0001213900-23-008709.txt : 20230207
0001213900-23-008709.hdr.sgml : 20230207
20230207062647
ACCESSION NUMBER: 0001213900-23-008709
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 91
CONFORMED PERIOD OF REPORT: 20221231
FILED AS OF DATE: 20230207
DATE AS OF CHANGE: 20230207
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: Akoustis Technologies, Inc.
CENTRAL INDEX KEY: 0001584754
STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661]
IRS NUMBER: 331229046
STATE OF INCORPORATION: DE
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-38029
FILM NUMBER: 23592710
BUSINESS ADDRESS:
STREET 1: 9805 NORTHCROSS CENTER COURT, SUITE A
CITY: HUNTERSVILLE
STATE: NC
ZIP: 28078
BUSINESS PHONE: 7026054086
MAIL ADDRESS:
STREET 1: 9805 NORTHCROSS CENTER COURT, SUITE A
CITY: HUNTERSVILLE
STATE: NC
ZIP: 28078
FORMER COMPANY:
FORMER CONFORMED NAME: DANLAX, CORP.
DATE OF NAME CHANGE: 20130820
10-Q
1
f10q1222_akoustistech.htm
QUARTERLY REPORT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 001-38029
AKOUSTIS TECHNOLOGIES, INC.
(Exact name of registrant as specified in its
charter)
Delaware
33-1229046
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
9805 Northcross Center Court, Suite A
Huntersville, NC
28078
(Address of principal executive offices)
(Postal Code)
Registrant’s telephone number, including
area code: 1-704-997-5735
Securities registered under Section 12(b) of the
Act:
Title of Each Class:
Trading Symbol
Name of each exchange on which registered:
Common Stock, $0.001 par value
AKTS
The Nasdaq Stock Market LLC (Nasdaq Capital Market)
Securities registered under Section 12(g) of the
Act:
None
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No
☒
As of February 3, 2023, there were 71,554,411 shares of the registrant’s
common stock, $0.001 par value per share, issued and outstanding.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
December 31,
June 30,
2022
2022
Assets
Assets:
Cash and cash equivalents
$
46,569
$
80,485
Accounts receivable
3,171
3,793
Inventory
5,807
4,094
Other current assets
4,767
3,359
Total current assets
60,314
91,731
Property and equipment, net
54,469
51,157
Goodwill
8,051
8,051
Intangibles, net
8,267
8,994
Operating lease right-of-use asset, net
1,088
1,126
Other assets
71
279
Total Assets
$
132,260
$
161,338
Liabilities
and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued expenses
$
8,444
$
11,204
Contingent consideration
—
855
Deferred revenue
60
286
Operating lease liability
271
313
Total current liabilities
8,775
12,658
Long-term Liabilities:
Convertible notes payable, net
43,181
43,731
Contingent consideration
276
591
Operating lease liability
833
811
Other long-term liabilities
117
117
Total long-term liabilities
44,407
45,250
Total Liabilities
53,182
57,908
Stockholders’ Equity
Preferred stock, par value $0.001: 5,000,000 shares authorized; none issued and outstanding
—
—
Common stock, $0.001 par value; 125,000,000 shares authorized; 58,161,133, and 57,079,347 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively
58
57
Additional paid in capital
316,065
310,171
Accumulated deficit
(237,045
)
(206,798
)
Total Stockholders’ Equity
79,078
103,430
Total Liabilities and Stockholders’ Equity
$
132,260
$
161,338
See accompanying notes to the condensed consolidated
financial statements
1
Akoustis Technologies, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
For the Three Months Ended December 31, 2022
For the Three Months Ended December 31, 2021
For the Six Months Ended December 31, 2022
For the Six Months Ended December 31, 2021
Revenue
$
5,865
$
3,672
$
11,432
$
5,540
Cost of revenue
5,274
4,549
11,727
7,451
Gross profit (loss)
591
(877
)
(295
)
(1,911
)
Operating expenses
Research and development
7,645
9,192
17,730
17,166
General and administrative expenses
5,838
5,146
12,833
9,022
Total operating expenses
13,483
14,338
30,563
26,188
Loss from operations
(12,892
)
(15,215
)
(30,858
)
(28,099
)
Other (expense) income
Interest (expense) income
(702
)
28
(1,445
)
62
Other (expense) income
5
—
(9
)
—
Change in fair value of contingent consideration
1,616
—
1,170
—
Change in fair value of derivative liabilities
818
—
839
—
Total other (expense) income
1,737
28
555
62
Net loss before income taxes
$
(11,155
)
$
(15,187
)
$
(30,303
)
$
(28,037
)
Income Tax (expense) benefit
(1
)
(58
)
56
(58
)
Net Loss
$
(11,156
)
$
(15,245
)
$
(30,247
)
$
(28,095
)
Net loss (income) attributable to noncontrolling interest
—
(19
)
—
(19
)
Net loss attributable to common stockholders
$
(11,156
)
$
(15,264
)
$
(30,247
)
$
(28,114
)
Net loss per common share - basic and diluted
$
(0.19
)
$
(0.29
)
$
(0.53
)
$
(0.54
)
Weighted average common shares outstanding - basic and diluted
57,583,844
52,924,078
57,369,118
52,180,077
See accompanying notes to the condensed consolidated
financial statements.
2
Akoustis Technologies, Inc.
Condensed Consolidated Statements of Changes
in Stockholders’ Equity
(In thousands)
(Unaudited)
For the Three Months Ended December 31, 2022
Common Stock
Additional Paid In
Accumulated
Total
Shares
Par Value
Capital
Deficit
Equity
Balance, September 30, 2022
57,341
$
57
$
312,519
$
(225,889
)
$
86,687
Stock-based compensation
329
1
1,894
—
1,895
ESPP purchases
89
—
288
—
288
Common stock issued in payment of note interest
402
—
1,364
—
1,364
Net loss
—
—
—
(11,156
)
(11,156
)
Balance, December 31, 2022
58,161
$
58
$
316,065
$
(237,045
)
$
79,078
For the Three Months Ended December
31, 2021
Common Stock
Additional Paid In
Accumulated
Noncontrolling
Shares
Par Value
Capital
Deficit
Interest
Equity
Balance, September 30, 2021
52,038
$
52
$
272,966
$
(160,620
)
$
—
$
112,398
Common stock issued for cash, net of issuance costs
1,931
2
13,355
—
—
13,357
Stock-based compensation
356
—
2,900
—
—
2,900
Common stock issued for exercise of warrants
4
—
33
—
—
33
Common stock issued for exercise of options
15
—
107
—
—
107
ESPP purchases
53
1
311
—
—
312
Common stock issued in acquisition
263
—
2,297
—
—
2,297
Noncontrolling interest acquired
—
—
—
—
7,510
7,510
Net loss
—
—
—
(15,264
)
18
(15,246
)
Balance, December 31, 2021
54,660
$
55
$
291,969
$
(175,884
)
$
7,528
$
123,668
For the Six Months Ended December 31, 2022
Common Stock
Additional Paid In
Accumulated
Noncontrolling
Shares
Par Value
Capital
Deficit
Interest
Equity
Balance, June 30, 2022
57,079
$
57
$
310,170
$
(206,798
)
$
—
$
103,429
Stock-based compensation
591
1
4,243
—
—
4,244
ESPP purchases
89
—
288
—
—
288
Common stock issued in payment of note interest
402
—
1,364
—
—
1,364
Net loss
—
—
—
(30,247
)
—
(30,247
)
Balance, December 31, 2022
58,161
$
58
$
316,065
$
(237,045
)
$
—
$
79,078
For the Six Months Ended December
31, 2021
Common Stock
Additional
Paid In
Accumulated
Noncontrolling
Shares
Par Value
Capital
Deficit
Interest
Equity
Balance, June 30, 2021
51,236
$
51
$
265,130
$
(147,771
)
$
—
$
117,410
Common stock issued for cash, net of issuance costs
2,487
3
18,786
—
—
18,789
Stock-based compensation
593
—
5,248
—
—
5,248
Common stock issued for exercise of warrants
8
—
57
—
—
57
Common stock issued for exercise of options
20
—
140
—
—
140
ESPP purchases
53
1
311
—
—
312
Common stock issued in acquisition
263
—
2,297
—
—
2,297
Noncontrolling interest acquired
—
—
—
—
7,510
7,510
Net loss
—
—
—
(28,113
)
18
(28,095
)
Balance, December 31, 2021
54,660
$
55
$
291,969
$
(175,884
)
$
7,528
$
123,668
See accompanying notes to the condensed consolidated
financial statements.
3
Akoustis Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands, except per share data)
(Unaudited)
Six Months Ended December 31, 2022
Six Months Ended December 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
$
(30,247
)
$
(28,095
)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
5,092
3,174
Stock-based compensation
4,244
5,248
Amortization of debt discount
290
—
Amortization of operating lease right of use asset
171
130
Non cash interest payments
1,364
—
Change in fair value of derivative liabilities
(839
)
—
Change in fair value of contingent consideration
(1,170
)
—
(Gain) Loss on disposal of fixed assets & intangibles
16
(194
)
Changes in operating assets and liabilities:
Accounts receivable
622
(349
)
Inventory
(1,713
)
(698
)
Other current assets
(1,200
)
(832
)
Accounts payable and accrued expenses
(2,469
)
(1,611
)
Lease liabilities
(155
)
(135
)
Deferred revenue
(226
)
(176
)
Net Cash Used in Operating Activities
(26,220
)
(23,538
)
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for property, plant and equipment
(7,985
)
(12,823
)
Acquisition of business, net of cash acquired
—
(4,079
)
Cash received from the sale of fixed assets
—
287
Net Cash Used in Investing Activities
(7,985
)
(16,615
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of issuance costs
—
18,789
Proceeds from exercise of employee stock options
—
140
Proceeds from employee stock purchase plan
289
312
Proceeds from exercise of warrants
—
57
Net Cash Provided by Financing Activities
289
19,298
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
(33,916
)
(20,855
)
Cash, Cash Equivalents and Restricted Cash - Beginning of Period
80,485
88,322
Cash, Cash Equivalents and Restricted Cash - End of Period
$
46,569
$
67,467
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Period for:
Income taxes
40
—
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Fixed assets included in accounts payable and accrued expenses
100
(223
)
Operating lease right-of-use asset, net
133
—
Operating lease liability
(133
)
—
Common stock issued in payment of interest
1,364
—
Acquisition of Business
Tangible assets, excluding cash and cash equivalents
—
1,346
Intangibles
—
9,711
Goodwill
—
7,835
Deferred tax liability
—
(2,039
)
Contingent consideration
—
(1,082
)
Liabilities assumed
—
(1,885
)
Issuance of common stock for acquisition
—
(2,297
)
Noncontrolling interest
—
(7,510
)
See accompanying notes to the condensed consolidated
financial statements
4
AKOUSTIS TECHNOLOGIES, INC.
Notes to the Condensed Consolidated Financial
Statements
(Unaudited)
Note 1. Organization
Akoustis Technologies, Inc. (the
“Company”) was incorporated on April 10, 2013, and effective December 15, 2016, the Company changed its state of
incorporation to the State of Delaware. Through its wholly-owned subsidiary, Akoustis, Inc. (a Delaware corporation), the Company,
headquartered in Huntersville, North Carolina, is focused on developing, designing, and manufacturing innovative radio frequency
(“RF”) filter products for the wireless industry, including for products such as smartphones and tablets, cellular
infrastructure equipment, Wi-Fi Customer Premise Equipment (“CPE”), and military and defense communication applications.
Located between the device’s antenna and its digital backend, the RF front-end (“RFFE”) is the circuitry that
performs the analog signal processing and contains components such as amplifiers, filters and switches. To construct the resonator
devices that are the building blocks for its RF filters, the Company has developed a family of novel, high purity acoustic
piezoelectric materials as well as a unique microelectromechanical system (“MEMS”) wafer semiconductor process,
collectively referred to as XBAWTM technology. The Company leverages its integrated device manufacturing
(“IDM”) business model to develop and sell high performance RF filters using its XBAWTM technology. Filters
are critical in selecting and rejecting signals, and their performance enables differentiation in the modules defining the RFFE.
Additionally, through RFM Integrated Device, Inc. (“RFMi”), a wholly-owned subsidiary of Akoustis, Inc., the Company
makes sales of complementary surface acoustic wave (“SAW”) resonators, RF filters, crystal (Xtal) resonators and
oscillators, and ceramic products branded as “RFMi” products.
Note 2. Liquidity
As of December 31, 2022, the Company had cash
and cash equivalents of $46.6 million and working capital of $51.5 million. The Company has historically incurred recurring operating
losses and experienced net cash used in operating activities.
On January 19, 2023, the Company closed an underwritten
public offering of 12,545,454 shares of its common stock at a price to the public of $2.75 per share, which included the underwriters’
exercise of their over-allotment option in full, for net proceeds of approximately $32.0 million. See Note 18-Subsequent Events.
The Company expects cash and cash equivalents to be sufficient to fund
its operations beyond the next twelve months from the date of filing of this Form 10-Q. These funds will be used to fund the Company’s
operations, including capital expenditures, R&D, commercialization of its technology, development of its patent strategy and expansion
of its patent portfolio, servicing outstanding debt, potential strategic transactions, as well as to provide working capital and funds
for other general corporate purposes. Except for the $48.0 million of common stock remaining available to be sold under its ATM Sales
Agreement with Oppenheimer & Co. Inc., Craig-Hallum Capital Group LLC, and Roth Capital Partners, LLC, the Company has no commitments
or arrangements to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all.
If the Company is unable to obtain additional
financing in a timely fashion and on acceptable terms, its financial condition and results of operations may be materially adversely
affected and it may not be able to continue operations or execute its stated commercialization plan.
Note 3. Summary of Significant Accounting
Policies
Basis of Presentation
The Company’s unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information
and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual
financial statements. In the opinion of management, all adjustments (consisting of normal accruals) considered necessary for a fair presentation
have been included. The Company has evaluated subsequent events through the filing of this Form 10-Q. Operating results for the quarter
ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending June 30, 2023 or any future
interim period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s
audited consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the SEC on September
12, 2022 (the “2022 Annual Report”).
Principles of Consolidation
The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiaries as of December 31, 2022, Akoustis, Inc. and RFM Integrated Device, Inc.
All significant intercompany accounts and transactions have been eliminated in consolidation.
5
Significant Accounting Policies and Estimates
The Company’s significant accounting
policies are disclosed in Note 3. Summary of Significant Accounting Policies in the 2022 Annual Report. Since the date of the 2022
Annual Report, there have been no material changes to the Company’s significant accounting policies. The preparation of the
unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes
thereto. The policies, estimates and assumptions include valuing equity securities, derivative liabilities, deferred taxes and
related valuation allowances, contingent consideration, goodwill, intangible assets, revenue recognition, and the fair values of
long-lived assets. Actual results could differ from the estimates.
Recently Issued Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated
financial statements.
Note 4. Revenue Recognition from Contracts
with Customers
Disaggregation of Revenue
The Company’s primary revenue streams include
foundry fabrication services and product sales across multiple geographic regions, primarily the Americas, Asia and Europe.
Foundry Fabrication Services
Foundry fabrication services revenue includes MEMS foundry services, which the Company exited in fiscal year 2021, and Non-Recurring
Engineering (“NRE”). Under these contracts, products are delivered to the customer at the completion of the service, which
represents satisfaction of the performance obligation as well as transfer of title. Depending on language with regards to enforceable
right to payment for performance completed to date, related revenue will either be recognized over time or at a point in time.
Product Sales
Product sales revenue consists of sales of RF
filters and amps which are sold with contract terms stating that title passes, and the customer takes control, at the time of shipment.
Revenue is then recognized when the devices are shipped, and the performance obligation has been satisfied. If devices are sold under
contract terms that specify that the customer does not take ownership until the goods are received, revenue is recognized when the customer
receives the goods.
