PART I — FINANCIAL INFORMATION [ITEM 1. FINANCIAL STATEMENTS](index=4&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, and cash flows, with notes on accounting policies and performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | Metric | Dec 31, 2020 (in thousands) | Jun 30, 2020 (in thousands) | Change (in thousands) | | :--------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Cash and cash equivalents | $47,685 | $44,308 | +$3,377 | | Total current assets | $50,933 | $46,203 | +$4,730 | | Property and equipment, net | $25,080 | $23,605 | +$1,475 | | Total Assets | $77,570 | $71,433 | +$6,137 | | Total current liabilities | $15,266 | $6,130 | +$9,136 | | Total long-term liabilities | $15,820 | $23,808 | -$7,988 | | Total Liabilities | $31,086 | $29,938 | +$1,148 | | Total Stockholders' Equity | $46,484 | $41,495 | +$4,989 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Three Months Ended December 31 | Metric (in thousands) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :--------------------------- | :----------- | :----------- | :----------- | | Revenue with customers | $1,308 | $518 | +$790 | | Cost of revenue | $2,602 | $787 | +$1,815 | | Gross profit (loss) | $(1,294) | $(269) | -$(1,025) | | Research and development | $5,566 | $4,897 | +$669 | | General and administrative | $3,361 | $2,759 | +$602 | | Total operating expenses | $8,927 | $7,656 | +$1,271 | | Loss from operations | $(10,221) | $(7,925) | -$(2,296) | | Net loss | $(11,910) | $(9,314) | -$(2,596) | | Net loss per common share | $(0.30) | $(0.30) | $0.00 | Six Months Ended December 31 | Metric (in thousands) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :--------------------------- | :----------- | :----------- | :----------- | | Revenue with customers | $1,944 | $1,061 | +$883 | | Cost of revenue | $4,251 | $1,123 | +$3,128 | | Gross profit (loss) | $(2,307) | $(62) | -$(2,245) | | Research and development | $11,946 | $9,967 | +$1,979 | | General and administrative | $6,288 | $5,569 | +$719 | | Total operating expenses | $18,234 | $15,536 | +$2,698 | | Loss from operations | $(20,541) | $(15,598) | -$(4,943) | | Net loss | $(23,860) | $(18,289) | -$(5,571) | | Net loss per common share | $(0.61) | $(0.59) | -$(0.02) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) | Metric (in thousands) | Jun 30, 2020 | Dec 31, 2020 | Change |\n| :----------------------------- | :----------- | :----------- | :----------- | | Common Shares | 37,990 | 41,399 | +3,409 | | Common Stock Par Value | $38 | $41 | +$3 | | Additional Paid In Capital | $145,072 | $173,918 | +$28,846 | | Accumulated Deficit | $(103,615) | $(127,475) | -$(23,860) | | Total Stockholders' Equity | $41,495 | $46,484 | +$4,989 | - Common stock issued for cash, net of issuance costs, contributed **$20.155 million** to equity during the three months ended December 31, 2020[17](index=17&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | Metric (in thousands) | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | Change (YoY) | | :------------------------------------------------------ | :---------------------------- | :---------------------------- | :----------- | | Net Cash Used in Operating Activities | $(16,170) | $(12,050) | -$(4,120) | | Net Cash Used in Investing Activities | $(4,491) | $(4,251) | -$(240) | | Net Cash Provided by Financing Activities | $24,038 | $32,500 | -$(8,462) | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $3,377 | $16,199 | -$(12,822) | | Cash, Cash Equivalents and Restricted Cash - End of Period | $47,785 | $46,353 | +$1,432 | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim financial information, and do not include all information required for annual statements[28](index=28&type=chunk) - The consolidated financial statements include the Company and its wholly-owned subsidiary, Akoustis, Inc., with intercompany accounts and transactions eliminated[29](index=29&type=chunk) - No material changes to significant accounting policies since the 2020 Annual Report; key estimates include valuation of equity securities, derivative financial instruments, deferred taxes, revenue recognition, and long-lived assets[30](index=30&type=chunk) [Note 1. Organization](index=11&type=section&id=Note%201.%20Organization) - The company focuses on developing, designing, and manufacturing RF filter products for smartphones, tablets, cellular infrastructure, WiFi CPE, and military/defense applications[25](index=25&type=chunk) - Utilizes XBAW™ technology, which combines novel high purity acoustic piezoelectric materials and a unique microelectromechanical system (MEMS) wafer process[25](index=25&type=chunk) [Note 2. Liquidity](index=11&type=section&id=Note%202.%20Liquidity) | Metric (in millions) | Dec 31, 2020 | Jan 25, 2021 | | :------------------------ | :----------- | :----------- | | Cash and cash equivalents | $47.7 | $43.9 | | Working capital | $35.7 | N/A | - The company expects current funds to be sufficient for operations beyond the next twelve months but acknowledges historical operating losses and the potential need for additional financing[27](index=27&type=chunk) [Note 3. Summary of Significant Accounting Policies](index=11&type=section&id=Note%203.%20Summary%20of%20Significant%20Accounting%20Policies) [Allowance for Doubtful Accounts](index=12&type=section&id=Allowance%20for%20Doubtful%20Accounts) - An allowance for doubtful accounts is established for estimated losses in accounts receivable collection[31](index=31&type=chunk) [Inventory](index=13&type=section&id=Inventory) - Inventory is valued at the lower of cost or net realizable value using the FIFO method[32](index=32&type=chunk) | Inventory Category (in thousands) | Dec 31, 2020 | Jun 30, 2020 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Raw Materials | $23 | $24 | -$1 | | Work in Process | $464 | $69 | +$395 | | Finished Goods | $164 | $43 | +$121 | | Total Inventory | $651 | $136 | +$515 | [Shares of Restricted Stock Outstanding](index=13&type=section&id=Shares%20of%20Restricted%20Stock%20Outstanding) | Metric | Dec 31, 2020 | Dec 31, 2019 | Change | | :--------------------------------------- | :----------- | :----------- | :---------- | | Restricted stock in reportable shares | 10,000 | 144,750 | -134,750 | [Reclassification](index=13&type=section&id=Reclassification) - Prior period amounts were reclassified for presentation consistency, without affecting net loss[36](index=36&type=chunk) [Recently Issued Accounting Pronouncements](index=13&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - Management does not anticipate any material effect on the financial statements from recently issued, but not yet effective, accounting pronouncements[37](index=37&type=chunk) [Note 4. Revenue Recognition from Contracts with Customers](index=14&type=section&id=Note%204.%20Revenue%20Recognition%20from%20Contracts%20with%20Customers) - The company's primary revenue streams include foundry fabrication services (NRE and MEMS foundry, with MEMS exited in fiscal year 2020) and product sales (RF filters and amps)[38](index=38&type=chunk)[39](index=39&type=chunk) [Disaggregation of Revenue](index=14&type=section&id=Disaggregation%20of%20Revenue) Three Months Ended December 31 | Revenue Stream (in thousands) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :----------------------------------- | :----------- | :----------- | :----------- | | NRE - RF Filters | $670 | $311 | +$359 | | Filters/Amps | $638 | $195 | +$443 | | MEMS Foundry Fabrication Services | $— | $12 | -$12 | | Total Revenue with Customers | $1,308 | $518 | +$790 | Six Months Ended December 31 | Revenue Stream (in thousands) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :----------------------------------- | :----------- | :----------- | :----------- | | NRE - RF Filters | $727 | $427 | +$300 | | Filters/Amps | $1,217 | $377 | +$840 | | MEMS Foundry Fabrication Services | $— | $257 | -$257 | | Total Revenue with Customers | $1,944 | $1,061 | +$883 | [Performance Obligations](index=16&type=section&id=Performance%20Obligations) - Contracts for product sales and foundry fabrication services involve one performance obligation: delivery of the final product[44](index=44&type=chunk) [Contract Balances](index=16&type=section&id=Contract%20Balances) | Metric (in thousands) | Jun 30, 2020 | Dec 31, 2020 | Increase/(Decrease) | | :-------------------- | :----------- | :----------- | :------------------ | | Contract Assets | $125 | $383 | +$258 | | Contract Liability | $— | $57 | +$57 | - A contract liability of **$57 thousand** was recorded at December 31, 2020, for upfront payments for non-recurring engineering services to be performed later[46](index=46&type=chunk) [Backlog of Remaining Customer Performance Obligations](index=16&type=section&id=Backlog%20of%20Remaining%20Customer%20Performance%20Obligations) - Revenue expected from backlog of performance obligations was **$3.8 million** as of December 31, 2020[47](index=47&type=chunk) [Note 5. Property and Equipment, net](index=17&type=section&id=Note%205.%20Property%20and%20Equipment%2C%20net) | Asset Category (in thousands) | Dec 31, 2020 | Jun 30, 2020 | Change | | :---------------------------- | :----------- | :----------- | :----- | | Land | $1,000 | $1,000 | $0 | | Building | $3,000 | $3,000 | $0 | | Equipment | $27,689 | $24,746 | +$2,943| | Leasehold Improvements | $1,550 | $964 | +$586 | | Total | $33,825 | $30,282 | +$3,543| | Less: Accumulated Depreciation| $(8,745) | $(6,677) | -$(2,068)| | Total Property and Equipment, net | $25,080 | $23,605 | +$1,475| - Depreciation expense for the six months ended December 31, 2020, was **$2.1 million**, up from **$1.4 million** in the prior year[51](index=51&type=chunk) [Note 6. Accounts Payable and Accrued Expenses](index=17&type=section&id=Note%206.%20Accounts%20Payable%20and%20Accrued%20Expenses) | Category (in thousands) | Dec 31, 2020 | Jun 30, 2020 | Change | | :-------------------------------------- | :----------- | :----------- | :----- | | Accounts payable | $936 | $2,135 | -$1,199| | Accrued salaries and benefits | $2,336 | $2,478 | -$142 | | Accrued professional fees | $95 | $193 | -$98 | | Accrued utilities | $228 | $138 | +$90 | | Accrued interest | $146 | $137 | +$9 | | Accrued goods received not invoiced | $792 | $396 | +$396 | | Other accrued expenses | $37 | $422 | -$385 | | Totals | $4,570 | $5,899 | -$1,329| [Note 7. Derivative Liabilities](index=18&type=section&id=Note%207.