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, 2024
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number: 000-56218
AELUMA, INC.
(Exact Name of Registrant as Specified in Charter)
27 Castilian Drive Goleta, California 93117
(Address of Principal Executive Offices)
(805)351-2707
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of exchange on which registered
None - -
Securities registered pursuant to Section
12(g) of the Act: Common Stock, $0.0001 par value
Indicate by check mark if the registrant is
a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Exchange 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 by Rule 12b-2 of the Exchange 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,
2023, as computed by reference to $2.90, the price at which the common stock was last sold, was approximately $29,294,872.
As of September 25, 2024, there were 12,178,424
shares of the issuer’s common stock outstanding and no share of preferred stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
Table of Contents
Page
PART I 1
Item 1. Business 1
Item 1A. Risk Factors 5
Item 1B. Unresolved Staff Comments 5
Item 1C. Cybersecurity 5
Item 2. Properties 5
Item 3. Legal Proceedings 5
Item 4. Mine Safety Disclosure 5
PART II 6
Item 6. Reserved 6
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 10
Item 8. Financial Statements and Supplementary Data F-1
Item 9A. Controls and Procedures 11
Item 9B. Other Information 11
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 11
PART III 12
Item 10. Directors, Executive Officers and Corporate Governance 12
Item 11. Executive Compensation 18
Item 14. Principal Accounting Fees and Services 24
Item 15. Exhibit and Financial Statement Schedules 25
SIGNATURES 27
i
INTRODUCTORY NOTE
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.
Special Note Regarding
Forward-Looking Statements
This report contains
forward-looking statements and information that are based on the beliefs of our management as well as assumptions made by and information
currently available to us. Such statements should not be unduly relied upon. Forward-looking statements include statements about our expectations,
beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts or that are not present facts or
conditions. Forward-looking statements and information can generally be identified by the use of forward-looking terminology or words,
such as “anticipate,” “approximately,” “believe,” “continue,” “estimate,”
“expect,” “forecast,” “intend,” “may,” “ongoing,” “pending,” “perceive,”
“plan,” “potential,” “predict,” “project,” “seeks,” “should,”
“views” or similar words or phrases or variations thereon, or the negatives of those words or phrases, or statements that
events, conditions or results “can,” “will,” “may,” “must,” “would,” “could”
or “should” occur or be achieved and similar expressions in connection with any discussion, expectation or projection of future
operating or financial performance, costs, regulations, events or trends. The absence of these words does not necessarily mean that a
statement is not forward-looking.
Forward-looking statements
and information are based on management’s current expectations and assumptions, which are inherently subject to uncertainties, risks
and changes in circumstances that are difficult to predict. These statements reflect our current view concerning future events and are
subject to risks, uncertainties and assumptions. There are important factors that could cause actual results to vary materially from those
described in this report as anticipated, estimated or expected, as well as general conditions in the economy, capital markets, Securities
and Exchange Commission (the “SEC”) regulations which affect trading in the securities of “penny stocks,”
and other risks and uncertainties. Except as required by law, we assume no obligation to update any forward-looking statements publicly,
or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new
information becomes available in the future. Depending on the market for our stock and other conditional tests, a specific safe harbor
under the Private Securities Litigation Reform Act of 1995 may be available. Notwithstanding the above, Section 27A of the Securities
Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), expressly state that the safe harbor for forward-looking statements does not apply to companies
that issue penny stock. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward-looking
statements may not apply to us at certain times.
ii
PART I
Item 1. Business.
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 photodetectors and photodetector array circuits for imaging applications in mobile devices,
as well as other technologies. 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.
Because we will leverage
compound semiconductor materials, our devices may operate at longer wavelengths than traditional silicon-based image sensors, 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.
Additionally, Aeluma’s
technology may be used to manufacture other electronic and optoelectronic devices in the future including lasers, transistors, and solar
cells.
Aeluma has acquired key
manufacturing equipment, and has headquarters in Goleta, California with a manufacturing cleanroom to house this equipment.
