Aeluma, Inc.

Note 1 – The Company

Throughout these notes, “the Company,” “Aeluma,” “we,” “us,” “its,” and “our” refer to Aeluma, Inc. and our wholly owned subsidiary Aeluma Operating Co. (“Subsidiary”).

Aeluma develops high-performance photonic and electronic technologies for communications and sensing in telecom, artificial intelligence (“AI”) datacom, mobile, defense and aerospace, robotics, automotive, augmented reality/virtual reality (“AR/VR”), and quantum applications. The Company’s proprietary platform combines compound semiconductor materials with large-diameter substrates to leverage manufacturing infrastructure used in high-volume microelectronics. Aeluma’s technology and product development activities have focused on photodetectors, photodetector arrays, lasers, optical amplifiers, and other technologies. The Company’s photodetectors and photodetector arrays can detect near infrared (“NIR”) and shortwave infrared (“SWIR”) light. Its lasers and optical amplifiers are primarily based on quantum dot technology. Aeluma’s platform may also be applied to other photonic and electronic devices including transistors and solar cells.

Note 2 – Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been presented in accordance with U.S. generally accepted accounting principles (“GAAP”). All significant intercompany balances and transactions are eliminated in consolidation. There wereno significant intercompany balances or transactions during the fiscal years ended June 30, 2026 and 2025. The summary of significant accounting policies presented below is designed to assist in understanding the Company’s financial statements. Such financial statements and accompanying notes are the representations of the Company’s management, who is responsible for the Company’s integrity and objectivity.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

Cash and Cash Equivalents

The Company considers cash in banks, deposits in transit, and highly liquid investments with original maturity of three months or less to be cash and cash equivalents. As of June 30, 2026, cash and cash equivalents consisted of cash on deposit and an investment in money market funds. The Company’s investment in money market funds is classified within Level 1 of the fair value hierarchy because it is valued using quoted market prices in active markets. The fund invests 100% of its assets in short-term U.S. Treasury obligations and has no minimum holding periods or redemption gates.

Segments

The Company’s chief operating decision maker (“CODM”), the Chief Executive Officer, manages the Company’s business activities asone single operating and reportable segment at the consolidated level. The CODM uses consolidated net income (loss) as the sole measure of segment profit or loss for purposes of assessing performance and allocating resources. The CODM reviews consolidated financial information, including revenues and expenses as presented in the consolidated statements of operations. No additional measures of segment profit or loss are used by the CODM. Because the Company operates as a single reportable segment, all financial information disclosed herein represents the results of the Company’s single reportable segment. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies.

Property and Equipment

Property, equipment, and leasehold improvements are reported at historical cost, net of accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally from three to seven years for property and equipment. Leasehold improvements are amortized over the lesser of the remaining lease term or the estimated useful life of the improvements. Repairs and maintenance to these assets are charged to expenses as incurred; major improvements enhancing the function and/or the asset’s useful life are capitalized. When items are sold or retired, the related cost and accumulated depreciation are removed from the accounts, and any gains or losses arising from such transactions are recognized.

Leases

The Company determines whether an arrangement contains a lease at inception. Operating lease right of use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments. ROU assets and lease liabilities are recognized at lease commencement based on the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate at the lease commencement date. The Company includes lease extension and termination options in the lease term when it is reasonably certain, based on consideration of relevant economic factors, that such options will be exercised.

The Company elected the short-term lease exemption for leases with an initial term of 12 months or less and, accordingly, does not recognize ROU assets or lease liabilities for such leases. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. Leases with a term of one month or less are not included in the Company’s lease disclosures.

Operating lease expense, including amortization of ROU assets and interest accretion on lease liabilities, is recognized on a straight-line basis over the lease term and included in lease expense in the consolidated statements of operations.

Intangible Assets

Intangible assets are associated with the Aeluma.com domain name and are amortized on a straight-line basis over 10 years.

Revenue Recognition

The Company follows a five-step approach for recognizing revenue: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to the performance obligations in the contract; and (5) recognizing revenue when, or as, the entity satisfies a performance obligation. Revenue is recognized when control of the promised goods or services is transferred to the customer. For performance obligations that are satisfied at a single point in time, the Company recognizes revenue at the point when control transfers, which is typically upon delivery, customer acceptance, or another specified milestone defined in the contract. For performance obligations satisfied over time, revenue is recognized as progress is made toward completion, using a measure that best depicts the transfer of control to the customer. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from revenue. Incidental items that are immaterial in the context of the contract are recognized as expenses. The Company does not have any significant financing components associated with its revenue contracts, as payment is received within one year. The Company currently draws revenue from two primary sources:

The Company capitalizes certain incremental costs incurred to obtain or fulfill a contract when such costs are expected to be recoverable in accordance with ASC 340,Other Assets and Deferred Costs. Prepaid costs, such as advance payments to vendors or subcontractors directly related to a customer contract, are recorded as assets and subsequently expensed consistent with the transfer of goods or services to the customer.

