we are unable to generate sufficient cash to service our debt, we may be required to adopt one or more alternatives, such as selling assets, restructuring our debt or obtaining additional capital through equity sales or incurrence of additional debt on terms that may be onerous or highly dilutive to Molekule stockholders. Our ability to engage in any of these activities would depend on the capital markets and our financial condition at such time, and we may not be able to do so when needed, on desirable terms or at all, which could result in a default on our debt obligations. Any failure by us to make all payments under the debt instruments when due would cause us to be in default under the applicable debt instrument. In the event of any such default, lenders may be able to foreclose on our assets that secure the debt or declare all borrowed funds, together with accrued and unpaid interest, immediately due and payable, thereby potentially causing all of our available cash to be used to pay our indebtedness or forcing us into bankruptcy or liquidation if we do not then have sufficient cash available. Any such event or occurrence could severely and negatively impact our operations and prospects.

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

We have incurred operating losses each year since our inception and only began to recognize revenue starting in July 2021. Legacy Molekule had declining revenue in the last three years and also sustained operating losses for those years. These losses are expected to continue during 2023. Even if the Merger is successful, we cannot be certain that the combined company will ever achieve or sustain profitability. If the combined company continues to incur operating losses for a period longer than expected, or in an amount greater than expected, the combined company may be unable to continue its operations.

The combined company may fail to realize the anticipated benefits of the Merger and the Molekule Merger.

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

The failure to successfully integrate the businesses and operations of Molekule, Legacy Molekule and Aura in the expected time frame may adversely affect the combined company’s future results.

Molekule and Aura have operated and, until the completion of the Merger, will continue to operate independently. The Molekule Merger was completed in January 2023, and Molekule’s management continues to consolidate and integrate the Molekule and Legacy Molekule businesses. There can be no assurances that the Molekule and Aura businesses can be integrated successfully. It is possible that the integration process could result in the loss of key Molekule employees or key Aura employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-Closing integration process that takes longer than originally anticipated. Specifically, the following issues, among others, must be addressed in integrating the operations of Molekule, Legacy Molekule and Aura in order to realize the anticipated benefits of the Merger and the Molekule Merger so the combined company performs as expected:

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combining the companies’ operations and corporate functions;

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challenges arising from the expansion into those Aura jurisdictions where Molekule does not currently operate or have significant operations;

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coordinating and integrating research and development teams across technologies and products to enhance product development;

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

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avoiding delays in connection with the Merger or the integration processes of the Molekule Merger and the Merger;

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

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integrating and unifying the offerings and services available to customers;

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identifying and eliminating redundant and underperforming functions and assets;

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

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

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obligations that Molekule will have to counterparties of Aura that arise as a result of the change in control of Aura;

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

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increased scale and complexity of Molekule’s operations resulting from the Molekule Merger and the Merger;

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

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coordinating distribution and marketing efforts.

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

We are party to a senior loan agreement and a mezzanine loan agreement, each entered into with SVB, and a facility term loan with Trinity. In addition, the combined company will become a guarantor under the loan agreement with Bank Mizrahi upon the Closing. These agreements contain various affirmative and negative covenants, and future credit or lease agreements that the combined company may enter into also likely will contain affirmative and negative covenants.

The agreements governing our indebtedness with SVB and Trinity contain covenants that restrict our ability to, among other things, incur liens, incur additional indebtedness, other than permitted indebtedness, enter into mergers or acquisitions, sell or otherwise dispose of assets, pay dividends or repurchase stock, make investments and engage in affiliate transactions, subject to customary exceptions. In addition, the agreements with SVB contain a financial covenant that requires us to maintain, at all times, unrestricted and unencumbered cash and cash equivalents of at least $2.0 million to be tested any day, and we are required to maintain an aggregate net revenue of $50.0 million for the 12 months ended March 31, 2024 and, with respect to future annual periods, net revenue levels reasonably agreed between us and SVB prior to February 28 of each calendar year thereafter.

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. At the time of the closure and as of the date of this

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prospectus, we held assets in securities in sweep accounts purchased through SVB but managed in segregated custodial accounts by a third-party asset manager. On March 13, 2023, the FDIC announced that all of SVB’s deposits and substantially all of its assets had been transferred to a newly created, full-service FDIC-operated bridge bank, SVBB. SVBB assumed all loans that were previously held by SVB. On March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVBB’s customer deposits and certain other liabilities and acquired substantially all of SVBB’s loans and certain other assets from the FDIC.

Under the terms of our senior loan agreement and mezzanine loan agreement with SVB, we are required to keep substantially all of our cash and investments with SVB. While we have had full access to the assets in our sweep accounts since March 13, 2023, the combined company may be impacted by other disruptions to the U.S. banking system caused by the recent developments involving SVB, including potential delays in its ability to transfer funds and potential delays in making payments to vendors while new banking relationships are established.

The combined company’s ability to comply with these provisions may be affected by events beyond its control. Failure to comply with these covenants could result in an event of default, which, if not cured or waived, could accelerate the combined company’s repayment obligations.

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

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

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

If key employees of Molekule, including the previous employees of Legacy Molekule who joined Molekule after the Molekule Merger, or Aura depart, the integration of the companies may be more difficult and Molekule’s business following the Merger may be harmed. Furthermore, Molekule may have to incur significant costs in identifying, hiring and retaining replacements for departing employees and may lose significant expertise and talent relating to the business of each of Molekule and Aura, and the combined company’s ability to realize the anticipated benefits of the Merger and the Molekule Merger may be adversely affected. In addition, there could be disruptions to or distractions for the workforce and management associated with integrating employees into Molekule. No assurance can be given that, following Closing, Molekule will be able to attract or retain key employees of Molekule and Aura to the same extent that those companies have been able to attract or retain their own employees in the past.

Our strategy is to evaluate potential strategic acquisitions of businesses, including partnerships or joint ventures with third parties. The combined company may not be successful in identifying acquisition, partnership and joint venture candidates. In addition, the combined company may not be able to continue the operational success of such businesses or successfully finance or integrate any businesses that it acquires or with which it forms a partnership or joint venture. The process of integrating an acquired business may involve

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unforeseen costs and delays or other operational, technical and financial difficulties and may require a disproportionate amount of management attention and financial and other resources.

Any acquisition, partnership or joint venture may not be successful, may reduce the combined company’s cash reserves, may negatively affect its earnings and financial performance and, to the extent financed with the proceeds of debt, may increase its indebtedness. Any acquisition, partnership or joint venture may also involve the issuance of equity securities, either as merger consideration or in order to raise funds through an equity offering or private placement, which would dilute the interests of existing stockholders. We cannot ensure that any acquisition, partnership or joint venture the combined company makes will not have a material adverse effect on its business, financial condition and results of operations.

Combined company stockholders may experience dilution in the future.

From time to time in the future, the combined company may issue additional shares of its capital stock or offer debt or other equity securities, including additional shares of Molekule Common Stock or warrants to purchase Molekule Common Stock, senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Issuing additional shares of capital stock, other equity securities or securities convertible into equity may dilute the economic and voting rights of existing stockholders, reduce the market price of shares of Molekule Common Stock or both. Debt securities convertible into equity could be subject to adjustments in the conversion rate pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit the combined company’s ability to pay dividends to the holders of the combined company’s common stock. The decision to issue securities in any future offering will depend on market conditions and other factors, which may adversely affect the amount, timing or nature of future offerings. As a result, holders of Molekule Common Stock bear the risk that future offerings may reduce the market price of shares of Molekule Common Stock and dilute their percentage ownership.

On June 29, 2022, we issued a warrant to purchase up to 1,500,000 shares of Molekule Common Stock at an exercise price of $11.00 per share, which was subsequently lowered to $2.00 per share (the “2022 Warrant”). On May 5, 2023, we issued (i) a Series A Warrant to purchase up to 3,125,000 shares of Molekule Common Stock, (ii) a Series B Warrant to purchase up to 6,250,000 shares of Molekule Common Stock and (iii) a Pre-Funded Warrant to purchase up to 2,850,000 shares of Molekule Common Stock (collectively, the “2023 Warrants”). The Series A Warrant has an exercise price of $1.60 per share; the Series B Warrant has an exercise price of $1.84 per share; and the Pre-Funded Warrant has a purchase price of $1.59 per share and a nominal exercise price. Any exercise or partial exercise of these warrants would dilute the holders of Molekule Common Stock. Whether or not the warrants are exercised will depend on the Molekule Common Stock price, and any exercise is at the discretion of the holder of the warrants. The combined company may issue other warrants, options and derivative securities in the future, which would also dilute the holders of Molekule Common Stock.

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

The trading market for the Molekule Common Stock will depend in part on the research and reports that securities or industry analysts publish about the combined company or its businesses. While securities and industry analysts currently cover Molekule, securities and industry analysts may not publish research on

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the combined company. If no securities or industry analysts provide coverage of the combined company, the trading price for the Molekule Common Stock would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover the combined company downgrade its securities or publish inaccurate or unfavorable research about its businesses or if the combined company’s operating results do not meet analyst expectations, the Molekule Common Stock price would likely decline. If one or more of these analysts cease coverage of the combined company or fail to publish reports on the combined company regularly, demand for Molekule Common Stock could decrease, which might cause the Molekule Common Stock price and trading volume to decline.

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

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

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

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

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

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the amount of dividends that the combined company may distribute to its stockholders is subject to restrictions under Delaware law and is limited by the negative covenants in its loan agreements and, potentially, the terms of any future indebtedness that the combined company may incur.

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

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

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

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

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

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

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developments involving the combined company’s competitors;

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the cost of servicing and maintaining the combined company’s products;

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

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the costs associated with acquisitions, including the Merger and the Molekule Merger and other mergers the combined company may pursue in the future;

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

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

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

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

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

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

In particular, the combined company will continue to devote considerable resources, including the allocation of capital expenditures, to growing the SaaS service offering revenue over the next several years. There can be no assurance that the combined company will meet revenue targets for this service, and if it fails to achieve its revenue goals, its growth and operating results will be materially adversely affected. Additionally, new or existing customers may choose to purchase the combined company’s SaaS services rather than its on-premise solutions. If the combined company’s customers’ purchases trend away from perpetual licenses toward its SaaS, or to the extent customers defer orders, the combined company’s product revenue, and its timing of revenue generally, may be adversely affected, which could adversely affect its results of operations and financial condition.

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

In order to remain competitive, we expect the combined company will continue to make significant investments in technology. However, there is no guarantee that the capital and resources that we have invested, or that the combined company will invest in the future, will allow the combined company to develop suitable SaaS platform enhancements or software applications or maintain and expand the SaaS platform and technology infrastructure, including through IoT solutions as intended, which could have a material adverse effect on the combined company’s ability to compete or require it to purchase expensive software solutions from third-party developers.

Following the completion of the Merger, our exposure to fluctuations in foreign currency exchange rates will be increased.

Aura conducts a significant portion of its operations outside of the United States, which also operate in their respective local currencies, the most significant of which are currently NIS, the euro and the Indian

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rupee. Therefore, following the completion of the Merger, the combined company’s international operations will account for a more significant portion of overall operations than they do presently for Molekule, and its exposure to fluctuations in foreign currency exchange rates will increase. Because our financial statements will continue to be presented in U.S. dollars subsequent to the completion of the Transactions, the local currencies will be translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, thereby increasing the foreign exchange translation risk.

Risks Related to Molekule’s Business

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

The success of our principal products — Pūrgo, Air Mini+, Air Pro, Air Pro RX and corresponding filters and filter subscriptions — depends on the ability of these products to perform as expected. It is possible: (i) that our products will be found to be less effective than anticipated or fail to receive necessary regulatory clearances; (ii) that the products, even if effective, will be difficult to manufacture at commercial levels or uneconomical to market; (iii) that proprietary rights of third parties will preclude us from using certain technologies or marketing such products; and (iv) that third parties will use or market superior or equivalent technologies or products.

Moreover, our products may contain defects in design and manufacture that may cause them to not perform as expected or that may require repairs, recalls and design changes. We have a limited frame of reference from which to evaluate the long-term performance of our products. All of our products were initially launched in 2019 or later. If these devices, or additional devices or applications of our technology that we may develop in the future, fail to perform as expected, customers may delay deliveries or terminate further orders and we may need to initiate product recalls, each of which could adversely affect our sales and brand and could adversely affect our business, financial condition and results of operations.

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

Global logistics and supply chain bottlenecks could have an adverse effect on our business and operating results.

Logistics and supply chain bottlenecks could have an adverse effect on our business and impact the availability and cost of raw materials and component parts. For example, various electronic components and semi-conductor chips have become increasingly difficult to source and, when available, may be subject to substantially longer lead times and higher costs than historically applicable. We expect these ongoing global logistics and supply chain bottlenecks and component shortages may adversely impact our ability to source component parts at favorable prices (if at all) and may result in delays in, or reduced output from, our third-party manufacturing activities. Higher component costs and/or delays in our ability to manufacture and distribute our products could have a material adverse effect on our sales, revenues and results of operations.

Our limited operating history and rapid growth makes evaluating our current business and future prospects difficult and may increase the risk of investment.

Our limited operating history may make it difficult to evaluate our current business and future prospects as we continue to grow our business. Our ability to forecast our future revenue and operating results is subject to a number of uncertainties, including our ability to plan for and model future growth. We have encountered, and will continue to encounter, risks and uncertainties frequently experienced by growing companies in rapidly evolving industries as we continue to grow our business. If our assumptions regarding these uncertainties, which we use to plan our business and budget for our expenses, are incorrect or change in reaction to changes in our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

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We have made, and expect to continue to make, significant investments in our business, including investments in our manufacturing, technology, marketing and sales efforts. These investments include an investment to expand the capabilities of our facilities, increased staffing and further market expansion. If our business does not generate the level of revenue required to support this investment, our net sales and profitability will be adversely affected.

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

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

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successfully establish our technology and brand;

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establish a commercial footprint;

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

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capitalize on our collaboration with experts in aerospace;

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explore opportunities for collaboration; or

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identify opportunities to establish industry leadership domestically and internationally.

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

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

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support the development of a team of senior sales associates;

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accelerate our development of complementary devices; and

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

Our planned growth will place significant demands on our management and on our operational and financial resources. We have hired and expect to continue hiring additional personnel to support our planned growth.

Our organizational structure will become more complex as we add staff, and we will need to improve our operational, legal, financial and management controls as well as our reporting systems and procedures. We will require significant capital expenditures and the investment of valuable management resources to grow and develop in these areas. We may be unable to hire, train, retain and manage the necessary personnel or to identify, manage and exploit potential strategic relationships and market opportunities. A failure to manage our growth effectively could materially and adversely affect our ability to market our products, which could have a material adverse effect on our business, financial condition and results of operations.

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

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

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reduce the spread of COVID-19 and any mutation or variation thereof, and our devices may ultimately not succeed in reducing the spread of COVID-19 or any mutation or variation thereof. Further, additional research may determine that COVID-19 is transmitted among human beings in other ways not known or fully understood. We expect demand for our products would be significantly less than anticipated if our products are not perceived as being effective at reducing the risk of COVID-19 transmission or if COVID-19 is determined to spread in ways other than through airborne transmission.

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

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

We lack manufacturing experience and capabilities and are required to rely on third-party manufacturers and are dependent on their quality and effectiveness.

We do not have our own manufacturing facilities or capabilities and as such we rely on certain third parties to manufacture our products and product components. We have engaged Mack Molding, an FDA-regulated subsidiary of the privately held Mack Group, to manufacture the Pūrgo device. In addition, we outsource the majority of the manufacture and assembly of our Air Mini+, Air Pro and Air Pro RX air purifiers to IAC, and we also outsource the production of our filters to Columbus Industries.

