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, 2025
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: 001-42570
AELUMA,
INC.
(Exact
name of registrant as specified in its 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
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 Section 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 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, 2024, as computed by reference to $7.65, the price at which the common stock was last sold, was approximately $77.8
million.
As of September 7, 2025, there were 15,892,887 shares of the issuer’s
common stock, $0.0001 par value per share, outstanding, and no shares of preferred stock, $0.0001 par value per share, outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
None.
TABLE OF CONTENTS
Page
PART I 1
Item 1. Business. 1
Item 1A. Risk Factors. 6
Item 1B. Unresolved Staff Comments. 30
Item 1C. Cybersecurity. 30
Item 2. Properties. 30
Item 3. Legal Proceedings. 30
Item 4. Mine Safety Disclosure. 30
Item 6. Reserved. 31
Item 7A. Quantitative and Qualitative Disclosures about Market Risk. 36
Item 8. Financial Statements and Supplementary Data. F-1
Item 9A. Controls and Procedures. 37
Item 9B. Other Information. 38
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 38
PART III 39
Item 10. Directors, Executive Officers and Corporate Governance. 39
Item 11. Executive Compensation. 45
Item 14. Principal Accounting Fees and Services. 50
Item 15. Exhibit and Financial Statement Schedules. 51
SIGNATURES 53
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 high-performance semiconductors for sensing, communication,
and computing applications. Aeluma has pioneered a technique to manufacture devices using 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 arrays for imaging applications in mobile devices, as well as other applications. Aeluma’s technology
has the potential to impact a broad range of market verticals. Aeluma is based in Goleta, California, considered one of the most important
technology hubs in the world that some claim is the next Silicon Valley. We operate in a 9,000 sq. ft. facility with a state-of-the-art
research and development (R&D)/manufacturing cleanroom and access to world-class rapid prototyping capabilities. The facility houses
unique equipment for scalable manufacturing. We also partner with production-scale fabrication foundries and packaging companies. We maintain
extensive patent protection and trade secrets that relate to our materials, manufacturing technology and applications.
Recent Events
Shelf Registration Statement
On July 31st, 2025, we filed a
registration statement on Form S-3 with the SEC, using a “shelf” registration process. Under this shelf registration
process, we may sell any combination of the securities described in the related prospectus in one of more offerings up to a total
dollar amount of proceeds of $100,000,000. The prospectus describes the general manner in which our securities may be offered by the
prospectus. Each time we sell securities under the prospectus, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also add, update, or change information contained in
this prospectus or in documents incorporated by reference in this prospectus. The prospectus supplement that contains specific
information about the terms of the securities being offered may also include a discussion of certain U.S. Federal income tax
consequences and any risk factors or other special considerations applicable to those securities. To the extent that any statement
that we make in a prospectus supplement is inconsistent with statements made in this prospectus or in documents incorporated by
reference in this prospectus, you should rely on the information in the prospectus supplement. The “shelf” registration
statement was originally filed on July 31, 2025, amended on August 6, 2025 and declared effective on August 8, 2025 (File No.
3330289135) (the “Shelf S3”).
Recent Government Contracts
In August 2024, we received a contract by NASA
to develop quantum dot photonic integrated circuits (PICs) on silicon. This advanced technology targets next-generation space and aerospace
applications, enabling capabilities such as free-space laser communication, autonomous navigation, and precision sensing.
In September 2024, we received an $11.7 million contract with
DARPA to develop heterogeneous integration technology for nano-scale semiconductors that is compatible with leading-edge and future advanced-node
semiconductors. Technology applications include artificial intelligence (“AI”), mobile devices, and 5G/6G wireless networking.
This DARPA contract to Aeluma is structured with $6.0 million expected to be invoiced over the first 18 months and the remaining
$5.7 million invoiced over the following 18 months, contingent on Aeluma meeting certain milestones.
