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 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, WiFi 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 process, collectively referred to as XBAW™ 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.
Note 2. Liquidity
As of September 30, 2020, the Company had
cash and cash equivalents of $37.2 million and working capital of $35.1 million. The Company has historically incurred recurring
operating losses and experienced net cash used in operating activities of $7.9 million for the three months ended September 30,
2020, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the
issuance date.
As of October 22, 2020, the Company had
$34.5 million of cash and cash equivalents, which the Company expects 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 our technology, development of our patent strategy and expansion of our patent portfolio,
as well as to provide working capital and funds for other general corporate purposes. Except pursuant to its ATM Equity OfferingSM
Sales Agreement with BofA Securities, Inc. and Piper Sandler & Co., the Company has no commitments or arrangements to
obtain any additional funds, and there can be no assurance such funds, including under the ATM Equity OfferingSM Sales
Agreement, 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 (“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. 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 September 30, 2020 are not necessarily indicative of the results that may be expected for the year
ending June 30, 2021 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 August 21, 2020 (the “2020 Annual Report”).
Principles of Consolidation
The accompanying unaudited condensed consolidated
financial statements include the accounts of the Company and its wholly owned subsidiary, Akoustis, 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 2020 Annual Report. Since the date of the 2020 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 and derivative financial instruments issued in financing transactions,
deferred taxes and related valuation allowances, revenue recognition, contingent real estate liability and the fair values of long-lived
assets. Actual results could differ from the estimates.
Allowance for Doubtful Accounts
The Company provides an allowance for doubtful accounts equal
to the estimated losses to be incurred in the collection of accounts receivable.
Inventory, net
Inventory is stated at the lower of cost or net realizable value
using the first-in, first-out (FIFO) valuation method.
Inventory, net of reserves, consisted of the following as of September
30, 2020 and June 30, 2020 (in thousands):
|
|
September 30,
2020
|
|
|
June 30,
2020
|
|
Raw Materials
|
|
$
|
28
|
|
|
$
|
24
|
|
Work in Process
|
|
|
83
|
|
|
|
69
|
|
Finished Goods
|
|
|
125
|
|
|
|
43
|
|
Total Inventory
|
|
$
|
236
|
|
|
$
|
136
|
|
Shares of Restricted Stock Outstanding
Shares outstanding include shares of restricted
stock with respect to which restrictions have not lapsed. Restricted stock included in reportable shares outstanding was the following
as of September 30, 2020 and 2019. Shares of restricted stock are included in the calculation of weighted average shares outstanding.
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
Restricted stock included in reportable shares outstanding
|
|
|
28,750
|
|
|
|
181,000
|
|
Reclassification
Certain prior period amounts have been
reclassified to conform to current period presentation. The reclassifications did not have an impact on net loss as previously
reported.
Recently Issued Accounting Pronouncements
Accounting Pronouncements Recently Adopted
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.
