UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
☒ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period
Commission file number 000-56218
Aeluma, Inc.
(Exact name of registrant as specified in its
charter)
27 Castilian Drive
Goleta, California93117
(Address of principal executive offices) (Zip
Code)
Registrant’s telephone number, including
area code: (805) 351-2707
Securities registered pursuant to Section 12(b) of the Act: None
Title of each class Trading Symbol(s) Name of each exchange on which registered
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $0.0001 par value
Indicate by check mark whether the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☒
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐
If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the registrant’s
common stock, par value $0.0001 per share, held by non-affiliates of the registrant as of December 31, 2022, as computed by reference
to $2.10, the price at which the common stock was last sold, was approximately $19,461,580.
The
number of the registrant’s shares of common stock outstanding on September 20, 2023 was
12,167,930.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Table of Contents
Page
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 4
Item 1B. Unresolved Staff Comments 4
Item 2. Properties 4
Item 3. Legal Proceedings 4
Item 4. Mine Safety Disclosure 4
PART II 5
Item 6. [Reserved] 6
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 11
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 12
Item 9B. Other Information 12
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 12
PART III 13
Item 10. Directors, Executive Officers and Corporate Governance 13
Item 11. Executive Compensation 19
Item 14. Principal Accounting Fees and Services 23
Item 15. Exhibit and Financial Statement Schedules 24
Signatures 26
i
PART I
Item 1. Business.
Unless otherwise stated or the context otherwise
indicates, references to “Aeluma,” the “Company,” “we,” “our,” “us,” or similar
terms refer to Aeluma, Inc. and Subsidiary.
Overview
We
develop novel optoelectronic devices for sensing and communications applications. Aeluma has pioneered a technique to manufacture devices
using high performance compound semiconductor materials on large-diameter substrates that are commonly used to manufacture mass market
microelectronics. This enables cost effective manufacturing of high-performance photodetector array circuits for imaging applications
in mobile devices, as well as other technologies. Photodetector devices may be used as image sensors that generate an image by detecting
light, in a manner similar to a digital camera taking pictures. Our devices may incorporate additional functionality for 3D image capture
when integrated into various system architectures. This technology has the potential to enhance the performance and capability of camera
image sensors, light detection and ranging (LiDAR), augmented reality/virtual reality (AR/VR), facial recognition, and other applications.
Aeluma has acquired key manufacturing equipment, and has headquarters
in Goleta, California with a manufacturing cleanroom to house this equipment.
Because we will leverage compound semiconductor
materials, our devices may operate out to longer wavelengths, up to at least 1600 nm, which is advantageous for a number of reasons including
eye safety. Beyond 1400 nm is considered eye safe at significantly higher optical power levels relative to that at shorter wavelengths.
Therefore, for LiDAR sensing systems, the range (the detectable object distance) can be increased significantly. Operating at specific
longer wavelengths (for example, near 1550 nm) also enables imaging both in low light (dark) conditions, as well as in direct sunlight.
Therefore, images could be captured outdoors and in various conditions.
Our Strategy
We will continue to develop our technology that
includes novel materials and devices based on those novel materials. Our primary focus is to manufacture high-performance photodetector
array circuits for image sensors and other optoelectronic devices. Initial efforts aim to penetrate the 3D imaging and sensing (mobile
and consumer, defense and aerospace, industrial, medical, auto), LiDAR (robotic vehicles, autonomous driving (AD), advanced driver assistance
systems (ADAS), topography, wind, industrial), and communications (telecommunications, data center communication, artificial intelligence
(AI) communications, and quantum processing and communications) markets.
Our Technology
Our technology is based on heterogeneous integration
of compound semiconductor materials on large-diameter substrates such as silicon. This heterogeneous integration enables the subsequent
device fabrication and manufacturing in large-scale manufacturing environments that are suited to mass markets.
Competition
There are two primary classes of image sensors
currently on the market: low-cost silicon sensors for mass market applications, and high-performance compound semiconductor (ex. InGaAs)
sensors deployed primarily in specialty applications. The major suppliers of silicon CMOS image sensors include Sony, Samsung, Omnivision,
On Semi, STM, Panasonic, Canon, SK Hynix, and others (Source: Yole Development, www.yole.fr). The major suppliers of InGaAs sensors include
Hamamatsu, Sumitomo, Teledyne/FLIR, Excelitas, and others (Source: Markets and Markets, www.marketsandmarkets.com).
