Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2023March 31, 2024.

 

or

 

Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

 

Commission file number: 001-37850

 

ATOMERA INCORPORATEDINCORPORATED

(Exact name of registrant as specified in its charter)

 

Delaware

30-0509586

(State or other jurisdiction of(I.R.S. Employer
incorporation or organization)Identification No.)

 

750 University Avenue, Suite 280

Los Gatos, California 95032

(Address, including zip code, of registrant’s principal executive offices)

 

((408)408) 442-5248

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock: Par value $0.001ATOMNasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐Accelerated Filer ☐
Non-accelerated FilerSmaller reporting company
Emerging Growth Company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by checkmark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act: Yes ☐ No No

 

The number of outstanding shares of the Registrant’s Common Stock, par value $.001 per share, as of July 28, 2023April 29, 2024 was 25,793,90726,887,371.

 

 

   

 

 

Atomera Incorporated

 

Index

 

  Page
PART I. Financial Information 
   
Item 1.Financial Statements3
   
 Condensed Balance Sheets – June 30, 2023 (unaudited)March 31, 2024 (Unaudited) and December 31, 202220233
   
 Unaudited Condensed Statements of Operations – For the Three and Six Months Ended June 30,March 31, 2024 and 2023 and 20224
   
 

Unaudited Condensed Statements of Comprehensive Loss – For the Three and Six Months Ended June 30,March 31, 2024 and 2023 and 2022

5

   
 Unaudited Condensed Statements of Stockholders’ Equity – For the Three and Six Months Ended June 30,March 31, 2024 and 2023 and 20226
   
 Unaudited Condensed Statements of Cash Flows – For the SixThree Months Ended June 30,March 31, 2024 and 2023 and 20227
   
 Notes to the Unaudited Condensed Financial Statements8
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1615
   
Item 3.Quantitative and Qualitative Disclosures about Market Risk2018
   
Item 4.Controls and Procedures2019
   
PART II. Other Information 
  
Item 1A.Risk Factors2120
Item 5.Other Information20
   
Item 6.Exhibits2120
   
Signatures2221

 

 

 

 

 2 

 

 

PART I. Financial Information

Item 1. Financial Statements

 

Atomera Incorporated

Condensed Balance Sheets

(in thousands, except per share data)

 

          
 June 30, December 31,  March 31, December 31, 
 2023  2022  2024  2023 
 (Unaudited)     (Unaudited)    
ASSETS                
                
Current assets:                
Cash and cash equivalents $12,904  $21,184  $14,806  $12,591 
Short-term investments  10,931      4,458   6,940 
Unbilled contracts receivable     550 
Interest receivable  50      73   79 
Prepaid expenses and other current assets  650   418   328   244 
Total current assets  24,535   21,602   19,665   20,404 
                
Property and equipment, net  135   158   83   100 
Long-term prepaid maintenance and supplies  91   91   91   91 
Security deposit  14   14   14   14 
Operating lease right-of-use asset  631   700   459   517 
Financing lease right-of-use-asset  3,583   4,164   2,622   2,903 
                
Total assets $28,989  $26,729  $22,934  $24,029 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                
Current liabilities:                
Accounts payable $562  $397  $601  $618 
Accrued expenses  218   173   210   222 
Accrued payroll related expenses  578   967   454   1,382 
Current operating lease liability  259   245   263   264 
Current financing lease liability  1,357   1,126   1,357   1,328 
Deferred Revenue  17    
Total current liabilities  2,974   2,908   2,902   3,814 
                
Long-term operating lease liability  400   521   194   295 
Long-term financing lease liability  2,376   2,986   1,431   1,750 
                
Total liabilities  5,750   6,415   4,527   5,859 
                
Commitments and contingencies (see Note 9)            
                
Stockholders’ equity:                
Preferred stock $0.001 par value, authorized 2,500 shares; none issued and outstanding as of June 30, 2023 and December 31, 2022      
Common stock: $0.001 par value, authorized 47,500 shares; 25,770 and 23,973 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively;  26   24 
Preferred stock $0.001 par value, authorized 2,500 shares; none issued and outstanding as of March 31 2024 and December 31, 2023      
Common stock: $0.001 par value, authorized 47,500 shares; 26,905 shares issued and 26,885 outstanding as of March 31, 2024; and 26,107 shares issued and outstanding as of December 31, 2023  27   26 
Additional paid in capital  216,681   203,585   226,288   221,229 
Other comprehensive income (loss)  (2)     (1)   
Accumulated deficit  (193,466)  (183,295)  (207,907)  (203,085)
Total stockholders’ equity  23,239   20,314   18,407   18,170 
Total liabilities and stockholders’ equity $28,989  $26,729  $22,934  $24,029 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 3 

 

 

Atomera Incorporated

Condensed Statements of Operations

(Unaudited)

(in thousands, except per share data)

 

             
  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 
  2023  2022  2023  2022 
Revenue $  $  $  $375 
Cost of revenue           (81)
Gross margin           294 
                 
Operating expenses                
Research and development  3,192   2,433   6,228   4,772 
General and administrative  1,775   1,667   3,517   3,315 
Selling and marketing  393   347   782   672 
Total operating expenses  5,360   4,447   10,527   8,759 
                 
Loss from operations  (5,360)  (4,447)  (10,527)  (8,465)
                 
Other income (expense)                
Interest income  152   35   351   38 
Accretion income  107      109    
Interest expense  (51)  (69)  (104)  (140)
Total other income (expense), net  208   (34)  356   (102)
                 
