UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, ~~2021~~2022

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

For the transition period from __________ to __________

Commission File Number: 001-38029

AKOUSTIS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

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

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

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

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

Title of Each Class:		Trading Symbol		Name of each exchange on which registered:
Common Stock, $0.001 par value		AKTS		The Nasdaq Stock Market LLC (Nasdaq Capital Market)

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

None

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

Indicate by check mark whether the registrant has submitted electronically ~~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 ~~January 20, 2022,~~February 3, 2023, there were ~~54,672,366~~71,554,411 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 DECEMBER 31, ~~2021~~2022

TABLE OF CONTENTS

			Page No.
PART I — FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS		1

Condensed Consolidated Balance Sheets as of December 31, ~~2021~~2022 and June 30, ~~2021~~2022 (unaudited)			1

Condensed Consolidated Statements of Operations for the three and six months ended December 31, 2022 and 2021 ~~and 2020~~ (unaudited)			2

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended December 31, 2022 and 2021 ~~and 2020~~ (unaudited)			3

Condensed Consolidated Statements of Cash Flows for the six months ended December 31, 2022 and 2021 ~~and 2020~~ (unaudited)		5	4

Notes to the Condensed Consolidated Financial Statements (unaudited)		6	5

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		18

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		24

ITEM 4.	CONTROLS AND PROCEDURES		24

PART II — OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS		25

ITEM 1A.	RISK FACTORS		25

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26	25

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	27	25

ITEM 4.	MINE SAFETY DISCLOSURES	27	25

ITEM 5.	OTHER INFORMATION	27	25

ITEM 6.	EXHIBITS	28	26

EXHIBIT INDEX		28	26

SIGNATURES		29	27

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Akoustis Technologies, Inc.

Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)

	December 31,			June 30,			December 31,			June 30,
	2021			2021			2022			2022
Assets
Assets:
Cash and cash equivalents	$	67,467		$	88,322		$	46,569		$	80,485
Accounts receivable		2,502			1,170			3,171			3,793
Inventory		2,286			1,390			5,807			4,094
Other current assets		3,158			2,314			4,767			3,359
Total current assets		75,413			93,196			60,314			91,731

Property and equipment, net		40,248			30,730			54,469			51,157
Goodwill		7,835			—			8,051			8,051
Intangibles, net		10,167			572			8,267			8,994
Operating lease right-of-use asset, net		389			471			1,088			1,126
Other assets		60			25			71			279
Total Assets	$	134,112		$	124,994		$	132,260		$	161,338

Liabilities and Equity
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued expenses	$	6,720		$	6,954		$	8,444		$	11,204
Contingent consideration								—			855
Deferred revenue		101			41			60			286
Operating lease liability - current		291			270
Operating lease liability								271			313
Total current liabilities		7,112			7,265			8,775			12,658

Long-term Liabilities:
Convertible notes payable, net								43,181			43,731
Contingent consideration		1,082			—			276			591
Operating lease liability		94			202			833			811
Deferred tax liability		2,039			—
Other long-term liabilities		117			117			117			117
Total long-term liabilities		3,332			319			44,407			45,250

Total Liabilities		10,444			7,584			53,182			57,908

Equity
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; 54,659,660 and 51,235,764 shares issued and outstanding at December 31, 2021 and June 30, 2021, respectively		55			51
Common stock, $0.001 par value; 125,000,000 shares authorized; 58,161,133, and 57,079,347 shares issued and outstanding at December 31, 2022 and June 30, 2022, respectively								58			57
Additional paid in capital		291,969			265,130			316,065			310,171
Accumulated deficit		(175,884	)		(147,771	)		(237,045	)		(206,798	)
Total Akoustis Technologies, Inc. equity	$	116,140		$	117,410
Noncontrolling interest		7,528			—
Total Equity		123,668			117,410
Total Liabilities and Equity	$	134,112		$	124,994
Total Stockholders’ Equity								79,078			103,430
Total Liabilities and Stockholders’ Equity							$	132,260		$	161,338

See accompanying notes to the condensed consolidated financial statements

Akoustis Technologies, Inc.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

	For the Three Months Ended December 31, 2021			For the Three Months Ended December 31, 2020			For the Six Months Ended December 31, 2021			For the Six Months Ended December 31, 2020			For the Three Months Ended December 31, 2022			For the Three Months Ended December 31, 2021			For the Six Months Ended December 31, 2022			For the Six Months Ended December 31, 2021
Revenue													$	5,865		$	3,672		$	11,432		$	5,540
Revenue with customers	$	3,672		$	1,308		$	5,540		$	1,944

Cost of revenue		4,549			2,602			7,451			4,251			5,274			4,549			11,727			7,451

Gross profit (loss)		(877	)		(1,294	)		(1,911	)		(2,307	)		591			(877	)		(295	)		(1,911	)

Operating expenses
Research and development		9,192			5,566			17,166			11,946			7,645			9,192			17,730			17,166
General and administrative expenses		5,146			3,361			9,022			6,288			5,838			5,146			12,833			9,022
Total operating expenses		14,338			8,927			26,188			18,234			13,483			14,338			30,563			26,188

Loss from operations		(15,215	)		(10,221	)		(28,099	)		(20,541	)		(12,892	)		(15,215	)		(30,858	)		(28,099	)

Other (expense) income
Interest (expense) income		28			(1,703	)		62			(3,135	)		(702	)		28			(1,445	)		62
Other (expense) income														5			—			(9	)		—
Change in fair value of contingent consideration														1,616			—			1,170			—
Change in fair value of derivative liabilities		—			14			—			(184	)		818			—			839			—
Total other (expense) income		28			(1,689	)		62			(3,319	)		1,737			28			555			62
Net loss before income taxes	$	(15,187	)	$	(11,910	)	$	(28,037	)	$	(23,860	)	$	(11,155	)	$	(15,187	)	$	(30,303	)	$	(28,037	)

Income Taxes		(58	)		—			(58	)		—
Income Tax (expense) benefit														(1	)		(58	)		56			(58	)

Net Loss	$	(15,245	)	$	(11,910	)	$	(28,095	)	$	(23,860	)	$	(11,156	)	$	(15,245	)	$	(30,247	)	$	(28,095	)

Net loss (income) attributable to noncontrolling interest		(19	)		—			(19	)		—			—			(19	)		—			(19	)
Net loss attributable to common stockholders	$	(15,264	)	$	(11,910	)	$	(28,114	)	$	(23,860	)	$	(11,156	)	$	(15,264	)	$	(30,247	)	$	(28,114	)

Net loss per common share - basic and diluted	$	(0.29	)	$	(0.30	)	$	(0.54	)	$	(0.61	)	$	(0.19	)	$	(0.29	)	$	(0.53	)	$	(0.54	)

Weighted average common shares outstanding - basic and diluted		52,924,078			39,445,268			52,180,077			38,810,985			57,583,844			52,924,078			57,369,118			52,180,077

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 Six Months Ended December 31, 2021
Additional
Common Stock Paid In Accumulated
Shares Par Value Capital Deficit Equity

Balance, June 30, 2021 51,236 $ 51 $ 265,130 $ (147,771 ) $ 117,410

Common stock issued for cash, net of issuance costs 556 1 5,431 — 5,432

Stock-based compensation 237 — 2,348 — 2,348

Common stock issued for exercise of warrants 4 — 24 — 24

Common stock issued for exercise of options 5 — 33 — 33

Net loss — — — (12,849 ) (12,849 )

Balance, September 30, 2021 52,038 $ 52 $ 272,966 $ (160,620 ) $ 112,398

	For the Three Months Ended December 31, 2022
	Common Stock				Additional Paid In		Accumulated			Total
	Shares		Par Value		Capital		Deficit			Equity

Balance, September 30, 2022		57,341	$	57	$	312,519	$	(225,889	)	$	86,687

Stock-based compensation		329		1		1,894		—			1,895

ESPP purchases		89		—		288		—			288

Common stock issued in payment of note interest		402		—		1,364		—			1,364

Net loss		—		—		—		(11,156	)		(11,156	)

Balance, December 31, 2022		58,161	$	58	$	316,065	$	(237,045	)	$	79,078

Additional
Common Stock Paid In Accumulated Noncontrolling
Shares Par Value Capital Deficit Interest Equity

Balance, September 30, 2021 52,038 $ 52 $ 272,966 $ (160,620 ) $ — $ 112,398

Common stock issued for cash, net of issuance costs 1,931 2 13,355 — — 13,357

Stock-based compensation 356 — 2,900 — — 2,900

Common stock issued for exercise of warrants 4 — 33 — — 33

Common stock issued for exercise of options 15 — 107 — — 107

ESPP purchase 53 1 311 — — 312

Common stock issued in acquisition 263 — 2,297 — — 2,297

Noncontrolling interest acquired — — — — 7,510 7,510

Net loss — — — (15,264 ) 18 (15,246 )

Balance, December 31, 2021 54,660 $ 55 $ 291,969 $ (175,884 ) $ 7,528 $ 123,668

~~See accompanying notes to the condensed consolidated financial statements.~~

	For the Three Months Ended December 31, 2021
	Common Stock				Additional Paid In		Accumulated			Noncontrolling
	Shares		Par Value		Capital		Deficit			Interest		Equity

Balance, September 30, 2021		52,038	$	52	$	272,966	$	(160,620	)	$	—	$	112,398

Common stock issued for cash, net of issuance costs		1,931		2		13,355		—			—		13,357

Stock-based compensation		356		—		2,900		—			—		2,900

Common stock issued for exercise of warrants		4		—		33		—			—		33

Common stock issued for exercise of options		15		—		107		—			—		107

ESPP purchases		53		1		311		—			—		312

Common stock issued in acquisition		263		—		2,297		—			—		2,297

Noncontrolling interest acquired		—		—		—		—			7,510		7,510

Net loss		—		—		—		(15,264	)		18		(15,246	)

Balance, December 31, 2021		54,660	$	55	$	291,969	$	(175,884	)	$	7,528	$	123,668

A~~koustis Technologies, Inc.~~

~~Condensed Consolidated Statements of Changes in Equity~~

~~(In thousands)~~

~~(Unaudited)~~

For the Six Months Ended December 31, 2020
Additional
Common Stock Paid In Accumulated
Shares Par Value Capital Deficit Equity

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

Stock-based compensation 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 Six Months Ended December 31, 2022
	Common Stock				Additional Paid In		Accumulated			Noncontrolling
	Shares		Par Value		Capital		Deficit			Interest		Equity

Balance, June 30, 2022		57,079	$	57	$	310,170	$	(206,798	)	$	—	$	103,429

Stock-based compensation		591		1		4,243		—			—		4,244

ESPP purchases		89		—		288		—			—		288

Common stock issued in payment of note interest		402		—		1,364		—			—		1,364

Net loss		—		—		—		(30,247	)		—		(30,247	)

Balance, December 31, 2022		58,161	$	58	$	316,065	$	(237,045	)	$	—	$	79,078

					Additional								For the Six Months Ended December 31, 2021
	Common Stock				Paid In		Accumulated						Common Stock				Additional Paid In		Accumulated			Noncontrolling
	Shares		Par Value		Capital		Deficit			Equity			Shares		Par Value		Capital		Deficit			Interest		Equity

Balance, September 30, 2020		38,582	$	39	$	150,711	$	(115,565	)	$	35,185
Balance, June 30, 2021														51,236	$	51	$	265,130	$	(147,771	)	$	—	$	117,410

Common stock issued for cash, net of issuance costs		2,296		2		20,153		—			20,155			2,487		3		18,786		—			—		18,789

Stock-based compensation		350		—		2,066		—			2,066			593		—		5,248		—			—		5,248

Common stock issued for exercise of warrants		33		—		118		—			118			8		—		57		—			—		57

Common stock issued for exercise of options		73		—		422		—			422			20		—		140		—			—		140

ESPP purchase		32		—		204		—			204
ESPP purchases														53		1		311		—			—		312

Common stock issued in payment of note interest		33		—		244		—			244
Common stock issued in acquisition														263		—		2,297		—			—		2,297

Noncontrolling interest acquired														—		—		—		—			7,510		7,510

Net loss		—		—		—		(11,910	)		(11,910	)		—		—		—		(28,113	)		18		(28,095	)

Balance, December 31, 2020		41,399	$	41	$	173,918	$	(127,475	)	$	46,484
Balance, December 31, 2021														54,660	$	55	$	291,969	$	(175,884	)	$	7,528	$	123,668

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)

