What changed in this filing

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Item 1. Financial Statements

2026-02-11 compared with 2025-11-12 · 257 added, 248 removed, 293 unchanged (63% of the section changed)

1 unchanged sentence

and Subsidiary

Consolidated Balance Sheets

Condensed Consolidated Balance Sheets

($ in thousands, except per share data)

September 30, 2025

Current assets:

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Preferred stock, $ 0.0001 par value:

10,000,000 authorized, and none issued and outstanding at September 30, 2025 and June 30, 2025

10,000,000 authorized, and none issued and outstanding at December 31, 2025 and June 30, 2025

Common stock, $ 0.0001 par value:

50,000,000 shares authorized, and 17,851,863 and 15,864,360 shares issued and outstanding at September 30, 2025 and June 30, 2025, respectively

50,000,000 shares authorized, and 18,002,949 and 15,864,360 shares issued and outstanding at December 31, 2025 and June 30, 2025, respectively

Additional paid-in capital

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and Subsidiary

Consolidated Statements of Operations (unaudited)

Condensed Consolidated Statements of Operations

($ in thousands, except per share data)

Three Months Ended September 30,

Three Months Ended

Six Months Ended

Operating expenses:

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Total operating expenses

Loss from operations

Income (loss) from operations

Other income (expense):

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Changes in fair value of derivative liabilities

Total other income, net

Total other income (expense), net

Loss before income tax expense

Income tax expense

Net loss per share - basic and diluted

Loss per share - basic and diluted

Weighted average common shares outstanding - basic and diluted

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and Subsidiary

Consolidated Statement of Stockholders’

Condensed Consolidated Statement of Stockholders’

Equity (unaudited)

($ in thousands)

Three Months Ended September 30, 2025 and 2024

Three Months Ended December 31, 2025 and 2024

Stockholders’

Balance, October 1, 2025

Restricted stock units vested

Stock options exercised

Stock warrants exercised

Stock-based compensation

Balance, December 31, 2025

Stockholders’

Balance, October 1, 2024

Stock options exercised

Stock warrants exercised

Stock-based compensation

Balance, December 31, 2024

Six Months Ended December 31, 2025 and 2024

Stockholders’

Balance, July 1, 2025

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Stock-based compensation

Balance, September 30, 2025

Balance, December 31, 2025

Stockholders’

Balance, July 1, 2024

Stock options exercised

Stock warrants exercised

Stock-based compensation

Balance, September 30, 2024

Balance, December 31, 2024

The accompanying notes are an integral part of

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and Subsidiary

Consolidated Statements of Cash Flows (unaudited)

Condensed Consolidated Statements of Cash Flows

($ in thousands)

Three Months Ended

September 30,

Six Months Ended

Operating activities:

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Proceeds from stock option exercise

Proceeds from stock warrant exercise

Proceeds from convertible notes issuance

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and Subsidiary

Notes to Consolidated Financial Statements (unaudited)

Notes to Condensed Consolidated Financial Statements

Note 1 – The Company and Basis of Presentation

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“Aeluma,” “we,” “us” and “our” refer to Aeluma, Inc.

and Subsidiary.

Aeluma 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 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 and other applications.

Aeluma’s technology is broadly applicable across mobile, automotive,

artificial intelligence (AI), defense & aerospace, communication, augmented reality (AR), virtual reality (VR), high-performance computing,

and quantum computing.

Aeluma is based in Goleta, California, where the Company operates in a 9,000 sq.

facility with a state-of-the-art

research and development (“R&D”) and manufacturing cleanroom and access to world-class rapid prototyping capabilities.

The facility houses unique equipment for scalable manufacturing.

The Company recently added a second facility with 2,400 sq.

and meeting space, also in Goleta, California.

and our wholly owned subsidiary Aeluma

Operating Co.

(“Subsidiary”).

Aeluma 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 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 and other applications.

technology is broadly applicable across mobile, automotive, artificial intelligence (“AI”), defense & aerospace, communication,

augmented reality (“AR”), virtual reality (“VR”), high-performance computing, and quantum computing.

based in Goleta, California, where the Company operates in a 9,000 sq.

facility with a state-of-the-art research and development (“R&D”)

and manufacturing cleanroom and access to world-class rapid prototyping capabilities.

The facility houses unique equipment for scalable

manufacturing.