Although our manufacturers are experienced contract manufacturers of medical devices, there can be no assurance that our manufacturers will be able to continue to manufacture our products successfully, including in a manner that complies with regulatory requirements, or at a scale to meet customer demand. In addition, the failure to achieve and maintain high manufacturing standards, including failure to detect or control unexpected events or unanticipated manufacturing errors, or the frequent occurrence of such errors, could result in delays or failures in product testing or delivery, cost overruns, product recalls or withdrawals and other problems that could seriously hurt our business. Third-party manufacturers can encounter difficulties involving manufacturing processes, facilities, operations, production yields, quality control, compliance and shortages of qualified personnel.

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

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

Disruption of our supply chain could have an adverse impact on our business, financial condition and results of operations.

Our ability to manufacture, assemble, transport and sell our products is critical to our success. Damage or disruption to our supply chain, including third-party manufacturing, assembly or transportation and distribution capabilities, due to weather, including any potential effects of climate change, natural disaster, fire or explosion, terrorism, pandemics (such as the ongoing COVID-19 pandemic), strikes, government action or other reasons beyond our control or the control of our suppliers, manufacturers and business partners could impair our ability to manufacture or sell our products. Failure to take adequate steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if they occur, particularly when a product is sourced from or manufactured by a single supplier, manufacturer or location, could adversely affect our business or financial results.

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

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

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

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

It is not currently possible to reliably project the direct impact of the ongoing COVID-19 pandemic on our operations. For example, governmental mandates related to the ongoing global COVID-19 pandemic, among other factors, have negatively impacted, and may continue to impact, personnel and operations at third-party manufacturing and component part supplier facilities in the United States and around the world,

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creating logistics and supply chain bottlenecks across many industries. These disruptions have adversely impacted the availability and cost of raw materials and component parts. For example, various electronic components and semi-conductor chips have become increasingly difficult to source and, when available, may be subject to substantially longer lead times and higher costs than historically applicable. We expect that these ongoing global logistics and supply chain bottlenecks and component shortages may adversely impact our ability to source component parts at favorable prices (if at all) and may result in delays in, or reduced output from, our third-party manufacturing activities. Higher component costs and/or delays in our ability to manufacture and distribute our products could have a material adverse effect on our sales, revenues and operating results.

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

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

We use a broad range of manufactured components and raw materials in our products, including aluminum, semiconductors, resin, filtration media and equipment such as fans and motors. Materials, wages and subcontracting costs comprise a significant portion of our total costs. The current economic environment, including increasing interest rates and inflation, has resulted, and may continue to result, in price volatility and an increase of these costs. Further increases in the price of these items could further materially increase our operating costs and materially adversely affect our profit margins. Similarly, transportation, steel and healthcare costs have risen steadily over the past few years and represent an increasing burden for us. Although we try to contain these costs whenever possible, and although we try to pass along increased costs in the form of price increases to our customers, we may be unsuccessful in doing so, and even when successful, the timing of such price increases may lag significantly behind our incurrence of higher costs.

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

Entry into new markets may require us to compete with new companies, cater to customer expectations and comply with new complex regulations, which may be unfamiliar. Accordingly, we could need to invest significant resources in market research, legal counsel and our organizational infrastructure, and a return on such investments may not be achieved for several years, if at all. Additionally, failure to comply with applicable regulations or to obtain required licenses could result in penalties or fines. Further, we may fail in demonstrating the value of any new value-added product to customers, which would compromise our ability to successfully create new revenue streams or receive returns in excess of investments. Any of these risks, if realized, could materially and adversely affect our business, financial condition and results of operations.

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

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

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

If orders are delayed, the timing of our revenues could be affected and orders may remain in our backlog for extended periods of time. Revenue recognition occurs at time of product shipment and is subject to unanticipated delays. If we receive relatively large orders in any given quarter, fluctuations in the

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levels of our quarterly backlog can result because the backlog in that quarter may reach levels that may not be sustained in subsequent quarters. As a result, our backlog may not be indicative of our future revenues.

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

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

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

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

The sale and support of our products entails the risk of product liability claims. Any product liability claim brought against us, regardless of its merit, could result in material expense, diversion of management time and attention, damage to our business and reputation and brand, and could cause us to fail to retain existing customers or to fail to attract new customers. Any of the foregoing problems, including product liability claims or product recalls in the future, regardless of the ultimate outcome, could harm our reputation and have a material adverse effect on our business, financial condition and results of operations.

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

Our business-to-business (“B2B”) channel strategy depends in part on our ability to sell our products to healthcare, hospitality and education and government facilities. We have limited experience with respect to sales and marketing, and in particular marketing to hospitals and healthcare facilities. We launched the Molekule Air Platform specifically to address the needs of companies returning to in-person office and work arrangements, and we have limited information to-date in order to fully understand if the needs of our customers will support this business channel strategy. If we are unsuccessful at manufacturing, marketing and selling our products and services, our business, operating results and financial condition will be materially adversely affected.

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

We have invested and expect to continue to invest in research and development efforts that further enhance our products. These investments may involve significant time, risks and uncertainties, including the risk that the expenses associated with these investments may affect our margins, operating results and

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liquidity and that such investments may not generate sufficient revenues to offset liabilities assumed and expenses associated with these new investments.

The air purification industry changes rapidly as a result of technological and product developments, which may render our products and technology, including our SteriDuct technology and PECO nanotechnology, less effective. We believe that we must continue to invest a significant amount of time and resources in our products and technology to maintain and improve our competitive position. If we do not achieve the benefits anticipated from these investments or if the achievement of these benefits is delayed, our business, operating results and prospects may be materially adversely affected.

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

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

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

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

We operate in an industry that is competitive and subject to technological change.

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

Many competitors have longer operating histories, larger customer bases and greater financial, research and development, technical, marketing and sales and personnel resources than us. Given their capital resources, larger companies that compete or may compete with us in the future are better positioned relative to us to substantially increase their manufacturing capacity, research and development and marketing efforts or to withstand any significant reduction in orders by customers. Such larger companies are able to: (i) provide broader and more diverse product lines and market focus and thus are not as susceptible to downturns or seasonality in a particular market; (ii) make greater investments in research and development; (iii) carry on larger research and development initiatives; (iv) undertake more extensive marketing campaigns; and (v) adopt more aggressive pricing policies than us. In addition, some of our competitors have been in operation much longer than we have been and therefore may have more longstanding and established relationships with current and potential customers, established sales and distribution networks, significant goodwill and global name recognition. We also expect to continue to face competition from alternative technologies. Our technology and products may be rendered obsolete or uneconomical by advances in existing technological approaches or products or the development of different approaches or products by one or more of our competitors.

In addition, we believe that the COVID-19 pandemic as well as recently discovered more virulent and more infectious strains of the coronavirus have increased, and will continue to increase, this competition. Further, the FDA Enforcement Policy for Sterilizers, Disinfectant Devices, and Air Purifiers during the Coronavirus Disease 2019 (COVID-19) Public Health Emergency and other temporary accommodations implemented by the FDA as a result of the COVID-19 pandemic to enable disinfectant devices, sterilizers,

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air purifiers and other medical equipment to be brought to market in an expedited manner has made it easier for new entrants to enter into our market.

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

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

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

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

We may seek out collaboration opportunities to extend our UV-C LED technology and PECO nanotechnology to the integrated air handling systems of large buildings, elevators and commercial aircraft.

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

We rely on our information technology systems to manage numerous aspects of our business, and a disruption of these systems could adversely affect our business.

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

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

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

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our operations are disrupted or shut down;

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our or our customers’ or employees’ confidential, proprietary information is stolen or disclosed;

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we incur costs or are required to pay fines in connection with stolen customer, employee or other confidential information;

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we must dedicate significant resources to system repairs or increase cybersecurity protection; or

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we otherwise incur significant litigation or other costs.

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

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

Our digital marketing and social media efforts may expose us to certain risks.

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

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

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

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

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

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

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

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

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changes in search algorithms by search engines;

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ineffectiveness of our marketing efforts and other spend to continue to acquire new customers;

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decline in popularity of, or governmental restrictions on, social media platforms where we advertise;

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

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

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

Changes in our product and channel mix may impact our gross margins and financial performance.

Our financial performance may be affected by the mix of products — Pūrgo, Air Mini+, Air Pro, Air Pro RX and corresponding filters and filter subscriptions — we sell during a given period. Different products as well as different methods of distribution have different margins, and therefore, our gross margins may fluctuate based on the mix of products sold or sales channels through which products are sold in a given period. If our product or channel mix shifts too far into lower gross margin products or sales in a given period and we are not able to sufficiently reduce the production and other costs associated with those products or sales or substantially increase the sales of our higher gross margin products, our profitability could be reduced.

Additionally, the introduction of new products or services may further heighten quarterly fluctuations in gross profit and gross profit margins due to manufacturing ramp-up and start-up costs as well as new product introduction pricing strategies. Other factors that may negatively affect our gross profit include increases in freight and material costs, as well as increased promotional discounting. We may experience significant quarterly fluctuations in gross profit margins or operating income or loss due to the impact of the mix of products, channels or geographic areas in which we sell our products from period to period.

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

We have limited experience with respect to determining the optimal prices for our products and subscription models, and as a result, we have in the past, and expect that we may in the future, need to change our pricing model from time to time, which could impact our financial results. Further, we can give no assurance that we will be able to maintain satisfactory prices for our Pūrgo, Air Mini+, Air Pro and Air Pro RX and other products we may develop in the future. If we are forced to lower the price we charge for our products, including due to the prices of our competitors, our gross margins will decrease, which may harm our ability to invest in and grow our business. If we are unable to maintain our prices, or if our costs increase due to inflation or otherwise and we are unable to offset such increase with an increase in our prices, our margins could erode, which could harm our business, financial condition and results of operations.

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

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

A major earthquake, fire, tsunami, hurricane, cyclone or other disaster, such as a pandemic, major flood, seasonal storms, nuclear event or terrorist attack affecting our facilities or the areas in which we are located, or affecting those of our third-party manufacturers, could significantly disrupt our or their operations and delay or prevent product production and distribution during the time required to repair, rebuild or replace our or our third-party manufacturers’ damaged facilities. These delays could be lengthy and costly.

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If any of our third-party manufacturers’ facilities are negatively impacted by such a disaster, production and distribution of our products could be delayed, which can impact the period in which we recognize the revenue related to the sale of those products. Additionally, customers may delay purchases of our products until operations return to normal. Even if we are able to respond quickly to a disaster, the continued effects of the disaster could create uncertainty in our business operations. In addition, concerns about terrorism, the effects of a terrorist attack, political turmoil, labor strikes, war (including the war in Ukraine) or the outbreak of epidemic diseases (including the outbreak of COVID-19 and variants) could have a negative effect on our operations and sales.

If we are unable to complete and implement our plan to manufacture, fulfill and ship some of our products from our in-house facility, our profitability may suffer.

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

Global economic disruptions and inflation or stagflation could seriously harm our business.

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

Further, inflation or possible stagflation in the United States and other regions has the potential to adversely affect our liquidity, business, financial condition and operating results by increasing our overall product cost structure, which would negatively impact our business, particularly if we are unable to achieve the increases in product prices necessary to appropriately offset the additional costs sufficient to maintain margins. The existence of inflation in certain economies has resulted in, and may continue to result in, higher interest rates and capital costs, energy and shipping costs, increased costs of labor, weakening exchange rates and other similar effects. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, operating results and liquidity will be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our operating results and when the cost of inflation is incurred. Inflation and any economic challenges may also adversely impact spending patterns by our customers.

In addition, current macroeconomic conditions have caused turmoil in the banking sector. For example, on March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. At the time of the closure and as of the date of this prospectus, we held assets in securities in sweep accounts purchased through SVB but managed in segregated custodial accounts by a third-party asset manager. On March 13, 2023, the FDIC announced that all of SVB’s deposits and substantially all of its assets had been transferred to a newly created, full-service FDIC-operated bridge bank, SVBB. SVBB assumed all loans that were previously held by SVB. On March 27, 2023, First-Citizens Bank & Trust Company assumed all of SVBB’s customer deposits and certain other liabilities and acquired substantially all of SVBB’s loans and certain other assets from the FDIC.

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While we have had full access to the assets in our sweep accounts since March 13, 2023, we may be impacted by other disruptions to the U.S. banking system caused by the recent developments involving SVB, including potential delays in our ability to transfer funds and potential delays in making payments to vendors while new banking relationships are established.

We cannot predict at this time to what extent our or our collaborators, employees, suppliers, contract manufacturers and/or vendors could be negatively impacted by these and other macroeconomic and geopolitical events.

The sale of our products depends in part upon customer discretionary spending, and economic conditions that adversely impact consumers’ ability and desire to spend discretionary income may reduce overall levels of spending on our products. For example, during the fiscal year ended December 31, 2022, Legacy Molekule observed a slowdown in purifier sales on its direct-to-consumer website, which it believes was a result of macroeconomic conditions negatively impacting prospective customers’ willingness to purchase air purifiers.

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

The market for air purification technology and products is rapidly evolving. As is typical for a rapidly evolving industry, demand for and market acceptance of recently introduced products are subject to a high level of uncertainty and may be influenced by uncertain economic conditions or the existence or absence of seasonal wildfires or health epidemics. For example, uncertain economic conditions may affect a prospective customer’s discretionary income and willingness to purchase our air purifiers, and the absence of seasonal wildfires or health epidemics could negatively impact the demand for our air purifiers. Moreover, since the market for our products is evolving, it is difficult to predict the future growth rate, if any, and size of this market.

Because of our limited operating history and the emerging nature of the markets in which we compete, we may be unable to accurately forecast our revenues or our profitability. The market for our products and the long-term acceptance of our products are uncertain, and our ability to attract and retain qualified personnel with industry expertise, particularly sales and marketing personnel, is uncertain. To the extent we are unsuccessful in increasing revenues, we may be required to appropriately adjust spending to compensate for any unexpected revenue shortfall, or to reduce our operating expenses, causing us to forego potential revenue generating activities, either of which could have a material adverse effect on our business, operating results and financial condition.

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

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

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

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

This seasonality may adversely affect our business and cause our results of operations to fluctuate.

Risks Related to Regulation

We are subject to continuing regulation by the FDA, and if we fail to comply with regulations, including FDA and other state regulations, our business could suffer.

We and the third-party suppliers and manufacturers we engage with to produce our air purifiers and filters are subject to FDA regulatory requirements, which include quality system regulations related to the manufacture of our products, labeling regulations and medical device reporting (“MDR”) regulations. For

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example, MDR regulations require us to report to the FDA if we become aware of information that reasonably suggests our air purifiers or component products may have caused or contributed to a death or serious injury, or have malfunctioned and the products or a similar product we market would likely cause or contribute to a death or serious injury if the malfunction were to recur. We are also required to report corrections and removals to the FDA where the correction or removal was initiated to reduce a risk to health posed by our products or to remedy a violation of the Federal Food, Drug, and Cosmetic Act (the “FDCA”) caused by any of our products that may present a risk to health, and maintain records of other corrections or removals.

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

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

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

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

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recall, termination of distribution, administrative detention, injunction or seizure of our products;

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customer notifications or repair, replacement or refunds;

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operating restrictions or partial suspension or total shutdown of production;

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refusing or delaying our requests for modifications to our air purifier devices, including Pūrgo, the Air Mini+, the Air Pro and the Air Pro RX;

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withdrawing or suspending clearance that has already been granted;

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

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criminal prosecution.

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

We are subject to certain advertising and promotional regulations.

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

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

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

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

Significant additional governmental regulation could subject us to unanticipated delays, which would adversely affect our sales and revenues.

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

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

Our international operations subject us to a variety of risks and uncertainties that could adversely affect our business and operating results. Our business is subject to risks associated with manufacturing and selling our products in locations outside of the United States.

