Aeluma, Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2022, the company’s fiscal first quarter. The filing is dated November 14, 2022. Financial statements are unaudited.
Business context
Aeluma is a research-and-development-stage company developing infrared and other optoelectronic sensors using compound semiconductor materials on large-diameter silicon wafers. Its target applications include imaging, 3D sensing, LiDAR, and related markets. It has not generated revenue.
Financial results and position
| Metric | Three months ended September 30, 2022 | Prior comparable period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $1,566,687 | $694,776 |
| Operating loss | $(1,566,687) | $(694,776) |
| Other income | $36,646 | $91,126 |
| Net loss | $(1,530,041) | $(603,650) |
| Basic and diluted loss per share | $(0.14) | $(0.06) |
| Net cash used in operating activities | $(1,316,739) | $(492,052) |
Operating expenses rose by $871,911, which management attributed to the start-up of operations and stock-based compensation tied to advisor and consulting arrangements. Other income declined primarily because the company subleased less facility space. Gross margin and operating margin are not meaningful because the company reported no revenue.
At September 30, 2022, cash was $2,371,323, down from $3,740,722 at June 30, 2022. Current assets were $3,383,076 and current liabilities were $795,731, yielding reported working capital of $2,587,345. Total assets were $4,854,203; stockholders’ equity was $3,639,992. The company reported no borrowings; its liabilities included $576,764 of operating lease obligations, of which $158,284 was current. Cash used in investing activities was $52,660; there was no financing cash flow in the quarter.
Changes, outlook, and risks
- Net loss increased by $926,391 from the prior-year quarter. Operating cash use increased by $824,687.
- Management says available cash is insufficient to complete its business plan and expects significant additional expenditures before meaningful positive operating cash flow. The company says it will need additional capital, primarily through debt or equity, but gives no assurance financing will be available on acceptable terms.
- The filing states that losses are expected to continue in the near term and that substantial doubt exists about the company’s ability to continue as a going concern. Management’s stated measures include raising capital or obtaining financing, controlling overhead, and pursuing material sales or research contracts; none had been formalized as of the report date.
- The filing provides no revenue or earnings guidance. Development risks include limited operating history, product and technology development, financing needs, competition, intellectual-property protection, and supplier disruptions and longer-than-expected lead times.
- Stock-based compensation was material: $70,090 for options and $166,977 amortized for restricted stock awards during the quarter. A $300,000 consulting stock award was recorded as a current liability pending issuance; 150,000 shares were issued on November 7, 2022.
- Management concluded disclosure controls and procedures were not effective as of September 30, 2022. It reported no material change in internal control over financial reporting during the quarter.
- Lee McCarthy gave notice on November 8, 2022 that he would resign as COO effective November 17, 2022; the filing says the resignation was not due to a disagreement with the company.
- The company reported no legal proceedings expected to have a material adverse effect and no material subsequent events other than the share issuance noted above.
Most important facts to verify
- Cash needs, actual cash burn, and the timing and terms of any new financing; the filing identifies no committed financing.
- Progress toward customer contracts, revenue generation, and commercial readiness of the sensor technology.
- How and when management will remediate ineffective disclosure controls.
- Accounting and equity treatment of the $300,000 consulting award and the 150,000 shares issued after quarter-end.
- Operational impact of the COO’s departure and any resulting changes to management or execution plans.