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,~~September 30, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:001-38029

AKOUSTIS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Delaware		33-1229046
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

9805 Northcross Center Court, Suite A
Huntersville, NC		28078
(Address of principal executive offices)		(Postal Code)

Registrant’s telephone number, including area code: ~~1-704 - 997-5735~~1-704-997-5735

Securities registered under Section 12(b) of the Act:

Title of Each Class:

Trading Symbol

Name of each exchange
on which registered:

Common Stock, $0.001 par value

AKTS

The Nasdaq Stock Market LLC

(Nasdaq Capital Market)

Securities registered under Section 12(g) of the Act:

None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒☐
Non-accelerated filer	☐☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of ~~April 24,~~October 22, 2020, there were ~~36,389,000~~38,627,814 shares of the registrant’s common stock, $0.001 par value per share, issued and outstanding.

AKOUSTIS TECHNOLOGIES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~MARCH31,~~SEPTEMBER 30, 2020

TABLE OF CONTENTS

		Page No.

	PART I — FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	1

Condensed Consolidated Balance Sheets as of ~~March 31,~~September 30, 2020 and June 30, ~~2019~~2020 (unaudited)		1

Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020 and 2019 (unaudited)		2

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020 and 2019 (unaudited)		3

Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019 (unaudited)		54

Notes to the Condensed Consolidated Financial Statements (unaudited)		65

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2016

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2621

ITEM 4.	CONTROLS AND PROCEDURES	2621

	PART II — OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	2722

ITEM 1A.	RISK FACTORS	2722

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2822

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	2922

ITEM 4.	MINE SAFETY DISCLOSURES	2922

ITEM 5.	OTHER INFORMATION	2922

ITEM 6.	EXHIBITS	2922

EXHIBIT INDEX		2923

SIGNATURES		3024

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

Akoustis Technologies, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

(Unaudited)

	March 31,			June 30,			September 30,			June 30,
	2020			2019			2020			2020

Assets

Assets:
Cash and cash equivalents	$	39,577		$	30,054		$	37,189		$	44,308
Accounts receivable		692			285
Inventory		76			94
Accounts receivable, net								346			351
Inventory, net								236			136
Other current assets		812			1,289			1,513			1,408
Total current assets		41,157			31,722			39,284			46,203

Property and equipment, net		19,942			15,178			23,458			23,605

Intangibles, net		494			388			577			544

Assets held for sale, net		21			300

Operating lease right-of-use asset, net		751			—			645			699
Restricted cash		100			100			100			100
Other assets		449			261			282			282
Total Assets	$	62,914		$	47,949		$	64,346		$	71,433

Liabilities and Stockholders’ Equity

Current Liabilities:
Accounts payable and accrued expenses	$	3,393		$	3,211		$	3,749		$	5,899
Deferred revenue		—			5			190			—
Contingent real estate liability		—			446
Operating lease liability-current		223			—
Operating lease liability - current								241			231
Total current liabilities		3,616			3,662			4,180			6,130

Long-term Liabilities:
Convertible notes payable, net		20,152			18,215			22,858			21,628
Operating lease liability - non current		534			—
Operating lease liability - non-current								408			472
Loans payable								1,598			1,591
Other long-term liabilities		117			117			117			117
Total long-term liabilities		20,803			18,332			24,981			23,808

Total Liabilities		24,419			21,994			29,161			29,938

Stockholders’ Equity
Preferred Stock, par value $0.001: 5,000,000 shares authorized; none issued and outstanding		—			—
Common stock, $0.001 par value; 100,000,000 shares authorized; 36,351,976 and 30,140,955 shares issued and outstanding at March 31, 2020 and June 30, 2019, respectively		36			30
Preferred stock, par value $0.001: 5,000,000 shares authorized; none issued and outstanding								—
Common stock, $0.001 par value; 100,000,000 shares authorized; 38,582,189 and 37,990,380 shares issued and outstanding at September 30, 2020 and June 30, 2020, respectively								39			38
Additional paid in capital		131,997			93,399			150,711			145,072
Accumulated deficit		(93,538	)		(67,474	)		(115,565	)		(103,615	)
Total Stockholders’ Equity		38,495			25,955			35,185			41,495
Total Liabilities and Stockholders’ Equity	$	62,914		$	47,949		$	64,346		$	71,433

See accompanying notes to the condensed consolidated financial statements

��

Akoustis Technologies, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

													For the Three Months Ended September 30, 2020			For the Three Months Ended September 30, 2019
	For the Three Months Ended March 31, 2020			For the Three Months Ended March 31, 2019			For the Nine Months Ended March 31, 2020			For the Nine Months Ended March 31, 2019
Revenue													$	636		$	543
Revenue with customers	$	363		$	237		$	1,424		$	764
Grant revenue		—			—			—			109
Total revenue		363			237			1,424			873

Cost of revenue		217			299			1,340			813			1,649			336

Gross profit (loss)		146			(62	)		84			60
Gross profit														(1,013	)		207

Operating expenses
Research and development		5,769			5,505			15,736			14,340			6,380			5,079
General and administrative expenses		2,589			2,503			8,158			6,841			2,927			2,801
Total operating expenses		8,358			8,008			23,894			21,181			9,307			7,880

Loss from operations		(8,212	)		(8,070	)		(23,810	)		(21,121	)		(10,320	)		(7,673	)

Other (expense) income
Interest (expense) income		(1,162	)		(781	)		(3,259	)		(2,006	)
Interest (expense)														(1,431	)		(994	)
Rental income		54			70			164			207			—			55
Other (expense)														(1	)		(1	)
Change in fair value of contingent real estate liability		480			905			446			805			—			(18	)
Change in fair value of derivative liabilities		1,066			(1,558	)		396			(1,372	)		(198	)		(344	)
Total other (expense) income		438			(1,364	)		(2,253	)		(2,366	)		(1,630	)		(1,302	)
Net loss	$	(7,774	)	$	(9,434	)	$	(26,063	)	$	(23,487	)	$	(11,950	)	$	(8,975	)

Net loss per common share - basic and diluted	$	(0.21	)	$	(0.31	)	$	(0.80	)	$	(0.88	)	$	(0.31	)	$	(0.30	)

Weighted average common shares outstanding - basic and diluted		36,263,779			29,959,908			32,659,339			26,659,999			38,176,702			30,325,185

See accompanying notes to the condensed consolidated financial statements

A~~koustis~~Akoustis Technologies, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

~~(In thousands)~~

(Unaudited)

For the Nine Months Ended March 31, 2020
Common Stock Additional
Paid In Accumulated Stockholders’
Shares Par Value Capital Deficit Equity

Balance, June 30, 2019 30,141 $ 30 $ 93,399 $ (67,475 ) $ 25,954

Common stock issued for services 283 — 1,703 — 1,703
Common stock issued for exercise of warrants 6 — — — —
Vesting of restricted shares — — 303 — 303
Common stock issued in payment of note interest 38 — 244 — 244
Net loss — — — (8,975 ) (8,975 )
Balance, September 30, 2019 30,468 $ 30 $ 95,649 $ (76,450 ) $ 19,229

Common stock issued for cash, net of issuance costs 5,520 6 32,164 — 32,170
Common stock issued for services 178 — 1,602 — 1,602
Common stock issued for exercise of warrants 68 — — — —
Common stock issued for exercise of options 10 — 55 — 55
Common stock issued for equipment purchase 5 — 40 — 40
ESPP purchase 28 — 168 — 168
Common stock issued in payment of note interest 34 — 244 — 244
Repurchase and retirement of common shares (99 ) — — — —
Net loss — — — (9,314 ) (9,314 )
Balance, December 31, 2019 36,212 $ 36 $ 129,922 $ (85,764 ) $ 44,194

Common stock issued for cash, net of issuance costs — — 19 — 19
Common stock issued for services 105 — 1,803 — 1,803
Common stock issued for exercise of options 2 — 9 — 9
Common stock issued in payment of note interest 34 — 244 — 244
Repurchase and retirement of common shares (1 ) — — — —
Net loss — — — (7,774 ) (7,774 )
Balance, March 31, 2020 36,352 $ 36 $ 131,997 $ (93,538 ) $ 38,495

~~Akoustis Technologies, Inc.~~

~~Condensed Consolidated Statements of Changes in Stockholders’ Equity - Continued~~

(In thousands)

~~(Unaudited)~~

	For the Three Months Ended September 30, 2020
	Common Stock				Additional Paid In		Accumulated			Stockholders’
	Shares		Par Value		Capital		Deficit			Equity

Balance, June 30, 2020		37,990	$	38	$	145,072	$	(103,615	)	$	41,495

Common stock issued for services		127		—		2,027		—			2,027

Common stock issued for exercise of options		18		—		102		—			102

Common stock issued for cash, net of issuance costs		416		—		3,267		—			3,267

Common stock issued in payment of note interest		31		1		243		—			244

Net loss		—		—		—		(11,950	)		(11,950	)

Balance, September 30, 2020		38,582	$	39	$	150,711	$	(115,565	)	$	35,185

	For the Nine Months Ended March 31, 2019														For the Three Months Ended September 30, 2019
	Common Stock					Additional Paid In			Accumulated			Stockholders’			Common Stock				Additional Paid In		Accumulated			Stockholders’
	Shares			Par Value		Capital			Deficit			Equity			Shares		Par Value		Capital		Deficit			Equity

Balance, June 30, 2018		22,203		$	22	$	52,074		$	(38,246	)	$	13,850
Cumulative-effect adjustment from adoption of ASC 60		—			—		—			20			20
Common stock issued for cash, net of issuance costs		—			—		(81	)		—			(81	)
Balance, June 30, 2019																30,141	$	30	$	93,399	$	(67,474	)	$	25,955

Common stock issued for services		112			—		1,947			—			1,947			283		—		1,703		—			1,703

Common stock issued for exercise of warrants		19			—		71			—			71			6		—		—		—			—

Vesting of restricted shares		—			—		351			—			351			—		—		303		—			303

Common stock issued in payment of note interest		40			—		290			—			290			38		—		244		—			244

Net loss		—			—		—			(7,308	)		(7,308	)		—		—		—		(8,975	)		(8,975	)
Balance, September 30, 2018		22,374		$	22	$	54,652		$	(45,534	)	$	9,140

Common stock issued for cash, net of issuance costs		7,362			8		28,733			—			28,741
Common stock issued for services		121			—		1,044			—			1,044
Intrinsic value of beneficial conversion feature		—			—		3,951			—			3,951
Vesting of restricted shares		—			—		177			—			177
Common stock issued in payment of note interest		53			—		244			—			244
Net loss		—			—		—			(6,745	)		(6,745	)
Balance, December 31, 2018		29,910		$	30	$	88,801		$	(52,279	)	$	36,552

Common stock issued for cash, net of issuance costs		1			—		—			—			—
Common stock issued for services		46			—		2,125			—			2,125
Common stock issued for exercise of warrants		16			—		—			—			—
Common stock issued for exercise of options		19			—		133			—			133
Vesting of restricted shares		—			—		80			—			80
Repurchase of common shares		(21	)		—		—			—			—
Common stock issued in payment of note interest		37			—		244			—			244
Net loss		—			—		—			(9,434	)		(9,434	)
Balance, March 31, 2019		30,008		$	30	$	91,383		$	(61,713	)	$	29,700

Balance, September 30, 2019																30,468	$	30	$	95,649	$	(76,450	)	$	19,229

See accompanying notes to the condensed consolidated financial statements.

