By Lisa Thompson
Akoustis (OTC:AKTS) is continuing to make progress with new customers in the mobile phone space in China including both RF front-end makers and mobile phone OEMs. There are now four potential new customers. The front-end makers are primarily using SAW filters and looking for BAW solutions for their customers.
A new market is developing that Akoustis is eager to pursue. It is high band (5GHz and above) tri-band routers. The company has now talked to all the Wi-Fi vendors of either chips or routers including Tier one OEMS for enterprise and retail markets. Akoustis believes it’s single crystal BAW technology has potential to delivery the highest quality, small form factor solution, for the 5GHz and above bands. These new routers, which are just beginning to come to market, use 2.5GHz, 5.2 GHz, and now 5.7GHz bands and are sold to both residential and commercial customers. In addition to the performance challenge for current vendors to hit the 5.7GHz band with their technology, competitive chips are 8 x 5 mms in size. The Akoustis’ proposed solution is estimated to be 5-6 times smaller. This new tri-band router market has potential to utilize tens-of-millions of units per year. It is possible that the company could sign customers in this market and then be shipping product in twelve to fifteen months, just shortly behind current customers. The possibility for sales in this market has caused the company to explore higher production capacity than it had previously planned.
December 31, 2016 - Q2 2017 Results
The highlights of Akoustis’ December quarter was its first booking of revenue, and a capital raise of $2.1 million. As another product milestone was hit, the company posted its first bookings. This was for design work and masks for the military customer for $29,000. As it is contractually owed, it was accounted for as deferred revenues. Also in an accounting change to reflect industry norms, the company is now posting money received as grants as revenue as it expects these grants to be an ongoing part of business. In Q2 2017, the company received $159,000 in grant income and we expect it to receive another payment in Q3 2017.
The operating loss was $2.8 million versus $1.1 million due mostly to increased stock-based compensation in SG&A. In other income there was a $712,000 loss from change in fair value of derivative liability due to the large increase in the stock price versus last year’s price. This resulted in a loss of $3.4 million versus a loss of $800,000 last year or a non-GAAP loss of $0.12 compared to a loss of $0.08 a year ago.
In December and January Akoustis sold stock at $5.00 and as of February 7, 2017 it had $11 million in cash on the balance sheet. The company believes that is enough cash to fund operations until March 2018, but will still have to raise more cash until it reaches profitability. It also fulfills the listing requirement for uplisting the stock to NASDAQ.
Update on Current Customers
Akoustis still expects to ramp production in the second-half of 2017 for the non-consumer customer. In addition to the one program already won, the company is hoping to be designed into a second program with the possibility of additional filters for the second program. These two programs are expected to use the same BAW filter product. We expect Akoustis to book NRE (non-recurring development) revenues from this company in the June quarter with production ramping in FY2018.
Akoustis expects to deliver samples to its Chinese RF front-end customer by the end of March, and hopefully product in the Q2/Q3 time frame to be built into September/October products. For the mobile market, the company is now focusing on Band 41 product that is now the hottest band in China and it is hard for the SAW manufacturers to serve this market.
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