What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-02-12 compared with 2023-11-09 · 105 added, 103 removed, 121 unchanged (63% of the section changed)

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and Subsidiary.

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.

not place undue reliance on forward-looking statements as predictive of future results.

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.

We develop novel optoelectronic

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semiconductor materials on large-diameter substrates that are commonly used to manufacture mass market microelectronics.

cost effective manufacturing of high-performance photodetector array circuits for imaging applications in mobile devices, as well as

other technologies.

Photodetector devices may be used as image sensors that generate an image by detecting light, in a manner similar

to a digital camera taking pictures.

Our devices may incorporate additional functionality for 3D image capture when integrated into various

system architectures.

This technology has the potential to enhance the performance and capability of camera image sensors, light detection

and ranging (LiDAR), augmented reality/virtual reality (AR/VR), facial recognition, and other applications.

cost effective manufacturing of high-performance photodetector array circuits for imaging applications in mobile devices, as well as other

technologies.

Photodetector devices may be used as image sensors that generate an image by detecting light, in a manner similar to a digital

camera taking pictures.

Our devices may incorporate additional functionality for 3D image capture when integrated into various system

architectures.

This technology has the potential to enhance the performance and capability of camera image sensors, light detection and

ranging (LiDAR), augmented reality/virtual reality (AR/VR), facial recognition, and other applications.

Aeluma has acquired

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gross proceeds of $6,052,500 (the “Offering”).

Pursuant to the Offering, we paid a cash placement agent fee of $389,200

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.

Pursuant to the Offering, we paid a cash placement

agent fee of $389,200 and issued placement agent warrants to purchase up to 85,653 shares of common stock at an exercise price of $3.00

We also agreed to pay certain expenses of the placement agent in connection with the Offering.

In connection with the Subscription Agreement,

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Departure and Appointment of Directors and Officers

Lee McCarthy resigned from his position as interim

Chief Financial Officer on August 18, 2021 and from his directorship on December 1, 2021.

McCarthy’s vacancy on the

board, we appointed Ms.

Mehta is a Class II director.

On December 1, 2021, we also appointed Mr.

John Paglia to the

board of directors;

Paglia is a Class I director.

On November 8, 2022, Lee McCarthy provided notice

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result of any disagreements with us on any matter related to the operations, policies, or practices of us.

On December 14, 2023, Palvi Mehta’s term

on the board of directors expired.

Mehta’s decision to not run for re-election 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

on December 14, 2023, the shareholders voted to elect Mr.

Ensley to the board.

Plan of Operations

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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.

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.

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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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.

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.

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.

General and administrative

expenses consist primarily of compensation and related costs for personnel, including stock-based compensation and employee benefits.

addition, general and administrative expenses include third-party consulting, legal, insurance, audit and accounting services.

Other income, net of

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Income Tax Expense

Income tax expense consists primarily of

income taxes in certain state jurisdictions in which we conduct business.

Income tax expense consists primarily of income

taxes in certain state jurisdictions in which we conduct business.

Results of Operations

Three months ended September 30, 2023 compared

to the three months ended September 30, 2022

Our results of operations for the three-month

period ended September 30, 2023, as compared to the three-month period ended September 30, 2022, were as follows:

Three Months Ended

September 30,

Six months ended December 31, 2023 compared

to the six months ended December 31, 2022

Our results of operations for the six-month period

ended December 31, 2023, as compared to the six-month period ended December 31, 2022, were as follows:

Six Months Ended

Operating expenses

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$ (2,610,590 )

We recognized our revenue of

$32,400 from product sales for sampling purchases for the three months ended September 30, 2023.

Revenue increased 100% to

$295,392, of which $32,400 was from product sales for sampling purchases and $262,992 was from government contracts, for the six

months ended December 31, 2023.

During the six months ended December 31, 2022, we were pre-revenue and, accordingly recorded no revenues.

Operating expenses :

Operating expense

decreased $51,576 to $1,515,111 for the three months ended September 30, 2023 from $1,566,687 for the same period in 2022, due primarily

to a reduction in insurance expense offset by increased research and development activities and stock-based compensation expenses.

