ALMU — FY2026 Annual Report Analysis

Spending more than doubled while revenue slipped 4%

Aeluma, Inc. (Nasdaq: ALMU) closed its fiscal year on June 30, 2026 and filed its annual report (Form 10-K) on September 16, 2026. The headline is a company that raised and spent aggressively against a revenue base that did not grow: revenue of $4.46 million, down 4% from $4.67 million, against total operating expenses of $14.65 million, up 115% from $6.81 million. The net loss widened from $3.02 million to $9.16 million.

Aeluma is a development-stage semiconductor company in Goleta, California. It grows compound semiconductor materials — such as indium gallium arsenide, which detects light at wavelengths silicon largely cannot — on the large silicon and gallium arsenide wafers used by mainstream chip factories. The commercial pitch is compound-semiconductor performance at silicon-scale manufacturing cost, aimed at AI data-center optical links, phone and AR/VR depth sensing, defense imaging, and quantum photonics. The company states plainly in its own filing that it "remains in the development stage" and has "not yet generated significant revenues from commercial product sales."

That framing matters for reading the numbers below. Essentially all of the revenue is funded research, not product sales: $4.28 million of the $4.46 million came from government contracts, with only $183 thousand from other products and services (down from $266 thousand). This is a research organization that bills the U.S. government, not yet a chip supplier with a book of commercial orders.

Takeaway: Aeluma ended the year with $56 million in cash and a fully funded multi-year runway, but it bought that runway with equity, not with business progress — revenue went backwards, the cost of delivering it rose 53%, and 59% of all revenue came from a single government customer. The balance sheet removed the financing risk; it did not answer the commercial question.

The cost of delivering revenue rose while revenue fell

The most informative line is not the net loss — it is cost of revenue, which rose 53%, from $1.88 million to $2.89 million, on 4% less revenue. Management attributes the increase to "material purchases to support the delivery of our products and services associated with revenue." In plain terms: Aeluma spent a third more on materials and direct delivery costs to produce slightly less billable output.

Gross margin — the share of revenue left after the direct costs of delivering it, before overheads — fell from 59.6% to 35.2%. For a company whose entire investment thesis rests on manufacturing compound semiconductors more cheaply than incumbents do, a 24-point margin decline on development-contract work is the single number a sceptical investor should press management on. It is not necessarily a red flag on the underlying technology: the mix of contracts can swing hard year to year at this scale, and a handful of hardware-heavy deliverables can dominate a $4 million revenue line. But the filing gives no contract-level breakdown that would let an outsider distinguish "unfavourable mix this year" from "our cost structure does not yet work."

Where the $7.8 million of extra spending went

Operating expenses (which in Aeluma's presentation include cost of revenue) rose $7.84 million. The split is revealing:

• R&D: +$3.37 million to $4.67 million (+260%). This is the spending you want to see from a company at this stage, and it now roughly matches revenue in size.
• G&A: +$3.46 million to $7.09 million (+95%). G&A is now the largest single expense line, at 1.6x revenue and 1.5x R&D.
• Cost of revenue: +$1.01 million to $2.89 million (+53%).

A large share of the increase is non-cash: stock-based compensation was $4.52 million, up from $1.89 million — the accounting charge for shares and options granted to employees, which reduces reported profit without consuming cash. That is why the $9.16 million net loss translated into only $3.27 million of actual cash used in operations. Headcount reached 27 employees (24 full-time) at year-end, all US-based, so the compensation build-out is real but small in absolute terms; the per-head equity cost is what is heavy.

Note also that other income swung by $1.91 million, from an $880 thousand expense to $1.03 million of income. None of this is operating progress: FY2025's charge was non-cash convertible-note and derivative accounting, while FY2026's income is interest earned on the offering proceeds. Interest income of $1.03 million was two-thirds the size of the company's entire gross profit. Strip the swing out and the year-over-year deterioration is worse than the net-loss line suggests — the operating loss widened 4.8x, versus a 3.0x widening in net loss.

One more distortion worth flagging: loss per share widened 126% while the net loss widened 203%. The gap is dilution working in the reported number's favour — the weighted average share count rose 34%, from 13.17 million to 17.67 million, spreading a much larger loss over many more shares.

The balance sheet: the year's real accomplishment

Aeluma finished the year with $56.0 million in cash and equivalents, against $15.7 million (including a certificate of deposit) a year earlier, and net working capital of $55.4 million versus $16.6 million. Total liabilities are $3.73 million, of which $1.84 million is a long-term office lease obligation. There is no debt.

All of that came from selling shares:

• September 19, 2025: underwritten public offering of 1,955,000 shares, $25.4 million gross / $23.4 million net.
• May–June 2026: 830,484 shares sold through a $50 million at-the-market program established March 20, 2026, $20.7 million gross / $20.1 million net, leaving $29.3 million of capacity.
• Warrant and option exercises added $812 thousand.