In April 2025, we received a contract with the
U.S. Department of Energy to develop commercially viable, low-cost shortwave infrared (SWIR) photodetectors. The award will accelerate
commercialization of Aeluma’s wafer-scale platform for high-sensitivity, energy-efficient photodetector sensors applicable across
critical growth sectors.
In June 2025, we received a contract with the
U.S. Navy that could accelerate development of high-speed photodetectors for government and commercial applications. The new contract
is for up to $1.3 million in funding, includes a major global interconnect manufacturer as a proposed subcontractor, and involves support
from a top-tier government prime contractor.
In June 2025, we received a contract with the
U.S. Navy that could accelerate development and commercialization for next-generation quantum computing and sensing systems. The new contract
will support Aeluma’s low size, weight, and power imaging sensors for next-generation submarine systems.
1
Private Placements and Conversion of Notes
Between August 5, 2024 and August 27, 2024, we issued convertible promissory
notes in the aggregate principal amount of $3.1 million to 10 accredited investors, pursuant to a private note financing. The Notes were
to mature in June 2026 and did not carry any interest. The Notes were 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 $5.0 million 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”)). In
the event the Company did not complete qualified financing or uplist at or before the maturity date, the outstanding balance of the Notes
would automatically convert without any further action by the Holder into shares of the Company’s common stock equal to eighty-five
percent (85%) to the VWAP of the Common Stock on the OTC Markets for the five trading days immediately prior to maturity date. The Note
also provided that if there was 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 was dependent upon the type of Conversion Event that occurs, the Note carried a ceiling and floor price: the applicable
conversion price would not be lower than 85% of the 5-day VWAP on the applicable Closing Date (the “Floor Price”) nor would
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 was equal to $2.68 per share. Since the Floor Price is tied to the Closing Date, the Floor Price may be different
for investors who 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.
The Note Purchase Agreement (“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.
On March 25, 2025, we determined that a Conversion
Event had occurred pursuant to the terms of the Notes. As a result, all holders elected to convert their Notes at the applicable Ceiling
Price of $3.50 per share, resulting in the issuance of an aggregate of 898,573 shares of Common Stock in exchange for $3.1 million in
outstanding principal under the Notes. Following the conversion, we have no further obligations under the converted Notes. The shares
issued upon conversion are subject to piggyback registration rights previously granted to the investors. See Public Offering of Common
Stock in Note 3 – Convertible Notes
Public Offering of Common Stock
On March 26, 2025, we entered into an Underwriting
Agreement (“UA”) with Craig-Hallum Capital Group LLC in connection with a public offering of 2,285,714 shares of its common
stock at a price of $5.25 per share (the “Offering”). We also granted the Underwriter a 30-day option to purchase up to an
additional 342,857 shares to cover over-allotments, which was exercised in full on March 27, 2025. The Offering closed on March 28, 2025.
The Offering was conducted pursuant to our registration
statements on Form S-1 (File No. 333-285469), declared effective by the SEC on March 25, 2025, and on Form S-1MEF filed under Rule 462(b),
effective March 26, 2025.
Under the terms of the UA, we provided a 7.0%
underwriting discount per share and issued to the Underwriter warrants to purchase up to 5.0% of the total shares sold in the Offering
(including the over-allotment shares), with an exercise price equal to 115% of the public offering price.
Total gross proceeds from the Offering, including
the over-allotment option, were $13.8 million. Net proceeds, after underwriting discounts and Offering expenses, were $12.6 million. We
intend to use the proceeds for business development, scaling manufacturing operations, and general corporate purposes.
In connection with the Offering, we, as well as
our directors and officers, agreed to a 90-day lock-up period restricting sales or transfers of Company securities, subject to customary
exceptions. The Underwriter has the discretion to release these restrictions at any time.