Recent
Events
For the
year ended June 30, 2024, we were awarded several contracts, totaling $1,323,237,
some of which is from the U.S. Navy, the Office of the Secretary of Defense, and the Department of Energy, for providing services and
for delivering materials. The awards are firm fixed price contracts that shall be paid upon completion of certain milestones, and may
include deliveries of samples or materials.
Our Strategy
We will continue to develop
our technology that includes novel materials and devices based on our core intellectual property. 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.
1
Competition
There are two primary
classes of image sensors for the near infrared and shortwave infrared currently on the market: low-cost silicon-based sensors and high-performance
compound semiconductor (ex. indium gallium arsenide or InGaAs) sensors. The major suppliers of silicon CMOS image sensors include Sony,
Samsung, Omnivision, Onsemi, ST Microelectronics, Panasonic, Canon, SK Hynix, and others (Source: Yole Development, www.yole.fr). Alternative
technologies that can be manufactured on silicon include germanium and colloidal quantum dots. 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, germanium, and colloidal
quantum dots 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 spectrum (900-1700 nm), cutting
off near 1700 nm, with the ability to extend to near 2500 nm.
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 between 2 to 4 inches in diameter. 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, and to leverage silicon-based wafer-scale techniques for backend processing, integration, and packaging.
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 also
performs on government-funded R&D projects. 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 mobile and consumer electronics manufacturers, LiDAR companies and Tier 1 automotive suppliers, module
manufacturers, component suppliers, or semiconductor manufacturing companies. Aeluma is pursuing direct sales relationships and strategic
partnerships.
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, robotics, AR/VR, AI, and defense and aerospace.
Markets
The CMOS image sensors
market is projected to be $30B in 2026 (Source: Yole Development). 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 currently use our technology in any of their products. Apple leverages vertical cavity
surface emitting lasers (VCSEL) emitters in conjunction with single photon avalanche diode (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 $5-80B in 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).
2
Intellectual Property
Aeluma has filed several
patent applications with the United States Patent and Trademark Office (USPTO), and several patents have been issued. 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.
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.
3
Manufacturing
We have established a
manufacturing and R&D 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 R&D and sampling purposes.
Marketing
Marketing activities
include direct relationships with potential customers and partners. We are under nondisclosure agreement (NDA) with a number of current
and potential customers and partners, several of which have either visited Aeluma or hosted a visit by Aeluma representatives at their
sites.
Employees & Human
Resources
At June 30, 2024, Aeluma had 11 full-time employees,
2 part-time employees, and consultants. The majority of employees work in engineering. None of our employees are represented by a labor
union. We have not experienced any work stoppages, and we consider our relations with our employees to be very good. 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.
Sustainability
We are committed to leveraging our technology
for sustainable operations. Recognizing the profound impact of climate change on the global economy, our company, and our stakeholders,
we embrace our responsibility to safeguard the planet. Our journey toward sustainability is ongoing, driven by a commitment to understand
our environmental footprint and enhance our positive impact.
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.
Corporate Information
Aeluma was incorporated
in Delaware on August 21, 2020, under the name Parc Investments, Inc.; the name was changed to Aeluma, Inc. in June 2021. Our principal
executive offices are located at 27 Castilian Drive, Goleta, California 93117. Our website is located at Aeluma, Inc. (ALMU)
and we make available, free of charge, on or through our website all of our periodic reports, including our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and current reports on Form 8-K, as soon as reasonably practicable after we file such reports with the
SEC. Our website and the information contained on our website is not incorporated by reference and is not a part of this Annual Report.
4
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
1C. Cybersecurity.
Risk Management and
Strategy
We periodically assess
risks from cybersecurity threats, and monitor our information systems for potential vulnerabilities. However, to date, given the small
size of our company and the nature of our operations, our reliance on information systems has been limited to the use of standard off-the-shelf
software (such as Google, QuickBooks and Microsoft Office) and the use by our employees of standard personal computers. Accordingly, management
has not implemented any formal process for assessing, identifying, and managing risks from cybersecurity threats.