%20Derivative%20Liabilities) | Metric (in thousands) | Jun 30, 2020 | Dec 31, 2020 | Change | | :----------------------------------------- | :----------- | :----------- | :----- | | Fair Value Measurement Using Level 3 Inputs| $1,110 | $1,294 | +$184 | - Valuation assumptions for derivative features of convertible notes include a remaining term of **2.41 years** (Dec 31, 2020), expected volatility of **68%**, a risk-free interest rate of **0.15%**, and a **0%** dividend yield[57](index=57&type=chunk) [Note 8. Convertible Notes](index=18&type=section&id=Note%208.%20Convertible%20Notes) - All holders of the **$10 million** October 2018 Notes elected to convert them into common stock at a rate of **196.08 shares** per **$1,000** principal amount (conversion price of **$5.10** per share) prior to the February 1, 2021 redemption date[59](index=59&type=chunk)[60](index=60&type=chunk) | Convertible Debt (in thousands) | Maturity Date | Stated Interest Rate | Conversion Price | Face Value | Carrying Value (Dec 31, 2020) | | :------------------------------ | :------------ | :------------------- | :--------------- | :--------- | :---------------------------- | | Short Term (October 2018 Notes) | 02/01/2021 | 6.50% | $5.10 | $10,000 | $9,795 | | Long Term | 5/31/2023 | 6.50% | $5.00 | $15,000 | $14,351 | [Note 9. Loans Payable](index=20&type=section&id=Note%209.%20Loans%20Payable) - Akoustis, Inc. obtained a **$1.6 million** PPP Loan in May 2020 at **1.00%** interest, with an application for full forgiveness submitted in November 2020[65](index=65&type=chunk) | PPP Loan (in thousands) | Maturity Date | Stated Interest Rate | Face Value | Carrying Value (Dec 31, 2020) | | :---------------------- | :------------ | :------------------- | :--------- | :---------------------------- | | Short Term | 10/31/2021-12/31/2021 | 1.00% | $619 | $594 | | Long Term | 05/20/2022 | 1.00% | $1,014 | $1,010 | [Note 10. Concentrations](index=22&type=section&id=Note%2010.%20Concentrations) [Vendors](index=22&type=section&id=Vendors) Three Months Ended December 31 | Vendor | Dec 31, 2020 | Dec 31, 2019 | | :--------- | :----------- | :----------- | | Vendor 1 | — | 13% | | Vendor 2 | — | 19% | | Vendor 3 | — | 12% | [Customers](index=22&type=section&id=Customers) Three Months Ended December 31 | Customer | Dec 31, 2020 | Dec 31, 2019 | | :--------- | :----------- | :----------- | | Customer 3 | 32% | 55% | | Customer 4 | 15% | 29% | Six Months Ended December 31 | Customer | Dec 31, 2020 | Dec 31, 2019 | | :--------- | :----------- | :----------- | | Customer 1 | 22% | 30% | | Customer 7 | 44% | — | | Customer 8 | 12% | — | [Note 11. Stockholders' Equity](index=23&type=section&id=Note%2011.%20Stockholders%27%20Equity) [ATM Program and Offerings](index=23&type=section&id=ATM%20Program%20and%20Offerings) - Sold **2,296,023** shares of common stock for approximately **$20.5 million** gross proceeds through the ATM Program during the three months ended December 31, 2020[78](index=78&type=chunk) - Sold **416,221** shares for approximately **$3.4 million** gross proceeds through the ATM Program during the three months ended September 30, 2020[77](index=77&type=chunk) [Equity Incentive Plans](index=23&type=section&id=Equity%20Incentive%20Plans) - Granted **415,554** stock options with a weighted average grant date fair value of **$4.46** during the six months ended December 31, 2020[79](index=79&type=chunk)[80](index=80&type=chunk) - Awarded **634,061** restricted stock units (RSUs) with a weighted average grant date fair value of **$8.25** during the six months ended December 31, 2020[82](index=82&type=chunk) Stock-Based Compensation Expense (in thousands) | Compensation Expense (in thousands) | Three Months Dec 31, 2020 | Three Months Dec 31, 2019 | Six Months Dec 31, 2020 | Six Months Dec 31, 2019 | | :---------------------------------- | :------------------------ | :------------------------ | :---------------------- | :---------------------- | | Research and Development | $928 | $790 | $1,942 | $1,746 | | General and Administrative | $1,138 | $812 | $2,151 | $1,559 | | Total | $2,066 | $1,602 | $4,093 | $3,305 | [Note 12. Commitments and Contingencies](index=24&type=section&id=Note%2012.%20Commitments%20and%20Contingencies) [Leases](index=24&type=section&id=Leases) Operating Lease Expense (in thousands) | Lease Expense (in thousands) | Three Months Dec 31, 2020 | Three Months Dec 31, 2019 | Six Months Dec 31, 2020 | Six Months Dec 31, 2019 | | :--------------------------- | :------------------------ | :------------------------ | :---------------------- | :---------------------- | | Operating Lease Expense | $75 | $46 | $150 | $102 | - Weighted average remaining lease term for operating leases is **2.25 years**, with a weighted average discount rate of **12.47%** as of December 31, 2020[88](index=88&type=chunk) [Ontario County Industrial Development Authority Agreement](index=25&type=section&id=Ontario%20County%20Industrial%20Development%20Authority%20Agreement) - Agreement with OCIDA provides substantial tax savings and exemptions from sales, use, and mortgage recording taxes for the NY Facility, expiring December 31, 2028[90](index=90&type=chunk) [Litigation, Claims and Assessments](index=25&type=section&id=Litigation%2C%20Claims%20and%20Assessments) - No material pending legal proceedings are currently known that would significantly affect financial position, results of operations, or cash flows[91](index=91&type=chunk) [Note 13. Related Party Transactions](index=25&type=section&id=Note%2013.%20Related%20Party%20Transactions) - Akoustis, Inc. sold inventory and designs to Big Red, LLC, a related party, for **$25,000** on September 30, 2020[92](index=92&type=chunk) [Note 14. Segment Information](index=27&type=section&id=Note%2014.%20Segment%20Information) - The company operates in two segments: Foundry Fabrication Services and RF Product[94](index=94&type=chunk) Income (Loss) from Operations (in thousands) | Segment | Three Months Dec 31, 2020 | Three Months Dec 31, 2019 | Six Months Dec 31, 2020 | Six Months Dec 31, 2019 | | :--------------------------- | :------------------------ | :------------------------ | :---------------------- | :---------------------- | | Foundry/Fabrication Services | $320 | $53 | $324 | $277 | | RF Product | $(10,567) | $(7,978) | $(20,865) | $(15,875) | | Total | $(10,221) | $(7,925) | $(20,541) | $(15,598) | [Note 15. Loss Per Share](index=27&type=section&id=Note%2015.%20Loss%20Per%20Share) - Common stock equivalents (convertible notes, options, warrants) are excluded from diluted EPS calculations due to the company reporting losses, making their inclusion anti-dilutive[96](index=96&type=chunk) | Common Stock Equivalents | Dec 31, 2020 | Dec 31, 2019 | Change | | :----------------------- | :----------- | :----------- | :---------- | | Convertible Notes | 4,960,800 | 4,960,800 | 0 | | Options | 2,589,719 | 2,242,665 | +347,054 | | Warrants | 359,570 | 541,999 | -182,429 | | Total | 7,910,089 | 7,745,464 | +164,625 | [Note. 16. Subsequent Events](index=29&type=section&id=Note.%2016.%20Subsequent%20Events) - On January 7, 2021, and January 26, 2021, the company issued a total of **1,960,800** shares of common stock from the conversion of **$10 million** principal amount of October 2018 Notes[98](index=98&type=chunk) - On January 25, 2021, the company issued a redemption notice for its **$15 million** May 2018 Notes, allowing conversion at **200** shares per **$1,000** principal amount (conversion price of **$5.00** per share)[98](index=98&type=chunk)[99](index=99&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=30&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, operational highlights, future outlook, COVID-19 impact, and liquidity [Cautionary Note Regarding Forward-Looking Statements](index=30&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) - Forward-looking statements relate to future operations, financial projections, capital utilization, customer engagement, and intellectual property, but are not guarantees of actual results[102](index=102&type=chunk) - Risks include inability to obtain adequate financing, limited operating history, inability to generate revenue/profitability, R&D results, market acceptance, COVID-19 impact, and intellectual property protection[103](index=103&type=chunk) [Overview](index=31&type=section&id=Overview) - Akoustis develops, designs, and manufactures RF filter solutions for **4G/LTE**, **5G**, **WiFi**, and defense applications using its proprietary **XBAW™ technology**[106](index=106&type=chunk) - The company operates an Integrated Device Manufacturing (IDM) business model, producing filters in its New York facility and holding **38 patents** with **75 pending applications** as of January 19, 2021[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - The business model aims to provide standardized and customized filters directly to OEMs and module manufacturers, retaining ownership of core technology and IP[107](index=107&type=chunk)[110](index=110&type=chunk)[113](index=113&type=chunk) [Impact of COVID-19 on our Business](index=32&type=section&id=Impact%20of%20COVID-19%20on%20our%20Business) - Implemented social distancing, self-health attestations, mask policies, remote work, and staggered shifts to protect employees[114](index=114&type=chunk) - Observed declining demand and price reductions in the electronics industry, along with delays in material and equipment shipments from suppliers due to the pandemic[115](index=115&type=chunk) [Recent Developments](index=33&type=section&id=Recent%20Developments) - Shipped fourth **5G** small cell network infrastructure filter to a tier-1 customer (Oct 2020)[117](index=117&type=chunk) - Awarded a new **DARPA** contract to advance **XBAW® technology** (Oct 2020)[117](index=117&type=chunk) - Received orders for **CBRS** equipment **XBAW® filter solutions** and **5G/WiFi** mobile coexistence filters from a leading RF front-end maker (Oct/Nov 2020)[117](index=117&type=chunk) - Secured multiple **WiFi 6** design wins for coexistence filters and tri-band **MU-MIMO** products (Dec 2020)[118](index=118&type=chunk) - Issued a redemption notice with respect to **$10 million** principal amount of the Company's outstanding **6.5%** convertible senior notes due in 2023 (Dec 2020)[117](index=117&type=chunk) [Critical