What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-14 compared with 2022-05-16 · 99 added, 76 removed, 198 unchanged (47% of the section changed)

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registration requirement and are subject to further contractual restrictions on transfer.

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 silicon wafers that are commonly used to manufacture mass market microelectronics.

This enables cost effective

manufacturing of high-performance photodetector array circuits for imaging applications in mobile devices.

These devices may be used as

image sensors that generate an image by detecting light, in a manner similar to a digital camera taking pictures.

Our devices may incorporate

additional functionality for 3D image capture when integrated into various system architectures.

This technology has the potential to

enhance the performance and capability of camera image sensors, Lidar, augmented reality, facial recognition, and other applications.

Aeluma has acquired a key piece of manufacturing equipment, an MOCVD tool, and has headquarters in Goleta, CA with a manufacturing cleanroom

to house this equipment.

Prior to the Merger,

the sole business purpose of the Company was to seek the acquisition of or merger with, an existing company.

As a result of the consummation

of the Merger, on June 22, 2021, Biond Photonics, Inc.

became our wholly-owned subsidiary and the business of Biond Photonics, Inc.

the business of the Company going forward.

Accordingly, at the closing, the Company ceased to be a shell company.

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 silicon wafers that are commonly used to manufacture mass market microelectronics.

cost effective manufacturing of high performance photodetector array circuits for imaging applications in mobile devices.

These devices

may be used as image sensors that generate an image by detecting light, in a manner similar to a digital camera taking a picture.

devices may incorporate additional functionality and enhanced performance to enable 3D image capture when integrated into various system

architectures.

This technology has the potential to greatly enhance the performance and capability of camera image sensors, LiDAR, augmented

reality, facial recognition, and other applications.

Aeluma has acquired a key piece of manufacturing equipment and has headquarters in

Goleta, CA with a manufacturing cleanroom to house this equipment.

The Private Placement Offering

Immediately following the Merger, we sold 3,482,500

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approximately $265,000 of legal and other expenses incurred in connection with the Offering.

A note payable to an

officer of Parc Investments, Inc.

in the amount of $50,000 was repaid directly from the proceeds from the Offering.

Subject to certain customary exceptions, we agreed

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Plan of Operations

We have been developing our materials and characterization

capabilities at our headquarters in Goleta, CA, in connection with the further development of our business and the implementation of our

plan of operations.

We have installed some key manufacturing equipment at our headquarters and will continue to develop relationships

with manufacturing partners to carry out certain steps of our manufacturing processes externally.

We have gained access to a rapid prototyping

facility and are leveraging this access to fabricate early-stage prototypes.

In the future, we intend to implement appropriate quality

and manufacturing controls.

Some equipment was procured previously, and other equipment is being procured through purchase orders

with equipment vendors.

Spare parts have also been procured to ensure minimal disruptive to our development.

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 financing during June/July of 2021.

We have also leveraged funds to continue strengthening our intellectual property including patent

applications, trademarks, development of trade secrets and manufacturing process recipes.

We have been developing

our materials and characterization capabilities at our headquarters in Goleta, CA, in connection with the further development of our business

and the implementation of our plan of operations.

We have installed some key manufacturing equipment at our headquarters and will continue

to develop relationships with manufacturing partners to carry out certain steps of our manufacturing processes externally.

We have gained

access to a rapid prototyping facility and are leveraging this access to fabricate early-stage prototypes.

In the future, we intend to

implement appropriate quality and manufacturing controls.

Some equipment was procured previously, and other equipment is being procured

through purchase orders with equipment vendors.

The COVID-19 pandemic has adversely disrupted, and may further disrupt, the operations

at certain of our suppliers and other third-party providers.

Lead times for certain materials and parts ordered have been longer than

anticipated and on-site support for equipment maintenance has been challenging to schedule.

Spare parts have been procured to minimize

disruption to our development.

The rapid prototyping facility that we access for development was closed for a brief period of time at

the start of the COVID-19 pandemic.

It has been open for unlimited access since Aeluma has first gained access.

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 financing during June/July of 2021.

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

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Results of Operations

Nine months ended March 31, 2022 compared

to the nine months ended March 31, 2021

Our results of operations for the nine-month period

ended March 31, 2022, as compared to the nine-month period ended March 31, 2021, were as follows (some balances on the prior

period’s combined financial statements have been reclassified to conform to the current period presentation):

Nine Months Ended

Three months ended September 30, 2022 compared

to the three months ended September 30, 2021

Our results of operations for the three-month

period ended September 30, 2022, as compared to the three-month period ended September 30, 2021, were as follows (some balances on the

prior period’s combined financial statements have been reclassified to conform to the current period presentation):

Three Months Ended September 30,

Change ’22 vs.

Operating expenses

Other Income (Expense):

Sub-lease rental income & other income

Loss before provision for income tax

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$ (1,530,041 )

$ (2,116,597 )

Net Revenues :

We are pre-revenue and, accordingly

recorded no revenues for either the nine months ended March 31, 2022 or 2021.

recorded no revenues for either the three months ended September 30, 2022 or 2021.