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 semiconductor technologies that
scale for mass markets. Our technology has the potential to impact across mobile, automotive, AI, defense & aerospace, communication,
augmented reality (“AR”), virtual reality (“VR”), high-performance computing (“HPC”) and quantum computing
applications. Aeluma operates an R&D/manufacturing facility at its headquarters in Goleta, California, and has developed relationships
with volume fabrication foundries and packaging partners. We will continue to mature our manufacturing processes to further our commercialization
traction. We have generated revenue through various customer and government contracts, including small-volume orders, engineering sample
evaluations, non-recurring engineering (NRE) development efforts, and R&D projects. We will continue to perform on these various efforts,
expand our business development and marketing efforts, further engage with our manufacturing partners, and continue our efforts toward
volume production and commercialization.
2
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 (e.g., indium gallium arsenide or “InGaAs”)
sensors deployed primarily in specialty applications. According to Yole Development, the major suppliers of silicon complementary metal-oxide
semiconductor (“CMOS”) image sensors include Sony, Samsung, Omnivision, onsemi, STMicroelectronics, Panasonic, Canon, SK Hynix,
and others. According to Markets and Markets, the major suppliers of InGaAs sensors include Hamamatsu, Sumitomo, Teledyne/FLIR, Excelitas,
and others. InGaAs sensors are manufactured primarily on 2- to 4-inch substrates. As an example, to manufacture 20 million sensor chips
of a nominal size (i.e. chip area), approximately 425,000 3-inch wafers are required, whereas only 18,000 12-inch wafers would be required
for the same volume. Aeluma aims to leverage larger diameter substrates up to 12-inch.
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 high absorption in the NIR,
but also extends well into the shortwave infrared (SWIR) spectrum (900-1700 nm), with the ability to extend to near 2500 nm. Generally
speaking, 940 nm is not considered “eye-safe;” wavelengths in the SWIR are considered “eye-safe”.
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 substrates, whereas competing InGaAs photodetectors are manufactured on indium phosphide (InP)
substrates that are typically 2 to 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, and to leverage wafer-scale integration
and packaging that is available for 8- and 12-inch substrates. As a result, we believe we are positioned to manufacture our products potentially
at a ten times lower cost for mass market applications and are able to scale our production to meet mass market demands at a faster rate
than incumbent technologies.
In addition to photodetectors for sensors, our
technology may apply to a broad range of photonic and electronic semiconductors.
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 semiconductors at scale.
Customers
Aeluma has customer engagements that involve development
of wafers, delivery of engineering samples for evaluation, delivery of small volumes of chips, and R&D contracts. Aeluma’s technology
is broadly applicable. Potential markets for our technology include mobile, consumer electronics, AI, defense and aerospace, automotive,
AR/VR, and quantum computing. Our current strategy is to pursue partnerships with system integrators, including mobile and consumer electronics
manufacturers, Tier-1 suppliers, module manufacturers, component suppliers, or semiconductor manufacturing companies. Aeluma is pursuing
direct sales relationships and strategic partnerships. We have active engagements with approximately 20 prospective customers.
3
See “Risk Factors—Risks
Relating to Our Business, Growth Prospects and Operating Results—Our customers may require our products to undergo a lengthy
and expensive qualification process without any assurance of product sales.”
Markets
Aeluma’s technology is broadly applicable
and has the potential to impact across mobile and consumer electronics, AI, defense and aerospace, robotics, automotive, AR/VR, quantum
computing, and other markets. According to a report by Yole Development dated June 2024, the CMOS image sensors market is projected to
be $28.6 billion by 2029. In the mobile market, Apple arguably leads in terms of deploying advanced capabilities such as facial identification
and lidar sensing in their devices. Apple does not currently use our technology in any of their products. According to a press release
from Apple issued May 5, 2021, Apple leverages vertical cavity surface emitting laser (VCSEL) emitters in conjunction with single-photon
avalanche diode (SPAD) photodetectors for the facial identification and the lidar scanner in smartphones and tablets, and such technology
“helps to deliver faster, more realistic AR experiences and improves autofocus in low-light scenes in photos and videos”.