Akoustis Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands, except per share data)

(Unaudited)

							Three Months Ended			Three Months Ended
							September 30, 2020			September 30, 2019
	Nine Months ended March 31, 2020			Nine Months ended March 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(26,063	)	$	(23,487	)	$	(11,950	)	$	(8,975	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,194			1,815			993			695
Common stock issued for services		5,108			5,522			2,027			1,703
Amortization of debt discount		2,333			1,347			1,038			711
Amortization of operating lease right of use asset								54			27
Non cash interest payments								244			244
Change in fair value of derivative liabilities		(396	)		1,372			198			344
Amortization of operating lease right of use asset		91			—
Loss on disposal of fixed assets		—			(38	)
Non cash interest payment		731			777
Change in fair value of contingent real estate liability		(446	)		(805	)		—			18
Changes in operating assets and liabilities:
Accounts receivable		(407	)		55			5			(299	)
Inventory		18			(92	)		(100	)		(12	)
Other current assets		477			(60	)		(105	)		143
Other assets		(188	)		(188	)		—			(63	)
Accounts payable and accrued expenses		195			410			(452	)		(317	)
Lease liabilities		(85	)		—			(54	)		(25	)
Change in other long-term liabilities		—			19
Deferred revenue		(5	)		(66	)		190			8
Net Cash Used in Operating Activities		(16,443	)		(13,419	)		(7,912	)		(5,798	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for machinery and equipment		(6,340	)		(4,436	)		(2,308	)		(1,581	)
Cash received from sale of assets held for sale		28			33
Cash paid for intangibles		(143	)		(92	)		(38	)		(64	)
Net Cash Used in Investing Activities		(6,455	)		(4,495	)		(2,346	)		(1,645	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		32,189			28,659			3,037			—
Proceeds from stock option exercises		64			133
Proceeds from employee stock purchase plan		168			—
Proceeds from the exercise of warrants		—			71
Proceeds received from convertible note, net of issuance costs		—			8,867
Proceeds from exercise of employee stock options								102			—
Net Cash Provided by Financing Activities		32,421			37,730			3,139			—

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash		9,523			19,816			(7,119	)		(7,443	)

Cash, Cash Equivalents and Restricted Cash - Beginning of Period		30,154			14,817			44,408			30,154

Cash, Cash Equivalents and Restricted Cash - End of Period	$	39,677		$	34,633		$	37,289		$	22,711

SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Period for:
Interest		488			256			163			163

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Accrued interest paid in common shares		731			777
Common stock issued in payment of interest								244			244
Stock compensation payable		303			203			—			303
ASC 606 transition adjustment		—			20
Convertible Notes – Beneficial Conversion Feature		—			3,951
Reclass from assets held for sale		(251	)		—
Assets purchase using common stock		40			—
Fixed assets in accounts payable		290			—
Fixed assets included in accounts payable and accrued expenses								(1,467	)		—
Debt issuance costs included in accounts payable and accrued expenses								(230	)		—

See accompanying notes to the condensed consolidated financial statements

AKOUSTIS TECHNOLOGIES, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Note 1. Organization

Akoustis Technologies, Inc. (“the Company”) was incorporated ~~under the laws of the State of Nevada~~ on April 10, ~~2013. Effective~~2013, and effective December 15, 2016, the Company changed its state of incorporation ~~from the State of Nevada~~ to the State of Delaware. Through its subsidiary, Akoustis, Inc. (a Delaware corporation), the Company, headquartered in Huntersville, North Carolina, is focused on developing, designing, and manufacturing innovative radio frequency (“RF”) filter products for the wireless industry, including for products such as smartphones and tablets, cellular infrastructure equipment, WiFi Customer Premise Equipment (“CPE”), and military and defense communication applications. Located between the device’s antenna and its digital backend, the RF front-end (“RFFE”) is the circuitry that performs the analog signal processing and contains components such as amplifiers, filters and switches. To construct the resonator devices that are the building blocks for its RF filters, the Company has developed a family of novel, high purity acoustic piezoelectric materials as well as a unique microelectromechanical system (“MEMS”) wafer process, collectively referred to as XBAW™ technology. The Company leverages its integrated device manufacturing (“IDM”) business model to develop and sell high performance RF filters using its XBAW^TM technology. Filters are critical in selecting and rejecting signals, and their performance enables differentiation in the modules defining the RFFE.

Note 2. Liquidity

~~At March 31,~~As of September 30, 2020, the Company had cash and cash equivalents of ~~$39.6~~$37.2 million and working capital of ~~$37.5~~$35.1 million. The Company has historically incurred recurring operating losses and ~~has~~ experienced net cash used in operating activities of ~~$16.4~~$7.9 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2020, which raises substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date.

As of ~~April 24,~~October 22, 2020, the Company had ~~$38.4~~$34.5 million of cash and cash equivalents, which the Company expects to be sufficient to fund its operations beyond the next twelve months from the date of filing of this Form 10-Q. These funds will be used to fund the Company’s operations, including capital expenditures, R&D, commercialization of our technology, development of our patent strategy and expansion of our patent portfolio, as well as to provide working capital and funds for other general corporate purposes. ~~The~~Except pursuant to its ATM Equity Offering^SMSales Agreement with BofA Securities, Inc. and Piper Sandler & Co., the Company has no commitments or arrangements to obtain any additional funds, and there can be no assurance such funds, including under the ATM Equity Offering^SM Sales Agreement, will be available on acceptable terms or at all. If the Company is unable to obtain additional financing in a timely fashion and on acceptable terms, its financial condition and results of operations may be materially adversely affected and it may not be able to continue operations or execute its stated commercialization plan.

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“~~U.S.~~ GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered necessary for a fair presentation have been included. The Company has evaluated subsequent events through the filing of this Form 10-Q. Operating results for the quarter ended ~~March 31,~~September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending June 30, ~~2020~~2021 or any future interim period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the SEC on ~~September 13, 2019~~August 21, 2020 (the ~~“2019~~“2020 Annual Report”).

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Akoustis, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

Significant Accounting Policies and Estimates

The Company’s significant accounting policies are disclosed in Note 3-Summary of Significant Accounting Policies in the ~~2019~~2020 Annual Report. Since the date of the ~~2019~~2020 Annual Report, ~~other than adopting ASC 842 “Leases” discussed in the footnote below,~~ there have been no material changes to the Company’s significant accounting policies. The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes thereto. The policies, estimates and assumptions include valuing equity securities and derivative financial instruments issued in financing transactions, deferred taxes and related valuation allowances, revenue recognition, contingent real estate liability and the fair values of long-lived assets. Actual results could differ from the estimates.

Allowance for Doubtful Accounts

The Company provides an allowance for doubtful accounts equal to the estimated losses to be incurred in the collection of accounts receivable.

Inventory, net

Inventory is stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) valuation method.

Inventory, net of reserves, consisted of the following as of September 30, 2020 and June 30, 2020 (in thousands):

		September 30, 2020		June 30, 2020
Raw Materials	��	$	28	$	24
Work in Process			83		69
Finished Goods			125		43
Total Inventory		$	236	$	136

Shares of Restricted Stock Outstanding

Shares outstanding include shares of restricted stock with respect to which restrictions have not lapsed. Restricted stock included in reportable shares outstanding was the following as of September 30, 2020 and 2019. Shares of restricted stock are included in the calculation of weighted average shares outstanding. ~~Restricted stock included in reportable shares outstanding were as follows as of March 31, 2020 and 2019.~~

March 31,
2020 March 31,
2019
Shares of restricted stock included in reportable shares outstanding 116,250 311,328

		September 30, 2020				September 30, 2019
Restricted stock included in reportable shares outstanding			28,750				181,000

Reclassification

Certain prior period amounts have been reclassified to conform to current period presentation. The reclassifications did not have an impact on net loss as previously reported.

~~Restricted Cash~~

Restricted cash at March 31, 2020 and June 30, 2019 represents a retained balance obligation included in a deposit account control agreement required by the Company’s 6.5% Convertible Senior Secured Notes due 2023 issued in May 2018. The restriction on the cash will lapse in conjunction with the extinguishment of the debt.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Recently Adopted

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842),” with multiple amendments subsequently issued. The new guidance requires that lease arrangements be presented on the lessee’s balance sheet by recording a right-of-use asset and a lease liability equal to the present value of the related future minimum lease payments. The Company adopted the standard in the first quarter of fiscal 2020, using the modified retrospective approach which permits lessees to recognize a cumulative-effect adjustment to the opening balance of accumulated deficit in the period of adoption. Upon adoption, the Company recorded a right-of-use asset of $0.7 million and a lease liability of $0.7 million.

~~The Company elected the transition package of practical expedients, under which the Company~~Management does not ~~have to reassess (1) whether~~believe that any expired or existing contracts are leases, or contain leases, (2) the lease classification for any expired or existing leases, and (3) initial direct costs for any existing leases. Further, the Company elected the practical expedientrecently issued, but not to separate lease and non-lease components for substantially all of its classes of leases and to account for the combined lease and non-lease components as a single lease component. In addition, the Company made anyet effective accounting ~~policy election to exclude leases with an initial term of 12 months or less from the balance sheet. This standard did not~~pronouncements, when adopted, will have a material ~~impact~~effect on the ~~Condensed Consolidated Statement of Operations or Condensed Consolidated Statement of Cash Flows. See Note 12 for further disclosures resulting from the adoption of this new standard.~~

~~In June 2018, the FASB issued ASU No. 2018-07,~~~~Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting~~. Under the new standard, companies are no longer required to value non-employee awards differently from employee awards. Companies value all equity classified awards on their grant date under ASC718 and forgo revaluing the award after the grant date. ASU 2018-07 is effective for annual reporting periods beginning after December 15, 2018, including interim reporting periods within that reporting period. The Company adopted the standard during the first quarter of fiscal year 2020. This standard did not have a material impact on the Company’s condensed consolidated financial statements. Approximately $0.3 million of accrued expenses associated with share-based compensation was reclassified to equity.

~~In May 2017, the FASB issued ASU 2017-09, “~~~~Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,”~~which provides guidance about which changes to the terms or conditions of a stock-based payment award require an entity to apply modification accounting in Topic 718. The Company adopted the standard during the first quarter of fiscal year 2020 and there was no material impact on itsaccompanying condensed consolidated financial statements.

Note 4. Revenue Recognition from Contracts with Customers

Disaggregation of Revenue

The Company’s primary revenue streams include foundry fabrication services and product sales.

Foundry Fabrication Services

Foundry fabrication services revenue includes Non-Recurring Engineering (“NRE”) and microelectromechanical systems (“MEMS”) foundry ~~services and Non-Recurring Engineering (“NRE”).~~services. The Company exited the MEMS business during fiscal year 2020. Under these contracts, products are delivered to the customer at the completion of the service which represents satisfaction of the performance obligation as well as transfer of title. Depending on language with regards to enforceable right to payment for performance completed to date, related revenue will either be recognized over time or at a point in time.

Product Sales

Product sales revenue consists of sales of RF filters and amps which are sold with contract terms stating that title passes, and the customer takes control at the time of shipment. Revenue is then recognized when the devices are shipped, and the performance obligation has been satisfied. If devices are sold under contract terms that specify that the customer does not take ownership until the goods are received, revenue is recognized when the customer receives the goods.

The following table summarizes the revenues of the Company’s reportable segments for the three months ended ~~March 31,~~September 30, 2020 (in thousands):

	Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers		Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers
MEMS	$	8	$	—	$	8
NRE - RF Filters		224		—		224	$	57	$	—	$	57
Filters/Amps		—		131		131		—		579		579
Total	$	232	$	131	$	363	$	57		579		636

~~The following table summarizes the revenues of the Company’s reportable segments for the nine months ended March 31, 2020 (in thousands):~~

Foundry
Fabrication
Services
Revenue
Product Sales
Revenue Total
Revenue
with
Customers
MEMS $ 265 $ — $ 265
NRE - RF Filters 652 — 652
Filters/Amps — 507 507
Total $ 917 $ 507 $ 1,424

The following table summarizes the revenues of the Company’s reportable segments for the three months ended ~~March 31,~~September 30, 2019 (in thousands):

	Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers		Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers
MEMS	$	30	$	—	$	30	$	245	$	—	$	245
NRE - RF Filters		129		—		129		116		—		116
Filters/Amps		—		78		78		—		182		182
Total	$	159	$	78	$	237	$	361	$	182	$	543

~~The following table summarizes the revenues of the Company’s reportable segments for the nine months ended March 31, 2019 (in thousands):~~

Foundry
Fabrication
Services
Revenue
Product Sales
Revenue Total
Revenue
with
Customers
MEMS $ 175 $ — $ 175
NRE - RF Filters 392 — 392
Filters/Amps — 197 197
Total $ 567 $ 197 $ 764

Performance Obligations

The Company has determined that contracts for product sales revenue and foundry fabrication services revenue involve one performance obligation, which is delivery of the final product.