Government contracts include both cost-reimbursement and fixed-price contracts. Cost-reimbursement contracts provide for the reimbursement of allowable costs plus the payment of a fee. These contracts fall into four basic types: (i) cost-sharing contract under which government reimburses only a portion of the incurred costs, (ii) cost plus fixed fee contracts which provide for the payment of a fixed fee irrespective of the final cost of performance, (iii) cost plus incentive fee contracts which provide for increases or decreases in the fee, within specified limits, based upon actual results as compared to contractual targets relating to such factors as cost, performance and delivery schedule, and (iv) cost plus award fee contracts which provide for the payment of an award fee determined at the discretion of the customer based upon the performance of the contractor against pre-established criteria. Under cost-reimbursement type contracts, the contractor is reimbursed periodically for allowable costs and is paid a portion of the fee based on contract progress. Fixed-price contracts establish a set price for goods or services, which may be firm or adjustable under specific conditions. Adjustable fixed-price contracts can include elements such as ceiling or target prices, which are only subject to change through contract clauses that allow for equitable adjustments. Firm-fixed-price contracts do not permit any price changes based on the contractor’s actual costs, placing full financial risk and responsibility on the contractor. In contrast, fixed-price contracts with economic price adjustments allow for price changes, either increases or decreases, based on predefined events or conditions.

For the fiscal year ended June 30, 2026, the Company was awarded six government contracts of $5.3 million for the provision of services and delivery of materials. The awards are either firm-fixed-price contracts, where payments are made upon completion of specified performance milestones, or cost-reimbursement contracts, where allowable costs are reimbursed with an additional fee. For the fiscal year ended June 30, 2025, the Company was awarded six government contracts totaling $13.8 million. Revenue associated with these contracts is recognized as the related performance obligations are satisfied, including upon the achievement of specified performance milestones, as applicable, in accordance with the Company’s revenue recognition policy.

As of June 30, 2026, total remaining performance obligations under all obligated government contracts amounted to approximately $5.4 million with an additional $5.7 million of continent obligations.

Stock-Based Compensation

The Company accounts for stock-based compensation arrangements in accordance with guidance issued by the Financial Accounting Standards Board (“FASB”), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees, consultants, and directors based on estimated fair values.

The Company estimates the fair value of stock-based compensation awards on the date of grant using an option-pricing model for stock options. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the fair value of stock-based compensation awards using the Black-Scholes model. This model requires the Company to estimate the expected volatility and value of its common stock and the expected term of the stock options, all of which are highly complex and rely on subjective variables. For employees and directors, the expected life was calculated based on the simplified method as described by the U.S. Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 110, Share-Based Payment. For other service providers, the expected life was calculated using the contractual term of the award. The Company’s estimate of expected volatility was based on the volatility of peers. The Company has selected a risk-free rate based on the implied yield available on U.S. Treasury securities with a maturity equivalent to the expected term of the options. The Company accounts for forfeitures upon occurrence.

The Company estimates the fair value of restricted stock units (“RSUs”) on the date of grant based on the fair market value of the Company’s common stock. The value of the portion of the award that is ultimately expected to vest is recognized as stock-based compensation expense over the requisite service periods in the Company’s consolidated statements of operations. Because RSUs do not include exercise features, the valuation of these awards does not require the use of an option-pricing model or assumptions related to expected volatility, expected term, or risk-free interest rates. The Company accounts for forfeitures upon occurrence.

Income (Loss) Per Share

Basic income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income (loss) per share is computed by dividing the net income (loss) attributable to common stockholders by the sum of the weighted average number of common shares outstanding plus potential dilutive common shares outstanding during the period. Potential dilutive securities, comprised of shares underlying stock options, RSUs, and warrants, are not reflected in diluted loss per share because such shares are anti–dilutive. The dilutive impact of potential common shares resulting from common stock equivalents is determined by applying the treasury stock method. For the fiscal year ended June 30, 2026,1,772,828 shares underlying stock options,216,291 shares underlying RSUs and 80,507 shares underlying warrants were excluded from the calculation of diluted income per share as their inclusion would have been anti-dilutive.