Foundry Fabrication Services
Foundry fabrication services revenue includes
Non-Recurring Engineering (“NRE”) and microelectromechanical systems (“MEMS”) foundry services. The Company
exited the MEMS business during fiscal year 2020. 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 for the three months ended September 30, 2020 (in thousands):
|
|
Foundry
Fabrication
Services
Revenue
|
|
|
Product Sales
Revenue
|
|
|
Total Revenue
with
Customers
|
|
NRE - RF Filters
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
57
|
|
Filters/Amps
|
|
|
—
|
|
|
|
579
|
|
|
|
579
|
|
Total
|
|
$
|
57
|
|
|
|
579
|
|
|
|
636
|
|
The following table summarizes the revenues of the Company’s
reportable segments for the three months ended September 30, 2019 (in thousands):
|
|
Foundry
Fabrication
Services
Revenue
|
|
|
Product Sales
Revenue
|
|
|
Total Revenue
with
Customers
|
|
MEMS
|
|
$
|
245
|
|
|
$
|
—
|
|
|
$
|
245
|
|
NRE - RF Filters
|
|
|
116
|
|
|
|
—
|
|
|
|
116
|
|
Filters/Amps
|
|
|
—
|
|
|
|
182
|
|
|
|
182
|
|
Total
|
|
$
|
361
|
|
|
$
|
182
|
|
|
$
|
543
|
|
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 and liability for the first quarter of fiscal year 2020
and 2019 (in thousands):
|
|
Contract
Assets
|
|
|
Contract
Liability
|
|
Balance, June 30, 2020
|
|
$
|
125
|
|
|
$
|
—
|
|
Closing, September 30, 2020
|
|
|
133
|
|
|
|
190
|
|
Increase/(Decrease)
|
|
$
|
8
|
|
|
$
|
190
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2019
|
|
$
|
140
|
|
|
$
|
5
|
|
Closing, September 30, 2019
|
|
|
139
|
|
|
|
13
|
|
Increase/(Decrease)
|
|
$
|
(1
|
)
|
|
$
|
8
|
|
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). At September 30, 2020, the Company recorded a contract
liability of $190 thousand related to the sale of amplifiers that were not shipped during the quarter but payment had been received.
The Company shipped the amplifiers in the second quarter of fiscal year 2021. The amount of revenue recognized in the three months
ended September 30, 2019 that was included in the opening contract liability balance was $5 thousand which related to product sales.
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 three months ended September 30, 2020 and 2019 that was included in the
opening contract asset balance was $51 thousand, which primarily related to non-recurring engineering, business and $94 thousand,
which primarily related to MEMS business, respectively.
Backlog of Remaining Customer Performance Obligations
Revenue expected to be recognized and recorded
as sales during this fiscal year from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) was
$0.9 million at September 30, 2020.
Note 5. Property and Equipment, net
Property
and equipment, net consisted of the following as of September 30, 2020 and June 30, 2020 (in thousands):
|
|
Estimated
Useful Life
|
|
September 30,
2020
|
|
|
June 30,
2020
|
|
Land
|
|
n/a
|
|
$
|
1,000
|
|
|
$
|
1,000
|
|
Building
|
|
11 years
|
|
|
3,000
|
|
|
|
3,000
|
|
Equipment
|
|
2-10 years
|
|
|
25,465
|
|
|
|
24,746
|
|
Leasehold Improvements
|
|
*
|
|
|
1,072
|
|
|
|
964
|
|
Software
|
|
3 years
|
|
|
294
|
|
|
|
294
|
|
Furniture & Fixtures
|
|
5 years
|
|
|
11
|
|
|
|
11
|
|
Computer Equipment
|
|
3 years
|
|
|
281
|
|
|
|
267
|
|
Total
|
|
|
|
|
31,123
|
|
|
|
30,282
|
|
Less: Accumulated Depreciation
|
|
|
|
|
(7,665
|
)
|
|
|
(6,677
|
)
|
Total
|
|
|
|
$
|
23,458
|
|
|
$
|
23,605
|
|
|
(*)
|
Leasehold
improvements are amortized on a straight-line basis over the term of the lease or the
estimated useful lives, whichever is shorter.
|
The Company recorded depreciation expense
of $1.0 million and $0.7 million for the three months ended September 30, 2020 and 2019, respectively.
As of September 30, 2020, equipment with
a net book value totaling $4.3 million had not been placed in service and therefore was not depreciated during the period. As of
June 30, 2020, fixed assets with a net book value totaling $5.6 million had not been placed in service and therefore was not depreciated
during the period.
Note
6. Accounts Payable and Accrued Expenses
Accounts
payable and accrued expenses consisted of the following at September 30, 2020 and June 30, 2020 (in thousands):
|
|
September 30,
2020
|
|
|
June
30,
2020
|
|
Accounts payable
|
|
$
|
707
|
|
|
$
|
2,135
|
|
Accrued salaries and benefits
|
|
|
1,943
|
|
|
|
2,478
|
|
Accrued professional fees
|
|
|
42
|
|
|
|
193
|
|
Accrued utilities
|
|
|
158
|
|
|
|
138
|
|
Accrued interest
|
|
|
141
|
|
|
|
137
|
|
Accrued goods received not invoiced
|
|
|
559
|
|
|
|
396
|
|
Other accrued expenses
|
|
|
199
|
|
|
|
422
|
|
Totals
|
|
$
|
3,749
|
|
|
$
|
5,899
|
|
Note
7. Derivative Liabilities
The
table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and
liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months
ended September 30, 2020 (in thousands):
|
|
Fair Value
Measurement
Using Level 3
Inputs
Total
|
|
Balance, June 30, 2020
|
|
$
|
1,110
|
|
Change in fair value of derivative liabilities
|
|
|
198
|
|
Balance, September 30, 2020 (see note 8)
|
|
$
|
1,308
|
|
The
fair value of the derivative features of the convertible note at the balance sheet dates were calculated using the with-and-without
method, a form of the income approach, valued with the following assumptions:
|
|
September
30,
2020
|
|
|
June
30,
2020
|
|
Remaining term (years)
|
|
|
2.66-3.16
|
|
|
|
2.92-3.42
|
|
Expected volatility
|
|
|
68
|
%
|
|
|
70
|
%
|
Risk free interest rate
|
|
|
0.15-0.17
|
%
|
|
|
0.18-0.20
|
%
|
Dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Risk-free
interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the
issuance.
Dividend
yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate
declaring dividends in the near future.
Volatility: The Company calculates the
expected volatility of the stock price using the historical volatilities of the Company’s common stock traded on the Nasdaq
Capital Market.
Remaining
term: The Company’s remaining term is based on the remaining contractual term of the convertible notes.
Note
8. Convertible Notes
The
following table summarizes convertible debt as of September 30, 2020 (in thousands):
|
|
Maturity Date
|
|
Stated
Interest
Rate
|
|
|
Conversion
Price
|
|
|
Face
Value
|
|
|
Remaining
Debt
(Discount)
|
|
|
Fair Value
of
Embedded
Conversion
Option
|
|
|
Carrying
Value
|
|
Long Term convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.5% convertible senior secured notes
|
|
5/31/2023
|
|
|
6.50
|
%
|
|
$
|
5.00
|
|
|
$
|
15,000
|
|
|
$
|
(2,981
|
)
|
|
$
|
1,066
|
|
|
$
|
13,085
|
|
6.5% convertible senior notes
|
|
11/30/2023
|
|
|
6.50
|
%
|
|
$
|
5.10
|
|
|
|
10,000
|
|
|
|
(469
|
)
|
|
|
242
|
|
|
|
9,773
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance as of September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,000
|
|
|
$
|
(3,450
|
)
|
|
$
|
1,308
|
|
|
$
|
22,858
|
|
The
following table summarizes convertible debt as of June 30, 2020 (in thousands):
|
|
Maturity
Date
|
|
Stated
Interest
Rate
|
|
|
Conversion
Price
|
|
|
Face
Value
|
|
|
Remaining
Debt
(Discount)
|
|
|
Fair Value
of
Embedded
Conversion
Option
|
|
|
Carrying
Value
|
|
Long Term convertible notes payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.5% convertible senior secured notes
|
|
5/31/2023
|
|
|
6.50
|
%
|
|
$
|
5.00
|
|
|
$
|
15,000
|
|
|
$
|
(3,918
|
)
|
|
$
|
894
|
|
|
$
|
11,976
|
|
6.5% convertible senior notes
|
|
11/30/2023
|
|
|
6.50
|
%
|
|
$
|
5.10
|
|
|
|
10,000
|
|
|
|
(564
|
)
|
|
|
216
|
|
|
|
9,652
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance as of June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
$
|
25,000
|
|
|
$
|
(4,482
|
)
|
|
$
|
1,110
|
|
|
$
|
21,628
|
|
Note
9. Loans Payable
Paycheck
Protection Program Loan
On
May 20, 2020, Akoustis, Inc., the operating subsidiary of the Company, issued a promissory note (the “Promissory Note”)
in favor of Bank of America, NA (the “Lender”) that provides for a loan in the principal amount of $1.6 million (the
“PPP Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief,
and Economic Security Act (the “CARES Act”), which is administered by the United States Small Business Administration
(the “SBA”). The PPP Loan is scheduled to mature two years from the date of funding of the PPP Loan (the “Maturity
Date”) and accrues interest at a rate of 1.00% per annum. Payments under the PPP Loan are deferred for the first sixteen
months of its term. Commencing 60 days from the funding of the PPP Loan, but not more than sixteen months from the funding of
the PPP Loan, Akoustis, Inc. is obligated to apply to the Lender for loan forgiveness for all or a portion of the PPP Loan. Such
forgiveness will be determined, subject to limitations, based on the use of loan proceeds in accordance with the PPP, including
for payroll costs and mortgage interest, rent and utility costs. If the SBA confirms full forgiveness of the unpaid balance of
the PPP Loan, and reimburses the Lender for the total outstanding principal and interest due under the PPP Loan, then the loan
will be deemed satisfied in full. If the SBA does not confirm full forgiveness of the PPP Loan, then the Lender will establish
repayment terms of the outstanding principal and interest due under the PPP Loan. No assurance is provided that Akoustis, Inc.
will obtain forgiveness of the PPP Loan in whole or in part. The Promissory Note contains customary events of default relating
to, among other things, payment defaults and provisions of the Promissory Note. The Company treated the PPP Loan as debt and
included it as a long-term liability on the balance sheet.
The following table summarizes Paycheck Protection Program debt
as of September 30, 2020 (in thousands):
|
|
Maturity Date
|
|
Stated
Interest
Rate
|
|
|
Face
Value
|
|
|
Remaining
Debt
(Discount)
|
|
|
Carrying
Value
|
|
Long Term Loans payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycheck Protection Plan loan
|
|
05/20/2022
|
|
|
1.00
|
%
|
|
$
|
1,633
|
|
|
$
|
(35
|
)
|
|
$
|
1,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance as of September 30, 2020
|
|
|
|
|
|
|
|
$
|
1,633
|
|
|
$
|
(35
|
)
|
|
$
|
1,598
|
|
The following table summarizes Paycheck Protection Program
debt as of June 30, 2020 (in thousands):
|
|
Maturity
Date
|
|
Stated
Interest
Rate
|
|
|
Face
Value
|
|
|
Remaining
Debt
(Discount)
|
|
|
Carrying
Value
|
|
Long Term Loans payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paycheck
Protection Plan loan
|
|
05/20/2022
|
|
|
1.00
|
%
|
|
$
|
1,633
|
|
|
$
|
(42
|
)
|
|
$
|
1,591
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending Balance as of June
30, 2020
|
|
|
|
|
|
|
|
$
|
1,633
|
|
|
$
|
(42
|
)
|
|
$
|
1,591
|
|
The amortization of PPP loan debt discount of $6.4 thousand
was treated as interest expense on the income statement.
Note
10. Concentrations
Vendors
Vendor
concentration as a percentage of purchases for the three months ended September 30, 2020 and 2019 are as follows:
|
|
Three Months
09/30/2020
|
|
|
Three Months
09/30/2019
|
|
Vendor 1
|
|
|
11
|
%
|
|
|
—
|
|
Vendor 2
|
|
|
—
|
|
|
|
15
|
%
|
Customers
Customer concentration as a percentage
revenue for the three months ended September 30, 2020 and 2019 are as follows:
|
|
Three Months
09/30/2020
|
|
|
Three Months
09/30/2019
|
|
Customer 1
|
|
|
74
|
%
|
|
|
—
|
|
Customer 2
|
|
|
10
|
%
|
|
|
—
|
|
Customer 3
|
|
|
—
|
|
|
|
45
|
%
|
Customer 4
|
|
|
—
|
|
|
|
20
|
%
|
Customer 5
|
|
|
—
|
|
|
|
20
|
%
|
Note
11. Stockholders’ Equity
Equity
Issuances
On May 8, 2020, the Company entered
into an ATM Equity OfferingSM Sales Agreement with BofA Securities, Inc. and Piper & Sandler & Co.
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 “ATM Program”).
During
the three months ended September 30, 2020, the Company sold a total of 416,221 shares of its common stock at a price to the public
of an average of $8.08 per share through the ATM Program for aggregate gross proceeds of approximately $3.4 million, before deducting
compensation paid to the sales agents of approximately $0.1 million.
Equity Incentive Plans
During the three months ended September
30, 2020, the Company granted employees options to purchase an aggregate of 356,750 shares of common stock with a weighted average
grant date fair value of $4.48. 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:
|
|
Three
Months
Ended
September 30,
2020
|
|
Exercise price
|
|
$ 7.72 - 8.14
|
|
Expected term (years)
|
|
4.75 – 5.00
|
|
Risk-free interest rate
|
|
0.25% – 0.28%
|
|
Volatility
|
|
67 - 68%
|
|
Dividend yield
|
|
0%
|
|
Weighted Average Grant Date Fair Value of Options granted during the period
|
|
$4.48
|
|
Expected
term: The Company’s expected term is based on the period the options are expected to remain outstanding. The Company estimated
this amount utilizing the “Simplified Method” in that the Company does not have sufficient historical experience to
provide a reasonable basis to estimate an expected term.
Risk-free
interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar term on the date of the grant.
Volatility:
The Company calculates the expected volatility of the stock price using the historical volatilities of the Company’s common
stock traded on the Nasdaq Capital Market.
Dividend
yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring
dividends in the near future.
During the three months ended September
30, 2020 the Company awarded certain employees and directors grants of an aggregate of 407,403 restricted stock units (“RSUs”)
with a weighted average grant date fair value of $8.07. 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.
Compensation
expense related to our stock-based awards described above was as follows (in thousands):
|
|
Three Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Research and Development
|
|
$
|
1,014
|
|
|
$
|
956
|
|
General and Administrative
|
|
|
1,013
|
|
|
|
747
|
|
Total
|
|
$
|
2,027
|
|
|
$
|
1,703
|
|
Unrecognized
stock-based compensation expense and weighted-average years to be recognized are as follows (in thousands):
|
|
As of September 30, 2020
|
|
|
|
Unrecognized stock-
based
compensation
|
|
|
Weighted-
average
years
to be recognized
|
|
Options
|
|
$
|
3,257
|
|
|
|
2.39
|
|
Restricted stock awards/units
|
|
$
|
8,267
|
|
|
|
2.40
|
|
Note
12. Commitments and Contingencies
Leases
The
Company leases office space and office equipment in Huntersville, NC as well as equipment in Canandaigua, NY. Our 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.