Accounting Policies](index=33&type=section&id=Critical%20Accounting%20Policies) - No material changes to critical accounting policies and estimates since the 2020 Annual Report on Form 10-K[119](index=119&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) [Three Months Ended December 31, 2020 and 2019](index=33&type=section&id=Three%20Months%20Ended%20December%2031%2C%202020%20and%202019) Revenue (in millions) | Revenue (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | | Total Revenue | $1.3 | $0.5 | +$0.8 | | RF Product Revenue | +227% | N/A | N/A | | NRE Services Revenue | +115% | N/A | N/A | Cost of Revenue (in millions) | Cost of Revenue (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :---------------------------- | :----------- | :----------- | :----------- | | Total Cost of Revenue | $2.6 | $0.8 | +$1.8 | - Cost of revenue increase driven by **$0.5 million** in RF product costs and **$1.2 million** in net realizable value (NRV) inventory adjustments[121](index=121&type=chunk) R&D Expenses (in millions) | R&D Expenses (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :------------------------- | :----------- | :----------- | :----------- | | Total R&D Expenses | $5.6 | $4.9 | +$0.7 | - R&D personnel costs increased by **$0.2 million (8.5%)** due to higher headcount; material and facility costs increased by **$0.7 million**[123](index=123&type=chunk) G&A Expenses (in millions) | G&A Expenses (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :------------------------- | :----------- | :----------- | :----------- | | Total G&A Expenses | $3.4 | $2.8 | +$0.6 | - G&A employee compensation (including stock-based compensation) increased by **$0.6 million**[124](index=124&type=chunk) Other (Expense)/Income (in millions) | Other (Expense)/Income (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :----------------------------------- | :----------- | :----------- | :----------- | | Total Other (Expense)/Income | $(1.7) | $(1.4) | -$(0.3) | | Debt discount amortization | $1.3 | $0.8 | +$0.5 | | Interest expense, net | $0.4 | $0.3 | +$0.1 | Net Loss (in millions) | Net Loss (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :--------------------- | :----------- | :----------- | :----------- | | Total Net Loss | $(11.9) | $(9.3) | -$(2.6) | [Six Months Ended December 31, 2020 and 2019](index=34&type=section&id=Six%20Months%20Ended%20December%2031%2C%202020%20and%202019) Revenue (in millions) | Revenue (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :-------------------- | :----------- | :----------- | :----------- | | Total Revenue | $1.9 | $1.1 | +$0.8 | | RF Product Revenue | +223% | N/A | N/A | | NRE Services Revenue | +70% | N/A | N/A | Cost of Revenue (in millions) | Cost of Revenue (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :---------------------------- | :----------- | :----------- | :----------- | | Total Cost of Revenue | $4.3 | $1.1 | +$3.1 | - Cost of revenue increase driven by **$2.0 million** in RF product costs and **$1.1 million** in net realizable value (NRV) inventory adjustments[128](index=128&type=chunk) R&D Expenses (in millions) | R&D Expenses (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :------------------------- | :----------- | :----------- | :----------- | | Total R&D Expenses | $11.9 | $10.0 | +$2.0 | - R&D personnel costs increased by **$0.7 million (12.5%)** due to higher headcount; material and facility costs increased by **$1.2 million** due to increased R&D activities[129](index=129&type=chunk) G&A Expenses (in millions) | G&A Expenses (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :------------------------- | :----------- | :----------- | :----------- | | Total G&A Expenses | $6.3 | $5.6 | +$0.7 | - G&A employee compensation (including stock-based compensation) increased by **$0.8 million**[131](index=131&type=chunk) Other (Expense)/Income (in millions) | Other (Expense)/Income (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :----------------------------------- | :----------- | :----------- | :----------- | | Total Other (Expense)/Income | $(3.3) | $(2.7) | -$(0.6) | | Debt discount amortization | $2.3 | $1.5 | +$0.8 | | Interest expense | $0.8 | $0.6 | +$0.2 | Net Loss (in millions) | Net Loss (in millions) | Dec 31, 2020 | Dec 31, 2019 | Change (YoY) | | :--------------------- | :----------- | :----------- | :----------- | | Total Net Loss | $(23.9) | $(18.3) | -$(5.6) | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's cash and cash equivalents increased to **$47.7 million** as of December 31, 2020, primarily due to **$23.2 million** from common stock issuance, offsetting significant cash used in operating and investing activities[134](index=134&type=chunk) - The company expects current cash to fund operations for over **12 months** but anticipates continued losses and potential need for additional capital[134](index=134&type=chunk) [Financing Activities](index=36&type=section&id=Financing%20Activities) - Cash and cash equivalents increased by **$3.4 million**, primarily from **$23.2 million** in common stock issuance proceeds, offsetting **$16.2 million** used in operations and **$4.5 million** in capital expenditures[134](index=134&type=chunk) [Balance Sheet and Working Capital](index=36&type=section&id=Balance%20Sheet%20and%20Working%20Capital) | Metric (in millions) | Dec 31, 2020 | Jun 30, 2020 | Change | | :--------------------------- | :----------- | :----------- | :----- | | Total Assets | $77.6 | $71.4 | +$6.2 | | Current Liabilities | $15.3 | $6.1 | +$9.2 | | Long-term Liabilities | $15.8 | $23.8 | -$8.0 | | Stockholders' Equity | $46.5 | $41.5 | +$5.0 | - Increase in current liabilities by **$9.2 million** was due to reclassification of convertible debt and loans payable from long-term[135](index=135&type=chunk) [Cash Flow Analysis](index=37&type=section&id=Cash%20Flow%20Analysis) | Cash Flow Activity (in millions) | Six Months Ended Dec 31, 2020 | Six Months Ended Dec 31, 2019 | Change (YoY) | | :------------------------------- | :---------------------------- | :---------------------------- | :----------- | | Operating Activities | $(16.2) | $(12.1) | -$(4.1) | | Investing Activities | $(4.5) | $(4.3) | -$(0.2) | | Financing Activities | $24.0 | $32.5 | -$(8.5) | [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Quantitative and qualitative disclosures about market risk are not applicable as the company qualifies as a smaller reporting company - This item is not applicable to smaller reporting companies[140](index=140&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=37&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls were effective as of December 31, 2020, reporting no material changes in internal financial controls [Management's Evaluation of Disclosure Controls and Procedures](index=37&type=section&id=Management%27s%20Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Disclosure controls and procedures were evaluated and deemed effective at the reasonable assurance level as of December 31, 2020[142](index=142&type=chunk) [Changes in Internal Control over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the quarter ended December 31, 2020[143](index=143&type=chunk) PART II — OTHER INFORMATION [ITEM 1. LEGAL PROCEEDINGS](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is not involved in material legal proceedings expected to significantly affect its business or financial condition - No material pending legal proceedings are currently known to the company[144](index=144&type=chunk) [ITEM 1A. RISK FACTORS](index=38&type=section&id=ITEM%201A.%20RISK%20FACTORS) No material changes to risk factors previously disclosed in the 2020 Annual Report on Form 10-K - No material changes to risk factors since the 2020 Annual Report on Form 10-K[145](index=145&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=38&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No unregistered sales of equity securities occurred during the period, except as previously disclosed in Form 8-K reports - No unregistered sales of equity securities during the period, except as previously reported[146](index=146&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=38&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This item is not applicable to the company for the reporting period - This item is not applicable[146](index=146&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=38&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company for the reporting period - This item is not applicable[146](index=146&type=chunk) [ITEM 5. OTHER INFORMATION](index=38&type=section&id=ITEM%205.%20OTHER%20INFORMATION) This item is not applicable to the company for the reporting period - This item is not applicable[146](index=146&type=chunk) [ITEM 6. EXHIBITS](index=38&type=section&id=ITEM%206.%20EXHIBITS) Exhibits listed in the Exhibit Index are filed or furnished as part of this report - Exhibits are filed or furnished as part of this report[146](index=146&type=chunk) [EXHIBIT INDEX](index=39&type=section&id=EXHIBIT%20INDEX) The Exhibit Index lists documents filed with Form 10-Q, including organizational documents, certifications, and interactive data - Includes Articles of Conversion, Certificate of Incorporation, Amended and Restated Bylaws, and various certifications (Rule 13(a)-14(a)/15(d)-14(a) and Section 1350) and Interactive Data Files[148](index=148&type=chunk) [SIGNATURES](index=40&type=section&id=SIGNATURES) The report is formally signed by Kenneth E. Boller, Interim CFO of Akoustis Technologies, Inc., on February 1, 2021 - Report signed by Kenneth E. Boller, Interim Chief Financial Officer, on February 1, 2021[150](index=150&type=chunk)[151](index=151&type=chunk)

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 September 30, 2020 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) | --- | ...

Akoustis Technologies Inc (NASDAQ:AKTS) Q4 2020 Earnings Conference Call August 24, 2020 8:00 AM ET Company Participants Tom Sepenzis - Vice President of Investor Relations Jeff Shealy - Founder and CEO Ken Boller - Interim CFO Dave Aichele - EVP of Business Development Conference Call Participants Rick Schafer - Oppenheimer Anthony Stoss - Craig-Hallum Capital Group Harsh Kumar - Piper Sandler Operator Good day, ladies and gentlemen, and welcome to the Akoustis Technologies Business Update Conference Call. ...