We depend on digital technologies, including information
systems, infrastructure and cloud applications and services, including those of third parties with which we may deal. Sophisticated and
deliberate attacks on, or security breaches in, our systems or infrastructure, or the systems or infrastructure of third parties or the
cloud, could lead to corruption or misappropriation of our assets, proprietary information and sensitive or confidential data. As a company
without significant investments in data security protection, we may not be sufficiently protected against such occurrences. We may not
have sufficient resources to adequately protect against, or to investigate and remediate any vulnerability to, cyber incidents. It is
possible that any of these occurrences, or a combination of them, could have adverse consequences on our business and lead to financial
loss. However, risks from cybersecurity threats have, to date, not materially affected us, our business strategy, results of operations
or financial condition.
Governance
As discussed above, given
the nature of our current operations and our experience to date, we do not currently perceive cybersecurity as a particularly significant
risk to our business. Accordingly, we have not tasked our Board of Directors with any additional cybersecurity oversight duties, or designated
any committee of the Board of Directors to specifically oversee cybersecurity risks to our business.
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 $14,014 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 for two 60 months periods.
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.
5
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 25,
2024, we had 12,178,424 shares of our common stock outstanding held by approximately 99 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.
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
“Offering”).
On January 10, 2023,
we held a second close of the 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 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 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.
6
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. 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. You should not place undue reliance on
forward-looking statements as predictive of future results.
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 photodetectors and photodetector array circuits for imaging applications in mobile devices,
as well as other technologies. This technology has the potential to enhance the performance and capability of camera image sensors, LiDAR,
AR/VR, facial recognition, and other applications. Additionally, Aeluma’s technology may be used to manufacture other electronic
and optoelectronic devices in the future including lasers, transistors, and solar cells.
Private Placements
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”).
Pursuant to the Offering, we paid a cash placement
agent fee of $411,015 and issued placement agent warrants to purchase up to 85,653 shares of common stock at an exercise price of $3.00
per share. We also agreed to pay certain expenses of the placement agent in connection with 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.
The closings of the 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 Offering was sold to “accredited investors,” as defined in Regulation D, and was conducted on a “reasonable
best efforts” basis.
Between August 5, 2024
and August 27, 2024, we issued convertible promissory notes in the aggregate principal amount of $3,145,000 to 10 accredited investors,
pursuant to a private note financing. The Notes mature in June 2026 and do not carry any interest. The Notes are convertible into shares
of the Company’s common stock par value $0.0001 per share (the “Common Stock”) upon the occurrence of certain events,
(i.e., qualified financing resulting in at least $5,000,000 to the Company, if the Common Stock is uplisted to a national securities exchange
or if neither of those such events occur prior to the maturity date, (together with Sale of the Company (as hereinafter defined), a “Conversion
Event”)). The Note also provides that if there is a Sale of the Company, as defined in the Note, the Holder may elect to receive
a cash payment equal to the aggregate amount of principal then outstanding under such Holder’s Note or convert the Note into shares
of Common Stock equal to 85% of the VWAP of the Common Stock on the OTC Markets for the five trading days immediately prior to the Sale
of the Company. Although the conversion price is dependent upon the type of Conversion Event that occurs, the Note does carry a ceiling
and floor price: the applicable conversion price will not be lower than 85% of the 5-day VWAP on the applicable Closing Date (the “Floor
Price”) nor will the applicable conversion price be higher than $3.50 per share (the “Ceiling Price”); the Floor Price
and Ceiling Price shall automatically adjust in the event of a stock split or consolidation by the Company. The Floor Price for the investors
who participated in this initial closing is equal to $2.68 per share. Since the Floor Price is tied to the Closing Date, the Floor Price
may be different for investors that are part of a different closing, should the Company hold additional closings. The Investors were granted
piggyback registration rights for the shares of Common Stock underlying the Note.