Income Taxes

The Company is expected to have net operating loss carryforwards that it can use to offset a certain amount of taxable income in the future. The Company is currently analyzing the amount of loss carryforwards that will be available to reduce future taxable income. The resulting deferred tax assets will be offset by a valuation allowance due to the uncertainty of their realization. The primary difference between income tax expense attributable to continuing operations and the amount of income tax expense that would result from applying domestic federal statutory rates to income before income taxes relates to the recognition of a valuation allowance for deferred income tax assets.

The Company has adopted FASB ASC 740-10, “Income Taxes” which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold of more likely than not as a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. Interest and penalties totaled $0 for the periods presented. The Company’s net operating loss carryforwards are subject to IRS examination until they are fully utilized, and such tax years are closed.

The Company files tax returns in the U.S. federal jurisdiction and the state of California. The Company’s federal and state return forms are subject to review by the taxing authorities. The Company is not currently under examination by any taxing authority, nor has it been notified of an impending examination.

Concentration of Risk

The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company’s accounts are insured by the FDIC up to federally insured limits.

The Company manages its credit risk associated with exposure to its direct customers on outstanding accounts receivable through the application of credit approvals and other monitoring procedures. The Company closely monitors the aging of accounts receivable from its direct customers. Significant customers are those that represent 10% or more of revenue or accounts receivable. For the fiscal year ended June 30, 2026,59% and 14% of the Company’s revenue was derived from two customers and, for the fiscal year ended June 30, 2025,71% of the Company’s revenue was derived from one customer. All customers have been government agencies. As of June 30, 2026,100% of the Company’s accounts receivable balance was attributable to four customers, including government agencies. As of June 30, 2025, all of the Company’s accounts receivable balance was attributable to one government agency.

New Accounting Pronouncements Adopted

In December 2023, the FASB issued ASU 2023-09,Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU amends the disclosure requirements for income taxes, including the requirement for further disaggregation of the income tax rate reconciliation and income taxes paid disclosures. The amendments in this guidance must be applied prospectively, with the option to apply retrospectively. This guidance is effective for fiscal years beginning after December 15, 2024. The Company adopted ASU 2023-09 in fiscal year 2026 and the adoption did not have a material impact on the Company’s financial position, results of operations, or related disclosures, as the Company remains in a cumulative loss position.

Recent Accounting Pronouncements under Evaluation

In July 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-05,Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient to assume that conditions as of the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This guidance is effective for annual reporting periods beginning after December 15, 2025, and for interim periods within those annual reporting periods, with early adoption permitted. The amendments in ASU 2025-05 should be applied prospectively. The Company is currently evaluating the impact of this new standard on its consolidated financial statements, however the adoption is not expected to have a material impact on the consolidated financial statements.

In November 2024, the FASB issued ASU. 2024-03,Disaggregation of Income Statement Expenses (DISE). The ASU requires additional disclosure regarding specific types of expenses included in the income statement. This guidance applies to all public business entities and is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. The Company is currently evaluating the impact of this new standard on its consolidated financial statements, however the adoption is not expected to have a significant impact on the consolidated financial statements.

Note 3 – Convertible Notes

During August 2024, the Company issued convertible promissory notes in the aggregate principal amount of $3.1 million to 10 accredited investors, pursuant to a private note financing. The Notes were set to mature in June 2026 and did not carry any interest. The Notes were convertible into shares of the Company’s common stock upon the occurrence of certain events. On March 25, 2025, the Company determined that a conversion event had occurred, and the Notes were converted at $3.50 per share, resulting in the issuance of an aggregate of 898,573 shares of common stock in exchange for $3.1 million in outstanding principal amount of Notes. Following the conversion, the Company has no further obligations under the converted Notes. The shares issued upon conversion are subject to piggyback registration rights previously granted to the investors.

For the fiscal year ended June 30, 2025, the Company recorded amortization of discount on convertible notes of $715 thousand. The carrying amount of convertible notes, totaling $1.7 million, including unamortized debt discount of $1.5 million, was reclassed to equity during the quarter ended March 31, 2025.

Note 4 – Stockholders’ Equity

Authorized Shares

The Company’s certificate of incorporation authorizes the issuance of two classes of shares of capital stock. The total number of shares that this corporation is authorized to issue is 50,000,000 shares of $0.0001 par value common stock and 10,000,000 of $0.0001 par value preferred stock. No preferred shares were issued or outstanding as of June 30, 2026.