[Cautionary Note Regarding Forward-Looking Information](index=5&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Information) This section warns that forward-looking statements are not guarantees and are subject to various risks and uncertainties - Forward-looking statements include plans for developing commercially viable RF filters, projections of financial items (income, EPS, capital expenditures), future financial performance, ability to utilize cash, and ability to engage customers while maintaining intellectual property ownership[7](index=7&type=chunk) - Key risk factors influencing actual results include limited operating history, inability to generate revenues or achieve profitability, impact of the COVID-19 pandemic, inability to obtain adequate financing, R&D results, market acceptance of products, competition, manufacturing scaling challenges, and intellectual property issues[8](index=8&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk) [Definitions and Glossary](index=7&type=section&id=DEFINITIONS) This section defines key company references and technical terminology essential for understanding the report's content - The terms 'we,' 'Akoustis,' the 'Company,' 'our,' and 'us' refer to Akoustis Technologies, Inc., a Delaware corporation, and its wholly owned consolidated subsidiary, Akoustis, Inc[12](index=12&type=chunk) - Key technical terms defined include Acoustic wave, AlN (Aluminum Nitride), Acoustic wave filter, Band/channel/frequency band, Bulk acoustic wave (BAW), Digital baseband, Duplexer, Filter, Group III element nitrides, Insertion Loss, Lossy, Metrology, Monolithic topology, Power Amplifier Duplexer (PAD), Piezoelectric materials, Quality factor (Q), Resonator, RF (radio frequency), RF front-end (RFFE), RF spectrum, Surface acoustic wave (SAW), TDD LTE, Tier one/two, Trusted Foundry, and Wafer[13](index=13&type=chunk)[14](index=14&type=chunk)[15](index=15&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk) [PART I](index=9&type=section&id=PART%20I) [ITEM 1. Business](index=9&type=section&id=ITEM%201.%20Business) Akoustis is an emerging commercial product company developing and manufacturing innovative RF filter solutions using proprietary XBAW technology for wireless applications [Overview](index=9&type=section&id=1.1.%20Overview) Akoustis develops and manufactures RF filter solutions using proprietary XBAW technology for various wireless applications, targeting high-frequency bands - Akoustis is an emerging commercial product company focused on developing, designing, and manufacturing innovative RF filter solutions for the wireless industry[27](index=27&type=chunk) - The company has developed a proprietary microelectromechanical system (MEMS) based bulk acoustic wave (BAW) technology and a unique manufacturing process flow, called 'XBAW', for its filters[27](index=27&type=chunk) - Akoustis operates as a 'pure-play' RF filter supplier, providing discrete filter solutions direct to Original Equipment Manufacturers (OEMs) and aligning with front-end module manufacturers[28](index=28&type=chunk) [Business Strategy and Customer Engagement](index=10&type=section&id=1.2.%20Business%20Strategy%20and%20Customer%20Engagement) Akoustis plans to engage customers by offering standardized and custom filters, leveraging its unique high-band filter technology while retaining IP ownership - The company intends to engage with multiple wireless markets by providing standardized filters as catalog components, delivering unique filters to customer-supplied specifications, and potentially offering models and design kits for customers to design their own filters[33](index=33&type=chunk) - Akoustis expects customers lacking access to high-band filter technology to be open to engaging with its pure-play filter company, as two dominant BAW filter suppliers currently use such technology as a competitive advantage[34](index=34&type=chunk) - The company plans to pursue RF filter design and R&D development agreements and potentially joint ventures with target customers and strategic partners, while intending to retain ownership of its core technology and intellectual property[35](index=35&type=chunk) [Impact of COVID-19 on our Business](index=10&type=section&id=1.3.%20Impact%20of%20COVID-19%20on%20our%20Business) The COVID-19 pandemic has impacted Akoustis' operations through health measures, supply chain disruptions, and anticipated negative effects on global business activity - Akoustis adopted social distancing, daily self-health attestations, and mandatory mask policies, along with new staffing plans including remote work and segregated on-site shifts, to protect employee health and safety[36](index=36&type=chunk) - Government measures to contain COVID-19 have impacted business meetings, deliverables to customers, and the ability to obtain materials, equipment, and services from suppliers, causing potential delays[36](index=36&type=chunk) - The company anticipates negative impacts on global business activity, observing delays, declining demand, and price reductions in the electronics industry due to decelerating business and consumer activity[37](index=37&type=chunk) [Business Developments (Fiscal Year 2020)](index=10&type=section&id=1.4.%20Business%20Developments) FY2020 saw significant product development and commercialization milestones, including new orders and design wins for defense, 5G mobile, and WiFi 6E filter solutions - Received a new purchase order from a strategic Defense customer for five filter solutions (2-4 GHz) and shipped five S-band filters for phased array radar applications[39](index=39&type=chunk)[43](index=43&type=chunk) - Achieved design lock and pre-production of its 5.6GHz WiFi BAW filter, shipped first pre-production 5.6GHz XBAW filter to a tier-1 WiFi OEM, and announced a first design win for 5.2 and 5.6 GHz WiFi coexistence filters with a tier-1 consumer-focused OEM[39](index=39&type=chunk)[40](index=40&type=chunk)[46](index=46&type=chunk) - Secured a follow-on order for two additional 5G Mobile filter solutions, received its first 5G network infrastructure filter order for small cell base stations, and announced its first volume commercial order and design win for 5G small cell network infrastructure filters[40](index=40&type=chunk)[41](index=41&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Added **14 filters** to its product catalog in fiscal 2020, including WiFi (5.6 GHz, 5.2 GHz, 5.5 GHz WiFi-6E), 5G network infrastructure (Band n77, Band n79, CBRS), defense (3.8 GHz, S-Band), and unmanned aircraft systems (C-Band) filters[81](index=81&type=chunk) [Financing](index=12&type=section&id=1.5.%20Financing) Akoustis has incurred significant operating losses, funding operations through equity and debt, and anticipates continued costs for commercialization and R&D - The company incurred losses totaling approximately **$103.6 million** from May 2014 inception through June 30, 2020, primarily from material and processing costs for technology development and commercialization, personnel, and professional fees[49](index=49&type=chunk) - As of August 17, 2020, Akoustis had **$39.3 million** in cash and cash equivalents, which is expected to fund operations beyond the next 12 months, including capital expenditures, R&D, commercialization, and patent strategy[50](index=50&type=chunk) Recent Financing Activity (FY2020) | Activity | Gross Proceeds ($M) | Shares Issued (M) | | :------------------------------------- | :------------------ | :---------------- | | Common Stock Offering | $34.5 | 5.52 | | ATM Equity Offering Sales Agreement | $11.2 | 1.39 | | Paycheck Protection Program (PPP) Loan | $1.6 | N/A | [Our Technology and Solutions](index=13&type=section&id=1.6.%20Our%20Technology%20and%20Solutions) Akoustis' XBAW technology offers superior performance for high-frequency, wide-bandwidth, and high-power RF filter applications, addressing critical mobile device RFFE challenges - XBAW technology uses novel high purity piezoelectric materials, fabricated into bulk-mode acoustic wave resonators and RF filters, offering high performance acoustic properties superior to lossy polycrystalline materials in existing BAW filters[54](index=54&type=chunk)[55](index=55&type=chunk) - The mobile device industry faces challenges from rising demand for wireless broadband, leading to an unprecedented need for high-performance RFFE modules, increased frequency bands, and demand for filters with higher selectivity and wide bandwidth[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - Akoustis' solutions focus on commercializing wide bandwidth RF filters for sub-6 GHz bands, enabling new PAD module or RFFE competition, and are expected to reduce overall system cost and improve RFFE performance by creating an alternative to inferior filter materials[59](index=59&type=chunk) [Commercialization and Research and Development](index=16&type=section&id=1.7.%20Commercialization%20and%20Research%20and%20Development) Akoustis is commercializing wide bandwidth RF filters and invested $20.5 million in R&D in FY2020, leading to 14 new filter introductions - The company has completed the alpha and beta phases for its first generation XBAW process technology (XB1) and began the production ramp for its first high volume tier one customer, supporting its WiFi 6 CPE product, in the fourth quarter of fiscal year 2020[67](index=67&type=chunk) - Research and development expense totaled **$20.5 million** for the year ended June 30, 2020, an **8% increase** from **$19.1 million** in FY2019, with investments in materials advancement, resonator development, RF filter design, high yield wafer manufacturing, and filter packaging[69](index=69&type=chunk) - Akoustis added **14 filters** to its product catalog, including WiFi (5.6 GHz, 5.2 GHz, 5.5 GHz WiFi-6E), 5G network infrastructure (Band n77, Band n79, CBRS), defense (3.8 GHz, S-Band), and unmanned aircraft systems (C-Band) filters, with **12 of these completed in fiscal 2020**[81](index=81&type=chunk) [Raw Materials](index=19&type=section&id=1.8.%20Raw%20Materials) Akoustis sources various raw materials for its BAW RF filter fabrication, managing a supply chain with some single-sourced substrates and purity level considerations - Akoustis sources raw materials, process gases, metals, and other supplies for fabricating BAW RF filter circuits, including two types of substrate materials (one with a single source) and various high purity metals for electrode formation[83](index=83&type=chunk) - The company must work with suppliers to ensure adequate supply of raw materials, process gases, and metals as it ramps from R&D into high volume manufacturing, addressing potential issues like purity level changes by source[83](index=83&type=chunk) [Intellectual Property](index=19&type=section&id=1.9.%20Intellectual%20Property) Akoustis protects its XBAW RF filter technology through 33 patents and 71 pending applications, along with trade secrets and contractual obligations - As of August 17, 2020, Akoustis' IP portfolio included **33 patents**, with one blocking patent licensed from Cornell University, and **71 pending patent applications**[31](index=31&type=chunk)[85](index=85&type=chunk) - These patents cover the company's XBAW RF filter technology from raw materials through the system architectures, with owned patents expiring between 2034 and 2038[31](index=31&type=chunk)[85](index=85&type=chunk) - The company relies on patents, trade secrets, copyrights, trademarks, and contractual obligations (confidentiality agreements with employees, contractors, and customers) to protect its proprietary information[84](index=84&type=chunk)[88](index=88&type=chunk) [Competition](index=20&type=section&id=1.10.