8-K: Akoustis Completes XBAW Design Updates and Announces $10 Million Registered Direct Offering

Akoustis has finalized design updates to its XBAW manufacturing process to avoid patent infringement and announced a $10 million registered direct offering.

Summary

• Akoustis has completed design updates to its XBAW manufacturing process to remove features claimed by Qorvo in two U.S. patents.
• These updates have been incorporated into new and many earlier XBAW filter designs since the Fall of 2022.
• The company has released these design updates to manufacturing for all remaining filter products in production and distribution.
• Akoustis believes these design changes will not impact the performance or reliability of their filters.
• Akoustis also announced a registered direct offering of 50,000,000 shares at $0.20 per share, expected to close around May 24, 2024.
• The gross proceeds from the offering are expected to be approximately $10 million, before deducting fees and expenses.
• The company intends to use the net proceeds for working capital and to fund operations.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company faced a legal setback, it proactively addressed the issue and secured additional funding. However, the dilution of shares and the ongoing risks temper the positive aspects.

Positives

• Akoustis has proactively addressed the Qorvo patent infringement issue by updating its XBAW designs.
• The company has successfully implemented these design changes without impacting product performance or reliability.
• The $10 million capital raise will provide additional working capital and fund operations.
• The company is well-prepared to move forward despite the jury's verdict in the Qorvo litigation.

Negatives

• Akoustis was disappointed with the jury's verdict in the Qorvo litigation.
• The company had to undertake design changes to avoid patent infringement.
• The company is raising capital through a share offering which will dilute existing shareholders.

Risks

• The company faces risks related to its limited operating history and inability to generate revenues or achieve profitability.
• There is a risk that the company's common stock may not meet the minimum requirements for continued listing on the Nasdaq Capital Market.
• The company is subject to risks related to general economic conditions, competition, and the ability to scale its manufacturing facility.
• The company faces risks related to the outcome of current and future litigation.
• There are risks associated with the company's reliance on third parties and the quality of its products.
• The company is subject to risks related to its ability to innovate and adapt to new technologies.
• The company is subject to risks related to stock volatility and illiquidity.
• The company is subject to risks related to the potential for dilution from future stock issuances.

Future Outlook

Akoustis intends to use the net proceeds from the offering for working capital and to fund operations, and management does not expect the Qorvo verdict to affect its ability to market its product portfolio.

Management Comments

• Dave Aichele, Executive Vice President of Business Development, stated that Akoustis prepared well in advance for all potential outcomes of the Qorvo litigation.
• Management believes the design updates do not have any form, fit or function impact to the performance and reliability of the filters.
• Management does not expect the verdict will affect its ability to market its product portfolio to existing and future customers.

Industry Context

The announcement comes as Akoustis navigates a legal challenge from Qorvo, a competitor in the RF filter market, while also seeking to secure additional funding to support its operations and growth in the competitive semiconductor industry.

Comparison to Industry Standards

• The legal challenge from Qorvo is not uncommon in the semiconductor industry, where intellectual property is highly valued and often litigated.
• The capital raise is a common strategy for companies in the semiconductor industry to fund research and development, manufacturing expansion, and working capital needs.
• Companies like Qorvo, Skyworks, and Broadcom are major players in the RF filter market, and Akoustis is positioning itself as a competitor with its XBAW technology.
• The at-the-market offering is a common method for raising capital, but it can dilute existing shareholders.

Legal Proceedings

• Akoustis was involved in a patent infringement lawsuit with Qorvo, Inc., which resulted in a jury verdict against Akoustis.
• The company has updated its XBAW designs to remove any patented features claimed by Qorvo.

Stakeholder Impact

• Shareholders will experience dilution due to the new share offering.
• Customers will continue to receive Akoustis's products with updated designs.
• Employees will continue to work at the company with the new funding.
• The company's suppliers will continue to provide materials for manufacturing.

Next Steps

• The company will close the registered direct offering on or about May 24, 2024.
• Akoustis will continue to manufacture and distribute its updated XBAW filter products.
• The company will use the proceeds from the offering for working capital and to fund operations.

Key Dates

Keywords

XBAW, RF filters, patent infringement, registered direct offering, capital raise, manufacturing process, Qorvo, working capital, semiconductor, wireless