Shares outstanding rose from 15.86 million to 19.26 million, up 21.4%. Existing holders financed the runway through roughly a fifth of their ownership.

At FY2026's $3.27 million operating burn plus $646 thousand of equipment purchases, $56 million looks like a decade of runway. Treat that arithmetic with caution. FY2026's cash burn was flattered by the $4.52 million non-cash compensation charge and by collecting $622 thousand of receivables, and the expense base was still ramping through the year — the exit run-rate is higher than the full-year average. Even so, on any plausible doubling or tripling of burn, Aeluma is funded for several years without returning to the market. That is an unusually comfortable position for a company of this size and removes going-concern risk from the list of things to worry about.

Concentration: two customers, both government

Customer concentration got slightly better in form and remains severe in substance. In FY2026, 59% and 14% of revenue came from two customers; in FY2025, a single customer accounted for 71%. All of them are government agencies. At June 30, 2026, 100% of accounts receivable was owed by four customers.

During the year Aeluma signed six new government contracts — including with NASA, the State University of New York, and the Office of the Secretary of Defense — while continuing work for the U.S. Navy and DARPA, which the filing says "contributed significantly to our revenue during the year." Spreading the top customer's share from 71% to 59% is progress. But a business whose revenue is nearly entirely federal R&D funding carries appropriations risk, not just customer risk, and the 10-K explicitly names potential federal staffing and funding reductions as a threat to program timing.

On the commercial side, the filing's language is carefully limited: Aeluma "began receiving requests for price quotations and accepting initial commercial sales orders," which "have been relatively small and may not lead to production orders." It also announced wafer production and fabrication relationships with Tower Semiconductor and Sumitomo Chemical Advanced Technologies during the year — meaningful validation of the capital-light manufacturing model, since it means Aeluma does not need to build a fab, but not yet revenue.

The CHIPS Act letter of intent, and its dilution catch

Aeluma has signed a letter of intent for up to $30 million in funding under the CHIPS Act, administered by the U.S. Department of Commerce, to support development of its non-InP photonics manufacturing platform. Relative to a company with $4.5 million of revenue, that is transformative money.

Two conditions deserve emphasis. First, it is a letter of intent, not an award: it remains "subject to the completion of further due diligence, required approvals... and the parties' negotiation and execution of definitive award documents," with part paid up front and the rest tied to milestones. Second, and less widely understood, it is not free money in the usual grant sense — the filing states that on executing final award documents, Aeluma "would issue equity securities to the U.S. Department of Commerce with an aggregate value equal to the award amount." At the current equity base, a $30 million equity issuance would be a very large additional dilution event. The award is worth having; investors should model it as a financing, not a subsidy.

An unresolved internal-controls problem

Management concluded that disclosure controls and procedures were ineffective as of June 30, 2026, and identified a material weakness in internal control over financial reporting — an accounting-process deficiency severe enough that a material error could go undetected. The stated cause is "an insufficient number of personnel with appropriate technical accounting and SEC reporting expertise" for non-routine and complex transactions.

Aeluma hired a full-time CFO on August 4, 2025 and added accounting personnel in August 2026, and says remediation is in progress with no assurance of when it completes. This is a common finding at companies of this size, and the auditor issued a clean opinion on the financial statements themselves. It is still an open item, and it matters more than usual for a company that just took on a $50 million ATM program, a prospective federal equity award, and a rapidly growing expense base — exactly the "non-routine and complex transactions" the weakness concerns.

What to watch in FY2027

Management gave no revenue or earnings guidance, which is normal for a company at this stage. The filing does set out what it is trying to do: complete customer and manufacturing qualifications, deliver on existing contracts, increase manufacturing readiness, and "convert qualified customer engagements into recurring product revenue." A subsequent event points the same direction — on August 24, 2026 Aeluma expanded its Goleta lease by roughly 3,400 square feet, adding about $437 thousand of payments over 60 months, with the space available from October 1, 2026.

Our read on trajectory: FY2027 is a year in which the spending is already committed and the revenue is not. The expense base exiting FY2026 is running well above the full-year $14.6 million, R&D and G&A will annualize higher, and there is no sign in the filing of a contracted commercial order large enough to move a $4.5 million revenue line. Expect the loss to widen again in FY2027 even if commercial traction begins. The balance sheet can absorb that comfortably.

The specific things that would change the assessment, in order of importance: a signed, definitive CHIPS award (converting the letter of intent, with disclosed equity terms); any named commercial production order from the data-center-optics or consumer-sensing engagements, which would be the first evidence the platform sells outside federal R&D budgets; a recovery in gross margin back toward FY2025's 59%, which would indicate the FY2026 compression was contract mix rather than structural cost; and remediation of the material weakness. Absent the second of those, Aeluma remains a well-capitalized research company with a credible technology story and, as of this filing, no commercial revenue base to value it on.