%20Competition) The RF filter market is highly concentrated, with Akoustis competing as a pure-play supplier by offering superior performance and competitive costs - The RF filter market is controlled by a small number of suppliers, including Broadcom Corporation, Murata Manufacturing Co., Ltd., Qorvo, Inc., Skyworks Solutions Inc., Taiyo Yuden Co. Ltd., and Qualcomm Incorporated[89](index=89&type=chunk) - Broadcom Corporation and Qorvo, Inc. dominate the high band BAW filter market, controlling a significant portion of the customer base[89](index=89&type=chunk) - Akoustis plans to compete as a pure-play filter supplier, offering superior performance over the full frequency range at competitive costs, but faces challenges in convincing customers of its intellectual property position, volume delivery capability, price targets, and quality/reliability[90](index=90&type=chunk) [Employees](index=20&type=section&id=1.11.%20Employees) As of June 30, 2020, Akoustis had 95 full-time and 7 part-time employees, focusing on competitive compensation to attract and retain talent - As of June 30, 2020, Akoustis had a total of **95 full-time employees** plus **7 part-time and temporary employees**[91](index=91&type=chunk) - The company prioritizes hiring and retaining the best talent by establishing competitive compensation and benefits packages to enhance its ability to recruit experienced personnel and key technologists[91](index=91&type=chunk) [Government Regulations](index=20&type=section&id=1.12.%20Government%20Regulations) Akoustis' business is subject to various federal and state regulations, with noncompliance potentially leading to investigations, sanctions, and adverse financial impacts - Akoustis' business and products are subject to regulation by federal and state agencies, including the FCC (radio frequency emission), FTC (consumer protection), Department of Commerce (import/export), CPSC (product safety), and EPA (environmental)[92](index=92&type=chunk) - Compliance with FCC rules for RF emissions may require certification, verification, or registration of RF filters, potentially increasing development and production costs and delaying market launch[93](index=93&type=chunk) - Noncompliance with applicable regulations could result in investigations, sanctions, mandatory product recalls, enforcement actions, fines, damages, civil and criminal penalties, or injunctions, materially adversely affecting the business and financial condition[96](index=96&type=chunk) [ITEM 1A. Risk Factors](index=21&type=section&id=ITEM%201A.%20Risk%20Factors) This section outlines material risks to Akoustis' operations, financial condition, and future prospects, including limited operating history, COVID-19 impact, competition, and debt obligations - The company has a limited operating history and has incurred approximately **$103.6 million** in net losses since inception, making it difficult to forecast future prospects and achieve profitability[99](index=99&type=chunk)[101](index=101&type=chunk) - The COVID-19 pandemic has negatively impacted manufacturing capabilities, supply chain, and sales efforts, leading to potential delays in product launches and prolonged dependence on capital raising[106](index=106&type=chunk)[107](index=107&type=chunk)[109](index=109&type=chunk) - Akoustis faces intense competition in the RF filter market, dominated by larger players, which could lead to pricing pressures, decreased gross margins, and loss of market share if the company cannot keep pace with rapid technological changes and achieve market acceptance for its products[114](index=114&type=chunk)[118](index=118&type=chunk)[132](index=132&type=chunk)[135](index=135&type=chunk) - The company's long-term success depends on obtaining, maintaining, and enforcing its intellectual property rights, with risks including pending applications not resulting in issued patents, challenges to patent validity, and the high costs of litigation[179](index=179&type=chunk)[182](index=182&type=chunk)[189](index=189&type=chunk) - Akoustis has substantial debt obligations (**$25.0 million** in convertible notes) requiring significant cash or common stock for servicing, and restrictive covenants may limit business and financing activities[211](index=211&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=49&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC regarding the company's filings [ITEM 2. Properties](index=50&type=section&id=ITEM%202.%20Properties) Akoustis maintains its headquarters in Huntersville, NC, and operates a 120,000 square foot MEMS fabrication facility in Canandaigua, NY, under a lease-back agreement - The company's headquarters in Huntersville, NC, is 22,000 square feet with a lease expiring in February 2023[247](index=247&type=chunk) - Akoustis owns a 120,000 square foot MEMS fabrication facility in Canandaigua, NY, acquired in June 2017, which houses 50 employees[247](index=247&type=chunk) - The NY Facility is subject to a first priority lien to The Bank of New York Mellon Trust Company, N.A. and a lease-back agreement with the Ontario County Industrial Development Agency (OCIDA) for tax savings[247](index=247&type=chunk) [ITEM 3. Legal Proceedings](index=50&type=section&id=ITEM%203.%20Legal%20Proceedings) Akoustis is not currently involved in any material pending legal proceedings, nor is it aware of any such proceedings contemplated by governmental authorities - The company is not currently aware of any material pending legal proceedings to which it is a party or of which any of its property is the subject[249](index=249&type=chunk) - No such proceedings are contemplated by any governmental authority[249](index=249&type=chunk) [ITEM 4. Mine Safety Disclosures](index=50&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Akoustis Technologies, Inc [PART II](index=51&type=section&id=PART%20II) [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities](index=51&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20Of%20Equity%20Securities) Akoustis' common stock trades on Nasdaq, with 38.1 million shares outstanding as of August 17, 2020, and no anticipated dividends - The company's Common Stock is traded on the Nasdaq Capital Market under the symbol 'AKTS'[251](index=251&type=chunk) - As of August 17, 2020, there were **38,067,550 shares** of Common Stock issued and outstanding, held by approximately **119 stockholders** of record[5](index=5&type=chunk)[251](index=251&type=chunk) - Akoustis has never paid any dividends on its capital stock and does not anticipate paying any cash dividends on its Common Stock in the foreseeable future, intending to retain future earnings for business growth[252](index=252&type=chunk) Equity Compensation Plan Information (as of June 30, 2020) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for future issuance (c) | | :------------------------------------------------ | :-------------------------------------------------------------------------------------------- | :------------------------------------------------------------------------------ | :--------------------------------------------------------------- | | Equity compensation plans approved by security holders - options | 2,294,415 | $5.84 | 3,758,226 | | Equity compensation plans approved by security holders – restricted stock units | 1,580,586 | $0.00 | — | | Total | 3,875,001 | | 3,758,226 | [ITEM 6. Selected Financial Data](index=52&type=section&id=ITEM%206.%20Selected%20Financial%20Data) This item is not applicable to Akoustis Technologies, Inc [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Akoustis' financial performance, condition, liquidity, and capital resources for the fiscal years ended June 30, 2020 and 2019 [Overview and Plan of Operation](index=53&type=section&id=7.1.%20Overview%20and%20Plan%20of%20Operation) Akoustis develops and manufactures RF filter solutions using proprietary XBAW technology for wireless applications, targeting sub-7 GHz bands and retaining IP ownership - Akoustis is focused on developing, designing, and manufacturing innovative RF filter solutions for the wireless industry using its proprietary MEMS-based bulk acoustic wave (BAW) technology, 'XBAW'[263](index=263&type=chunk) - Initial RF filter designs target ultra-high band, sub-7 GHz 4G/LTE, 5G, WiFi, and defense bands, aiming to address problems such as loss, bandwidth, power handling, and isolation in RF front-ends[264](index=264&type=chunk) - The company plans to pursue RF filter design and R&D development agreements and potentially joint ventures with target customers and strategic partners, while intending to retain ownership of its core technology and intellectual property[265](index=265&type=chunk) [Critical Accounting Policies](index=53&type=section&id=7.2.%20Critical%20Accounting%20Policies) Akoustis' financial statements require significant management judgment and estimates for critical accounting policies, including derivative liabilities and stock-based compensation - The company evaluates options, warrants, convertible notes, and other contracts to determine if they qualify as derivatives, marking their fair value to market each balance sheet date and recording changes as other income or expense[268](index=268&type=chunk) - Fair value measurements for financial assets and liabilities are categorized into a three-level hierarchy (Level 1: quoted prices in active markets; Level 2: observable inputs other than quoted prices; Level 3: significant unobservable inputs)[277](index=277&type=chunk)[278](index=278&type=chunk) - Stock-based compensation expense is recognized for all equity-based payments, net of forfeitures, with the fair value of option awards estimated using the Black-Scholes model and restricted stock awards at grant date fair value[279](index=279&type=chunk)[281](index=281&type=chunk) [Results of Operations (Year Ended June 30, 2020 Compared to Year Ended June 30, 2019)](index=56&type=section&id=7.3.%20Results%20of%20Operations%20(Year%20Ended%20June%2030,%202020%20Compared%20to%20Year%20Ended%20June%2030,%202019)) FY2020 saw a 27.7% revenue increase to $1.8 million, but higher operating expenses led to a net loss of $36.1 million, up 23.6% from FY2019 Key Financial Results (in thousands, except per share data) | Metric | FY2020 | FY2019 | Change ($) | Change (%) | | :-------------------------------------------- | :---------- | :---------- | :---------- | :--------- | | Revenue | $1,790 | $1,443 | $347 | 24.0% | | Cost of Revenue | $2,414 | $1,013 | $1,401 | 138.3% | | Gross Profit | $(624) | $430 | $(1,054) | -245.1% | | Research and Development Expenses | $20,523 | $19,075 | $1,448 | 7.6% |\n| General and Administrative Expenses | $10,891 | $8,922 | $1,969 | 22.1% | | Other (Expense) Income | $(4,102) | $(1,681) | $(2,421) | 144.0% | | Net Loss | $(36,140) | $(29,248) | $(6,892) | 23.6% | | Net Loss Per Common Share - Basic and Diluted | $(1.07) | $(1.06) | $(0.01) | 0.9% | - The increase in revenue was primarily due to a **$0.5 million** increase in filter revenue and a **$0.2 million** increase in engineering services, partially offset by a **$0.3 million** decrease in MEMS revenue (a product line exited in FY2020) and a **$0.1 million** decrease in grant revenue[284](index=284&type=chunk) - The increase in net loss was primarily driven by higher interest expense (**$1.7 million**), increased personnel costs (**$2.3 million**, mainly R&D), higher R&D/Fabrication supplies (**$0.2 million**), increased depreciation expense (**$0.6 million**), higher general expenses (**$0.8 million**, mainly professional fees), and an increase in valuation of contingent liabilities (**$0.6 million**)[289](index=289&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=7.4.