Operating Expenses :

During the nine months

ended March 31, 2022 and 2021, we incurred $2,370,006 and $23,325 of operating expenses, respectively.

During the three months

ended September 30, 2022 and 2021, we incurred $1,566,687 and $694,777 of operating expenses, respectively.

This increase was due to the

start-up of operations and stock compensation expenses related to advisor agreements.

start-up of operations and stock compensation expenses related to advisor and consulting agreements.

Sub-lease rental income and other income:

During the nine months ended March 31, 2022 and 2021, the Company recorded net rental and other income of $229,284 and $0, respectively.

The increase was due to the rental of our new facility and a related sub-lease to our tenant.

During the three months ended September 30, 2022 and 2021, the Company recorded net rental and other income of $36,646 and $91,126, respectively.

The decrease was due to the reduced rental space to a sub-lease to our tenant.

Provision for income tax :

The Company recorded

no provision for income tax for the nine months ended March 31, 2022 and $800 for the nine months ended March 31, 2021.

no provision for income tax for either of the three months ended September 30, 2022 and 2021, as such amounts are insignificant.

Net loss increased to $1,530,041

for the nine months ended March 31,2022, as compared to $24,125 for the nine months ended March 31, 2021 for start-up of operations

and stock compensation expenses related to advisor agreements.

for the three months ended September 30,2022, as compared to $603,650 for the three months ended September 30, 2021 for start-up of operations

and stock compensation expenses related to advisor and consulting agreements.

Capital Resources and Liquidity

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the basis that are a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course

As presented in the financial statements, we incurred a net loss of $2,140,722 for the nine months ended March 31, 2022

As presented in the financial statements, we incurred a net loss of $1,530,041 for the three months ended September 30, 2022

and losses are expected to continue in the near term.

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revenues and profitable operations.

At March 31, 2022, we had $4,815,842 of cash on hand.

At September 30, 2022, we had $2,371,323 of cash on hand.

These funds are insufficient to complete

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view it as a likely occurrence.

Cash, total current assets, total assets, total

current liabilities and total liabilities as of March 31, 2022 as compared to June 30, 2021, were as follows:

Total current assets

Total current liabilities

Total liabilities

At March 31, 2022, we had working capital

of $5,166,427 compared to working capital of $7,185,135 at June 30, 2021.

Current assets decreased to $5,584,921 at March 31,

2022 from $7,472,235 at June 30, 2021, primarily as a result of the start-up of operations.

Current liabilities increased to $418,494

at March 31, 2022 from $287,100 at June 30, 2021, primarily as a result of the timing of accounts payable.

For the nine months ended March 31, 2022,

net cash used by operations was $1,416,839 and was the result of the net loss from operations, and changes in accounts payable, offset

by changes in other current assets.

For the nine months ended March 31, 2021 net cash used in operations was $79,163.

working capital of $2,587,345 and $4,058,409 at September 30, 2022 and June 30, 2022, respectively.

Current assets decreased $1,047,772

to $3,383,076 at September 30, 2022 from $4,430,848 at June 30, 2022, primarily due to funding operating expenses of $1,566,687 for the

three months ended September 30, 2022.

Current liabilities increased $423,292 to $795,731 at September 30, 2022 from $372,439 at June

30, 2022, due primarily to a $300,000 increase in other liabilities, which will be recorded to additional paid-in capital when restricted

stocks are issued in November 2022.

The following

table shows a summary of our cash flows for the periods presented:

Three Months Ended September 30,

Change ’22 vs.

Net cash (used in) provided by

Operating activities

$ (1,316,739 )

Investing activities

Financing activities

Decrease in cash

$ (1,369,399 )

Net cash used in our operating activities were

$1,316,739 and $492,052 for the three months ended September 30, 2022 and 2021.

The increase of $824,687 was due mainly to $871,911 increase

in operating expenses.

Net cash used in our investing activities was

$716,499 and $109,684 for the nine months ended March 31,2022 and 2021, respectively.

Investing activity for the 2022 period related

to the setup of our new facility.

$52,660 and $258,910 for the three months ended September 30,2022 and 2021, respectively.

Investing activity for the three months ended

September 30, 2021was related to the setup of our new facility.

Our financing activities generated a cash inflow

of $161,930 for the nine months ended March 31, 2022, due to the offering described above.

In the nine months ended March 31,

2021, financing activities netted $344,402 from Founder loans and SAFE Notes.

of $161,930 for the three months ended September 30, 2021, due to the offering described above.

Critical Accounting Policies

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A summary of our other critical accounting policies

is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Transition

Report on Form 10-KT for the period ended June 30, 2021.

During the nine months ended March 31,2022, there were no significant

changes in our critical accounting policies.

is included in Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report

on Form 10-K for the year ended June 30, 2022.

During the three months ended September 30,2022, there were no significant changes

in our critical accounting policies.

Off-Balance Sheet Arrangements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis