Aeluma, Inc. — Form 10-Q Summary
Period clarification: The request metadata says 2020 Q2, but this filing is for the quarter ended June 30, 2021, and presents comparisons with 2020. The financial statements are unaudited.
Business context and reporting period
Aeluma develops infrared and other optoelectronic sensor technology using compound semiconductor materials on silicon wafers, targeting imaging, 3D sensing, lidar, and related markets. It is a research-and-development-stage company and had generated no revenue through June 30, 2021.
On June 22, 2021, Parc Investments, Inc. merged with Biond Photonics, Inc. (doing business as Aeluma) in a transaction treated as a recapitalization and reverse acquisition. Biond Photonics is the accounting acquirer; future historical financial statements are to reflect its history. The company changed its name to Aeluma, Inc. and its fiscal year-end to June 30.
Financial results and liquidity
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $243,690 | $2,944 | $255,853 | $2,992 |
| Net loss | $202,740 | $3,760 | $217,203 | $3,808 |
| Basic and diluted loss per share | $0.05 | $0.00 | $0.06 | $0.00 |
For the six-month period, other income and expense included $90,758 of sublease and other income, a $48,308 increase in the value of SAFE liabilities, and $3,000 of interest expense. The filing reports no revenue, so operating margins are not meaningful.
At June 30, 2021, cash was $6.79 million, total current assets $7.47 million, total assets $9.08 million, current liabilities $287,100, and total liabilities $897,555. Working capital was $7.19 million. Total liabilities included $767,596 of operating lease liabilities; officer advances and notes payable had been repaid. Compared with December 31, 2020, cash increased from $38,302 and total assets from $154,190, principally following the merger-related financing and the facility lease.
Six-month cash flow: $68,394 used in operating activities, $27,253 used in investing activities, and $6.84 million provided by financing activities; ending cash was $6.79 million. The financing inflow primarily reflected the private placement. No dividends or operating cash generation were reported.
Material changes, outlook, and risks
- Operating expenses and net loss increased substantially versus 2020 as operations began and advisor stock compensation was recorded. The company recognized $36,473 of stock-based compensation expense in the first half and reported $1.34 million of deferred compensation related to advisor shares.
- In June, the company sold 3.885 million shares at $2.00 per share for $7.77 million gross proceeds; disclosed offering costs and placement fees reduced proceeds. A further 115,000 shares sold on July 1 for $206,930 net proceeds. The placement agent received shares and warrants; the warrants cover 348,500 shares at $2.00 through the period covered by the notes.
- The company began a five-year facility lease in April 2021, with $781,813 of undiscounted lease payments. It subleased part of the space and recorded $84,743 of rent income during the first half.
- Management plans to prepare the facility, install and bring equipment online, conduct development runs, pursue customer purchase agreements, and continue R&D and customer/partner engagement. It reported support letters from two prospective customers, but no finalized purchase agreements or formal financing agreements as of the report date.
- Management expects continuing losses and significant additional spending. The filing states that current funds are insufficient to complete the business plan and that additional financing may be needed. It identifies substantial uncertainty about obtaining funding and achieving sustainable revenue and profitable operations; the going-concern disclosure says these conditions may raise doubt about the company’s ability to continue as a going concern.
- The filing discusses possible COVID-19-related supply delays and business disruption, technology and product-development execution, competition, financing and dilution, and the ability to protect intellectual property. Management said the pandemic’s financial impact could not be reasonably estimated.
- Disclosure controls and procedures were concluded to be ineffective as of June 30, 2021. Management said it intended to work on establishing and maintaining effective controls. The company reported no material legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the reporting-period mismatch: this is a June 30, 2021 10-Q, not a 2020 Q2 filing.
- Reconcile the offering’s gross proceeds, placement fees and expenses, shares issued, and warrant coverage across the financial statements, notes, and MD&A; figures vary by whether July 1 activity is included.
- Assess cash runway against the stated plan, lease commitments, expected R&D and equipment costs, and the explicit need for additional capital.
- Track whether the two customer support letters become binding purchase agreements and whether equipment installation and development runs meet management’s timeline.
- Evaluate the reverse-acquisition accounting, share dilution and advisor compensation, and management’s remediation of ineffective disclosure controls.