%20Liquidity%20and%20Capital%20Resources) Cash on hand increased to $44.4 million by June 30, 2020, primarily from common stock sales and a $1.6 million PPP loan, supporting operations beyond 12 months - Cash on hand increased by **$14.2 million** to **$44.4 million** as of June 30, 2020, compared to **$30.2 million** as of June 30, 2019[291](index=291&type=chunk) - The increase in cash was primarily due to **$43.1 million** from common stock sales, **$1.6 million** from a PPP loan, and **$0.7 million** from various equity plans, partially offset by **$21.3 million** used in operating activities and **$9.9 million** for capital expenditures[291](index=291&type=chunk) - Akoustis entered into an ATM Equity Offering Sales Agreement to sell up to **$50 million** in common stock, having sold approximately **$11.2 million** gross proceeds through this program during FY2020[292](index=292&type=chunk) - The company received a **$1.6 million** PPP Loan under the CARES Act, with payments deferred for 16 months and potential for forgiveness based on the use of proceeds for payroll, mortgage interest, rent, and utility costs[293](index=293&type=chunk) [Balance Sheet and Working Capital (June 30, 2020 Compared to June 30, 2019)](index=57&type=section&id=7.5.%20Balance%20Sheet%20and%20Working%20Capital%20(June%2030,%202020%20Compared%20to%20June%2030,%202019)) Total assets increased by $23.5 million, driven by cash and property, while liabilities and stockholders' equity also grew due to debt and capital raises Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2020 | June 30, 2019 | Change ($) | | :--------------------------- | :------------ | :------------ | :--------- | | Total Current Assets | $46,203 | $31,721 | $14,482 | | Property and Equipment, net | $23,605 | $15,178 | $8,427 | | Total Assets | $71,433 | $47,949 | $23,484 | | Total Current Liabilities | $6,130 | $3,662 | $2,468 | | Total Long-term Liabilities | $23,808 | $18,332 | $5,476 | | Total Liabilities | $29,938 | $21,994 | $7,944 | | Total Stockholders' Equity | $41,495 | $25,955 | $15,540 | - The increase in Property, Plant and Equipment, net, was primarily due to **$11.4 million** in equipment purchases for the NY facility, partially offset by **$3.0 million** in depreciation[296](index=296&type=chunk) - The increase in long-term liabilities was primarily due to changes in convertible debt offerings (**$3.4 million**), the addition of the PPP loan (**$1.6 million**), and a new lease liability (**$0.5 million**)[298](index=298&type=chunk) - Stockholders' equity increased by **$15.5 million**, driven by a **$51.7 million** increase in Additional Paid-in Capital (from common stock issuance, stock for services, warrant/option exercise, and stock for note interest), which was partially offset by the **$36.1 million** net loss[299](index=299&type=chunk) [Cash Flow Analysis (Year Ended June 30, 2020 Compared to the Year Ended June 30, 2019)](index=58&type=section&id=7.6.%20Cash%20Flow%20Analysis%20(Year%20Ended%20June%2030,%202020%20Compared%20to%20the%20Year%20Ended%20June%2030,%202019)) In fiscal year 2020, cash used in operating activities increased to $21.3 million, reflecting higher operating expenses for development and commercialization. Investing activities also used more cash, primarily for R&D equipment. However, financing activities provided a substantial $45.5 million, mainly from common stock issuances, leading to a net increase in cash, cash equivalents, and restricted cash of $14.3 million Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | FY2020 | FY2019 | Change ($) | | :-------------------------------------------------------- | :---------- | :---------- | :--------- | | Net Cash Used in Operating Activities | $(21,305) | $(17,668) | $(3,637) | | Net Cash Used in Investing Activities | $(9,891) | $(4,891) | $(5,000) | | Net Cash Provided by Financing Activities | $45,450 | $37,896 | $7,554 | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $14,254 | $15,337 | $(1,083) | | Cash, Cash Equivalents and Restricted Cash - End of Period | $44,408 | $30,154 | $14,254 | - Cash used in operating activities increased by **$3.6 million** year-over-year, attributable to higher operating expenses associated with the ramp-up of development and commercialization activities, R&D personnel, material costs, G&A costs, and depreciation expense[300](index=300&type=chunk) - Cash used in investing activities increased by **$5.0 million** year-over-year, primarily due to increased spend on R&D equipment[301](index=301&type=chunk) - Cash provided by financing activities increased by **$7.5 million** year-over-year, due to additional proceeds from common stock issuances, partially offset by lower proceeds from convertible notes issued compared to the prior period[302](index=302&type=chunk) [Off-Balance Sheet Transactions](index=58&type=section&id=7.7.%20Off-Balance%20Sheet%20Transactions) Akoustis Technologies, Inc. did not engage in any off-balance sheet arrangements as of June 30, 2020 - The Company did not engage in any 'off-balance sheet arrangements' as of June 30, 2020[303](index=303&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to Akoustis Technologies, Inc [ITEM 8. Financial Statements and Supplemental Data](index=59&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplemental%20Data) This section presents the audited consolidated financial statements for Akoustis Technologies, Inc. for the fiscal years ended June 30, 2020 and 2019, prepared in accordance with GAAP [Report of Independent Registered Public Accounting Firm](index=60&type=section&id=8.1.%20Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Marcum LLP issued an unqualified opinion on Akoustis' consolidated financial statements for FY2020 and FY2019, noting the change in lease accounting - Marcum LLP audited the consolidated financial statements and expressed an unqualified opinion, stating they present fairly, in all material respects, the financial position and results of operations in conformity with GAAP[307](index=307&type=chunk) - The company changed its method of accounting for leases in fiscal 2020 due to the adoption of ASC Topic 842, Leases[308](index=308&type=chunk) - The auditor was not engaged to perform an audit of the company's internal control over financial reporting and, accordingly, expressed no opinion on its effectiveness[310](index=310&type=chunk) [Consolidated Balance Sheets](index=61&type=section&id=8.2.%20Consolidated%20Balance%20Sheets) The consolidated balance sheets show increased total assets, liabilities, and stockholders' equity for Akoustis as of June 30, 2020, compared to 2019 Consolidated Balance Sheets (in thousands) | Assets | June 30, 2020 | June 30, 2019 | | :------------------------------------ | :------------ | :------------ | | Cash and cash equivalents | $44,308 | $30,054 | | Total current assets | $46,203 | $31,721 | | Property and equipment, net | $23,605 | $15,178 | | Total Assets | $71,433 | $47,949 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $6,130 | $3,662 | | Convertible notes payable, net | $21,628 | $18,215 | | Loans payable | $1,591 | — | | Total long-term liabilities | $23,808 | $18,332 | | Total Liabilities | $29,938 | $21,994 | | Total Stockholders' Equity | $41,495 | $25,955 | [Consolidated Statements of Operations](index=62&type=section&id=8.3.%20Consolidated%20Statements%20of%20Operations) Akoustis' FY2020 statements show increased revenue but a negative gross profit and a higher net loss of $36.1 million due to rising expenses Consolidated Statements of Operations (in thousands, except per share data) | Metric | FY2020 | FY2019 | | :-------------------------------------------- | :---------- | :---------- | | Revenue | $1,790 | $1,443 | | Cost of revenue | $2,414 | $1,013 | | Gross profit | $(624) | $430 | | Research and development | $20,523 | $19,075 | | General and administrative expenses | $10,891 | $8,922 | | Total operating expenses | $31,414 | $27,997 | | Loss from operations | $(32,038) | $(27,567) | | Total Other (expense) income | $(4,102) | $(1,681) | | Net loss | $(36,140) | $(29,248) | | Net loss per common share - basic and diluted | $(1.07) | $(1.06) | [Consolidated Statements of Changes in Stockholders' Equity](index=63&type=section&id=8.4.%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Stockholders' equity increased to $41.5 million in FY2020, driven by significant capital raises that offset the accumulated deficit from net losses Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Metric | June 30, 2018 | June 30, 2019 | June 30, 2020 | | :-------------------------------------------- | :------------ | :------------ | :------------ | | Common Shares Outstanding | 22,203 | 30,141 | 37,990 | | Common Stock Par Value | $22 | $30 | $38 | | Additional Paid In Capital | $52,074 | $93,399 | $145,072 | | Accumulated Deficit | $(38,246) | $(67,474) | $(103,615) | | Total Stockholders' Equity | $13,850 | $25,955 | $41,495 | - Additional paid-in capital increased by **$51.7 million** in FY2020, primarily from **$42.9 million** in net proceeds from common stock issuance, **$6.7 million** for common stock issued for services, and **$1.0 million** for common stock issued in payment of convertible note interest[299](index=299&type=chunk)[319](index=319&type=chunk) - The accumulated deficit increased by **$36.1 million** in FY2020 due to the net loss incurred during the year[299](index=299&type=chunk)[319](index=319&type=chunk) [Consolidated Statements of Cash Flows](index=64&type=section&id=8.5.%20Consolidated%20Statements%20of%20Cash%20Flows) FY2020 cash flows show increased cash usage in operating and investing activities, offset by strong financing from stock issuances, leading to a net cash increase Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | FY2020 | FY2019 | | :-------------------------------------------------------- | :---------- | :---------- | | Net Cash Used in Operating Activities | $(21,305) | $(17,668) | | Net Cash Used in Investing Activities | $(9,891) | $(4,891) | | Net Cash Provided by Financing Activities | $45,450 | $37,896 | | Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash | $14,254 | $15,337 | | Cash, Cash Equivalents and Restricted Cash - End of Period | $44,408 | $30,154 | - Cash used in operating activities increased by **$3.6 million** in FY2020, primarily due to higher operating expenses associated with development and commercialization activities[300](index=300&type=chunk)[323](index=323&type=chunk) - Cash used for machinery and equipment in investing activities increased to **$9.75 million** in FY2020 from **$4.75 million** in FY2019[323](index=323&type=chunk) - Financing activities provided **$45.5 million** in FY2020, mainly from **$43.15 million** in proceeds from common stock issuance, contributing to a net increase in cash and equivalents[302](index=302&type=chunk)[323](index=323&type=chunk) [Notes to Consolidated Financial Statements](index=66&type=section&id=8.6.