Contract Balances

The following table summarizes the changes in the opening and closing balances of the Company’s contract asset and liability for the first quarter of fiscal year 2020 and 2019 (in thousands):

	Contract Assets			Contract Liability
Balance, June 30, 2020	$	125		$	—
Closing, September 30, 2020		133			190
Increase/(Decrease)	$	8		$	190

Balance, June 30, 2019	$	140		$	5
Closing, September 30, 2019		139			13
Increase/(Decrease)	$	(1	)	$	8

The Company records a receivable when the title for goods has transferred. Generally, all sales are contract sales (with either an underlying contract or purchase order), resulting in all receivables being contract receivables. When invoicing occurs prior to revenue recognition a contract liability is recorded (as deferred revenue on the Condensed Consolidated Balance ~~Sheet)~~Sheets).

At September 30, 2020, the Company recorded a contract liability of $190 thousand related to the sale of amplifiers that were not shipped during the quarter but payment had been received. The ~~following table summarizes~~Company shipped the ~~changes~~amplifiers in the ~~opening and closing balances~~second quarter of ~~the Company’s contract asset and liability for the nine months ended March 31, 2020 and 2019 (in thousands):~~

Contract Assets Contract Liabilities
Balance, June 30, 2019 $ 140 $ 5
Closing, March 31, 2020 96 —
Increase/(Decrease) (44 ) (5 )

Balance, June 30, 2018 $ 7 $ 53
Closing, March 31, 2019 57 4
Increase/(Decrease) 50 (49 )

fiscal year 2021. The amount of revenue recognized in the ~~nine~~three months ended ~~March 31, 2020~~September 30, 2019 that was included in the opening contract liability balance was $5 thousand which related to ~~filter~~product sales. The amount of revenue recognized in the nine months ended March 31, 2019 that was included in the opening contract liability balance consisted of $28 thousand that related to non-recurring engineering sales and $25 thousand that related to MEMS business.

Contract assets are recorded when revenue recognized exceeds the amount invoiced. The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The amount of contract assets invoiced in the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and 2019 that was included in the opening contract asset balance was ~~$140~~$51 thousand, which primarily related to non-recurring engineering, business and $94 thousand, which primarily related to MEMS ~~business.~~business, respectively.

Backlog of Remaining Customer Performance Obligations

Revenue expected to be recognized and recorded as sales during this fiscal year from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) was ~~$0.3~~$0.9 million at ~~March 31, 2020 and was $0.2 million at March 31, 2019.~~

~~Grant Revenue~~

From time to time the Company applies for grants from various government bodies (state & federal), such as the National Science Foundation (“NSF”) or the Department of Defense (DoD), to support research and development. In addition, the Company is eligible for “matching awards” from state boards to provide additional funds to the Company to supplement the funds awarded under the federal grant program. The Company records grant revenue as a part of revenue from operations given that grant revenue is viewed as an ongoing function of its intended operations. The revenue from grants is not viewed as “incidental” or “peripheral” which would result in the presentation of grant revenue as “Other income”. The Company recognizes non-refundable grant revenue when the performance obligations have been met, application has been submitted and approval is reasonably assured.

September 30, 2020.

~~Note 5. Common Stock Equivalents~~

~~The Company had the following common stock equivalents at March 31, 2020 and 2019. These are excluded from the loss per share calculation as they are considered anti-dilutive.~~

March 31,
2020 March 31,
2019
Convertible Notes 4,960,800 4,960,800
Options 2,265,165 2,177,314
Warrants 541,999 708,651
Total 7,767,964 7,846,765

Note 6.5. Property and Equipment, net

Property and equipment, net consisted of the following as of ~~March 31,~~September 30, 2020 and June 30, ~~2019~~2020 (in thousands):

Estimated Useful Life March 31,
2020 June 30,
2019
Land n/a $ 1,000 $ 1,000
Building 11 years 3,000 3,000
Equipment 2-10 years 20,381 13,611
Leasehold Improvements * 949 949
Software 3 years 214 161
Furniture & Fixtures 5 years 11 11
Computer Equipment 3 years 260 203
Total 25,815 18,935
Less: Accumulated depreciation (5,873 ) (3,757 )
Total $ 19,942 $ 15,178

	Estimated Useful Life	September 30, 2020			June 30, 2020
Land	n/a	$	1,000		$	1,000
Building	11 years		3,000			3,000
Equipment	2-10 years		25,465			24,746
Leasehold Improvements	*		1,072			964
Software	3 years		294			294
Furniture & Fixtures	5 years		11			11
Computer Equipment	3 years		281			267
Total			31,123			30,282
Less: Accumulated Depreciation			(7,665	)		(6,677	)
Total		$	23,458		$	23,605

~~(*) Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.~~

(*)

Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter.

The Company recorded depreciation expense of ~~$0.7~~$1.0 million and ~~$0.6~~$0.7 million for the three months ended ~~March 31,~~September 30, 2020 and 2019, respectively. ~~The Company recorded depreciation expense~~

As of ~~$2.2~~September 30, 2020, equipment with a net book value totaling $4.3 million had not been placed in service and ~~$1.8~~therefore was not depreciated during the period. As of June 30, 2020, fixed assets with a net book value totaling $5.6 million ~~for~~had not been placed in service and therefore was not depreciated during the ~~nine months ended March 31, 2020 and 2019, respectively.~~period.

Note 7.6. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following at ~~March 31,~~September 30, 2020 and June 30, ~~2019~~2020 (in thousands):

	March 31, 2020		June 30, 2019		September 30, 2020		June 30, 2020
Accounts payable	$	607	$	245	$	707	$	2,135
Accrued salaries and benefits		1,619		1,552		1,943		2,478
Accrued professional fees		140		315		42		193
Accrued utilities		117		193		158		138
Accrued interest		135		135		141		137
Accrued goods received not invoiced		127		69		559		396
Other accrued expenses		648		702		199		422
Totals	$	3,393	$	3,211	$	3,749	$	5,899

109

Note 8.7. Derivative Liabilities

The table below provides a summary of the changes in fair value, including net transfers in and/or out, of all financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the ~~nine~~three months ended ~~March 31,~~September 30, 2020 (in thousands):

Fair Value
Measurement
Using Level 3
Inputs
Total

Balance, June 30, 2019 $ 955
Change in fair value of derivative liabilities (included in other (expense) income) (396 )
Balance, March 31, 2020 (see footnote 9) $ 559

	Fair Value Measurement Using Level 3 Inputs Total
Balance, June 30, 2020	$	1,110
Change in fair value of derivative liabilities		198
Balance, September 30, 2020 (see note 8)	$	1,308

The fair value of the derivative features of the convertible note at the balance sheet dates were calculated using the with-and-without method, a form of the income approach, valued with the following ~~weighted average~~ assumptions:

	March 31, 2020			June 30, 2019			September 30, 2020			June 30, 2020
Remaining term (years)		3.16-3.67			3.92			2.66-3.16			2.92-3.42
Expected volatility		60	%		49	%		68	%		70	%
Risk free interest rate		0.30%-0.32	%		1.73	%		0.15-0.17	%		0.18-0.20	%
Dividend yield		0.00			0.00	%		0.00	%		0.00	%

Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Bill with a similar term on the date of the issuance.

Dividend yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

Volatility:The Company ~~estimated~~calculates the expected volatility of the stock price ~~based on a blend~~using the historical volatilities of the Company’s ~~own historic volatility and~~common stock traded on the ~~corresponding volatility of the Company’s peer group stock price for a period consistent with the convertible notes’ expected term.~~Nasdaq Capital Market.

Remaining term: The Company’s remaining term is based on the remaining contractual term of the convertible notes.

Note 9.8. Convertible Notes

The following table summarizes convertible debt as of ~~March 31,~~September 30, 2020 (in thousands):

	Maturity Date	Stated Interested Rate	Conversion Price		Face Value		Remaining Debt (Discount)			Fair Value of Embedded Conversion Option		Carrying Value		Maturity Date	Stated Interest Rate			Conversion Price		Face Value		Remaining Debt (Discount)			Fair Value of Embedded Conversion Option		Carrying Value
Long Term convertible notes payable
6.5% convertible senior secured notes	5/31/2023	6.50%	$	5.00	$	15,000	$	(4,753	)	$	439	$	10,686	5/31/2023		6.50	%	$	5.00	$	15,000	$	(2,981	)	$	1,066	$	13,085
6.5% convertible senior notes	11/30/2023	6.50%	$	5.10		10,000		(654	)		120		9,466	11/30/2023		6.50	%	$	5.10		10,000		(469	)		242		9,773
Ending Balance as of March 31, 2020					$	25,000	$	(5,407	)	$	559	$	20,152

Ending Balance as of September 30, 2020																				$	25,000	$	(3,450	)	$	1,308	$	22,858

The following table summarizes convertible debt as of June 30, ~~2019~~2020 (in thousands):

	Maturity Date	Stated Interested Rate	Conversion Price		Face Value		Remaining Debt (Discount)			Fair Value of Embedded Conversion Option		Carrying Value		Maturity Date	Stated Interest Rate			Conversion Price		Face Value		Remaining Debt (Discount)			Fair Value of Embedded Conversion Option		Carrying Value
Long Term convertible notes payable
6.5% convertible senior secured notes	5/31/2023	6.50%	$	5.00	$	15,000	$	(6,825	)	$	955	$	9,130	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		(915	)		—		9,085	11/30/2023		6.50	%	$	5.10		10,000		(564	)		216		9,652
Ending Balance as of June 30, 2019					$	25,000	$	(7,740	)	$	955	$	18,215

Ending Balance as of June 30, 2020																				$	25,000	$	(4,482	)	$	1,110	$	21,628

Note 9. Loans Payable

Paycheck Protection Program Loan

On May 20, 2020, Akoustis, Inc., the operating subsidiary of the Company, issued a promissory note (the “Promissory Note”) in favor of Bank of America, NA (the “Lender”) that provides for a loan in the principal amount of $1.6 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which is administered by the United States Small Business Administration (the “SBA”). The PPP Loan is scheduled to mature two years from the date of funding of the PPP Loan (the “Maturity Date”) and accrues interest at a rate of 1.00% per annum. Payments under the PPP Loan are deferred for the first sixteen months of its term. Commencing 60 days from the funding of the PPP Loan, but not more than sixteen months from the funding of the PPP Loan, Akoustis, Inc. is obligated to apply to the Lender for loan forgiveness for all or a portion of the PPP Loan. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds in accordance with the PPP, including for payroll costs and mortgage interest, rent and utility costs. If the SBA confirms full forgiveness of the unpaid balance of the PPP Loan, and reimburses the Lender for the total outstanding principal and interest due under the PPP Loan, then the loan will be deemed satisfied in full. If the SBA does not confirm full forgiveness of the PPP Loan, then the Lender will establish repayment terms of the outstanding principal and interest due under the PPP Loan. No assurance is provided that Akoustis, Inc. will obtain forgiveness of the PPP Loan in whole or in part. The Promissory Note contains customary events of default relating to, among other things, payment defaults and provisions of the Promissory Note. The Company treated the PPP Loan as debt and included it as a long-term liability on the balance sheet.

The following table summarizes Paycheck Protection Program debt as of September 30, 2020 (in thousands):

	Maturity Date	Stated Interest Rate			Face Value		Remaining Debt (Discount)			Carrying Value
Long Term Loans payable
Paycheck Protection Plan loan	05/20/2022		1.00	%	$	1,633	$	(35	)	$	1,598

Ending Balance as of September 30, 2020					$	1,633	$	(35	)	$	1,598

The following table summarizes Paycheck Protection Program debt as of June 30, 2020 (in thousands):

	Maturity Date	Stated Interest Rate			Face Value		Remaining Debt (Discount)			Carrying Value
Long Term Loans payable
Paycheck Protection Plan loan	05/20/2022		1.00	%	$	1,633	$	(42	)	$	1,591

Ending Balance as of June 30, 2020					$	1,633	$	(42	)	$	1,591

The amortization of PPP loan debt discount of $6.4 thousand was treated as interest expense on the income statement.