7
The NPA also contains
customary representation and warranties of the Company and the Investors, indemnification obligations of the Company, termination provisions,
and other obligations and rights of the parties.
The foregoing description
of the NPA and the Note is qualified by reference to the full text of the forms of NPA and Note, which are filed as Exhibits hereto and
incorporated herein by reference.
Departure and Appointment of Directors and Officers
Mrs. Mehta decided not run for re-election in
2023; such decision was not the result of any disagreements with us on any matter related to the operations, policies, or practices of
us. The Board nominated Mr. Craig Ensley to fill the vacancy on the Board; on December 14, 2023, the shareholders voted to elect Mr. Ensley
to the board.
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 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.
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, costs associated with design, fabrication, packaging and testing of our devices, and facility lease
and utility expenses. We expense research and development expenses as incurred.
8
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, insurance, audit and accounting services.
Other Income
Other income, net of other expenses, consists
primarily of interest income and income generated from subleasing a portion of our research and development facility. The sub-lease ended
in March 2023
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, 2024 compared to the
year ended June 30, 2023
Our results of operations for the year ended June
30, 2024, as compared to the year ended June 30, 2023, were as follows:
Year Ended June 30,
Income tax expense - - - -
Revenue: Revenue increased $725,215, or
375.1 %, to $918,554, of which $64,756 was from commercial product and service contracts and $853,798 was from government contracts, for
the year ended June 30, 2024 from $193,339, of which $15,000 was from commercial product and service contracts and $178,339 was from government
contracts, for the same period in 2023.
Operating expenses: Operating expense decreased
$221,162, or 3.9%, to $5,481,862 for the year ended June 30, 2024 from $5,703,024 for the same period in 2023, due primarily to a reduction
in consulting expenses, offset partially by increased salaries and stock-based compensation expenses.
Other income: Other income decreased $129,090,
99.2%, to $1,013 for the year ended June 30, 2024 from $130,103 for the same period in 2023. The decrease was due primarily to a $128,921
decrease in sub-lease income as the sublease ended in March 2023.
Income tax expense: We did not record income
tax expense for either of the years ended June 30, 2024 and 2023.
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 $4,562,295 and $5,379,582 for the years ended June 30,
2024 and 2023, respectively, and losses are expected to continue in the near term. The accumulated deficit was $13,624,361 at June 30,
2024. We have been funding our operations through the sale of common stock in private placement transactions.
9
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, 2024, we had $1,291,072 of cash and cash equivalents.
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; (c) executing material sales or research contracts;
and (d) pursuing additional sales and 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 $766,160and $4,576,807 at June 30, 2024
and 2023, respectively. Current assets decreased $3,941,060 to $1,392,846 at June 30, 2024 from $5,333,906 at June 30, 2023, primarily
due to a $3,780,618 decrease in cash. Current liabilities decreased $130,413 to $626,686 at June 30, 2024 from $757,099 at June 30, 2023,
due primarily to decreases in accounts payable.
The following table shows a summary of our cash
flows for the periods presented:
Year Ended June 30,
Net cash provided by (used in)
Net cash used in our operating activities were
$3,454,779 and $3,637,972 for the years ended June 30, 2024 and 2023, respectively, due primarily to net losses of $4,562,295 and $5,379,582
for the years ended June 30, 2024 and 2023, respectively.
Net cash used in our investing activities was
$321,838 and $672,545 for the years ended June 30, 2024 and 2023, respectively. Investing activities include purchase of equipment and
payment for leasehold improvements.
Net cash used in our financing activities was
$4,001 for the year ended June 30, 2024 and net cash provided by our financing activities was $5,641,485 for the year ended June 30, 2023.
We paid $4,001 to purchase Lee McCarthy’s unvested restricted shares for the year ended June 30, 2024 and received $5,641,284
from Private Placements, net of $411,015 offering cost.
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.
10
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, 2024 and 2023 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, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of
its operations and its cash flows for each of the years in the two-year period ended June 30, 2024, 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