Operating expense increased

$185,321 to $2,906,902 for the six months ended December 31, 2023 from $2,721,581 for the same period in 2022, due primarily to increased

cost of revenue and stock-based compensation expenses, offset primarily by a reduction in consulting expenses.

Other income:

Other income decreased $110,310

to $402 for the three months ended September 30, 2023 from $36,646 for the same period in 2022.

to $681 for the six months ended December 31, 2023 from $110,991 for the same period in 2022.

The decrease was due primarily to a $105,516

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Income tax expense :

We did not record

income tax expense for either of the three months ended September 30, 2023 and 2022.

We did not record income

tax expense for either of the six months ended December 31, 2023 and 2022.

Impact of COVID-19

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challenges, the residual effects of the COVID-19 pandemic did not have a significant impact on the Company's results of operations or

financial condition for the three months ended September 30, 2023.

financial condition for the six months ended December 31, 2023.

Capital Resources and Liquidity

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As presented in the financial statements, we incurred a net loss of $2,610,829 and $2,610,590 for the

three months ended September 30, 2023 and 2022, respectively, and losses are expected to continue in the near term.

six months ended December 31, 2023 and 2022, respectively, and losses are expected to continue in the near term.

The accumulated deficit

was $10,544,375 at September 30, 2023.

was $11,672,895 at December 31, 2023.

We have been funding our operations through private loans and the sale of common stock in private

placement transactions.

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

At September 30, 2023, we had $3,757,227 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 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 December 31, 2023, we had $2,423,054 of cash and cash equivalents.

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

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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 $3,421,346 and $4,576,807 at September 30,

2023 and 2022, respectively.

Current assets decreased $1,313,839 to $4,020,067 at September 30, 2023 from $5,333,906 at June 30, 2023,

primarily due to a $1,314,463 decrease in cash.

Current liabilities decreased $158,378 to $598,721 at September 30, 2023 from $757,099

at June 30, 2022, due primarily to decreases in accounts payable.

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 $2,348,750 and $4,576,807 at December 31, 2023 and June 30, 2023, respectively.

Current assets decreased $2,534,288 to $2,799.618 at

December 31, 2023 from $5,333,906 at June 30, 2023, primarily due to a $2,648,636 decrease in cash.

Current liabilities decreased $306,231

to $450,868 at December 31, 2023 from $757,099 at June 30, 2022, due primarily to decreases in accounts payable.

The following table shows a summary of our cash

flows for the periods presented:

Three Months Ended September 30,

Six Months Ended

Net cash (used in) provided by:

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$ (2,648,636 )

$ (1,369,399 )

Net cash used in our operating activities were

$1,303,362 and $1,316,739 for the three months ended September 30, 2023 and 2022, respectively, due primarily to net losses of $1,482,309

and $1,530,041, respectively.

Net cash used in our operating activities

were $2,480,345 and $2,001,195 for the six months ended December 31, 2023 and 2022, respectively, due primarily to net losses of $2,610,829

and $2,610,590 for the six months ended December 31, 2023 and 2022, respectively.

Net cash used in our investing activities was

$7,100 and $52,660 for the three months ended September 30, 2023 and 2022, respectively.

$164,290 and $103,826 for the six months ended December 31, 2023 and 2022, respectively.

Investing activities include purchase of equipment

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Net cash used in our financing activities was

$4,001 for the three months ended September 30, 2023, compared to none for the same period of 2022.

We paid $4,001 to purchase Lee

McCarthy’s unvested restricted shares.

$4,001 for the six months ended December 31, 2023 and net cash provided by our financing activities was $1,426,615 for the six months

ended December 31, 2022.

We paid $4,001 to purchase Lee McCarthy’s unvested restricted shares for the six months ended December

31, 2023 and received $1,426,615 from Private Placements, net of $124,385 offering cost.

Critical Accounting Policies

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is included in our Annual Report on Form 10-K for the year ended June 30, 2023.

During the three months ended September 30,

During the six months ended December 31, 2023,

there were no significant changes in our critical accounting policies.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and

Qualitative Disclosures about Market Risk

Not applicable.

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