Note 10. Concentrations

Vendors

Vendor concentration as a percentage of purchases for the three months ended ~~March 31,~~September 30, 2020 and 2019 are as follows:

	Three Months ~~Ended~~ ~~03/31/~~09/30/2020			Three Months ~~Ended~~ ~~03/31/~~09/30/2019
Vendor 1		11	%		—
Vendor 2		—			2115	%

~~Vendor concentration as a percentage of purchases for the nine months ended March 31, 2020 and 2019 are as follows:~~

	~~Nine Months~~ ~~Ended~~ ~~03/31/2020~~			~~Nine Months~~ ~~Ended~~ ~~03/31/2019~~
~~Vendor 1~~		13	%		—

Customers

Customer concentration as a percentage of revenue for the three months ended ~~March 31,~~September 30, 2020 and 2019 are as follows:

Three Months
Ended
03/31/2020 Three Months
Ended
03/31/2019
Customer 1 38 % 28 %
Customer 2 33 % —
Customer 3 12 % —
Customer 4 11 % —
Customer 5 — 21 %
Customer 6 — 23 %

~~Customer concentration as a percentage of revenue (excluding grant revenue) for the nine months ended March 31, 2020 and 2019 are as follows:~~

Nine Months
Ended
03/31/2020 Nine Months
Ended
03/31/2019
Customer 1 20 % 22 %
Customer 2 11 % —
Customer 3 13 % —
Customer 4 17 % 12 %
Customer 5 22 % —
Customer 6 — 14 %
Customer 7 — 11 %

	Three Months 09/30/2020			Three Months 09/30/2019
Customer 1		74	%		—
Customer 2		10	%		—
Customer 3		—			45	%
Customer 4		—			20	%
Customer 5		—			20	%

Note 11. Stockholders’ Equity

~~Underwritten Public~~Equity Issuances

On May 8, 2020, the Company entered into an ATM Equity Offering^SM Sales Agreement with BofA Securities, Inc. and Piper & Sandler & Co. pursuant to which the Company may sell from time to time shares of ~~Common Stock~~its common stock having an aggregate offering price of up to $50,000,000 (the “ATM Program”).

During the ~~nine~~three months ended ~~March 31,~~September 30, 2020, the Company sold a total of ~~5,520,000~~416,221 shares of its common stock at a price to the public of ~~$6.25~~an average of $8.08 per share through the ATM Program for aggregate gross proceeds of ~~$34.5~~approximately $3.4 million, before deducting compensation paid to the ~~underwriting discount and offering expenses payable by the Company~~sales agents of approximately ~~$2.3~~$0.1 million. The Company expects to use the proceeds of the offering to fund the Company’s operations and growth of its business, including for capital expenditures, working capital, research and development, the commercialization of its technology and other general corporate purposes.

Equity Incentive Plans

During the ~~nine~~three months ended ~~March 31,~~September 30, 2020, the Company granted employees ~~and directors~~ options to purchase an aggregate of ~~222,500~~356,750 shares of common stock with a weighted average grant date fair value of ~~$4.26.~~$4.48. The fair values of the Company’s options were estimated at the dates of grant using a Black-Scholes option pricing model with the following ~~weighted average~~ assumptions:

		~~Nine~~Three Months Ended ~~March 31,~~ September 30, 2020
Exercise price		$ ~~4.71~~7.72 - ~~8.09~~8.14
Expected term (years)		4.75 – 5.00
Risk-free interest rate		~~0.64%~~0.25% – ~~1.74%~~0.28%
Volatility		6567 - ~~67%~~68%
Dividend yield		0%
Weighted Average Grant Date Fair Value of Options granted during the period		$~~4.26~~4.48

Expected term: The Company’s expected term is based on the period the options are expected to remain outstanding. The Company estimated this amount utilizing the “Simplified Method” in that the Company does not have sufficient historical experience to provide a reasonable basis to estimate an expected term.

Risk-free interest rate: The Company uses the risk-free interest rate of a U.S. Treasury Note with a similar term on the date of the grant.

Volatility: The Company calculates the expected volatility of the stock price using the historical volatilities of the Company’s common stock traded on the Nasdaq Capital Market.

Dividend yield: The Company uses a 0% expected dividend yield as the Company has not paid dividends to date and does not anticipate declaring dividends in the near future.

During the ~~nine~~three months ended ~~March 31,~~September 30, 2020 the Company awarded certain employees and ~~contractors~~directors grants of an aggregate of ~~872,061~~407,403 restricted stock units (“RSUs”) with a weighted average grant date fair value of ~~$7.65.~~$8.07. The RSUs will be expensed over the requisite service period. The terms of the RSUs include vesting provisions based solely on continued service. If the service criteria are satisfied, the RSUs will generally vest over 4 – 5 years.

Compensation expense related to our stock-based awards described above was as follows (in thousands):

	Three Months Ended March 31,				Nine Months Ended March 31,				Three Months Ended September 30,
	2020		2019		2020		2019		2020		2019
Research and Development	$	929	$	1,468	$	2,675	$	3,027	$	1,014	$	956
General and Administrative		874		787		2,433		2,495		1,013		747
Total	$	1,803	$	2,255	$	5,108	$	5,522	$	2,027	$	1,703

Unrecognized stock-based compensation expense and weighted-average years to be recognized are as follows (in thousands):

As of March 31, 2020

Unrecognized stock-
based
compensation
Weighted-
average
years
to be recognized
Options $ 2,147 2.06
Restricted stock awards/units $ 7,203 2.09

	As of September 30, 2020
	Unrecognized stock- based compensation		Weighted- average years to be recognized
Options	$	3,257		2.39
Restricted stock awards/units	$	8,267		2.40

Note 12. Commitments and Contingencies

Leases

The Company leases office space and office equipment in Huntersville, NC as well as equipment in Canandaigua, NY. ~~On January 7, 2020, the Company entered into an amended~~Our leases have remaining lease ~~agreement with the current lessor in order~~terms of up to five years, some of which include options to extend the ~~lease term and increase office space at our Huntersville, NC corporate office. The amended lease expands our space~~leases for up to ~~22,000 square feet and extends the term to February 2023. This resulted in a remeasurement of the previous right of use liability which resulted in an increase of approximately $0.2 million.~~

twenty-four months. Following adoption of ASC 842, lease expense excludes capital area maintenance and property taxes.

The components of lease expense were as ~~follows (in thousands):~~follows:

Three Months Ended
March 31,
2020 Three Months Ended
March 31
2019 Nine Months Ended
March 31,
2020 Nine Months Ended
March 31,
2019
Operating Lease Expense $ 55 $ 51 $ 144 $ 161

		Three Months Ended September 30, 2020				Three Months Ended September 30, 2019
Operating Lease Expense		$	75				43

Supplemental balance sheet information related to leases was as follows (in thousands):

Classification on the
Condensed Consolidated Balance Sheet

March 31,
2020

Classification on the
Condensed Consolidated
Balance Sheet

September 30,
2020

Assets

Operating lease assets

Other non-current assets

751

Other non-current assets

645

Liabilities

Other current liabilities

Current liabilities

223

Current liabilities

241

Operating lease liabilities

Other non-current liabilities

534

Other non-current liabilities

408

Weighted Average Remaining Lease Term:
Operating leases	~~2.9 Years~~	2.5

Weighted Average Discount Rate:
Operating leases		12.47	%

The following table outlines the minimum future lease payments for the next five years and thereafter, (in thousands):

For the year ending June 30,
2020 $ 76
2021 305
2022 312
2023 204
2024 7
Thereafter —
Total lease payments (Undiscounted cash flows) 904

Less imputed interest (147 )
Total $ 757

For the year ending June 30,
2021	$	229
2022		313
2023		204
2024		7
2025		—
Thereafter		—
Total lease payments (undiscounted cash flows)		753

Less imputed interest		(104	)
Total	$	649

Ontario County Industrial Development Authority Agreement

On February 27, 2018, the Company entered into a Lease and Project Agreement (the “Lease and Project Agreement”) and a Company Lease Agreement (the “Company Lease Agreement” and together with the Lease and Project Agreement, the “Agreements”), each dated as of February 1, 2018, with the Ontario County Industrial Development Agency, a public benefit corporation of the State of New York (the “OCIDA”). Pursuant to the Agreements, the Company ~~leases~~will lease for $1.00 annually to the OCIDA an approximately 9.995 acre parcel of land in Canandaigua, New York, together with the improvements thereon (including the Company’s New York fabrication facility), and ~~transferred~~transfer title to certain related equipment and personal property to the OCIDA (collectively, the “Facility”). The OCIDA ~~leases~~will lease the Facility back to the Company for annual rent payments specified in the Lease and Project Agreement for the Company’s primary use as research and development, manufacturing, warehouse and professional office space in its business, and to be subleased, in part, by the Company to various existing tenants. The Company estimates substantial tax savings during the term of the Agreements, which expire on December 31, 2028. In addition, subject to the terms of the Lease and Project Agreement, certain purchases and leases of eligible items will be exempt from the imposition of sales and use taxes. Subject to the terms of the Lease and Project Agreement, the OCIDA has also granted to the Company an exemption from certain mortgage recording taxes for one or more mortgages securing an aggregate principal amount not to exceed $12.0 million, or such greater amount as approved by the OCIDA in its sole and absolute discretion. The benefits provided to the Company pursuant to the terms of the Lease and Project Agreement are subject to ~~clawback~~claw back over the life of the Agreements upon certain recapture events, including certain events of default.

~~Real Estate Contingent Liability~~

On March 23, 2017, we entered into an Asset Purchase Agreement and a Real Property Purchase Agreement (collectively, the “STC-MEMS Agreements”) with The Research Foundation for the State University of New York (“RF-SUNY”) and Fuller Road Management Corporation (“FRMC”), an affiliate of RF-SUNY (collectively, “Sellers”), respectively, to acquire certain specified assets, including STC-MEMS, a semiconductor wafer-manufacturing and MEMS operation with associated wafer-manufacturing tools, and the associated real estate and improvements located in Canandaigua, NY used in the operation of STC-MEMS (the assets and real estate and improvements referred to together herein as the “STC-MEMS Business”).

In connection with the acquisition of the STC-MEMS Business, the Company agreed to pay to FRMC a penalty, if the Company sold the property subject to the related Definitive Real Property Purchase Agreement within three (3) years after the date of such agreement for an amount in excess of $1.75 million, subject to certain enumerated exceptions. The penalty imposed would have been equivalent to the amount that the sales price of the property exceeded $1.75 million up to a maximum penalty. Due to the lapse of the three-year penalty period, the maximum penalty as of March 31, 2020 was $0.

		~~Maximum~~ ~~Penalty~~
~~Year 3, ending March 23, 2020~~		$	—

The fair value of the contingent liability was reduced to zero due to the lapse of the sale restriction period. As of March 31, 2020, and June 30, 2019, the fair value of the contingent liability was $0.0 million and $0.4 million, respectively. During the three months ended March 31, 2020 and 2019, the Company marked the contingent liability to fair value and recorded a gain of $0.48 million and $0.91 million, respectively, relating to the change in fair value. During the nine months ended March 31, 2020 and 2019, the Company marked the contingent liability to fair value and recorded a gain of $0.45 million and $0.80 million, respectively, relating to the change in fair value.

Litigation, Claims and Assessments

From time to time, the Company may become involved in lawsuits, investigations and claims that arise in the ordinary course of business. The Company believes it has meritorious defenses against all pending claims and intends to vigorously pursue them. While it is not possible to predict or determine the outcomes of any pending actions, the Company believes the amount of liability, if any, with respect to such actions, would not materially affect its financial position, results of operations or cash flows.