We believe that our technology will be able to
compete effectively because we are uniquely positioned to outperform silicon CMOS image sensors while achieving a cost of manufacturing
that is lower than that for traditional InGaAs sensors. Compared to silicon, InGaAs demonstrates higher detection sensitivity and a broader
wavelength absorption spectrum. Silicon absorbs or detects light in the visible spectral region (400-750 nm) and partially in the near
infrared (NIR) spectral region (greater than 750 nm), cutting off near 940 nm. InGaAs not only demonstrates higher absorption in the
NIR, but also extends well into the shortwave infrared (SWIR) spectrum (900-1700 nm), cutting off near 1700 nm, with the ability to extend
to near 2500 nm.
1
We believe that we are also positioned to win
on price in competing with current InGaAs sensors while having the ability to realize much larger area photodetector arrays because of
our ability to manufacture on up to 12-inch silicon substrates, whereas competing InGaAs photodetectors are manufactured on indium phosphide
(InP) substrates that are typically 2-4 inches in size. Therefore, in addition to realizing many more sensor chips per wafer, we have
the ability to realize array sizes that are larger than what is possible with traditional InGaAs manufacturing on InP wafers.
Existing and potential competitors have or could
have advantages such as greater name recognition, longer operating histories, broader and deeper product portfolios, larger customer
bases, substantially greater financial and other resources, and larger scale manufacturing operations. However, we believe that our products
will have the potential to compete because of our unique ability to manufacture high performance devices at scale and at low cost.
Customers
Aeluma has customer engagements that involve
development of wafers, delivery of engineering samples for evaluation, and delivery of small volumes of chips. Aeluma’s technology
is broadly applicable. Potential markets include automotive LiDAR, industrial LiDAR, robotics, mobile, AR/VR, AI, communications, and
defense and aerospace. Our current strategy is to pursue partnerships with system integrators, including LiDAR companies and Tier 1 automotive
suppliers, or semiconductor manufacturing companies. Aeluma is pursuing direct sales relationships.
Potential customers include those in the mobile
market (both mobile phone manufacturers and companies that sell integrated solutions to them), LiDAR for cars and other vehicles, and
defense and aerospace.
Markets
The
CMOS image sensors market is projected to be $30B in 2026 (Source: Yole Development). In terms of total market unit sales, the
following are projected for 2024: 1.73 billion mobile phones, 131 million tablets, and 113 automotive vehicles (Source:
www.idc.com). Manufacturers of mobile phones, tablets, and LiDAR for automotive vehicles may be prospective customers for Aeluma. In
the mobile market, Apple arguably leads in terms of deploying advanced capabilities such as LiDAR sensing in their devices; Apple
does not use our technology. Apple leverages VCSEL emitters in conjunction with SPAD detectors for a LiDAR scanner in smartphones
and tablets and such technology “helps to deliver faster, more realistic augmented reality experiences and improves autofocus
in low-light scenes in photos and videos”
(https://www.apple.com/newsroom/2021/05/apple-awards-an-additional-410-million-from-its-advanced-manufacturing-fund-to-ii-vi/).
Other major smartphone suppliers include Samsung, Xiaomi, OPPO, vivo, Huawei, and realme (Source: www.counterpointresearch.com). The
automotive LiDAR market is projected to be between $5-80Bin
2030
(https://www.bloomberg.com/press-releases/2022-05-31/lidar-market-size-to-be-worth-4-71-billion-by-2030-grand-view-research-inc;
AEye Presentation, LD Micro Invitational 2022; Estimate by Velodyne).
Intellectual Property
Aeluma has filed several patent applications
with the United States Patent and Trademark Office (USPTO). We have filed trademarks for the name “Aeluma” and the slogan
“Sensing Reimagined” with the USPTO. We maintain protection of trade secrets that include “know-how” and process
recipes.
Our Intellectual Property Approach
Our strategy for the protection of our proprietary
technology is to seek worldwide patent protection with a focus on jurisdictions that represent significant global semiconductor markets.
However, we will assess on a case-by-case basis whether it is strategically more favorable to maintain trade secret protection for our
inventions and “know-how” rather than pursue patent protection. Generally, patents have a term of twenty years from the earliest
priority date, assuming that all maintenance fees are paid, no portion of the patent has been terminally disclaimed and the patent has
not been invalidated. In certain jurisdictions, and in certain circumstances, patent terms can be extended or shortened.