Other major smartphone suppliers include Samsung, Xiaomi, OPPO, vivo, Huawei, and realme according to Counterpoint Research. According
to an estimate by Velodyne, the automotive lidar market is projected to be between $5 billion to $80 billion in 2030. According to
Statista, the AI market is projected to be $826 billion in 2030. The silicon photonics market is projected to be $8 billion in 2030 according
to Grand View Research. Silicon photonics is a key technology that enables optical interconnects inside data centers in support of AI
infrastructure. The total addressable market for the quantum computing industry is projected to grow to $20 billion by 2030 according
to UBS. According to Yole Group, the mobile and consumer market represented $296 billion in semiconductor revenue in 2023, and according
to DIGITIMES Asia, the global semiconductor market is projected to exceed $1 trillion in 2030. Based on third party market research and
internal assumptions, we estimate our serviceable addressable market could reach $4.9 billion in 2030, growing at a 47% compound annual
rate from $1.0 billion in 2026.
Intellectual Property
Aeluma has filed several patent applications with
the United States Patent and Trademark Office (USPTO), and several patents have been issued. To date, we have approximately 30 issued
and pending patents. 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 photonics and electronics
based on high-performance semiconductors. 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.
4
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.
See “Risk Factors—Risks
Relating to Our Business, Growth Prospects and Operating Results—Environmental and health and safety liabilities and expenditures
could materially adversely affect our results of operations and financial condition” for additional information.
Manufacturing
Our operations include R&D and manufacturing
capabilities for semiconductor wafer production, quick-turn chip fabrication, rapid prototyping, test and validation. We also partner
with production-scale fabrication foundries, packaging and integration companies. We expect to rely on such external resources and capabilities
to scale our production capacity in support of high-volume markets.
Sales
We have sold chips and wafers in relatively small volumes to customers,
and have shipped samples for R&D and sampling evaluations. However, we cannot predict whether or not customers will ultimately purchase
our product in large volumes.
See “Risk Factors—Risks
Relating to Our Business, Growth Prospects and Operating Results—We will depend on a limited number of customers and the
loss of one or more of these customers could have a material adverse effect on our business, financial condition and results of operations.”
Marketing
Marketing activities include direct relationships with potential customers
and partners. We are under nondisclosure agreements (NDA) with several current and potential customers and partners. In addition to posting
information on our website, we occasionally participate in conferences and trade shows to market our technology and product offerings.
5
Employees & Human Resources
At June 30, 2025, Aeluma had 12 full-time employees,
two 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 www.aeluma.com 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.
Item 1A. Risk Factors
Investing in our securities includes a high
degree of risk. Prior to making a decision about investing in our securities, you should consider carefully the specific factors discussed
below, together with all of the other information contained in this prospectus. If any of the following risks actually occurs, our business,
financial condition, results of operations and future prospects would likely be materially and adversely affected. This could cause the
market price of our Common Stock to decline and could cause you to lose all or part of your investment.
Risks Relating to Our Business, Growth Prospects
and Operating Results
We are recently formed and only in the early
development stages. Although we have generated some revenue, we are not in volume production for any of our product offerings. Our lack
of operating history makes it difficult to evaluate our business and prospects, and may increase the risks associated with an investment
in our Common Stock.
Biond Photonics, now Aeluma, was formed in 2019.
Although the Company has generated some revenue, the Company is subject to the risks involved with any speculative early-stage enterprise.
There is no assurance that the Company will successfully offer, market and distribute its products or services. The Company may experience
continuing net losses and negative cash flows from operations. The extent of continuing losses and negative cash flows from operations
and the time required to reach profitability are highly uncertain. There is no assurance that the Company will be able to achieve profitability
or that profitability, if achieved, can be sustained on an ongoing basis. There is no assurance that actual cash requirements will not
exceed our estimates. Such risks for the Company include, but are not limited to:
● an evolving, unpredictable and unproven business model;
6
● an intensely competitive developing market;
● rapidly changing technology;
● managing development and growth;
● dependence on key personnel;
● dependence on outsourced resources, materials and equipment;
● limited operating capital and limited access to credit; and
In
order to address these risks, the Company must, among other things:
● implement and successfully execute its business strategy;
● provide superior customer service;
● respond to competitive developments;
● attract, retain, and motivate qualified personnel; and
● respond to unforeseen and changing circumstances.