Effective November 5, 2018, the employment by the Company of its former principal financial officer, John T. Kurtzweil (the “Former CFO”), ended, after which the Former CFO filed for an arbitration hearing pursuant to the terms of his employment agreement and filed a complaint under the whistleblower provisions of the Sarbanes-Oxley Act of 2002 with the Occupational Safety and Health Administration (“OSHA”) of the U.S. Department of Labor. On October 28, 2019, the Company and the Former CFO entered into a Settlement Agreement that resolved all pending disputes between the parties with no admission of liability by either party. OSHA approved the Settlement Agreement and closed its investigation of the Former CEO’s whistleblower complaint on November 26, 2019. Pursuant to the Settlement Agreement, the Company paid the Former CFO an all-inclusive settlement amount of $375 thousand in cash. As part of the Settlement Agreement, all unvested restricted stock units and stock options were acknowledged as forfeited as of such date. The arbitration was closed on December 30, 2019.

~~Tax Credit Contingency~~

The Company accrues a liability for indirect tax contingencies when it believes that it is both probable that a liability has been incurred and that it can reasonably estimate the amount of the loss. The Company reviews these accruals and adjusts them to reflect ongoing negotiations, settlements, rulings, advice of legal counsel and other relevant information. To the extent new information is obtained and the Company’s views on the probable outcomes of claims, suits, assessments, investigations or legal proceedings change, changes in the Company’s accrued liabilities would be recorded in the period in which such determination is made.

The Company’s gross unrecognized indirect tax credits totaled $0.1 million as of March 31, 2020 and $0.1 million as of June 30, 2019 and is recorded on the Consolidated Balance Sheet as a long-term liability.

Note 13. Related Party Transactions

~~Consulting Services~~

Total stock-based compensation expense related to stock-based awards granted in prior years for consulting services provided by a firm owned by one of the Co-Chairmen of the Company’s board of directors was $8 thousandAsset Purchase and ~~$17 thousand for the three months ended March 31, 2020 and 2019, respectively, and $32 thousand and $32 thousand for the nine months ended March 31, 2020 and 2019, respectively.~~

~~Equipment Purchase~~Sale

On ~~October 11, 2019,~~September 30, 2020, Akoustis, Inc. sold to a third party certain of its inventory, together with related warranty obligations, delivery commitments and design data and files (the “Designs”). In connection with such transaction, Akoustis, Inc. entered into an Asset Purchase Agreement, dated September 30, 2020 with Big Red, LLC for the ~~Company issued 2,500 shares~~purchase of ~~common stock to~~the Designs for $25,000. Members of Big Red, LLC include the brother of the Company’s Chief Executive Officer ~~in exchange for equipment with a fair market value~~and two non-executive employees of ~~$20,000.~~the Company.

Note 14. Segment Information

Operating segments are defined as components of an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company operates in two segments, Foundry Fabrication Services which consists of engineering review services and STC-MEMS foundry services, and RF Product which consists of amplifier and filter product sales, and grant revenue. The Company records all general and administrative costs in the RF Product segment.

The Company evaluates performance of its operating segments based on revenue and operating profit (loss). Segment information for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2020 and 2019 are as follows (in thousands):

Foundry/
Fabrication
Services RF Product Total

Three months ended March 31, 2020
Revenue with customers $ 232 $ 131 $ 363
Total Revenue 232 131 363
Cost of revenue 138 79 217
Gross margin 94 52 146
Research and development — 5,769 5,769
General and administrative — 2,589 2,589
Income (Loss) from Operations $ 94 (8,306 ) (8,212 )

Three months ended March 31, 2019
Revenue with customers $ 159 $ 78 $ 237
Total Revenue 159 78 237
Cost of revenue 176 123 299
Gross margin (17 ) (45 ) (62 )
Research and development — 5,505 5,505
General and administrative — 2,503 2,503
Income (Loss) from Operations $ (17 ) $ (8,053 ) (8,070 )

Nine months ended March 31, 2020
Revenue with customers $ 917 $ 507 $ 1,424
Total Revenue 917 507 1,424
Cost of revenue 545 795 1,340
Gross margin 372 (288 ) 84
Research and development — 15,736 15,736
General and administrative — 8,158 8,158
Income (Loss) from Operations $ 372 (24,182 ) (23,810 )

Nine months ended March 31, 2019
Revenue with customers $ 567 $ 197 $ 764
Grant revenue — 109 109
Total Revenue 567 306 873
Cost of revenue 666 147 813
Gross margin (99 ) 159 60
Research and development — 14,340 14,340
General and administrative — 6,841 6,841
Income (Loss) from Operations $ (99 ) $ (21,022 ) (21,121 )

As of March 31, 2020
Accounts receivable $ 574 $ 118 $ 692
Property and equipment, net — $ 19,942 $ 19,942

As of June 30, 2019
Accounts receivable $ 150 $ 135 $ 285
Property and equipment, net $ 54 $ 15,124 $ 15,178

	Foundry/ Fabrication Services		RF Product			Total

Three months ended September 30, 2020
Revenue	$	57		579			636
Cost of revenue		53		1,596			1,649
Gross margin		4		(1,017	)		(1,013	)
Research and development		—		6,380			6,380
General and administrative		—		2,927			2,927
Income (Loss) from Operations	$	4		(10,324	)		(10,320	)

Three months ended September 30, 2019
Revenue	$	361	$	182		$	543
Cost of revenue		138		198			336
Gross margin		223		(16	)		207
Research and development		—		5,079			5,079
General and administrative		—		2,801			2,801
Income (Loss) from Operations	$	223		(7,896	)		(7,673	)

As of September 30, 2020
Accounts receivable	$	26		320			346
Property and equipment, net		—		23,458			23,458

As of June 30, 2020
Accounts receivable	$	71	$	280		$	351
Property and equipment, net	$	—	$	23,605		$	23,605

Note 15. Loss Per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three months ended September 30, 2020 and September 30, 2019 presented in these condensed consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

The Company had the following common stock equivalents at September 30, 2020 and 2019:

	September 30, 2020		September 30, 2019
Convertible Notes		4,960,800		4,960,800
Options		2,633,165		2,137,665
Warrants		395,700		626,343
Total		7,989,665		7,724,808

~~Note 15. Subsequent Events~~

~~Supplemental Indentures~~

On April 17, 2020, the Company entered into supplemental indentures to the indentures governing its outstanding 6.5% Convertible Senior Secured Notes due 2023 and its outstanding 6.5% Convertible Senior Notes due 2023. Among other things, the supplemental indentures permit the incurrence of indebtedness made available through the CARES Act and regulations thereunder.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report to “Akoustis,” the “Company,” “we,” “us,” and “our” refer to Akoustis Technologies, Inc. and its consolidated subsidiary, Akoustis, Inc. each of which is a Delaware corporation.

Cautionary Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that relate to our plans, objectives, estimates, and goals. Any and all statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future,” and terms of similar import (including the negative of any of the foregoing) may identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the development of commercially viable radio frequency (“RF”) filters, (ii) projections of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our future financial performance, including any such statement contained in this management’s discussion and analysis of financial condition or in the results of operations included pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), (iv) our ability to efficiently utilize cash and cash equivalents to support our operations for a given period of time, (v) our ability to engage customers while maintaining ownership of our intellectual property, and (vi) the assumptions underlying or relating to any statement described in (i), (ii), (iii), (iv) or (v) above.

Forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon our current projections, plans, objectives, beliefs, expectations, estimates, and assumptions and are subject to a number of risks and uncertainties and other influences, many of which are beyond our control. Actual results and the timing of certain events and circumstances may differ materially from those described by the forward-looking statements as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of the forward-looking statements or cause actual results to differ materially from expected or desired results may include, without ~~limitation:~~limitation, our ~~ability~~inability to ~~continue~~obtain adequate financing and sustain our status as a going concern; our ~~inability to obtain adequate financing; our~~ limited operating history; our inability to service the debt represented by our $25.0 million principal amount of senior convertible notes due in 2023; our inability to generate revenues or achieve profitability; the results of our research and development (“R&D”) activities; our inability to achieve acceptance of our products in the market; the impact of the COVID-19 pandemic on our operations, financial condition and the worldwide ~~economy;~~economy, including its impact on our ability to access the capital markets; general economic conditions, including upturns and downturns in the industry; our limited number of patents; failure to obtain, maintain, and enforce our intellectual property rights; our inability to attract and retain qualified personnel; our reliance on third parties to complete certain processes in connection with the manufacture of our products; product quality and defects; existing or increased competition; our ability to market and sell our products; our inability to successfully scale our New York wafer fabrication facility and related operations while maintaining quality control and assurance and avoiding delays in output; contracting with customers and other parties with greater bargaining power and agreeing to terms and conditions that may adversely affect our business; risks related to doing business in foreign countries; any security breaches or other disruptions compromising our proprietary information and exposing us to liability; our failure to innovate or adapt to new or emerging technologies; our failure to comply with regulatory requirements; results of any arbitration or litigation that may arise; stock volatility and illiquidity; our failure to implement our business plans or strategies; our failure to ~~remediate the material weaknesses in our~~maintain effective internal control over financial reporting; and our failure to obtain and maintain the Trusted Foundry accreditation of our New York wafer fabrication facility.

These and other risks and uncertainties, which are described in more detail in ~~the section of this report titled “Risk Factors” and in~~ our Annual Report on Form 10-K, filed with the SEC on ~~September 13, 2019~~August 21, 2020 (the ~~“2019~~“2020 Annual Report”), could cause our actual results to differ materially from those expressed or implied by the forward-looking statements in this report. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them. Except as may be required by law, we do not undertake any obligation to update the forward-looking statements contained in this report to reflect any new information or future events or circumstances or otherwise.

Overview

Akoustis® is an emerging commercial product company focused on developing, designing, and manufacturing innovative RF filter ~~products~~solutions for the wireless industry, including for products such as smartphones and tablets, network infrastructure equipment, WiFi Customer Premise Equipment (“CPE”) and defense applications. Filters are critical in selecting and rejecting signals, and their performance enables differentiation in the modules defining the RF front-end (“RFFE”). Located between the device’s antenna and its digital backend, the ~~“RFFE”~~RFFE is the circuitry that performs the analog signal processing and contains components such as amplifiers, filters and switches. We have developed a proprietary microelectromechanical system (“MEMS”) based bulk acoustic wave (“BAW”) technology and a unique manufacturing process flow, called “XBAW”, for our filters produced for use in RFFE modules. Our XBAW^TMfilters incorporate optimized high purity piezoelectric materials for high power, high frequency and wide bandwidth operation. We are developing RF filters for 4G/LTE, 5G, WiFi and defense bands using our proprietary resonator device models and product design kits (PDKs). As we qualify our RF filter products, we are engaging with target customers to evaluate our filter solutions. Our initial designs target UHB, sub 7 GHz 4G/LTE, 5G, WiFi and defense bands. We expect our filter solutions will address problems (such as loss, bandwidth, power handling, and isolation) created by the growing number of frequency bands in the RFFE of mobile devices, infrastructure and premise equipment to support 4G/LTE, 5G, and WiFi. We have prototyped, sampled and begun commercial shipment of our single-band low-loss BAW filter designs for 4G/LTE frequency bands, 5G frequency bands and 5GHz WiFi bands which are suited to competitive BAW solutions and historically cannot be addressed with low-band, lower power handling surface acoustic wave (“SAW”) technology.

We ~~believe owning~~own and/or have filed applications for patents on the core resonator device technology, manufacturing facility and intellectual property (“IP”) necessary to produce our RF filter ~~designs~~chips and operate as a “pure-play” RF filter supplier, providing discrete filter solutions direct to Original Equipment Manufacturers (“OEMs”) and aligning with the front-end module manufacturers that seek to acquire high performance filters to expand their module businesses. We believe this business model is the most direct and efficient means of delivering our solutions to the market. ~~Furthermore, our~~

Technology. Our device technology is based upon bulk-mode acoustic resonance, which we believe is superior to surface-mode resonance for high-band and ultra-high-band (“UHB”) applications that include 4G/LTE, 5G, WiFi, and defense applications. Although some of our target customers utilize or ~~make~~manufacture the RFFE module, they may lack access to critical ~~ultra-high-band (UHB)~~UHB filter technology ~~needed~~that we produce, which is necessary to compete in high frequency applications. We seek to design, manufacture, and market our RF filter products to mobile phone original equipment manufacturers (“OEMs”), defense OEMs, network infrastructure OEMs, and WiFi CPE OEM’s to enable broader competition among the front-end module manufacturers. We operate as a “pure-play” RF filter supplier and align with the front-end module manufacturers who seek to acquire high performance filters to expand their module business.