2
Governmental & Environmental Regulations
Our primary products are anticipated to be compound
semiconductor optoelectronic devices manufactured on silicon substrates, including InGaAs photodetectors and photodetector arrays. To
the extent that our products are or become subject to U.S. export controls and regulations, these regulations may limit the export of
our products and technology, and provision of our services outside of the United States, or may require export authorizations, including
by license, a license exception, or other appropriate government authorizations and conditions, including annual or semi-annual reporting.
Export control and economic sanctions laws may also include prohibitions on the sale or supply of certain of our products to embargoed
or sanctioned countries, regions, governments, persons, and entities. In addition, various countries regulate the importation of certain
products, through import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our
products. The exportation, re-exportation, and importation of our products and technology and the provision of services, including by
our partners, must comply with these laws or else we may be adversely affected, through reputational harm, government investigations,
penalties, and a denial or curtailment of our ability to export our products and technology. Complying with export control and sanctions
laws may be time-consuming and may result in the delay or loss of sales opportunities. Although we take precautions to prevent our products
and technology from being provided in violation of such laws, our products and technology may have previously been, and could in the
future be, provided inadvertently in violation of such laws, despite the precautions we take. If we are found to be in violation of U.S.
sanctions or export control laws, it could result in substantial fines and penalties for us and for the individuals working for us. Export
or import laws or sanctions policies are subject to rapid change and have been the subject of recent U.S. and non-U.S. government actions.
Changes in export or import laws or sanctions policies, may adversely impact our operations, delay the introduction and sale of our products
in international markets, or, in some cases, prevent the export or import of our products and technology to certain countries, regions,
governments, persons, or entities altogether, which could adversely affect our business, financial condition and results of operations.
We seek to comply with all applicable statutory
and administrative requirements concerning environmental quality. Expenditures for compliance with federal state and local environmental
laws have not had, and are not expected to have, a material effect on our capital expenditures, results of operations or competitive
position.
In addition, to the extent that our facilities
and operations are or become subject to the plant and laboratory safety requirements of various environmental and occupational safety
and health laws in the U.S., we believe we are in compliance with all such laws and regulations, and to date, those regulations have
not materially restricted or impeded operations. Further, we believe our processes to be highly efficient, generating very low levels
of waste and emissions. For this reason, we do not view issues surrounding climate change and any currently foreseeable related regulations
as materially impacting our business and financial statements, beyond any inestimable impact on the macro-economic environment.
We are also generally subject to other industry
and environmental regulations for electronic and semiconductor products such as the Restriction of Hazardous Substances Directive 2002/95/EC.
Manufacturing
We have established a manufacturing and research
and development facility at our headquarters in Goleta, California. We have installed key equipment and we plan to control our core materials
manufacturing and development. In addition to our facility, we work with a variety of vendors and are establishing relationships with
industrial foundries to build out our manufacturing supply chain.
Sales
We are now delivering wafers and chips to some
customers, primarily for research and development and sampling purposes.
3
Marketing
Marketing activities include direct relationships
with potential customers and partners. We are under nondisclosure agreement (NDA) with a number of potential customers and partners,
several of which have either visited Aeluma or hosted a visit by Aeluma representatives at their sites.
Employees
At June 30, 2023, Aeluma had 11 full-time employees,
2 part-time employees, and consultants. The majority of employees work in engineering. We plan to hire additional persons on an as-needed
basis. On a case-by-case basis, Aeluma may offer stock options to employees for attraction and retention.
Litigation
There is no material litigation, arbitration,
governmental proceeding or any other legal proceeding currently pending or known to be contemplated against us or any members of our
management team in their capacity as such, and we and the members of our management team have not been subject to any such proceeding
in the 10 years preceding the date of this Report. We may however be involved, from time to time, in claims and lawsuits incidental to
the conduct of our business in the ordinary course. We carry insurance coverage in such amounts as we believe to be reasonable under
the circumstances and that may or may not cover any or all of our liabilities in respect of these matters. We do not believe that the
ultimate resolution of these matters will have a material adverse impact on our consolidated financial position, cash flows or results
of operations, but cannot guarantee the same.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required
to provide the information called for by this Item. However, we encourage you to review the risk factors included in our registration
statement on Form S-1 (File No. 333-273149) that was filed with the SEC on July 6, 2023.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our principal executive office is located at
27 Castilian Dr., Goleta, California. Effective February 22, 2021, we entered into a triple-net lease agreement with SBR Associates LP
for the commercial building at 27 Castilian Dr. Goleta, California for a term of five years, which began on April 1, 2021. The current
rent for this property is $13,673 per month, with a CPI escalation over the initial base rent over the term of the lease. The lease expires
on March 31, 2026, with the option to renew the lease with reasonable notice.