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the three months ended December 31, 2022, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
1,143
$
1,223
$
2,366
Asia
748
1,759
2,507
Europe
—
992
992
Total
$
1,891
$
3,974
$
5,865
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the six months ended December 31, 2022, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
1,849
$
2,136
$
3,985
Asia
975
4,834
5,809
Europe
—
1,628
1,628
Other
—
10
10
Total
$
2,824
$
8,608
$
11,432
6
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the three months ended December 31, 2021, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
249
$
779
$
1,028
Asia
135
1,817
1,952
Europe
—
692
692
Total
$
384
$
3,288
$
3,672
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the six months ended December 31, 2021, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
583
$
876
$
1,459
Asia
213
3,006
3,219
Europe
—
862
862
Total
$
796
$
4,744
$
5,540
Performance Obligations
The Company has determined that contracts for
product sales revenue and foundry fabrication services revenue involve one performance obligation, which is delivery of the final product.
Contract Balances
The following table summarizes the changes in
the opening and closing balances of the Company’s contract asset (included in Other current assets on the Consolidated Balance
Sheet) and contract liability (included as Deferred revenue on the Consolidated Balance Sheet) for the first six months of fiscal years
2023 and 2022 (in thousands):
Contract Assets
Contract Liability
Balance, June 30, 2022
$
908
$
286
Closing, December 31, 2022
2,334
60
Increase/(Decrease)
$
1,426
$
(226
)
Balance, June 30, 2021
$
411
$
41
Closing, December 31, 2021
823
101
Increase/(Decrease)
$
412
$
60
7
The Company records a receivable when the title
for goods has transferred. Generally, all sales are contract sales (with either an underlying contract or purchase order), resulting
in all receivables being contract receivables. When invoicing occurs prior to revenue recognition a contract liability is recorded (as
deferred revenue on the Condensed Consolidated Balance Sheets). The amount of revenue recognized in the six months ended December 31,
2022, that was included in the opening contract liability balance was $286 thousand which related to timing of shipments.
Contract assets are recorded when revenue recognized
exceeds the amount invoiced. The difference between the opening and closing balances of the Company’s contract assets and contract
liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The
amount of contract assets invoiced in the six months ended December 31, 2022, that was included in the opening contract asset balance
was $245 thousand, which primarily related to non-recurring engineering services.
Backlog of Remaining Customer Performance
Obligations
Revenue expected to be recognized and recorded as sales
during the remainder of this fiscal year from the backlog of performance obligations that are unsatisfied (or partially unsatisfied)
at December 31, 2022 was $7.4 million. The Company’s backlog may vary significantly each reporting period based on the timing of
major new contract commitments. In addition, our customers have the right, under some infrequent circumstances, to terminate contracts
or defer the timing of the Company's services and their payments to us.
Note 5: Inventory
Inventory, net of reserves, consisted of the following as of December
31, 2022 and June 30, 2022 (in thousands):
December 31, 2022
June 30, 2022
Raw Materials
$
1,461
$
1,077
Work in Process
3,132
1,061
Finished Goods
1,214
1,956
Total Inventory
$
5,807
$
4,094
Note 6. Property and Equipment, net
Property and equipment, net consisted of the
following as of December 31, 2022 and June 30, 2022 (in thousands):
Estimated
Useful Life
December 31,
2022
June 30,
2022
Land
n/a
$
1,000
$
1,000
Building and leasehold improvements
*
8,782
7,715
Equipment
2-10 years
63,918
57,750
Computer Equipment & Software
3-5 years
2,417
1,966
Total
76,117
68,431
Less: Accumulated Depreciation
(21,648
)
(17,274
)
Total
$
54,469
$
51,157
(*)
Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter. Buildings are amortized on a straight-line basis between 11 and 39 years.
8
The Company recorded depreciation expense of
$2.3 million and $1.6 million for the three months ended December 31, 2022 and 2021, respectively. The Company recorded depreciation
expense of $4.4 million and $3.1 million for the six months ended December 31, 2022 and 2021, respectively.
As of December 31, 2022, equipment with a net book
value totaling $7.0 million had not been placed in service and therefore was not depreciated during the period. As of June 30, 2022, fixed
assets with a net book value totaling $14.5 million had not been placed in service and therefore was not depreciated during the period.
Note 7. Business Acquisition
On October 15, 2021, the Company acquired a majority
ownership position in RFMi, a fabless supplier of acoustic wave RF resonators and filters, to expand product offerings and provide access
to new markets. The Company acquired a 51% ownership interest in RFMi from Tai-Saw Technology Co., Ltd. (“TST”) in exchange
for $6.0 million in cash and approximately $2.3 million payable in common stock of the Company. On April 29, 2022, the Company exercised
its option to acquire the remaining 49% ownership interest in RFMi from TST for an additional $3.5 million in cash and approximately
420,053 shares of common stock of the Company with a fair value at closing of $1.9 million.
Additionally, earn-out payments payable in cash
and/or shares of common stock of the Company may be payable to TST based on the achievement of sales targets for RFMi products in each
of calendar year 2022 and 2023, with potential payouts in the range of $0 to $3.0 million. The initial $1.1 million estimated fair value
of the associated liability was based on the present value of the expected future payouts resulting from the projected RFMi product sales,
applying a volatility rate of 30% against those future projected revenues and using a discount rate of 9.9% and 10.2% for the first and
second earnouts, respectively, and thus represented a Level 3 fair value measurement. The contingent consideration is re-measured to fair
value at each reporting date until the contingency is resolved, and those changes in fair value are recognized in earnings. The Company
has determined that the sales targets for calendar year 2022 were not met and the related earnout payment is not owed. The fair value
of the contingent consideration decreased $1,170 thousand during the six months ended December 31, 2022.
Pro Forma Results
The following unaudited pro forma financial information
summarizes the results of operations for the three and six months ended December 31, 2021 as if the acquisition had been completed as
of July 1, 2021 (in thousands). The pro forma results were calculated applying the Company’s accounting policies and include the
effects of adjustments related to the amortization charges from the acquired intangibles. The unaudited pro forma information does not
purport to be indicative of the results that would have been obtained if the acquisitions had actually occurred at the beginning of the
year prior to acquisition, nor of the results that may be reported in the future.
Three Months Ended
Six Months Ended
December 31,
December 31,
2021
2021
Unaudited Proforma
Unaudited Proforma
Revenues
$
3,914
$
7,596
Net Loss
$
(15,370
)
$
(28,370
)
Net Loss per share
$
(0.29
)
$
(0.54
)
Note 8. Goodwill
The Company performs an annual test for goodwill
impairment during our last fiscal quarter. The Company will also test for impairment between annual test dates if an event occurs or circumstances
change that would indicate the carrying amount may be impaired.
During the six months ended December 31, 2022,
the Company did not identify any events or circumstances that would require an interim goodwill impairment test. The Company does not
amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of goodwill as of December 31, 2022
was $8.1 million.
9
Note 9. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consisted
of the following at December 31, 2022 and June 30, 2022 (in thousands):
December 31, 2022
June 30, 2022
Accounts payable
$
2,602
$
3,630
Accrued salaries and benefits
3,207
4,641
Accrued goods received not invoiced
1,041
1,472
Other accrued expenses
1,594
1,461
Totals
$
8,444
$
11,204
Note 10. Notes Payable
Convertible Senior Notes due 2027
The following table summarizes convertible debt
as of December 31, 2022 (in thousands):
Maturity Date
Stated Interest Rate
Conversion Price
Face Value
Remaining Debt (Discount)
Fair Value of Embedded Derivatives
Carrying Value
Long Term convertible notes payable
6.0% convertible senior notes
06/15/2027
6.00
%
$
4.71
$
44,000
$
(3,008
)
$
2,189
$
43,181
Ending Balance as of December 31, 2022
$
44,000
$
(3,008
)
$
2,189
$
43,181
The following table summarizes convertible debt
as of June 30, 2022 (in thousands):
Maturity Date
Stated Interest Rate
Conversion Price
Face Value
Remaining Debt (Discount)
Fair Value of Embedded Derivatives
Carrying Value
Long Term convertible notes payable
6.0% convertible senior notes
06/15/2027
6.00
%
$
4.71
$
44,000
$
(3,297
)
$
3,028
$
43,731
Ending Balance as of June 30, 2022
$
44,000
$
(3,297
)
$
3,028
$
43,731
Interest expense on the Notes during the three
months ended December 31, 2022 included contractual interest of $660 thousand and debt discount amortization of $146 thousand. Interest
expense on the Notes during the six months ended December 31, 2022 included contractual interest of $1,320 thousand and debt discount
amortization of $290 thousand.
10
Note 11. Concentrations
Customers
Customer concentration as a percentage of revenue
for the three months ended December 31, 2022 and 2021 are as follows:
Three Months 12/31/2022
Three Months 12/31/2021
Customer 1
15
%
22
%
Customer 2
12
%
—
Customer 3
12
%
—
Customer concentration as a percentage of revenue
for the six months ended December 31, 2022 and 2021 are as follows:
Six Months 12/31/2022
Six Months 12/31/2021
Customer 1
21
%
27
%
Customer 2
10
%
—
Customer 3
10
%
—
Customer 4
—
14
%
Customer concentration as a percentage of accounts
receivable at December 31, 2022 and June 30, 2022 are as follows:
December 31, 2022
June 30, 2022
Customer 1
22
%
26
%
Customer 2
15
%
—
Customer 3
12
%
—
Customer 4
—
13
%
Vendors
Vendor concentration as a percentage of purchases
for the six months ended December 31, 2022 and 2021 are as follows:
Six Months 12/31/2022
Six Months 12/31/2021
Vendor 1
10
%
—
Vendor 2
—
17
%
11
Note 12. Equity
Equity Offering Program
On May 2, 2022, the Company entered into an ATM
Sales Agreement with Oppenheimer & Co. Inc., Craig-Hallum Capital Group LLC, and Roth Capital Partners, LLC pursuant to which the
Company may sell from time-to-time shares of its common stock having an aggregate offering price of up to $50,000,000 (the “2022
Equity Offering Program”). On May 25, 2022, the Company announced that it was suspending sales under the 2022 Equity Offering Program.
If, in the future, the Company determines to resume sales pursuant to the 2022 Equity Offering Program, it intends to notify investors
by the filing of a Current Report on Form 8-K or other public announcement.
Equity Incentive Plans
During the six months ended December 31, 2022,
the Company granted employees options to purchase an aggregate of approximately 235 thousand shares of common stock. The fair values of
the Company’s options were estimated at the dates of grant using a Black-Scholes option pricing model with the following assumptions:
Six Months
Ended
December 31,
2022
Exercise price
$
2.83 – 3.57
Expected term (years)
4.00 - 4.75
Volatility
67 – 68
%
Risk-free interest rate
3.77 – 4.59
%
Dividend yield
0
%
Weighted Average Grant Date Fair Value of Options granted during the period
$
1.87
During the six months ended December 31, 2022
the Company awarded certain employees and directors grants of an aggregate of approximately 1.0 million restricted stock units (“RSUs”)
with a weighted average grant date fair value of $3.51. The RSUs will be expensed over the requisite service period. The terms of the
RSUs include vesting provisions based solely on continued service. If the service criteria are satisfied, the RSUs will generally vest
over 4 – 5 years.
During the six months ended December 31, 2022
the Company awarded certain employees grants of an aggregate of approximately 0.39 million restricted stock units with market value appreciation
conditions (“MVSUs”) with a weighted average grant date fair value of $7.86. The MVSUs will be expensed over the requisite
service period. The terms of the MVSUs include vesting provisions based on continued service. The number of shares of the Company’s
common stock earned at vesting is based on the Company’s stock price performance with amounts earned subject to a vesting multiplier
ranging from 0% to 200%. If the service criteria are satisfied, the MVSUs will vest over 3 years.
12
Compensation expense related to our stock-based
awards described above was as follows (in thousands):
Three Months Ended December 31,
Six Months Ended December 31,
2022
2021
2022
2021
Research and Development
$
883
$
1,716
$
2,051
$
2,948
General and Administrative
1,012
1,184
2,193
2,300
Total
$
1,895
$
2,900
$
4,244
$
5,248
Unrecognized stock-based compensation expense
and weighted-average years to be recognized are as follows (in thousands):
As of December 31, 2022
Unrecognized stock-based compensation
Weighted- average years to be recognized
Options
$
2,597
2.07
Restricted stock units
$
11,607
2.32
Note 13. Commitments and Contingencies
Leases
The Company leases office space in Huntersville,
NC, Carrollton, Texas and Taiwan and leases equipment in Canandaigua, NY. Its leases have remaining lease terms of up to five years, some
of which include options to extend the leases for up to twenty-four months. Following adoption of ASC 842, lease expense excludes capital
area maintenance and property taxes. During the three months ended December 31, 2022, the lease pertaining to the office space in Carrollton,
Texas was extended for an additional five years. This resulted in the remeasurement of the respective right of use asset and corresponding
right of use liability.
The components of lease expense were as follows:
Three
Months
Ended
December 31,
2022
Three
Months
Ended
December 31,
2021
Six
Months
Ended
December 31,
2022
Six
Months
Ended
December 31,
2021
Operating Lease Expense
$
106
$
82
$
201
$
157
Supplemental balance sheet information related
to leases was as follows (in thousands):
Classification on the Condensed Consolidated Balance Sheet
December 31, 2022
June 30, 2022
Assets
Operating lease assets
Other non-current assets
$
1,088
$
1,126
Liabilities
Operating lease liabilities
Current liabilities
271
313
Operating lease liabilities
Long term liabilities
833
811
Weighted Average Remaining Lease Term:
Operating leases
3.54Years
3.42 Years
Weighted Average Discount Rate:
Operating leases
11.30
%
10.03
%
13
The following table outlines the minimum future
lease payments for the next five years and thereafter, (in thousands):
For the year ending June 30,
2023
$
189
2024
378
2025
389
2026
242
Thereafter
167
Total lease payments (undiscounted cash flows)
1,365
Less imputed interest
(261
)
Total
$
1,104
Note 14. Commitments and Contingencies
Ontario County Industrial Development Authority
Agreement
On February 27, 2018, the Company entered into
a Lease and Project Agreement (the “Lease and Project Agreement”) and a Company Lease Agreement (the “Company Lease
Agreement” and together with the Lease and Project Agreement, the “Agreements”), each dated as of February 1, 2018,
with the Ontario County Industrial Development Agency, a public benefit corporation of the State of New York (the “OCIDA”).
Pursuant to the Agreements, the Company will lease for $1.00 annually to the OCIDA an approximately 9.995 acre parcel of land in Canandaigua,
New York, together with the improvements thereon (including the Company’s New York fabrication facility), and transfer title to
certain related equipment and personal property to the OCIDA (collectively, the “Facility”). The OCIDA will lease the Facility
back to the Company for annual rent payments specified in the Lease and Project Agreement for the Company’s primary use as research
and development, manufacturing, warehouse and professional office space in its business, and to be subleased, in part, by the Company
to various existing tenants. The Company estimates substantial tax savings during the term of the Agreements, which expire on December
31, 2028. In addition, subject to the terms of the Lease and Project Agreement, certain purchases and leases of eligible items will be
exempt from the imposition of sales and use taxes. Subject to the terms of the Lease and Project Agreement, the OCIDA has also granted
to the Company an exemption from certain mortgage recording taxes for one or more mortgages securing an aggregate principal amount not
to exceed $12.0 million, or such greater amount as approved by the OCIDA in its sole and absolute discretion. Benefits totaling approximately
$0.3 million provided to the Company through December 31, 2022 pursuant to the terms of the Lease and Project Agreement are subject to
claw back over the life of the Agreements upon certain recapture events, including certain events of default.