Manufacturing. We currently ~~build high performance~~manufacture our high-performance RF filter circuits, using our first generation XBAW^TM wafer process, in our 120,000-square foot wafer-manufacturing facility located in Canandaigua, New York, which we acquired in June 2017.

Intellectual Property. As of ~~April 24,~~October 19, 2020, our ~~intellectual property (IP)~~IP portfolio included 3133 patents, including a blocking patent that we have licensed from Cornell University. Additionally, as of ~~April 24,~~October 19, 2020, we have 6173 pending patent applications. These patents cover our XBAW^TMRF filter technology from raw materials through the system architectures. ~~Where possible, we leverage both federal and state level R&D grants to support development and commercialization of our technology.~~

~~We are developing RF filters for 4G/LTE, 5G, WiFi~~By designing, manufacturing, and ~~defense bands using~~marketing our ~~proprietary resonator device models and product design kits (PDKs). As we qualify our first~~ RF filter products to mobile phone OEMs, defense OEMs, network infrastructure OEMs, and WiFi CPE OEMs, we ~~are engaging with target customers~~seek to ~~evaluate our filter solutions. Our initial designs target UHB, sub 7 GHz 4G/LTE, 5G, WiFi and defense bands.~~ enable broader competition among the front-end module manufacturers.

Since ~~Akoustis owns its~~we own and/or have filed applications for patents on the core technology and ~~controls~~control access to ~~its~~our intellectual property, we expect to offer several ways to engage with potential customers. First, we intend to engage with multiple wireless markets, providing standardized filters that we design and offer as standard catalog components. Second, we expect to deliver unique filters to customer-supplied specifications, which we will design and fabricate on a customized basis. Finally, we may offer our models and design kits for our customers to design their own filters utilizing our proprietary technology.

We have earned minimal revenue from operations since inception, and we have funded our operations primarily with development contracts, RF filter and production orders, government grants, MEMS foundry and engineering services, and sales of debt and equity securities. ~~We have~~The Company has incurred losses, ~~totaling approximately $93.5 million from inception through March 31, 2020. These losses are~~ primarily the result of material and processing costs associated with developing and commercializing our technology, as well as personnel costs, professional fees (primarily accounting and legal), and other general and administrative (“G&A”) expenses. We expect to continue to incur substantial costs for commercialization of our technology on a continuous basis because our business model involves materials and solid-state device technology development and engineering of catalog and custom filter design solutions.

~~Impact of COVID-19 on our Business~~

Although the ultimate impact of the COVID-19 pandemic on our business is unknown, in an effort to protect the health and safety of our employees, we have taken proactive, precautionary action and adopted social distancing policies at our locations, including the implementation of new staffing plans in our facilities whereby many employees work remotely and the remaining on-site force is divided into multiple shifts or segregated in different parts of the facility. In an effort to contain COVID-19 or slow its spread, governments around the world have also enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. These measures have impacted the method and timing of certain business meetings and deliverables to certain customers, as well as our ability to obtain certain materials or equipment from suppliers.

We anticipate that these actions and the global health crisis caused by COVID-19 will negatively impact business activity across the globe. We have observed declining demand and price reductions in the electronics industry as business and consumer activity decelerates across the globe. When COVID-19 is demonstrably contained, we anticipate a rebound in economic activity, depending on the rate, pace, and effectiveness of the containment efforts deployed by various national, state, and local governments; however, the timing and extent of any such rebound is uncertain.

We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers, employees, and prospects, or on our financial results for the remainder of fiscal year 2020 or beyond.

~~Plan of Operation~~

We plan to commercialize our technology by designing and manufacturing single-band and multi-band BAW RF filter solutions in our New York wafer fabrication facility. We expect our filter solutions will address problems (such as loss, bandwidth, power handling, and isolation) created by the growing number of frequency bands in the RFFE of mobile devices, infrastructure and premise equipment to support 4G/LTE, 5G, and WiFi. We have prototyped our first single-band low-loss BAW filter designs for 4G/LTE frequency bands, which are dominated by competitive BAW solutions and historically cannot be addressed with low-band, lower power handling surface acoustic wave (“SAW”) technology.

To succeed, we must convince mobile phone OEMs, RFFE module manufacturers, ~~cellular~~network infrastructure OEMs, WiFi CPE OEMs and ~~military~~defense customers to use our XBAW^TM filter technology in their systems and modules. However, since there are two dominant BAW filter suppliers in the industry that have high-band technology, and both utilize such technology as a competitive advantage at the module level, we expect customers that lack access to high-band filter technology will be open to engage with our pure-play filter company.

We plan to pursue RF filter design and R&D development agreements and potentially joint ventures with target customers and other strategic partners, although we cannot guarantee we will be successful in these efforts. These types of arrangements may subsidize technology development costs and qualification, filter design costs, and offer complementary technology and market intelligence and other avenues to revenue. However, we intend to retain ownership of our core technology, intellectual property, designs, and related improvements. We expect to pursue development of catalog designs for multiple customers and to offer such catalog products in multiple sales channels.

Impact of COVID-19 on our Business

Although the ultimate impact of ~~April 24, 2020,~~ the ~~Company had $38.4 million of cash~~COVID-19 pandemic on our business is unknown, in an effort to protect the health and ~~cash equivalents to fund our operations, including capital expenditures, R&D, commercialization~~safety of our ~~technology, development~~employees, we have taken proactive, precautionary action and adopted social distancing measures, daily self-health attestations, and mandatory mask policies at our locations, including when warranted by state and local guidelines, the implementation of new staffing plans in our ~~patent strategy~~facilities whereby certain employees work remotely and ~~expansion~~the remaining on-site force is divided into multiple shifts or segregated in different parts of ~~our patent portfolio,~~the facility. Our actions continue to evolve in response to new government measures and scientific knowledge regarding COVID-19. In an effort to contain COVID-19 or slow its spread, governments around the world have also enacted various measures, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing when engaging in essential activities. These measures have impacted the method and timing of certain business meetings and deliverables to certain customers, as well as our ability to ~~provide working capital~~obtain certain materials, equipment and ~~funds~~services from suppliers. For example, Executive Orders issued by the Governor of New York introduced potential delays in the procurement of installation and maintenance services from vendors without personnel located in New York, New Jersey or Connecticut.

These actions and the global health crisis caused by COVID-19 have negatively impacted business activity across the globe. We have observed declining demand and price reductions in the electronics industry as business and consumer activity has decelerated. Additionally, we have observed delays in certain suppliers’ shipment of materials necessary for ~~other general corporate purposes. Our anticipated expenses include employee salaries~~us to manufacture our products and ~~benefits, compensation paid~~in certain vendors’ ability to ~~consultants, capital costs~~deliver equipment for ~~research~~installation at our facilities. When COVID-19 is demonstrably contained, we anticipate a rebound in economic activity, depending on the rate, pace, and ~~other equipment, costs associated with development activities (including travel~~effectiveness of the containment efforts deployed by various national, state, and ~~administration), costs associated with~~local governments; however, the ~~integration~~timing and ~~operation~~extent of any such rebound is uncertain.

We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our ~~New York wafer fabrication facility~~employees, customers, partners, suppliers, and ~~related operations, legal expenses, sales~~stakeholders, or as required by federal, state, or local authorities. It is not clear what the ultimate effects any such alterations or modifications may have on our business, including the effects on our customers, employees, and ~~marketing costs, G&A expenses, and other costs associated with an early stage, public technology company. We anticipate increasing the number of employees; however, this is highly dependent~~prospects, or on ~~the nature of~~ our development efforts, and our success in commercialization. We anticipate adding employees for R&D in both our New York and North Carolina facilities, as well as G&A functions, to support our efforts. We expect capital expenditures to be between $8 million and $10 millionfinancial results for the ~~purchase~~remainder of ~~equipment and software during the next 12 months.~~

The amounts we actually spend for any specific purpose may vary significantly and will depend on a number of factors, including, but not limited to, the pace of progress of our commercialization and development efforts, actual needs with respect to product testing, R&D, market conditions and changes infiscal year 2021 or ~~revisions to our marketing strategies.~~

Commercial development of new technology, by its nature, is unpredictable. Although we will undertake development efforts with commercially reasonable diligence, there can be no assurance that our current cash position will be sufficient to enable us to commercialize our technology to the extent needed to create future sales to sustain operations. If our current cash is insufficient for these purposes, we are unable to source additional funds on terms acceptable to the Company (or at all), or we experience costs in excess of estimates to continue our R&D plan, it is possible that we would not have sufficient resources to continue as a going concern and we may be required to curtail or suspend our operations. Even if we are able to source sufficient funds to continue as a going concern, our technology may not be accepted, we may never earn revenues sufficient to support our operations, and we may never be profitable.beyond.

Recent Developments

On ~~January 7,~~August 19, 2020, the Company announced ~~that it had received an order~~the industry’s first 6.5 GHz BAW filter for the emerging WiFi 6E standard. This filter compliments the 5.5 GHz filter introduced in June of 2020, with the two combining to filter all the new spectrum allotted for WiFi 6E between 5.1 and ~~shipped its 5.2 GHz and 5.6 GHz coexistence WiFi filters to an original equipment manufacturer (OEM).~~7.1 GHz.

On ~~January 30,~~August 24, 2020, Akoustis announced its first order for its 5.5 and 6.5 GHz WiFi 6E filters from a tier-1 enterprise-class customer. The filters are being tested for inclusion in a next-generation multi-user multiple-in-multiple-out (MU-MIMO) platform that ~~it had locked the design of its Citizen’s Broadband Radio Service 5G network infrastructure filter and had shipped samples~~is expected to ~~three OEM’s.~~ramp in calendar 2021.

On ~~February 3,~~August 26, 2020, the Company announced that it had received its ~~first volume commercial order~~third design win for 5G small cell network infrastructure ~~filters~~equipment from ~~a small cell base station provider focused on markets in Asia.~~

In mid-February, Akoustis announced the entry into a new market with an order for the design and development of XBAW filters for a customer for unmanned aircraft systems (UAS), commonly referred to as drones. The filters will be used for control and non-payload communication links.its tier-1 customer.

On ~~April 8,~~September 2, 2020, Akoustis announced that it had added former Grant Thornton CEO J. Michael McGuire to its board of directors.

On September 23, 2020, the Company announced that it ~~had achieved its first non-defense commercial~~received a design win and initial order for ~~XBAW filters in the~~a 5G small cell network ~~equipment market.~~

~~Underwritten Public Offering of Common Stock~~

~~During~~infrastructure XBAW™ filter from a second customer. The filter operated within the nine months ended March 31, 2020, the Company sold a total of 5,520,000 shares of its common stock at a price to the public of $6.25 per share for aggregate gross proceeds of $34.5 million before deducting the underwriting discount and offering expenses payable by the Company of approximately $2.3 million. The Company expects to use the proceeds of the offering to fund the Company’s operations and growth of its business, including for capital expenditures, working capital, research and development, the commercialization of its technology and other general corporate purposes.5G new radio band n79.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” ~~under the heading “Critical Accounting Policies”~~ included in our ~~2019~~2020 Annual Report.

Results of Operations

Three Months Ended ~~March 31,~~September 30, 2020 and 2019

Revenue

The Company recorded revenue of ~~$0.4 million during the three months ended March 31, 2020 as compared to $0.2~~$0.6 million for the three months ended ~~March 31, 2019. Revenue recorded during the three months ended March 31,~~September 30, 2020 ~~included $0.1~~as compared to $0.5 million ~~of RF filter and amplifier sales and $0.2 million of non-recurring engineering services. The RF filters sales were primarily sales of defense filters. Revenue~~ for the three months ended ~~March 31, 2019 consisted~~September 30, 2019. The increase of $0.1 million was primarily due to an increase in RF product revenue of ~~non-recurring engineering services and $0.1~~$0.4 million or 219%. Partially offsetting the increase in filter sales was a decrease in MEMS revenue of ~~RF filter and amplifier sales.~~$0.2 million, a product line that the Company exited during fiscal year 2020.