Registration Rights Agreement

The Company is party to a registration rights agreement pursuant to which it has filed a registration statement on Form S-1 with the SEC, which was declared effective on March 26, 2025 and converted into a Form S-3 pursuant to a post-effective amendment effective February 6, 2026. The agreement provides for certain liquidated damages upon the occurrence of certain events restricting the holder’s ability to trade the common stock as result of the Company’s failure to maintain their registration for resale or trading suspensions or halts. The liquidated damages are capped at eight percent of the shares covered by the registration rights agreement. The registration statement initially covered the resale of 11,010,002 shares. The Company expects to continue to satisfy its obligations under the registration rights agreement and does not expect to pay any damages pursuant to this agreement. Therefore, no liability has been recorded.

Public Offerings of Common Stock

In March 2025, the Company sold an aggregate of 2,628,571 shares of its common stock in an underwritten public offering for gross proceeds of $13.8 million, resulting in net proceeds of $12.6 million after underwriting discounts, commissions, and offering expenses. The Company issued to the underwriter warrants to purchase up to 131,427 shares which are exercisable for a per share price of $6.04 through March 2035. See Note 7 - Warrants.

On September 19, 2025, the Company sold 1,955,000 shares of its common stock in an underwritten public offering for gross proceeds of $25.4 million, resulting in net proceeds of $23.4 million after underwriting discounts, commissions, and offering expenses.

On March 20, 2026, the Company entered into a sales agreement, pursuant to which the Company may sell shares of the Company’s common stock having an aggregate offering price of up to $50 million, through an “at-the-market” offering program (the “ATM Program”). During May and June 2026, the Company sold 830,484 shares of its common stock under the ATM program for gross proceeds of $20.7 million, resulting in net proceeds of $20.1 million, after deducting commissions and other offering expenses. Any shares of common stock offered and sold under the agreement are issued pursuant to the Company’s effective shelf registration statement on Form S-3.

Note 5 – Stock-Based Compensation

The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) provides for the issuance of shares of common stock pursuant to awards of stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards, cash awards, and stock bonus awards. The number of shares reserved for issuance under the 2021 Plan is eligible to increase automatically on January 1 of each year through 2031 by an additional number of shares equal to the lesser of (x)5% of the outstanding number of shares of the Company’s common stock (on a fully diluted basis) on the immediately preceding December 31, and (y) such lower number as may be determined by the Compensation Committee of the Company’s Board of Directors. As of June 30, 2026, a total of 1,989,119 shares were subject to outstanding awards under the 2021 Plan and 1,727,085 shares remained available for issuance pursuant to future awards.

Restricted Stock Awards

Restricted Stock Awards (“RSAs”) are grants of shares of the Company’s common stock that vest in accordance with terms and conditions established by the Company’s Board of Directors. Recipients of RSAs generally will have voting and dividend rights with respect to such shares upon grant without regard to vesting, unless the RSA agreement provides otherwise. Shares of restricted stock that do not vest are subject to forfeiture.

The Company has entered into various consulting agreements that involved the issuance of common stock in exchange for future services. These agreements included time-based vesting provisions and repurchase rights tied to service terms. In connection with these agreements, the Company recorded deferred compensation for the fair value of the shares in excess of the amounts paid. The deferred compensation was recognized as consulting expense in the consolidated statements of operations over the applicable service periods.

For the fiscal year ended June 30, 2025, $20 thousand was recognized as consulting expense in the consolidated statements of operations. All related shares had vested and the associated expense was fully amortized as of June 30, 2026. Accordingly, as of June 30, 2026, there wasno deferred compensation remaining in the consolidated balance sheets.

Restricted Stock Units

RSUs are rights to acquire shares of the Company’s common stock that vest and settle in accordance with terms and conditions established by the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) and any forms of agreement approved by the administrator of the 2021 Plan.

For the fiscal year ended June 30, 2026, the Company granted RSUs to employees, consultants and members of the Company’s board of directors representing rights to acquire up to 338,711 shares of common stock. The RSUs are scheduled to vest over varying periods of up to four years. Each vesting installment is subject to the recipient’s continued service with the Company through the applicable vesting date.

The following is a schedule summarizing RSU activity for the period presented:

Stock Options

During the fiscal year ended June 30, 2026, the Company granted employees options to purchase 566,553 shares of common stock. These options have exercise prices ranging from $12.20 to $21.63, expire on the tenth anniversary of their respective grant dates, and vest over a 48-month period. The right to exercise vested employee stock options is contingent upon the optionee’s continued service with the Company through each applicable vesting date. In September 2025, the Company granted to a member of its board of directors options to purchase 3,653 shares of common stock at an exercise price of $18.27, which vested aftertwo months of service.

For the fiscal year ended June 30, 2025, the Company granted stock options of 78,000 and 723,354 to consultants, and employees and members of the Company’s board of directors, respectively. The stock options granted to consultants expire in 10 years, have exercise prices ranging from $2.97 to $3.51 and vest insix months to 2 years. Stock options granted to employees and members of the Company’s board of directors expire in 10 years, have exercise prices ranging from $5.93 to $18.99, and vest inone month toforty-eight months.

The Company estimates the fair value of each option granted using the Black-Scholes option-pricing model. The Company used the following assumptions to estimate the fair value of stock options for the period presented:

The following is a schedule summarizing stock option activities for the periods presented ($ in thousands, except per share data):

For the fiscal year ended June 30, 2026 and 2025, stock-based compensation expenses for stock options and RSUs were $4.5 million and $1.9 million, respectively. Unrecognized stock-based compensation expense was $10.6 million, and the average expected recognition period was 1.7 years as of June 30, 2026.

Note 6 – Operating Leases

The Company entered into an amendment dated November 20, 2025, which modified its existing lease originally executed on February 22, 2021, for a facility in Goleta, California, reflecting the exercise of one of the two original sixty-month extension options and extending the lease term for an additional five years from April 1, 2026 through March 31, 2031. On April 1, 2026, the Company concluded that exercise of the second of the two available lease extension options was reasonably certain. Accordingly, the Company remeasured the related ROU assets and lease liability, and recognized the net present value of the additional lease payments, resulting in an increase of $739 thousand to the ROU asset and $839 thousand to the lease liability as of April 1, 2026, with the difference from prior amortization absorbed into the ROU asset.

The Company is a party to a 5-year operating lease for an office in Goleta, California through September 21, 2030, with total lease payments of $303 thousand. The Company recorded the net present value of $274 thousand for both the ROU asset and lease liability on September 5, 2025.

The following table presents maturities of operating lease liabilities on an undiscounted basis as of June 30, 2026 ($ in thousands):

The weighted average remaining lease term and the discount rate for the lease at June 30, 2026 are 9.1 years and 3.99%, respectively. The total lease expenses were $230 thousand and $168 thousand for the fiscal year ended June 30, 2026 and 2025, respectively. The variable costs for common area operating expenses and electricity were $332 thousand and $231 thousand for the fiscal year ended June 30, 2026 and 2025, respectively.

Note 7 – Warrants

All of the Company’s outstanding warrants to purchase common stock are exercisable at any time prior to their expiration dates and include a provision that allows for cashless exercise at the time of exercise. Under the cashless exercise provision, the holder may elect to receive a reduced number of shares of common stock determined according to a formula based on the fair market value of the Company’s common stock at the time of exercise, rather than paying the exercise price in cash. For the fiscal year ended June 30, 2026, warrants to purchase 462,381 shares were exercised, resulting in the issuance of 427,594 shares of common stock.

The following warrants to purchase common stock were outstanding as of June 30, 2026:

Note 8 – Income Taxes

The Company reported a pre-tax loss of $9.2 million and $3.0 million for the years ended June 30, 2026 and 2025, respectively.

There is no federal or state provision for income taxes because the Company has incurred operating losses since inception and is in a full valuation allowance position. Deferred income taxes reflect the net tax effects primarily of the net operating losses and the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. As of June 30, 2026, the Company has approximately $17.7 million in federal and $19.0 million of state net operating loss carryforwards available to offset future taxable income.

Deferred tax assets are measured using the applicable combined federal and state statutory income tax rates expected to apply when the related temporary differences reverse. For federal income tax purposes, the U.S. statutory corporate income tax rate is 21%, as established by the Tax Cuts and Jobs Act of 2017. The applicable California state income tax rate, net of the federal tax benefit, is approximately 7%, resulting in a combined statutory tax rate of approximately 28%. The tax effect of deferred tax assets and liabilities at this combined statutory rate is offset by changes in the valuation allowance recorded against deferred tax assets, as applicable.

Note 9 – Subsequent Event

Subsequent to June 30, 2026, on August 24, 2026, the Company amended its existing lease agreement to expand the leased premises at 150 Catilian Dr., Goleta CA, 93117 by approximately 3,400 square feet. The additional space is expected to be available for use beginning October 1, 2026. The lease amendment will result in additional lease payments of approximately $437 thousand over the lease term of 60 months.