Aeluma, Inc. — Form 10-Q summary
Business and period: Unaudited results for the quarter and six months ended December 31, 2022, Aeluma’s fiscal second quarter. The company is developing infrared optical sensors and related optoelectronic devices; it remains in the research and development stage and has not generated revenue.
Financial results
| Metric | Three months ended Dec. 31, 2022 | Six months ended Dec. 31, 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $1,154,894 | $2,721,581 | $1,399,590 (six months) |
| Operating loss | $1,154,894 | $2,721,581 | $1,399,590 (six months) |
| Net loss | $1,080,549 | $2,610,590 | $1,226,345 (six months) |
| Basic and diluted loss per share | $0.10 | $0.24 | $0.12 (six months) |
| Operating cash used | Not provided for quarter | $2,001,195 | $895,184 (six months) |
Six-month operating expenses rose $1,321,991 year over year, which management attributed to startup operations and stock compensation. The company recorded $110,991 of other income for the six months, primarily sublease rental and other income, down from $173,245 as less facility space was subleased. No income tax expense was recorded. Profit margins are not meaningful because revenue was zero.
At December 31, 2022, cash was $3,062,316, total current assets were $3,763,160, and total current liabilities were $428,671. Total assets were $5,200,312; total liabilities were $806,893; and stockholders’ equity was $4,393,419. Lease liabilities totaled $537,804, including $159,582 current and $378,222 long term. The filing reports no other borrowings in the presented balance sheet. Six-month investing cash use was $103,826 and financing cash inflow was $1,426,615, principally from the December private placement.
Changes, outlook and risks
- Six-month net loss increased by $1,384,245 versus 2021, while operating cash use increased by $1,106,011. Cash declined $678,406 during the six months.
- In December 2022, Aeluma sold 517,000 shares at $3.00 per share for gross proceeds of $1,551,000; disclosed net proceeds were $1,426,615. A January 10, 2023 closing added 214,667 shares for $644,000 gross, before fees and expenses.
- Management expects continuing losses and says cash is insufficient to complete the business plan. The filing identifies substantial doubt about the company’s ability to continue as a going concern absent additional funding and sustainable revenue. No formal agreements for the described financing or sales/research-contract plans had been entered into as of the report date. There is no specific financial guidance.
- Management’s stated steps include raising capital, controlling overhead and expenses, and pursuing material sales or research contracts; success is not assured. Equity financing could dilute shareholders, while debt financing could impose restrictions.
- Risks discussed include limited operating history, product development and commercialization, competition, supplier delays and availability, recruiting and retaining personnel, intellectual-property protection, and access to financing. The company reported no material legal proceedings known to it.
- Disclosure controls and procedures were deemed not effective as of December 31, 2022. Management said it intended to work on maintaining effective controls; no material change in internal control over financial reporting during the quarter was reported.
Investor verification points
- Confirm the going-concern funding needs, available runway, and status and terms of financing or commercial/research agreements.
- Verify the reported current-asset, current-liability, and working-capital figures: the balance sheet lists $3,763,160 of current assets and $428,671 of current liabilities, while MD&A cites different current-asset/current-liability amounts and $3,334,489 of working capital.
- Review dilution from the December and January share issuances, placement-agent fees and warrants, and outstanding equity awards.
- Assess progress toward product prototypes, manufacturing readiness, customer validation, and revenue generation, none of which is quantified as a firm forecast in this filing.
- Track remediation of ineffective disclosure controls and any subsequent updates on control effectiveness.