Litigation, Claims and Assessments
On October 4, 2021, the Company was named as a defendant
in a complaint filed by Qorvo, Inc. in the United States District Court for the District of Delaware alleging, among other things, patent
infringement, false advertising, false patent marking, and unfair competition. The complaint alleges that the defendants misappropriated
proprietary information, made misleading statements about the characteristics of certain of its products, and sold products infringing
on certain of the plaintiff’s patents. The plaintiff seeks an injunction enjoining the Company from the alleged infringement and
damages, including punitive and statutory enhanced damages, in an unspecified amount. The Company filed a motion to dismiss all of the
claims other than the direct patent infringement claims, but the court permitted the plaintiff to file an amended complaint which the
court subsequently determined was sufficient for pleading purposes. The Court dismissed the Company’s motion in May 2022. The Court
held a claims construction hearing in November 2022. At present the Company believes this lawsuit is without merit and intends to defend
against it vigorously. However, the Company can provide no assurance as to the outcome of such dispute, and such action may result in
judgments against the Company for an injunction, significant damages or other relief, such as future royalty payments to Qorvo, Inc. or
restrictions on certain of the Company’s activities. Resolution of such matter may be prolonged and costly, and the ultimate result
or judgment is uncertain due to the inherent uncertainty in litigation and other proceedings. Even if ultimately settled or resolved in
the Company’s favor, this and other possible future actions may result in significant expenses, diversion of management and technical
personnel attention and disruptions and delays in the Company’s business and product development, and other collateral consequences,
all of which could have a material adverse effect on its business, financial condition and results of operations. Any out-of-court settlement
of this or other actions may also have an adverse effect on the Company’s business, financial condition and results of operations,
including, but not limited to, substantial expenses, the payment of royalties, licensing or other fees payable to third parties, or restrictions
on its ability to develop, manufacture and sell its products.
From time to time, the Company may become involved
in lawsuits, investigations and claims that arise in the ordinary course of business. The Company believes it has meritorious defenses
against all pending claims and intends to vigorously pursue them. While it is not possible to predict or determine the outcomes of any
pending actions, the Company believes the amount of liability, if any, with respect to such actions, would not materially affect its financial
position, results of operations or cash flows.
14
Tax Credit Contingency
The Company accrues a liability for indirect tax
contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount
of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal
counsel and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes
of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be
recorded in the period in which such determination is made.
The Company’s gross unrecognized indirect
tax credits totaled $0.1 million as of December 31, 2022 and $0.1 million as of June 30, 2022 and are recorded on the Consolidated Balance
Sheet as a long-term liability.
Note 15. Segment Information
Operating segments are defined as components of
an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker, or
decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision
maker is its Chief Executive Officer. The Company operates in two segments, Foundry Fabrication Services, which consists of engineering
review services and STC-MEMS foundry services, and RF Filters, which consists of amplifier and filter product sales, and grant revenue.
The Company records all general and administrative costs in the RF Filters segment.
The Company evaluates performance of its operating
segments based on revenue and operating profit (loss). Segment information for the three and six months ended December 31, 2022 and 2021
are as follows (in thousands):
Foundry Fabrication Services
RF Filters
Total
Three months ended December 31, 2022
Revenue
$
1,891
$
3,974
$
5,865
Cost of revenue
1,126
4,148
5,274
Gross margin
765
(174
)
591
Research and development
—
7,645
7,645
General and administrative
—
5,838
5,838
Income (Loss) from Operations
$
765
(13,657
)
(12,892
)
Three months ended December 31, 2021
Revenue
$
384
$
3,288
$
3,672
Cost of revenue
377
4,172
4,549
Gross margin
7
(884
)
(877
)
Research and development
—
9,192
9,192
General and administrative
—
5,146
5,146
Income (Loss) from Operations
$
7
(15,222
)
(15,215
)
Six months ended December 31, 2022
Revenue
$
2,823
$
8,609
$
11,432
Cost of revenue
2,018
9,709
11,727
Gross margin
805
(1,100
)
(295
)
Research and development
—
17,730
17,730
General and administrative
—
12,833
12,833
Income (Loss) from Operations
$
805
(31,663
)
(30,858
)
Six months ended December 31, 2021
Revenue
$
796
$
4,744
$
5,540
Cost of revenue
947
6,504
7,451
Gross margin
(151
)
(1,760
)
(1,911
)
Research and development
—
17,166
17,166
General and administrative
—
9.022
9,022
Income (Loss) from Operations
$
(151
)
(27,948
)
(28,099
)
As of December 31, 2022
Accounts receivable
$
89
$
3,072
$
3,171
Property and equipment, net
—
54,469
54,469
As of June 30, 2022
Accounts receivable
$
572
$
3,221
$
3,793
Property and equipment, net
—
51,157
51,157
15
Note 16. Loss Per Share
Basic net loss per common share is computed by
dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted
net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for
the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three and six months ended
December 31, 2022 and December 31, 2021 presented in these condensed consolidated financial statements, the weighted-average number of
common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.
The Company had the following common stock equivalents
at December 31, 2022 and 2021:
December 31, 2022
December 31, 2021
Convertible Notes
9,341,825
—
Options
3,217,400
2,981,627
Warrants
41,103
158,759
Total
12,600,328
3,140,386
Note 17. Fair Value Measurement
Fair value is defined as the price that would
be received upon selling an asset or the price paid to transfer a liability on the measurement date. It focuses on the exit price in the
principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. A three-tier
fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in
measuring fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.
The three levels of inputs used to measure fair values are as follows:
Level 1: Observable prices in active
markets for identical assets and liabilities.
Level 2: Observable inputs other than
quoted prices in active markets for identical assets and liabilities.
Level 3: Unobservable inputs that are
supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
The following table classifies the liabilities
measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2022:
Fair value at December 31, 2022
Level 1
Level 2
Level 3
Contingent consideration
$
276
$
—
$
—
$
276
Derivative liabilities
2,189
—
—
2,189
Total fair value
$
2,465
$
—
$
—
$
2,465
The following table classifies the liabilities
measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2022:
Fair value at June 30, 2022
Level 1
Level 2
Level 3
Contingent consideration
$
1,446
$
—
$
—
$
1,446
Derivative liabilities
3,028
—
—
3,028
Total fair value
$
4,474
$
—
$
—
$
4,474
The following table sets forth a summary of the
changes in the fair value of Level 3 contingent consideration that are measured at fair value on a recurring basis:
Contingent consideration
December 31, 2022
Beginning balance
$
1,446
Initial fair value of contingent consideration
—
Change in fair value of contingent consideration
(1,170
)
Ending balance
$
276
There were no transfers between Level 1, 2, or
3 valuation classifications during the three or six months ended December 31, 2022.
16
The fair value of contingent consideration liabilities
that was classified as Level 3 in the table above was estimated using a Monte Carlo simulation in an option pricing framework with significant
inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant
inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future sales revenue
of RFMi products in calendar year 2023 and the volatility of those revenues, appropriately discounted considering the uncertainties associated
with the obligation, and as calculated in accordance with the terms of the acquisition agreements. The development and determination of
the unobservable inputs for Level 3 fair value measurements and the fair value calculations are the responsibility of the Company’s
chief financial officer and are approved by the chief executive officer.
The fair value of the contingent consideration
liabilities on December 31, 2022 and June 30, 2022 were valued with the following assumptions:
December 31, 2022
June 30, 2022
Discount Rate
12.5
%
14.3% – 14.5
%
Revenue volatility
30
%
30
%
Risk free interest rate
4.65
%
1.71% – 3.04
%
Remaining term (years)
1.08
0.59 – 1.58
The following table sets forth a summary of the
changes in the fair value of Level 3 derivative liabilities that are measured at fair value on a recurring basis:
Fair Value of Embedded Derivatives
December 31, 2022
Beginning balance
$
3,028
Initial fair value of make-whole provision in convertible notes
—
Initial fair value of change in control provision in convertible notes
—
Change in fair value of convertible note derivatives
(839
)
Ending balance
$
2,189
The fair value of the embedded derivatives in
our convertible notes that were classified as Level 3 in the table above were estimated using a with and without approach on a lattice
model framework with significant inputs that are not observable in the market and thus represent a Level 3 fair value measurement as defined
in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability and timing assessments
of expected future change of control events, the volatility of our share price and the discount rate used to present value future cash
payments under the convertible debt obligation. The development and determination of the unobservable inputs for Level 3 fair value measurements
and the fair value calculations are the responsibility of the Company’s chief financial officer and are approved by the chief executive
officer.
The fair value of the embedded derivatives in
our convertible notes as of December 31, 2022 and June 30, 2022 were valued with the following assumptions:
December 31,
2022
June 30,
2022
Stock Price
$
2.82
$
3.70
Volatility of stock price
70
%
70
%
Risk free interest rate
4.05
%
3.01
%
Debt yield
39.4
%
41.5
%
Remaining term (years)
4.5
5.0
Note 18. Subsequent Events
Acquisition of Grinding & Dicing Services,
Inc.
On January 1, 2023 (the “Closing Date”),
Akoustis Technologies, Inc. (the “Company”) and its wholly-owned subsidiary, Akoustis, Inc. (the “Purchaser”),
entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Grinding & Dicing Services, Inc. (“GDSI”)
and the stockholders of GDSI (the “Sellers”). Pursuant to the Purchase Agreement, the Purchaser acquired all of the outstanding
capital stock of GDSI (such acquisition, the “Transaction”).
The total consideration paid to the Sellers at closing
of the Transaction consisted of $14.0 million in cash, approximately $1.7 million of shares of the Company’s common stock and a
secured promissory note in the original principal amount of $4.0 million issued by the Purchaser to the Sellers’ representative
(the “Note”). The Note does not bear interest, is subject to partial prepayment (reduction of the outstanding principal amount
down to $1.3 million) on the second anniversary of the Closing Date, and is payable in full on the third anniversary of the Closing Date.
The Purchaser can reduce the principal amount of the Note (i) to satisfy certain post-closing adjustments to the Transaction purchase
price, (ii) to satisfy the Sellers’ indemnification obligations under the Purchase Agreement, and (iii) if GDSI’s President
is terminated for cause or due to disability or resigns without good reason prior to maturity. The Note is secured by certain of the Purchaser’s
and GDSI’s assets. In the event of certain events of default, including failure to pay amounts due under the Note and certain bankruptcy
events, the outstanding principal amount of the Note will become immediately due.
Underwritten Offering of Common Stock
On January 19, 2023, the Company closed an underwritten
public offering of 12,545,454 shares of its common stock at a price to the public of $2.75 per share pursuant to an underwriting agreement
with B. Riley Securities, Inc., as representative of the several underwriters named therein. The shares of common stock issued at closing
included 1,636,363 shares issued pursuant to the underwriters’ over-allotment option, which was exercised in full. Net proceeds
from the offering were approximately $32.0 million. Certain of the Company’s directors and officers participated in the offering
by purchasing shares on the same terms and conditions as other investors.
17
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report to “Akoustis,”
the “Company,” “we,” “us,” and “our” refer to Akoustis Technologies, Inc. and its consolidated
subsidiaries.
This quarterly report on Form 10-Q contains forward-looking
statements that relate to our plans, objectives, estimates, and goals. Any and all statements contained in this report that are not statements
of historical fact may be deemed to be forward-looking statements. Terms such as “may,” “might,” “would,”
“should,” “could,” “project,” “estimate,” “predict,” “potential,”
“strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,”
“believe,” “continue,” “intend,” “expect,” “future,” and terms of similar
import (including the negative of any of the foregoing) may identify forward-looking statements. However, not all forward-looking statements
may contain one or more of these identifying terms. Forward-looking statements in this report may include, without limitation, statements
regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the development
of commercially viable radio frequency (“RF”) filters, (ii) projections of income (including income/loss), earnings (including
earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance,
including any such statement contained in this management’s discussion and analysis of financial condition or in the results of
operations included pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), (iv) our
ability to efficiently utilize cash and cash equivalents to support our operations for a given period of time, (v) our ability to engage
customers while maintaining ownership of our intellectual property, and (vi) the assumptions underlying or relating to any statement described
in (i), (ii), (iii), (iv) or (v) above.
Forward-looking statements are not meant to predict
or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections,
plans, objectives, beliefs, expectations, estimates, and assumptions and are subject to a number of risks and uncertainties and other
influences, many of which are beyond our control. Actual results and the timing of certain events and circumstances may differ materially
from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute
to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may
include, without limitation, our inability to obtain adequate financing and sustain our status as a going concern; our limited operating
history; our inability to generate revenues or achieve profitability; the results of our research and development (“R&D”)
activities; our inability to achieve acceptance of our products in the market; the impact of the COVID-19 pandemic on our operations,
financial condition and the worldwide economy, including its impact on our ability to access the capital markets; increases in prices
for raw materials, labor, and fuel caused by rising inflation; general economic conditions, including upturns and downturns in the industry;
shortages in supplies needed to manufacture our products, or needed by our customers to manufacture devices incorporating our products;
our limited number of patents; failure to obtain, maintain, and enforce our intellectual property rights; claims of infringement,
misappropriation or misuse of third party intellectual property, including the lawsuit filed by Qorvo, Inc. in October 2021, that, regardless
of merit, could result in significant expense and loss of our intellectual property rights; our inability to attract and retain qualified
personnel; the outcome of current and any future litigation; our inability to attract and retain qualified personnel; our reliance on
third parties to complete certain processes in connection with the manufacture of our products; product quality and defects; existing
or increased competition; our ability to market and sell our products; our inability to successfully manufacture, market and sell products
based on our technologies; our ability to meet the required specifications of customers and achieve qualification of our products for
commercial manufacturing in a timely manner; our inability to successfully scale our New York wafer fabrication facility and related operations
while maintaining quality control and assurance and avoiding delays in output; contracting with customers and other parties with greater
bargaining power and agreeing to terms and conditions that may adversely affect our business; the possibility that the anticipated benefits
from our business acquisitions (including the acquisition of RFM Integrated Device, Inc. (“RFMi”) and Grinding & Dicing
Services, Inc. (“GDSI”)) will not be realized in full or at all or may take longer to realize than expected; the possibility
that costs or difficulties related to the integration of acquired businesses’ (including RFMi’s and GDSI’s) operations
will be greater than expected and the possibility of disruptions to our business during integration efforts and strain on management time
and resources; risks related to doing business in foreign countries, including China; any security breaches, cyber-attacks or other disruptions
compromising our proprietary information and exposing us to liability; our failure to innovate or adapt to new or emerging technologies;
our failure to comply with regulatory requirements; results of any arbitration or litigation that may arise; stock volatility and illiquidity;
our failure to implement our business plans or strategies; our failure to maintain effective internal control over financial reporting;
our failure to obtain or maintain a Trusted Foundry accreditation or our New York fabrication facility; and shortages in supplies needed
to manufacture our products, or needed by our customers to manufacture devices incorporating our products.
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These and other risks and uncertainties, which
are described in more detail in Part II, Item 1A. “Risk Factors” of this report and in our Annual Report on Form 10-K, filed
with the SEC on September 12, 2022 (the “2022 Annual Report”), could cause our actual results to differ materially from those
expressed or implied by the forward-looking statements in this report. Readers are cautioned not to place undue reliance on forward-looking
statements because of the risks and uncertainties related to them. Except as may be required by law, we do not undertake any obligation
to update the forward-looking statements contained in this report to reflect any new information or future events or circumstances or
otherwise.
Overview
Akoustis® is an emerging commercial product company
focused on developing, designing, and manufacturing innovative RF filter solutions for the wireless industry, including for products such
as smartphones and tablets, network infrastructure equipment, Wi-Fi Customer Premise Equipment (“CPE”) and defense applications.