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

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Other risks and uncertainties we face from global operations include:

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

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

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costs and difficulties of customizing products for foreign countries;

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

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laws and business practices favoring local competition;

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

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

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

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

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

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potential adverse tax consequences arising from global operations;

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

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

Our failure to effectively manage the risks and uncertainties associated with global operations could limit future growth of our business and adversely affect our business and operating results.

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

Changes in tax laws or tax rulings could materially affect our financial position, operating results and cash flows.

The tax regimes we are subject to or operate under, including income and non-income taxes, are unsettled and may be subject to significant change. Changes in tax laws, regulations or rulings, or changes in interpretations of existing laws and regulations, could materially affect our financial position and results of operations. For example, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) made broad and complex changes to the U.S. tax code, including changes to U.S. federal tax rates, additional limitations on the deductibility of interest, both positive and negative changes to the utilization of future net operating loss (“NOL”) carryforwards, allowing for the expensing of certain capital expenditures and putting into effect the migration from a “worldwide” system of taxation to a more territorial system.

Future guidance from the IRS with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. The Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) has already modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act or any newly enacted

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federal tax legislation. The issuance of additional regulatory or accounting guidance related to the Tax Act could materially affect our tax obligations and effective tax rate in the period issued.

In addition, our international operations are, and to the extent we expand internationally, our operations will be, subject to other jurisdictions with complex tax laws, the application of which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have an adverse impact on our liquidity and operating results. In addition, the authorities in several jurisdictions could review our tax returns and impose additional tax, interest and penalties, which could have an impact on us and on our operating results. In addition, many countries in Europe and a number of other countries and organizations have recently proposed or recommended changes to existing tax laws or have enacted new laws that could significantly increase our tax obligations in the countries where we do business or require us to change the manner in which we operate our business.

We are subject to environmental, health and safety laws and regulations related to our operations, which could subject us to compliance costs or potential liability in the event of non-compliance.

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

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

In addition, the export of our products internationally from our or our manufacturers’ production facilities subjects us to environmental laws and regulations concerning the import and export of chemicals and hazardous substances such as the U.S. Toxic Substances Control Act and the European Union (“EU”) Registration, Evaluation, Authorisation and Restriction of Chemical Substances. These laws and regulations require the testing and registration of some chemicals that we ship along with, or that form a part of, our products. If we fail to comply with these or similar laws and regulations, we may be required to

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make significant expenditures to reformulate the chemicals that we use in our products or incur costs to register such chemicals to gain or regain compliance. Additionally, we could be subject to significant fines or other civil and criminal penalties should we not achieve such compliance.

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

Aspects of our businesses are subject to privacy, data use and data security regulations, which could increase our costs.

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

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

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

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

Risks Related to our Intellectual Property

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

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

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If we are unable to adequately protect or enforce our intellectual property rights, such information may be used by others to compete against us.

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

Despite our efforts to protect our intellectual property and proprietary rights, it is possible that competitors or other unauthorized third parties may obtain, copy, use or disclose our technologies, including our UV-LED SteriDuct technology or PECO nanotechnology, inventions, processes, improvements or any other intellectual property. We cannot assure you that any of our existing or future patents or other intellectual property rights will not be challenged, invalidated, circumvented or will otherwise provide us with meaningful protection. Any of our pending patent applications may not be granted, and we may not be able to obtain foreign patents or pending applications corresponding to our U.S. patents. Even if foreign patents are granted, effective enforcement in foreign countries may not be available. Once the patents have expired, it is possible that competitors and other third parties may commercialize products that utilize our proprietary processes, which could materially reduce or eliminate any competitive advantage that we may have over our competitors.

There may be circumstances where we may not have the right to control the preparation, filing and prosecution of all patent applications that we license from third parties, or to maintain or enforce the rights to patents licensed from third parties, in which case, we will be dependent on our licensors to obtain, maintain and enforce patent protection for our licensed intellectual property. Our licensors may not successfully prosecute the patent applications that are licensed to us, and even if patents are issued in respect of these patent applications, our licensors may fail to maintain these patents or may determine not to pursue litigation against other companies that are infringing these patents. In other words, such licensed patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business. Further, we cannot be certain that such activities related to the preparation, filing, prosecution, maintenance or enforcement of the licensed patent rights by licensors have been or will be conducted in compliance with applicable laws and regulations or will result in valid and enforceable patent rights. We may have limited control over the manner in which our licensors initiate an infringement proceeding against a third-party infringer of the licensed patent rights or defend certain of the licensed patent rights. It is possible that the licensor’s infringement proceeding or defense activities with respect to the licensed patent rights may be less vigorous than had we conducted them. In the event that our licensors fail to adequately pursue and maintain patent protection for the licensed patents and patent applications they control, and to timely cede control of such prosecution or enforcement to us, our competitors might be able to enter the market, which would have a material adverse effect on our business.

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

If our patents and other intellectual property rights do not adequately protect our technology, our competitors may be able to offer competitive or similar products. Competitors may also be able to develop

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similar technology independently, reverse engineer our technology or design around our patents and other intellectual property rights. Any of the foregoing events would lead to increased competition and reduce our revenue or gross margins, which would adversely affect our operating results.

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

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

If we breach any of our license agreements, it could have a material adverse effect on our businesses, operating results and financial condition.

We are party to a license agreement that grants us an exclusive worldwide license for use of PECO nanotechnology in certain licensed products and processes, and we have entered and may in the future enter into license agreements with third parties under which we may license the improved PECO or other technology in our current or future products.

These intellectual property license agreements may require us to comply with various obligations, as well as potential royalty and milestone payments and other obligations. If we fail to comply with our obligations under any of these or future license agreements, use the licensed intellectual property in an unauthorized manner or if we become subject to bankruptcy-related proceedings or otherwise materially breach any license agreements, the terms of the license granted may be materially modified by rendering currently exclusive licenses non-exclusive or we may give our licensors the right to terminate the applicable license agreement, in whole or in part. Generally, the loss or termination of our rights under the PECO license or any other licenses that we may acquire in the future could harm our businesses, financial condition and results of operations.

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

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

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

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

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our right to sublicense patent and other intellectual property rights to third parties;

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

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our right to transfer or assign the license;

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the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and

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whether and the extent to which inventors are able to contest the assignment of our rights to our licensors.

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

Our intellectual property licensed from various third parties may be subject to retained rights.

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

In addition, the United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act, or the Bayh-Dole Act. The federal government retains a “nonexclusive, nontransferable, irrevocable, paid-up license” for its own benefit. The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “nonexclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself. In addition, a number of other countries have similar regimes regarding “march-in” rights. We have collaborated with academic institutions to accelerate our research or development efforts and may need to do so again in the future. While we try to avoid engaging with university partners in projects in which there is a risk that government funds may be commingled, we cannot guarantee that any co-developed intellectual property will be free from government rights pursuant to the Bayh-Dole Act or similar legislation. If, in the future, we co-own or license intellectual property that is critical to our business that is developed in whole or in part with government funds subject to the Bayh-Dole Act or other similar legislation, our ability to enforce or otherwise exploit such licensed intellectual property may be adversely affected.

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

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

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

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

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

Our business relies on technological and other innovations embodied in various forms of proprietary information and other intellectual property related information. Any failure to protect our intellectual property rights could potentially harm our competitive advantages to an extent, which may have an adverse effect on our operating results and financial condition.

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

In addition, our failure to adequately protect our intellectual property rights could result in the reduction or loss of our competitive advantage. We may be unable to prevent third parties from using our proprietary information and other intellectual property without our authorization or from independently developing proprietary information and other intellectual property that is similar to ours, particularly in those countries where the laws do not protect our proprietary rights to the same degree as in the United States or those countries where we do not have intellectual property rights protection. The use of our proprietary information and other intellectual property, including our SteriDuct technology and PECO nanotechnology, by others could reduce or eliminate competitive advantages that we have developed, potentially causing us to lose sales, licensing opportunities, actual or potential customers, or otherwise harm our businesses. If it becomes necessary for us to litigate to protect these intellectual property rights, any proceedings could be burdensome, lengthy and costly, could result in counterclaims challenging our intellectual property (including validity or enforceability) or accusing us of infringement, and we may not prevail.

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

Our confidentiality agreements could be breached or may not provide meaningful protection for at least a portion of our trade secrets or proprietary technology. Adequate remedies may not be available in the event of an unauthorized use or disclosure of our trade secrets and proprietary technology, including our SteriDuct technology and PECO nanotechnology. Violations by others of our confidentiality agreements and the loss of employees who have specialized knowledge and expertise could harm our competitive position

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resulting from the exclusive nature of such knowledge and expertise and cause our sales and operating results to decline as a result of increased competition. In addition, others may obtain knowledge of our trade secrets through independent development or other access by legal means.

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

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

We may incur substantial costs enforcing and defending our intellectual property rights.

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

Risks Related to Molekule Common Stock

The largest Molekule stockholders have the ability to control all matters submitted to Molekule stockholders for approval.

The six largest Molekule stockholders beneficially own, in the aggregate, approximately 60% of the outstanding shares of Molekule Common Stock. As a result, if these stockholders were to choose to act together, they would be able to control all matters submitted to Molekule stockholders for approval, as well as our management and affairs. For example, these persons, if they choose to act collectively, would control the election of directors and approval of any charter amendment, merger, consolidation or sale of all or substantially all of our assets. These stockholders could cause us to take actions that these stockholders believe to be in our best interests but with which the remainder of Molekule stockholders disagree. For example, they could cause us to enter into mergers with companies that operate in different businesses or could elect to cause us to sell all or substantially all of our assets.

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

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

Molekule Common Stock is listed on Nasdaq. Notwithstanding such listing, there can be no assurance that an active or liquid public market will fully develop or be sustained. In addition, if we do not meet

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Nasdaq’s continuing listing requirements, including Nasdaq requirements related to maintenance of a minimum stock price, the aggregate market value of Molekule Common Stock and the number of public holders of Molekule Common Stock, we could be delisted by Nasdaq. In the absence of an active or liquid public market:

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

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market visibility for our securities may be limited; and

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

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

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

The trading price and volume of Molekule Common Stock may be volatile.

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

The market for Molekule Common Stock will depend on a number of factors, most of which we cannot control, including:

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

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general market conditions, including fluctuations in commodity prices;

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domestic and international economic, legal and regulatory factors unrelated to our performance;

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actual or anticipated fluctuations in our quarterly and annual results and those of our competitors;

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quarterly variations in the rate of growth of our financial indicators, such as revenue, EBITDA, net income and net income per share;

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our businesses, operations, results and prospects;

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our operating and financial performance;

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future mergers and strategic alliances;

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changes in government regulation, taxes, legal proceedings or other developments;

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shortfalls in our operating results from levels forecasted by securities analysts;

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changes in revenue or earnings estimates, or changes in recommendations by equity research analysts;

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failure to achieve the perceived benefits of the mergers as rapidly as or to the extent anticipated by financial or industry analysts;

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speculation in the press or investment community;

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the failure of research analysts to cover Molekule Common Stock;

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sales of Molekule Common Stock by the Company, large stockholders or management, or the perception that such sales may occur;

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changes in accounting principles, policies, guidance, interpretations or standards;

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announcements concerning us or our competitors;

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public reaction to our press releases, other public announcements and filings with the SEC;

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strategic actions taken by competitors;

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actions taken by Molekule stockholders;

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additions or departures of key management personnel;

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maintenance of acceptable credit ratings or credit quality;

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the general state of the securities markets; and

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the risk factors described in this prospectus.

These and other factors may impair the market for Molekule Common Stock and the ability of investors to sell shares of Molekule Common Stock at an attractive price. These factors also could cause the market price and demand for Molekule Common Stock to fluctuate substantially, which may negatively affect the price and liquidity of Molekule Common Stock. Many of these factors and conditions are beyond the control of us or Molekule stockholders.

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

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

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

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make a special written suitability determination for the purchaser;

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

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

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

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

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

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports

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and proxy statements and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find Molekule Common Stock less attractive because we may rely on these exemptions. If some investors find Molekule Common Stock less attractive as a result, there may be a less active trading market for Molekule Common Stock, and the Molekule Common Stock price may be more volatile.

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

We will remain an “emerging growth company” for up to five years (through the fiscal year ending December 31, 2026), although we will lose that status sooner if our revenue exceeds $1.235 billion in any year, if we issue more than $1.0 billion in non-convertible debt in a three-year period or if the market value of Molekule Common Stock that is held by non-affiliates exceeds $700 million as of June 30 of any year.

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

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

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

Our officers, directors and other Molekule stockholders — who collectively own 25,057,558 shares of Molekule Common Stock, or approximately 73.7% of the outstanding shares of Molekule Common Stock, have agreed that they will not offer, sell or otherwise transfer any shares of Molekule Common Stock until July 12, 2023, subject to limited exceptions.

Any release of shares of Molekule Common Stock under these lock-up agreements, or the perception that such release could occur, would have a negative effect on the trading price of Molekule Common Stock. In addition, a significant number of shares of Molekule Common Stock will be eligible for sale in the public market on July 12, 2023. The trading price of Molekule Common Stock may decline as this lock-up expiration date approaches and following the expiration of these lock-up agreements.

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

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

The expenses required to adequately report as a public company are material, and compliance with the various reporting and other requirements applicable to public companies requires considerable time and

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attention of management. For example, the Sarbanes-Oxley Act and the rules of the SEC and national securities exchanges impose various requirements on public companies, including requiring the establishment and maintenance of effective disclosure and internal controls. Our management and other personnel need to devote a substantial amount of time to these compliance initiatives.

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

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

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

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

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

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

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

It further provides that, if any action the subject matter of which is within the scope of the forum and venue selection provision is filed in a court other than a court located within the State of Delaware in the name of any Molekule stockholder, such stockholder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action brought in any such court to enforce the forum and venue selection provision; and (y) having service

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of process made upon such stockholder in any such action by service upon such stockholder’s counsel in the action as agent for such stockholder. It further provides that any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of Molekule shall be deemed to have notice of and consented to the provisions of the forum and venue selection provision.

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

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

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

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

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

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

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General Risk Factors

Business or economic disruptions could seriously harm our business.

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

For example, Russia’s invasion of Ukraine has prompted the U.S. and other countries to announce sanctions against Russia, which could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, particularly if current or new sanctions continue for an extended period of time or if geopolitical tensions result in expanded military operations on a global scale. In addition, the recent invasion of Ukraine by Russia, and the impact of sanctions against Russia and the potential for retaliatory acts from Russia, could result in increased cyberattacks against U.S. companies. The full effect of this military conflict and related sanctions on the global economy and our existing and prospective customers and, as a result, our business remains uncertain.

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

We are dependent on management and key personnel, and our business would suffer if we fail to retain our key personnel and attract additional highly skilled employees.

Our success depends, to a significant degree, upon the continued contributions of the members of our senior management and highly credentialed scientists. If we lose the services of one or more of these people, we may be unable to achieve our business objectives. We may be unable to attract and retain personnel with the advanced technical qualifications or managerial experience necessary for the development of our business and products or commercialization of our products.

Our success depends on the specialized skills of our management team and key operating personnel, particularly those of our Chief Executive Officer, Jason DiBona, our Chief Financial Officer, Ryan Tyler, and our Chief Operating Officer, Ritankar “Ronti” Pal. This may present particular challenges as we operate in a specialized industry, which may make replacement of our management team and key operating personnel difficult. A loss of any of our managers or key employees, or our failure to satisfactorily perform our responsibilities, could have an adverse effect on our business, operating results, financial condition and prospects.

Our success has been dependent, and will continue to depend, on our ability to identify, hire, develop, motivate and retain highly qualified personnel for all areas of our organization, particularly research and development and marketing and sales. Trained and experienced personnel are in high demand and may be in short supply. Many of the companies with which we compete for experienced employees have greater resources than us and may be able to offer more attractive terms of employment. In addition, we invest significant time and expense in training employees, which increases their value to competitors that may seek to recruit them.