Item 3. Legal Proceedings.
We are not currently involved in any material
legal proceedings. From time-to-time we are, and we anticipate that we will be, involved in legal proceedings, claims, and litigation
arising in the ordinary course of our business and otherwise. The ultimate costs to resolve any such matters could have a material adverse
effect on our financial statements. We could be forced to incur material expenses with respect to these legal proceedings, and in the
event that there is an outcome in any that is adverse to us, our financial position and prospects could be harmed.
Item 4. Mine Safety Disclosures
Not applicable.
4
PART II
Item 5. Market for Registrant’s Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock trades on the OTCQB system under
the symbol “ALMU.” Our CUSIP number is 00776X. There is currently limited trading volume for our Common Stock.
Holders of Record
As
of September 21, 2023, we had 12,167,930 shares of our common stock outstanding held by approximately 126 stockholders of record.
Dividend Policy
We have never paid any cash dividends on our
capital stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain future
earnings to fund ongoing operations and future capital requirements. Any future determination to pay cash dividends will be at the discretion
of our board of directors and will be dependent upon financial condition, results of operations, capital requirements and such other
factors as the board of directors deems relevant.
Recent Sales of Unregistered Securities
During the periods covered by this Report, we
have not issued unregistered securities to any person, except as described below. None of these transactions involved any underwriters,
underwriting discounts or commissions, except as specified below, or any public offering, and, unless otherwise indicated below, the
Registrant believes that each transaction was exempt from the registration requirements of the Securities Act by virtue of Section 4(a)(2)
thereof and/or Rule 506 of Regulation D promulgated thereunder, and/or Regulation S promulgated thereunder regarding offshore offers
and sales. All recipients had adequate access, though their relationships with the Registrant, to information about the Registrant.
2021 Offering
On June 5, 2021, we issued 20,000 shares of common
stock pursuant to an advisory agreement.
On June 10, 2021, we issued an aggregate of 511,278
shares of common stock pursuant to three individual Advisory Agreements, which includes an additional 164,108 shares to Mr. DenBaars,
who is one of our directors.
On June 10, 2021, we issued an aggregate of 99,414
shares of common stock pursuant to an Omnibus Equity Agreement, pursuant to which each of the signatories pursuant thereto agreed to
convert his/her shares issuable under his/her respective Simple Agreements for Future Equity agreements into shares of our common stock
at the close of the Merger.
On June 10, 2021, we entered into an amended
advisor agreement with Mr. DenBaars to issue an additional 164,108 for the consideration amount of $2,461.62 to take on additional advisor
duties.
On June 22, 2021, pursuant to the Merger, we
issued an aggregate of 4,100,000 shares of our Common Stock in exchange for all of the shares of Biond Photonics’ shares of capital
stock issued and outstanding immediately prior to the Merger.
On July 1, 2021, we sold 115,000 common
stock shares at a purchase price of $2.00 per share in a private placement offering for net proceeds (after deducting offering costs
of $23,070) of $206,930 and issued 11,500 warrants to purchase common stock to GP Nurmenkari Inc., who acted as the placement
agent for this private placement offering.
5
2022 Offering
On November 7, 2022,
we issued 150,000 shares of common stock to a consultant for providing consulting services to us.
On December 22, 2022,
we issued an aggregate of 517,000 shares of our common stock to 21 accredited investors, for aggregate gross proceeds of $1,551,000 (the
“2022 Private Offering”).
On January 10, 2023,
we held a second close of the 2022 Private Offering, pursuant to which we issued an aggregate of 214,667 shares of our common stock for
aggregate gross proceeds of $644,000.
On March 31, 2023, we
held the third closing of the 2022 Private Offering, pursuant to which we issued an aggregate of 715,665 shares of our common stock for
aggregate gross proceeds of $2,147,000.
On May 10, 2023, we
held the final closing of the 2022 Private Offering, pursuant to which we issued an aggregate of 570,166 shares of our common stock for
aggregate gross proceeds of $1,710,500.