Filters are critical in selecting and rejecting signals, and their performance enables differentiation in the modules defining the RF
front-end (“RFFE”). Located between the device’s antenna and its digital backend, the RFFE is the circuitry that performs
the analog signal processing and contains components such as amplifiers, filters and switches. We have developed a proprietary microelectromechanical
system (“MEMS”) based bulk acoustic wave (“BAW”) technology and a unique manufacturing process flow, called “XBAW®”,
for our filters produced for use in RFFE modules. Our XBAW® filters incorporate optimized high purity piezoelectric materials
for high power, high frequency and wide bandwidth operation. We are developing RF filters for 5G, Wi-Fi and defense bands using our proprietary
resonator device models and product design kits (PDKs). As we qualify our RF filter products, we are engaging with target customers to
evaluate our filter solutions. Our initial designs target UHB, sub 7 GHz 5G, Wi-Fi and defense bands. We expect our filter solutions will
address problems (such as loss, bandwidth, power handling, and isolation) created by the growing number of frequency bands in the RFFE
of mobile devices, infrastructure and premise equipment to support 5G, and Wi-Fi. We have prototyped, sampled and begun commercial shipment
of our single-band low loss BAW filter designs for 5G frequency bands and 5 GHz and 6 GHz Wi-Fi bands which are suited to competitive
BAW solutions and historically cannot be addressed with low-band, lower power handling surface acoustic wave (“SAW”) technology.
Additionally, through our wholly owned subsidiary, RFMi, which we acquired majority ownership in October 2021 and full ownership in April
2022, we operate a fabless business whereby we make sales of complementary SAW resonators, RF filters, crystal (“Xtal”) resonators
and oscillators, and ceramic products—addressing opportunities in multiple end markets, such as automotive and industrial applications.
We also offer back-end semiconductor supply chain services through our wholly owned subsidiary, Grinding & Dicing Services, Inc.,
which we acquired in January 2023.
We own and/or have filed applications for patents
on the core resonator device technology, manufacturing facility and intellectual property (“IP”) necessary to produce our
RF filter chips and operate as a “pure-play” RF filter supplier, providing discrete filter solutions direct to Original Equipment
Manufacturers (“OEMs”) and aligning with the front- end module manufacturers that seek to acquire high performance filters
to expand their module businesses. We believe this business model is the most direct and efficient means of delivering our solutions to
the market.
Technology. Our device technology
is based upon bulk-mode acoustic resonance, which we believe is superior to surface-mode resonance for high-band and ultra-high- band
(“UHB”) applications that include 4G/LTE, 5G, Wi-Fi, and defense applications. Although some of our target customers utilize
or manufacture the RFFE module, they may lack access to critical UHB filter technology that we produce, which is necessary to compete
in high frequency applications.
Manufacturing. We currently
manufacture Akoustis’ high-performance RF filter circuits, using our first generation XBAW® wafer process, in our
125,000-square foot wafer-manufacturing facility located in Canandaigua, New York (the “NY Facility”), which we acquired in
June 2017. Our SAW-based RF filter products are manufactured by a third party and sold either directly or through a sales distributor.
Intellectual Property. As of January 27, 2023, our IP portfolio included 80 patents, including
a blocking patent that we have licensed from Cornell University. Additionally, as of January 27, 2023, we have 127 pending patent applications.
These patents cover our XBAW® RF filter technology from raw materials through the system architectures.
By designing, manufacturing, and marketing our
RF filter products to mobile phone OEMs, defense OEMs, network infrastructure OEMs, and Wi-Fi CPE OEMs, we seek to enable broader competition
among the front-end module manufacturers.
Since we own and/or have filed applications for
patents on the core technology and control access to our intellectual property, we expect to offer several ways to engage with potential
customers. First, we intend to engage with multiple wireless markets, providing standardized filters that we design and offer as standard
catalog components. Second, we expect to deliver unique filters to customer-supplied specifications, which we will design and fabricate
on a customized basis. Finally, we may offer our models and design kits for our customers to design their own filters utilizing our proprietary
technology.
We expect to continue to incur substantial costs
for commercialization of our technology on a continuous basis because our business model involves materials and solid-state device technology
development and engineering of catalog and custom filter design solutions. To succeed across our combined portfolio of Akoustis, XBAW,
and RFMi products, we must convince customers in a wide range of industries including mobile phone OEMs, RFFE module manufacturers, network
infrastructure OEMs, WiFi CPE OEMs, medical device makers, automotive and defense customers to use our products in their systems and modules.
For example, since there are two dominant BAW filter suppliers in the industry that have high-band technology, and both utilize such technology
as a competitive advantage at the module level, we expect customers that lack access to high-band filter technology will be open to engage
with our company for XBAW filters.
19
To help drive our XBAW filter business, we plan
to continue to pursue RF filter design and R&D development agreements and potentially joint ventures with target customers and other
strategic partners, although we cannot guarantee we will be successful in these efforts. These types of arrangements may subsidize technology
development costs and qualification, filter design costs, and offer complementary technology and market intelligence and other avenues
to revenue. However, we intend to retain ownership of our core XBAW technology, intellectual property, designs, and related improvements.
Across our combined portfolio of Akoustis, XBAW, and RFMi products, we expect to continue development of catalog designs for multiple
customers and to offer such catalog products in multiple sales channels.
Business Environment and Current Trends
Impact of COVID-19 on our Business
Although the ultimate impact of the COVID-19 pandemic
on our business is unknown, in an effort to protect the health and safety of our employees, we have taken proactive, precautionary action,
including when warranted by state and local guidelines. Our actions continue to evolve in response to new government measures and scientific
knowledge regarding COVID-19. In an effort to contain COVID-19 or slow its spread, governments around the world have also enacted various
measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence,
and practice social distancing when engaging in essential activities. These measures have impacted the method and timing of certain business
meetings and deliverables to certain customers, as well as our ability to obtain certain materials, equipment and services from suppliers.
These actions and the global health crisis caused
by COVID-19 have negatively impacted business activity across the globe. We have observed declining demand and price reductions in the
electronics industry as business and consumer activity has decelerated. Additionally, COVID-19 has contributed to some of the delays we
have observed in certain suppliers’ shipment of materials necessary for us to manufacture our products and in certain vendors’
ability to deliver equipment for installation at our facilities. When COVID-19 is demonstrably contained, we anticipate that its effects
on global commerce will subside; however, the timing and extent of this is uncertain. We will continue to actively monitor the situation
and may take further actions altering our business operations that we determine are in the best interests of our employees, customers,
partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the ultimate effects
any such alterations or modifications may have on our business, including the effects on our customers, employees, and prospects, or on
our financial results for the remainder of fiscal year 2023 or beyond.
Semiconductor Shortages and Supply Chain Issues
The global silicon semiconductor industry is experiencing
a shortage in supply and difficulties in ability to meet customer demand. This shortage has led to an increase in lead-times of production
of semiconductor chips and components. As our business depends in significant part upon manufacturers of products requiring semiconductors,
as well as the current and anticipated production of these products, we have sought to manage the impact of supply shortages though carefully
maintaining and increasing key inventory levels. In some cases, we have incurred higher costs to secure available inventory, or have extended
our purchase commitments or placed non-cancellable orders with suppliers, which introduces inventory risk if our forecasts and assumptions
are inaccurate. We believe the global supply chain challenges and their adverse impact on our business and financial results will persist
through calendar year 2023. We expect these constrained supply conditions to increase our costs of goods sold and increase uncertainty
with respect to the timing of delivery of specific customer orders.
Effects of Inflation and Recession Fears
Inflation and other macroeconomic pressures in
the U.S. and the global economy such as rising interest rates, energy prices and recession fears are creating a complex and challenging
business environment. Inflationary pressures, including increased costs of labor and goods included in our supply chain, have negatively
impacted our revenue, operating margins and net income and may continue to do so through the remainder of the fiscal year. Additionally,
we have observed certain customers reduce or defer orders, citing negative economic forecasts.
Recent Legislation
On August 9, 2022, President Biden signed into
law the CHIPS and Science Act of 2022, which appropriates funds to support the construction of semiconductor plants in the United States
and advancement of United States semiconductor research and development. The Company is evaluating the provisions of the new law and its
potential impact to the Company.
20
Recent Developments
On October 4, 2022, we announced that we had started
sampling two new Wi-Fi 6E and Wi-Fi 7 filter solutions.
On October 6, 2022, we announced that we had become a charter member
of the Semiconductor Industry Association.
On October 26, 2022, we announced that we had
received three new Wi-Fi 6E design wins for carrier-class applications.
On November 21, 2022, we announced that we had joined the Wi-Fi NOW
industry association as an official filter partner.
On December 21, 2022, we announced the completion
of qualification of our internally developed wafer-level-packaging (WLP) technology for the 5G mobile, Wi-Fi, timing control, and other
markets.
On December 28, 2022, we announced our first design
win in 5G mobile from Tier-1 RF component company customer.
On January 4, 2023, we announced the acquisition
of GDSI, a U.S.-based, trusted supplier of semiconductor back-end supply chain services.
On January 18, 2023, we announced that we had
received our first high-volume 5G mobile XBAW filter order from a Tier-1 RF component company.
On January 25, 2023, we announced the closing
of a public offering of common stock and full exercise of the underwriters’ option to purchase additional shares.
Critical Accounting Policies
There have been no material changes to our critical
accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” included in our 2022 Annual Report.
Results of Operations
Three Months Ended December 31, 2022 and
2021
Revenue
The Company recorded revenue of $5.9 million for
the three months ended December 31, 2022 as compared to $3.7 million for the three months ended December 31, 2021. The increase of $2.2
million, or 60%, was primarily due to an increase in foundry fabrication service revenue by $1.5 million or 420% as well as an increase
in filter product revenue by $0.7 million or 20%.
Cost of Revenue
Cost of revenue includes direct labor, material,
net realizable value (NRV) adjustments, and facility costs primarily associated with foundry services revenue, manufacturing of filter
products and engineering services. The Company recorded cost of revenue of $5.3 million for the three months ended December 31, 2022 as
compared to $4.5 million for the three months ended December 31, 2021. The $0.8 million increase is primarily due to costs associated
with foundry fabrication services, which increased by $0.7 million.
Research and Development Expenses
R&D expenses were $7.6 million for the three
months ended December 31, 2022, as compared to $9.2 million for the three months ended December 31, 2021, a decrease of $1.6 million or
17.4%. The decrease was driven by lower personnel costs, including stock-based compensation, which were $3.8 million compared to $5.3
million in the prior year period, a decrease of $1.5 million or 28.3%.
General and Administrative Expense
General and administrative (“G&A”)
expenses include salaries and wages for executive and administrative staff, stock-based compensation, professional fees, insurance costs
and other general costs associated with the administration of our business. G&A expenses for the three months ended December 31, 2022
were $5.8 million, which is an increase of $0.7 million compared to the $5.1 million for the three months ended December 31, 2021. Year-over-year
changes within G&A expenses include a decrease in employee compensation (including stock-based compensation) of $0.5 million. This
decrease was offset by an increase in general expenses of $1.2 million, primarily professional fees and intangible amortization.
21
Other (Expense)/Income
Other income for the three months ended December
31, 2022 was $1.7 million, compared to other income of $28 thousand for the three months ended December 31, 2021. The income increase
of $1.7 million was comprised of interest expense of $0.7 million offset by a gain on the value of contingent consideration of $1.6 million
and a gain on the value of derivative liabilities of $0.8 million.
Net Loss
The Company recorded a net loss of $11.2 million
for the three months ended December 31, 2022, compared to a net loss of $15.2 million for the three months ended December 31, 2021. The
period-over-period change of $4.0 million, or 26.3%, was primarily driven by an increase in revenue of $2.2 million as well as a decrease
in R&D expenses of $1.5 million and an increase in other income of $1.7 million. These expense decreases were partially offset by
an increase in G&A expenses of $0.5 million and an increase in cost of revenue of $0.7 million.
Six Months Ended December 31, 2022 and 2021
Revenue
The Company recorded revenue of $11.4 million
for the six months ended December 31, 2022 as compared to $5.5 million for the six months ended December 31, 2021. The increase of $5.9
million was primarily due to an increase in RF filter product revenue of $3.9 million or 81%, which includes revenue from sales of RFMi
products. In addition, revenue from foundry fabrication services increased by $2.0 million or 264%.
Cost of Revenue
Cost of revenue includes direct labor, material,
net realizable value (NRV) adjustments, and facility costs primarily associated with foundry services revenue, manufacturing of filter
products and engineering services. The Company recorded cost of revenue of $11.7 million for the six months ended December 31, 2022 as
compared to $7.5 million for the six months ended December 31, 2021. The $4.2 million increase is primarily due to costs associated with
RF product revenue which increased by $3.2 million, which includes cost of revenue from sales of RFMi products. In addition, costs related
to foundry fabrication services increased by $1.1 million or 113%.
Research and Development Expenses
R&D expenses were $17.7 million for the six
months ended December 31, 2022, as compared to $17.2 million for the six months ended December 31, 2021, an increase of $0.5 million or
2.9%. Personnel costs, including stock-based compensation, were $9.1 million compared to $9.5 million in the prior year period, a decrease
of $0.4 million or 4.2%. R&D material costs were $4.7 million, 26.6% higher than the prior period.
General and Administrative Expense
G&A expenses include salaries and wages for
executive and administrative staff, stock-based compensation, professional fees, insurance costs and other general costs associated with
the administration of our business. G&A expenses for the six months ended December 31, 2022 were $12.8 million, which is an increase
of $3.8 million compared to the $9.0 million for the six months ended December 31, 2021. Year-over-year changes within G&A expenses
include an increase in general expenses of $3.8 million, primarily professional fees and intangible amortization.
22
Other (Expense)/Income
Other income for the six months ended December
31, 2022 was $0.6 million, compared to other income of $62 thousand for the six months ended December 31, 2021. The income increase of
$0.5 million was comprised of an increase in interest expense of $1.5 million offset by a gain on the value of contingent consideration
of $1.2 million and a gain on the value of derivative liabilities of $0.8 million.
Net Loss
The Company recorded a net loss of $30.2 million
for the six months ended December 31, 2022, compared to a net loss of $28.1 million for the six months ended December 31, 2021. The period-over-period
increase of $2.1 million, or 14%, was primarily driven by an increase in cost of revenue of $4.3 million, an increase in G&A expenses
and R&D expenses of $4.2 million. These expense increases were partially offset by an increase in other income of $0.5 million and
an increase in revenue of $5.9 million.
Liquidity and Capital Resources
Overview
The Company’s short-term and long-term liquidity
requirements primarily arise from funding (i) research and development expenses, (ii) G&A expenses including salaries, bonuses, commissions
and stock-based compensation, (iii) working capital requirements, (iv) business acquisitions and investments we may make from time to
time, including potential performance based payments related to our acquisition of RFMi, and a note payable issued in connection with
our acquisition of GDSI, and (v)interest and principal payments related to our $44.0 million aggregate principal amount of outstanding
convertible notes. Additionally, in the near-term, the Company makes capital expenditures in connection with the expansion of the capacity
of its manufacturing facility in Canandaigua, New York.
The Company has incurred losses and negative cash
flow from operations since inception. Our operations thus far have been funded primarily with sales of equity and debt securities, as
well as contract research and government grants, foundry services and engineering services. We expect our operating expenditures to continue
to increase to support future growth of our manufacturing capabilities and expansion of our product offerings, as well as an increase
in research and development and headcount costs to support this growth. We believe we currently have sufficient resources to fund operations
and planned investments for at least the next twelve months. However, until we are able to generate sufficient cash flow from operations
to achieve and maintain profitability and meet our obligations as they come due, we may need to raise additional capital to support our
business. In June 2022, we completed an offering of convertible notes resulting in net proceeds to the Company of $43.7 million. In January
2023, we completed a public offering of our common stock raising $32.0 million in net proceeds. Also in January 2023, approximately $14
million in cash was paid to the sellers in the GDSI acquisition as mentioned in Footnote 18. Additionally, the Company estimates that
approximately $5.0 million of additional cash is needed to complete construction in progress assets that are currently not in service.
We also have access to an at-the-market offering program pursuant to which we may sell up to $50 million of Common Stock. As of the date
of this Quarterly Report, the Company had sold $2.0 million of Common Stock under such at-the-market offering program and previously announced
that it was suspending sales under the at-the-market offering program. If, in the future, the Company determines to resume sales under
the at-the-market offering program, it intends to notify investors by the filing of a Current Report on Form 8-K or other public announcement.
