Mobix Labs(MOBX) - 2024 Q2 - Quarterly Report

Mergers and Acquisitions - The company completed the merger with Mobix Labs, Inc. on December 21, 2023, changing its name from Chavant Capital Acquisition Corp. to Mobix Labs, Inc.[165] - The acquisition of RaGE Systems was finalized on May 21, 2024, with an aggregate consideration of 3,214,045 shares valued at $7,682 and $2,000 in cash, including potential earn-out payments of up to $8,000 over eight fiscal quarters[169][170]. - The acquisition of EMI Solutions was completed on December 18, 2023, for a total consideration of 964,912 shares valued at $8,856 and $2,200 in cash[182]. - The company is actively pursuing acquisitions to enhance its product portfolio and expand into strategically aligned industries, particularly in aerospace, military, defense, and medical sectors[164]. Financial Performance - Net revenue for the three months ended June 30, 2024, was $2,058,000, an increase of $1,978,000 or 2,473% compared to $80,000 for the same period in 2023[189]. - For the nine months ended June 30, 2024, net revenue was $3,488,000, an increase of $2,697,000 or 341% compared to $791,000 for the same period in 2023[190]. - Cost of revenue for the three months ended June 30, 2024, was $1,327,000, an increase of $1,042,000 or 366% compared to $285,000 for the same period in 2023[192]. - Research and development expenses for the three months ended June 30, 2024, were $1,369,000, a decrease of $1,790,000 or 57% compared to $3,159,000 for the same period in 2023[194]. - Selling, general and administrative expenses for the three months ended June 30, 2024, were $8,710,000, an increase of $2,335,000 or 37% compared to $6,375,000 for the same period in 2023[197]. - Net loss for the three months ended June 30, 2024, was $7,679,000, a decrease of $2,325,000 or 23% compared to a net loss of $10,004,000 for the same period in 2023[201]. - Loss from operations for the nine months ended June 30, 2024, was $35,179,000, an increase of $4,375,000 or 14% compared to $30,804,000 for the same period in 2023[187]. - Selling, general and administrative expenses for the nine months ended June 30, 2024, were $31,731,000, an increase of $10,533,000 or 50% compared to $21,198,000 for the same period in 2023[199]. Cash Flow and Financing - The company raised gross proceeds of $21,014 from the merger, including $1,264 from cash held in Chavant's trust account and $19,750 from a private investment in public equity (PIPE) at $10.00 per share[180]. - Net cash provided by financing activities for the nine months ended June 30, 2024, was $15,991, which included $21,014 from the merger and PIPE[220]. - The company completed a private placement in July 2024, raising gross proceeds of $4,000 before fees and expenses[222]. - For the nine months ended June 30, 2024, net cash used in operating activities was $14,767, which included a net loss of $8,497[218]. - The company expects to continue incurring operating losses and negative cash flows, necessitating additional debt or equity financing[228]. Liabilities and Assets - Total liabilities increased to $32,741 as of June 30, 2024, compared to $21,789 as of September 30, 2023, primarily due to the earnout and PIPE make-whole liabilities totaling $4,909[225]. - The company incurred a loss from operations of $35,179 for the nine months ended June 30, 2024, and an accumulated deficit of $92,920 as of the same date[227]. - Cash balance as of June 30, 2024, was $205, up from $89 at September 30, 2023, with a working capital deficit of $21,431[222]. Fair Value and Accounting - The fair value of the earnout liability decreased, resulting in non-cash gains of $661,000 and $30,599,000 for the three months and nine months ended June 30, 2024, respectively[201]. - As of June 30, 2024, the estimated fair value of the PIPE make-whole liability was adjusted to $1,949, resulting in a non-cash loss of $310 for the three months ended June 30, 2024[205]. - The Private Warrants had an estimated fair value of $562 as of June 30, 2024, leading to a non-cash gain of $68 for the three months ended June 30, 2024[207]. - The fair value of the earnout liability was estimated at $10.66 as of December 2023, with an expected volatility of 50% and a risk-free rate of 3.9%[233]. - The fair value of the PIPE make-whole liability was estimated at $21.10 as of December 2023, with an expected volatility of 49% and a risk-free rate of 5.4%[234]. - The company recognizes liabilities for uncertain tax positions based on a two-step process regarding recognition and measurement[245]. - The company allocates the purchase price of acquisitions to tangible and intangible assets based on their estimated fair values, with excess recorded as goodwill[246]. Company Classification and Future Expectations - The company is classified as an "emerging growth company," allowing it to take advantage of certain exemptions from various reporting requirements[252]. - The company is also classified as a "smaller reporting company," which allows it to provide only two years of audited financial statements[254]. - Stock-based compensation expense is expected to increase in future periods due to existing unrecognized stock-based compensation and additional awards granted[243]. - The company has not recorded any impairment charges during the three months and nine months ended June 30, 2024 and 2023, but future cash flows may vary from expectations[251]. - The company uses a Monte Carlo simulation model to estimate the fair value of both earnout and PIPE make-whole liabilities, incorporating significant assumptions[233][234].