Item 6. [Reserved].
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion of our financial
condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included
elsewhere in this filing.
You should read the following discussion and
analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes
and other financial information included in this report. Some of the information contained in this discussion and analysis or set forth
elsewhere in this report, including information with respect to our plans and strategy for our business, includes forward-looking statements
that involve risks and uncertainties as described under the heading “Forward-Looking Statements” elsewhere in this report.
You should review the disclosure under the heading “Risk Factors” in other filings we make with the SEC for a discussion
of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking
statements contained in the following discussion and analysis.
Overview
On June 22, 2021, we, Acquisition Sub and Biond
Photonics, entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”). Pursuant to the terms
of the Merger Agreement, on June 22, 2021, Biond Photonics merged with and into Acquisition Sub, with Acquisition Sub continuing as the
surviving corporation and our wholly owned subsidiary.
As a result of the Merger, we acquired the business
of Biond Photonics, a California corporation, doing business as Aeluma. See “Description of Business”above.
At the time the certificates of merger reflecting the Merger were filed with the Secretaries of State of California and Delaware,
each of Biond Photonics’ shares of capital stock issued and outstanding immediately prior to the closing of the Merger was converted
into the right to receive (a) 1.299135853 shares of our common stock (the “Common Share Conversion Ratio”), with the maximum
number of shares of our common stock issuable to the former holders of Biond Photonics’ capital stock equal to 4,100,002 after
adjustments due to rounding for fractional shares. Immediately prior to the effectiveness of the Merger, an aggregate of 2,500,000 shares
of our common stock owned by the stockholders of Parc Investments, Inc. prior to the Merger were forfeited and cancelled (the “Stock
Forfeiture”).
The issuance of shares of our common stock to
Biond Photonics’ former security holders are collectively referred to as the “Share Conversion.”
6
The Merger Agreement contained customary representations
and warranties and pre- and post-closing covenants of each party and customary closing conditions.
As a condition to the Merger, we entered into
an indemnity agreement with our former officer and directors (the “Pre-Merger Indemnity Agreement”), pursuant to which we
agreed to indemnify such former officer and directors for actions taken by them in their official capacities relating to the consideration,
approval and consummation of the Merger and certain related transactions.
The Merger was treated as a recapitalization
and reverse acquisition for us for financial reporting purposes. Biond Photonics is considered the acquirer for accounting purposes,
and our historical financial statements before the Merger were replaced with the historical financial statements of Biond Photonics before
the Merger in filings with the SEC. The Merger is intended to be treated as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended.
The issuance of securities pursuant to the Share
Conversion was not registered under the Securities Act, in reliance upon the exemption from registration provided by Section 4(a)(2)
of the Securities Act, which exempts transactions by an issuer not involving any public offering, and Rule 506 of Regulation D
promulgated by the SEC thereunder. These securities may not be offered or sold in the U.S. absent registration or an applicable exemption
from the registration requirement and are subject to further contractual restrictions on transfer.
Prior to the Merger, our sole business purpose
was to seek the acquisition of or merger with, an existing company.
As a result of the consummation of the Merger,
on June 22, 2021, Biond Photonics, Inc. became our wholly owned subsidiary and the business of Biond Photonics, Inc. became our business
going forward. Accordingly, at the closing, we ceased to be a shell company.
Aeluma develops novel optoelectronic devices
for sensing and communications applications. Aeluma has pioneered a technique to manufacture devices using high performance compound
semiconductor materials on large diameter silicon wafers that are commonly used to manufacture mass market microelectronics. This enables
cost effective manufacturing of high-performance photodetector array circuits for imaging applications in mobile devices. These devices
may be used as image sensors that generate an image by detecting light, in a manner similar to a digital camera taking a picture. Our
devices may incorporate additional functionality and enhanced performance to enable 3D image capture when integrated into various system
architectures. This technology has the potential to greatly enhance the performance and capability of camera image sensors, Lidar, augmented
reality, facial recognition, and other applications. Aeluma has acquired a key piece of manufacturing equipment and has headquarter in
Goleta, California with a manufacturing cleanroom to house this equipment.
The Private Placement Following the Merger
Immediately following the Merger, we sold 3,482,500
shares of our common stock pursuant to an initial closing of a private placement offering at a purchase price of $2.00 per share (the
“Offering Price”). We held a second closing on June 28, 2021 for an additional 402,500 shares of our common stock and a third
and final closing on July 1, 2021 for an additional 115,000. Accordingly, we sold a total of 4,000,000 shares of our common stock. This
private placement offering is referred to herein as the “Merger Offering.”
The aggregate gross proceeds from the three closings
of the Merger Offering were $8,000,000 (before deducting placement agent fees and expenses of the Merger Offering).
The three closings of the Merger Offering were
exempt from registration under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D promulgated by the SEC
thereunder. The common stock in the Merger Offering was sold to “accredited investors,” as defined in Regulation D,
and was conducted on a “reasonable best efforts” basis.
In connection with the Merger Offering and subject
to the closing of the Merger Offering, we agreed to pay the placement agent, GP Nurmenkari Inc. (the “Placement Agent”),
a U.S. registered broker-dealer, a cash placement fee of 10% of the gross proceeds raised from investors in the Merger Offering (other
than the first $630,000 of common stock sold to pre-Merger Biond Photonics shareholders and their friends and family, for which the Placement
Agent received a 3% cash fee, and $170,000 of common stock sold to pre-Merger Biond Photonics friends and family for which the Placement
Agent received no cash fee) and to issue to it 50,000 shares of our common stock and warrants to purchase a number of shares of our common
stock equal to 10% of the number of shares of common stock sold in the Merger Offering (other than the first $800,000 of common stock
sold to pre-Merger Biond Photonics shareholders and their friends and family), with a term of five years and an exercise price of $2.00
per share (the “Placement Agent Warrants”). We also agreed to pay certain expenses of the Placement Agent in connection with
the Merger Offering.
7
As a result of the foregoing, we paid the Placement
Agent an aggregate commission of $748,900 and issued to it 50,000 shares of our common stock and Placement Agent Warrants to purchase
360,000 shares of our common stock in connection with the two closings of the Merger Offering. We have also reimbursed the Placement
Agent for approximately $265,000 for legal and other expenses incurred in connection with the Merger Offering.
A note payable to an officer of Parc Investments,
Inc. in the amount of $50,000 was repaid directly from the proceeds from the Merger Offering.
Subject to certain customary exceptions, we have
agreed to indemnify the Placement Agent to the fullest extent permitted by law against certain liabilities that may be incurred in connection
with the Offering, including certain civil liabilities under the Securities Act, and, where such indemnification is not available, to
contribute to the payments the Placement Agent and their sub-agents may be required to make in respect of such liabilities.
Recent Private Placement
Between December 2022 and May 2023, we entered
into subscription agreements (the “Subscription Agreement”) with certain accredited investors, pursuant to which we issued
an aggregate of 2,017,498 shares of our common stock, par value $0.0001 per share, at a per share purchase price of $3.00, for aggregate
gross proceeds of $6,052,500 (the “Offering”).
In connection with the Subscription Agreement,
we also entered into a Registration Rights Agreement with the Investors, pursuant to which we agreed to register all of the shares of
common stock issued in the Offering, including the shares of common stock underlying the warrant issued to the placement agent in this
registration statement. (See, Description of Securities – Registration Rights Agreement)
Pursuant to the Offering, we paid a cash placement
agent fee and expenses in the amount of $411,015 and issued placement agent warrants (“Placement Agent Warrants”) to purchase
up to an aggregate of 85,653 shares of common stock at an exercise price of $3.00 per share.
The Subscription Agreement also contains customary
representation and warranties of us and the Investors, indemnification obligations of us, termination provisions, and other obligations
and rights of the parties.
The foregoing description of the Subscription
Agreement, Registration Rights Agreement and form of Placement Agent Warrants is qualified by reference to the full text of the forms
of Subscription Agreement, Registration Rights Agreement and form of Placement Agent Warrants, which are filed as Exhibits hereto and
incorporated herein by reference.
Departure and Appointment of Directors and Officers
Our board of directors is authorized to have
five members. As of the effectiveness of the Merger, Mr. Ian Jacobs and Mr. Mark Tompkins resigned from our board of directors, and Mr.
Jonathan Klamkin, Mr. Lee McCarthy and Mr. Steven DenBaars were appointed to our board of directors. Mr. DenBaars is a Class I director.
Also, as of the effectiveness of the Merger,
Mr. Jacobs resigned from all officer positions with us, and Jonathan Klamkin was appointed as our President and Chief Executive Officer,
Lee McCarthy was appointed as our interim Chief Financial Officer and Chief Operating Officer.