The Company cannot make an assurance that it will
succeed in addressing these risks.
Our failure to raise additional capital
or generate cash flows necessary to expand our operations and invest in new enterprises in the future could reduce our ability to compete
successfully and harm our results of operations.
Historically, we have funded our operations
and capital expenditures primarily through equity issuances and cash generated from our operations. Although we currently anticipate
that our existing cash and cash equivalents and cash flow from operations will be sufficient to meet our cash needs for the
foreseeable future, our business may not always generate sufficient cash flow from operations to fund our activities and we may
require additional financing, which we may not be able to obtain on favorable terms. If we raise equity financing to fund operations
or on an opportunistic basis, our stockholders may experience significant dilution of their ownership interests. If we engage in
debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, force us to maintain
specified liquidity or other ratios or restrict our ability to pay dividends or make acquisitions. Additionally, if we need such
financing and it is not available to us, or is not available to us on satisfactory terms, our ability to operate and expand our
business or to respond to competitive pressures would be limited and we could be required to delay, significantly curtail, or
eliminate planned operations or other elements of our growth strategy. To reduce this risk, we filed the Shelf S3, which allows us
to sell any combination of the securities described in the registration statement in one or more offerings up to a total dollar
amount of proceeds of $100,000,000; however, there is no guarantee that we will sell any shares pursuant to the Shelf S3.
We may not be able to successfully implement
our growth strategy on a timely basis or at all. Our future growth, profitability and cash flows depend upon our ability to successfully
implement our growth strategy, which, in turn, is dependent upon a number of factors, including our ability to:
● expand our eco-system of partners for our technology and products;
● acquire new customers;
● ensure a consistent and timely supply chain;
● expand our presence within verticals;
● continue to innovate our product offerings; and
● selectively pursue strategic and value-enhancing acquisitions.
7
There can be no assurance that we can successfully
achieve any or all of the above initiatives in the manner or time period that we expect. Further, achieving these objectives will require
investments that may result in short-term costs without generating any current revenue and therefore may be dilutive to our earnings.
We cannot provide any assurance that we will realize, in full or in part, the anticipated benefits we expect our strategy will achieve.
The failure to realize those benefits could have a material adverse effect on our business, financial condition and results of operations.
The timelines of adoption for our technologies
might be longer than we anticipate.
As a semiconductor company,
we develop technologies and components that our customers incorporate into their end-products and systems, which may require development
effort that may involve development risk for our customers; these products would then be subject to market adoption and selling lead-times.
In some cases, there may be one or more additional intermediate participants in the supply chain. Collectively, the sequential nature
of development and adoption of our products may take longer than expected and could potentially delay revenue growth and adversely impact
our business.
Changes to regulatory agencies could pose risks related
to our business operations and financial outlook.
On January 20, 2025, President Donald J. Trump
issued Executive Order No. 14158 entitled “Establishing and Implementing the President’s “Department of Government Efficiency”
or “DOGE”, which is tasked with making changes to eliminate regulations, cut expenditures, and restructure federal agencies,
some of which could impact public companies and companies in our industry. Through DOGE or similar recently issued Executive Orders
and initiatives, it is possible the Trump administration could institute significant changes to certain regulatory agencies. These changes
could result in a significant reduction in staff and/or federal funding, which may cause backlogs or other interruptions to regulatory
reviews and approvals causing a delay to our operations and/or special projects. As such, these changes to regulatory agencies could negatively
impact our business operations and financial outlook.
Compliance with federal securities laws,
rules, and regulations, as well as Nasdaq requirements, has become increasingly complex, and the significant attention and expense
we must devote to those areas may have an adverse impact on our business.