Balance Sheet and Working Capital
The Company had $46.6 million of cash and cash
equivalents on hand as of December 31, 2022, which reflects a decrease of $33.9 million compared to $80.5 million as of June 30, 2022.
The decrease is primarily due to cash used in operations of $26.1 million and cash used for investing activities of $8.1 million. The
Company estimates that cash on hand will be sufficient to fund its operations, including current capital expense commitments, beyond the
next twelve months from the date of filing of this Form 10-Q. However, the Company has historically incurred recurring operating losses
and will continue to do so until it generates sufficient revenues from operations; as a result, we may need to obtain additional capital
through the sale of additional equity securities, debt, or otherwise, to fund operations past that date. There is no assurance that the
Company’s projections and estimates are accurate. The Company is actively managing and controlling its cash outflows to mitigate
liquidity risks.
December 31, 2022 compared to June 30, 2022
As of December 31, 2022, the Company had current
assets of $60.3 million, made up primarily of cash on hand of $46.6 million. As of June 30, 2022, current assets were $91.7 million comprised
primarily of cash on hand of $80.5 million.
Property, Plant and Equipment was $54.4 million
as of December 31, 2022 as compared to a balance of $51.2 million as of June 30, 2022.
Total assets as of December 31, 2022 and June
30, 2022 were $132.3 million and $161.3 million, respectively.
Current liabilities as of December 31, 2022 and
June 30, 2022 were $8.8 million and $12.7 million, respectively.
Long-term liabilities totaled $44.4 million as
of December 31, 2022, compared to $45.3 million as of June 30, 2022.
Equity was $79.1 million as of December 31, 2022,
compared to $103.4 million as of June 30, 2022, a decrease of $24.3 million, or 23.5%. This decrease was primarily due to the net loss
for the six months ended December 31, 2022 of $30.2 million which was partially offset by the increase in additional paid-in-capital (“APIC”)
of $5.9 million. The increase in APIC was primarily due to common stock issued for services.
23
Cash Flow Analysis
Operating activities used cash of $26.1 million
during the six months ended December 31, 2022 and $23.5 million during the comparative period ended December 31, 2021. The $2.6 million
period-over-period increase in cash used was attributable to higher general and administrative expenses associated legal and professional
fees.
Investing activities used cash of $8.1 million
for the six months ended December 31, 2022 compared to $16.6 million for the comparative period ended December 31, 2021. The decrease
of $8.5 million was primarily due to a $4.8 million decrease in purchases of capital equipment as well as a $4.1 million decrease in cash
paid for investment in subsidiary related to the purchase of RFMi during the second quarter of fiscal year 2022.
Financing activities decreased by $19 million
compared to the six months ended December 31, 2021 primarily due to the decrease in proceeds from issuance of common stock.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Management’s Evaluation of Disclosure
Controls and Procedures
We maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), is (1) recorded, processed, summarized, and reported within the time periods
specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive
officer and principal financial officer, to allow timely decisions regarding required disclosure.
As of December 31, 2022, our management, with
the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily
applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our Chief Executive Officer and
Chief Financial Officer have concluded based upon the evaluation described above that, as of December 31, 2022, our disclosure controls
and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial
Reporting
During the quarter ended December 31, 2022, there
were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated
under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
From time to time, we may become involved in various
lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an
adverse result in these or other matters may arise from time to time that may have an adverse effect on our business, financial condition
or results of operations and prospects.
Except for the matter described under “Litigation,
Claims and Assessments” in “Note 14. – Commitments and Contingencies” of the condensed consolidated financial
statements in this Item 1 of Part I of this Quarterly Report on Form 10-Q, which description is incorporated in this “Item 1. Legal
Proceedings” by reference, we are currently not aware of any material pending legal proceedings to which we are a party or of which
any of our property is the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority.
ITEM 1A. RISK FACTORS.
In addition to the information set forth in this
report, you should carefully consider the factors discussed under Part I, Item 1A, “Risk Factors” in our Annual Report on
Form 10-K for the fiscal year ended June 30, 2022. These factors could materially adversely affect our business, financial condition,
liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results
or the results contemplated by the forward-looking statements contained in this report. There have been no material changes to the risk
factors described in Part I, Item 1A, “Risk Factors,” included in our 2022 Annual Report.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES
AND USE OF PROCEEDS.
Unregistered Sales of Equity Securities
Other than any sales previously reported in the
Company’s Current Reports on Form 8-K, the Company did not sell any unregistered securities during the period covered by this report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
None
25
ITEM 6. EXHIBITS.
The exhibits in the Exhibit Index below are filed
or furnished, as applicable, as part of this report.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Filed herewith
**
Furnished herewith
†
Management contract or compensatory plan or arrangement
26
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: February 7, 2023
Akoustis Technologies, Inc.
By:
/s/ Kenneth E. Boller
Kenneth E. Boller
Chief Financial Officer
(Principal Financial and Accounting Officer)
27
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EX-4.1
2
f10q1222ex4-1_akoustistech.htm
DESCRIPTION OF COMMON STOCK OF THE REGISTRANT REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
Exhibit
4.1
DESCRIPTION
OF COMMON STOCK OF AKOUSTIS TECHNOLOGIES, INC.
REGISTERED
PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
The
following information is a summary of information concerning the common stock, par value $0.001 per share (the “Common Stock”),
of Akoustis Technologies, Inc. (“we,” “our,” or “us”) and does not purport to be complete. It is
subject to and qualified in its entirety by reference to our Certificate of Incorporation, as amended (the “Certificate of Incorporation”),
our Amended and Restated Bylaws (the “Bylaws”), and the applicable provisions of the General Corporation Law of the State
of Delaware (the “DGCL”), each of which are incorporated by reference as an exhibit to the Annual Report on Form 10-K of
which this Exhibit 4.8 is a part.
Authorized
Common Stock
The
Certificate of Incorporation authorizes the issuance of 100,000,000 shares of Common Stock. Our authorized but unissued shares of Common
Stock are available for issuance without further action by our stockholders, unless such action is required by applicable law or the
rules of any stock exchange or automated quotation system on which our securities may be listed or traded.
Voting
Powers
At
every annual or special meeting of stockholders, every holder of Common Stock is entitled to one vote per share. There is no cumulative
voting in the election of directors.
Dividend,
Liquidation and Other Rights
The
holders of outstanding shares of Common Stock are entitled to receive dividends out of assets or funds legally available for the payment
of dividends at such times and in such amounts as the Company’s board of directors (the “Board of Directors”) from
time to time may determine. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be
dependent upon financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems
relevant.
The
Common Stock is not entitled to pre-emptive rights and is not subject to conversion or redemption. Upon liquidation, dissolution or winding
up of our company, the assets legally available for distribution to stockholders are distributable ratably among the holders of the Common
Stock after payment of liquidation preferences, if any, on any outstanding payment of other claims of creditors.
Anti-Takeover
Provisions
The
following paragraphs regarding certain provisions of the DGCL, the Certificate of Incorporation, and the Bylaws are summaries of the
material terms thereof and do not purport to be complete. We urge you to read the applicable provisions of the DGCL and the Certificate
of Incorporation and Bylaws.
1
General
Provisions
of the DGCL, and the Certificate of Incorporation and Bylaws could have the effect of discouraging others from attempting an unsolicited
offer to acquire our company. Such provisions may also have the effect of preventing changes in our management. It is possible that these
provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.
Authorized
but Unissued Shares
The
authorized but unissued shares of our Common Stock and our preferred stock are available for future issuance without any further vote
or action by our stockholders. These additional shares may be utilized for a variety of corporate purposes, including future public or
private offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued
shares of our Common Stock and our preferred stock could render more difficult or discourage an attempt to obtain control over us by
means of a proxy contest, tender offer, merger or otherwise.
Director
Vacancies
The
Bylaws provide that all vacancies on the Board of Directors may be filled only by the affirmative vote of a majority of directors then
in office, even if less than a quorum.
Special
Meeting of Stockholders and Advance Notice Requirements for Stockholder Proposals and Director Nominations
The
Bylaws require that special meetings of stockholders be called only by a majority of our entire Board of Directors, by the chairman of
the board, if any, the Chief Executive Officer, if any, the President or the Secretary. In addition, the Bylaws provide that candidates
for director may be nominated and other business brought before an annual meeting only by the Board of Directors or by a stockholder
who gives written notice to us not less than 90 days, nor more than 120 days, prior to the first anniversary of the preceding year’s
annual meeting, subject to certain exceptions. Such stockholder’s notice must set forth certain information required by the Bylaws.
These provisions may have the effect of deterring unsolicited offers to acquire our company or delaying stockholder actions, even if
they are favored by the holders of a majority of our outstanding voting securities.
Supermajority
Voting for Amendments to our Bylaws
The
Bylaws provide that the Board of Directors is expressly authorized to adopt, amend or repeal the Bylaws and that our stockholders may
amend the Bylaws only with the approval of at least 66 2/3% of the voting power of all shares of our capital stock then outstanding.
Choice
of Forum
The
Bylaws provide that, subject to certain exceptions, the Court of Chancery of the State of Delaware will be the exclusive forum for any
claim, including any derivative claim, (i) that is based upon a violation of a duty by a current or former director or officer or stockholder
in such capacity or (ii) as to which the DGCL confers jurisdiction upon the Court of Chancery.
2
Business
Combinations
Section
203 of the DGCL generally prohibits a public corporation which has not opted out of the restrictions contained in such section from engaging
in any business combination with any interested stockholder for a three-year period following the time that the stockholder becomes an
interested stockholder, unless:
●
prior
to such time, the Board of Directors approved either the business combination or the transaction which resulted in the stockholder becoming
an interested stockholder;
●
upon
consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned
at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or
●
at
or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of
at least 66 2⁄3% of the outstanding voting stock that is not owned by the interested stockholder.
Generally,
a “business combination” includes a merger, asset or stock sale or other transaction resulting in a financial benefit to
the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that
person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our voting stock.
Under
certain circumstances, this provision could make it more difficult for a person who would be an “interested stockholder”
to effect various business combinations with a corporation for a three-year period. This provision generally does not apply to a corporation
that does not have a class of voting stock that is listed on a national securities exchange or held of record by more than 2,000 stockholders.
Because the Company’s voting stock trades on the Nasdaq Capital Market and the Company has not otherwise opted out of Section 203,
the restrictions on business combinations with interested stockholders applies to the Company.
Listing
on the Nasdaq Capital Market
Shares
of Common Stock are listed on the Nasdaq Capital Market under the symbol “AKTS.”
Transfer
Agent
The
name, address and telephone number of the transfer agent of Common Stock is Broadridge Financial Solutions, Inc. at 51 Mercedes Way,
Edgewood, New York 11717.
3
EX-10.1
3
f10q1222ex10-1_akoustistech.htm
AMENDMENT TO 2018 STOCK INCENTIVE PLAN OF AKOUSTIS TECHNOLOGIES, INC., ADOPTED AUGUST 26, 2022
Exhibit 10.1
AMENDMENT
TO
2018 STOCK INCENTIVE PLAN
OF
AKOUSTIS TECHNOLOGIES, INC.
This Amendment (“Amendment”)
to the 2018 Stock Incentive Plan (as amended, the “Existing Plan”; as amended hereby, the “Plan”)
of Akoustis Technologies, Inc., a Delaware corporation (the “Company”), is adopted by the Company’s Board of
Directors (the “Board”) as of August 26, 2022, subject to approval by the Company’s stockholders (the “Stockholders”).
Statement of Purpose
The Existing Plan was originally
approved by the Board on August 24, 2018, and by the Stockholders on November 1, 2018, upon which date it became effective.
Under Section 16(a) of the Existing Plan, the Board may amend the Existing Plan at any time, contingent on the approval of the
Stockholders if Stockholder approval is required by applicable law. The Board has determined that it is in the best interests of the Company
to amend the Existing Plan to: (1) increase the number of shares authorized for issuance and (2) increase the number of shares
that may be issued as Incentive Stock Options.
NOW, THEREFORE, the Existing
Plan is hereby amended as follows, subject to the approval of the Stockholders:
1. Capitalized Terms. All
capitalized terms used and not defined in this Amendment shall have the meanings given thereto in the Existing Plan.
2. Amendment to Existing
Plan.
Section 5(a) “Shares
of Stock Subject to the Plan:” is hereby deleted in its entirety and replaced with the following:
“(a) Shares of Stock Subject
to the Plan: Subject to adjustments as provided in this Section 5, the maximum aggregate number of shares of Common Stock that
may be issued pursuant to Awards granted under the Plan shall not exceed 12,000,000 shares, plus any shares subject to an award granted
under any of the Prior Plans, which Prior Plan award is at any time forfeited, cancelled, terminated, expires or lapses for any reason
without the issuance of shares or pursuant to which such shares are forfeited or reacquired by the Company. Shares delivered under the
Plan shall be authorized but unissued shares, treasury shares or shares purchased on the open market or by private purchase. The Company
hereby reserves sufficient authorized shares of Common Stock to meet the grant of Awards hereunder.”
Section 5(b)(i) is
hereby deleted in its entirety and replaced with the following:
“The maximum aggregate number of
shares of Common Stock that may be issued under the Plan pursuant to the grant of Incentive Options shall not exceed 12,000,000 shares
of Common Stock.”
3. Reference to and
Effect on the Plan. The Plan, as amended hereby, and all other documents, instruments and agreements executed
or delivered in connection therewith, shall remain in full force and effect, and are hereby ratified and confirmed.
4. Governing Law. This
Amendment shall be governed by and construed in accordance with the laws of the State of Delaware.
* * *
Effective this 26th day
of August 2022, subject to Stockholder approval.
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Jeffrey B. Shealy, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Akoustis Technologies, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
CERTIFICATION PURSUANT TO RULE 13a-14(a) OR 15d-14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Kenneth E. Boller, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q of Akoustis Technologies, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
In connection with the Quarterly Report of Akoustis
Technologies, Inc. (the “Company”) on Form 10-Q for the quarterly period ended December 31, 2022, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Jeffrey B. Shealy, Chief Executive Officer of the Company, certify,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 07, 2023
/s/ Jeffrey B. Shealy
Jeffrey B. Shealy
President and Chief Executive Officer
(Principal Executive Officer)
A signed original of this written statement required
by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within
the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.
In connection with the Quarterly Report of Akoustis
Technologies, Inc. (the “Company”) on Form 10-Q for the quarterly period ended December 31, 2022, as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), I, Kenneth E. Boller, Interim Chief Financial Officer of the Company,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: February 07, 2023
/s/ Kenneth E. Boller
Kenneth E. Boller
Chief Financial Officer
(Principal Financial and Accounting Officer)
A signed original of this written statement required
by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within
the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.
Fiscal period values are FY, Q1, Q2, and Q3. 1st, 2nd and 3rd quarter 10-Q or 10-QT statements have value Q1, Q2, and Q3 respectively, with 10-K, 10-KT or other fiscal year statements having FY.
This is focus fiscal year of the document report in YYYY format. For a 2006 annual report, which may also provide financial information from prior periods, fiscal 2006 should be given as the fiscal year focus. Example: 2006.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
For the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
Indicate number of shares or other units outstanding of each of registrant's classes of capital or common stock or other ownership interests, if and as stated on cover of related periodic report. Where multiple classes or units exist define each class/interest by adding class of stock items such as Common Class A [Member], Common Class B [Member] or Partnership Interest [Member] onto the Instrument [Domain] of the Entity Listings, Instrument.
Indicate 'Yes' or 'No' whether registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. This information should be based on the registrant's current or most recent filing containing the related disclosure.
Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
Indicate whether the registrant is one of the following: Large Accelerated Filer, Accelerated Filer, Non-accelerated Filer. Definitions of these categories are stated in Rule 12b-2 of the Exchange Act. This information should be based on the registrant's current or most recent filing containing the related disclosure.
Boolean flag that is true when the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Sum of the carrying values as of the balance sheet date of obligations incurred through that date and due within one year (or the operating cycle, if longer), including liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received, taxes, interest, rent and utilities, accrued salaries and bonuses, payroll taxes and fringe benefits.