8
Mr. McCarthy resigned from his position as interim
Chief Financial Officer on August 18, 2021 and from his directorship on December 1, 2021. To fill Mr. McCarthy’s vacancy on the
board, we appointed Ms. Palvi Mehta. Ms. Mehta is a Class II director.
On December 1, 2021, we also appointed Mr. John
Paglia to the board of directors; Mr. Paglia is a Class I director.
On November 8, 2022, Lee McCarthy provided notice
of his resignation as our Chief Operating Officer effective November 17, 2022. Mr. McCarthy’s decision to resign was not the
result of any disagreements with us on any matter related to the operations, policies, or practices of us.
Plan of Operations
We have been developing our materials and characterization
capabilities at our headquarters in Goleta, California, in connection with the further development of our business and the implementation
of our plan of operations. We have installed some key manufacturing equipment at our headquarters and will continue to develop relationships
with manufacturing partners to carry out certain steps of our manufacturing processes externally. We have gained access to a rapid prototyping
facility and are leveraging this access to fabricate early-stage prototypes. In the future, we intend to implement appropriate quality
and manufacturing controls. Some equipment was procured previously, and other equipment is being procured through purchase orders with
equipment vendors.
The primary sources of funding for equipment
procurement and installation are the seed funding raised prior to becoming a public company and the funding raised from our financings.
We have also leveraged funds to continue strengthening our intellectual property including patent applications, trademarks, and development
of trade secrets and manufacturing process recipes. We will continue to develop our manufacturing and product development strategy by
further engaging customers and strategic partners.
Limited Operating History
We cannot guarantee that the proceeds from the
Offering will be sufficient to carry out all of our business plans. Our business is subject to risks inherent in growing an enterprise,
including limited capital resources, risks inherent in the research and development process and possible rejection of our products in
development.
If financing is not available on satisfactory
terms, we may be unable to carry out all of our operations. Equity financing will result in dilution to existing stockholders.
Components of Results of Operations
Revenue
Our revenue currently consists of commercial
product sales and government contracts. For the year ended June 30, 2023, products are sold as samples and government contracts are primarily
for research and development.
Operating Expenses
The cost of revenue consists of costs of materials,
as well as direct compensation and expenses incurred to provide deliverables that resulted in payment of our success fee and wafers delivered.
We anticipate that our cost of revenue will vary substantially depending on the nature of products and/or services delivered in each
customer engagement.
Research and development
expenses consist primarily of compensation and related costs for personnel, including stock-based compensation and employee benefits
as well as costs associated with design, fabrication, packaging and testing of our devices. We expense research and development expenses
as incurred.
General and administrative expenses consist primarily
of compensation and related costs for personnel, including stock-based compensation and employee benefits. In addition, general
and administrative expenses include third-party consulting, legal, audit and accounting services.
9
Facility expenses consist primarily of lease
and utility expenses at our headquarters in Goleta, California and insurance expenses consist mainly of directors and officers insurance.
Other Income
Other income, net of other expenses, consists
primarily of income generated from subleasing a portion of our research and development facility.
Income Tax Expense
Income tax expense consists primarily of
income taxes in certain state jurisdictions in which we conduct business.
Results of Operations
Year ended June 30, 2023 compared to the
year ended June 30, 2022
Our results of operations for the year ended
June 30, 2023, as compared to the same period of 2022, were as follows (some of the balances on the prior period’s combined financials
statements have been reclassified to conform to the current period presentation):
Year Ended June 30, Change ’23
Income tax expense - - -
Revenue: The company recognized its first
revenue of $193,339, consisting of $15,000 from product sales and $178,339 from a government contract.
Operating Expenses: During the years ended
June 30, 2023 and 2022, we incurred operating expenses of $5,703,024 and $3,733,522, respectively. This increase was mainly due to increased
salaries and stock-based compensation resulting from additional employees hired to support our growth and increased costs related to
research and development activities.
Other income: During the years ended June
30, 2023 and 2022, we recorded other income of $130,103 and $281,823, respectively. The decrease was primarily due to a decrease in sub-lease
rental income. The sub-lease ended in March 2023.
Income tax expense: We recorded no income
tax expense for the years ended June 30, 2023 and 2022.