%20Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed information supporting the financial statements, covering organization, liquidity, accounting policies, revenue, assets, liabilities, and commitments [Note 1. Organization](index=66&type=section&id=8.6.1.%20Note%201.%20Organization) Akoustis Technologies, Inc. develops and manufactures innovative RF filter products using its proprietary XBAW™ technology and an IDM business model - Akoustis Technologies, Inc. is focused on developing, designing, and manufacturing innovative radio frequency ('RF') filter products for the wireless industry[326](index=326&type=chunk) - The company utilizes its proprietary XBAW™ technology, based on novel, high purity acoustic piezoelectric materials and a unique microelectromechanical system ('MEMS') wafer process[326](index=326&type=chunk) - Akoustis leverages an integrated device manufacturing ('IDM') business model to develop and sell high performance RF filters[326](index=326&type=chunk) [Note 2. Liquidity](index=66&type=section&id=8.6.2.%20Note%202.%20Liquidity) Despite $44.4 million cash and $40.1 million working capital, recurring operating losses raise substantial doubt about Akoustis' ability to continue as a going concern - As of June 30, 2020, the Company had cash and cash equivalents of **$44.4 million** and working capital of **$40.1 million**[327](index=327&type=chunk) - Recurring operating losses and **$21.3 million** in net cash used in operating activities for FY2020 raise substantial doubt about the Company's ability to continue as a going concern[327](index=327&type=chunk) - As of August 17, 2020, the Company had **$39.3 million** of cash and cash equivalents, expected to fund operations beyond the next twelve months, but there is no assurance of obtaining additional funds or sustained profitability[328](index=328&type=chunk) [Note 3. Summary of significant accounting policies](index=66&type=section&id=8.6.3.%20Note%203.%20Summary%20of%20significant%20accounting%20policies) This note details Akoustis' significant accounting policies, including GAAP basis, consolidation, estimates for fair value, stock-based compensation, and income taxes - The Company's consolidated financial statements are prepared in accordance with GAAP and SEC rules, requiring management to make estimates and assumptions for critical accounting estimates[329](index=329&type=chunk)[331](index=331&type=chunk) - Critical accounting estimates include the fair value of long-lived assets, valuation allowance for deferred tax assets (full valuation allowance due to losses), valuation of equity instruments, derivative liabilities (using Monte Carlo simulation and with-and-without method), and contingent real estate liability[333](index=333&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk)[337](index=337&type=chunk) - Key policies cover cash and cash equivalents (highly liquid investments < 3 months), restricted cash ($100k for convertible notes), inventory (lower of cost or NRV, FIFO), property and equipment (cost less depreciation, straight-line), intangible assets (patents/trademarks, amortized over 15 years for patents), and impairment of long-lived assets[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk)[345](index=345&type=chunk) - The company adopted ASC Topic 842, Leases, in fiscal 2020, recognizing a right-of-use asset and lease liability of **$0.7 million**, and ASU 2018-07 for non-employee share-based payment accounting, which had no material impact[370](index=370&type=chunk)[372](index=372&type=chunk) [Note 4. Revenue Recognition from Contracts with Customers](index=73&type=section&id=8.6.4.%20Note%204.%20Revenue%20Recognition%20from%20Contracts%20with%20Customers) Akoustis adopted ASC Topic 606, recognizing revenue from foundry services and product sales at a point in time or over time, with a $0.7 million backlog - Akoustis adopted ASC Topic 606, 'Revenue from Contracts with Customers,' effective July 1, 2018, using a five-step process to recognize revenue[373](index=373&type=chunk)[374](index=374&type=chunk) - Primary revenue streams include Foundry Fabrication Services (MEMS foundry services and Non-Recurring Engineering) and Product Sales (RF filters and amps)[379](index=379&type=chunk)[380](index=380&type=chunk) Revenue by Segment (in thousands) | Segment | FY2020 Revenue | FY2019 Revenue | | :--------------------------- | :------------- | :------------- | | Foundry Fabrication Services | $991 | $1,058 | | Product Sales | $799 | $276 | | Grant Revenue | — | $109 | | **Total Revenue** | **$1,790** | **$1,443** | - Revenue expected to be recognized from the backlog of unsatisfied performance obligations for the next fiscal year was **$0.7 million** at June 30, 2020[388](index=388&type=chunk) [Note 5. Property and equipment](index=76&type=section&id=8.6.5.%20Note%205.%20Property%20and%20equipment) Akoustis' net property and equipment increased to $23.6 million in FY2020, primarily due to $11.4 million in equipment purchases for the NY facility Property and Equipment, Net (in thousands) | Category | June 30, 2020 | June 30, 2019 | | :----------------------- | :------------ | :------------ | | Land | $1,000 | $1,000 | | Building | $3,000 | $3,000 | | Equipment | $24,746 | $13,611 | | Leasehold Improvements | $964 | $949 | | Software | $294 | $161 | | Furniture & Fixtures | $11 | $11 | | Computer Equipment | $267 | $203 | | Total | $30,282 | $18,935 | | Less: Accumulated depreciation | $(6,677) | $(3,757) | | **Total, net** | **$23,605** | **$15,178** | - The approximate **$8.4 million** year-over-year increase in Property, Plant and Equipment, net, is primarily due to the purchase of **$11.4 million** in equipment for the NY facility, partially offset by **$3.0 million** in depreciation[296](index=296&type=chunk)[390](index=390&type=chunk) - Depreciation expense was **$2.9 million** for the year ended June 30, 2020, compared to **$2.4 million** in 2019[391](index=391&type=chunk) - As of June 30, 2020, equipment with a net book value of **$5.6 million** had not yet been placed in service and was not depreciated[391](index=391&type=chunk) [Note 6. Accounts payable and accrued expenses](index=78&type=section&id=8.6.6.%20Note%206.%20Accounts%20payable%20and%20accrued%20expenses) Accounts payable and accrued expenses increased to $5.9 million as of June 30, 2020, driven by higher accounts payable and accrued salaries Accounts Payable and Accrued Expenses (in thousands) | Category | June 30, 2020 | June 30, 2019 | | :------------------------------- | :------------ | :------------ | | Accounts payable | $2,135 | $248 | | Accrued salaries and benefits | $2,478 | $2,163 | | Accrued professional fees | $193 | $315 | | Accrued utilities | $138 | $193 | | Accrued interest | $137 | $137 | | Accrued good received not invoiced | $396 | $69 | | Other accrued expenses | $422 | $86 | | **Totals** | **$5,899** | **$3,211** | - Total accounts payable and accrued expenses increased by **$2.7 million** from June 30, 2019, to June 30, 2020[392](index=392&type=chunk) [Note 7. Derivative Liabilities](index=78&type=section&id=8.6.7.%20Note%207.%20Derivative%20Liabilities) Akoustis' derivative liabilities, primarily from convertible note conversion options, were valued at $1.11 million as of June 30, 2020, using Monte Carlo simulation Fair Value of Derivative Liabilities (in thousands) | Metric | FY2020 | FY2019 | | :------------------------------------------------------------------- | :----- | :----- | | Balance, June 30 | $1,110 | $955 | | Change in fair value of derivative liabilities (included in other (expense) income) | $155 | $(150) | Weighted Average Valuation Assumptions for Derivative Liabilities | Assumption | June 30, 2020 | June 30, 2019 | | :------------------------ | :-------------- | :------------ | | Remaining term (years) | 2.92-3.42 | 3.92 | | Expected volatility | 70% | 49% | | Risk-free interest rate | 0.18%-0.20% | 1.73% | | Dividend yield | 0.00 | 0.00% | - The fair value of derivative liabilities is computed using a Monte Carlo simulation and the with-and-without method, with changes recorded as other income or expense in the consolidated statements of operations[272](index=272&type=chunk)[273](index=273&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk) [Note 8. Convertible Notes](index=79&type=section&id=8.6.8.%20Note%208.%20Convertible%20Notes) Akoustis had $25.0 million in convertible notes outstanding as of June 30, 2020, with specific conversion prices, interest terms, and make-whole provisions Convertible Debt Summary (as of June 30, 2020, in thousands) | Note Type | Maturity Date | Interest Rate | Conversion Price | Face Value | Remaining Debt (Discount) | Fair Value of Embedded Conversion Option | Carrying Value | | :-------------------------------------- | :------------ | :------------ | :--------------- | :--------- | :------------------------ | :--------------------------------------- | :------------- | | 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** | - The May 2018 notes (**$15.0 million** principal) mature on May 31, 2023, accrue **6.5% interest** (payable in cash and/or stock), and have a conversion price of **$5.00 per share** (adjusted from $6.55) Holders have a one-time put right prior to May 31, 2021, with a make-whole payment for early conversion[399](index=399&type=chunk)[401](index=401&type=chunk) - The October 2018 notes (**$10.0 million** principal) mature on November 30, 2023, accrue **6.5% interest** (payable in cash), and have a conversion price of **$5.10 per share** The company may redeem these notes under certain stock price conditions, and holders have a one-time put right on November 30, 2021[402](index=402&type=chunk)[403](index=403&type=chunk)[404](index=404&type=chunk) - Second Supplemental Indentures were entered into on April 17, 2020, to permit the incurrence of indebtedness made available through the CARES Act[406](index=406&type=chunk) [Note 9. Loans Payable](index=83&type=section&id=8.6.9.%20Note%209.%20Loans%20Payable) Akoustis received a $1.6 million PPP Loan in May 2020, with a two-year maturity, 1.00% interest, and potential for forgiveness based on use of proceeds - Akoustis, Inc. received a **$1.6 million** PPP Loan on May 20, 2020, under the CARES Act, with a two-year maturity and **1.00% annual interest**[408](index=408&type=chunk) - Payments under the PPP Loan are deferred for the first sixteen months, and the company is obligated to apply for loan forgiveness based on the use of proceeds for payroll costs, mortgage interest, rent, and utility costs[408](index=408&type=chunk) - No assurance is provided that Akoustis, Inc. will obtain forgiveness of the PPP Loan in whole or in part[408](index=408&type=chunk) [Note 10. Concentrations](index=83&type=section&id=8.6.10.%20Note%2010.