In September 2025, the Company added a second facility with 2,400 sq.

of office and meeting space, also in Goleta,

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

Aeluma maintains extensive patent protection and trade secrets related to its materials, manufacturing technology, and applications.

The accompanying consolidated financial statements

have been presented in accordance with U.S.

Aeluma maintains extensive patent

protection and trade secrets related to its materials, manufacturing technology, and applications.

The accompanying condensed consolidated financial

statements have been presented in accordance with U.S.

generally accepted accounting principles (“GAAP”).

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and objectivity.

This Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, should be read in conjunction with our Annual

This Quarterly Report on Form 10-Q for the period ended December 31, 2025, should be read in conjunction with our Annual

Report on Form 10-K for the fiscal year ended June 30, 2025.

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Results for interim periods are not necessarily indicative of those to be expected for the full

Cash and Cash Equivalents

The Company considers cash in banks, deposits

in transit, and highly liquid investments with original maturity of three months or less to be cash and cash equivalents.

As of December

31, 2025, cash and cash equivalents consisted of cash on deposit and an investment in money market funds.

The Company’s investment

in money market funds is classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices in active

The fund invests 100 % of its assets in short-term U.S.

Treasury obligations and has no minimum holding periods or redemption

Revenue Recognition

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Company currently draws revenue from two primary sources:

product and service contracts:

● Commercial product and service

Revenue is currently generated from multiple customers for R&D-related services and small-volume orders.

Revenue is principally generated under R&D contracts with agencies of the U.S.

● Government contracts:

is principally generated from R&D contracts with agencies of the U.S.

government or with prime contractors.

contracts may include cost-reimbursement or fixed-price terms.

These contracts may include

cost-reimbursement or fixed-price terms.

The Company capitalizes certain incremental costs

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or conditions.

For the three months ended September 30, 2025,

For the three and six months ended December 31,

2025, the Company was awarded one government contract of $ 150 thousand for the provision of services and delivery of materials.

is a firm-fixed-price contract, under which payments are made upon completion of specified performance milestones.

award is a firm-fixed-price contract, under which payments are made upon completion of specified performance milestones.

Revenue associated

with this contract will be recognized upon achievement of designated milestones.

For the three months ended September 30, 2024,

For the three and six months ended December 31,

2024, the Company was awarded two government contracts of $ 11.9 million for providing services and delivering materials.

awards are firm fixed contracts that shall be paid upon completion of performance and recognized as revenue over an expected term of 36

As of September 30, 2025, total remaining performance

The awards are firm-fixed-price contracts that shall be paid upon completion of performance and recognized as revenue over an expected

term of 36 months.

As of December 31, 2025, total remaining performance

obligations under all obligated government contracts amounted to $ 7.9 million.

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The Company estimates the fair value of stock-based

compensation awards on the date of grant using an option-pricing model.

The value of the portion of the award that is ultimately expected

to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations.

Company estimates the fair value of stock-based compensation awards using the Black-Scholes model.

This model requires the Company to

estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex

and rely on subjective variables.

For employees and directors, the expected life was calculated based on the simplified method as described

compensation awards on the date of grant using an option-pricing model for stock options.

The value of the portion of the award that is

ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements

of operations.

The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model.

This model requires

the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which

are highly complex and rely on subjective variables.

For employees and directors, the expected life was calculated based on the simplified

method as described by the U.S.

Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No.

110, Share-Based Payment.

For other service

providers, the expected life was calculated using the contractual term of the award.

The Company’s estimate of expected volatility

was based on the volatility of peers.

The Company has selected a risk-free rate based on the implied yield available on U.S.

securities with a maturity equivalent to the expected term of the options.

110, Share-Based

For other service providers, the expected life was calculated using the contractual term of the award.

The Company’s estimate

of expected volatility was based on the volatility of peers.

The Company has selected a risk-free rate based on the implied yield available

Treasury securities with a maturity equivalent to the expected term of the options.

The Company accounts for forfeitures upon

The Company estimates the fair value of restricted

stock units (“RSUs”) on the date of grant based on the fair market value of the Company’s common stock.

the portion of the award that is ultimately expected to vest is recognized as stock-based compensation expense over the requisite service

periods in the Company’s consolidated statements of operations.

Because RSUs do not include exercise features, the valuation of

these awards does not require the use of an option-pricing model or assumptions related to expected volatility, expected term, or risk-free

interest rates.

The Company accounts for forfeitures upon occurrence.