In addition, our current employees are at-will employees, which means that either we or the employee may terminate the employment relationship at any time, and our agreements with our independent contractors generally extend only on a monthly basis after an initial term, with the ability of either party to terminate the agreement upon prior notice to the other party.

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We may not be able to attract, develop and maintain the skilled workforce necessary to operate our business, and labor expenses may increase as a result of a shortage in the supply of qualified personnel, which will negatively impact our business, operating results, financial condition and prospects. Each member of senior management, as well as our key employees, may terminate employment without notice and without cause or good reason. The members of our senior management, except for Mr. DiBona, Mr. Tyler and Mr. Pal, are not subject to non-competition agreements. Accordingly, the adverse effect resulting from the loss of certain members of senior management could be compounded by our inability to prevent them from competing with us.

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

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

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

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

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retention of employees from the acquired company;

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

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

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

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

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

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

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

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

We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities. As the use of digital technologies has increased,

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cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data, all of which are vital to our operations and business strategy. There can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigating their effects.

Despite the implementation of security measures, our computer systems and those of our current and future third-party service providers are vulnerable to damage or disruption from hacking, computer viruses, software bugs, unauthorized access or disclosure, natural disasters, terrorism, war and telecommunication, equipment and electrical failures. In addition, there can be no assurance that we will promptly detect any such disruption or security breach, if at all. Unauthorized access, loss or dissemination could disrupt our operations, including our ability to conduct research and development activities, process and prepare company financial information and manage various general and administrative aspects of our business.

To the extent that any such disruption or security breach results in a loss of or damage to our data or applications, or inappropriate disclosure or theft of confidential, proprietary or personal information, we could incur liability, suffer reputational damage or poor financial performance or become the subject of regulatory actions by federal, state or non-U.S. authorities, any of which could adversely affect our business.

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

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

We may be subject to legal proceedings in the ordinary course of our business. If the outcomes of these proceedings are adverse to us, it could have a material adverse effect on our business, financial condition and results of operations.

We may be subject various legal proceedings from time to time, which could have a material adverse effect on our business, financial condition and results of operations. Claims arising out of actual or alleged violations of law could be asserted against us by individuals, either individually or through class actions, by governmental entities in civil or criminal investigations and proceedings or by other entities. These claims could be asserted under a variety of laws, including but not limited to consumer finance laws, consumer protection laws, intellectual property laws, privacy laws, labor and employment laws, securities laws and employee benefit laws. These actions could expose us to adverse publicity and to substantial monetary damages and legal defense costs, injunctive relief and criminal and civil fines and penalties, including but not limited to suspension or revocation of licenses to conduct business. See the section entitled “Business of Molekule — Legal Proceedings.”

Insurance policies may be expensive and only protect us from some business risks, which will leave us exposed to significant uninsured liabilities.

We do not know if we will be able to obtain and maintain insurance with adequate levels of coverage. Any significant uninsured liability may require us to pay substantial amounts, which may adversely affect our business, financial position and results of operations.

Risks Related to Aura

Aura expects a lack of significant profits in the coming years.

Aura is in the first stages of commercial marketing of its products. Therefore, there is no certainty that Aura’s operations will turn a profit in the short term. In order to deal with the aforementioned risk, Aura is

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working to expand the scope of its customers and to streamline and reduce its production costs. Furthermore, Aura is working to expand the range of its products. Aura can provide no assurance that such measures will be successful.

Aura’s business is subject to the state of the Israeli economy and the spread of the COVID-19 virus.

In early 2020, the Covid pandemic, caused by the COVID-19 virus, began spreading around the world and was eventually declared as a global pandemic by the World Health Organization. The outbreak of the pandemic and the uncertain times that followed its rapid spread caused a global health and economic crisis, which also affected the state of Israel. Since the outbreak of the pandemic, some of the world’s population received a COVID-19 vaccination. However, at the same time, new variants of the virus evolved and different countries around the world experienced additional outbreaks at various magnitudes.

Aura estimates that the continuation of the pandemic as a result of the evolution of the Omicron variant and/or additional variants together with its present and future consequences may affect Aura’s business in light of its field of operations — the field of indoor air quality and the system it is developing for purifying air inside buildings and enclosed spaces in different manners, as detailed below.

The ongoing outbreak of the COVID-19 virus could increase the influence of the risk factors Aura is exposed to as a result of a general worsening of economic conditions, including the onset of a recession, a general economic slowdown and a decrease in the rate of consumption. Furthermore, any limitations imposed on the transfer of goods as a result of a virus outbreak may have an effect on the availability of the raw materials used by Aura and may cause their prices to change and may also have an effect on the distribution of Aura’s products in various countries around the world.

Aura faces risks related to war and security incidents.

The security situation in the State of Israel and its area may affect Aura, whose management, offices, logistics centers and production facilities are located in Israel. The deterioration of the security situation, including a war leading to the closure of air and seaports, may delay the activities related to the distribution of Aura’s products. Furthermore, it is possible that some of Aura’s employees and directors will be called to reserve service, which could have an impact on Aura’s operations.

Aura faces risks from its activity in developing countries.

Aura markets its products also in developing countries, which are exposed to crises and some of which are characterized by a government or regime that is sometimes politically and economically unstable. Such crises may delay and even reduce the scope of Aura’s sales in these countries, thus damaging its income.

Aura is dependent on a single supplier.

Aura is dependent on the Beth El group since Beth El is the only supplier that produces Aura’s products in three different plants. Beth El is responsible for the entire production chain of Aura’s products, starting with the purchase of the raw materials, through the assembly of the products and their inspection to their packaging for shipment. A decrease in the volume of the manufacturer’s activity or in its production capacity, including due to financial difficulties it may encounter, may have a material impact on Aura’s operation, including damage its reputation in the event of delays in the delivery of products to clients. Aura estimates that if it is forced to terminate the engagement with Beth El, the production of its products may stop for approximately three months before an alternative manufacturer is found and production begins with said manufacturer.

Aura has a history of losses and may not be able to achieve profitability in the near, medium or long term (if at all).

Investments in start-up companies, such as Aura, are risky. Investing in start-up companies, such as Aura, may not yield the investors in such companies the desired return, and may even result in the loss of all or most of the investment funds. In addition, the companies operating in Aura’s field have accumulated significant losses, they continue to accumulate losses over long periods even after the end of research and

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development, and many companies operating in Aura’s field show profitability from the sale of products and/or business collaborations only after years (and even decades), if at all. Aura has a history of losses and may not be able to achieve profitability in the near, medium or long term (if at all).

Aura is exposed to competition.

Aura is exposed to competition both from parties currently operating in Aura’s field of operation and from parties who may compete with it in the future due to the increased rate of growth experienced by Aura’s field of operations in light of the spread of the COVID-19 virus. Aura is working to promote and speed up its entry into additional markets with the aim of establishing itself as a leading company in the field. Furthermore, Aura is working to deepen its hold in the markets in which it operates and to increase its market share.

The creation of an alternative technology or the reverse engineering of Aura’s products may harm the scope of Aura’s activities.

Aura’s business depends to a great extent on its intellectual property rights. Aura submitted several patent and trademark registration applications. The creation of an alternative technology or the reverse engineering of Aura’s products may harm the scope of Aura’s activities.

Failure to obtain sufficient insurance coverage may harm Aura’s activity, its growth rate and its ability to penetrate the relevant markets.

Aura purchased insurance policies to secure the insurance coverage required for its operations, including professional liability, product liability and cargo insurance. However, not all possible risks are covered or can be fully covered by the various policies arranged, and therefore, in the event of damage or loss, the insurance benefits received, to the extent any are received, will not necessarily cover the full extent of the damage and/or all the possible losses (both with respect to damage caused to third parties, including Aura’s clients, and with respect to product quality and/or its suitability for its operational purpose). Furthermore, there are certain insurance policies that Aura may decide not to arrange at all for various reasons such as the lack of financial viability. It will be noted that the decision on the type and scope of the insurance is made taking into account various consideration, including, without limitation, the cost of the insurance, its nature and the extent of the coverage offered, the relevant legal requirements and the ability to obtain proper coverage in the insurance market. Aura may be exposed to warranty claims for its products and other additional claims that could affect its business, its reputation and its ability to enter into engagements with clients and retain existing clients. As a result, failure to obtain sufficient insurance coverage may harm Aura’s activity, its growth rate and its ability to penetrate the relevant markets.

Aura is dependent on skilled and professional personnel.

Aura’s activity is characterized by the highest level of knowledge, professionalism and expertise in its field and also requires personnel with experience and knowledge in its fields of operation, including in the fields of research, engineering, marketing and sales. Aura’s ability to continue developing its products and meet sales and business development goals depends, without limitation, on its ability to continue employing such skilled personnel.

A malfunction in one of the production and/or storage processes could lead to damage to Aura’s products.

Aura’s products are manufactured according to strict quality requirements. A malfunction in one of the production and/or storage processes could lead to damage to Aura’s products and, as a result, to Aura’s business results. Aura deals with this risk factor, without limitation, by controlling the production and storage processes and defining authorization levels for those trained to work in the product environment, as well as installing physical security measures at the production and storage sites. Aura can provide no assurances that these measures will be successful.

The existence of operational difficulties over a long period of time may damage Aura.

Aura provides new, innovative and complex systems for production. Aura must deliver the systems at times that match its clients’ needs. In addition, Aura is constantly looking at ways to lower its production

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costs. As a result of the above, Aura faces the need to overcome operational difficulties in order to ensure the quality of its systems and its ability to meet its obligations towards its clients with respect to delivery times. The existence of operational difficulties over a long period of time may damage Aura’s reputation and lead to the diversion of orders and projects for Aura’s competitors.

Aura is exposed to various cyber risks.

Cyber and information security risks threaten the activity of companies characterized by targeted technological knowledge. The Aura Air system, being based, among other things, on the use of internet technologies, is exposed to various cyber risks, including cyber-attacks that may cause damage to the information in its systems and their shutdown. Aura prepares to counter these risks, including cyber-attacks, by various means, which include, without limitation, encryption of information with an advanced encryption standard, use of an automatic system that scans to detect breaches in Aura’s cloud services, definition of separate identities for system users, use of cryptographic authentication and authorization techniques, designing the device securely without ports, monitoring Aura servers and using storage media meeting the requirements of ISO 27001, 27017 and 27018 standards.

Despite Aura’s attempts to reduce the aforementioned exposure, cyber-attacks occur unexpectedly, and it is not certain that the measures taken by Aura to eradicate the possible damages from cyber-attacks will help it if they do occur. The damage caused to Aura by a cyber-attack may have a negative impact on Aura’s reputation, operations and results.

Aura may be unable to penetrate markets in additional countries.

As part of Aura’s strategy, it intends to grow and penetrate into additional markets in potential target countries. Penetrating a new market also requires experience, proven technology, compliance with the quality standards accepted in that country, use of certain communication protocols and cyber restrictions to the extent that there are any, which may affect the rate of penetration of Aura’s products into the market, something that may have an adverse effect on Aura’s growth and its business results.

Failure to comply with “preferred enterprise” requirements may damage Aura.

In accordance with the approvals received, Aura operates as a “preferred enterprise.” The tax benefits that Aura receives as part of the “preferred enterprise” program require it to meet various conditions. Partial or complete failure to comply with these requirements may result in the demand for payment of additional taxes retroactively and even damage Aura’s status as a “preferred enterprise” in the future.

Aura may be sued for the violation of intellectual property rights of third parties.

Aura may be sued for the violation of intellectual property rights of third parties, including, without limitation, a breach of the defenses put in place by third parties, even if such is not done maliciously. This may damage Aura’s ability to sell and develop certain products, as well as cause additional expenses, including, without limitation, for the purchase of user licenses and legal protections. A loss in a lawsuit or the inability to sell and develop certain technologies may have a negative impact on Aura’s operating results and financial condition.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus and the documents that Molekule refers you to in this prospectus, as well as oral statements made or to be made by Molekule and Aura, include certain “forward-looking statements” within the meaning of, and subject to the safe harbor created by, Section 27A of the Securities Act, Section 21E of the Exchange Act and the Private Securities Litigation Reform Act of 1995, which are referred to as the safe harbor provisions, with respect to the businesses, strategies and plans of Molekule and Aura, their expectations relating to the Merger and their future financial condition and performance. Statements included in this prospectus that are not historical facts are forward-looking statements, including statements about the beliefs and expectations of the management of each of Molekule and Aura. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative thereof and similar expressions are intended to identify such forward-looking statements that are intended to be covered by the safe harbor provisions, although not all forward-looking statements contain such identifying words. Molekule cautions investors that any forward-looking statements are subject to known and unknown risks and uncertainties, many of which are outside Molekule’s and Aura’s control and that may cause actual results and future trends to differ materially from those matters expressed in, or implied or projected by, such forward-looking statements, which speak only as of the date of this prospectus. Investors are cautioned not to place undue reliance on these forward-looking statements. Among the risks and uncertainties that could cause actual results to differ from those described in forward-looking statements are the following:

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general economic conditions in the markets in which Molekule and Aura operate;

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the impact of the COVID-19 pandemic and related prophylactic measures;

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expected timing of regulatory approvals and product launches;

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non-performance of third-party vendors and contractors;

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risks related to Molekule’s and Aura’s ability to successfully sell their products and the market reception to and performance of their products;

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the possibility that our products do not ultimately perform in line with our testing or that prior test results may not be replicated in future studies;

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

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the limited operating history of Molekule, Legacy Molekule and Aura;

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the ability of Molekule and Aura to manage growth;

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the ability of Molekule and Aura to obtain additional financing when and if needed;

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the ability to expand Molekule’s and Aura’s product offerings;

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the ability of Molekule and Aura to compete with others in their industry;

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the ability of Molekule and Aura to protect their intellectual property;

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the ability of certain existing Molekule stockholders to determine the outcome of matters that require Molekule stockholder approval;

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Molekule’s ability to retain the listing of Molekule Common Stock on Nasdaq;

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the ability of Molekule and Aura to defend against legal proceedings;

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success in retaining or recruiting, or changes required in, Molekule’s or Aura’s officers, key employees or directors;

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the ability to successfully integrate the businesses of Molekule, Legacy Molekule and Aura;

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the ability of the parties to achieve the expected benefits from the Merger within the expected time frames or at all;

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the incurrence of significant transaction and other related fees and costs;

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the incurrence of unexpected costs, liabilities or delays relating to the Merger;

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the risk that the public assigns a lower value to Aura’s business than the value used in negotiating the terms of the Merger;

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the risk that the Transactions may not be accretive to Molekule’s current stockholders;

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the risk that the Transactions may prevent Molekule from acting on future opportunities to enhance stockholder value;

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the dilutive impact of the stock consideration that will be issued in the Merger;

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the risk that any goodwill or identifiable intangible assets recorded due to the Merger could become impaired; and

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potential disruptions to the business of the companies while the Merger is pending.

For further discussion of these and other risks, contingencies and uncertainties you should consider, please see the section entitled “Risk Factors.”

All subsequent written or oral forward-looking statements attributable to Molekule or Aura or any person acting on behalf of either company are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Neither Molekule nor Aura is under any obligation, and each expressly disclaims any obligation, to update, alter or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, except as may be required by law.

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
GIVING EFFECT TO THE MOLEKULE MERGER

On January 12, 2023, Molekule Group, Inc. (f/k/a AeroClean Technologies, Inc.), a Delaware corporation (“Molekule”), completed its previously announced acquisition of Molekule, Inc., a Delaware corporation (“Legacy Molekule”), pursuant to the Agreement and Plan of Merger dated as of October 3, 2022 (the “Molekule Merger Agreement”) by and among Molekule, Air King Merger Sub Inc., a Delaware corporation and direct wholly owned subsidiary of Molekule (“Molekule Merger Sub”), and Legacy Molekule. Pursuant to the Molekule Merger Agreement, Molekule Merger Sub merged with and into Legacy Molekule, with Legacy Molekule continuing as the surviving entity and a wholly owned subsidiary of Molekule (the “Molekule Merger”). In connection with the closing of the Molekule Merger, Molekule changed its name from “AeroClean Technologies, Inc.” to “Molekule Group, Inc.”