%20Concentrations) In FY2020, one vendor accounted for 12% of purchases, and the top five customers each contributed 10% to 19% of total revenue Vendor Concentration (Percentage of Purchases) | Vendor | FY2020 | | :------- | :----- | | Vendor 1 | 12% | Customer Concentration (Percentage of Revenue) | Customer | FY2020 | FY2019 | | :--------- | :----- | :----- | | Customer 1 | 19% | 12% | | Customer 2 | 19% | — | | Customer 3 | 14% | 31% | | Customer 4 | 11% | — | | Customer 5 | 10% | — | [Note 11. Stockholders' Equity](index=83&type=section&id=8.6.11.%20Note%2011.%20Stockholders'%20Equity) Stockholders' equity increased significantly in FY2020 due to $45.7 million from common stock sales and various equity incentive plans - During FY2020, Akoustis sold **5,520,000 shares** of common stock for **$34.5 million** gross proceeds and **1,392,661 shares** through an ATM program for **$11.2 million** gross proceeds[411](index=411&type=chunk)[412](index=412&type=chunk) - The 2018 Stock Incentive Plan, approved by stockholders, reserved **6,000,000 shares**, with **3,758,226 shares** remaining available for future grants as of June 30, 2020[415](index=415&type=chunk) Stock-Based Compensation Expense (in thousands) | Category | FY2020 | FY2019 | | :------------------------------- | :----- | :----- | | Research and Development | $3,454 | $4,182 | | General and Administrative | $3,280 | $3,058 | | **Total** | **$6,734** | **$7,240** | - As of June 30, 2020, the company had **$2.1 million** in unrecognized stock-based compensation expense for outstanding options (amortized over 2 years) and **$6.5 million** for unvested restricted stock awards/units (amortized over 2.07 years)[422](index=422&type=chunk)[426](index=426&type=chunk) [Note 12. Commitments and contingencies](index=89&type=section&id=8.6.12.%20Note%2012.%20Commitments%20and%20contingencies) Akoustis' commitments include leases, a lease-back agreement, and a settled arbitration, with a contingent real estate liability expiring in March 2020 - The company amended its Huntersville, NC office lease, expanding space to **22,000 sq ft** and extending the term to February 2023, resulting in a **$0.2 million** increase in the right-of-use asset and liability[434](index=434&type=chunk) Lease Information (in thousands) | Metric | FY2020 | June 30, 2020 | | :------------------------------------ | :---------- | :------------ | | Operating Lease Expense | $219 | N/A | | Operating lease right-of-use asset | N/A | $699 | | Operating lease liability-current | N/A | $231 | | Operating lease liability-non current | N/A | $472 | | Weighted Average Remaining Lease Term | N/A | 2.75 Years | | Weighted Average Discount Rate | N/A | 12.47% | - The contingent real estate liability related to the acquisition of the STC-MEMS Business, which imposed a penalty if the property was sold above **$1.75 million** within three years, was reduced to zero as of June 30, 2020, due to the lapse of the sale restriction period[440](index=440&type=chunk)[441](index=441&type=chunk) - Akoustis settled all pending disputes with its former principal financial officer for an all-inclusive settlement amount of **$375 thousand** in cash in FY2020[443](index=443&type=chunk) [Note 13. Related Party Transactions](index=91&type=section&id=8.6.13.%20Note%2013.%20Related%20Party%20Transactions) Related party transactions in FY2020 included $40 thousand in stock-based compensation for consulting and a $20 thousand equipment purchase from the CEO's brother - Total stock-based compensation expense related to the Co-Chairman's consulting services was **$40 thousand** for the year ended June 30, 2020[446](index=446&type=chunk) - On October 11, 2019, the Company issued **2,500 shares** of common stock to the brother of the Company's Chief Executive Officer in exchange for equipment with a fair market value of **$20 thousand**[446](index=446&type=chunk) [Note 14. Income Taxes](index=93&type=section&id=8.6.14.%20Note%2014.%20Income%20Taxes) Akoustis reported a 0.00% income tax provision, with $24.3 million in deferred tax assets fully offset by a valuation allowance due to cumulative losses - The income tax provision was **0.00%** for both the years ended June 30, 2020, and June 30, 2019[450](index=450&type=chunk) Deferred Tax Assets and Liabilities (in thousands, as of June 30, 2020) | Category | Amount | | :------------------------------- | :----- | | Net Operating Loss Carryforwards | $20,542 | | Stock-based compensation | $2,422 | | Credits | $869 | | Other | $484 | | **Total Deferred Tax Assets** | **$24,317** | | Convertible debt discount | $(472) | | Accumulated depreciation/basis differences | $(1,150) | | **Total Deferred Tax Liabilities** | **$(1,622)** | | **Valuation Allowance** | **$(22,695)** | | **Net Deferred Tax Assets** | **$0** | - A full valuation allowance of approximately **$22.7 million** was recorded against deferred tax assets as of June 30, 2020, due to a history of cumulative losses, indicating that the benefits are not more likely than not to be realized[454](index=454&type=chunk) - The CARES Act, enacted in March 2020, did not have a material impact on the financial statements due to the company's full valuation allowance position[448](index=448&type=chunk) [Note 15. Segment Information](index=95&type=section&id=8.6.15.%20Note%2015.%20Segment%20Information) Akoustis operates in two segments: Foundry Fabrication Services and RF Filters, with performance evaluated based on revenue and operating profit/loss - Akoustis operates in two segments: Foundry Fabrication Services (engineering review services and STC-MEMS foundry services) and RF Filters (amplifier and filter product sales, and grant revenue)[458](index=458&type=chunk) Segment Performance (Year ended June 30, 2020, in thousands) | Metric | Foundry Fabrication Services | RF Filters | Total | | :-------------------------- | :--------------------------- | :--------- | :---- | | Revenue | $991 | $799 | $1,790 | | Cost of revenue | $703 | $1,711 | $2,414 | | Gross margin | $288 | $(912) | $(624) | | Research and development | — | $20,523 | $20,523 | | General and administrative | $14 | $10,877 | $10,891 | | Income/(Loss) from Operations | $274 | $(32,312) | $(32,038) | Segment Performance (Year ended June 30, 2019, in thousands) | Metric | Foundry Fabrication Services | RF Filters | Total | | :-------------------------- | :--------------------------- | :--------- | :---- | | Revenue | $1,058 | $276 | $1,334 | | Grant Revenue | — | $109 | $109 | | Cost of revenue | $811 | $202 | $1,013 | | Gross margin | $247 | $183 | $430 | | Research and development | — | $19,075 | $19,075 | | General and administrative | $50 | $8,872 | $8,922 |\n| Loss from Operations | $197 | $(27,764) | $(27,567) | [Note 16. Subsequent Events](index=95&type=section&id=8.6.16.%20Note%2016.%20Subsequent%20Events) There were no subsequent events requiring disclosure [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=96&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) Akoustis reported no changes in or disagreements with its accountants on accounting and financial disclosure matters for FY2020 [ITEM 9A. Controls and Procedures](index=96&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that Akoustis' disclosure controls and internal control over financial reporting were effective as of June 30, 2020, after remediating prior weaknesses - Management, with the participation of the CEO and Interim CFO, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2020[463](index=463&type=chunk) - Material weaknesses in internal control over financial reporting identified in the FY2019 Annual Report were remediated during fiscal year 2020, and management concluded that internal control over financial reporting was effective as of June 30, 2020[465](index=465&type=chunk) - As a non-accelerated filer, Akoustis is no longer required to provide an auditor's attestation of management's assessment of internal control over financial reporting[466](index=466&type=chunk) [ITEM 9B. Other Information](index=96&type=section&id=ITEM%209B.%20Other%20Information) There is no other information required to be disclosed [PART III](index=97&type=section&id=PART%20III) [ITEM 10. Directors, Executive Officers and Corporate Governance](index=97&type=section&id=ITEM%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from Akoustis' definitive proxy statement for its 2020 annual meeting [ITEM 11. Executive Compensation](index=97&type=section&id=ITEM%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from Akoustis' definitive proxy statement for its 2020 annual meeting [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=97&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information for this item is incorporated by reference from Akoustis' definitive proxy statement for its 2020 annual meeting [ITEM 13. Certain Relationships and Related Transactions, and Director Independence](index=97&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information for this item is incorporated by reference from Akoustis' definitive proxy statement for its 2020 annual meeting [ITEM 14. Principal Accountant Fees and Services](index=97&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information for this item is incorporated by reference from Akoustis' definitive proxy statement for its 2020 annual meeting [PART IV](index=98&type=section&id=PART%20IV) [ITEM 15. Exhibits and Financial Statement Schedules](index=98&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of the 10-K report, including consolidated financial statements and an extensive exhibit index - The consolidated financial statements, including Balance Sheets, Statements of Income and Comprehensive Income, Statements of Equity, Statements of Cash Flows, and Notes to Consolidated Financial Statements, are filed as part of this report[474](index=474&type=chunk) - All financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto[475](index=475&type=chunk) - The Exhibit Index includes various documents such as the Plan of Conversion, Asset Purchase Agreement, Certificates of Incorporation, Indentures for convertible notes, Grant Agreements, Stock Incentive Plans, Employee Stock Purchase Plan, Promissory Note (PPP Loan), and certifications[477](index=477&type=chunk)[478](index=478&type=chunk)

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 March 31, 2020 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) | --- | --- ...

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, 2019 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 ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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) 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 September 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended June 30, 2019 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) Delaw ...

Akoustis Technologies, Inc. (NASDAQ:AKTS) Q4 2019 Results Conference Call August 26, 2019 10:00 AM ET Company Participants Tom Sepenzis - VP, Corporate Development and IR Jeff Shealy - Founder and CEO Ken Boller - Interim CFO Dave Aichele - VP, Business Development Conference Call Participants Anthony Stoss - Craig-Hallum Capital Group Cody Acree - Loop Capital Markets Matt Farrell - Piper Jaffray Suji Desilva - ROTH Capital Partners Wei Mok - Oppenheimer & Company Operator Good day, ladies and gentlemen an ...