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Potential dilutive securities,

comprised of stock options, restricted stock units, and warrants, are not reflected in diluted loss per share because such shares are

anti–dilutive.

The dilutive impact of potential common shares resulting from common stock equivalents is determined by applying

the treasury stock method.

For the three months ended September 30, 2025, 1,522,371 stock options and 533,835 warrants were

excluded from the calculation of diluted income per share as their inclusion would have been anti-dilutive.

comprised of shares underlying stock options, restricted stock units, and warrants, are not reflected in diluted loss per share because

such shares are anti–dilutive.

The dilutive impact of potential common shares resulting from common stock equivalents is determined

by applying the treasury stock method.

For the three and six months ended December 31, 2025, 1,724,069 shares underlying stock

options, 156,292 shares underlying RSUs and 402,408 shares underlying warrants were excluded from the calculation of diluted income per

share as their inclusion would have been anti-dilutive.

Concentration of Risk

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The Company’s

accounts are insured by the FDIC, but at times our cash in these accounts may exceed federally insured limits.

accounts are insured by the FDIC up to federally insured limits.

The Company manages its credit risk associated

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represent 10% or more of revenue or accounts receivable.

For the three months ended September 30, 2025, 65 % and 17 % of our revenue was

derived from Customers E and B, and, for the three months ended September 30, 2024, 36 %, 21 %, 10 %, 10 %, and 10 % of our revenue was derived

from Customer A, C, B, D and F, respectively.

As of September 30, 2025, 72 % and 13 % of accounts receivables were attributable to Customers

As of September 30, 2024, 53 %, 16 %, 16 % and 16 % of accounts receivable were attributable to Customer A, B, D and F, respectively.

Customers A, B, C, D and E are government agencies

For the three months ended December 31, 2025, 67 % and 15 % of our revenue was

derived from two customers and, for the three months ended December 31, 2024, 76 % of our revenue was derived from one customer.

six months ended December 31, 2025, 69 % and 17 % of our revenue was derived from two customers and, for the six months ended December 31,

2024, 59 % and 11 % of our revenue was derived from two customers.

As of December 31, 2025, 93 % of accounts receivables were attributable

to one customer and, as of June 30, 2024, 100 % of accounts receivable were attributable to one customer.

All customers are government

Recent Accounting Pronouncements under Evaluation

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The Company is currently evaluating the impact of this new standard on its consolidated financial statements,

and the adoption is not expected to have a material impact on the consolidated financial statements.

however the adoption is not expected to have a material impact on the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income

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The Company is currently evaluating the impact of this new standard on its consolidated financial statements,

and the adoption is not expected to have a significant impact on the consolidated financial statements.

however the adoption is not expected to have a significant impact on the consolidated financial statements.

In November 2024, the FASB issued ASU.

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The Company is currently evaluating the impact of this new standard on its

consolidated financial statements, and the adoption is not expected to have a significant impact on the consolidated financial statements.

consolidated financial statements, however the adoption is not expected to have a significant impact on the consolidated financial statements.

Note 2 – Convertible 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 set 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 was uplisted to a national securities exchange

or if neither of those such events occurred 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 a 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 at a conversion price 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 could 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

occurred, the Note carried a ceiling and floor price:

the applicable conversion price was not lower than 85 % of the 5-day VWAP on the

applicable Closing Date (the “Floor Price”) nor was the applicable conversion price be higher than $ 3.50 per share (the “Ceiling

the Floor Price and Ceiling Price shall automatically adjust in the event of a stock split or consolidation by the Company.

Since the Floor Price was tied to the Closing Date, the Floor Price differed for investors who were part of different closings.

Price for the investors who participated in the closings was equal to $ 2.47 or $ 2.68 per share.

The Investors were granted piggyback registration

rights for the shares of Common Stock underlying the Note.

The Note Purchase Agreement also contained customary

representations and warranties of the Company and the Investors, indemnification obligations of the Company, termination provisions, and

other obligations and rights of the parties.

The Company analyzed the embedded features of

the convertible notes, and the debt discount is being amortized over the term of the convertible notes using the effective interest

method and the derivative liabilities are marked-to-market at each reporting date.

During August 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

set 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 was uplisted to a national securities exchange or if neither of those such

events occurred prior to the maturity date, (together with Sale of the Company (as hereinafter defined), a “Conversion Event”)).