Federal securities laws, rules, and regulations, as well as Nasdaq
rules and regulations, require companies to maintain extensive corporate governance measures, impose comprehensive reporting and disclosure
requirements, set strict independence and financial expertise standards for audit and other committee members, and impose civil and criminal
penalties for companies and their chief executive officers, chief financial officers, and directors for securities law violations. These
laws, rules and regulations have increased, and in the future are expected to continue to increase, the scope, complexity, and cost of
our corporate governance, reporting and disclosure practices, which could harm our results of operations and divert management’s
attention from business operations.
We generate a substantial portion of our
revenue from contracts with U.S. federal government agencies, which are subject to a number of challenges and risks that may
adversely impact our business, prospects, financial condition, and operating results.
Contracts with U.S. federal governmental agencies,
or prime contractors of these agencies, have in the past accounted for, and may in the future account for, a substantial portion of our
revenue. Contracts with government entities or prime contractors are subject to the following risks:
8
If we were suspended or debarred from contracting
with the U.S. government, if our reputation or relationship with government agencies was impaired, or if the government otherwise ceased
doing business with us or significantly decreased the amount of business it does with us, our business, prospects, financial condition,
and operating results would be materially and adversely affected.
We rely on our management team and other
key employees and will need additional personnel to grow our business. The loss of one or more key employees or our inability to attract
and retain qualified personnel could harm our business.
Our future success is substantially dependent
on our ability to attract, retain and motivate the members of our management team and other key employees throughout our organization.
The loss of one or more members of our management team or other key employees could materially impact our sales or our R&D programs
and materially harm our business, financial condition, results of operations and prospects. We do not maintain key person life insurance
policies on any of our management team members or key employees. Competition for highly skilled personnel is intense. We may not be successful
in attracting or retaining qualified personnel to fulfill our current or future needs. For positions in our offices near Santa Barbara
in particular, we may experience challenges hiring new and mid-level employees in part due to the high local housing costs. Our competitors
may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find
suitable replacements on a timely basis, on competitive terms, or at all.
If our estimates or judgments relating to
our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below
the expectations of investors, resulting in a decline in the market price of our common stock.
The preparation of financial statements in conformity
with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect
the amounts reported in our financial statements. Significant assumptions and estimates used in preparing our financial statements include
those related to assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on
various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets, liabilities, equity, revenue, and expenses that are not readily apparent from other sources. Our
results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions,
which could cause our results of operations to fall below the expectations of investors, resulting in a decline in the market price of
our common stock.
Changes in accounting rules and regulations,
or interpretations thereof, could result in unfavorable accounting charges or require us to change our compensation policies.
Accounting methods and policies for companies
such as ours, including policies governing revenue recognition, leases, R&D and related expenses, and accounting for stock-based compensation,
are subject to review, interpretation and guidance from our auditors and relevant accounting authorities, including the SEC. Changes to
accounting methods or policies, or interpretations thereof, may require us to reclassify, restate or otherwise change or revise our historical
financial statements, including those contained in this prospectus.
9
Our ability to use our net operating loss
carryforwards and certain other tax attributes may be limited.
We do not expect to become profitable in the near
future and may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward
to offset future taxable income, if any, until such unused losses expire. Under Sections 382 and 383 of the Internal Revenue Code of 1986,
as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in
its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards
(“NOLs”), and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes may
be limited. The merger, our prior equity offerings and other changes in our stock ownership may have resulted in ownership changes. In
addition, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which are
outside of our control. As a result, if we earn net taxable income, our ability to use our pre-change net operating loss carryforwards
to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability
to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could
accelerate or permanently increase state taxes owed.
We will depend on a limited number of customers
and the loss of one or more of these customers could have a material adverse effect on our business, financial condition, and results
of operations.
Currently, Aeluma has customer engagements that
involve R&D, development of wafers, and delivery of engineering samples for evaluation. There is no assurance that any of these potential
customers will purchase our product after they complete their analysis. Since we cannot predict how many of these evaluations will turn
into sales, if any, we cannot guarantee that we will generate sufficient revenue to be profitable.