At the effective time of the Molekule Merger, the outstanding shares of Legacy Molekule common stock, par value $0.0001 per share, that were issued and outstanding immediately prior to the effective time of the Molekule Merger were converted automatically into, and the holders of such shares were entitled to receive, by virtue of the Molekule Merger and upon the terms and subject to the conditions set forth in the Molekule Merger Agreement, 14,907,210 fully paid and nonassessable shares of Molekule Common Stock (the “Molekule Merger Consideration”).

At the effective time of the Molekule Merger, each in-the-money Legacy Molekule warrant, by virtue of the Molekule Merger and without further action on the part of the holder thereof, converted into the right to receive, for each share of Legacy Molekule common stock subject to such in-the-money Legacy Molekule warrant (including shares of Legacy Molekule common stock issuable upon conversion of any Legacy Molekule preferred stock issuable upon exercise of any Legacy Molekule warrant), a portion of the Molekule Merger Consideration equal to the Molekule Merger Consideration that would have been payable in respect of such share had such in-the-money Legacy Molekule warrant been exercised immediately prior to the effective time of the Molekule Merger less the exercise price with respect to such warrant. Each Legacy Molekule warrant issued and outstanding as of the effective time of the Molekule Merger that was not an in-the-money Legacy Molekule warrant was automatically cancelled and terminated for no consideration immediately prior to the effective time of the Molekule Merger.

At the effective time of the Molekule Merger, each outstanding option to acquire Legacy Molekule common stock was cancelled and terminated for no consideration. Any shares of Legacy Molekule common stock that were available for issuance pursuant to Legacy Molekule’s 2015 stock plan (the “Residual Shares”) were converted at the effective time of the Molekule Merger into the number of shares of Molekule Common Stock equal to the product of the number of such Residual Shares and the exchange ratio determined in accordance with the Molekule Merger Agreement.

The unaudited pro forma condensed combined statement of operations should be read in conjunction with the separate historical financial statements and accompanying notes of Molekule and Legacy Molekule as of and for the year ended December 31, 2022.

The unaudited pro forma condensed combined statement of operations are based on and have been derived from Molekule’s and Legacy Molekule’s audited historical financial statements as of and for the year ended December 31, 2022. The unaudited pro forma condensed combined statement of operations were prepared in accordance with Article 8 of Regulation S-X using the assumptions set forth in the notes hereto and transaction accounting adjustments that reflect the application of accounting required by U.S. GAAP, including the effects of the Molekule Merger. The unaudited pro forma condensed combined have been prepared on the basis that Molekule is the acquirer for accounting purposes. The unaudited pro forma condensed combined financial statements do not include a pro forma balance sheet as the Molekule Merger is reflected in the most recent historical balance sheet as of March 31, 2023 filed in Molekule’s Form 10-Q for the quarterly period then ended. The unaudited pro forma condensed combined financial statements do not include a pro forma statement of operations for the three months ended March 31, 2023 as the results of Legacy Molekule are included in Molekule’s results of operations from the date of acquisition, January 12, 2023. Molekule does not believe that the results of Legacy Molekule’s operations for the period from January 1, 2023 through January 11, 2023 are material to the consolidated results of operations

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of Molekule for the period ended March 31, 2023. Pro forma financial information related to the acquisition of Aura Smart Air Ltd. is not included because the acquisition is not “significant” within the meaning of Regulation S-X.

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

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

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2022

	Historical Molekule(a)			Historical Legacy Molekule(b)			Reclassification Adjustments			Transaction Accounting Adjustments			Pro Forma Condensed Combined
Product revenues		$	227,186		$	48,028,194		$			$			$	48,255,380
Cost of sales			112,559			32,476,891									32,589,450
Gross profit			114,628			15,551,303									15,665,931
Operating expenses:
Selling, general and administrative			15,453,261			—			47,636,365(c)			989,702(d)			64,079,328
Research and development			1,954,552			—			701,206(c)						2,655,758
General, administrative, research and development			—			38,948,195			(38,948,195)(c)						—
Sales, marketing and advertising			—			9,389,376			(9,389,376)(c)						—
Total operating expenses			17,407,813			48,337,571						(989,702)			66,735,086
Operating loss			(17,293,185)			(32,786,268)						(989,702)			(51,069,155)
Change in fair value of warrant liability			(10,623,000)			—									(10,623,000)
Other income (expense):
Other income			—			35,510,107									35,510,107
Other expense			—			(159,645)									(159,645)
Interest expense			—			(4,116,425)									(4,116,425)
Total other income (expense)			—			31,234,037									31,234,037
Loss before income tax benefit			(6,670,185)			(1,552,231)						(989,702)			(9,212,118)
Income tax benefit			(501,254)			—									(501,254)
Net loss		$	(6,168,931)		$	(1,552,231)		$	—		$	(989,702)		$	(8,710,864)
Net loss per share-basic		$	(0.42)		$	—								$	(0.29
Weighted-average common shares outstanding:
Basic and diluted			14,676,369			—						15,431,198(e)			30,107,567

See the accompanying notes to the unaudited pro forma condensed combined statement of operations, which are an integral part hereof. The pro forma adjustments are explained in the notes below.

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NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED STATEMENT OF OPERATIONS

Note 1. Description of the Transaction

On October 3, 2022, Molekule, Legacy Molekule and Molekule Merger Sub entered into the Molekule Merger Agreement, pursuant to which they agreed to combine in an all-stock transaction. Pursuant to the Molekule Merger Agreement, on January 12, 2023, Merger Sub merged with and into Legacy Molekule, with Legacy Molekule continuing as the surviving entity and a wholly owned subsidiary of Molekule. In connection with the closing of the Molekule Merger, Molekule changed its name from “AeroClean Technologies, Inc.” to “Molekule Group, Inc.”

At the effective time of the Molekule Merger, each outstanding option to acquire Legacy Molekule common stock was cancelled and terminated for no consideration. The Residual Shares were converted at the effective time of the Molekule Merger into the number of shares of Molekule Common Stock equal to the product of the number of such Residual Shares and the exchange ratio determined in accordance with the Molekule Merger Agreement.

Note 2. Basis of Pro Forma Presentation

The accompanying unaudited pro forma condensed combined financial statements have been prepared pursuant to Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” The accompanying unaudited pro forma condensed combined financial statements are based on the historical financial information of Molekule and Legacy Molekule. In the opinion of Molekule’s management, the unaudited pro forma condensed combined financial statements reflect adjustments that are necessary to present fairly the unaudited pro forma condensed combined statements of operations for the period indicated.

The unaudited pro forma condensed combined statement of operations is for illustrative and informational purposes only and is not intended to represent what Molekule’s results of operations would have been had the Molekule Merger occurred on the dates indicated. The unaudited pro forma condensed combined statement of operations also should not be considered indicative of Molekule’s future results of operations.

Molekule and Legacy Molekule prepared their respective statement of operations in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). The Molekule Merger is being accounted for using the acquisition method of accounting under the provisions of Accounting Standards Codification 805, Business Combinations, with Molekule being treated as the accounting acquirer. In identifying Molekule as the acquiring entity for accounting purposes, Molekule and Legacy Molekule took into account a number of factors, including (i) which entity is issuing its equity interests, (ii) the expectation that, following the effective time of the Molekule Merger, holders of shares of Molekule Common Stock as of immediately prior to the effective time of the Molekule Merger will hold, in the

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aggregate, more than 50% of the issued and outstanding shares of Molekule Common Stock immediately following the effective time of the Molekule Merger, (iii) the intended corporate governance structure of Molekule following the effective time of the Molekule Merger, (iv) the intended senior management of Molekule following the effective time of the Molekule Merger and (v) the terms of the share exchange. No single factor was the sole determinant in the overall conclusion that Molekule is the acquirer for accounting purposes; rather, all factors were considered in arriving at such conclusion.

The unaudited pro forma condensed combined statement of operations for the fiscal year ended December 31, 2022 gives effect to the Molekule Merger as if it had occurred on January 1, 2022.

Purchase Price Consideration

The allocation of the purchase price consideration reflected in these pro forma condensed combined financial statements consists of equity consideration in the form of shares of Molekule Common Stock issued to Legacy Molekule stockholders with a value of $52,466,073 based on 14,907,210 shares of Molekule Common Stock that Molekule issued to holders of Legacy Molekule common stock in connection with the Molekule Merger, 23,608 shares of Molekule Common Stock issued to Legacy Molekule warrantholders and 500,380 shares of Molekule Common Stock that vested prior to or on the closing date of the Molekule Merger. The value has been calculated based on the $3.40 share price of Molekule Common Stock on January 12, 2023 (the closing date of the Molekule Merger).

The valuation of the Molekule Merger Consideration is calculated as follows:

Shares of Molekule Common Stock Issued to Legacy Molekule Stockholders		14,907,210
Shares of Molekule Common Stock Issued to Legacy Molekule Warrantholders		23,608
Total		14,930,818
Molekule closing share price as of January 12, 2023	$	3.40
Consideration Transferred for Share Exchange		50,764,781
Fair value of replacement awards attributable to pre-Molekule Merger services		1,701,292
Total Consideration Transferred	$	52,466,073

Note 3. Adjustments to Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2022

(a)

The historical data presented for Molekule Group, Inc. has been derived from Molekule’s audited consolidated statement of operations for the year ended December 31, 2022.

(b)

The historical data presented for Molekule, Inc. has been derived from Legacy Molekule’s audited consolidated statement of operations for the year ended December 31, 2022.

(c)

Legacy Molekule’s “sales, marketing and advertising” expenses of $9,389,376 has been reclassified to “selling, general and administrative” expenses to conform to Molekule’s presentation. Legacy Molekule’s “general, administrative, research and development” expenses of $38,948,195 has been reclassified to “selling, general and administrative” expenses of $38,246,989 and “research and development” expenses of $701,206 to conform to Molekule’s presentation.

(d)

Represents (1) one-time transaction-related expenses of $367,425 that were incurred in connection with the Molekule Merger and (2) $622,277 of stock-based compensation for equity granted in connection with the Molekule Merger.

(e)

Basic and diluted loss per share were calculated using the historical weighted average shares outstanding and reflects (a) the issuance of 14,907,210 shares of Molekule Common Stock to Legacy Molekule stockholders as Molekule Merger Consideration, (b) the issuance of 23,608 shares of Molekule Common Stock to Legacy Molekule warrantholders as Molekule Merger Consideration and (c) 500,380 shares of Molekule Common Stock that vested prior to or on the closing of the Molekule Merger, assuming in each case that the shares were outstanding since January 1, 2022. Molekule’s warrants and restricted stock units were not included since the effects of potentially dilutive securities are antidilutive.

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INFORMATION ABOUT THE COMPANIES

Molekule Group, Inc.

Molekule is a pathogen elimination technology company on a mission to keep work, play and life going by improving IAQ. We have the largest range of proprietary and patented, FDA-cleared air purification devices to address the rapidly growing global air purification market. Our air hygiene product, Pūrgo™, is an FDA 510(k) cleared, Class II medical device that provides continuous air filtration, sanitization and supplemental ventilation solutions with technology that can be applied in any indoor space, including in hospitals, offices and even in elevators. Pūrgo™ products feature SteriDuct™, a proprietary germicidal UV-C technology. In addition, our Air Pro and Air Mini+ air purifiers leverage a PECO technology that can destroy viruses, bacteria, mold, allergens, VOCs, chemicals and more from the air. Our purpose is simple: to never stop innovating solutions that keep people healthy and safe, so life never stops. Shares of Molekule Common Stock are traded on Nasdaq under the symbol “MKUL.” Molekule’s principal executive offices are located at 10455 Riverside Drive, Palm Beach Gardens, Florida 33410, and its telephone number is (833) 652-5326.

Aura Smart Air Ltd.

Avatar Merger Sub Ltd.

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THE MERGER

The following discussion contains certain information about the proposed Merger. This discussion is subject, and qualified in its entirety by reference, to the Merger Agreement attached as Annex A hereto. You are urged to carefully read this entire prospectus, including the Merger Agreement included in Annex A hereto.

General

Upon the satisfaction or waiver of the conditions to closing contained in the Merger Agreement, (i) at the Effective Time, Merger Sub will merge with and into Aura, with Aura continuing as the surviving corporation and as a wholly owned subsidiary of Molekule, and the separate existence of Merger Sub will cease, and (ii) the Aura Ordinary Shares issued and outstanding immediately prior to the Effective Time, except as otherwise described herein, will be converted automatically into, and the holders of such Aura Ordinary Shares shall be entitled to receive, by virtue of the Merger and upon the terms and subject to the conditions set forth in the Merger Agreement, the Merger Consideration.

Background of the Merger

As part of Molekule’s ongoing strategic planning process, the Molekule Board and the Molekule management team regularly review and assess various potential strategic transactions available to enhance value for the Molekule stockholders and in pursuit of Molekule’s goal to achieve market leadership.

In connection with Molekule’s strategic objectives of expanding its sales reach by developing a broad network of channel sales and distribution partners and to build a broad range of product lines and service offerings, the Molekule Board authorized Molekule management to prepare a list of potential acquisition targets. Aura was one of several companies included on this list of strategic targets, and Molekule management considered Aura attractive for its advanced software, sensor and IoT technology, which Molekule believes it can implement across its range of products.

As part of Aura’s ongoing strategic planning process, the Aura Board and the Aura management team regularly review and assess various potential strategic transactions available to enhance value for the Aura shareholders and in pursuit of Aura’s goal to achieve market share.

In connection with Aura’s strategic objectives of achieving market share by joining a company with financial resources and a strong brand in the main target markets, the Aura Board authorized Aura management to prepare a list of alternative courses of action.

On April 26, 2022, Aviad Shnaiderman, Chief Executive Officer of Aura, made initial contact with Jason DiBona, Chief Executive Officer of Molekule. Mr. DiBona and Mr. A. Shnaiderman exchanged messages and agreed to meet in the future.

On May 9, 2022, Messrs. DiBona and A. Shnaiderman met via videoconference. During this discussion, the parties explored the prospect of Molekule and Aura pursuing a potential transaction. The discussion ended without any agreement between the parties on any specific or general next steps. Later that week, Mr. DiBona met with Ryan Tyler, Chief Financial Officer of Molekule, to update him on the videoconference with Mr. A. Shnaiderman. Messrs. DiBona and Tyler agreed to continue discussions with Aura.

Also later that week, Mr. A. Shnaiderman met with Yuval Bronstein, Chairman of Aura, to update him on the videoconference with Mr. DiBona and received a green light to continue discussions with Molekule.

In the month following the initial meeting, Mr. DiBona contacted Mr. A. Shnaiderman indicating Molekule’s desire to continue exploratory discussions.

On May 26, 2022, Molekule and Aura executed a Mutual Non-Disclosure Agreement for the purpose of considering a potential transaction.

On June 13, 2022, Molekule management, consisting of Messrs. DiBona and Tyler, met with Aura management, consisting of Mr. A. Shnaiderman, Eldar Shnaiderman (Chief Technology Officer) and Ofer Bluemenfeld (Chief Financial Officer). The purpose of the meeting was introductory in nature. Aura

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management presented on, among other things, Aura’s background, historical financial statements, desire to pursue a potential business combination and potential synergies between the parties. Mr. DiBona thanked Aura management for participating in the videoconference and suggested that the group schedule a date and time to continue discussions.

