Aeluma, Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2021, the first quarter of Aeluma’s fiscal year (fiscal year ending June 30). The filing is dated November 15, 2021. The company changed its fiscal year in June 2021 and completed its merger with Biond Photonics on June 22, 2021; the merger was accounted for as a reverse acquisition and recapitalization.
Business context
Aeluma is a research-and-development-stage company developing infrared optical sensors and optoelectronic devices using compound semiconductor materials on silicon wafers. Its intended markets include imaging, 3D sensing, lidar, and related applications. It had not generated revenue as of the filing and was preparing its Goleta-area facility and equipment for development and production work.
Financial results and liquidity
| Metric | Three months ended September 30, 2021 | Comparable 2020 period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $694,776 | $715 |
| Other income | $91,126 | $0 |
| Net loss | $603,650 | $715 |
| Basic and diluted loss per share | $0.06 | $0.00 |
| Net cash used in operating activities | $492,052 | $715 |
| Net cash used in investing activities | $258,910 | $0 |
| Net cash provided by financing activities | $161,930 | $0 |
At September 30, 2021, cash was $6.20 million, current assets $7.09 million, total assets $8.71 million, and working capital $6.74 million. Total liabilities were $935,215, including $729,970 of operating lease liabilities; the filing reports no debt balance. Stockholders’ equity was $7.77 million and accumulated deficit was $834,572. Cash declined by $589,032 during the quarter.
The company’s $8.0 million private placement raised gross proceeds across its June and July 2021 closings. In the quarter, it sold 115,000 shares for $230,000 gross proceeds and reported $161,930 net financing cash flow after offering costs. At quarter-end, 10,650,002 common shares were outstanding.
Changes versus the prior period
Operating expenses increased substantially from $715 to $694,776, which management attributed to the startup of operations and advisor-related stock compensation. The 2021 period also included $91,126 of sublease and other income. Net loss rose from $715 to $603,650. Investing outflows reflected facility setup, including equipment purchases and leasehold improvements. Comparisons with 2020 should be read in light of the company’s pre-operating status then and the merger in June 2021.
Outlook, risks, and notable items
- Going concern: Management states that losses are expected to continue and that cash on hand is insufficient to complete the business plan. The company expects to need additional debt or equity financing; the filing says these conditions may raise doubt about its ability to continue as a going concern.
- Plans: Over the next 12 months, Aeluma planned facility modifications, equipment installation and testing, development runs, internal R&D, and continued engagement with potential customers and strategic partners. It planned to pursue customer purchase agreements, but reported no formal agreements for its stated financing, cost-control, or contract initiatives as of the report date.
- Execution and financing risks: The company cautions that funding may not be available on acceptable terms, equity financing could dilute shareholders, and development, customer acceptance, and commercialization are uncertain.
- Controls: Management concluded disclosure controls and procedures were not effective as of September 30, 2021. It said it intended to work on establishing and maintaining effective controls. No material change in internal control over financial reporting during the quarter was reported.
- Lease and sublease: The company had a five-year facility lease and recognized $90,352 of rental income during the quarter from subleasing part of the facility. The lease includes extension options not included in the recorded liability.
- Contingencies and litigation: The filing describes potential liquidated damages under a registration rights agreement, capped at 8% of covered shares, but management expected to meet its obligations and recorded no liability. The company reported no known legal proceedings expected to have a material adverse effect.
Important facts for investors to verify
- Whether Aeluma secures additional financing and how long available cash supports its operating and equipment-installation plans.
- Progress on facility readiness, equipment commissioning, development runs, and conversion of customer support letters into revenue-generating contracts.
- Whether operating costs, cash burn, and sublease income develop as expected; the filing provides no revenue guidance or specific profitability timeline.
- Remediation of the disclosed ineffective disclosure controls and procedures.
- Offering-related costs and dilution, including placement-agent shares and warrants; the filing reports 360,000 placement-agent warrants with a $2.00 exercise price and five-year term.