	Six Months Ended December 31, 2021			Six Months Ended December 31, 2020			Six Months Ended December 31, 2022			Six Months Ended December 31, 2021

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(28,095	)	$	(23,860	)	$	(30,247	)	$	(28,095	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		3,174			2,080			5,092			3,174
Stock-based compensation		5,248			4,093			4,244			5,248
Amortization of debt discount		—			2,346			290			—
Amortization of operating lease right of use asset		130			110			171			130
Non cash interest payments		—			488			1,364			—
Change in fair value of derivative liabilities		—			184			(839	)		—
Gain on disposal of fixed assets		(194	)		—

Change in fair value of contingent consideration								(1,170	)		—
(Gain) Loss on disposal of fixed assets & intangibles								16			(194	)
Changes in operating assets and liabilities:
Accounts receivable		(349	)		(395	)		622			(349	)
Inventory		(698	)		(515	)		(1,713	)		(698	)
Other current assets		(832	)		(443	)		(1,200	)		(832	)
Accounts payable and accrued expenses		(1,611	)		(204	)		(2,469	)		(1,611	)
Lease liabilities		(135	)		(111	)		(155	)		(135	)
Deferred revenue		(176	)		57			(226	)		(176	)
Net Cash Used in Operating Activities		(23,538	)		(16,170	)		(26,220	)		(23,538	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for machinery and equipment		(12,823	)		(4,438	)
Cash paid for property, plant and equipment								(7,985	)		(12,823	)
Acquisition of business, net of cash acquired		(4,079	)		—			—			(4,079	)
Cash received from sale of fixed assets		287			—
Cash paid for intangibles		—			(53	)
Cash received from the sale of fixed assets								—			287
Net Cash Used in Investing Activities		(16,615	)		(4,491	)		(7,985	)		(16,615	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		18,789			23,192
Proceeds from issuance of common stock, net of issuance costs								—			18,789
Proceeds from exercise of employee stock options		140			524			—			140
Proceeds from employee stock purchase plan								289			312
Proceeds from exercise of warrants		57			118			—			57
Proceeds from employee stock purchase plan		312			204
Net Cash Provided by Financing Activities		19,298			24,038			289			19,298

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash		(20,855	)		3,377			(33,916	)		(20,855	)

Cash, Cash Equivalents and Restricted Cash - Beginning of Period		88,322			44,408			80,485			88,322

Cash, Cash Equivalents and Restricted Cash - End of Period	$	67,467		$	47,785		$	46,569		$	67,467

SUPPLEMENTARY CASH FLOW INFORMATION:
Cash Paid During the Period for:
Interest		—			325
Income taxes								40			—

SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Fixed assets included in accounts payable and accrued expenses								100			(223	)
Operating lease right-of-use asset, net								133			—
Operating lease liability								(133	)		—
Common stock issued in payment of interest		—			488			1,364			—
Fixed assets included in accounts payable and accrued expenses		(223	)		572
Acquisition of Business
Tangible assets, excluding cash and cash equivalents		1,346			—			—			1,346
Intangibles		9,711			—			—			9,711
Goodwill		7,835			—			—			7,835
Deferred tax liability		(2,039	)		—			—			(2,039	)
Contingent consideration		(1,082	)		—			—			(1,082	)
Liabilities assumed		(1,885	)		—			—			(1,885	)
Issuance of common stock for acquisition		(2,297	)		—			—			(2,297	)
Noncontrolling interest		(7,510	)		—			—			(7,510	)

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 on April 10, 2013, and effective December 15, 2016, the Company changed its state of incorporation to the State of Delaware. Through its wholly-owned subsidiary, Akoustis, Inc. (a Delaware corporation), the Company, headquartered in Huntersville, North Carolina, is focused on developing, designing, and manufacturing innovative radio frequency (“RF”) filter products for the wireless industry, including for products such as smartphones and tablets, cellular infrastructure equipment, Wi-Fi Customer Premise Equipment (“CPE”), and military and defense communication applications. Located between the device’s antenna and its digital backend, the RF front-end (“RFFE”) is the circuitry that performs the analog signal processing and contains components such as amplifiers, filters and switches. To construct the resonator devices that are the building blocks for its RF filters, the Company has developed a family of novel, high purity acoustic piezoelectric materials as well as a unique microelectromechanical system (“MEMS”) wafer semiconductor process, collectively referred to as XBAW^TM 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. ~~In October 2021, the Company acquired a 51% ownership interest in~~Additionally, through RFM Integrated Device, Inc. (“RFMi”), a ~~fabless supplier~~wholly-owned subsidiary of ~~acoustic wave RF resonators and filters. Through RFMi,~~Akoustis, Inc., the Company makes sales of ~~surface-acoustic-wave~~complementary surface acoustic wave (“SAW”) resonators, RF filters, crystal (Xtal) resonators and oscillators, and ceramic products branded as “RFMi” products.

Note 2. Liquidity

As of December 31, ~~2021,~~2022, the Company had cash and cash equivalents of ~~$67.5~~$46.6 million and working capital of ~~$68.3~~$51.5 million. The Company has historically incurred recurring operating losses and experienced net cash used in operating activities.

On January 19, 2023, the Company closed an underwritten public offering of 12,545,454 shares of its common stock at a price to the public of $2.75 per share, which included the underwriters’ exercise of their over-allotment option in full, for net proceeds of approximately $32.0 million. See Note 18-Subsequent Events.

The Company expects cash and cash equivalents to be sufficient to fund its operations beyond the next twelve months from the date of filing of this Form 10-Q. These funds will be used to fund the Company’s operations, including capital expenditures, R&D, commercialization of ~~our~~its technology, development of ~~our~~its patent strategy and expansion of ~~our~~its patent portfolio, servicing outstanding debt, potential strategic transactions, as well as to provide working capital and funds for other general corporate purposes. Except for the ~~approximately $7.0~~$48.0 million of common stock remaining available to be sold ~~pursuant to~~under its ATM ~~Equity Offering~~^SMSales Agreement ~~dated May 8, 2020,~~ with ~~BofA Securities, Inc. and Piper Sandler~~Oppenheimer & Co. Inc., Craig-Hallum Capital Group LLC, and Roth Capital Partners, LLC, the Company has no commitments or arrangements to obtain any additional funds, and there can be no assurance such funds will be available on acceptable terms or at all.

If the Company is unable to obtain additional financing in a timely fashion and on acceptable terms, its financial condition and results of operations may be materially adversely affected and it may not be able to continue operations or execute its stated commercialization plan.

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information and the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments (consisting of normal accruals) considered necessary for a fair presentation have been included. The Company has evaluated subsequent events through the filing of this Form 10-Q. Operating results for the quarter ended December 31, ~~2021~~2022 are not necessarily indicative of the results that may be expected for the year ending June 30, ~~2022~~2023 or any future interim period. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Form 10-K filed with the SEC on ~~August 30, 2021~~September 12, 2022 (the ~~“2021~~“2022 Annual Report”).

Principles of Consolidation

The accompanying ~~unaudited condensed~~ consolidated financial statements include the accounts of the Company and its ~~wholly owned subsidiary,~~wholly-owned subsidiaries as of December 31, 2022, Akoustis, Inc. and RFM Integrated Device, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation. For RFMi, a consolidated entity in which we have 51% of ownership, the Company records net loss (income) attributable to noncontrolling interest on the condensed consolidated statements of operations equal to the percentage of the ownership interest retained in such entity by the respective noncontrolling parties.

Significant Accounting Policies and Estimates

The Company’s significant accounting policies are disclosed in ~~Note. 3-Summary~~Note 3. Summary of Significant Accounting Policies in the ~~2021~~2022 Annual Report. Since the date of the ~~2021~~2022 Annual Report, there have been no material changes to the Company’s significant accounting policies. The preparation of the unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and the accompanying notes thereto. The policies, estimates and assumptions include valuing equity securities, derivative liabilities, deferred taxes and related valuation allowances, contingent consideration, goodwill, intangible assets, ~~initial fair value of the non-controlling interest,~~ revenue recognition, and the fair values of long-lived assets. Actual results could differ from the estimates.

~~Business Combinations~~ - Business combinations are accounted for under the acquisition method in accordance with ASC 805, Business Combinations. The acquisition method requires identifiable assets acquired and liabilities assumed and any noncontrolling interest in the business acquired be recognized and measured at fair value on the acquisition date, which is the date that the acquirer obtains control of the acquired business. The amount by which the fair value of consideration transferred as the purchase price exceeds the net fair value of assets acquired and liabilities assumed is recorded as goodwill. Transaction costs are expensed in a business combination.

~~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.~~

Recently Issued Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying condensed consolidated financial statements.

Note 4. Revenue Recognition from Contracts with Customers

Disaggregation of Revenue

The Company’s primary revenue streams include foundry fabrication services and product ~~sales.~~sales across multiple geographic regions, primarily the Americas, Asia and Europe.

Foundry Fabrication Services

Foundry fabrication services revenue includes MEMS foundry services, which the Company exited in fiscal year 2021, and Non-Recurring Engineering (“NRE”) ~~and microelectromechanical systems (“MEMS”) foundry services.~~. Under these contracts, products are delivered to the customer at the completion of the service, which represents satisfaction of the performance obligation as well as transfer of title. Depending on language with regards to enforceable right to payment for performance completed to date, related revenue will either be recognized over time or at a point in time.

Product Sales

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

The following table summarizes the revenues of the Company’s reportable segments by geographic region for the three months ended December 31, 2022, (in thousands):

	Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers
Americas	$	1,143	$	1,223	$	2,366
Asia		748		1,759		2,507
Europe		—		992		992
Total	$	1,891	$	3,974	$	5,865

The following table summarizes the revenues of the Company’s reportable segments by geographic region for the six months ended December 31, 2022, (in thousands):

	Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers
Americas	$	1,849	$	2,136	$	3,985
Asia		975		4,834		5,809
Europe		—		1,628		1,628
Other		—		10		10
Total	$	2,824	$	8,608	$	11,432

The following table summarizes the revenues of the Company’s reportable segments by geographic region for the three months ended December 31, 2021, (in thousands):

Foundry
Fabrication
Services
Revenue Product
Sales
Revenue Total
Revenue
with
Customers
NRE $ 383 $ — $ 383
Filters/Amps — 3,289 3,289
Total $ 383 $ 3,289 $ 3,672

	Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers
Americas	$	249	$	779	$	1,028
Asia		135		1,817		1,952
Europe		—		692		692
Total	$	384	$	3,288	$	3,672

The following table summarizes the revenues of the Company’s reportable segments by geographic region for the six months ended December 31, 2021, (in thousands):

Foundry
Fabrication
Services
Revenue Product
Sales
Revenue Total
Revenue
with
Customers
NRE $ 796 $ — $ 796
Filters/Amps — 4,744 4,744
Total $ 796 $
4,744
$ 5,540

	Foundry Fabrication Services Revenue		Product Sales Revenue		Total Revenue with Customers
Americas	$	583	$	876	$	1,459
Asia		213		3,006		3,219
Europe		—		862		862
Total	$	796	$	4,744	$	5,540

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

Foundry
Fabrication
Services
Revenue Product
Sales
Revenue Total
Revenue
with
Customers
NRE - RF Filters $ 670 $ — $ 670
Filters/Amps — 638 638
Total $ 670 $ 638 $ 1,308

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

Foundry
Fabrication
Services
Revenue Product
Sales
Revenue Total
Revenue
with
Customers
NRE - RF Filters $ 727 $ — $ 727
Filters/Amps — 1,217 1,217
Total $ 727 $ 1,217 $ 1,944

~~Performance Obligations~~

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

Contract Balances

The following table summarizes the changes in the opening and closing balances of the Company’s contract asset (included in Other current assets on the Consolidated Balance Sheet) and contract liability (included as Deferred revenue on the Consolidated Balance Sheet) for the first six months of fiscal years ~~2022~~2023 and ~~2021~~2022 (in thousands):

					Contract Assets		Contract Liability
Balance, June 30, 2022					$	908	$	286
Closing, December 31, 2022						2,334		60
Increase/(Decrease)					$	1,426	$	(226	)
	Contract Assets		Contract Liability
Balance, June 30, 2021	$	411	$	41	$	411	$	41
Closing, December 31, 2021		823		101		823		101
Increase/(Decrease)	$	412	$	60	$	412	$	60

Balance, June 30, 2020	$	125	$	—
Closing, December 31, 2020		383		57
Increase/(Decrease)	$	258	$	57

The Company records a receivable when the title for goods has transferred. Generally, all sales are contract sales (with either an underlying contract or purchase order), resulting in all receivables being contract receivables. When invoicing occurs prior to revenue recognition a contract liability is recorded (as deferred revenue on the Condensed Consolidated Balance Sheets). The amount of revenue recognized in the six months ended December 31, ~~2021~~2022, that was included in the opening contract liability balance was ~~$41~~$286 thousand which related to ~~non-recurring engineering services.~~timing of shipments.

Contract assets are recorded when revenue recognized exceeds the amount invoiced. The difference between the opening and closing balances of the Company’s contract assets and contract liabilities primarily results from the timing difference between the Company’s performance and the customer’s payment. The amount of contract assets invoiced in the six months ended December 31, ~~2021~~2022, that was included in the opening contract asset balance was ~~$293~~$245 thousand, which primarily related to non-recurring engineering services.

Backlog of Remaining Customer Performance Obligations

Revenue expected to be recognized and recorded as sales during the remainder of this fiscal year from the backlog of performance obligations that are unsatisfied (or partially unsatisfied) ~~was $5.4 million~~ at December 31, ~~2021.~~2022 was $7.4 million. The Company’s backlog may vary significantly each reporting period based on the timing of major new contract commitments. In addition, our customers have the right, under some infrequent circumstances, to terminate contracts or defer the timing of the Company's services and their payments to us.

Note 5: Inventory

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

~~Inventory~~reserves, consisted of the following as of December 31, ~~2021~~2022 and June 30, ~~2021~~2022 (in thousands):

	December 31, 2022		June 30, 2022
Raw Materials	$	1,461	$	1,077
Work in Process		3,132		1,061
Finished Goods		1,214		1,956
Total Inventory	$	5,807	$	4,094

December 31,
2021 June 30,
2021
Raw Materials $ 858 $ 124
Work in Process 718 1,188
Finished Goods 710 78
Total Inventory $ 2,286 $ 1,390

Note 6. Property and Equipment, net

Property and equipment, net consisted of the following as of December 31, ~~2021~~2022 and June 30, ~~2021~~2022 (in thousands):

	Estimated Useful Life	December 31, 2021			June 30, 2021			Estimated Useful Life	December 31, 2022			June 30, 2022
Land	n/a	$	1,000		$	1,000		n/a	$	1,000		$	1,000
Building	11 years		3,000			3,000
Building and leasehold improvements								*		8,782			7,715
Equipment	2-10 years		45,033			35,120		2-10 years		63,918			57,750
Leasehold Improvements	*		3,598			1,946
Software	3 years		617			580
Furniture & Fixtures	5 years		80			73
Computer Equipment	3 years		642			310
Computer Equipment & Software								3-5 years		2,417			1,966
Total			53,970			42,029				76,117			68,431
Less: Accumulated Depreciation			(13,722	)		(11,299	)			(21,648	)		(17,274	)
Total		$	40,248		$	30,730			$	54,469		$	51,157

(*)	Leasehold improvements are amortized on a straight-line basis over the term of the lease or the estimated useful lives, whichever is shorter. Buildings are amortized on a straight-line basis between 11 and 39 years.

The Company recorded depreciation expense of ~~$1.6~~$2.3 million and ~~$1.1~~$1.6 million for the three months ended December 31, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company recorded depreciation expense of ~~$3.1~~$4.4 million and ~~$2.1~~$3.1 million for the six months ended December 31, 2022 and 2021, ~~and 2020,~~ respectively.

As of December 31, ~~2021,~~2022, equipment with a net book value totaling ~~$11.7~~$7.0 million had not been placed in service and therefore was not depreciated during the period. As of June 30, ~~2021,~~2022, fixed assets with a net book value totaling ~~$4.9~~$14.5 million had not been placed in service and therefore was not depreciated during the period.

Note 7. Business Acquisition

On October 15, 2021, the Company acquired a majority ownership position in ~~RFM Integrated Device, Inc. (“RFMi”),~~RFMi, a fabless supplier of acoustic wave RF resonators and filters, to expand product offerings and provide access to new markets. The Company acquired a 51% ownership interest in RFMi from Tai-Saw Technology Co., Ltd. (“TST”) in exchange for $6.0 million in cash and approximately ~~$2.5~~$2.3 million payable in common stock of the Company. ~~The~~On April 29, 2022, the Company ~~has the~~exercised its option to acquire the remaining 49% ownership interest in RFMi from TST ~~on or before June 30, 2022,~~ for an additional $3.5 million in cash and approximately ~~$4.0 million in unregistered~~420,053 shares of common stock of the ~~Company.~~Company with a fair value at closing of $1.9 million.

Additionally, earn-out payments payable in cash and/or shares of common stock of the Company may be payable to TST based on the achievement of sales targets for RFMi products in each of calendar year 2022 and 2023, with potential payouts in the range of $0 to $3.0 million. The initial $1.1 million estimated fair value of the associated liability was based on the present value of the expected future payouts resulting from the projected RFMi product sales, applying a volatility rate of 30% against those future projected revenues and using a discount rate of 9.9% and 10.2% for the first and second earnouts, respectively, and thus represented a Level 3 fair value measurement. The contingent consideration is re-measured to fair value at each reporting date until the contingency is resolved, and those changes in fair value are recognized in earnings. ~~There have been no material changes in~~The Company has determined that the sales targets for calendar year 2022 were not met and the related earnout payment is not owed. The fair value of the contingent consideration ~~at December 31, 2021 since~~decreased $1,170 thousand during the ~~acquisition date.~~

~~The purchase price was preliminarily allocated based on the estimated fair values of the assets acquired and liabilities assumed as follows (in thousands):~~

Consideration:
Cash paid $ 6,000
Common stock 2,297
Fair value of contingent consideration 1,082
Total consideration $ 9,379

Cash $ 1,921
Other tangible assets 1,346
Intangible assets 9,711
Goodwill 7,835
Liabilities assumed (1,885 )
Deferred tax liability $ (2,039 )
Total assets acquired $ 16,889
Noncontrolling interest (7,510 )
Net assets acquired $ 9,379

The Company will continue to evaluate the fair market value and other estimates of certain assets, liabilities and tax estimates over the measurement period (up to one year from the acquisition date) as provided for in ASC 805-10.

~~The provisional values of the intangible assets acquired included trademarks of $1.6 million, developed technology of $1.2 million and customer relationships of $6.9 million.~~

The fair value of the trademarks acquired was determined based on an income approach using the “relief-from-royalty” method which estimated the value of the intangible asset by discounting the future cash flows of the asset to present value. Key inputs include a royalty rate of 3% and a discount rate of 19.5% as of the valuation date. The acquired trademarks assets are being amortized on a straight-line basis over their estimated useful lives of five years.

The fair value of the developed technology acquired was determined based on an income approach using the “relief-from-royalty” method which estimated the value of the intangible asset by discounting the future cash flows of the asset to present value. Key inputs include a royalty rate of 4% and a discount rate of 19.5% as of the valuation date. The acquired developed technology assets are being amortized on a straight-line basis over their estimated useful lives of seven years.

The fair value of the customer relationships acquired was determined based on an income approach using the “multi-period excess earnings” method in which the value of the intangible asset is determined by discounting the future cash flows of the asset to present value. Key inputs include a discount rate of 19.5%, an attrition rate of 5% and an operating expense adjustment factor of 5% as of the valuation date. These customer relationships are being amortized on a straight-line basis over their estimated useful life of seven years.

~~The fair value of the noncontrolling interest was determined by applying a lack of control discount of 16.7% to the implied fair value based on the total consideration paid for the 51% ownership.~~

The goodwill resulting from the acquisition of RFMi, which has been recorded in the RF Product segment, is attributed to synergies and other benefits that are expected to be generated from this transaction and is not deductible for income tax purposes. During the three and six months ended December 31, 2021, the Company recorded acquisition costs associated with the acquisition of RFMi totaling $0.1 million in “General and administrative expenses” in the Condensed Consolidated Statements of Operations. 2022.

Pro Forma Results

The following unaudited pro forma financial information summarizes the ~~revenues~~results of operations for the three and six months ended December 31, 2021 ~~and 2020,~~ as if the acquisition had been completed as of July 1, ~~2020~~2021 (in thousands). The pro forma results were calculated applying the Company’s accounting policies and include the effects of adjustments related to the amortization charges from the acquired intangibles. The unaudited pro forma information does not purport to be indicative of the results that would have been obtained if the acquisitions had actually occurred at the beginning of the year prior to acquisition, nor of the results that may be reported in the future. ~~Pro-forma earnings were not materially different from reported results for the periods presented and thus have not been included.~~

Three Months Ended
December 31, Six Months Ended
December 31,
2021 2020 2021 2020

Unaudited
Unaudited Unaudited Unaudited
Revenues $ 3,735 $ 2,175 $ 7,417 $ 3,541

	Three Months Ended			Six Months Ended
	December 31,			December 31,
	2021			2021
	Unaudited Proforma			Unaudited Proforma
Revenues	$	3,914		$	7,596
Net Loss	$	(15,370	)	$	(28,370	)
Net Loss per share	$	(0.29	)	$	(0.54	)

Note 8:8. Goodwill ~~and Intangible Assets~~

~~Intangible assets consisted~~The Company performs an annual test for goodwill impairment during our last fiscal quarter. The Company will also test for impairment between annual test dates if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

During the six months ended December 31, 2022, the Company did not identify any events or circumstances that would require an interim goodwill impairment test. The Company does not amortize goodwill as it has been determined to have an indefinite useful life. The carrying amount of ~~the following~~goodwill as of December 31, ~~2021 (in thousands):~~2022 was $8.1 million.

Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Weighted
Average Useful
Life in Years
Goodwill $ 7,835 $ — $ 7,835 indefinite
Trademarks $ 1,569 $ (16 ) $ 1,553 5
Developed Technology $ 1,847 $ (88 ) $ 1,759 10
Customer Relationships $ 6,927 $ (72 ) $ 6,855 7
Total $ 18,178 $ (176 ) $ 18,002

~~Intangible assets consisted of the following as of June 30, 2021 (in thousands):~~

Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount Weighted
Average Useful
Life in Years
Developed Technology $ 634 $ (62 ) $ 572 15

Amortization expense totaled $108 thousand for the three months ended December 31, 2021 and $115 thousand for the six months ended December 31, 2021. Estimated future amortization expense of intangible assets for each of the next five fiscal years and thereafter are as follows (in thousands):

2022 $ 966
2023 $ 1,519
2024 $ 1,519
2025 $ 1,519
2026 $ 1,519
Thereafter $ 3,125
Total $ 10,167

Note 9. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following at December 31, ~~2021~~2022 and June 30, ~~2021~~2022 (in thousands):

	December 31, 2021		June 30, 2021		December 31, 2022		June 30, 2022
Accounts payable	$	1,818	$	1,188	$	2,602	$	3,630
Accrued salaries and benefits		2,639		4,415		3,207		4,641
Accrued professional fees		226		49
Accrued utilities		131		127
Accrued goods received not invoiced		1,404		761		1,041		1,472
Other accrued expenses		502		414		1,594		1,461
Totals	$	6,720	$	6,954	$	8,444	$	11,204

Note 10. ~~Concentrations~~Notes Payable

~~Vendors~~Convertible Senior Notes due 2027

~~Vendor concentration~~The following table summarizes convertible debt as ~~a percentage~~ of ~~purchases for~~December 31, 2022 (in thousands):

	Maturity Date	Stated Interest Rate			Conversion Price		Face Value		Remaining Debt (Discount)			Fair Value of Embedded Derivatives		Carrying Value
Long Term convertible notes payable
6.0% convertible senior notes	06/15/2027		6.00	%	$	4.71	$	44,000	$	(3,008	)	$	2,189	$	43,181
Ending Balance as of December 31, 2022							$	44,000	$	(3,008	)	$	2,189	$	43,181

The following table summarizes convertible debt as of June 30, 2022 (in thousands):

	Maturity Date	Stated Interest Rate			Conversion Price		Face Value		Remaining Debt (Discount)			Fair Value of Embedded Derivatives		Carrying Value
Long Term convertible notes payable
6.0% convertible senior notes	06/15/2027		6.00	%	$	4.71	$	44,000	$	(3,297	)	$	3,028	$	43,731
Ending Balance as of June 30, 2022							$	44,000	$	(3,297	)	$	3,028	$	43,731

Interest expense on the Notes during the three months ended December 31, ~~2021~~2022 included contractual interest of $660 thousand and ~~2020 are as follows:~~debt discount amortization of $146 thousand. Interest expense on the Notes during the six months ended December 31, 2022 included contractual interest of $1,320 thousand and debt discount amortization of $290 thousand.

	Three Months 12/31/2021			Three Months 12/31/2020
~~Vendor 1~~		-			13	%
~~Vendor 2~~		17	%		-

Note 11. Concentrations

Customers

Customer concentration as a percentage of revenue for the three months ended December 31, ~~2021~~2022 and ~~2020~~2021 are as follows:

	Three Months 12/31/2021			Three Months 12/31/2020			Three Months 12/31/2022			Three Months 12/31/2021
Customer 1		-			18	%		15	%		22	%
Customer 2		22	%		29	%		12	%		—
Customer 3		-			32	%		12	%		—
Customer 4		-			15	%

Customer concentration as a percentage of revenue for the six months ended December 31, ~~2021~~2022 and ~~2020~~2021 are as follows:

	Six Months 12/31/2022			Six Months 12/31/2021
Customer 1		21	%		27	%
Customer 2		10	%		—
Customer 3		10	%		—
Customer 4		—			14	%

Customer concentration as a percentage of accounts receivable at December 31, 2022 and June 30, 2022 are as follows:

Six Months
12/31/2021 Six Months
12/31/2020
Customer 1 - 22 %
Customer 2 - 10 %
Customer 3 27 % 44 %
Customer 4 - 12 %

	December 31, 2022			June 30, 2022
Customer 1		22	%		26	%
Customer 2		15	%		—
Customer 3		12	%		—
Customer 4		—			13	%

Vendors

Vendor concentration as a percentage of purchases for the six months ended December 31, 2022 and 2021 are as follows:

	Six Months 12/31/2022			Six Months 12/31/2021
Vendor 1		10	%		—
Vendor 2		—			17	%

Note ~~11.~~12. Equity

Equity Offering Program

~~The~~On May 2, 2022, the Company ~~has in place~~entered into an ATM ~~Equity Offering~~^SMSales Agreement with ~~BofA Securities, Inc. and Piper Sandler~~Oppenheimer & Co. ~~(the “Sales Agreement”)~~Inc., Craig-Hallum Capital Group LLC, and Roth Capital Partners, LLC pursuant to which the Company may sell from time-to-time shares of its common stock having an aggregate offering price of up to ~~$100 million~~$50,000,000 (the ~~“Equity~~“2022 Equity Offering Program”). ~~As of December 31, 2021,~~On May 25, 2022, the Company ~~had sold an aggregate of $93.0 million of its shares~~announced that it was suspending sales under the 2022 Equity Offering Program. If, in the future, the Company determines to resume sales pursuant to the 2022 Equity Offering ~~Program.~~Program, it intends to notify investors by the filing of a Current Report on Form 8-K or other public announcement.

~~The following table summarizes sales through the Equity Offering Program during the six months ended December 31, 2021:~~

Three months ended Avg price
per share Number of
Shares Gross
Proceeds
(in millions) Offering
Expenses
(in millions) Net
Proceeds
(in millions)
September 30, 2021 $ 9.99 555,455 $ 5.5 $ 0.1 $ 5.4
December 31, 2021 $ 7.04 1,931,022 $ 13.6 $ 0.2 $ 13.4
Total $ 7.70 2,486,477 $ 19.1 $ 0.3 $ 18.8

Equity Incentive Plans

During the six months ended December 31, ~~2021,~~2022, the Company granted employees options to purchase an aggregate of approximately ~~0.6 million~~235 thousand shares of common stock. The fair values of the Company’s options were estimated at the dates of grant using a Black-Scholes option pricing model with the following assumptions:

	Six Months Ended December 31, 2021			Six Months Ended December 31, 2022
Exercise price	$	6.76 –10.15		$	2.83 – 3.57
Expected term (years)		4.75 – 5.00			4.00 - 4.75
Volatility		66-67	%		67 – 68	%
Risk-free interest rate		0.76%–1.14	%		3.77 – 4.59	%
Dividend yield		0	%		0	%
Weighted Average Grant Date Fair Value of Options granted during the period	$	5.23		$	1.87

During the six months ended December 31, ~~2021~~2022 the Company awarded certain employees and directors grants of an aggregate of approximately ~~0.9~~1.0 million restricted stock units (“RSUs”) with a weighted average grant date fair value of ~~$9.23.~~$3.51. The RSUs will be expensed over the requisite service period. The terms of the RSUs include vesting provisions based solely on continued service. If the service criteria are satisfied, the RSUs will generally vest over 4 – 5 years.

During the six months ended December 31, 2022 the Company awarded certain employees grants of an aggregate of approximately 0.39 million restricted stock units with market value appreciation conditions (“MVSUs”) with a weighted average grant date fair value of $7.86. The MVSUs will be expensed over the requisite service period. The terms of the MVSUs include vesting provisions based on continued service. The number of shares of the Company’s common stock earned at vesting is based on the Company’s stock price performance with amounts earned subject to a vesting multiplier ranging from 0% to 200%. If the service criteria are satisfied, the MVSUs will vest over 3 years.

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

	Three Months Ended December 31,				Six Months Ended December 31,				Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020		2022		2021		2022		2021
Research and Development	$	1,716	$	928	$	2,948	$	1,942	$	883	$	1,716	$	2,051	$	2,948
General and Administrative		1,184		1,138		2,300		2,151		1,012		1,184		2,193		2,300
Total	$	2,900	$	2,066	$	5,248	$	4,093	$	1,895	$	2,900	$	4,244	$	5,248

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

	As of December 31, 2021				As of December 31, 2022
	Unrecognized stock-based compensation		Weighted- average years to be recognized		Unrecognized stock-based compensation		Weighted- average years to be recognized
Options	$	4,082		2.53	$	2,597		2.07
Restricted stock units	$	12,271		2.37	$	11,607		2.32

Note ~~12.~~13. Commitments and Contingencies

Leases

The Company leases office space ~~and office equipment~~ in Huntersville, NC, ~~as well as~~Carrollton, Texas and Taiwan and leases equipment in Canandaigua, NY. ~~Our~~Its leases have remaining lease terms of up to five years, some of which include options to extend the leases for up to twenty-four months. Following adoption of ASC 842, lease expense excludes capital area maintenance and property taxes. During the three months ended December 31, 2022, the lease pertaining to the office space in Carrollton, Texas was extended for an additional five years. This resulted in the remeasurement of the respective right of use asset and corresponding right of use liability.

The components of lease expense were as follows:

Three
Months Ended
December 31,
2021 Three
Months Ended
December 31,
2020
Six
Months Ended
December 31,
2021

Six
Months Ended
December 31,
2020

Operating Lease Expense $ 82 $ 75 $ 157 $ 150

Three
Months
Ended
December 31,
2022

Three
Months
Ended
December 31,
2021

Six

Months
Ended
December 31,
2022

Six

Months
Ended
December 31,
2021

Operating Lease Expense

106

201

157

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

	Classification on the Condensed Consolidated Balance Sheet	December 31, 2021			June 30, 2021			Classification on the Condensed Consolidated Balance Sheet	December 31, 2022			June 30, 2022
Assets
Operating lease assets	Other non-current assets	$	389		$	471		Other non-current assets	$	1,088		$	1,126

Liabilities
Other current liabilities	Current liabilities		291			270
Operating lease liabilities								Current liabilities		271			313
Operating lease liabilities	Other non-current liabilities		94			202		Long term liabilities		833			811

Weighted Average Remaining Lease Term:
Operating leases			1.25			1.76				3.54 Years			3.42 Years

Weighted Average Discount Rate:
Operating leases			11.9	%		12.5	%			11.30	%		10.03	%

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

For the year ending June 30,
2022	$	176
2023		231		$	189
2024		7			378
2025		—			389
2026					242
Thereafter		—			167
Total lease payments (undiscounted cash flows)		414			1,365

Less imputed interest		(29	)		(261	)
Total	$	385		$	1,104

Note 14. Commitments and Contingencies

Ontario County Industrial Development Authority Agreement

On February 27, 2018, the Company entered into a Lease and Project Agreement (the “Lease and Project Agreement”) and a Company Lease Agreement (the “Company Lease Agreement” and together with the Lease and Project Agreement, the “Agreements”), each dated as of February 1, 2018, with the Ontario County Industrial Development Agency, a public benefit corporation of the State of New York (the “OCIDA”). Pursuant to the Agreements, the Company ~~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 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~~Benefits totaling approximately $0.3 million provided to the Company through December 31, 2022 pursuant to the terms of the Lease and Project Agreement are subject to claw back over the life of the Agreements upon certain recapture events, including certain events of default.

Litigation, Claims and Assessments

On October 4, 2021, the Company ~~and its subsidiary, Akoustis, Inc., were~~was named as ~~defendants~~a defendant in a complaint filed by Qorvo, Inc. in the United States District Court for the District of Delaware alleging, among other things, patent infringement, false advertising, false patent marking, and unfair competition. The complaint alleges that the defendants misappropriated proprietary information, made misleading statements about the characteristics of certain of its products, and sold products infringing on ~~the~~ certain of the plaintiff’s patents. The plaintiff seeks an injunction enjoining the ~~defendants~~Company from the alleged infringement and damages, including punitive and statutory enhanced damages, in an unspecified amount. The Company filed a motion to dismiss all of the claims other than the direct patent infringement claims, but the court permitted the plaintiff to file an amended complaint which the court subsequently determined was sufficient for pleading purposes. The Court dismissed the Company’s motion in May 2022. The Court held a claims construction hearing in November 2022. At present the Company believes this lawsuit is without merit and intends to defend against it vigorously. However, itthe Company can provide no assurance as to the outcome of such dispute, and such action may result in judgments against the Company for an injunction, significant damages or other relief, such as future royalty payments to Qorvo, Inc. or restrictions on certain of the Company’s activities. Resolution of such matter may be prolonged and costly, and the ultimate result or judgment is uncertain due to the inherent uncertainty in litigation and other proceedings. Even if ultimately settled or resolved in the Company’s favor, this ~~action~~and other possible future actions may result in significant expenses, diversion of management and technical personnel attention and disruptions and delays in the Company’s business and product development, and other collateral consequences, all of which could have a material adverse effect on its business, financial condition and results of operations. Any out-of-court settlement of this or other actions may also have an adverse effect on the Company’s business, financial condition and results of operations, including, but not limited to, substantial expenses, the payment of royalties, licensing or other fees payable to third parties, or restrictions on its ability to develop, manufacture and sell its products.

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

~~Note 13. Segment Information~~Tax Credit Contingency

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 2 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~~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 ~~its operating segments based~~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 ~~revenue and operating profit (loss). Segment information for~~ the ~~three and six months ended December 31, 2021 and 2020 are as follows (in thousands):~~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.

Foundry/
Fabrication
Services RF Product Total
Three months ended December 31, 2021
Revenue with customers $ 384 $ 3,288 $ 3,672
Cost of revenue 377 4,172 4,549
Gross margin 7 (884 ) (877 )
Research and development — 9,192 9,192
General and administrative — 5,146 5,146
Income (Loss) from Operations $ 7 (15,222 ) (15,215 )

Three months ended December 31, 2020
Revenue with customers $ 670 $ 638 $ 1,308
Cost of revenue 350 2,252 2,602
Gross margin 320 (1,614 ) (1,294 )
Research and development — 5,566 5,566
General and administrative — 3,361 3,361
Income (Loss) from Operations $ 320 (10,567 ) (10,221 )

Six months ended December 31, 2021
Revenue with customers $ 796 $ 4,744 $ 5,540
Cost of revenue 947 6,504 7,451
Gross margin (151 ) (1,760 ) (1,911 )
Research and development — 17,166 17,166
General and administrative — 9,022 9,022
Income (Loss) from Operations $ (151 ) (27,948 ) (28,099 )

Six months ended December 31, 2020
Revenue with customers $ 727 $ 1,217 $ 1,944
Cost of revenue 403 3,848 4,251
Gross margin 324 (2,631 ) (2,307 )
Research and development — 11,946 11,946
General and administrative — 6,288 6,288
Income (Loss) from Operations $ 324 (20,865 ) (20,541 )

As of December 31, 2021
Accounts receivable $ 365 $ 2,137 $ 2,502

As of June 30, 2021
Accounts receivable $
242
$
928
$ 1,170

~~Note 14. Loss Per Share~~

~~Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number~~The Company’s gross unrecognized indirect tax credits totaled $0.1 million as of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three and six months ended December 31, ~~2021~~2022 and ~~December 31, 2020 presented in these condensed consolidated financial statements,~~$0.1 million as of June 30, 2022 and are recorded on the ~~weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.~~Consolidated Balance Sheet as a long-term liability.

~~The Company had the following common stock equivalents at December 31, 2021 and 2020:~~

December 31,
2021 December 31,
2020
Convertible Notes — 4,960,800
Options 2,981,627 2,589,719
Warrants 158,759 359,570
Total 3,140,386 7,910,089

~~Note 15. Income Taxes~~

On October 15, 2021, the Company acquired a majority ownership position in RFMi, a fabless supplier of acoustic wave RF resonators and filters. The Company acquired a 51% ownership interest in RFMi from Tai-Saw Technology Co., Ltd. (“TST”) in exchange for $6.0 million in cash and approximately $2.5 million payable of common stock of the Company. The Company’s preliminary allocation of purchase price for this acquisition is included in Note 7 – Business Acquisition, and includes an approximately $2.0 million deferred tax liability related to the acquired identifiable intangible assets. AKTS and RFMi will not file a consolidated tax return. Therefore, the valuation allowance remains in place on the net AKTS deferred tax assets.

Note ~~16. Fair Value Measurement~~15. Segment Information

~~Fair value is~~Operating segments are defined as ~~the price that would be received upon selling~~components of an asset or the price paid to transfer a liability on the measurement date. It focuses on the exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. A three-tier fair value hierarchyenterprise about which separate financial information is ~~established as a basis for considering such assumptions~~available and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

~~Level 1: Observable prices in active markets for identical assets and liabilities.~~

~~Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities.~~

~~Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.~~

~~The following table sets forth a summary of the changes in the fair value of Level 3 contingent consideration that are measured at fair value on a recurring basis:~~

Contingent consideration December 31,
2021 December 31,
2020
Beginning balance $ — $ —
Initial fair value of contingent consideration 1,082 —
Change in fair value of contingent consideration — �� —
Ending balance $ 1,082 $ —

The fair value of contingent consideration liabilities that was classified as Level 3 in the table above was estimated using a Monte Carlo simulation in an option pricing framework with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future sales revenue of RFMi products in each of calendar year 2022 and 2023 and the volatility of those revenues, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the acquisition agreements. The development and determination of the unobservable inputs for Level 3 fair value measurements and the fair value calculations are the responsibility of the Company’s chief financial officer and are approvedevaluated regularly by the chief ~~executive officer.~~

~~Note. 17. Subsequent Events~~operating decision maker, or decision–making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company operates in two segments, Foundry Fabrication Services, which consists of engineering review services and STC-MEMS foundry services, and RF Filters, which consists of amplifier and filter product sales, and grant revenue. The Company records all general and administrative costs in the RF Filters segment.

The Company ~~performed a review~~evaluates performance of ~~events subsequent to~~its operating segments based on revenue and operating profit (loss). Segment information for the ~~balance sheet date through the date the financial statements were issued~~three and ~~determined that there were no such events requiring recognition or disclosure in the financial statements.~~six months ended December 31, 2022 and 2021 are as follows (in thousands):

	Foundry Fabrication Services			RF Filters			Total
Three months ended December 31, 2022
Revenue	$	1,891		$	3,974		$	5,865
Cost of revenue		1,126			4,148			5,274
Gross margin		765			(174	)		591
Research and development		—			7,645			7,645
General and administrative		—			5,838			5,838
Income (Loss) from Operations	$	765			(13,657	)		(12,892	)

Three months ended December 31, 2021
Revenue	$	384		$	3,288		$	3,672
Cost of revenue		377			4,172			4,549
Gross margin		7			(884	)		(877	)
Research and development		—			9,192			9,192
General and administrative		—			5,146			5,146
Income (Loss) from Operations	$	7			(15,222	)		(15,215	)

Six months ended December 31, 2022
Revenue	$	2,823		$	8,609		$	11,432
Cost of revenue		2,018			9,709			11,727
Gross margin		805			(1,100	)		(295	)
Research and development		—			17,730			17,730
General and administrative		—			12,833			12,833
Income (Loss) from Operations	$	805			(31,663	)		(30,858	)

Six months ended December 31, 2021
Revenue	$	796		$	4,744		$	5,540
Cost of revenue		947			6,504			7,451
Gross margin		(151	)		(1,760	)		(1,911	)
Research and development		—			17,166			17,166
General and administrative		—			9.022			9,022
Income (Loss) from Operations	$	(151	)		(27,948	)		(28,099	)

As of December 31, 2022
Accounts receivable	$	89		$	3,072		$	3,171
Property and equipment, net		—			54,469			54,469

As of June 30, 2022
Accounts receivable	$	572		$	3,221		$	3,793
Property and equipment, net		—			51,157			51,157

Note 16. Loss Per Share

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three and six months ended December 31, 2022 and December 31, 2021 presented in these condensed consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

The Company had the following common stock equivalents at December 31, 2022 and 2021:

	December 31, 2022		December 31, 2021
Convertible Notes		9,341,825		—
Options		3,217,400		2,981,627
Warrants		41,103		158,759
Total		12,600,328		3,140,386

Note 17. Fair Value Measurement

Fair value is defined as the price that would be received upon selling an asset or the price paid to transfer a liability on the measurement date. It focuses on the exit price in the principal or most advantageous market for the asset or liability in an orderly transaction between willing market participants. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair values are as follows:

Level 1: Observable prices in active markets for identical assets and liabilities.

Level 2: Observable inputs other than quoted prices in active markets for identical assets and liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities.

The following table classifies the liabilities measured at fair value on a recurring basis into the fair value hierarchy as of December 31, 2022:

	Fair value at December 31, 2022		Level 1		Level 2		Level 3
Contingent consideration	$	276	$	—	$	—	$	276
Derivative liabilities		2,189		—		—		2,189
Total fair value	$	2,465	$	—	$	—	$	2,465

The following table classifies the liabilities measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2022:

	Fair value at June 30, 2022		Level 1		Level 2		Level 3
Contingent consideration	$	1,446	$	—	$	—	$	1,446
Derivative liabilities		3,028		—		—		3,028
Total fair value	$	4,474	$	—	$	—	$	4,474

The following table sets forth a summary of the changes in the fair value of Level 3 contingent consideration that are measured at fair value on a recurring basis:

Contingent consideration	December 31, 2022
Beginning balance	$	1,446
Initial fair value of contingent consideration		—
Change in fair value of contingent consideration		(1,170	)
Ending balance	$	276

There were no transfers between Level 1, 2, or 3 valuation classifications during the three or six months ended December 31, 2022.

The fair value of contingent consideration liabilities that was classified as Level 3 in the table above was estimated using a Monte Carlo simulation in an option pricing framework with significant inputs that are not observable in the market and thus represents a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability assessments of expected future sales revenue of RFMi products in calendar year 2023 and the volatility of those revenues, appropriately discounted considering the uncertainties associated with the obligation, and as calculated in accordance with the terms of the acquisition agreements. The development and determination of the unobservable inputs for Level 3 fair value measurements and the fair value calculations are the responsibility of the Company’s chief financial officer and are approved by the chief executive officer.

The fair value of the contingent consideration liabilities on December 31, 2022 and June 30, 2022 were valued with the following assumptions:

	December 31, 2022			June 30, 2022
Discount Rate		12.5	%		14.3% – 14.5	%
Revenue volatility		30	%		30	%
Risk free interest rate		4.65	%		1.71% – 3.04	%
Remaining term (years)		1.08			0.59 – 1.58

The following table sets forth a summary of the changes in the fair value of Level 3 derivative liabilities that are measured at fair value on a recurring basis:

Fair Value of Embedded Derivatives	December 31, 2022
Beginning balance	$	3,028
Initial fair value of make-whole provision in convertible notes		—
Initial fair value of change in control provision in convertible notes		—
Change in fair value of convertible note derivatives		(839	)
Ending balance	$	2,189

The fair value of the embedded derivatives in our convertible notes that were classified as Level 3 in the table above were estimated using a with and without approach on a lattice model framework with significant inputs that are not observable in the market and thus represent a Level 3 fair value measurement as defined in ASC 820. The significant inputs in the Level 3 measurement not supported by market activity include the probability and timing assessments of expected future change of control events, the volatility of our share price and the discount rate used to present value future cash payments under the convertible debt obligation. The development and determination of the unobservable inputs for Level 3 fair value measurements and the fair value calculations are the responsibility of the Company’s chief financial officer and are approved by the chief executive officer.

The fair value of the embedded derivatives in our convertible notes as of December 31, 2022 and June 30, 2022 were valued with the following assumptions:

	December 31, 2022			June 30, 2022
Stock Price	$	2.82		$	3.70
Volatility of stock price		70	%		70	%
Risk free interest rate		4.05	%		3.01	%
Debt yield		39.4	%		41.5	%
Remaining term (years)		4.5			5.0

Note 18. Subsequent Events

Acquisition of Grinding & Dicing Services, Inc.

On January 1, 2023 (the “Closing Date”), Akoustis Technologies, Inc. (the “Company”) and its wholly-owned subsidiary, Akoustis, Inc. (the “Purchaser”), entered into a Stock Purchase Agreement (the “Purchase Agreement”) with Grinding & Dicing Services, Inc. (“GDSI”) and the stockholders of GDSI (the “Sellers”). Pursuant to the Purchase Agreement, the Purchaser acquired all of the outstanding capital stock of GDSI (such acquisition, the “Transaction”).

The total consideration paid to the Sellers at closing of the Transaction consisted of $14.0 million in cash, approximately $1.7 million of shares of the Company’s common stock and a secured promissory note in the original principal amount of $4.0 million issued by the Purchaser to the Sellers’ representative (the “Note”). The Note does not bear interest, is subject to partial prepayment (reduction of the outstanding principal amount down to $1.3 million) on the second anniversary of the Closing Date, and is payable in full on the third anniversary of the Closing Date. The Purchaser can reduce the principal amount of the Note (i) to satisfy certain post-closing adjustments to the Transaction purchase price, (ii) to satisfy the Sellers’ indemnification obligations under the Purchase Agreement, and (iii) if GDSI’s President is terminated for cause or due to disability or resigns without good reason prior to maturity. The Note is secured by certain of the Purchaser’s and GDSI’s assets. In the event of certain events of default, including failure to pay amounts due under the Note and certain bankruptcy events, the outstanding principal amount of the Note will become immediately due.

Underwritten Offering of Common Stock

On January 19, 2023, the Company closed an underwritten public offering of 12,545,454 shares of its common stock at a price to the public of $2.75 per share pursuant to an underwriting agreement with B. Riley Securities, Inc., as representative of the several underwriters named therein. The shares of common stock issued at closing included 1,636,363 shares issued pursuant to the underwriters’ over-allotment option, which was exercised in full. Net proceeds from the offering were approximately $32.0 million. Certain of the Company’s directors and officers participated in the offering by purchasing shares on the same terms and conditions as other investors.

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

References in this report to “Akoustis,” the “Company,” “we,” “us,” and “our” refer to Akoustis Technologies, Inc. and its consolidated subsidiaries.

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, our inability to obtain adequate financing and sustain our status as a going concern; our limited operating history; our inability to generate revenues or achieve profitability; the results of our research and development (“R&D”) activities; our inability to achieve acceptance of our products in the market; the impact of the COVID-19 pandemic on our operations, financial condition and the worldwide economy, including its impact on our ability to access the capital markets; increases in prices for raw materials, labor, and fuel caused by rising inflation; general economic conditions, including upturns and downturns in the industry; shortages in supplies needed to manufacture our products, or needed by our customers to manufacture devices incorporating our products; our limited number of patents; failure to obtain, maintain, and enforce our intellectual property rights; claims of infringement, misappropriation or misuse of third party intellectual property, including the lawsuit filed by Qorvo, Inc. in October 2021, that, regardless of merit, could result in significant expense and loss of our intellectual property rights; our inability to attract and retain qualified personnel; the outcome of current and any future litigation; our inability to attract and retain qualified personnel; our reliance on third parties to complete certain processes in connection with the manufacture of our products; product quality and defects; existing or increased competition; our ability to market and sell our products; our inability to successfully manufacture, market and sell products based on our technologies; our ability to meet the required specifications of customers and achieve qualification of our products for commercial manufacturing in a timely manner; our inability to successfully scale our New York wafer fabrication facility and related operations while maintaining quality control and assurance and avoiding delays in output; contracting with customers and other parties with greater bargaining power and agreeing to terms and conditions that may adversely affect our business; the possibility that the anticipated benefits from our business acquisitions (including the acquisition of RFM Integrated Device, Inc. (“RFMi”) and Grinding & Dicing Services, Inc. (“GDSI”)) will not be realized in full or at all or may take longer to realize than expected; the possibility that costs or difficulties related to the integration of acquired businesses’ (including ~~RFMi’s)~~RFMi’s and GDSI’s) operations will be greater than expected and the possibility of disruptions to our business during integration efforts and strain on management time and resources; risks related to doing business in foreign countries, including China; any security breaches, cyber-attacks or other disruptions compromising our proprietary information and exposing us to liability; our failure to innovate or adapt to new or emerging technologies; our failure to comply with regulatory requirements; results of any arbitration or litigation that may arise; stock volatility and illiquidity; our failure to implement our business plans or strategies; ~~and~~ our failure to maintain effective internal control over financial ~~reporting.~~reporting; our failure to obtain or maintain a Trusted Foundry accreditation or our New York fabrication facility; and shortages in supplies needed to manufacture our products, or needed by our customers to manufacture devices incorporating our products.

These and other risks and uncertainties, which are described in more detail in Part II, Item 1A. “Risk Factors” of this report and in our Annual Report on Form 10-K, filed with the SEC on ~~August 21, 2021~~September 12, 2022 (the ~~“2021~~“2022 Annual Report”), could cause our actual results to differ materially from those expressed or implied by the forward-looking statements in this report. Readers are cautioned not to place undue reliance on forward-looking statements because of the risks and uncertainties related to them. Except as may be required by law, we do not undertake any obligation to update the forward-looking statements contained in this report to reflect any new information or future events or circumstances or otherwise.

Overview

Akoustis® is an emerging commercial product company focused on developing, designing, and manufacturing innovative RF filter solutions for the wireless industry, including for products such as smartphones and tablets, network infrastructure equipment, Wi-Fi Customer Premise Equipment (“CPE”) and defense applications. Filters are critical in selecting and rejecting signals, and their performance enables differentiation in the modules defining the RF front-end (“RFFE”). Located between the device’s antenna and its digital backend, the RFFE is the circuitry that performs the analog signal processing and contains components such as amplifiers, filters and switches. We have developed a proprietary microelectromechanical system (“MEMS”) based bulk acoustic wave (“BAW”) technology and a unique manufacturing process flow, called “XBAW^®”, for our filters produced for use in RFFE modules. Our XBAW^®filters incorporate optimized high purity piezoelectric materials for high power, high frequency and wide bandwidth operation. We are developing RF filters for 5G, Wi-Fi and defense bands using our proprietary resonator device models and product design kits (PDKs). As we qualify our RF filter products, we are engaging with target customers to evaluate our filter solutions. Our initial designs target UHB, sub 7 GHz 5G, Wi-Fi and defense bands. We expect our filter solutions will address problems (such as loss, bandwidth, power handling, and isolation) created by the growing number of frequency bands in the RFFE of mobile devices, infrastructure and premise equipment to support 5G, and Wi-Fi. We have prototyped, sampled and begun commercial shipment of our single-band low loss BAW filter designs for 5G frequency bands and 5 GHz and 6 GHz Wi-Fi bands which are suited to competitive BAW solutions and historically cannot be addressed with low-band, lower power handling surface acoustic wave (“SAW”) technology. Additionally, through our ~~majority-owned~~wholly owned subsidiary, RFMi, which we acquired majority ownership in October 2021 and full ownership in April 2022, we operate a fabless business whereby we make sales of complementary SAW resonators, RF filters, crystal ~~(Xtal)~~(“Xtal”) resonators and oscillators, and ceramic ~~products.~~products—addressing opportunities in multiple end markets, such as automotive and industrial applications. We also offer back-end semiconductor supply chain services through our wholly owned subsidiary, Grinding & Dicing Services, Inc., which we acquired in January 2023.

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

Technology. Our device technology is based upon bulk-mode acoustic resonance, which we believe is superior to surface-mode resonance for high-band and ultra-high- band (“UHB”) applications that include 4G/LTE, 5G, Wi-Fi, and defense applications. Although some of our target customers utilize or manufacture the RFFE module, they may lack access to critical UHB filter technology that we produce, which is necessary to compete in high frequency applications.

Manufacturing. We currently manufacture Akoustis’ high-performance RF filter circuits, using our first generation XBAW^® wafer process, in our ~~120,000-square~~125,000-square foot ~~wafer- manufacturing~~wafer-manufacturing facility located in Canandaigua, New York (the “NY Facility”), which we acquired in June 2017. ~~RFMi~~Our SAW-based RF filter products are manufactured by a third party and sold either directly ~~to consumers~~ or ~~sold and shipped with Akoustis products.~~through a sales distributor.

Intellectual Property. As of January ~~17, 2022,~~27, 2023, our IP portfolio included 5680 patents, including a blocking patent that we have licensed from Cornell University. Additionally, as of January ~~17, 2022,~~27, 2023, we have 93127 pending patent applications. These patents cover our XBAW^® RF filter technology from raw materials through the system architectures.

By designing, manufacturing, and marketing our RF filter products to mobile phone OEMs, defense OEMs, network infrastructure OEMs, and Wi-Fi CPE OEMs, we seek to enable broader competition among the front-end module manufacturers.

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

We 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, foundry and engineering services, and sales of debt and equity securities. The Company has incurred losses, 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.

To succeed across our combined portfolio of Akoustis, XBAW, and RFMi products, we must convince customers in a wide range of industries including mobile phone OEMs, RFFE module manufacturers, network infrastructure OEMs, ~~Wi-Fi~~WiFi CPE OEMs, medical device makers, automotive and defense customers to use our ~~XBAW~~^®~~filter technology~~products in their systems and modules. ~~However,~~For example, since there are two dominant BAW filter suppliers in the industry that have high-band technology, and both utilize such technology as a competitive advantage at the module level, we expect customers that lack access to high-band filter technology will be open to engage with our ~~pure-play filter company.~~company for XBAW filters.

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

Business Environment and Current Trends

Impact of COVID-19 on our Business

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

These actions and the global health crisis caused by COVID-19 have negatively impacted business activity across the globe. We have observed declining demand and price reductions in the electronics industry as business and consumer activity has decelerated. Additionally, COVID-19 has contributed to some of the delays we have observed ~~delays~~ in certain suppliers’ shipment of materials necessary for us to manufacture our products and in certain vendors’ ability to deliver equipment for installation at our facilities. When COVID-19 is demonstrably contained, we anticipate ~~a rebound in economic activity, depending~~that its effects on ~~the rate, pace, and effectiveness of the containment efforts deployed by various national, state, and local governments;~~global commerce will subside; however, the timing and extent of ~~any such rebound~~this is uncertain.

We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in the best interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is not clear what the ultimate effects any such alterations or modifications may have on our business, including the effects on our customers, employees, and prospects, or on our financial results for the remainder of fiscal year ~~2022~~2023 or beyond.

Semiconductor Shortages and Supply Chain Issues

The global silicon semiconductor industry is experiencing a shortage in supply and difficulties in ability to meet customer demand. This shortage has led to an increase in lead-times of production of semiconductor chips and components. As our business depends in significant part upon manufacturers of products requiring semiconductors, as well as the current and anticipated production of these products, we have sought to manage the impact of supply shortages though carefully maintaining and increasing key inventory levels. In some cases, we have incurred higher costs to secure available inventory, or have extended our purchase commitments or placed non-cancellable orders with suppliers, which introduces inventory risk if our forecasts and assumptions are inaccurate. We believe the global supply chain challenges and their adverse impact on our business and financial results will persist through calendar year 2023. We expect these constrained supply conditions to increase our costs of goods sold and increase uncertainty with respect to the timing of delivery of specific customer orders.

Effects of Inflation and Recession Fears

Inflation and other macroeconomic pressures in the U.S. and the global economy such as rising interest rates, energy prices and recession fears are creating a complex and challenging business environment. Inflationary pressures, including increased costs of labor and goods included in our supply chain, have negatively impacted our revenue, operating margins and net income and may continue to do so through the remainder of the fiscal year. Additionally, we have observed certain customers reduce or defer orders, citing negative economic forecasts.

Recent Legislation

On August 9, 2022, President Biden signed into law the CHIPS and Science Act of 2022, which appropriates funds to support the construction of semiconductor plants in the United States and advancement of United States semiconductor research and development. The Company is evaluating the provisions of the new law and its potential impact to the Company.

Recent Developments

On October ~~13, 2021, Akoustis~~4, 2022, we announced that itwe had ~~received a design win and increased volume shipments of its 5.5 GHz and 6.5 GHz XBAW™ filters to a tier-1~~started sampling two new Wi-Fi 6E ~~original equipment manufacturer.~~and Wi-Fi 7 filter solutions.

On October ~~14, 2021, Akoustis~~6, 2022, we announced that ~~it was entering~~we had become a charter member of the ~~timing control market with ultra-high frequency XBAW™ resonators.~~Semiconductor Industry Association.

On October ~~18, 2021, Akoustis~~26, 2022, we announced that ~~it was acquiring a majority position in RFMi, a fabless supplier of acoustic wave resonators and filters.~~we had received three new Wi-Fi 6E design wins for carrier-class applications.

On November ~~3, 2021, Akoustis~~21, 2022, we announced that itwe had ~~engaged with a third mobile customer, a RF front-end module maker.~~joined the Wi-Fi NOW industry association as an official filter partner.

On ~~November 16, 2021, Akoustis~~December 21, 2022, we announced ~~that it had received a~~the completion of qualification of our internally developed wafer-level-packaging (WLP) technology for the 5G mobile, Wi-Fi, 6Etiming control, and other markets.

On December 28, 2022, we announced our first design win ~~for a MU-MIMO gateway product~~in 5G mobile from ~~a new~~Tier-1 RF component company customer.

On ~~December 16, 2021, Akoustis~~January 4, 2023, we announced the acquisition of GDSI, a U.S.-based, trusted supplier of semiconductor back-end supply chain services.

On January 18, 2023, we announced that itwe had received ~~a purchase~~our first high-volume 5G mobile XBAW filter order from a ~~new tier-1 5G mobile customer.~~Tier-1 RF component company.

On January 25, 2023, we announced the closing of a public offering of common stock and full exercise of the underwriters’ option to purchase additional shares.

Critical Accounting Policies

There have been no material changes to our critical accounting policies and estimates from the information provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our ~~2021~~2022 Annual Report.

Results of Operations

Three Months Ended December 31, ~~2021~~2022 and ~~2020~~2021

Revenue

The Company recorded revenue of $5.9 million for the three months ended December 31, 2022 as compared to $3.7 million for the three months ended December 31, ~~2021 as compared to $1.3 million for the three months ended December 31, 2020.~~2021. The increase of ~~$2.4~~$2.2 million, or 60%, was primarily due to an increase in RFfoundry fabrication service revenue by $1.5 million or 420% as well as an increase in filter product revenue ~~of $2.8~~by $0.7 million or ~~633%, which includes revenue from sales of RFMi products. Partially offsetting this increase was a decrease in non-recurring engineering services of $0.4 million.~~20%.

Cost of Revenue

Cost of revenue includes direct labor, material, net realizable value (NRV) adjustments, and facility costs primarily associated with foundry services revenue, manufacturing of filter products and engineering services. The Company recorded cost of revenue of $5.3 million for the three months ended December 31, 2022 as compared to $4.5 million for the three months ended December 31, ~~2021 as compared to $2.6 million for the three months ended December 31, 2020.~~2021. The ~~$1.9~~$0.8 million increase is primarily due to costs associated with ~~RF product revenue~~foundry fabrication services, which increased by ~~$2.0 million, which includes cost of revenue from sales of RFMi products.~~$0.7 million.

Research and Development Expenses

R&D expenses were $7.6 million for the three months ended December 31, 2022, as compared to $9.2 million for the three months ended December 31, 2021, ~~and were $3.6~~a decrease of $1.6 million or ~~65.1% higher than the prior year amount for the same period of $5.6 million. Personnel~~17.4%. The decrease was driven by lower personnel costs, including stock-based compensation, which were ~~$5.3~~$3.8 million compared to ~~$3.0~~$5.3 million in the prior year period, ~~an increase~~a decrease of ~~$2.3~~$1.5 million or ~~77.4%~~28.3%. ~~Facility costs of $2.2 million primarily associated with the NY Facility were $1.3 million higher than the prior period.~~

General and Administrative Expense

General and administrative (“G&A”) expenses include salaries and wages for executive and administrative staff, stock-based compensation, professional fees, insurance costs and other general costs associated with the administration of our business. G&A expenses for the three months ended December 31, ~~2021~~2022 were ~~$5.1~~$5.8 million, which is an increase of ~~$1.8~~$0.7 million compared to the $5.1 million for the three months ended December 31, ~~2020.~~2021. Year-over-year changes within G&A expenses include ~~an increase~~a decrease in employee compensation (including stock-based compensation) of ~~$0.7 million as well as increased~~$0.5 million. This decrease was offset by an increase in general expenses of ~~$1.0~~$1.2 million, primarily professional ~~fees.~~fees and intangible amortization.

Other (Expense)/Income

Other income for the three months ended December 31, ~~2021~~2022 was $1.7 million, compared to other income of $28 thousand ~~which was comprised of interest income. Other expenses~~ for the three months ended December 31, ~~2020 were $1.7 million, consisting~~2021. The income increase of $1.7 million was comprised of ~~debt discount amortization~~interest expense of $0.7 million offset by a gain on the value of contingent consideration of $1.6 million and ~~interest expense.~~a gain on the value of derivative liabilities of $0.8 million.

Net Loss

The Company recorded a net loss of $11.2 million for the three months ended December 31, 2022, compared to a net loss of $15.2 million for the three months ended December 31, ~~2021, compared to a net loss of $11.9 million for the three months ended December 31, 2020.~~2021. The period-over-period ~~incremental loss~~change of ~~$3.3~~$4.0 million, or ~~28.0%~~26.3%, was primarily driven by an increase in ~~cost of~~ revenue of ~~$1.9~~$2.2 million as well as a decrease in R&D expenses of $1.5 million and an increase in other income of $1.7 million. These expense decreases were partially offset by an increase in G&A expenses ~~and R&D expenses~~ of ~~$5.4 million. These expense increases were partially offset by a revenue increase of $2.4~~$0.5 million and ~~a decrease~~an increase in ~~other expenses~~cost of ~~$1.7~~revenue of $0.7 million.

Six Months Ended December 31, ~~2021~~2022 and ~~2020~~2021

Revenue

The Company recorded revenue of $11.4 million for the six months ended December 31, 2022 as compared to $5.5 million for the six months ended December 31, ~~2021 as compared to $1.9 million for the six months ended December 31, 2020.~~2021. The increase of ~~$3.6~~$5.9 million was primarily due to an increase in RF filter product revenue of ~~$3.7~~$3.9 million or ~~371%~~81%, which includes revenue from sales of RFMi products. In addition, revenue from foundry fabrication services increased by $2.0 million or 264%.

Cost of Revenue

Cost of revenue includes direct labor, material, net realizable value (NRV) adjustments, and facility costs primarily associated with foundry services revenue, manufacturing of filter products and engineering services. The Company recorded cost of revenue of $11.7 million for the six months ended December 31, 2022 as compared to $7.5 million for the six months ended December 31, ~~2021 as compared to $4.3 million for the six months ended December 31, 2020.~~2021. The ~~$3.2~~$4.2 million increase is primarily due to costs associated with RF product revenue which increased by ~~$2.7~~$3.2 million, which includes cost of revenue from sales of RFMi products. In addition, ~~non-recurring engineering~~ costs related to foundry fabrication services increased by ~~$0.5 million.~~$1.1 million or 113%.

Research and Development Expenses

R&D expenses were $17.7 million for the six months ended December 31, 2022, as compared to $17.2 million for the six months ended December 31, 2021, ~~and were $5.3~~an increase of $0.5 million or ~~43.7% higher than the prior year amount for the same period of $11.9 million.~~2.9%. Personnel costs, including stock-based compensation, were ~~$9.5~~$9.1 million compared to ~~$6.4~~$9.5 million in the prior year period, ~~an increase~~a decrease of ~~$3.1~~$0.4 million or ~~47.8%~~4.2%. ~~Facility~~R&D material costs ~~of $4.0~~were $4.7 million, ~~primarily associated with the NY Facility were $1.8 million higher than the prior period. Material costs of $3.3 million were $0.4 million~~26.6% higher than the prior period.

General and Administrative Expense

~~General and administrative (“~~G~~&A”)~~&A expenses include salaries and wages for executive and administrative staff, stock-based compensation, professional fees, insurance costs and other general costs associated with the administration of our business. G&A expenses for the six months ended December 31, ~~2021~~2022 were ~~$9.0~~$12.8 million, which is an increase of ~~$2.7~~$3.8 million compared to the $9.0 million for the six months ended December ~~2020.~~31, 2021. Year-over-year changes within G&A expenses include an increase in ~~employee compensation (including stock-based compensation) of $1.3 million as well as increased~~ general expenses of ~~$1.4~~$3.8 million, primarily professional ~~fees.~~fees and intangible amortization.

Other (Expense)/Income

Other income for the six months ended December 31, ~~2021~~2022 was $0.6 million, compared to other income of $62 thousand ~~which was comprised of interest income. Other expenses~~ for the six months ended December 31, ~~2020 were $3.3~~2021. The income increase of $0.5 million ~~consisting~~was comprised of ~~$3.1million of debt discount amortization and~~an increase in interest expense of $1.5 million offset by a gain on the value of contingent consideration of $1.2 million and a ~~loss~~gain on the value of derivative ~~liability valuation~~liabilities of ~~$0.2~~$0.8 million.

Net Loss

The Company recorded a net loss of $30.2 million for the six months ended December 31, 2022, compared to a net loss of $28.1 million for the six months ended December 31, ~~2021, compared to a net loss of $23.9 million for the six months ended December 31, 2020.~~2021. The period-over-period ~~incremental loss~~increase of ~~$4.2~~$2.1 million, or ~~17.7%~~14%, was primarily driven by an increase in cost of revenue of ~~$3.2~~$4.3 million, an increase in G&A expenses and R&D expenses of ~~$8.0~~$4.2 million. These expense increases were partially offset by ~~a revenue~~an increase in other income of ~~$3.6~~$0.5 million and ~~a decrease~~an increase in ~~other expenses~~revenue of ~~$3.3~~$5.9 million.

Liquidity and Capital Resources

~~Financing Activities~~Overview

~~During~~The Company’s short-term and long-term liquidity requirements primarily arise from funding (i) research and development expenses, (ii) G&A expenses including salaries, bonuses, commissions and stock-based compensation, (iii) working capital requirements, (iv) business acquisitions and investments we may make from time to time, including potential performance based payments related to our acquisition of RFMi, and a note payable issued in connection with our acquisition of GDSI, and (v)interest and principal payments related to our $44.0 million aggregate principal amount of outstanding convertible notes. Additionally, in the ~~six months ended December 31, 2021,~~near-term, the Company ~~sold a total~~makes capital expenditures in connection with the expansion of ~~2,468,477 shares~~the capacity of its manufacturing facility in Canandaigua, New York.

The Company has incurred losses and negative cash flow from operations since inception. Our operations thus far have been funded primarily with sales of equity and debt securities, as well as contract research and government grants, foundry services and engineering services. We expect our operating expenditures to continue to increase to support future growth of our manufacturing capabilities and expansion of our product offerings, as well as an increase in research and development and headcount costs to support this growth. We believe we currently have sufficient resources to fund operations and planned investments for at least the next twelve months. However, until we are able to generate sufficient cash flow from operations to achieve and maintain profitability and meet our obligations as they come due, we may need to raise additional capital to support our business. In June 2022, we completed an offering of convertible notes resulting in net proceeds to the Company of $43.7 million. In January 2023, we completed a public offering of our common stock ~~at a price to the public of an average of $7.70 per share under the ATM Equity Offering~~^SM~~Sales Agreement with BofA Securities, Inc. and Piper Sandler & Co., as amended on February 19, 2021 (the “Sales Agreement”) for aggregate gross proceeds of~~raising $32.0 million in net proceeds. Also in January 2023, approximately ~~$19.1~~$14 million ~~before deducting compensation~~in cash was paid to the sellers in the GDSI acquisition as mentioned in Footnote 18. Additionally, the Company estimates that approximately $5.0 million of additional cash is needed to complete construction in progress assets that are currently not in service. We also have access to an at-the-market offering program pursuant to which we may sell up to $50 million of Common Stock. As of the date of this Quarterly Report, the Company had sold $2.0 million of Common Stock under such at-the-market offering program and previously announced that it was suspending sales ~~agents and~~under the at-the-market offering program. If, in the future, the Company determines to resume sales under the at-the-market offering program, it intends to notify investors by the filing of a Current Report on Form 8-K or other ~~offering expenses of approximately $0.3 million.~~public announcement.

Balance Sheet and Working Capital

The Company had ~~$67.5~~$46.6 million of cash and cash equivalents on hand as of December 31, ~~2021,~~2022, which reflects a decrease of ~~$20.9~~$33.9 million compared to ~~$88.3~~$80.5 million as of June 30, ~~2021.~~2022. The decrease is primarily due to cash used in operations of ~~$23.5~~$26.1 million and cash used for investing activities of ~~$16.6 million. These cash uses were partially offset by cash provided by financing activities of $19.3~~$8.1 million. The Company estimates that cash on hand will be sufficient to fund its operations, including current capital expense commitments, beyond the next twelve months from the date of filing of this Form 10-Q. However, the Company has historically incurred recurring operating losses and will continue to do so until it generates sufficient revenues from operations; as a result, we may need to obtain additional capital through the sale of additional equity securities, debt, or otherwise, to fund operations past that date. There is no assurance that the Company’s projections and estimates are accurate. The Company is actively managing and controlling ~~the Company’s~~its cash outflows to mitigate liquidity risks.

December 31, ~~2021~~2022 compared to June 30, ~~2021~~2022

As of December 31, ~~2021,~~2022, the Company had current assets of ~~$75.4~~$60.3 million, made up primarily of cash on hand of ~~$67.5~~$46.6 million. As of June 30, ~~2021,~~2022, current assets were ~~$93.2~~$91.7 million comprised primarily of cash on hand of ~~$88.3~~$80.5 million.

Property, Plant and Equipment was ~~$40.2~~$54.4 million as of December 31, ~~2021~~2022 as compared to a balance of ~~$30.7~~$51.2 million as of June 30, ~~2021.~~2022.

Total assets as of December 31, ~~2021~~2022 and June 30, ~~2021~~2022 were ~~$134.1~~$132.3 million and ~~$125.0~~$161.3 million, respectively.

Current liabilities as of December 31, ~~2021~~2022 and June 30, ~~2021~~2022 were ~~$7.1~~$8.8 million and ~~$7.3~~$12.7 million, respectively.

Long-term liabilities ~~totalled $3.3~~totaled $44.4 million as of December 31, ~~2021,~~2022, compared to ~~$0.3~~$45.3 million as of June 30, ~~2021. The increase is primarily due to the contingent liability and deferred tax liability which are discussed in Note 7 – Business Acquisition.~~2022.

Equity was ~~$123.7~~$79.1 million as of December 31, ~~2021,~~2022, compared to ~~$117.4~~$103.4 million as of June 30, ~~2021, an increase~~2022, a decrease of ~~$6.3~~$24.3 million, or ~~5.3%~~23.5%. This ~~increase~~decrease was primarily due to the net loss for the six months ended December 31, 2022 of $30.2 million which was partially offset by the increase in additional paid-in-capital (“APIC”) of ~~$26.8 million for the six months ended December 31, 2021 which was offset by the net loss for the three months ended December 31, 2021 of $28.1~~$5.9 million. The increase in APIC was primarily due to common stock issued for ~~cash of $18.8 million, stock-based compensation of $5.2 million.~~services.

Cash Flow Analysis

Operating activities used cash of ~~$23.5~~$26.1 million during the six months ended December 31, ~~2021~~2022 and ~~$16.2~~$23.5 million during the comparative period ended December 31, ~~2020.~~2021. The ~~$7.3~~$2.6 million ~~period- over-period~~period-over-period increase in cash used was attributable to higher ~~operating~~general and administrative expenses associated ~~with the ramp of development~~legal and ~~commercialization activities (primarily R&D and production personnel and material costs).~~professional fees.

Investing activities used cash of ~~$16.6~~$8.1 million for the six months ended December 31, ~~2021~~2022 compared to ~~$4.5~~$16.6 million for the comparative period ended December 31, ~~2020.~~2021. The ~~$12.1~~decrease of $8.5 million ~~period-over-period increase~~ was primarily due to ~~increased~~a $4.8 million decrease in purchases of ~~production~~capital equipment ~~of $8.4~~as well as a $4.1 million ~~and net~~decrease in cash paid for ~~acquisitions~~investment in subsidiary related to the purchase of ~~$4.1 million. On October 15, 2021,~~RFMi during the ~~Company acquired a 51% ownership interest in RFMi from Tai-Saw Technology Co., Ltd. (“TST”) in exchange for $6.0 million in cash and approximately $2.5 million payable in common stock~~second quarter of the Company. The Company has the option to acquire the remaining 49% ownership interest in RFMi from TST on or before June 30, 2022, for an additional $3.5 million in cash and approximately $4.0 million in common stock of the Company. Additionally, earn-out payments aggregating up to $3.0 million payable in cash and/or shares of common stock of the Company may be payable to TST based on the future operating results of RFMi.fiscal year 2022.

Financing activities ~~increased cash~~decreased by ~~$19.3~~$19 million ~~during~~compared to the six months ended December 31, 2021 primarily due to the decrease in proceeds from issuance of common ~~stock pursuant to the Sales Agreement. In addition, stock option grants, warrant exercises and the employee stock purchase plan resulted in cash proceeds of $0.5 million.~~stock.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES

Management’s Evaluation of Disclosure Controls and Procedures

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

As of December 31, ~~2021,~~2022, 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 any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our Chief Executive Officer and ~~Interim~~ Chief Financial Officer have concluded based upon the evaluation described above that, as of December 31, ~~2021,~~2022, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

During the quarter ended December 31, ~~2021,~~2022, there were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15(d)-15(f) promulgated under the Securities Exchange Act of 1934, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

Except for the matter described under “Litigation, Claims and Assessments” in ~~“Note-12~~“Note 14. – Commitments and Contingencies” of the condensed consolidated financial statements in this Item 1 of Part I of this Quarterly Report on Form 10-Q, which description is incorporated in this “Item 1. Legal Proceedings” by reference, we are currently not aware of any material pending legal proceedings to which we are a party or of which any of our property is the subject, nor are we aware of any such proceedings that are contemplated by any governmental authority.

ITEM 1A. RISK FACTORS.

In addition to the ~~risk factors 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, ~~2021.~~2022. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by the forward-looking statements contained in this report. ~~Except as set forth below, there~~There have been no material changes to the risk factors described in Part I, Item 1A, “Risk Factors,” included in our ~~2021~~2022 Annual Report.

We are, and may become, subject to claims of infringement, misappropriation or misuse of third party intellectual property that, regardless of merit, could result in significant expense and loss of our intellectual property rights.

The semiconductor industry is characterized by the vigorous pursuit and protection of intellectual property rights. We have not undertaken a comprehensive review of the rights of third parties in our field. From time to time, we may be named in lawsuits or receive notices or inquiries from third parties regarding our products or the manner in which we conduct our business suggesting that we may be infringing, misappropriating or otherwise misusing patent, copyright, trademark, trade secret and other intellectual property rights. Any claims that our technology infringes, misappropriates or otherwise misuses the rights of third parties, regardless of their merit or resolution, could be expensive to litigate or settle and could divert the efforts and attention of our management and technical personnel, cause significant delays and materially disrupt the conduct of our business. We may not prevail in such proceedings given the complex technical issues and inherent uncertainties in intellectual property litigation. If such proceedings result in an adverse outcome, we could be required to:

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~~pay substantial damages, including treble damages if we were held to have willfully infringed;~~

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~~cease the manufacture, offering for sale or sale of the infringing technology or processes;~~

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~~expend significant resources to develop non-infringing technology or processes;~~

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~~obtain a license from a third party, which may not be available on commercially reasonable terms, or may not be available at all; or~~

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~~lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property against others.~~

On October 4, 2021, the Company was named as a defendant in a complaint filed by Qorvo, Inc. in the United States District Court for the District of Delaware alleging, among other things, patent infringement, false advertising, false patent marking, and unfair competition. The plaintiff seeks an injunction enjoining us from the alleged infringement and damages, including punitive and statutory enhanced damages, in an unspecified amount. We believe this lawsuit is without merit and intend to defend against it vigorously. However, we can provide no assurance as to the outcome of such dispute, and such action may result in judgments against us for an injunction, significant damages or other relief, such as future royalty payments to Qorvo, Inc. or restrictions on certain of our activities. Resolution of such matter may be prolonged and costly, and the ultimate result or judgment is uncertain due to the inherent uncertainty in litigation and other proceedings. Even if ultimately settled or resolved in our favor, this and other possible future actions may result in significant expenses, diversion of management and technical personnel attention and disruptions and delays in our business and product development, and other collateral consequences, all of which could have a material adverse effect on our business, financial condition and results of operations. Any out-of-court settlement of this or other actions may also have an adverse effect on our business, financial condition and results of operations, including, but not limited to, substantial expenses, the payment of royalties, licensing or other fees payable to third parties, or restrictions on our ability to develop, manufacture and sell our products.

Defense of any intellectual property infringement claims against us, regardless of their merit, would involve substantial litigation expense and would be a significant diversion of resources from our business. In the event of the foregoing or another successful claim of infringement against us, we may have to pay substantial damages, obtain one or more licenses from third parties, limit our business to avoid the infringing activities, pay royalties and/or redesign our infringing technology or alter related formulations, processes, methods or other technologies, any or all of which may be impossible or require substantial time and monetary expenditure. The occurrence of any of the above events could prevent us from continuing to develop and commercialize our filters and our business could materially suffer.

In addition, our agreements with prospective customers and manufacturing partners may require us to indemnify such customers and manufacturing partners for third party intellectual property infringement claims. Pursuant to such agreements, we may be required to defend such customers and manufacturing partners against certain claims that could cause us to incur additional costs. While we endeavor to include as part of such indemnification obligations a provision permitting us to assume the defense of any indemnification claim, not all of our current agreements contain such a provision and we cannot provide any assurance that our future agreements will contain such a provision, which could result in increased exposure to us in the case of an indemnification claim.

~~We have recently engaged, and may in the future engage, in acquisitions that could disrupt our business, cause dilution to our shareholders and harm our financial condition and operating results.~~

In October 2021, we acquired a majority ownership position in RFM Integrated Device, Inc. (“RFMi”), with the right to purchase the remaining 49% on or before June 30, 2022. The consideration for the acquisition includes cash and common stock as well as possible earn-out payments that may be paid in cash or common stock based on its future trading price. We may in the future make additional acquisitions of, or investments in, companies that we believe have products or capabilities that are a strategic or commercial fit with our current business or otherwise offer opportunities for our company. In connection with these acquisitions or investments, we may:

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~~issue common stock or other forms of equity that would dilute our existing shareholders’ percentage of ownership,~~

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~~incur debt and assume liabilities, and~~

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~~incur amortization expenses related to intangible assets or incur large and immediate write-offs.~~

We may not be able to complete acquisitions on favorable terms, if at all. If we do complete an acquisition, such as of RFMi, we cannot assure you that it will ultimately strengthen our competitive position, that it will be viewed positively by customers, financial markets or investors or that we will otherwise realize the expected benefits of such an acquisition to the anticipated extent or at all. Furthermore, the acquisition of RFMi and any future acquisitions could pose numerous additional risks to our expected operations, including, but not limited to:

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~~problems integrating the purchased business, products or technologies,~~

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~~challenges in achieving strategic objectives, cost savings and other anticipated benefits,~~

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~~increases to our expenses,~~

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the assumption of significant liabilities, which may have been previously unknown or not discoverable through diligence, that exceed the limitations of any applicable indemnification provisions or the financial resources of any indemnifying party,

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~~inability to maintain relationships with prospective key customers, vendors and other business partners of the acquired businesses,~~

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~~diversion of management’s attention from its day-to-day responsibilities,~~

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~~difficulty in maintaining controls, procedures and policies during the transition and integration,~~

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~~entrance into marketplaces where we have no or limited prior experience and where competitors have stronger marketplace positions,~~

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~~potential loss of key employees, particularly those of the acquired entity, and~~

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~~historical financial information may not be representative or indicative of our results as a combined company.~~

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

Unregistered Sales of Equity Securities

Other than ~~as described below and~~ 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.

On November 12, 2021, the Company issued 262,533 shares of its common stock to Tai-Saw Technology Co. Ltd. as partial payment for its 51% ownership interest in RFMi. These shares of Company common stock were issued in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof as transactions by an issuer not involving any public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

~~Not applicable~~None

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)

3.4		Certificate of Amendment to the Certificate of Incorporation, 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		Certificate of Amendment to the Certificate of Incorporation, as filed with the Delaware Secretary of State on November 10, 2022 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 14, 2022)

3.6		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)

4.1*		Description of Common Stock of the Registrant Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

10.1*		Amendment to 2018 Stock Incentive Plan of Akoustis Technologies, Inc., adopted August 26, 2022

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*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document.

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*	Filed herewith

**	Furnished herewith
†	Management contract or compensatory plan or arrangement

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: ~~January 31, 2022~~February 7, 2023	Akoustis Technologies, Inc.

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

2927

iso4217:USD xbrli:shares

Consideration:
Cash paid	$	6,000
Common stock		2,297
Fair value of contingent consideration		1,082
Total consideration	$	9,379

Cash	$	1,921
Other tangible assets		1,346
Intangible assets		9,711
Goodwill		7,835
Liabilities assumed		(1,885	)
Deferred tax liability	$	(2,039	)
Total assets acquired	$	16,889
Noncontrolling interest		(7,510	)
Net assets acquired	$	9,379

	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life in Years
Goodwill	$	7,835	$	—		$	7,835		indefinite
Trademarks	$	1,569	$	(16	)	$	1,553		5
Developed Technology	$	1,847	$	(88	)	$	1,759		10
Customer Relationships	$	6,927	$	(72	)	$	6,855		7
Total	$	18,178	$	(176	)	$	18,002

2022	$	966
2023	$	1,519
2024	$	1,519
2025	$	1,519
2026	$	1,519
Thereafter	$	3,125
Total	$	10,167

	Six Months 12/31/2021			Six Months 12/31/2020
Customer 1		-			22	%
Customer 2		-			10	%
Customer 3		27	%		44	%
Customer 4		-			12	%

Three months ended	Avg price per share		Number of Shares		Gross Proceeds (in millions)		Offering Expenses (in millions)		Net Proceeds (in millions)
September 30, 2021	$	9.99		555,455	$	5.5	$	0.1	$	5.4
December 31, 2021	$	7.04		1,931,022	$	13.6	$	0.2	$	13.4
Total	$	7.70		2,486,477	$	19.1	$	0.3	$	18.8

	Foundry/ Fabrication Services			RF Product			Total
Three months ended December 31, 2021
Revenue with customers	$	384		$	3,288		$	3,672
Cost of revenue		377			4,172			4,549
Gross margin		7			(884	)		(877	)
Research and development		—			9,192			9,192
General and administrative		—			5,146			5,146
Income (Loss) from Operations	$	7			(15,222	)		(15,215	)

Three months ended December 31, 2020
Revenue with customers	$	670		$	638		$	1,308
Cost of revenue		350			2,252			2,602
Gross margin		320			(1,614	)		(1,294	)
Research and development		—			5,566			5,566
General and administrative		—			3,361			3,361
Income (Loss) from Operations	$	320			(10,567	)		(10,221	)

Six months ended December 31, 2021
Revenue with customers	$	796		$	4,744		$	5,540
Cost of revenue		947			6,504			7,451
Gross margin		(151	)		(1,760	)		(1,911	)
Research and development		—			17,166			17,166
General and administrative		—			9,022			9,022
Income (Loss) from Operations	$	(151	)		(27,948	)		(28,099	)

Six months ended December 31, 2020
Revenue with customers	$	727		$	1,217		$	1,944
Cost of revenue		403			3,848			4,251
Gross margin		324			(2,631	)		(2,307	)
Research and development		—			11,946			11,946
General and administrative		—			6,288			6,288
Income (Loss) from Operations	$	324			(20,865	)		(20,541	)

As of December 31, 2021
Accounts receivable	$	365		$	2,137		$	2,502

As of June 30, 2021
Accounts receivable	$	242		$	928		$	1,170

	December 31, 2021		December 31, 2020
Convertible Notes		—		4,960,800
Options		2,981,627		2,589,719
Warrants		158,759		359,570
Total		3,140,386		7,910,089