Cost of Revenue

The Company recorded cost of revenue of ~~$0.2~~$1.6 million infor the three months ended ~~March 31,~~September 30, 2020 ~~and~~as compared to $0.3 million infor the three months ended ~~March 31, 2019,~~September 30, 2019. The $1.3 million increase is primarily due to costs associated with RF product revenue which ~~included~~increased by $0.4 million. Cost of revenue includes direct labor, ~~direct materials~~material, net realizable value (NRV) adjustments, and facility ~~costs. The decrease in cost~~costs primarily associated with foundry services revenue, manufacturing of ~~revenue was primarily related to a lower amount of sales of WiFi filters during the third quarter of fiscal year 2020.~~filter products and engineering services.

Research and Development Expenses

R&D expenses were ~~$5.8~~$6.4 million for the three months ended ~~March 31,~~September 30, 2020 and were ~~$0.3~~$1.3 million, or 5%26%, higher than the prior year amount for the same period of ~~$5.5~~$5.1 million. The period-over-period increase was primarily in the areas of R&D personnel costs, R&D materials and facility costs as well as R&D equipment depreciation. Personnel costs, including stock-based compensation, were $3.5 million compared to $3.0 million in the prior year period, an increase of $0.5 million or 16%. The higher personnel cost was primarily due to ~~an increase in parts~~increased headcount at both the Huntersville, NC location and the NY Fabrication Facility. Material and facility costs of $1.7 million primarily associated with the NY Facility were $0.5 million higher than the comparative period due to increased R&D activity. Equipment depreciation increased by $0.3 million as new equipment ~~expense and equipment depreciation at the Company’s Canandaigua NY wafer-manufacturing facility (the “NY Facility”).~~was placed into service subsequent to September 30, 2019.

General and Administrative Expense

General and administrative (“G&A”) expenses include salaries and wages for executive and administrative staff, stock-based compensation, professional fees, insurance costs and other general costs associated with the administration of our business. G&A expenses for the three months ended ~~March 31,~~September 30, 2020 were ~~$2.6~~$2.9 million, which is an increase of $0.1 million compared to the three months ended ~~March 31,~~September 30, 2019. Year over year changes within G&A expenses include an increase in employee compensation ~~including stock-based compensation~~ of $0.2 ~~million. In addition, bad debt expense and marketing expenses increased by a total of $0.1 million. These increases were~~million which was partially offset by ~~a decrease in~~lower general expenses, primarily professional ~~fees of $0.2 million.~~fees.

Other (Expense)/Income

Other ~~income~~expenses for the three months ended March 31, 2020 was $0.4 million, which was comprised of a gain on the change in the fair value of the derivative liability of $1.1 million and a gain on the change in the fair value of our real estate contingent liability of $0.5 million. Offsetting these income items was debt discount amortization of $0.8 million and interest expense, net of $0.3 million. Other (expense) for the three months ended March 31, 2019 was $1.4 million, which included a gain on the contingent real estate liability of $0.9 million, interest income of $0.2 million and rental income of $0.1 million, offset by $1.0 million of interest expense related to the amortization of debt issuance costs and interest on the convertible notes and a loss of $1.6 million on the change in the fair value of the derivative liability related to our convertible senior secured notes.

~~Net Loss~~

The Company recorded a net loss of $7.8 million for the three months ended March 31, 2020, compared to a net loss of $9.4 million for the three months ended March 31, 2019. The period-over-period change of $1.7 million, or 18%, was primarily driven by the change in derivative valuation of $2.6 million. This change was partially offset by a change in the gain on real estate liability valuation of $0.4 million and an increase in interest expense, net of $0.4 million and real estate contingent liability of $0.5 million.

~~Nine Months Ended March 31, 2020 and 2019~~

~~Revenue~~

The Company recorded revenue of $1.4 million during the nine months ended March 31, 2020 as compared to $0.9 million for the nine months ended March 31, 2019. Revenue recorded during the nine months ended March 31, 2020 included $0.5 million of RF filter and amplifier sales, $0.3 million of foundry services, and $0.6 million of revenue for non-recurring engineering services. The revenue for the nine months ended March 31, 2019 consisted of $0.4 million of revenue for non-recurring engineering services, $0.2 million of revenue for foundry services, $0.1 million of grant revenue and $0.2 million of RF filter and amplifier sales.

~~Cost of Revenue~~

The Company recorded cost of revenue of $1.3 million in the nine months ended March 31, 2020 and $0.8 million in the nine months ended March 31, 2019, which included direct labor, direct materials and facility costs. The increase in cost of sales was primarily related to sales of infrastructure and WiFi filters which was partially offset by a decrease in the cost of foundry services.

~~Research and Development Expenses~~

R&D expenses were $15.7 million for the nine months ended March 31, 2020 and were $1.4 million, or 10%, higher than the prior year amount for the same period of $14.3 million. The period-over-period increase was primarily in the areas of R&D personnel costs and R&D equipment depreciation. Personnel costs, including stock-based compensation, were $9.2 million compared to $8.5 million in the prior year period, an increase of $0.7 million or 8%. The higher personnel cost was due to additional R&D headcount at both the Huntersville, NC location and the NY Facility. R&D and Fabrication materials totaled $2.6 million which represents an increase of $0.5 million over the prior year. Depreciation expense of $2.1 million was $0.3 million higher than the prior year. These increases were partially offset by a decrease in facility costs of $0.2 million compared to the prior year.

~~General and Administrative Expense~~

G&A expenses include salaries and wages for executive and administrative staff, stock-based compensation, professional fees, insurance costs and other general costs associated with the administration of our business. G&A expenses for the nine months ended March 31,September 30, 2020 were $8.2 million, which is an increase of $1.4 million compared to the nine months ended March 31, 2019. Year over year changes within G&A expenses include an increase in employee compensation including stock compensation of $0.8 million, an increase in professional fees of $0.3 million and an increase in other administrative expenses of $0.2 million.

~~Other (Expense)/Income~~

~~Other (expense) for the nine months ended March 31, 2020 was $2.3~~$1.6 million, which included debt discount amortization of ~~$2.3~~$1.0 million, interest expense of $0.4 million, and ~~interest expense, net of $1.2 million. These expenses were partially offset by~~ a ~~reduction~~change in ~~the~~ fair value of our derivative liability of ~~$0.4 million, the expiration of the real estate contingent liability, resulting in $0.4 million of income, and interest income of $0.3~~$0.2 million. Other ~~(expense)~~expenses for the ~~nine~~three months ended ~~March 31,~~September 30, 2019 were ~~$2.4~~$1.3 million, ~~primarily~~ consisting of ~~$1.3~~$0.7 million of debt discount amortization and interest expense of ~~$1.0~~$0.4 million, and ~~an increase to~~a change in fair value of our derivative liability of ~~$1.4 million. These were partially offset by interest income of~~ $0.3 ~~million and a reduction to our real estate contingent liability of $0.8~~ million.

Net Loss

The Company recorded a net loss of ~~$26.1~~$12.0 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2020, compared to a net loss of ~~$23.5~~$9.0 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2019. The period-over-period incremental loss of ~~$2.5~~$3.0 million, or ~~11%~~33%, was primarily driven by an increase in cost of sales and R&D expenses of ~~$1.4 million and an increase in G&A expenses of $1.4~~$2.6 million. ~~These expenses were partially offset by a decrease in other expenses.~~

Liquidity and Capital Resources

Financing Activities

The Company had ~~$39.6~~$37.2 million of cash and cash equivalents on hand as of ~~March 31,~~September 30, 2020, which reflects ~~an increase~~a decrease of ~~$9.5~~$7.1 million compared to ~~$30.1~~$44.3 million as of June 30, ~~2019.~~2020. The ~~$9.5 million increase~~decrease is primarily due to ~~$32.5~~$7.9 million ~~of financing activities, primarily comprised of $32.3~~ in net cash ~~proceeds from the December 2019 underwritten offering of common stock. The Company~~ used ~~$16.4 million for~~in operating activities, ~~and $6.3~~$2.3 million in capital expenditures, net of $3.1 million in cash provided by financing activities for the ~~nine~~three months ended ~~March 31,~~September 30, 2020. The Company estimates that cash on hand will fund its operations, including current capital expense commitments beyond the next twelve months from the date of filing of this Form 10-Q. As a result, we may need to obtain additional capital through the sale of additional equity securities, debt, or otherwise, to fund operations past that date. There is no assurance that the Company’s projections and estimates are accurate. The Company is actively managing and controlling the Company’s cash outflows to mitigate these risks.

Balance Sheet and Working Capital

~~March 31,~~September 30, 2020 compared to June 30, ~~2019~~2020

As of ~~March 31,~~September 30, 2020, the Company had current assets of ~~$41.2~~$39.3 million made up primarily of ~~total~~ cash on hand of ~~$39.6~~$37.2 million. As of June 30, ~~2019,~~2020, current assets were ~~$31.7~~$46.2 million comprised primarily of ~~total~~ cash on hand of ~~$30.1~~$44.3 million.

Property, Plant and Equipment was ~~$19.9~~$23.5 million as of ~~March 31,~~September 30, 2020 as compared to a balance of ~~$15.2~~$23.6 million as of June 30, ~~2019. The approximate $4.7 million increase is primarily due to the purchase of R&D and manufacturing equipment of $6.9 million, offset by depreciation of $2.2 million.~~ 2020.

Total assets as of ~~March 31,~~September 30, 2020 and June 30, ~~2019~~2020 were ~~$62.9~~$64.3 million and ~~$47.9~~$71.4 million, respectively.

Current liabilities as of ~~March 31,~~September 30, 2020 and June 30, ~~2019~~2020 were ~~$3.6~~$4.2 million and ~~$3.6~~$6.1 million, respectively.

Long-term liabilities totaled ~~$20.8~~$25.0 million as of ~~March 31,~~September 30, 2020, compared to ~~$18.3~~$23.8 million as of June 30, ~~2019.~~2020. The increase of ~~$2.5~~$1.2 million was due to the increase in convertible notes, net of debt discount and issuance ~~costs, as well as the establishment of a right of use liability upon adoption of ASC 842 which totaled $0.5 million.~~

costs.

Stockholders’ equity was ~~$38.5~~$35.2 million as of ~~March 31,~~September 30, 2020, compared to ~~$26.0~~$41.5 million as of June 30, ~~2019,~~2020, a decrease of $6.3 million, or 15%. This decrease was primarily due to the net loss for the three months ended September 30, 2020 of $12.0 million which was partially offset by an increase in additional paid-in-capital (“APIC”). APIC was $150.7 million as of ~~$12.5~~September 30, 2020 and increased by $5.6 million ~~or 48%. This~~from June 30, 2020. The increase was primarily due to common stock issued for cash ~~net~~ of ~~issuance costs of $32.2~~$3.3 million, common stock issued for services of ~~$5.1 million, vesting of restricted shares of $0.3 million, employee stock purchases of $0.2~~$2.0 million, and ~~common~~ stock issued ~~for~~in payment of convertible note interest of ~~$0.7 million. These were offset by the net loss for the nine months ended March 31, 2020 of $26.1~~$0.2 million.

Cash Flow Analysis

Operating activities used cash of ~~$16.4~~$7.9 million during the ~~nine~~three months ended ~~March 31,~~September 30, 2020 and ~~$13.4~~$5.8 million during the 2019 comparative period. The ~~$3.0~~$2.1 million period-over-period increase in cash used was attributable to higher operating expenses associated with the ramp up of development and commercialization activities (primarily R&D and production personnel and material costs).

Investing activities used cash of ~~$6.5~~$2.3 million for the ~~nine~~three months ended ~~March 31,~~September 30, 2020 compared to ~~$4.5~~$1.6 million for the comparative period ended ~~March 31,~~September 30, 2019. The ~~$2.0~~$0.7 million period-over-period increase was primarily due to increased spend on ~~R&D~~production equipment.