Amount, after allowance for credit loss, of right to consideration from customer for product sold and service rendered in normal course of business, classified as current.
Amount of excess of issue price over par or stated value of stock and from other transaction involving stock or stockholder. Includes, but is not limited to, additional paid-in capital (APIC) for common and preferred stock.
Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
Sum of the carrying amounts as of the balance sheet date of all assets that are expected to be realized in cash, sold, or consumed within one year (or the normal operating cycle, if longer). Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.
Amount of liability recognized arising from contingent consideration in a business combination, expected to be settled within one year or the normal operating cycle, if longer.
Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Excludes cash and cash equivalents within disposal group and discontinued operation.
Aggregate par or stated value of issued nonredeemable common stock (or common stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable common shares, par value and other disclosure concepts are in another section within stockholders' equity.
Amount of deferred income and obligation to transfer product and service to customer for which consideration has been received or is receivable, classified as current.
Fair value, after the effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset, expected to be settled after one year or the normal operating cycle, if longer. Includes assets not subject to a master netting arrangement and not elected to be offset.
Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.
Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.
Total obligations incurred as part of normal operations that are expected to be paid during the following twelve months or within one business cycle, if longer.
Aggregate par or stated value of issued nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer). This item includes treasury stock repurchased by the entity. Note: elements for number of nonredeemable preferred shares, par value and other disclosure concepts are in another section within stockholders' equity.
Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
Amount of stockholders' equity (deficit), net of receivables from officers, directors, owners, and affiliates of the entity, attributable to both the parent and noncontrolling interests. Amount excludes temporary equity. Alternate caption for the concept is permanent equity.
Total number of common shares of an entity that have been sold or granted to shareholders (includes common shares that were issued, repurchased and remain in the treasury). These shares represent capital invested by the firm's shareholders and owners, and may be all or only a portion of the number of shares authorized. Shares issued include shares outstanding and shares held in the treasury.
The maximum number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) permitted to be issued by an entity's charter and bylaws.
Total number of nonredeemable preferred shares (or preferred stock redeemable solely at the option of the issuer) issued to shareholders (includes related preferred shares that were issued, repurchased, and remain in the treasury). May be all or portion of the number of preferred shares authorized. Excludes preferred shares that are classified as debt.
Aggregate share number for all nonredeemable preferred stock (or preferred stock redeemable solely at the option of the issuer) held by stockholders. Does not include preferred shares that have been repurchased.
The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.
Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.
The increase (decrease) during the period in the carrying value of derivative instruments reported as liabilities that are due to be disposed of within one year (or the normal operating cycle, if longer).
The aggregate amount of income or expense from ancillary business-related activities (that is to say, excluding major activities considered part of the normal operations of the business).
Generally recurring costs associated with normal operations except for the portion of these expenses which can be clearly related to production and included in cost of sales or services. Includes selling, general and administrative expense.
The aggregate costs incurred (1) in a planned search or critical investigation aimed at discovery of new knowledge with the hope that such knowledge will be useful in developing a new product or service, a new process or technique, or in bringing about a significant improvement to an existing product or process; or (2) to translate research findings or other knowledge into a plan or design for a new product or process or for a significant improvement to an existing product or process whether intended for sale or the entity's use, during the reporting period charged to research and development projects, including the costs of developing computer software up to the point in time of achieving technological feasibility, and costs allocated in accounting for a business combination to in-process projects deemed to have no alternative future use.
Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).
Number of [basic] shares or units, after adjustment for contingently issuable shares or units and other shares or units not deemed outstanding, determined by relating the portion of time within a reporting period that common shares or units have been outstanding to the total time in that period.
The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.
The average number of shares or units issued and outstanding that are used in calculating diluted EPS or earnings per unit (EPU), determined based on the timing of issuance of shares or units in the period.
Amount of increase in additional paid-in capital (APIC) for recognition of cost for employee stock purchase program (ESPP) award under share-based payment arrangement.
Amount of decrease in additional paid in capital (APIC) resulting from direct costs associated with issuing stock. Includes, but is not limited to, legal and accounting fees and direct costs associated with stock issues under a shelf registration.
Decrease in noncontrolling interest (for example, but not limited to, redeeming or purchasing the interests of noncontrolling shareholders, issuance of shares (interests) by the non-wholly owned subsidiary to the parent entity for other than cash, and a buyback of shares (interest) by the non-wholly owned subsidiary from the noncontrolling interests).
Number, after forfeiture, of shares or units issued under share-based payment arrangement. Excludes shares or units issued under employee stock ownership plan (ESOP).
Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.
Amount of noncash expense included in interest expense to amortize debt discount and premium associated with the related debt instruments. Excludes amortization of financing costs. Alternate captions include noncash interest expense.
Amount of increase (decrease) in the value of a contingent consideration liability, including, but not limited to, differences arising upon settlement.
Amount of cash and cash equivalents, and cash and cash equivalents restricted to withdrawal or usage. Excludes amount for disposal group and discontinued operations. Cash includes, but is not limited to, currency on hand, demand deposits with banks or financial institutions, and other accounts with general characteristics of demand deposits. Cash equivalents include, but are not limited to, short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
Amount of increase (decrease) in cash and cash equivalents, and cash and cash equivalents restricted to withdrawal or usage; excluding effect from exchange rate change. Cash includes, but is not limited to, currency on hand, demand deposits with banks or financial institutions, and other accounts with general characteristics of demand deposits. Cash equivalents include, but are not limited to, short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
The aggregate expense recognized in the current period that allocates the cost of tangible assets, intangible assets, or depleting assets to periods that benefit from use of the assets.
Amount of gain (loss) on sale or disposal of assets, including but not limited to property plant and equipment, intangible assets and equity in securities of subsidiaries or equity method investee.
Amount of transfers into (out of) an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
The increase (decrease) during the reporting period in the amounts payable to vendors for goods and services received and the amount of obligations and expenses incurred but not paid.
The increase (decrease) during the reporting period in amount due within one year (or one business cycle) from customers for the credit sale of goods and services.
Amount of increase (decrease) in deferred income and obligation to transfer product and service to customer for which consideration has been received or is receivable.
The increase (decrease) during the reporting period in the aggregate value of all inventory held by the reporting entity, associated with underlying transactions that are classified as operating activities.
Amount of cash inflow (outflow) from financing activities, including discontinued operations. Financing activity cash flows include obtaining resources from owners and providing them with a return on, and a return of, their investment; borrowing money and repaying amounts borrowed, or settling the obligation; and obtaining and paying for other resources obtained from creditors on long-term credit.
Amount of cash inflow (outflow) from investing activities, including discontinued operations. Investing activity cash flows include making and collecting loans and acquiring and disposing of debt or equity instruments and property, plant, and equipment and other productive assets.
Amount of cash inflow (outflow) from operating activities, including discontinued operations. Operating activity cash flows include transactions, adjustments, and changes in value not defined as investing or financing activities.
The value of the noncash (or part noncash) consideration given (for example, liability, equity) in a transaction. Noncash is defined as transactions during a period that do not result in cash receipts or cash payments in the period. "Part noncash" refers to that portion of a transaction not resulting in cash receipts or cash payments in the period.
The cash inflow from the sale of formerly productive land held for sale, anything permanently fixed to it, including buildings, structures on it, and so forth.
Akoustis Technologies, Inc. (the
“Company”) was incorporated on April 10, 2013, and effective December 15, 2016, the Company changed its state of
incorporation to the State of Delaware. Through its wholly-owned subsidiary, Akoustis, Inc. (a Delaware corporation), the Company,
headquartered in Huntersville, North Carolina, is focused on developing, designing, and manufacturing innovative radio frequency
(“RF”) filter products for the wireless industry, including for products such as smartphones and tablets, cellular
infrastructure equipment, Wi-Fi Customer Premise Equipment (“CPE”), and military and defense communication applications.
Located between the device’s antenna and its digital backend, the RF front-end (“RFFE”) is the circuitry that
performs the analog signal processing and contains components such as amplifiers, filters and switches. To construct the resonator
devices that are the building blocks for its RF filters, the Company has developed a family of novel, high purity acoustic
piezoelectric materials as well as a unique microelectromechanical system (“MEMS”) wafer semiconductor process,
collectively referred to as XBAWTM technology. The Company leverages its integrated device manufacturing
(“IDM”) business model to develop and sell high performance RF filters using its XBAWTM technology. Filters
are critical in selecting and rejecting signals, and their performance enables differentiation in the modules defining the RFFE.
Additionally, through RFM Integrated Device, Inc. (“RFMi”), a wholly-owned subsidiary of Akoustis, Inc., the Company
makes sales of complementary surface acoustic wave (“SAW”) resonators, RF filters, crystal (Xtal) resonators and
oscillators, and ceramic products branded as “RFMi” products.
The entire disclosure for the nature of an entity's business, major products or services, principal markets including location, and the relative importance of its operations in each business and the basis for the determination, including but not limited to, assets, revenues, or earnings. For an entity that has not commenced principal operations, disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward.
As of December 31, 2022, the Company had cash
and cash equivalents of $46.6 million and working capital of $51.5 million. The Company has historically incurred recurring operating
losses and experienced net cash used in operating activities.
On January 19, 2023, the Company closed an underwritten
public offering of 12,545,454 shares of its common stock at a price to the public of $2.75 per share, which included the underwriters’
exercise of their over-allotment option in full, for net proceeds of approximately $32.0 million. See Note 18-Subsequent Events.
The Company expects cash and cash equivalents to be sufficient to fund
its operations beyond the next twelve months from the date of filing of this Form 10-Q. These funds will be used to fund the Company’s
operations, including capital expenditures, R&D, commercialization of its technology, development of its patent strategy and expansion
of its patent portfolio, servicing outstanding debt, potential strategic transactions, as well as to provide working capital and funds
for other general corporate purposes. Except for the $48.0 million of common stock remaining available to be sold under its ATM Sales
Agreement with Oppenheimer & Co. Inc., Craig-Hallum Capital Group LLC, and Roth Capital Partners, LLC, the Company has no commitments
or arrangements to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all.
If the Company is unable to obtain additional
financing in a timely fashion and on acceptable terms, its financial condition and results of operations may be materially adversely
affected and it may not be able to continue operations or execute its stated commercialization plan.
Note 3. Summary of Significant Accounting
Policies
Basis of Presentation
The Company’s unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information
and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual
financial statements. In the opinion of management, all adjustments (consisting of normal accruals) considered necessary for a fair presentation
have been included. The Company has evaluated subsequent events through the filing of this Form 10-Q. Operating results for the quarter
ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending June 30, 2023 or any future
interim period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s
audited consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the SEC on September
12, 2022 (the “2022 Annual Report”).
Principles of Consolidation
The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiaries as of December 31, 2022, Akoustis, Inc. and RFM Integrated Device, Inc.
All significant intercompany accounts and transactions have been eliminated in consolidation.
Significant Accounting Policies and Estimates
The Company’s significant accounting
policies are disclosed in Note 3. Summary of Significant Accounting Policies in the 2022 Annual Report. Since the date of the 2022
Annual Report, there have been no material changes to the Company’s significant accounting policies. The preparation of the
unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes
thereto. The policies, estimates and assumptions include valuing equity securities, derivative liabilities, deferred taxes and
related valuation allowances, contingent consideration, goodwill, intangible assets, revenue recognition, and the fair values of
long-lived assets. Actual results could differ from the estimates.
Recently Issued Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated
financial statements.
Note 4. Revenue Recognition from Contracts
with Customers
Disaggregation of Revenue
The Company’s primary revenue streams include
foundry fabrication services and product sales across multiple geographic regions, primarily the Americas, Asia and Europe.
Foundry Fabrication Services
Foundry fabrication services revenue includes MEMS foundry services, which the Company exited in fiscal year 2021, and Non-Recurring
Engineering (“NRE”). Under these contracts, products are delivered to the customer at the completion of the service, which
represents satisfaction of the performance obligation as well as transfer of title. Depending on language with regards to enforceable
right to payment for performance completed to date, related revenue will either be recognized over time or at a point in time.
Product Sales
Product sales revenue consists of sales of RF
filters and amps which are sold with contract terms stating that title passes, and the customer takes control, at the time of shipment.
Revenue is then recognized when the devices are shipped, and the performance obligation has been satisfied. If devices are sold under
contract terms that specify that the customer does not take ownership until the goods are received, revenue is recognized when the customer
receives the goods.
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the three months ended December 31, 2022, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
1,143
$
1,223
$
2,366
Asia
748
1,759
2,507
Europe
—
992
992
Total
$
1,891
$
3,974
$
5,865
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the six months ended December 31, 2022, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
1,849
$
2,136
$
3,985
Asia
975
4,834
5,809
Europe
—
1,628
1,628
Other
—
10
10
Total
$
2,824
$
8,608
$
11,432
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the three months ended December 31, 2021, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
249
$
779
$
1,028
Asia
135
1,817
1,952
Europe
—
692
692
Total
$
384
$
3,288
$
3,672
The following table summarizes the revenues of
the Company’s reportable segments by geographic region for the six months ended December 31, 2021, (in thousands):
Foundry
Fabrication
Services
Revenue
Product
Sales
Revenue
Total
Revenue
with
Customers
Americas
$
583
$
876
$
1,459
Asia
213
3,006
3,219
Europe
—
862
862
Total
$
796
$
4,744
$
5,540
Performance Obligations
The Company has determined that contracts for
product sales revenue and foundry fabrication services revenue involve one performance obligation, which is delivery of the final product.
Contract Balances
The following table summarizes the changes in
the opening and closing balances of the Company’s contract asset (included in Other current assets on the Consolidated Balance
Sheet) and contract liability (included as Deferred revenue on the Consolidated Balance Sheet) for the first six months of fiscal years
2023 and 2022 (in thousands):
Contract Assets
Contract Liability
Balance, June 30, 2022
$
908
$
286
Closing, December 31, 2022
2,334
60
Increase/(Decrease)
$
1,426
$
(226
)
Balance, June 30, 2021
$
411
$
41
Closing, December 31, 2021
823
101
Increase/(Decrease)
$
412
$
60
The Company records a receivable when the title
for goods has transferred. Generally, all sales are contract sales (with either an underlying contract or purchase order), resulting
in all receivables being contract receivables. When invoicing occurs prior to revenue recognition a contract liability is recorded (as
deferred revenue on the Condensed Consolidated Balance Sheets). The amount of revenue recognized in the six months ended December 31,
2022, that was included in the opening contract liability balance was $286 thousand which related to timing of shipments.
Contract assets are recorded when revenue recognized
exceeds the amount invoiced. The difference between the opening and closing balances of the Company’s contract assets and contract
liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The
amount of contract assets invoiced in the six months ended December 31, 2022, that was included in the opening contract asset balance
was $245 thousand, which primarily related to non-recurring engineering services.
Backlog of Remaining Customer Performance
Obligations
Revenue expected to be recognized and recorded as sales
during the remainder of this fiscal year from the backlog of performance obligations that are unsatisfied (or partially unsatisfied)
at December 31, 2022 was $7.4 million. The Company’s backlog may vary significantly each reporting period based on the timing of
major new contract commitments. In addition, our customers have the right, under some infrequent circumstances, to terminate contracts
or defer the timing of the Company's services and their payments to us.
The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.
The entire disclosure for inventory. Includes, but is not limited to, the basis of stating inventory, the method of determining inventory cost, the classes of inventory, and the nature of the cost elements included in inventory.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Property and equipment, net consisted of the
following as of December 31, 2022 and June 30, 2022 (in thousands):
Estimated
Useful Life
December 31,
2022
June 30,
2022
Land
n/a
$
1,000
$
1,000
Building and leasehold improvements
*
8,782
7,715
Equipment
2-10 years
63,918
57,750
Computer Equipment & Software
3-5 years
2,417
1,966
Total
76,117
68,431
Less: Accumulated Depreciation
(21,648
)
(17,274
)
Total
$
54,469
$
51,157
(*)
Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter. Buildings are amortized on a straight-line basis between 11 and 39 years.