Net Loss: Net loss increased to $5,379,582
for the year ended June 30, 2023, as compared to $3,451,699 for the same period of 2022. The increase was primarily due to increases
in operating expenses resulting increased salaries and stock-based compensation, and research and development activities.
Capital Resources and Liquidity
Our financial statements have been presented
on the basis that are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course
of business. As presented in the financial statements, we incurred a net loss of $5,379,582 and $3,451,699 for the years ended June 30,
2023 and 2022, respectively, and losses are expected to continue in the near term. The accumulated deficit was $9,062,066 at June 30,
2023. We have been funding our operations through private loans and the sale of common stock in private placement transactions.
10
Management anticipates that significant additional
expenditures will be necessary to develop and expand our business before significant positive operating cash flows can be achieved. Our
ability to continue as a going concern is dependent upon our ability to raise additional capital and to ultimately achieve sustainable
revenues and profitable operations. At June 30, 2023, we had $5,071,690 of cash on hand. These funds are insufficient to complete our
business plan and as a consequence, we will need to seek additional funds, primarily through the issuance of debt or equity securities
for cash to operate our business. No assurance can be given that any future financing will be available or, if available, that it will
be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our
operations, in the case of debt financing or cause substantial dilution for our stockholders, in the case of equity financing.
Management has undertaken steps as part of a
plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond. These steps include (a)
raising additional capital and/or obtaining financing; (b) controlling overhead and expenses; and (c) executing material sales or research
contracts. There can be no assurance that we can successfully accomplish these steps and it is uncertain that we will achieve a profitable
level of operations and obtain additional financing. There can be no assurance that any additional financing will be available to us
on satisfactory terms and conditions, if at all. As of the date of this Report, we have not entered into any formal agreements regarding
the above.
In the event we are unable to continue as a going
concern, the Company may elect or be required to seek protection from its creditors by filing a voluntary petition in bankruptcy or may
be subject to an involuntary petition in bankruptcy. To date, management has not considered this alternative, nor does management view
it as a likely occurrence.
We had working capital of $4,576,807 and $4,058,409
at June 30, 2023 and 2022, respectively. Current assets increased $903,058 to $5,333,906 at June 30, 2023 from $4,430,848 at June 30,
2022, primarily due to the private placement described above. Current liabilities increased $384,660 to $757,099 at June 30, 2023 from
$372,439 at June 30, 2022, due to increases in accounts payable.
The following table shows a summary of our cash
flows for the periods presented:
Year Ended June 30, Change ’23
Net cash (used in) provided by:
Net cash used in our operating activities increased
$1,385,181 to $3,637,972 for the year ended June 30, 2023, compared to $2,252,791 for the same period in 2022, primarily due to a $1,927,883
increase in net loss. The decrease was reduced mainly by non-cash expense increases of $258,000 in consultant expense, $244,433 in stock-based
compensation expense, and $302,172 in accounts payable.
Net cash used in our investing activities were
$672,545 and $955,667 for the years ended June 30, 2023 and 2022, respectively. Investing activities for the periods presented are related
to the equipment purchases and the setup of our facility.
Our financing activities resulted in a cash inflow
of $5,641,485 and 161,930 for the years ended June 30, 2023 and 2022, respectively. Financing activities for the periods presented are
proceeds from the sale of common stock in private placements.
Recent Accounting Pronouncements
The Company has evaluated all issued but not yet effective accounting
pronouncements and determined that they are either immaterial or not relevant to the Company.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.
Not applicable.
11
Item 8. Financial Statements and Supplementary Data.
Index to Consolidated Financial Statements
Page
Report of Independent Registered Public Accounting Firm (PCAOB No. 00468) F-2
Consolidated Balance Sheets as of June 30, 2023 and 2022 F-3
Notes to Consolidated Financial Statements F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the Board of Directors and Stockholders of
Aeluma, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated
balance sheets of Aeluma, Inc. and Subsidiary (the Company) as of June 30, 2023 and 2022, and the related consolidated statements of
operations, stockholders’ equity, and cash flows for each of the years in the two-year period ended June 30, 2023, and the related
notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2023 and 2022, and the results of
its operations and its cash flows for each of the years in the two-year period ended June 30, 2023, in conformity with accounting principles
generally accepted in the United States of America.
Explanatory Paragraph – Going Concern
The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements,
the Company has incurred significant operating losses and negative cash flows from operations, and has generated limited revenue. These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard
to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the
responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial
statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United
States) “PCAOB” and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.