What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-11 compared with 2024-11-08 · 98 added, 96 removed, 105 unchanged (65% of the section changed)

13 unchanged sentences

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

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.

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.

develops novel optoelectronic and electronic devices for sensing, communication, and computing applications.

Aeluma has pioneered a technique

to produce semiconductor materials and chips using high-performance compound semiconductors 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, where the Company operates in a 9,000 sq.

facility with

a state-of-the-art R&D/manufacturing cleanroom and access to world-class rapid prototyping capabilities.

The facility houses unique

equipment for scalable manufacturing.

Aeluma also partners with production-scale fabrication foundries and packaging companies.

maintains extensive patent protection and trade secrets that relate to its materials, manufacturing technology and applications.

is a transformative semiconductor company specializing in high-performance technology that scales.

Applications include mobile, automotive,

AI, defense & aerospace, communication, AR/VR, high-performance commuting, and quantum computing.

Aeluma aims to break out of traditional

manufacturing to expand the reach of its technology into mass markets.

The demand for higher performance semiconductors in consumer markets

is increasing (https://www.marketsandmarkets.com/Market-Reports/shortwave-ir-market-52975079.html).

Aeluma’s disruptive technology

is scalable, cost effective, while not sacrificing performance.

Additionally,

Aeluma’s technology may be used to manufacture other electronic and optoelectronic devices in the future including lasers, transistors,

and solar cells.

has acquired key manufacturing equipment, and has headquarters in Goleta, California with a manufacturing cleanroom to house this equipment.

Aeluma’s technology may be used to manufacture other electronic and optoelectronic devices including lasers, transistors, and solar

Government Contract

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The University of California Santa Barbara is also a proposed subcontractor to support the implementation of test devices.

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.

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.

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”)).

In the event the Company does not complete qualified

financing or uplist at or before the maturity date, the outstanding balance of the Notes shall 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 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.

conversion price is dependent upon the type of Conversion Event that occurs, the Note does carry a ceiling and floor price:

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”);

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.

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”)).

In the event the Company does not complete qualified financing or uplist at or before the maturity

date, the outstanding balance of the Notes shall 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 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.

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

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.

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of Operations

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.

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.

technology is based on heterogeneous integration of compound semiconductor materials on large-diameter substrates such as silicon.

heterogeneous integration enables the subsequent device fabrication and manufacturing in large-scale manufacturing environments that

are suited to mass markets.

will continue to develop our technology that includes novel materials and devices based on our core intellectual property.

focus is to manufacture high-performance semiconductor technologies that scale for mass markets.

Aeluma operates an R&D/manufacturing

facilities at its headquarters in Goleta, California, and has developed relationships with volume fabrication foundries and packaging

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.

We expect to rely on such external capabilities to scale our production capacity in support of high-volume markets.

Operating History

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of Operations

months ended September 30, 2024 compared to the three months ended September 31, 2023

results of operations for the three ended September 30, 2024, as compared to the same period of 2023, were as follows:

Three Months Ended September 30,

results of operations for the six months ended December 31, 2024, as compared to the same period of 2023, were as follows:

Six Months Ended December 31,

Operating expenses

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$ (3,624,443 )

Revenue increased $448,335 to $480,735, of which $430,735 was from government contracts and $50,000 was from commercial product and service

contract, for the three months ended September 30, 2024 from $32,400, all of which was from commercial product and service contracts

for the same period in 2023.

Operating expense decreased $302,996, or 20.0%, to $1,212,115 for the three months ended September 30, 2024 from $1,515,111

for the same period in 2023, due primarily to decreases in consulting and professional expenses, offset partially by increases in cost

of revenue associated with increased revenue and higher seasonal utility charges.

Other income (expense):

Other income (expense)

consists of amortization of discount on convertible notes of ($144,776), changes in fair value of derivative liabilities of $146,435 and

interest income of $102 for the three months ended September 30, 2024.

$ (2,610,829 )

$ (1,013,614 )

Revenue increased $1,797,862 to $2,093,254, of which $1,892,261 was from government contracts and $200,993 was from commercial product

and service contract, for the six months ended December 31, 2024 from $295,392 of which $262,992 was from government contracts and $32,400

was from commercial product and service contract, for the same period in 2023.

Operating expenses decreased $471,866, or 16.2%, to $2,435,036 for the six months ended December 31, 2024 from $2,906,902

for the same period in 2023, due primarily to decreases in consulting and professional expenses and less purchases for R&D activities.

income (expense):

Other income (expense) consists of amortization of discount on convertible notes of ($427,819), changes in fair

value of derivative liabilities of ($2,855,045) and interest income of $203 for the six months ended December 31, 2024.

tax expense :

We did not record income tax expense for either of the three months ended September 30, 2024 and 2023.

the exception of some lingering supply chain 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, 2024.

We did not record income tax expense for either of the six months ended December 31, 2024 and 2023.

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

As presented in the financial statements, we incurred a net loss of $729,619 and $1,482,309 for the three months ended September

30, 2024 and 2023, respectively, and losses are expected to continue in the near term.

The accumulated deficit was $14,353,980 at September

We have been funding our operations through the sale of common stock in private placement transactions.

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 $3,624,443 and $2,610,829

for the six months ended December 31, 2024 and 2023, respectively, and losses are expected to continue in the near term.

The accumulated

deficit was $17,248,804 at December 31, 2024.

We have been funding our operations through the sale of convertible notes and common stock

in private placement transactions.

anticipates that significant additional expenditures will be necessary to develop and expand our business before significant positive

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and to ultimately achieve sustainable revenues and profitable operations.

At September 30, 2024, we had $3,502,520 of cash and cash equivalents.

At December 31, 2024, we had $3,063,059 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

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this alternative, nor does management view it as a likely occurrence.

We had working capital of $1,395,817 and $766,160

at September 30, 2024 and June 30, 2024, respectively.

Current assets increased $2,634,144 to $4,026,990 at September 30, 2024 from $1,392,846

at September 30, 2024, primarily due to a $2,211,448 increase in cash.

Current liabilities increased $2,004,487 to $2,631,173 at September

30, 2024 from $626,686 at June 30, 2024, due primarily to increases in derivative liabilities.

had working capital of $4,041,363 and $766,160 at December 31, 2024 and June 30, 2024, respectively.

Current assets increased $3,137,323

to $4,530,169 at December 31, 2024 from $1,392,846 at December 31, 2024, primarily due to a $1,771,987 increase in cash and a $1,264,628

increase in accounts receivable.

Current liabilities decreased $137,880 to $488,806 at December 31, 2024 from $626,686 at June 30, 2024,

due primarily to decrease in accounts payable.

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

Three Months Ended September 30,

Six Months Ended December 31,

Net cash provided by (used in)

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$ (1,332,216 )

$ (2,480,345 )

Investing activities

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$ (2,648,636 )

Net cash used in our operating activities were

$931,915 and $1,303,362 for the three months ended September 30, 2024 and 2023, respectively, due primarily to net losses of $729,619

and $1,482,309 for the three months ended September 30, 2024 and 2023, respectively.

cash used in our investing activities was $1,637 and $7,100 for the three months ended September 30, 2024 and 2023, respectively.

cash used in our operating activities were $1,332,216 and $2,480,345 for the six months ended December 31, 2024 and 2023, respectively,

due primarily to net losses of $3,624,443 and $2,610,829 for the six months ended December 31, 2024 and 2023, respectively.

cash used in our investing activities was $40,797 and $164,290 for the six months ended December 31, 2024 and 2023, respectively.

activities include purchase of equipment.

cash provided by our financing activities was $3,145,000 for the three months ended September 30, 2024 and net cash used in our financing

cash provided by our financing activities was $3,145,000 for the six months ended December 31, 2024 and net cash used in our financing

activities was $4,001 for the same period of 2023.

We received $3,145,000 from issuing convertible notes for the three months ended September

30, 20214 and paid $4,001 to purchase Lee McCarthy’s unvested restricted shares for the same period of 2023.

We received $3,145,000 from issuing convertible notes for the six months ended December

31, 2024 and paid $4,001 to purchase unvested restricted shares for the same period of 2023.

Accounting Policies

the three months ended September 30, 2024, there were no significant changes in our critical accounting policies.

the three and six months ended December 31, 2024, there were no significant changes in our critical accounting policies.

Quantitative and Qualitative Disclosures about Market Risk

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