The Company recorded depreciation expense of
$2.3 million and $1.6 million for the three months ended December 31, 2022 and 2021, respectively. The Company recorded depreciation
expense of $4.4 million and $3.1 million for the six months ended December 31, 2022 and 2021, respectively.
As of December 31, 2022, equipment with a net book
value totaling $7.0 million had not been placed in service and therefore was not depreciated during the period. As of June 30, 2022, fixed
assets with a net book value totaling $14.5 million had not been placed in service and therefore was not depreciated during the period.
The entire disclosure for long-lived, physical asset used in normal conduct of business and not intended for resale. Includes, but is not limited to, work of art, historical treasure, and similar asset classified as collections.
On October 15, 2021, the Company acquired a majority
ownership position in RFMi, a fabless supplier of acoustic wave RF resonators and filters, to expand product offerings and provide access
to new markets. The Company acquired a 51% ownership interest in RFMi from Tai-Saw Technology Co., Ltd. (“TST”) in exchange
for $6.0 million in cash and approximately $2.3 million payable in common stock of the Company. On April 29, 2022, the Company exercised
its option to acquire the remaining 49% ownership interest in RFMi from TST for an additional $3.5 million in cash and approximately
420,053 shares of common stock of the Company with a fair value at closing of $1.9 million.
Additionally, earn-out payments payable in cash
and/or shares of common stock of the Company may be payable to TST based on the achievement of sales targets for RFMi products in each
of calendar year 2022 and 2023, with potential payouts in the range of $0 to $3.0 million. The initial $1.1 million estimated fair value
of the associated liability was based on the present value of the expected future payouts resulting from the projected RFMi product sales,
applying a volatility rate of 30% against those future projected revenues and using a discount rate of 9.9% and 10.2% for the first and
second earnouts, respectively, and thus represented a Level 3 fair value measurement. The contingent consideration is re-measured to fair
value at each reporting date until the contingency is resolved, and those changes in fair value are recognized in earnings. The Company
has determined that the sales targets for calendar year 2022 were not met and the related earnout payment is not owed. The fair value
of the contingent consideration decreased $1,170 thousand during the six months ended December 31, 2022.
Pro Forma Results
The following unaudited pro forma financial information
summarizes the results of operations for the three and six months ended December 31, 2021 as if the acquisition had been completed as
of July 1, 2021 (in thousands). The pro forma results were calculated applying the Company’s accounting policies and include the
effects of adjustments related to the amortization charges from the acquired intangibles. The unaudited pro forma information does not
purport to be indicative of the results that would have been obtained if the acquisitions had actually occurred at the beginning of the
year prior to acquisition, nor of the results that may be reported in the future.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).
The Company performs an annual test for goodwill
impairment during our last fiscal quarter. The Company will also test for impairment between annual test dates if an event occurs or circumstances
change that would indicate the carrying amount may be impaired.
During the six months ended December 31, 2022,
the Company did not identify any events or circumstances that would require an interim goodwill impairment test. The Company does not
amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of goodwill as of December 31, 2022
was $8.1 million.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
The following table summarizes convertible debt
as of December 31, 2022 (in thousands):
Maturity Date
Stated Interest Rate
Conversion Price
Face Value
Remaining Debt (Discount)
Fair Value of Embedded Derivatives
Carrying Value
Long Term convertible notes payable
6.0% convertible senior notes
06/15/2027
6.00
%
$
4.71
$
44,000
$
(3,008
)
$
2,189
$
43,181
Ending Balance as of December 31, 2022
$
44,000
$
(3,008
)
$
2,189
$
43,181
The following table summarizes convertible debt
as of June 30, 2022 (in thousands):
Maturity Date
Stated Interest Rate
Conversion Price
Face Value
Remaining Debt (Discount)
Fair Value of Embedded Derivatives
Carrying Value
Long Term convertible notes payable
6.0% convertible senior notes
06/15/2027
6.00
%
$
4.71
$
44,000
$
(3,297
)
$
3,028
$
43,731
Ending Balance as of June 30, 2022
$
44,000
$
(3,297
)
$
3,028
$
43,731
Interest expense on the Notes during the three
months ended December 31, 2022 included contractual interest of $660 thousand and debt discount amortization of $146 thousand. Interest
expense on the Notes during the six months ended December 31, 2022 included contractual interest of $1,320 thousand and debt discount
amortization of $290 thousand.
The entire disclosure for any concentrations existing at the date of the financial statements that make an entity vulnerable to a reasonably possible, near-term, severe impact. This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date.
On May 2, 2022, the Company entered into an ATM
Sales Agreement with Oppenheimer & Co. Inc., Craig-Hallum Capital Group LLC, and Roth Capital Partners, LLC pursuant to which the
Company may sell from time-to-time shares of its common stock having an aggregate offering price of up to $50,000,000 (the “2022
Equity Offering Program”). On May 25, 2022, the Company announced that it was suspending sales under the 2022 Equity Offering Program.
If, in the future, the Company determines to resume sales pursuant to the 2022 Equity Offering Program, it intends to notify investors
by the filing of a Current Report on Form 8-K or other public announcement.
Equity Incentive Plans
During the six months ended December 31, 2022,
the Company granted employees options to purchase an aggregate of approximately 235 thousand shares of common stock. The fair values of
the Company’s options were estimated at the dates of grant using a Black-Scholes option pricing model with the following assumptions:
Six Months
Ended
December 31,
2022
Exercise price
$
2.83 – 3.57
Expected term (years)
4.00 - 4.75
Volatility
67 – 68
%
Risk-free interest rate
3.77 – 4.59
%
Dividend yield
0
%
Weighted Average Grant Date Fair Value of Options granted during the period
$
1.87
During the six months ended December 31, 2022
the Company awarded certain employees and directors grants of an aggregate of approximately 1.0 million restricted stock units (“RSUs”)
with a weighted average grant date fair value of $3.51. The RSUs will be expensed over the requisite service period. The terms of the
RSUs include vesting provisions based solely on continued service. If the service criteria are satisfied, the RSUs will generally vest
over 4 – 5 years.
During the six months ended December 31, 2022
the Company awarded certain employees grants of an aggregate of approximately 0.39 million restricted stock units with market value appreciation
conditions (“MVSUs”) with a weighted average grant date fair value of $7.86. The MVSUs will be expensed over the requisite
service period. The terms of the MVSUs include vesting provisions based on continued service. The number of shares of the Company’s
common stock earned at vesting is based on the Company’s stock price performance with amounts earned subject to a vesting multiplier
ranging from 0% to 200%. If the service criteria are satisfied, the MVSUs will vest over 3 years.
Compensation expense related to our stock-based
awards described above was as follows (in thousands):
Three Months Ended December 31,
Six Months Ended December 31,
2022
2021
2022
2021
Research and Development
$
883
$
1,716
$
2,051
$
2,948
General and Administrative
1,012
1,184
2,193
2,300
Total
$
1,895
$
2,900
$
4,244
$
5,248
Unrecognized stock-based compensation expense
and weighted-average years to be recognized are as follows (in thousands):
The entire disclosure for shareholders' equity and share-based payment arrangement. Includes, but is not limited to, disclosure of policy and terms of share-based payment arrangement, deferred compensation arrangement, and employee stock purchase plan (ESPP).
The Company leases office space in Huntersville,
NC, Carrollton, Texas and Taiwan and leases equipment in Canandaigua, NY. Its leases have remaining lease terms of up to five years, some
of which include options to extend the leases for up to twenty-four months. Following adoption of ASC 842, lease expense excludes capital
area maintenance and property taxes. During the three months ended December 31, 2022, the lease pertaining to the office space in Carrollton,
Texas was extended for an additional five years. This resulted in the remeasurement of the respective right of use asset and corresponding
right of use liability.
The components of lease expense were as follows:
Three
Months
Ended
December 31,
2022
Three
Months
Ended
December 31,
2021
Six
Months
Ended
December 31,
2022
Six
Months
Ended
December 31,
2021
Operating Lease Expense
$
106
$
82
$
201
$
157
Supplemental balance sheet information related
to leases was as follows (in thousands):
Classification on the Condensed Consolidated Balance Sheet
December 31, 2022
June 30, 2022
Assets
Operating lease assets
Other non-current assets
$
1,088
$
1,126
Liabilities
Operating lease liabilities
Current liabilities
271
313
Operating lease liabilities
Long term liabilities
833
811
Weighted Average Remaining Lease Term:
Operating leases
3.54 Years
3.42 Years
Weighted Average Discount Rate:
Operating leases
11.30
%
10.03
%
The following table outlines the minimum future
lease payments for the next five years and thereafter, (in thousands):
The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability.
Ontario County Industrial Development Authority
Agreement
On February 27, 2018, the Company entered into
a Lease and Project Agreement (the “Lease and Project Agreement”) and a Company Lease Agreement (the “Company Lease
Agreement” and together with the Lease and Project Agreement, the “Agreements”), each dated as of February 1, 2018,
with the Ontario County Industrial Development Agency, a public benefit corporation of the State of New York (the “OCIDA”).
Pursuant to the Agreements, the Company will lease for $1.00 annually to the OCIDA an approximately 9.995 acre parcel of land in Canandaigua,
New York, together with the improvements thereon (including the Company’s New York fabrication facility), and transfer title to
certain related equipment and personal property to the OCIDA (collectively, the “Facility”). The OCIDA will lease the Facility
back to the Company for annual rent payments specified in the Lease and Project Agreement for the Company’s primary use as research
and development, manufacturing, warehouse and professional office space in its business, and to be subleased, in part, by the Company
to various existing tenants. The Company estimates substantial tax savings during the term of the Agreements, which expire on December
31, 2028. In addition, subject to the terms of the Lease and Project Agreement, certain purchases and leases of eligible items will be
exempt from the imposition of sales and use taxes. Subject to the terms of the Lease and Project Agreement, the OCIDA has also granted
to the Company an exemption from certain mortgage recording taxes for one or more mortgages securing an aggregate principal amount not
to exceed $12.0 million, or such greater amount as approved by the OCIDA in its sole and absolute discretion. Benefits totaling approximately
$0.3 million provided to the Company through December 31, 2022 pursuant to the terms of the Lease and Project Agreement are subject to
claw back over the life of the Agreements upon certain recapture events, including certain events of default.
Litigation, Claims and Assessments
On October 4, 2021, the Company was named as a defendant
in a complaint filed by Qorvo, Inc. in the United States District Court for the District of Delaware alleging, among other things, patent
infringement, false advertising, false patent marking, and unfair competition. The complaint alleges that the defendants misappropriated
proprietary information, made misleading statements about the characteristics of certain of its products, and sold products infringing
on certain of the plaintiff’s patents. The plaintiff seeks an injunction enjoining the Company from the alleged infringement and
damages, including punitive and statutory enhanced damages, in an unspecified amount. The Company filed a motion to dismiss all of the
claims other than the direct patent infringement claims, but the court permitted the plaintiff to file an amended complaint which the
court subsequently determined was sufficient for pleading purposes. The Court dismissed the Company’s motion in May 2022. The Court
held a claims construction hearing in November 2022. At present the Company believes this lawsuit is without merit and intends to defend
against it vigorously. However, the Company can provide no assurance as to the outcome of such dispute, and such action may result in
judgments against the Company for an injunction, significant damages or other relief, such as future royalty payments to Qorvo, Inc. or
restrictions on certain of the Company’s activities. Resolution of such matter may be prolonged and costly, and the ultimate result
or judgment is uncertain due to the inherent uncertainty in litigation and other proceedings. Even if ultimately settled or resolved in
the Company’s favor, this and other possible future actions may result in significant expenses, diversion of management and technical
personnel attention and disruptions and delays in the Company’s business and product development, and other collateral consequences,
all of which could have a material adverse effect on its business, financial condition and results of operations. Any out-of-court settlement
of this or other actions may also have an adverse effect on the Company’s business, financial condition and results of operations,
including, but not limited to, substantial expenses, the payment of royalties, licensing or other fees payable to third parties, or restrictions
on its ability to develop, manufacture and sell its products.
From time to time, the Company may become involved
in lawsuits, investigations and claims that arise in the ordinary course of business. The Company believes it has meritorious defenses
against all pending claims and intends to vigorously pursue them. While it is not possible to predict or determine the outcomes of any
pending actions, the Company believes the amount of liability, if any, with respect to such actions, would not materially affect its financial
position, results of operations or cash flows.
Tax Credit Contingency
The Company accrues a liability for indirect tax
contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount
of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal
counsel and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes
of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be
recorded in the period in which such determination is made.
The Company’s gross unrecognized indirect
tax credits totaled $0.1 million as of December 31, 2022 and $0.1 million as of June 30, 2022 and are recorded on the Consolidated Balance
Sheet as a long-term liability.
Operating segments are defined as components of
an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker, or
decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision
maker is its Chief Executive Officer. The Company operates in two segments, Foundry Fabrication Services, which consists of engineering
review services and STC-MEMS foundry services, and RF Filters, which consists of amplifier and filter product sales, and grant revenue.
The Company records all general and administrative costs in the RF Filters segment.
The Company evaluates performance of its operating
segments based on revenue and operating profit (loss). Segment information for the three and six months ended December 31, 2022 and 2021
are as follows (in thousands):
The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.
Basic net loss per common share is computed by
dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted
net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for
the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three and six months ended
December 31, 2022 and December 31, 2021 presented in these condensed consolidated financial statements, the weighted-average number of
common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.
The Company had the following common stock equivalents
at December 31, 2022 and 2021:
Fair value is defined as the price that would
be received upon selling an asset or the price paid to transfer a liability on the measurement date. It focuses on the exit price in the
principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. A three-tier
fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in
measuring fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.
The three levels of inputs used to measure fair values are as follows:
Level 1: Observable prices in active
markets for identical assets and liabilities.
Level 2: Observable inputs other than
quoted prices in active markets for identical assets and liabilities.
Level 3: Unobservable inputs that are
supported by little or no market activity and that are significant to the fair value of the assets and liabilities.
The following table classifies the liabilities
measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2022:
Fair value at December 31, 2022
Level 1
Level 2
Level 3
Contingent consideration
$
276
$
—
$
—
$
276
Derivative liabilities
2,189
—
—
2,189
Total fair value
$
2,465
$
—
$
—
$
2,465
The following table classifies the liabilities
measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2022:
Fair value at June 30, 2022
Level 1
Level 2
Level 3
Contingent consideration
$
1,446
$
—
$
—
$
1,446
Derivative liabilities
3,028
—
—
3,028
Total fair value
$
4,474
$
—
$
—
$
4,474
The following table sets forth a summary of the
changes in the fair value of Level 3 contingent consideration that are measured at fair value on a recurring basis:
Contingent consideration
December 31, 2022
Beginning balance
$
1,446
Initial fair value of contingent consideration
—
Change in fair value of contingent consideration
(1,170
)
Ending balance
$
276
There were no transfers between Level 1, 2, or
3 valuation classifications during the three or six months ended December 31, 2022.
The fair value of contingent consideration liabilities
that was classified as Level 3 in the table above was estimated using a Monte Carlo simulation in an option pricing framework with significant
inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant
inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future sales revenue
of RFMi products in calendar year 2023 and the volatility of those revenues, appropriately discounted considering the uncertainties associated
with the obligation, and as calculated in accordance with the terms of the acquisition agreements. The development and determination of
the unobservable inputs for Level 3 fair value measurements and the fair value calculations are the responsibility of the Company’s
chief financial officer and are approved by the chief executive officer.