In early July 2022, Messrs. DiBona and Tyler contacted Amin Khoury, PhD (Hon), Chairman of the Molekule Board, to update him on management’s discussions with Aura. It was noted that, although the information on Aura was preliminary, the Company should continue discussions with Aura with respect to a potential business combination.

On July 14, 2022, Messrs. A. Shnaiderman and Bluemenfeld updated the Aura Board on management’s discussions with Molekule. The Aura Board requested that Aura management present reasons for the transaction, so the Aura Board could decide whether management should go forward with the conversations.

Also on July 14, 2022, Molekule management, consisting of Messrs. DiBona and Tyler, presented to the Aura Board. Messrs. DiBona and Tyler discussed Molekule’s long-term strategic goals and plans and noted the benefits of the potential business combination, including the possibility of implementing Aura’s advanced software, sensor and IoT technology into Molekule’s range of products.

On July 28, 2022, members of Aura management, consisting of Messrs. A. Shnaiderman, E. Shnaiderman and Blumenfeld and Roei Friedberg (Chief Executive Officer of Aura Americas) presented to the Molekule Board. The participants in the meeting discussed the two companies’ market positions and the potential merits, to be confirmed in due diligence, of a business combination. The Molekule and Aura participants in this meeting agreed to engage in further exploratory discussions.

Between late July and early October 2022, the Molekule and Aura management teams met weekly to discuss their respective businesses.

On August 11, 2022, the Molekule Board and Molekule management, consisting of Messrs. DiBona and Tyler, met by videoconference. During the meeting, Mr. Tyler provided an update on Molekule’s mergers and acquisition strategy and potential targets, including Aura. The Molekule Board and Molekule management agreed that Aura could be an attractive acquisition target due to its sector position, available product lines and marketing initiatives.

On August 17, 2022, the Aura Board and Aura management, consisting of Messrs. Bluemenfeld, A. Shnaiderman and E. Shnaiderman, met by videoconference. During the meeting, Mr. A. Shnaiderman provided an update on the conversations with Molekule regarding the proposed merger. In light of the possibility that the proposed merger would include ancillary arrangements between Aura’s controlling shareholders and Molekule, for the sake of prudence, the Aura Board decided that the negotiations would be carried out by a special committee of the Aura Board that would include three independent directors — Alon Granot, Amir Gil and Dganit Palti. The special committee appointed independent legal counsel.

On August 28, 2022, the Aura Board and Aura management, consisting of Messrs. Bluemenfeld, A. Shnaiderman and E. Shnaiderman, met by videoconference. During the meeting, Mr. A. Shnaiderman provided the reasons for the proposed merger and the advantages and synergies of the combined companies.

On October 12, 2022, Molekule management, Aura management and the Legacy Molekule executives and director who were expected to join Molekule after the completion of the Molekule Merger (Jonathan Harris, then Chief Executive Officer of Legacy Molekule, Ritankar “Ronti” Pal, then Chief Financial Officer and Chief Operating Officer of Legacy Molekule, and Brad Feld, then a member of the Legacy Molekule board of directors) participated in a videoconference. The purpose of the meeting was to introduce the broader management teams from each company to one another. Molekule management discussed the expected synergies in connection with the Molekule Merger.

Later in October, the Molekule Board and Molekule management met with the Aura Board.

On November 7, 2022, Molekule management met with Aura management to discuss the potential integration of the patented technologies of the companies.

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On November 10, 2022, the Molekule Board held a telephonic meeting via videoconference with Molekule management. At the meeting, Messrs. DiBona and Tyler provided an update on the potential transaction with Aura and discussed strategic updates on Aura, including regarding Aura’s history, financing, financial information, technology solutions and intellectual property and potential synergies between the Company and Aura. Mr. Tyler noted that, although Molekule was continuing to have ongoing discussions with Aura regarding a potential business combination, all necessary financial analysis and due diligence would need to be completed before any agreement could be reached. It was noted that all financial information received by Molekule to date was preliminary in nature. At the meeting, the Molekule Board agreed to engage Freshfields Bruckhaus Deringer US LLP (“Freshfields”) as U.S. legal counsel in connection with the potential transaction.

On November 14, 2022, Messrs. DiBona and Tyler and the following members of the Molekule Board: Dr. Khoury; Michael Senft; Thomas P. McCaffrey; and Timothy J. Scannell, met with the special committee of the Aura Board, consisting of the following directors: Amir Gil; Alon Granot; and Dganit Palti, as well as representatives from Meitar, counsel to the special committee. On November 22, 2022, there was a follow-up meeting with the same participants. The purpose of both meetings was to ask further questions about each of the respective businesses and the potential synergies of a business combination between the companies.

On December 5, 2022, after Aura’s controlling shareholders confirmed that they did not have and would not have a personal interest in the merger, the special committee dissolved. The special committee was formed in light of the possibility that Aura’s controlling shareholders might have personal interests in the merger; however, during the negotiations, the parties did not discuss any arrangements that might be considered personal interests of Aura’s controlling shareholders.

During the week of December 12, 2022, Messrs. DiBona and Harris, Joe Lester (Principal Engineer at Molekule), Azhar Zuberi (VP of Software and IT Infrastructure at Molekule) and Gene Ehrbar (VP of Product Management at Molekule) visited Aura’s office in Tel Aviv to conduct due diligence. During their visit to Tel Aviv, Molekule management inspected Aura’s products and technology, and the parties discussed how Aura’s products and technology could be integrated into Molekule’s products to develop their customer offering.

On January 4, 2023, the Aura Board held a meeting with members of Aura management and Arnon, Tadmor-Levy (“Arnon”), counsel for Aura, during which Aura management reported on the preliminary due diligence obtained during Molekule’s trip to Israel and the potential benefits of a transaction with Molekule. Arnon discussed the key legal steps to be undertaken in connection with a potential transaction, including the requirement that Molekule would list the Molekule Common Stock on the TASE.

On January 5, 2023, the Molekule Board held a special telephonic meeting with members of Molekule management and Freshfields, during which Molekule management reported on the preliminary due diligence obtained during their trip to Israel and the potential benefits of a transaction with Aura. Freshfields discussed the key legal steps to be undertaken in connection with a potential transaction, including the requirement that Molekule would list the Molekule Common Stock on the TASE as well as the requirement that shares of Molekule Common Stock issued as merger consideration would need to be registered on a Form S-4 with the SEC.

On January 12, 2023, representatives of Goldfarb Gross Seligman & Co. (“Goldfarb”), Israeli counsel for Molekule, and Arnon participated in a call to discuss due diligence and preliminary drafting of the merger agreement. Later that day, representatives of Goldfarb and Freshfields received access to Aura’s virtual data room to facilitate the due diligence process. That same day, representatives of Freshfields and Goldfarb submitted due diligence requests based on review of the available materials, and Arnon was given access to Molekule’s virtual diligence room.

On January 14, 2023, representatives of Freshfields provided representatives of Arnon with a draft of the proposed merger agreement, which reflected, among other things: (1) that Molekule Common Stock would be issued to Aura shareholders at a to-be-determined exchange ratio; (2) termination of the Aura Stock Options and Aura warrants upon the closing of the proposed merger; (3) a six-month lock-up of all Aura shareholders pursuant to lock-up agreements to be effective upon the closing of the proposed merger; (4) representations, which would not survive the closing of the proposed merger, regarding each party’s

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capitalization, due authority, required approvals and Aura’s businesses generally; (5) operating restrictions on Aura’s business during the period between signing and closing; (6) customary termination rights for each party; and (7) customary closing conditions, including the SEC declaring the Registration Statement effective and the Molekule Common Stock to be issued in connection with the proposed merger being approved for listing on Nasdaq.

During the week of January 16, 2023, representatives of Molekule, Freshfields and Aura met in Palm Beach Gardens, Florida to discuss a potential transaction. Representatives of Goldfarb and Arnon joined periodically via videoconference.

On January 18, 2023, representatives of Freshfields provided Arnon with an initial draft of a letter of intent (the “LOI”), which included an exclusivity agreement and non-binding term sheet, that provided for, among other terms, a stock-for-stock merger.

On January 19, 2023, representatives of Arnon provided Freshfields and Molekule comments to the LOI, including with respect to the duration of the exclusivity period, merger consideration, treatment of Aura warrants and Aura Stock Options, the requirement for an Israeli tax ruling, conditions to signing and conditions to closing, among other things. Later that day and following further negotiation, Molekule and Aura executed the LOI.

On January 26, 2023, the Molekule Board held a special telephonic meeting with members of Molekule management and Freshfields. At the meeting, members of Molekule management provided an update on the potential transaction with Aura. The Molekule Board and members of Molekule management discussed certain proposed terms of the potential transaction, including the consideration to be paid by Molekule. The Chairman noted that a combination with Aura would contribute both enterprise software and advanced sensor technology that is implementable across Molekule’s existing device platforms with major global healthcare, commercial and municipal customers. He also noted that the combination of the two companies would accelerate (i) an immediate and aggressive push into the burgeoning B2B market at a reduced cost to Molekule than if it pursued that business objective on its own and (ii) Molekule’s SaaS offering with AI-enabled technology for customers and “smart building” owners seeking to monitor and control IAQ on an enterprise-wide basis from a single location and facilitate the safe return of in-office workers. Further, the Chairman noted that the combination of the businesses would bring Molekule closer to executing its strategy of combining organic technology development with targeted, inorganic, strategic transactions to build the industry leader in IAQ solutions with a comprehensive suite of patented and proprietary products and technologies.

On January 29, 2023, representatives of Arnon sent representatives of Freshfields a revised draft of the merger agreement. Among other things, the revised draft of the merger agreement: (1) removed the obligation that both parties use reasonable best efforts to obtain approval of the IIA with respect to the transactions; (2) proposed that the parties obtain a different Israeli withholding tax ruling than that which was included in Molekule’s initial draft of the merger agreement; and (3) proposed that Aura’s obligation to close the transaction be conditioned on a member of Aura’s advisory board having been elected to serve as a member of the Molekule Board.

On February 1, 2023, representatives of Molekule, Freshfields, Goldfarb, Aura and Arnon participated in a videoconference to discuss the need to obtain consents from SVB and Bank Mizrahi in connection with the potential transaction.

On February 2, 2023, representatives of Molekule, Freshfields, Goldfarb, Aura and Arnon participated in a videoconference to discuss Arnon’s conversation with Bank Mizrahi on obtaining the required consent and further discussion on proposals to receive consents from SVB and Bank Mizrahi. Later that day, SVB and Bank Mizrahi each entered into the Lender Consents.

Also on February 2, 2023, representatives of Freshfields submitted a notice and an extension agreement to the LOI to Aura to extend the exclusivity period from February 6, 2023 to February 16, 2023.

Between February 2, 2023 and February 6, 2023, Molekule continued to conduct due diligence, and representatives of Arnon provided additional due diligence materials in response to follow-up questions and

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disclosure requests. On February 6, 2023, the parties participated in a legal due diligence call to discuss the status of the virtual data rooms, corporate questions and material agreements.

On February 6, 2023, representatives of Freshfields sent representatives of Arnon drafts of the merger agreement, form of support agreement and form of lock-up agreement. The proposed form of support agreement provided that, among other things, the Aura shareholders beneficially owning greater than 5% of the Aura Ordinary Shares (currently holding approximately 47.6% of the outstanding Aura Ordinary Shares) would vote in favor of the proposed transaction at the time the merger agreement was signed. The proposed form of lock-up agreement to be signed by Aura shareholders currently holding approximately 48.6% of the outstanding Aura Ordinary Shares and the holder of Aura’s warrants would also be executed concurrently with the execution of the merger agreement and provide for, among other things, a six month lock-up of the shares of Molekule Common Stock to be received by such Aura shareholders as merger consideration.

On February 6, 2023, Molekule and Aura executed the extension agreement to the LOI, extending the exclusivity period from February 6, 2023 to February 16, 2023.

Between February 6, 2023 and February 16, 2023, the parties and their representatives continued to negotiate the merger agreement and ancillary agreements thereto.

On February 14, 2023, representatives of Freshfields sent representatives of Arnon an initial draft of a technology collaboration agreement, whereby at signing Aura’s technology would be integrated with the Company’s products.

On February 15, 2023, representatives of Freshfields sent representatives of Arnon an initial draft of a distribution agreement, whereby at signing the Company would receive exclusive distribution rights to Aura’s products in the Americas (other than as prohibited under an existing distribution agreement between Aura and Delos Living, which currently has exclusivity to distribute Aura’s products in the transportation field in the U.S. and other jurisdictions) and Aura would receive exclusive rights to distribute Molekule’s products outside the U.S.

On February 16, 2023, the Molekule Board held a meeting via videoconference, which was also attended by Molekule management and representatives of Freshfields and Goldfarb. The Chairman provided an overview of the deal terms and agreements to be entered into. Representatives of Freshfields reviewed the fiduciary duties of the Molekule Board under Delaware law and presented important factors for the Molekule Board to consider in evaluating the potential transaction, including the strategic rationale and value of the potential transaction to Molekule and its stockholders. Thereafter, representatives of Freshfields provided an overview of the diligence process and the specific areas covered in the legal due diligence process. A representative from Freshfields then discussed the contractual arrangements with Aura’s material manufacturer and key supplier and presented an overview of the key terms and ancillary documents to be entered into in connection with the potential transaction. In addition, representatives from Freshfields explained the process to obtain the Molekule Board’s final approval of the potential transaction, which would be accomplished by the Molekule Board signing a unanimous written consent at such time when all signing conditions had been satisfied. Freshfields noted that the resolutions that would be included in the unanimous written consent would include approval of: (1) the proposed merger, which would include authorization to enter into a merger agreement, the form of support agreement, the form of lock-up agreement, the distribution agreement, the technology collaboration agreement and the SVB consent; and (2) the stock issuance, which would consist of 3,426,792 shares of Molekule Common Stock to be issued as merger consideration. Representatives from Goldfarb then discussed the requirement to publish a prospectus in Israel, the conditions and obligations under the Israeli “dual listing” regime and other legal implications of the potential transaction in Israel.

During the February 16, 2023 Molekule Board meeting, Mr. Tyler presented the standalone and pro forma financial information. Mr. Tyler discussed with the Molekule Board Aura’s balance sheet, income statement and forecast for fiscal year 2023. Mr. Tyler also discussed the standalone preliminary forecast for Aura for fiscal year 2023 prepared by Aura management and a preliminary pro forma combined income statement for fiscal year 2023. Topics discussed with the Molekule Board included growth in B2B sales and filter revenues and a reduction in certain overhead costs, with expectations that financial results would be

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down approximately 20% from 2021 on a pro forma basis with Legacy Molekule, with a cash balance of approximately $6.0 million at the end of the fiscal year. Mr. Tyler also discussed expected synergies to be achieved in connection with the potential transaction. Following the meeting, representatives of Freshfields, Goldfarb and Arnon continued to exchange drafts of the merger agreement and ancillary agreements.

On February 16, 2023, the Aura Board held a meeting, which was also attended by Aura management and representatives of Arnon. Messrs. Bluemenfeld and A. Shnaiderman provided an overview of the deal terms and agreements to be entered into. Representatives of Arnon reviewed the fiduciary duties of the Aura Board under Israeli law and presented important factors for the Aura Board to consider in evaluating the potential transaction. Mr. Bluemenfeld then discussed the contractual arrangements with Aura’s material manufacturer and key supplier and presented an overview of the key terms and ancillary documents to be entered into in connection with the potential transaction.

During the February 16, 2023 Aura Board meeting, Mr. Bluemenfeld presented the D&O runoff policy, Bank Mizrahi terms for the consent, the material manufacturer (Beth El) total exposure and reasons for the proposed merger. Mr. Bluemenfeld also discussed expected synergies to be achieved in connection with the potential transaction. Following the meeting, representatives of Freshfields, Goldfarb and Arnon continued to exchange drafts of the merger agreement and ancillary agreements.

On February 23, 2023, representatives of Freshfields and Arnon finalized drafts of the proposed merger agreement, Molekule and Aura disclosure schedules and the ancillary agreements.

Also on February 23, 2023, representatives of Freshfields updated the Molekule Board on the agreed forms of the transaction documents and changes to the agreements since the February 16, 2023 Molekule Board meeting, including, in the merger agreement, granting Aura the option of pursuing different tax withholding rulings subject to specified conditions, in the form of lock-up agreement, revising the duration of the lock-up period from six months to one year, and, in the technology collaboration agreement, the requirement that Aura place a copy of its source code into escrow and revising the termination conditions.

Additionally on February 23, 2023, Aura’s management and representatives of Arnon updated the Aura Board on the agreed forms of the transaction documents and changes to the agreements since the February 16, 2023 Aura Board meeting, including, in the merger agreement, granting Aura the option of pursuing different tax withholding rulings subject to specified conditions, in the form of lock-up agreement, revising the duration of the lock-up period from six months to one year, and, in the technology collaboration agreement, the requirement that Aura place a copy of its source code into escrow and revising the termination conditions.

On February 23, 2023, the Aura Board approved the Merger Agreement and related transactional matters and Israeli securities law matters.

After further discussion and based on the considerations set forth above, including the anticipated benefits of the Merger, on February 26, 2023, the Molekule Board unanimously (i) determined that the Merger Agreement and the Transactions, including the Merger, were fair to and in the best interests of Molekule and its stockholders, (ii) declared it advisable for Molekule to enter into the Merger Agreement and consummate the Merger upon the terms and subject to the conditions set forth therein, (iii) authorized the issuance of the Merger Consideration, (iv) approved the execution and delivery of the Merger Agreement and each of the ancillary agreements to the Merger Agreement by Molekule, the performance by Molekule of its covenants and other obligations under the Merger Agreement and the consummation of the Transactions, including the Merger, upon the terms and conditions set forth therein, (v) further approved the execution and filing of a registration statement on Form S-4 and all other documents required to be filed or furnished to the SEC in connection with the Transactions and (vi) agreed that the Merger, upon the terms and subject to the conditions contained in the Merger Agreement, was authorized and approved in accordance with the requirements of the DGCL and any applicable anti-takeover laws.

After further discussion and based on the considerations set forth above, including the anticipated benefits of the Merger, on February 26, 2023, the Aura Board unanimously (i) determined that the Merger Agreement and the Transactions, including the Merger, were fair to and in the best interests of Aura and its shareholders, (ii) declared it advisable for Aura to enter into the Merger Agreement and consummate the Merger upon the terms and subject to the conditions set forth therein, (iii) approved the Merger Consideration,

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(iv) approved the execution and delivery of the Merger Agreement and each of the ancillary agreements to the Merger Agreement by Aura, the performance by Aura of its covenants and other obligations under the Merger Agreement and the consummation of the Transactions, including the Merger, upon the terms and conditions set forth therein, (v) further approved the filing of the Form S-4 with the SEC and the ISA and (vi) agreed that the Merger, upon the terms and subject to the conditions contained in the Merger Agreement, was authorized and approved in accordance with the requirements of Israeli law.

On February 26, 2023, Molekule and Aura executed and delivered the Merger Agreement and the ancillary agreements were executed and delivered by the parties thereto.

Later on February 26, 2023, Molekule issued a press release announcing the execution of the Merger Agreement and summarizing the material terms of the Transactions, and on February 27, 2023, Aura issued an immediate report summarizing the terms of the Merger Agreement. Later on February 27, 2023, Molekule filed the immediate report with the SEC.

Aura’s Reasons for the Merger

The members of the Aura Board considered many factors in its resolution that the Merger Agreement, the Merger and the Transactions are advisable and in the best interests of Aura and its shareholders, including the following:

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The Aura Board believes that the synergies and collaboration of Aura’s activity with Molekule’s activity, inter alia, by combining their technologies, will allow the combined company to expand the range of their products that will be offered to customers, as well as to expand the variety and scope of Aura’s customers in various markets, including the United States, and accelerate the development and sales in such markets.

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The Aura Board found that the Merger Consideration is fair, reasonable, in accordance with market conditions and expresses a fair price for the Aura shareholders, taking into account, among other factors, Aura’s business and financial condition, market conditions, the feasibility of completing the Merger and the timetables for its completion and Molekule’s business and financial condition as disclosed in Molekule’s public reports.

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It should be noted that the Aura Board did not use methods such as discounted cash flow or adjusted asset valuation to determine the fair values of the companies party to the Transactions; rather, the fair values were primarily determined based on factors such as the market price of both Aura and Molekule.

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The Merger Consideration reflects a premium of approximately 59% (based on the closing price of each of Aura Ordinary Shares and Molekule Common Stock on the relevant stock exchange and the exchange rate at the end of the trading day on the date of approval of the Merger Agreement by the Aura Board) and a premium of about 249% — based on the average closing prices during the 30 trading days preceding the date of approval by the Aura Board.

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The Aura Board is of the opinion that the Merger Consideration will allow the Aura shareholders to benefit from the potential upside of holding Molekule Common Stock, the combined company’s potential long-term growth and the synergies of Aura’s activity with Molekule’s activity. The Aura Board is of the opinion that the Merger Consideration is fair and reflects the current fair value of Aura.

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Considering Aura’s financial condition, the Aura Board is of the opinion that the Merger will enable Aura’s activity to continue for a longer period than it could as a stand-alone company.

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The fact that other potential alternative transactions, such as capital raising, were not feasible.

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Although the completion of the Merger is contingent on certain conditions, the Aura Board is of the opinion that the Merger can be completed within a reasonable time.

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Considering the financial position of the merging companies, no reasonable concern exists that the surviving corporation will be unable to fulfill the obligations of Aura to its creditors as a result of the Merger.

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•

Based on the abovementioned factors, the Aura Board determined that the Merger Agreement, the Merger and the other Transactions are advisable and in the best interests of Aura and the Aura shareholders and recommends the Aura shareholders vote in favor of the Merger Agreement, the Merger and the other Transactions.

Treatment of Indebtedness of Aura

Aura is party to a loan agreement with Bank Mizrahi consisting of a short-term line of credit and a term loan. As a condition to the Aura Lender Consent, the short-term line of credit was reduced from a maximum of $2.0 million to $1.0 million and $1.3 million of the term loan was repaid by Aura, reducing the principal amount of the term loan to $2.7 million. As a further condition to the Aura Lender Consent, Molekule agreed to provide an unsecured guarantee of Aura’s repayment obligations under the loan agreement up to a maximum amount of $3.38 million, to be effective upon the Closing. Effective upon the Closing, the term loan will be designated as a new term loan bearing interest at the monthly Term SOFR plus 7.75%, but insofar as there are changes in Bank Mizrahi’s borrowing costs, Bank Mizrahi will have the right to increase such interest rate. Principal on the new term loan will be payable in 24 equal monthly installments commencing at the end of the 36-month period following the Closing. Interest on the new term loan is payable monthly commencing one month from the Closing. Molekule’s guarantee of Aura’s obligations under the loan agreement will be subordinate to Molekule’s payment obligations under its debt agreements with SVB.

Closing and Effectiveness of the Merger

The Closing is expected to take place on the second business day following the satisfaction or waiver (to the extent permitted by applicable law) of all of the conditions to completion of the Merger set forth in the Merger Agreement (other than those conditions that by their nature are to be satisfied by action taken at the Closing but subject to the satisfaction or waiver of such conditions) in accordance with the Merger Agreement or on such other date as Molekule and Aura may mutually agree in writing.

Support Agreements

In connection with the execution of the Merger Agreement, Aura shareholders beneficially owning greater than 5% of the Aura Ordinary Shares (currently holding approximately 47.6% of the outstanding Aura Ordinary Shares) executed Support Agreements, dated February 26, 2023, pursuant to which such Aura shareholders agreed to irrevocably and unconditionally vote or execute a written consent to adopt the Merger Agreement and approve the Merger. The Support Agreements will terminate on the earliest to occur of (i) the Effective Time, (ii) the termination of the Merger Agreement or (iii) the mutual agreement of the parties.

Post-Closing Dividend Policy

Molekule has never paid any cash dividends on shares of Molekule Common Stock and does not expect to pay cash dividends following the Merger. The payment of cash dividends in the future will be dependent upon Molekule’s revenues and earnings, if any, capital requirements and general financial condition and will be declared at the discretion of the Molekule Board. In addition, the terms of Molekule’s loan agreements contain restrictions on its ability to pay dividends, and the terms of agreements governing debt that Molekule may incur in the future may also limit or prohibit dividend payments. It is the current intention of the Molekule Board to retain all earnings, if any, for use in its business operations, and accordingly, the Molekule Board does not anticipate declaring any dividends in the foreseeable future.

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

Nasdaq and TASE Listings; Delisting of Aura Ordinary Shares

Molekule has agreed to take those actions reasonably necessary in order to list the shares of Molekule Common Stock on the TASE immediately prior to the completion of the Merger. Molekule has also agreed

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to use its best efforts to obtain, prior to the Closing, the agreement of the TASE to list such shares of Molekule Common Stock to be issued as Merger Consideration on the TASE.

Molekule will file a listing document with the ISA and TASE for the listing of Molekule Common Stock on the TASE upon the effectiveness of the Merger.

If the Merger is completed, Aura Ordinary Shares will cease to be listed on the TASE in accordance with the applicable rules and policies of the TASE.

Listing of Molekule Common Stock

Molekule Common Stock is currently listed on Nasdaq. It is a condition to the Closing that the Molekule Common Stock to be issued as Merger Consideration have been approved for listing on Nasdaq, subject only to official notice of issuance thereof.

U.S. Federal Securities Law Consequences

Assuming the effectiveness of the Registration Statement of which this prospectus forms a part, and subject to the lock-up provisions discussed below, the shares of Molekule Common Stock issued as Merger Consideration will not be subject to any restrictions on transfer arising under the Securities Act or the Exchange Act. This prospectus does not cover resales of shares of Molekule Common Stock received by any person upon the completion of the Merger, and no person is authorized to make any use of this prospectus, or the Registration Statement of which this prospectus forms a part, in connection with any resale of shares of Molekule Common Stock.

Material U.S. Federal Income Tax Consequences

The following is a discussion of the material U.S. federal income tax consequences to U.S. Holders (as defined below) of Aura Ordinary Shares of receiving Molekule Common Stock in the Merger and to Non-U.S. Holders (as defined below) of the ownership and disposition of Molekule Common Stock. This summary deals only with holders that hold their Aura Ordinary Shares as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion is based on the existing provisions of the Code, the U.S. Treasury Regulations promulgated under the Code and administrative rulings and court decisions in effect as of the date of this prospectus, all of which are subject to change, possibly with retroactive effect, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion.

This summary is not a complete description of all the tax consequences of the Merger and, in particular, does not address tax considerations applicable to investors subject to special rules, such as certain financial institutions, insurance companies, real estate investment trusts, regulated investment companies, U.S. expatriates or former long-term residents of the United States, U.S. Holders (as defined below) whose functional currency is not the U.S. dollar, dealers or traders, insurance companies, tax-exempt entities, persons that hold directly, indirectly or constructively 10% or more of Aura’s equity interests, persons holding their shares as part of a hedge, straddle, conversion, constructive sale or other integrated transaction, including the constructive sale provisions of Section 1259 of the Code, holders that treat their Aura Ordinary Shares as qualified small business stock for purposes of Sections 1045 and/or 1202 of the Code, holders who acquired their Aura Ordinary Shares in connection with stock option or stock purchase plans or in other compensatory transactions and persons subject to the “applicable financial statement” tax accounting rules under Section 451(b) of the Code. It also does not address any U.S. state and local tax, U.S. federal non-income tax or non-U.S. tax considerations. It also does not address the alternative minimum tax or the Medicare tax on net investment income. The following discussion is intended only as a summary of certain material U.S. federal income tax consequences of the Merger and does not purport to be a complete analysis or listing of all of the potential tax effects relevant to a decision on whether to approve the Merger.

As used herein, “holder” means a beneficial owner of Molekule Common Stock or Aura Ordinary Shares (as applicable). “U.S. Holder” means a holder that is, for U.S. federal income tax purposes, (i) a citizen or individual resident of the United States, (ii) a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia, (iii) a trust subject to the control of a U.S. person

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and the primary supervision of a U.S. court or (iv) an estate the income of which is subject to U.S. federal income tax without regard to its source. “Non-U.S. Holder” means a holder that is, for U.S. federal income tax purposes, an individual, a corporation, a trust or an estate that is not a U.S. Holder.

Partnerships (or other pass-through entities) holding Aura Ordinary Shares, and partners (or other owners) in such partnerships (or other pass-through entities), should consult their own tax advisors about the U.S. federal income tax consequences to them of receiving Molekule Common Stock as Merger Consideration.

The tax treatment of the Merger to a U.S. Holder will depend, in part, on whether or not Aura is or was classified as a PFIC for U.S. federal income tax purposes at any point during a U.S. Holder’s holding period. Except as discussed below under “— Passive Foreign Investment Company Rules,” this discussion assumes that Aura is not and has not been classified as a PFIC for U.S. federal income tax purposes.

The tax consequences of the Merger will depend on a holder’s specific situation. Holders should consult their own tax advisors as to the U.S. federal income tax consequences to them in light of their particular circumstances, as well as the applicability and effect of the alternative minimum tax and any state, local and non-U.S. income or other tax laws and any changes in those laws.

Tax Consequences to U.S. Holders of the Merger

Molekule and Aura intend for the Merger to be treated as a “reorganization” within the meaning of Section 368(a) of Code. Notwithstanding the foregoing, the completion of the Merger is not conditioned upon the Merger qualifying for the intended tax treatment, and neither Molekule nor Aura has requested, and neither intends to request, a ruling from the IRS or an opinion of counsel as to the U.S. federal income tax consequences of the Merger. Consequently, no assurance can be given that the IRS will not assert, or that a court would not sustain, a position contrary to any of those set forth below. If the Merger failed to qualify as a reorganization, holders of Aura Ordinary Shares who receive shares of Molekule Common Stock in exchange for Aura Ordinary Shares would generally be treated as if they sold their Aura Ordinary Shares in exchange for shares of Molekule Common Stock in a fully taxable transaction. Holders should consult their tax advisors regarding the tax characterization of the Merger under their particular circumstances, including whether the Merger qualifies as a reorganization and the tax considerations relevant to them if the Merger fails to qualify as a reorganization.

Subject to the PFIC rules discussed below, provided that the Merger qualifies as a “reorganization” within the meaning of Section 368(a) of the Code, holders will generally not recognize any gain or loss on their exchange of Aura Ordinary Shares for Molekule Common Stock as a result of the Merger.

Holders will generally have an adjusted tax basis in the shares of Molekule Common Stock received as Merger Consideration equal to the adjusted tax basis of the Aura Ordinary Shares surrendered by such holder in the Merger. The holding period for Molekule Common Stock received as Merger Consideration will generally include the holding period for the Aura Ordinary Shares surrendered therefor. If a holder holds different blocks of Aura Ordinary Shares (generally, Aura Ordinary Shares acquired on different dates or at different prices), such holder should consult its tax advisor with respect to the determination of the tax bases and/or holding periods of the particular shares of Molekule Common Stock received as Merger Consideration.

Passive Foreign Investment Company Rules

If Aura has been a PFIC at any point during a U.S. Holder’s holding period, special rules will apply to such U.S. Holder’s exchange of their Aura Ordinary Shares for Molekule Common Stock in the Merger. A non-U.S. corporation such as Aura will be classified as a PFIC for U.S. federal income tax purposes for any taxable year if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held for the production of passive income. For this purpose, cash and assets readily convertible into cash are categorized as a passive asset and the company’s goodwill and other unbooked intangibles are taken into account. Passive income generally includes, among other things, dividends, interest, rents, royalties and gains from the disposition of passive

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assets. Aura will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.

As a publicly traded foreign corporation, for this purpose, Aura can generally treat the aggregate fair market value of its gross assets as being equal to the aggregate value of its outstanding shares (“market capitalization”) plus the total amount of its liabilities and treat the excess of the fair market value of its assets over their book value as a non-passive asset to the extent attributable to its non-passive income. Aura has held a substantial amount of cash and cash equivalents and, based on the historic composition of Aura’s assets and the fair market value of such assets, it is possible that Aura may need to rely on the presence of goodwill to avoid being classified as a PFIC in its current or a prior taxable year. However, a decline in the price of Aura Ordinary Shares in 2022 has resulted in such goodwill declining significantly.

Aura’s status as a PFIC in any year depends on its assets and activities in that year. Because PFIC status is factual in nature, is determined annually and generally cannot be determined until the close of the taxable year, there can be no assurance that Aura will not be considered a PFIC for any taxable year. Due to recent fluctuations in the market price of Aura Ordinary Shares, it is possible Aura may be classified as a PFIC for its current or a prior taxable year. U.S. Holders are urged to consult their tax advisors regarding whether Aura is or has been classified as a PFIC for any taxable year.

If Aura were a PFIC for any taxable year during a U.S. Holder’s holding period, the taxation of such U.S. Holder’s exchange of their Aura Ordinary Shares for shares of Molekule Common Stock will be subject to special adverse tax rules. Under these special tax rules:

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such U.S. Holders will recognize gain (but not loss) regardless of whether the Merger qualifies as a reorganization for purposes of Section 368(a) of the Code;

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the gain will be allocated ratably over the U.S. Holder’s holding period for their Aura Ordinary Shares;

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the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which Aura was classified as a PFIC (each, a “pre-PFIC year”) will be taxable as ordinary income;

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the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and

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the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year.

U.S. Holders are urged to consult their tax advisors regarding whether Aura has been a PFIC at any time within their holding period and the resulting U.S. federal income tax consequences to them of the Merger, including the consequences if the U.S. Holder has made a mark-to-market election with respect to its Aura Ordinary Shares.

Tax Considerations to U.S. Holders in Respect of Ownership and Disposition of Molekule Common Stock

Dividends

Distributions paid by Molekule out of its current or accumulated earnings and profits (as determined for U.S. federal income tax purposes) generally will be taxable to a U.S. Holder as ordinary dividend income. Corporate U.S. Holders should generally be eligible for the dividends received deduction, and non-corporate U.S. Holders should generally qualify for reduced rates applicable to qualified dividend income, assuming in each case, that a minimum holding period and certain other generally applicable requirements are satisfied. Distributions in excess of current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of the U.S. Holder’s basis in their Molekule Common Stock and thereafter as capital gain. U.S. Holders should consult their own tax advisors with respect to the appropriate U.S. federal income tax treatment of any distribution received from Molekule.

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Sales or other dispositions of Molekule Common Stock

A U.S. Holder will recognize capital gain or loss on the sale or other disposition of their Molekule Common Stock in an amount equal to the difference between the U.S. Holder’s adjusted tax basis in their Molekule Common Stock and the amount realized from the disposition. Any gain or loss on a sale or other disposition of Molekule Common Stock generally will be treated as arising from U.S. sources and will be long-term capital gain or loss if the U.S. Holder has held the Molekule Common Stock for more than one year. Deductions for capital losses are subject to limitations.

Tax Consequences to Non-U.S. Holders of the Ownership and Disposition of Molekule Common Stock

Distributions

Distributions on Molekule Common Stock that are characterized as dividends paid to a Non-U.S. Holder will generally be subject to U.S. federal withholding tax at a 30% rate or such lower rate as may be provided by an applicable income tax treaty. To receive the benefit of a reduced treaty rate, a Non-U.S. Holder must furnish to Molekule or its paying agent a valid IRS Form W-8 BEN or BEN-E (or applicable successor form) certifying such holder’s qualification for the reduced rate. This certification must be provided to Molekule or its paying agent prior to the payment of dividends and must be updated periodically. If a Non-U.S. Holder who qualifies for a reduced treaty rate does not timely provide Molekule or the payment agent with the required certification, such Non-U.S. Holder may be entitled to a credit against their U.S. federal income tax liability or a refund of the tax withheld, which the Non-U.S. Holder may claim by filing the appropriate claim for refund with the IRS.

Dividends that are treated as “effectively connected” with a trade or business conducted by a Non-U.S. Holder within the United States (and, if an applicable income tax treaty so provides, are also attributable to a U.S. permanent establishment of such Non-U.S. Holder) are not subject to withholding tax, provided that the Non-U.S. Holder satisfies certain certification and disclosure requirements. Instead, such dividends, net of specified deductions and credits, are taxed at the same graduated U.S. federal income tax rates applicable to U.S. persons. To the extent a dividend is effectively connected with a U.S. trade or business, non-corporate Non-U.S. Holders may be eligible for taxation at reduced U.S. federal tax rates applicable to qualified dividend income. Any such effectively connected dividends received by a Non-U.S. Holder that is a treated as a corporation for U.S. federal income tax purposes may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or such lower rate as specified by an applicable income tax treaty.

Sales or Other Dispositions of Molekule Common Stock

Subject to the discussions under “— Information Reporting and Backup Withholding” and “— FATCA,” a Non-U.S. Holder will generally not be subject to any U.S. federal income tax or withholding tax on any gain realized upon such holder’s sale or other disposition of Molekule Common Stock. Gain on sale of Molekule Common Stock may be subject to U.S. net income tax (and in respect of corporate Non-U.S. Holders, branch profits tax) if the gain is effectively connected with a trade or business of the Non-U.S. Holder in the United States (and, if required by an applicable income tax treaty, is attributable to a permanent establishment or fixed base of the Non-U.S. Holder within the United States). Additionally, a Non-U.S. Holder that is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and meets certain other requirements will be subject to a flat 30% tax on the amount of gain derived from the sale, together with certain other U.S. source capital gains realized during such year, to the extent that they exceed certain U.S. source capital losses realized during such year.

FATCA

Sections 1471-1474 of the Code (commonly known as “FATCA”) impose a 30% withholding tax on certain types of payments (including dividends) made to “foreign financial institutions” and certain other non-U.S. entities unless (i) the foreign financial institution undertakes certain diligence and reporting obligations or (ii) the foreign non-financial entity either certifies it does not have any substantial U.S. owners or furnishes identifying information regarding each substantial U.S. owner. If any payee, whether or not it is a beneficial owner or an intermediary with respect to a payment, is a foreign financial institution that is not

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subject to special treatment under certain intergovernmental agreements, it must enter into an agreement with the U.S. Treasury requiring, among other things, that it undertakes to identify accounts held by certain U.S. persons or U.S.-owned foreign entities, annually report certain information about such accounts and withhold 30% on payments to account holders whose actions prevent them from complying with these reporting or other requirements. Withholding under this legislation on withholdable payments to foreign financial institutions and certain non-financial foreign entities would also apply with respect to the gross proceeds of a disposition of Molekule Common Stock (which will include sales, redemptions and returns on capital). However, proposed regulations on which taxpayers may rely suspend this withholding requirement in respect of gross proceeds until final regulations are published. Failure by a Non-U.S. Holder (or any non-U.S. intermediary through which it will hold its stock) that is subject to FATCA to comply with its certification and reporting requirements, or properly document its status as a person not subject to FATCA withholding, could result in withholding at a rate of 30% on withholdable payments made to the Non-U.S. Holder. Non-U.S. Holders or U.S. Holders owning Molekule Common Stock through a non-U.S. intermediary should consult their tax advisors regarding this legislation.

Information Reporting and Backup Withholding

In general, information reporting requirements may apply to dividends, sales proceeds or other amounts paid to Non-U.S. Holders, unless an exemption applies. Backup withholding tax may apply to amounts paid to Non-U.S. Holders if the Non-U.S. Holder fails to establish an exemption thereto. A Non-U.S. Holder can claim a credit against its U.S. federal income tax liability for the amount of any backup withholding tax and a refund of any excess, provided that all required information is timely provided to the IRS. Non-U.S. Holders should consult their tax advisors as to their qualification for exemption from backup withholding and the procedure for establishing an exemption.

THE DISCUSSION ABOVE DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR HOLDER. EACH HOLDER IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF THE MERGER IN LIGHT OF THE HOLDER’S OWN CIRCUMSTANCES.

Certain Israeli Tax Consequences of the Merger

The following description is not intended to constitute a complete analysis of all Israeli tax consequences of Aura shareholders relating to the Merger. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular person in light of his or her personal circumstances. The discussion should not be construed as legal or professional tax advice and does not cover all possible tax considerations.

Aura is seeking a tax ruling from the ITA with respect to (i) a full deferral of the obligation of Aura shareholders that generally hold less than 5% of the outstanding Aura Ordinary Shares to pay Israeli tax on the Merger Consideration and (ii) a limited deferral of the obligation of Aura shareholders that hold 5% or more of the outstanding Aura Ordinary Shares (and elect to participate in such ruling), viz., a deferral in respect of 50% of their Merger Consideration for a period of two years and in respect of the remaining 50% of their Merger Consideration for a period of four years, all subject to the conditions to be set forth in such ruling. The application for the tax ruling includes a request for an arrangement to be applied with respect to shares and equity awards granted to employees or services providers that are subject to tax pursuant to Section 102 or 3(i) of the ITO, all subject to statutory or other customary conditions, obligations and restrictions regularly associated with such a ruling to be included within the ruling. Obtaining an Israeli tax ruling is a closing condition to the Merger. There can be no assurance that such tax ruling will be granted before the Closing or at all or that, if obtained, such tax ruling will be granted under the conditions requested by Aura.

Absent receipt by Aura of an applicable tax ruling from the ITA prior to the Closing, if the parties elect to proceed with the Merger, the holders of Aura Ordinary Shares (excluding shares subject to Section 102 of the ITO) will be subject to Israeli capital gains tax in connection with the Merger, the Aura shareholders will be subject to Israeli withholding tax at the rate of 25% (for individuals) and 23% (for corporations) on the Merger Consideration (unless the shareholder obtains an individual certificate of exemption or a reduced tax rate from the ITA, as described below), and since there is no cash payment as part of the Merger, Molekule (or an exchange agent) will make any payments only after (i) the payment recipient has satisfied its Israeli

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tax obligation to the sole satisfaction of Molekule (or the exchange agent) or (ii) shares of Molekule common stock (out of the Merger Consideration) are sold to the extent necessary to satisfy the full amount of Israeli tax due.

Discussions between Aura and the ITA regarding the scope of the rulings are ongoing. If and when the Israeli tax treatment of the Merger is finalized, Aura will describe such treatment in an immediate report on the ISA’s website, referred to as “MAGNA.”

Israeli Capital Gains Tax

Generally, the exchange of Aura Ordinary Shares for the Merger Consideration would be treated as a sale and subject to Israeli tax both for Israeli and the non-Israeli resident shareholders of Aura. However, certain relief or exemptions may be available under Israeli law.

Israeli law generally imposes capital gains tax on the real capital gain from the sale of any capital assets by residents of Israel, as defined for Israeli tax purposes, and on the sale of capital assets located in Israel, including shares of Israeli companies by non-residents of Israel, unless a specific exemption is available or a tax treaty between Israel and the shareholder’s country of residence provides otherwise. Israeli law distinguishes between real capital gain and inflationary surplus. The real capital gain is the excess of the total capital gain over the inflationary surplus. You should consult your own tax advisor as to the method you should use to determine the inflationary surplus.

Generally, the capital gains tax rate applicable to the real capital gain is 25% for individuals, unless such shareholder claims a deduction for interest and CPI linkage differences expenses in connection with the shares sold, in which case the real capital gain will generally be taxed at a rate of 30%. If such individual is holding or is entitled to purchase, directly or indirectly, alone or together with such person’s relative or another person who collaborates with such person on a permanent basis, at least 10% of (i) the voting rights of Aura, (ii) the rights to receive Aura’s profits or its assets upon liquidation, (iii) the rights to appoint managers or directors or (iv) the rights to instruct a Major Shareholder to do any of the foregoing on the date of sale or on any date falling within the 12-month period preceding that date of sale, such Major Shareholder would be subject to Israeli capital gains tax at the rate of 30%.

The actual capital gains tax rates that may apply to individual Aura shareholders on the sale of Aura Ordinary Shares (which may be effectively higher or lower than the rates mentioned above) are subject also to various factors, including, inter alia, the date on which the shares were purchased, whether the shares are held through a nominee company or by the shareholder, the identity of the shareholder and certain tax elections that may have been made in the past by the shareholder.

In general, companies are subject to the corporate tax rate on real capital gains derived from the sale of shares at the rate of 23% in 2023. Please note that, due to certain provisions of the ITO, the effective capital gains tax applicable to certain companies may be different than that specified above.

Individual and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable to “business income,” currently 23% for companies and a marginal tax rate of up to 47% for individuals, plus an additional tax of 3%, which is imposed on individuals whose annual taxable income exceeds a certain threshold (NIS 698,280 for 2023); see “— Excess Tax” below.

Pursuant to Israeli tax law, non-Israeli residents (individuals or corporations) will generally be exempt from Israeli capital gains tax, subject to certain provisions of the ITO, on the sale of Aura Ordinary Shares that were acquired in or after Aura’s initial public offering on the TASE. However, non-Israeli corporations will not be entitled to the foregoing exemption if Israeli residents: (i) have a controlling interest of more than 25% in such non-Israeli corporation; or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.

Other non-Israeli residents (individuals or corporations) may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty between Israel and the seller’s country of residence (subject to the receipt of a valid certificate from the ITA allowing for an exemption or a reduced tax rate). For example, under the Convention between the Government of the State of Israel and the Government of the United States of America with Respect to Taxes on Income (the “U.S.-Israel Tax Treaty”), Israeli capital gains

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tax would generally not apply when arising from the sale, exchange or disposition of Aura Ordinary Shares by a person who qualifies as a resident of the United States within the meaning of the U.S.-Israel Tax Treaty and who holds the shares as a capital asset and is entitled to claim the benefits afforded to such person by the treaty. However, such exemption will not apply if (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel, (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties, (iii) the capital gains from such sale, exchange or disposition may be attributed to a permanent establishment of the U.S. resident that is maintained in Israel, under certain terms, (iv) the U.S. resident holds, directly or indirectly, securities representing 10% or more of the voting rights during any part of the 12-month period preceding the effective time of the sale, exchange or disposition, subject to certain conditions, or (v) the U.S. resident, if an individual, was physically present in Israel for a period or periods aggregating to 183 days or more during the relevant taxable year.

In order to obtain an applicable withholding tax exemption for capital gains tax, certain documentation or declarations will need to be provided to the ITA.

You are urged to consult with your own tax advisor regarding the applicability of these tax treaties to you and your receipt of Merger Consideration.

Excess Tax

Individuals who are subject to tax in Israel are also subject to an additional tax at a rate of 3% on annual income exceeding a certain threshold (NIS 698,280 for 2023), which amount is linked to the annual change in the Israeli consumer price index, including, but not limited to, dividends, interest and capital gain, subject to the provisions of an applicable tax treaty.

Israeli Tax Withholding

Whether or not a particular shareholder is actually subject to Israeli capital gains tax in connection with the Merger, absent receipt by Aura of an applicable tax ruling from the ITA prior to the Closing, if the parties elect to proceed with the Merger, all Aura shareholders will be subject to Israeli withholding tax at the rate of 25% (for individuals) and 23% (for corporations) on the Merger Consideratio