In addition, we cannot assure that any of our
future customers will not cease purchasing products from us in favor of products produced by other suppliers, significantly reduce orders,
or seek price reductions in the future, and any such event could have a material adverse effect on our revenue, profitability, and results
of operations.
Furthermore, if a significant portion of our revenue
is derived from customers in certain industries, a downturn or lower sales to customers in such industries could materially adversely
affect our business and results of operations. If we cannot successfully market our products, we will not receive revenue.
Due to the concentration and ongoing consolidation
within the semiconductor industry, we may also find that over the longer term, our revenues are dependent on relatively few customers.
If we lose any of these customers, or these customers do not pay us, our revenues could be materially adversely affected.
Customer concentration could potentially
result in volatility of revenues and stock prices.
While we are targeting a broad and diverse customer base of both private
and public customers as well as U.S. government agencies across multiple high-volume mass market opportunities, our initial phases of
volume production may be limited in diversity of customers. As a result, revenues during these phases may be volatile. Such revenue volatility
may potentially result in higher-than-average volatility in the price of our Common Stock.
Some of our business may be dependent on
a royalty-based business model, which is inherently risky.
The long-term success of our business model may
be dependent on future royalties paid to us by licensee-customers. We will depend on our ability to structure, negotiate and enforce agreements
for the determination and payment of royalties, as well as upon our licensees’ compliance with their agreements. We face risks inherent
in a royalty-based model, many of which are outside our control, such as the following:
10
● the impact of economic downturns; and
Uncertainties regarding the timing and amount
of customer orders could lead to excess inventory and write-downs of inventory that could materially adversely affect our financial condition
and results of operations.
We expect that our sales will be typically made
pursuant to individual purchase orders or customer agreements, and we do not expect to have long-term supply arrangements with our customers
requiring a commitment to purchase. We expect that the agreements with our customers may allow them to cancel orders prior to shipment
for standard products and, generally prior to start of production for custom products without incurring a penalty. We anticipate to routinely
generate inventory based on customers’ estimates of end-user demand for their products, which is difficult to predict. In times
of under supply for certain products, some customers could respond by inflating their demand signals. As markets level off and supply
capacity begins to match actual market demands, we could experience an increased risk of inventory write-downs, which may materially adversely
affect our results of operations and our financial condition. In addition, our customers may change their inventory practices on short
notice for any reason. Furthermore, short customer lead times are standard in the industry due to overcapacity. The cancellation or deferral
of product orders, the return of previously sold products, or overproduction of products due to the failure of anticipated orders to materialize
could result in excess obsolete inventory, which could result in write-downs of inventory or the incurrence of significant cancellation
penalties under our arrangements with our raw materials and equipment suppliers. Unsold inventory, canceled orders, and cancellation penalties
may materially adversely affect our results of operations, and inventory write-downs, which may materially adversely affect our financial
condition.
Our customers may require our products to
undergo a lengthy and expensive qualification process without any assurance of product sales.
Prior to purchasing our products, our customers
may require that our products undergo an extensive qualification process, which involves testing of the products in the customer’s
system, as well as rigorous reliability testing. This qualification process may continue for a few months or longer, and we cannot guarantee
that products will pass the required tests. However, qualification of a product by a customer does not ensure any sales of the product
to that customer. Even after successful qualification and sales of a product to a customer, a subsequent revision to the product or software,
changes in the product’s manufacturing process or the selection of a new supplier by us may require a new qualification process,
which may result in delays and in us holding excess or obsolete inventory. After our products are qualified, additional time may be required
before the customer commences volume production of components or devices that incorporate our products. Despite these uncertainties, we
will devote substantial resources, including design, engineering, sales, marketing and management efforts, toward qualifying our products
with customers in anticipation of sales. If we are unsuccessful or delayed in qualifying any of our products with a customer, such failure
or delay would preclude or delay sales of such product to the customer, which may impede our growth and cause our business to suffer.
Our business operations could suffer in