On March 25, 2025, the Company determined that

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Offerings of Common Stock in Note 3 – Stockholders’ Equity

During the quarter ended March 31, 2025, the carrying

amount of convertible notes, totaling $ 1.7 million, including unamortized debt discount of $ 1.5 million, was reclassed to equity.

the three months ended September 30, 2024, the Company recorded amortization of discount on convertible notes of $ 145 thousand.

Beginning with the quarter ended March 31, 2025,

the carrying amount of convertible notes, totaling $ 1.7 million, including unamortized debt discount of $ 1.5 million, was reclassed to

For the three and six months ended December 31, 2024, the Company recorded amortization of discount on convertible notes

of $ 283 thousand and $ 428 thousand, respectively.

Note 3 – Stockholders’ Equity

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is 50,000,000 shares of $ 0.0001 par value common stock and 10,000,000 of $ 0.0001 par value preferred stock.

shares were issued as of September 30, 2025.

shares were issued or outstanding as of December 31, 2025.

Registration Rights Agreement

The Company entered into a registration rights

agreement that provides for certain liquidated damages upon the occurrence of a “Registration Event,” which is defined as

the occurrence of any of the following events:

(a) the Company fails to file with the Commission the Registration Statement on or before

the Registration Filing Date;

(b) the Registration Statement is not declared effective by the Commission on or before the Registration

Effectiveness Date;

The Company is party to a registration rights

agreement pursuant to which it has filed a registration statement on Form S-1 with the SEC, which was declared effective on March 26,

The agreement provides for certain liquidated damages upon the occurrence of a “Registration Event,” which is defined

as the occurrence of any of the following events:

(a) the registration statement ceases for any reason to remain effective or the Holders

of Registrable Securities covered thereby are otherwise not permitted to utilize the prospectus therein to resell the Registrable Securities

covered thereby, except for Blackout Periods permitted herein;

or (d) following the listing or inclusion for quotation on an Approved

Market, the Registrable Securities, if issued and outstanding, are not listed or included for quotation on an Approved Market, or trading

of the Common Stock is suspended or halted on the Approved Market, which at the time constitutes the principal markets for the Common

Stock, for more than three (3) full, consecutive Trading Days (other than as a result of (A) actions or inactions of parties other than

the Company or its affiliates or of the Approved Market not reasonably in the control of the Company, or (B) suspension or halt of substantially

all trading in equity securities (including the Common Stock) on the Approved Market).

The maximum amount of liquidated damages that may

be paid by the Company shall be an amount equal to eight percent ( 8 %) of the shares covered by the registration rights agreement.

filing covered 11,010,002 shares.

The Company currently expects to satisfy all of its obligations under the Registration Agreement

and does not expect to pay any damages pursuant to this agreement;

covered thereby, except for Blackout Periods permitted by the registration rights agreement;

or (b) following the listing or inclusion

for quotation on an Approved Market, the Registrable Securities, if issued and outstanding, are not listed or included for quotation on

an Approved Market, or trading of the Common Stock is suspended or halted on the Approved Market, which at the time constitutes the principal

markets for the Common Stock, for more than three (3) full, consecutive Trading Days (other than as a result of (A) actions or inactions

of parties other than the Company or its affiliates or of the Approved Market not reasonably in the control of the Company, or (B) suspension

or halt of substantially all trading in equity securities (including the Common Stock) on the Approved Market).

The maximum amount of

liquidated damages that may be paid by the Company shall be an amount equal to eight percent ( 8 %) of the shares covered by the registration

rights agreement.

The registration statement initially covered the sale of 11,010,002 shares.

The Company currently expects

to satisfy all of its obligations under the Registration Agreement and does not expect to pay any damages pursuant to this agreement;

therefore, no liability has been recorded.

The Company filed the Registration Statement on

Form S-1 with the SEC, and it was declared effective on March 26, 2025.

As a result, the Company has satisfied the applicable filing and

effectiveness obligations under the Registration Rights Agreement and does not expect to pay any damages pursuant to this agreement.

no liability has been recorded.

Public Offering of Common Stock

On March 26, 2025, the Company 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 “March Offering”).

The Company 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.

Offering closed on March 28, 2025.

The March 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, the Company 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 March

Offering (including the over-allotment shares), with an exercise price equal to 115 % of the public offering price.

In March 2025, the Company sold an aggregate of

2,285,571 shares of its common stock in an underwritten public offering (the “March Offering”) for gross proceeds of $ 13.8

million, resulting in net proceeds of $ 12.6 million after underwriting discounts, commissions, and offering expenses.

The Company issued

to the underwriter warrants to purchase up to 131,427 shares which are exercisable for a per share price of $ 6.04 through March 2035.

See Note 6 - Warrants

Total gross proceeds from the March Offering,

including the over-allotment option, were $ 13.8 million.

Net proceeds, after underwriting discounts and Offering expenses, were $ 12.6

The Company intends to use the proceeds for business development, scaling manufacturing operations, and general corporate purposes.

In connection with the March Offering, the Company,

as well as its 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.

On September 17, 2025, the Company entered into

an Underwriting Agreement (“UA”) with Craig-Hallum Capital Group LLC, as the representative of the several underwriters named

therein (the “Underwriters”), relating to the issuance and sale by the Company of 1,700,000 shares of the Company’s

common stock, par value $ 0.0001 per share in its previously announced public offering (the “September Offering”).

offering price in the September Offering was $ 13.00 per share of Common Stock.

In connection with the September Offering, the Company

granted the Underwriters a 30-day option to purchase up to 255,000 additional shares of its Common Stock at the public offering price,

less the underwriting discount, and on September 18, 2025, the Underwriters exercised such option to purchase an additional 255,000 shares

of Common Stock.

The September Offering closed on September 19, 2025.

The net proceeds to the Company from the September

Offering were $ 23.4 million, after deducting underwriting discounts and commissions and after payment of offering expenses.

The Company intends to use the net proceeds from

the September Offering, together with its existing cash and cash equivalents, for expansion of business development efforts including

(i) advancing manufacturing processes for production;

(ii) hiring new employees;

and (iii) working capital and general business purposes.

The Company made the September Offering pursuant

to the Company’s effective shelf registration statement on Form S-3 (File No.

333-289135) previously filed

with and declared effective by the SEC and a prospectus supplement and accompanying prospectus filed with the SEC on September 18, 2025.

On September 19, 2025, the Company sold 1,700,000

shares of its common stock in an underwritten public offering (the “September Offering”) for gross proceeds of $ 25.4 million,

resulting in net proceeds of $ 23.4 million after underwriting discounts, commission, and offering expenses.

Note 4 – Stock-Based Compensation

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Shares of restricted stock that do not vest are subject to forfeiture.

The Company entered into various consulting agreements

that involved the issuance of common stock in exchange for future services.

These agreements included time-based vesting provisions and

repurchase rights tied to service terms.

The Company has entered into various consulting

agreements that involved the issuance of common stock in exchange for future services.

These agreements included time-based vesting provisions

and repurchase rights tied to service terms.

In connection with these agreements, the Company recorded deferred compensation for the fair

value of the shares in excess of the amounts paid.

The deferred compensation was recognized as consulting expense in the consolidated

The deferred compensation was recognized as consulting expense in the condensed consolidated

statements of operations over the applicable service periods.

For the three months ended September 30, 2025

and 2024, $ 0 and $ 7 thousand, respectively, were recognized as consulting expense in the consolidated statements of operations.

September 30, 2025, there was no deferred compensation remaining in the consolidated balance sheets, as all related shares had vested

and associated expense had been fully amortized as of June 30, 2025.

For the three and six months ended December 31,

2024, $ 7 and $ 14 thousand, respectively, were recognized as consulting expense in the condensed consolidated statements of operations.

All related shares had vested and the associated expense was fully amortized as of December 31, 2025.

Accordingly, as of December 31,

2025, there was no deferred compensation remaining in the condensed consolidated balance sheets.

Restricted Stock Units

Restricted Stock Units (“RSUs”) are

grants of shares of our common stock that vest in accordance with terms and conditions established by the administrator of the 2021 Equity

Incentive Plan (2021 Plan).

Subject to the provisions of the 2021 Plan, the administrator determines the terms and conditions of RSUs,

including the vesting criteria.

RSUs are rights to acquire shares of our common

stock that vest and settle in accordance with terms and conditions established by our 2021 Equity Incentive Plan (the “2021 Plan”)

and any forms of agreement approved by the administrator of the 2021 Plan.

During the three months ended September 30, 2025,

the Company granted 76,403 RSUs, of which 2,903 were fully vested on the date of grant.

The remaining RSUs will vest as follows:

25 % on the 12month anniversary of the grant recipient’s start date and 75 % in equal quarterly installments over the following 36

Each vesting installment is subject to the recipient’s continued service with the Company through the applicable vesting

Outstanding at July 1, 2025

Outstanding at September 30, 2025

the Company granted RSUs to employees representing rights to acquire up to 76,403 shares of common stock.

Of those RSUs, 2,903 were

fully vested on the date of grant and settled into the same number of shares of common stock.

The remaining RSUs are scheduled to vest

with respect to 25 % of the shares on the first anniversary of the grant recipient’s start date and the remaining 75 % in equal quarterly

installments over the following 12 quarters.

Each vesting installment is subject to the recipient’s continued service with the Company

through the applicable vesting date.

During the three months ended December 31, 2025,

the Company granted RSUs to employees, consultants and members of the Company’s board of directors representing rights to acquire

up to 87,458 shares of common stock.

The RSUs are scheduled to vest over varying periods of up to four years .

Each vesting installment

is subject to the recipient’s continued service with the Company through the applicable vesting date.

December 31, 2025

Three Months Ended

Six Months Ended

Beginning balance

Ending balance

Stock Options

For the three months ended September 30, 2025,

the Company granted 157,906 stock options to employees and members of the Company’s board of directors.

The stock options expire

in 10 years, have exercise prices ranging from $ 16.37 to $ 20.82 , and vest in one month to forty-eight months.

For the three months ended September 30, 2024,

the Company issued 12,000 stock options to a consultant.

The stock options expire in 10 years, have an exercise price

of $ 3.13 , and vest equally in twelve months.

the Company granted to employees and a member of the Company’s board of directors options to purchase up to 157,906 shares of common

The stock options expire on the tenth anniversary of their dates of grant, have exercise prices ranging from $ 16.37 to $ 20.82 ,

and vest in one month to forty-eight months.

The right to exercise vested options is contingent upon the optionee’s continued service with

the Company through each applicable vesting date.

For the three months ended December 31, 2025,

the Company granted to employees and a consultant options to purchase up to 77,000 shares of common stock.

The stock options expire on

the tenth anniversary of their dates of grant, have exercise prices ranging from $ 14.71 to $ 16.31 , and vest in one month to forty-eight

The right to exercise vested options is contingent upon the optionee’s continued service with the Company through each

applicable vesting date.

The Company estimates the fair value of each option

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for the period presented:

Three Months Ended

September 30,

Weighted-average fair value

Expected volatility

Expected term 5.0 years - 6.1 years 5.3 years

101.4 % - 119.2 %

113.9 % - 122.4 %

Expected term

5.0 years - 6.1 years

1.0 years - 5.3 years

Dividend yield

Risk-free interest rate

The following is a schedule summarizing stock option activities for

the periods presented ($ in thousands, except per share data):

3.69 % - 4.07 %

3.87 % - 4.31 %

The following is a schedule summarizing stock

option activities for the periods presented ($ in thousands, except per share data):

Three Months Ended

Exercise Price

Outstanding at October 1, 2025

Outstanding at December 31, 2025

Exercisable at December 31, 2025

Exercise Price

Outstanding at October 1, 2024

Outstanding at December 31, 2024

Exercisable at December 31, 2024

(1) Represents the excess of the fair value on the last day of the period (which was $ 17.17 and $ 7.65 as of December 31, 2025 and 2024, respectively) over the exercise price, multiplied by the number of options.

Six Months Ended

Exercise Price

Outstanding at July 1, 2025

Outstanding at September 30, 2025

Exercisable at September 30, 2025

(1) Represents

the excess of the fair value on the last day of the period (which was $ 16.10 as of September 30, 2025) over the exercise price, multiplied

by the number of options.

Outstanding at December 31, 2025

Exercisable at December 31, 2025

Exercise Price

Outstanding at July 1, 2024

Outstanding at September 30, 2024

Exercisable at September 30, 2024

(1) Represents

the excess of the fair value on the last day of the period (which was $ 3.17 as of September 30, 2024) over the exercise price, multiplied

by the number of options.

For the three months ended September 30, 2025

and 2024, stock-based compensation expenses for stock options and RSU granted were $ 1.1 million and $ 167 thousand, respectively.

stock-based compensation expense was $ 7.2 million, and the average expected recognition period was 1.8 years as of September 30, 2025.

Outstanding at December 31, 2024

Exercisable at December 31, 2024

For the three months ended December 31, 2025 and

2024, stock-based compensation expenses for stock options and RSUs were $ 1.1 million and $ 149 thousand, respectively.

For the six months

ended December 31, 2025 and 2024, stock-based compensation expenses for stock options and RSUs were $ 2.1 million and $ 316 thousand, respectively.

Unrecognized stock-based compensation expense was $ 8.5 million, and the average expected recognition period was 1.7 years as of December

Note 5 – Operating Lease

6 unchanged sentences

that such options will be exercised.

On April 1, 2021, the Company commenced a 5 -year

operating lease for a facility in Goleta, California.

The lease agreement includes extending the lease for two additional sixty-month

The Company is party to a 5 -year operating lease

for a facility in Goleta, California through April 1, 2026.

The lease agreement includes options to extend for two additional sixty-month

As of July 1, 2023, the Company determined that one of the two extension options was reasonably certain of exercise.

the Company remeasured the ROU asset and lease liability to reflect the updated lease term.

On September 21, 2025, the Company commenced a

5 -year operating lease for an office in Goleta, California with total lease payments of $ 303 thousand.

The Company recorded the net

present value of $ 274 thousand for both the ROU asset and lease liability on September 5, 2025.

The Company is party to a 5 -year operating lease

for an office in Goleta, California through September 21, 2030, with total lease payments of $ 303 thousand.

The Company recorded

the net present value of $ 274 thousand for both the ROU asset and lease liability on September 5, 2025.

The following table presents maturities of operating

lease liabilities on an undiscounted basis as of September 30, 2025 ($ in thousands):

lease liabilities on an undiscounted basis as of December 31, 2025 ($ in thousands):

Years ending June 30,

4 unchanged sentences

The weighted average remaining lease term and

the discount rate for the lease at September 30, 2025 are 5.4 years and 3.97 %, respectively.

the discount rate for the lease at December 31, 2025 are 5.1 years and 3.95 %, respectively.

The total lease expenses were $ 57 thousand

and $ 41 thousand for the three months ended September 30, 2025 and 2024, respectively.

and $ 41 thousand for the three months ended December 31, 2025 and 2024, respectively.

The total lease expenses were $ 104 thousand and

$ 83 thousand for the six months ended December 31, 2025 and 2024, respectively.

The variable costs for common area operating expenses

and electricity were $ 101 thousand and $ 84 thousand for the three months ended September 30, 2025 and 2024, respectively.

Note 6 – Warrants to Purchase Common

The warrants are exercisable at any time prior

to their expiration dates and include a provision that allows for cashless exercise at the time of exercise.

Under the cashless exercise

provision, the holder may elect to receive a reduced number of shares of common stock determined according to a formula based on the fair

market value of the Company’s common stock at the time of exercise, rather than paying the exercise price in cash.

and electricity were $ 57 thousand and $ 54 thousand for the three months ended December 31, 2025 and 2024, respectively.

The variable costs

for common area operating expenses and electricity were $ 158 thousand and $ 138 thousand for the six months ended December 31, 2025 and

2024, respectively.

Note 6 – Warrants

All of our outstanding warrants to purchase common

stock are exercisable at any time prior to their expiration dates and include a provision that allows for cashless exercise at the time

Under the cashless exercise provision, the holder may elect to receive a reduced number of shares of common stock determined

according to a formula based on the fair market value of the Company’s common stock at the time of exercise, rather than paying

the exercise price in cash.

During the three months ended December 31, 2025, warrants to purchase 131,427 shares were exercised, resulting

in the issuance of 124,415 shares of common stock.

During the six months ended December 31, 2025, warrants to purchase 140,480 shares

were exercised, resulting in the issuance of 132,539 shares of common stock.

The following warrants to purchase common stock

were outstanding as of September 30, 2025:

were outstanding as of December 31, 2025:

Number of Shares Exercise Price Expiration Date

5 unchanged sentences

6,660 3.00 March 31, 2028

41,738 3.00 May 10, 2028

41,738 3.00 March 10, 2028

Note 7 – Subsequent Events

The Company has evaluated subsequent events through

the filing date or the issuance of these financial statements and is not aware of any material items that would require disclosure in

the notes to the financial statements or would be required to be recognized as of September 30, 2025.

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 1. Financial Statements