~~Cash provided~~Financing activities increased cash by ~~financing activities was $32.4~~$3.1 million ~~for~~during the ~~nine~~three months ended ~~March 31,~~September 30, 2020 compared to ~~$37.7 million for~~ the ~~comparative~~same period ~~ended March 31, 2019. The $5.3 million period-over-period decrease was~~in 2019 due ~~a reduction in cash received~~to proceeds from ~~equity~~issuance of common stock pursuant to the Company’s ATM Equity Offering^SM Sales Agreement with BofA Securities, Inc. and ~~convertible note issuances in the comparative period.~~Piper & Sandler & Co.

~~Off-Balance Sheet Arrangements~~

~~We did not have any off-balance sheet arrangements as of March 31, 2020.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

~~Our~~We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, ~~is responsible for establishing~~including our principal executive officer and ~~maintaining a system~~principal financial officer, to allow timely decisions regarding required disclosure.

As of September 30, 2020, our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Our management recognizes that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosureany controls and procedures, ~~include, without limitation,~~no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

We conducted an evaluation under the supervision and with the participation of our Chief Executive Officer and our Interim Chief Financial Officer (our principal executive officer and principal financial officer) of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2020. Based on that evaluation, ourprocedures. Our Chief Executive Officer and Interim Chief Financial Officer have concluded based upon the evaluation described above that, as of September 30, 2020, our disclosure controls and procedures were ~~not~~ effective ~~as of such date due to~~at the ~~material weaknesses described below with respect to our internal control over financial reporting.~~reasonable assurance level.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As previously disclosed in our 2019 Annual Report, we identified the following material weaknesses in the Company’s internal controls over financial reporting as of June 30, 2019:

The Company did not design and implement effective Information Technology General Controls (“ITGC”) for certain information systems that are relevant to the preparation of the Company’s financial statements. Specifically, applications supporting the processes of payroll, cash management, fixed assets and financial close included deficiencies related to user access controls, change management, information technology operations and third-party service providers. These ITGC deficiencies, combined with inadequate compensating review controls, create a reasonable possibility that a material misstatement to the consolidated financial statements will not be prevented or detected on a timely basis.

Management review controls designed to address risks associated with complex accounting matters that arise from significant routine and non-routine transactions – related to revenue, share-based compensation, research and development expense, and debt – to ensure that those transactions are properly accounted for in accordance with U.S. GAAP did not operate effectively.

~~Remediation Plan~~

~~IT General Controls~~: During the first quarter of fiscal year 2020, key mitigating controls were designed and implemented to mitigate risks in the absence of full year coverage of SSAE-18 (SOC1) reports. These controls are being tested for design and operating effectiveness.

~~Non-Routine Transaction Review~~: During the first quarter of fiscal year 2020, controls were designed and implemented to mitigate risks related to review of all non-routine, material transactions specifically around revenue, share-based compensation, research and development expense and debt. These controls are being tested for design and operating effectiveness.

Changes in Internal Control over Financial Reporting

~~Other than~~During the ~~mitigating controls referenced above,~~quarter ended September 30, 2020, there ~~have been~~were no changes in our internal control over financial reporting, ~~that occurred during~~as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the ~~quarterly period covered by this report~~Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, our internal control over financial ~~reporting.~~reporting

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may have an adverse effect on our business, financial condition or results of operations and prospects.

We are currently not aware of any material pending legal proceedings to which we are a party or of which any of our property is the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority.

ITEM 1A. RISK FACTORS.

In addition to ~~the risk factor set forth below and~~ the other information set forth in this report, you should carefully consider the factors discussed under Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. ~~Other than as described below, there~~There have been no material changes to the risk factors described in Part I, Item 1A, ~~“Risk~~“Risk Factors,” included in our ~~2019~~2020 Annual Report.

We are dependent on the proper functioning of our critical facilities, our supply chain and distribution networks and the financial stability of our customers, all of which could be negatively impacted by the COVID-19 pandemic in a manner materially adverse to our business, financial condition or results of operations.

~~Our ability to manufacture products may be materially adversely impacted by COVID-19.~~

The COVID-19 pandemic is impacting worldwide economic activity. Estimates for economic growth have been reduced as a result of COVID-19, which may have a corresponding effect on our sales activity. The virus continues to spread globally, has been declared a pandemic by the World Health Organization and has spread to over 100 countries, including the United States. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, and has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. With the spread of the COVID-19 pandemic to the United States and other countries, it is unclear how economic activity and workflows might be impacted on a worldwide basis. Many employers in the United States are requiring their employees to work from home or not come into their offices or facilities. We manufacture primarily out of one facility in Canandaigua, New York. In order to mitigate the risk posed by COVID-19, we have implemented a new staffing plan whereby many employees work remotely, and the remaining on-site force is divided into two shifts. If the manufacturing capabilities of this facility are adversely impacted as a result of COVID-19, whether by a decrease in productivity caused by precautionary measures or by one or more employees becoming ill, it may not be possible for us to timely manufacture relevant products at required levels or at all. A reduction or interruption in any of our manufacturing processes could have a material adverse effect on our business, results of operations, financial condition and cash flows.

We also might be unable to obtain certain supplies, product components, or equipment from our suppliers and vendors due to constraints created by COVID-19. For instance, we have observed delays in certain suppliers’ deliveries of materials necessary for us to manufacture our products and in certain vendors’ ability to manufacture equipment used in our production process. Additionally, travel restrictions and stay-at-home orders or similar mandates of foreign and domestic governments have prevented us from visiting suppliers’ facilities as part of our quality control processes. These impacts may delay our launch of new products, adversely affect our ability to deliver customers’ orders timely or in the requested quantities and inhibit our ability to ensure the quality of supplies used in our products.

~~Our sales may be materially adversely impacted by COVID-19~~.

Our sales efforts typically function by in-person meetings with customers and potential customers to discuss our products. The method and timing of these meetings has been altered due to stay-at-home orders and travel restrictions relating to COVID-19. This limitation on the ability of our sales personnel to maintain their customary interaction with customers for a period of time may negatively affect demand for our products. We have also found that potential customers have been forced to slow and reprioritize various product development projects as a result of COVID-19. This disruption to our sales activity and our customers’ businesses, and the resulting delay in the growth of our business, may have a material adverse effect on our results of operations, financial condition and cash flows. Furthermore, a reduction or delay in revenues will prolong our dependence on capital raising to finance our operations.

~~Our ability to raise capital may be materially adversely impacted by COVID-19.~~

A sustained disruption in the capital markets from the COVID-19 pandemic could negatively impact our ability to raise capital. In the past, we have financed our operations by the issuance of equity and debt securities. However, we cannot predict when the macro-economic disruption stemming from COVID-19 will ebb or when the economy will return to pre-COVID-19 levels, if at all. This macro-economic disruption may disrupt our ability to raise additional capital to finance our operations in the future, which could materially and adversely affect our business, financial condition and prospects, and could ultimately cause our business to fail.

~~COVID-19 may heighten other risks.~~

The COVID-19 pandemic may have the effect of heightening many of the other risks described in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2019, such as risks related to the operation of our manufacturing facility, acceptance of our products into the market, doing business in foreign countries, attracting and retaining qualified personnel, our reliance on third parties to complete certain processes in connection with the manufacture of products, product quality and defects, successfully scaling the New York fabrication facility, stock volatility and illiquidity and maintaining effective internal control over financial reporting.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Unregistered Sales of Equity Securities

Other than any sales previously reported in the Company’s Current Reports on Form 8-K, the Company did not sell any unregistered securities during the period covered by this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

The Company is disclosing under this Item 5 the following information otherwise disclosable in a Current Report on Form 8-K under “Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year”:None.

On May 1, 2020, the Company’s Board of Directors (the “Board”) approved the Company’s Amended and Restated Bylaws (the “Amended and Restated Bylaws”), effective immediately. The Amended and Restated Bylaws amend and restate in their entirety the Company’s bylaws to, among other things: (i) amend the description of certain information a stockholder must provide with respect to a proposal to nominate a person for election or reelection as a Company director or business to be considered at a stockholders meeting and the procedure for making such proposal; (ii) revise requirements and procedures for stockholder actions by written consent; (iii) require the majority of the entire Board to approve certain actions; (iv) require a two-thirds vote for stockholders to amend the Amended and Restated Bylaws; (v) provide that the forum for the resolution of internal corporate claims shall be the Court of Chancery in the State of Delaware; and (vi) make other technical amendments.

The foregoing summary is subject to, and qualified in its entirety by, the full text of the Amended and Restated Bylaws, a copy of which is filed as Exhibit 3.5 to this Quarterly Report on Form 10-Q and is incorporated by reference into this Item 5.

ITEM 6. EXHIBITS.

The exhibits in the Exhibit Index below are filed or furnished, as applicable, as part of this report.

EXHIBIT INDEX

Exhibit Number		Description

3.1		Articles of Conversion of the Company, as filed with the Nevada Secretary of State on December 15, 2016 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 16, 2016)

3.2		Certificate of Conversion of the Company, as filed with the Delaware Secretary of State on December 15, 2016 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on December 16, 2016)

3.3		Certificate of Incorporation, as filed with the Delaware Secretary of State on December 15, 2016 (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K filed with the SEC on December 16, ~~2016)~~2016)

3.4		Certificate of Amendment to the Certificate of Incorporation of the Company, as filed with the Delaware Secretary of State on November 4, 2019 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 6, 2019)

3.5*		Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.5 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 1, 2020)

31.1*		Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive Officer

31.2*		Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Financial Officer

32.1*		Section 1350 Certification of Principal Executive Officer

32.2*		Section 1350 Certification of Principal Financial Officer

101*		Interactive Data Files of Financial Statements and Notes

101.INS*		Instant Document

101.SCH*		XBRL Taxonomy Schema Document

101.CAL*		XBRL Taxonomy Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Definition Linkbase Document

101.LAB*		XBRL Taxonomy Label Linkbase Document

101.PRE*		XBRL Taxonomy Presentation Linkbase Document

Filed herewith

†

Confidential portions of this exhibit have been omitted

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: ~~May 1,~~October 30, 2020	Akoustis Technologies, Inc.

	By:	/s/ Kenneth E. Boller
		Kenneth E. Boller
		Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

~~By:~~

~~/s/ Kenneth E. Boller~~

	March 31, 2020		March 31, 2019
Shares of restricted stock included in reportable shares outstanding		116,250		311,328

	Contract Assets			Contract Liabilities
Balance, June 30, 2019	$	140		$	5
Closing, March 31, 2020		96			—
Increase/(Decrease)		(44	)		(5	)

Balance, June 30, 2018	$	7		$	53
Closing, March 31, 2019		57			4
Increase/(Decrease)		50			(49	)

	Estimated Useful Life	March 31, 2020			June 30, 2019
Land	n/a	$	1,000		$	1,000
Building	11 years		3,000			3,000
Equipment	2-10 years		20,381			13,611
Leasehold Improvements	*		949			949
Software	3 years		214			161
Furniture & Fixtures	5 years		11			11
Computer Equipment	3 years		260			203
Total			25,815			18,935
Less: Accumulated depreciation			(5,873	)		(3,757	)
Total		$	19,942		$	15,178

	Three Months Ended 03/31/2020			Three Months Ended 03/31/2019
Customer 1		38	%		28	%
Customer 2		33	%		—
Customer 3		12	%		—
Customer 4		11	%		—
Customer 5		—			21	%
Customer 6		—			23	%

	Nine Months Ended 03/31/2020			Nine Months Ended 03/31/2019
Customer 1		20	%		22	%
Customer 2		11	%		—
Customer 3		13	%		—
Customer 4		17	%		12	%
Customer 5		22	%		—
Customer 6		—			14	%
Customer 7		—			11	%

	As of March 31, 2020
	Unrecognized stock- based compensation		Weighted- average years to be recognized
Options	$	2,147		2.06
Restricted stock awards/units	$	7,203		2.09

	Three Months Ended March 31, 2020		Three Months Ended March 31 2019		Nine Months Ended March 31, 2020		Nine Months Ended March 31, 2019
Operating Lease Expense	$	55	$	51	$	144	$	161