The
components of lease expense were as follows:
|
|
Three Months
Ended September 30,
2020
|
|
|
Three Months Ended September 30,
2019
|
|
Operating Lease Expense
|
|
$
|
75
|
|
|
|
43
|
|
Supplemental
balance sheet information related to leases was as follows (in thousands):
|
|
Classification on the
Condensed Consolidated
Balance Sheet
|
|
September 30,
2020
|
|
Assets
|
|
|
|
|
|
Operating lease assets
|
|
Other non-current assets
|
|
$
|
645
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Other current liabilities
|
|
Current liabilities
|
|
|
241
|
|
Operating lease liabilities
|
|
Other non-current liabilities
|
|
|
408
|
|
Weighted Average Remaining Lease Term:
|
|
|
|
Operating leases
|
|
|
2.5
|
|
|
|
|
|
|
Weighted Average Discount Rate:
|
|
|
|
|
Operating leases
|
|
|
12.47
|
%
|
The
following table outlines the minimum future lease payments for the next five years and thereafter, (in thousands):
For the year ending June 30,
|
|
|
|
2021
|
|
$
|
229
|
|
2022
|
|
|
313
|
|
2023
|
|
|
204
|
|
2024
|
|
|
7
|
|
2025
|
|
|
—
|
|
Thereafter
|
|
|
—
|
|
Total lease payments (undiscounted cash flows)
|
|
|
753
|
|
|
|
|
|
|
Less imputed interest
|
|
|
(104
|
)
|
Total
|
|
$
|
649
|
|
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. The benefits provided to the Company 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
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.
Note
13. Related Party Transactions
Asset Purchase and Sale
On September 30, 2020, Akoustis, Inc. sold
to a third party certain of its inventory, together with related warranty obligations, delivery commitments and design data and
files (the “Designs”). In connection with such transaction, Akoustis, Inc. entered into an Asset Purchase Agreement,
dated September 30, 2020 with Big Red, LLC for the purchase of the Designs for $25,000. Members of Big Red, LLC include the brother
of the Company’s Chief Executive Officer and two non-executive employees of the Company.
Note 14. 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 Product which
consists of amplifier and filter product sales, and grant revenue. The Company records all general and administrative costs in
the RF Product segment.
The
Company evaluates performance of its operating segments based on revenue and operating profit (loss). Segment information for
the three months ended September 30, 2020 and 2019 are as follows (in thousands):
|
|
Foundry/
Fabrication
Services
|
|
|
RF Product
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
57
|
|
|
|
579
|
|
|
|
636
|
|
Cost of revenue
|
|
|
53
|
|
|
|
1,596
|
|
|
|
1,649
|
|
Gross margin
|
|
|
4
|
|
|
|
(1,017
|
)
|
|
|
(1,013
|
)
|
Research and development
|
|
|
—
|
|
|
|
6,380
|
|
|
|
6,380
|
|
General and administrative
|
|
|
—
|
|
|
|
2,927
|
|
|
|
2,927
|
|
Income (Loss) from Operations
|
|
$
|
4
|
|
|
|
(10,324
|
)
|
|
|
(10,320
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
361
|
|
|
$
|
182
|
|
|
$
|
543
|
|
Cost of revenue
|
|
|
138
|
|
|
|
198
|
|
|
|
336
|
|
Gross margin
|
|
|
223
|
|
|
|
(16
|
)
|
|
|
207
|
|
Research and development
|
|
|
—
|
|
|
|
5,079
|
|
|
|
5,079
|
|
General and administrative
|
|
|
—
|
|
|
|
2,801
|
|
|
|
2,801
|
|
Income (Loss) from Operations
|
|
$
|
223
|
|
|
|
(7,896
|
)
|
|
|
(7,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
26
|
|
|
|
320
|
|
|
|
346
|
|
Property and equipment, net
|
|
|
—
|
|
|
|
23,458
|
|
|
|
23,458
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
$
|
71
|
|
|
$
|
280
|
|
|
$
|
351
|
|
Property and equipment, net
|
|
$
|
—
|
|
|
$
|
23,605
|
|
|
$
|
23,605
|
|
Note
15. 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 months ended September 30, 2020 and September 30, 2019 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 September 30, 2020 and 2019:
|
|
September 30,
2020
|
|
|
September 30,
2019
|
|
Convertible Notes
|
|
|
4,960,800
|
|
|
|
4,960,800
|
|
Options
|
|
|
2,633,165
|
|
|
|
2,137,665
|
|
Warrants
|
|
|
395,700
|
|
|
|
626,343
|
|
Total
|
|
|
7,989,665
|
|
|
|
7,724,808
|
|