The fair value of the contingent consideration
liabilities on December 31, 2022 and June 30, 2022 were valued with the following assumptions:
December 31, 2022
June 30, 2022
Discount Rate
12.5
%
14.3% – 14.5
%
Revenue volatility
30
%
30
%
Risk free interest rate
4.65
%
1.71% – 3.04
%
Remaining term (years)
1.08
0.59 – 1.58
The following table sets forth a summary of the
changes in the fair value of Level 3 derivative liabilities that are measured at fair value on a recurring basis:
Fair Value of Embedded Derivatives
December 31, 2022
Beginning balance
$
3,028
Initial fair value of make-whole provision in convertible notes
—
Initial fair value of change in control provision in convertible notes
—
Change in fair value of convertible note derivatives
(839
)
Ending balance
$
2,189
The fair value of the embedded derivatives in
our convertible notes that were classified as Level 3 in the table above were estimated using a with and without approach on a lattice
model framework with significant inputs that are not observable in the market and thus represent a Level 3 fair value measurement as defined
in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability and timing assessments
of expected future change of control events, the volatility of our share price and the discount rate used to present value future cash
payments under the convertible debt obligation. The development and determination of the unobservable inputs for Level 3 fair value measurements
and the fair value calculations are the responsibility of the Company’s chief financial officer and are approved by the chief executive
officer.
The fair value of the embedded derivatives in
our convertible notes as of December 31, 2022 and June 30, 2022 were valued with the following assumptions:
The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.
On January 1, 2023 (the “Closing Date”),
Akoustis Technologies, Inc. (the “Company”) and its wholly-owned subsidiary, Akoustis, Inc. (the “Purchaser”),
entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Grinding & Dicing Services, Inc. (“GDSI”)
and the stockholders of GDSI (the “Sellers”). Pursuant to the Purchase Agreement, the Purchaser acquired all of the outstanding
capital stock of GDSI (such acquisition, the “Transaction”).
The total consideration paid to the Sellers at closing
of the Transaction consisted of $14.0 million in cash, approximately $1.7 million of shares of the Company’s common stock and a
secured promissory note in the original principal amount of $4.0 million issued by the Purchaser to the Sellers’ representative
(the “Note”). The Note does not bear interest, is subject to partial prepayment (reduction of the outstanding principal amount
down to $1.3 million) on the second anniversary of the Closing Date, and is payable in full on the third anniversary of the Closing Date.
The Purchaser can reduce the principal amount of the Note (i) to satisfy certain post-closing adjustments to the Transaction purchase
price, (ii) to satisfy the Sellers’ indemnification obligations under the Purchase Agreement, and (iii) if GDSI’s President
is terminated for cause or due to disability or resigns without good reason prior to maturity. The Note is secured by certain of the Purchaser’s
and GDSI’s assets. In the event of certain events of default, including failure to pay amounts due under the Note and certain bankruptcy
events, the outstanding principal amount of the Note will become immediately due.
Underwritten Offering of Common Stock
On January 19, 2023, the Company closed an underwritten
public offering of 12,545,454 shares of its common stock at a price to the public of $2.75 per share pursuant to an underwriting agreement
with B. Riley Securities, Inc., as representative of the several underwriters named therein. The shares of common stock issued at closing
included 1,636,363 shares issued pursuant to the underwriters’ over-allotment option, which was exercised in full. Net proceeds
from the offering were approximately $32.0 million. Certain of the Company’s directors and officers participated in the offering
by purchasing shares on the same terms and conditions as other investors.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
The Company’s unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.
GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information
and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual
financial statements. In the opinion of management, all adjustments (consisting of normal accruals) considered necessary for a fair presentation
have been included. The Company has evaluated subsequent events through the filing of this Form 10-Q. Operating results for the quarter
ended December 31, 2022 are not necessarily indicative of the results that may be expected for the year ending June 30, 2023 or any future
interim period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s
audited consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the SEC on September
12, 2022 (the “2022 Annual Report”).
The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned subsidiaries as of December 31, 2022, Akoustis, Inc. and RFM Integrated Device, Inc.
All significant intercompany accounts and transactions have been eliminated in consolidation.
The Company’s significant accounting
policies are disclosed in Note 3. Summary of Significant Accounting Policies in the 2022 Annual Report. Since the date of the 2022
Annual Report, there have been no material changes to the Company’s significant accounting policies. The preparation of the
unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and
assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes
thereto. The policies, estimates and assumptions include valuing equity securities, derivative liabilities, deferred taxes and
related valuation allowances, contingent consideration, goodwill, intangible assets, revenue recognition, and the fair values of
long-lived assets. Actual results could differ from the estimates.
Management does not believe that any recently
issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated
financial statements.
Disclosure of accounting policy for basis of accounting, or basis of presentation, used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).
Disclosure of accounting policy regarding (1) the principles it follows in consolidating or combining the separate financial statements, including the principles followed in determining the inclusion or exclusion of subsidiaries or other entities in the consolidated or combined financial statements and (2) its treatment of interests (for example, common stock, a partnership interest or other means of exerting influence) in other entities, for example consolidation or use of the equity or cost methods of accounting. The accounting policy may also address the accounting treatment for intercompany accounts and transactions, noncontrolling interest, and the income statement treatment in consolidation for issuances of stock by a subsidiary.
Disclosure of accounting policy pertaining to new accounting pronouncements that may impact the entity's financial reporting. Includes, but is not limited to, quantification of the expected or actual impact.
Tabular disclosure of receivable, contract asset, and contract liability from contract with customer. Includes, but is not limited to, change in contract asset and contract liability.
Tabular disclosure of the extent of the entity's reliance on its major customers, if revenues from transactions with a single external customer amount to 10 percent or more of entity revenues, including the disclosure of that fact, the total amount of revenues from each such customer, and the identity of the reportable segment or segments reporting the revenues. The entity need not disclose the identity of a major customer or the amount of revenues that each segment reports from that customer. For these purposes, a group of companies known to the entity to be under common control is considered a single customer, and the federal government, a state government, a local government such as a county or municipality, or a foreign government is each considered a single customer.
Tabular disclosure of physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, balances by class of assets, depreciation and depletion expense and method used, including composite depreciation, and accumulated deprecation.
Tabular disclosure of condensed income statement, including, but not limited to, income statements of consolidated entities and consolidation eliminations.
Tabular disclosure of the (a) carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business (accounts payable); (b) other payables; and (c) accrued liabilities. Examples include taxes, interest, rent and utilities. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer). An alternative caption includes accrued expenses.
Tabular disclosure of allocation of amount expensed and capitalized for award under share-based payment arrangement to statement of income or comprehensive income and statement of financial position. Includes, but is not limited to, corresponding line item in financial statement.
Tabular disclosure of the significant assumptions used during the year to estimate the fair value of stock options, including, but not limited to: (a) expected term of share options and similar instruments, (b) expected volatility of the entity's shares, (c) expected dividends, (d) risk-free rate(s), and (e) discount for post-vesting restrictions.
Tabular disclosure of cost not yet recognized and weighted-average period over which cost is expected to be recognized for nonvested award under share-based payment arrangement.
Tabular disclosure of lessee's lease cost. Includes, but is not limited to, interest expense for finance lease, amortization of right-of-use asset for finance lease, operating lease cost, short-term lease cost, variable lease cost and sublease income.
Tabular disclosure of undiscounted cash flows of lessee's operating lease liability. Includes, but is not limited to, reconciliation of undiscounted cash flows to operating lease liability recognized in statement of financial position.
Tabular disclosure of the profit or loss and total assets for each reportable segment. An entity discloses certain information on each reportable segment if the amounts (a) are included in the measure of segment profit or loss reviewed by the chief operating decision maker or (b) are otherwise regularly provided to the chief operating decision maker, even if not included in that measure of segment profit or loss.
Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.
Tabular disclosure of input and valuation technique used to measure fair value and change in valuation approach and technique for each separate class of asset and liability measured on recurring and nonrecurring basis.
Tabular disclosure of the fair value of financial instruments, including financial assets and financial liabilities, and the measurements of those instruments, assets, and liabilities.
Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.
Amount of currency on hand as well as demand deposits with banks or financial institutions. Includes other kinds of accounts that have the general characteristics of demand deposits. Excludes cash and cash equivalents within disposal group and discontinued operation.
The proceeds received by an insurance entity after deducting offering and other costs of securities issued and after policy credits, in connection with its conversion from a mutual form of ownership to a stock entity.
The number of units sold in a public offering of each class of partners' capital account. Units represent shares of ownership of the general, limited, and preferred partners.
Amount, after accumulated amortization and accumulated impairment loss, of asset recognized from cost incurred to obtain or fulfill contract with customer.
Revenue Recognition from Contracts with Customers (Details) - Schedule of revenues of the Company’s reportable segments by geographic region - USD ($) $ in Thousands
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Revenue Recognition from Contracts with Customers (Details) - Schedule of changes in opening and closing balances of the contract asset and contract liability - USD ($) $ in Thousands
Amount of increase (decrease) in right to consideration in exchange for good or service transferred to customer when right is conditioned on something other than passage of time.
Carrying amount, net of reserves and adjustments, as of the balance sheet date of merchandise or goods which are partially completed. This inventory is generally comprised of raw materials, labor and factory overhead costs, which require further materials, labor and overhead to be converted into finished goods, and which generally require the use of estimates to determine percentage complete and pricing.
Amount of gain (loss) from the disposal of an asset through means other than sale, for example, but not limited to, abandonment, spin-off, and expropriation.
Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter. Buildings are amortized on a straight-line basis between 11 and 39 years.
Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
Amount of accumulated depreciation, depletion and amortization for physical assets used in the normal conduct of business to produce goods and services.
Amount before accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Useful life of long lived, physical assets used in the normal conduct of business and not intended for resale, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents the reported fact of one year, five months, and thirteen days. Examples include, but not limited to, land, buildings, machinery and equipment, office equipment, furniture and fixtures, and computer equipment.
Amount of currency on hand as well as demand deposits with banks or financial institutions, acquired at the acquisition date. Includes other kinds of accounts that have the general characteristics of demand deposits. Also includes short-term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates.
The net amount, measured at other than acquisition-date fair value, of all the assets acquired and liabilities assumed that arise from contingencies and were recognized by the entity, if the acquisition-date fair value cannot be determined and other criteria (as defined) related to the contingencies have been met.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Amount before accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Sum of the carrying values as of the balance sheet date of obligations incurred through that date, including liabilities incurred and payable to vendors for goods and services received, taxes, interest, rent and utilities, compensation costs, payroll taxes and fringe benefits (other than pension and postretirement obligations), contractual rights and obligations, and statutory obligations.
Carrying value as of the balance sheet date of liabilities incurred (and for which invoices have typically been received) and payable to vendors for goods and services received that are used in an entity's business. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
Carrying value as of the balance sheet date of the obligations incurred through that date and payable for employees' services provided. Used to reflect the current portion of the liabilities (due within one year or within the normal operating cycle if longer).
Amount of noncash expense included in interest expense to amortize debt discount and premium associated with the related debt instruments. Excludes amortization of financing costs. Alternate captions include noncash interest expense.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Period over which grantee's right to exercise award under share-based payment arrangement is no longer contingent on satisfaction of service or performance condition, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days. Includes, but is not limited to, combination of market, performance or service condition.
The weighted average grant-date fair value of options granted during the reporting period as calculated by applying the disclosed option pricing methodology.
The estimated dividend rate (a percentage of the share price) to be paid (expected dividends) to holders of the underlying shares over the option's term.
The estimated measure of the percentage by which a share price is expected to fluctuate during a period. Volatility also may be defined as a probability-weighted measure of the dispersion of returns about the mean. The volatility of a share price is the standard deviation of the continuously compounded rates of return on the share over a specified period. That is the same as the standard deviation of the differences in the natural logarithms of the stock prices plus dividends, if any, over the period.
The weighted average grant-date fair value of options granted during the reporting period as calculated by applying the disclosed option pricing methodology.
Expected term of award under share-based payment arrangement, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days.
The amount of purchased research and development assets that are acquired in a business combination have no alternative future use and are therefore written off in the period of acquisition.
Weighted average remaining lease term for operating lease, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days.
Amount of required minimum rental payments for operating leases having an initial or remaining non-cancelable lease term in excess of one year due in the next fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.
Amount of required minimum rental payments for operating leases having an initial or remaining non-cancelable lease term in excess of one year due in the fourth fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.
Amount of required minimum rental payments for operating leases having an initial or remaining non-cancelable lease term in excess of one year due in the third fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.
Amount of required minimum rental payments for operating leases having an initial or remaining non-cancelable lease term in excess of one year due in the second fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.
Amount of required minimum rental payments for operating leases having an initial or remaining non-cancelable lease term in excess of one year due after the fifth fiscal year following the latest fiscal year. Excludes interim and annual periods when interim periods are reported on a rolling approach, from latest balance sheet date.
Pursuant to the Agreements, the Company will lease for $1.00 annually to the OCIDA an approximately 9.995 acre parcel of land in Canandaigua,
New York, together with the improvements thereon (including the Company’s New York fabrication facility), and transfer title to
certain related equipment and personal property to the OCIDA (collectively, the “Facility”).
Amount, after allowance for credit loss, of right to consideration from customer for product sold and service rendered in normal course of business, classified as current.
The aggregate total of expenses of managing and administering the affairs of an entity, including affiliates of the reporting entity, which are not directly or indirectly associated with the manufacture, sale or creation of a product or product line.
Amount after accumulated depreciation, depletion and amortization of physical assets used in the normal conduct of business to produce goods and services and not intended for resale. Examples include, but are not limited to, land, buildings, machinery and equipment, office equipment, and furniture and fixtures.
Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Fair value, before effects of master netting arrangements, of a financial liability or contract with one or more underlyings, notional amount or payment provision or both, and the contract can be net settled by means outside the contract or delivery of an asset. Includes liabilities elected not to be offset. Excludes liabilities not subject to a master netting arrangement.
Sum as of the balance sheet date of the (a) fair values of all liabilities resulting from contracts that meet the criteria of being accounted for as derivative instruments, and (b) the carrying amounts of the liabilities arising from financial instruments or contracts used to mitigate a specified risk (hedge), and which are expected to be extinguished or otherwise disposed of within a year or the normal operating cycle, if longer, net of the effects of master netting arrangements.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Amount of increase (decrease) in fair value from changes in the assumptions or model used to calculate the fair value of a contract to service financial assets under which the benefits of servicing are expected to more than adequately compensate the servicer.
Fair value of financial instrument classified as an asset measured using unobservable inputs that reflect the entity's own assumption about the assumptions market participants would use in pricing.
Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.
Fair Value Measurement (Details) - Schedule of development and determination of the unobservable inputs for Level 3 fair value measurements $ in Thousands
Fair value of financial instrument classified as an asset measured using unobservable inputs that reflect the entity's own assumption about the assumptions market participants would use in pricing.
Fair value portion of borrowing which can be exchanged for a specified number of another security at the option of the issuer or the holder, for example, but not limited to, the entity's common stock.
The estimated measure of the percentage by which a share price is expected to fluctuate during a period. Volatility also may be defined as a probability-weighted measure of the dispersion of returns about the mean. The volatility of a share price is the standard deviation of the continuously compounded rates of return on the share over a specified period. That is the same as the standard deviation of the differences in the natural logarithms of the stock prices plus dividends, if any, over the period.
Expected term of award under share-based payment arrangement, in 'PnYnMnDTnHnMnS' format, for example, 'P1Y5M13D' represents reported fact of one year, five months, and thirteen days.
The total consideration paid to the Sellers at closing
of the Transaction consisted of $14.0 million in cash, approximately $1.7 million of shares of the Company’s common stock and a
secured promissory note in the original principal amount of $4.0 million issued by the Purchaser to the Sellers’ representative
(the “Note”). The Note does not bear interest, is subject to partial prepayment (reduction of the outstanding principal amount
down to $1.3 million) on the second anniversary of the Closing Date, and is payable in full on the third anniversary of the Closing Date.
The number of units sold in a public offering of each class of partners' capital account. Units represent shares of ownership of the general, limited, and preferred partners.
Describes the event or transaction that occurred between the balance sheet date and the date the financial statements are issued or available to be issued.
Per share amount of par value or stated value of stock classified as temporary equity. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable.