Going Concern and Liquidity |
9 Months Ended |
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Mar. 31, 2024 | |
Going Concern and Liquidity [Abstract] | |
Going Concern and Liquidity |
Note 2. Going Concern and Liquidity
The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of March 31, 2024, the Company had cash and cash equivalents of $15.2 million and working capital of $10.3 million. In the absence of additional liquidity, the Company anticipates that its existing cash resources, with a continued focus on cash conservation, is sufficient to fund its operations into the third quarter of fiscal 2025. There is no assurance that the Company’s projections and estimates are accurate. Furthermore, an adverse judgment against the Company in the trial with respect to Qorvo Inc. vs. Akoustis Technologies, Inc. DE Case 1:21-cv-01417-JPM, as described below under Note 14. Commitments and Contingencies (the “Delaware Trial”), would reduce the amount of time that the Company could continue operating with its current cash resources, and create an urgent need for additional liquidity or result in the Company’s curtailing or ceasing operations and seeking protection by filing a voluntary petition for relief under the Bankruptcy Code. These matters raise substantial doubt about the Company’s ability to continue as a going concern within one year from the date of this filing. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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, and commissions, (iii) working capital requirements, (iv) business acquisitions and investments it may make from time to time, and (v) interest and principal payments related to its $44.0 million aggregate principal amount of outstanding convertible notes and $4.0 million promissory note. Additionally, the Delaware Trial is currently in process. To the extent that the outcome of the trial includes judgments against the Company for significant damages or other relief, the Company’s liquidity will be additionally and severely constrained.
The Company has incurred losses and negative cash flow from operations since inception and is experiencing financial and operating challenges. Its operations thus far have been funded primarily with sales of equity and debt securities, as well as contract research and government grants, revenue with customers, foundry services and engineering services. In November 2023, the Company announced that it had undertaken significant expense reductions and cost-saving measures to reduce its operating cash flow burn. As a result of these cost-savings initiatives, the operating expenditures supporting the future growth of its manufacturing capabilities and expansion of our product offerings have decreased, along with decreases in research and development and headcount costs. Additionally, the Company estimates that approximately $0.7 million of additional cash is needed to complete construction in progress assets that are currently not in service, which construction has been paused as part of these cost-savings initiatives. The Company is actively managing and controlling its cash outflows to mitigate liquidity risks.
Until the Company is able to generate sufficient cash flow from operations to achieve and maintain profitability and meet obligations as they come due, the Company will need to raise significant additional capital to sustain its business through, among other means, public or private equity offerings (including sales of our common stock under our at-the-market equity offering program, described below), debt financings, real estate- or equipment-based financing arrangements, corporate collaborations and/or licensing arrangements.
In January 2024, the Company completed a public offering of its common stock raising $10.4 million in net proceeds. Additionally, the Company is re-activating its at-the-market equity offering program pursuant to that certain ATM Sales Agreement, dated May 2, 2022, with Oppenheimer & Co. Inc., Craig-Hallum Group LLC and Roth Capital Partners, LLC (the “ATM Sales Agreement”).
Except for the $48.0 million of common stock remaining available to be sold under its ATM Sales Agreement with 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. |