Net loss $(5,152) $(4,481) $(10,171) $(8,567)
                 
Net loss per common share, basic $(0.21) $(0.20) $(0.42) $(0.37)
Net loss per common share, diluted $(0.21) $(0.20) $(0.42) $(0.37)
                 
Weighted average number of common shares
outstanding, basic
  24,677   22,936   24,171   22,894 
Weighted average number of common shares
outstanding, diluted
  24,677   22,936   24,171   22,894 

       
  

Three Months Ended

March 31,

 
  2024  2023 
Revenue $18  $ 
Cost of revenue  (33)   
Gross margin (loss)  (15)   
         
Operating expenses        
Research and development  2,858   3,036 
General and administrative  1,811   1,742 
Selling and marketing  350   389 
Total operating expenses  5,019   5,167 
         
Loss from operations  (5,034)  (5,167)
         
Other income (expense)        
Interest income  205   199 
Accretion income  46   2 
Interest expense  (39)  (53)
Total other income (expense), net  212   148 
         
Net loss $(4,822) $(5,019)
         
Net loss per common share, basic $(0.19) $(0.21)
Net loss per common share, diluted $(0.19) $(0.21)
         
Weighted average number of common shares outstanding, basic  26,038   23,660 
Weighted average number of common shares outstanding, diluted  26,038   23,660 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

 4 

 

 

Atomera Incorporated

Condensed Statements of Comprehensive Loss

(Unaudited)

(in thousands, except per share data)

 

              
 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

  

Three Months Ended

March 31,

 
 2023  2022  2023  2022  2024  2023 
Net loss $(5,152) $(4,481) $(10,171) $(8,567) $(4,822) $(5,019)
Unrealized gain (loss) on available-for-sale securities        (2)     (1)  (2)
Net loss $(5,152) $(4,481) $(10,173) $(8,567)
Comprehensive income (loss) $(4,823) $(5,021)

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

 

 

 5 

 

 

Atomera Incorporated

Statements of Stockholders’ Equity

For the Three and Six Months Ended June 30,March 31, 2024 and 2023 and 2022

(Unaudited)

(in thousands)

 

                          
 Common Stock  Additional
Paid-in
  Other
Comprehensive
  Accumulated  Total
Stockholders’
  Common Stock  Additional
Paid-in
  Other
Comprehensive
  Accumulated  Total
Stockholders’
 
 Shares  Amount  Capital  Loss  Deficit  Equity  Shares  Amount  Capital  Loss  Deficit  Equity 
Balance January 1, 2023  23,973  $24  $203,585  $  $(183,295) $20,314 
Balance January 1, 2024  26,107  $26  $221,229  $  $(203,085) $18,170 
Stock-based compensation  297      927         927   275      1,024         1,024 
Stock option exercise  10      39         39   13      86         86 
Forfeiture of restricted stock issuance  (20)               
At-the-market sale of stock, net of commissions and expenses  50      274         274   510   1   3,949         3,950 
Net loss              (5,019)  (5,019)              (4,822)  (4,822)
Unrealized gain (loss) on available-for-sale securities           (2)     (2)           (1)     (1)
Balance March 31, 2023  24,330  $24  $204,825  $(2) $(188,314) $16,533 
Stock-based compensation  60      1,030         1,030 
Stock option exercise  10      39         39 
At-the-market sale of stock, net of commissions and expenses  1,370   2   10,787         10,789 
Net loss              (5,152)  (5,152)
Balance June 30, 2023  25,770  $26  $216,681  $(2) $(193,466) $23,239 
Balance March 31, 2024  26,885  $27  $226,288  $(1) $(207,907) $18,407 

 

                     
  Common Stock  Additional
Paid-in
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Capital  Deficit  Equity 
Balance January 1, 2022  23,207  $23  $194,212  $(165,854) $28,381 
Stock-based compensation  161      726      726 
Stock option exercise  25      166      166 
Net loss           (4,086)  (4,086)
Balance March 31, 2022  23,393  $23  $195,104  $(169,940) $25,187 
Stock-based compensation  33      859      859 
At-the-market sale of stock, net of commissions and expenses  31      185      185 
Net loss           (4,481)  (4,481)
Balance June 30, 2022  23,457  $23  $196,148  $(174,421) $21,750 

                         
  Common Stock  Additional
Paid-in
  Other
Comprehensive
  Accumulated  Total
Stockholders’
 
  Shares  Amount  Capital  Loss  Deficit  Equity 
Balance January 1, 2023  23,973  $24  $203,585  $  $(183,295) $20,314 
Stock-based compensation  297      927         927 
Stock option exercise  10      39         39 
At-the-market sale of stock, net of commissions and expenses  50      274         274 
Net loss              (5,019)  (5,019)
Unrealized gain (loss) on available-for-sale securities           (2)     (2)
Balance March 31, 2023  24,330  $24  $204,825  $(2) $(188,314) $16,533 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

 6 

 

 

Atomera Incorporated

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

 

       
  Six Months Ended
June 30,
 
  2023  2022 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net Loss $(10,171) $(8,567)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  40   39 
Operating lease right of use asset amortization  102   99 
Financing lease right of use asset amortization  581   638 
Stock-based compensation  1,957   1,585 
Accretion of discounts on available-for-sale securities  (89)   
Changes in operating assets and liabilities:        
Interest receivable  (42)   
Prepaid expenses and other current assets  (232)  (341)
Accounts payable  165   96 
Accrued expenses  45   10 
Accrued payroll expenses  (389)  (91)
Operating lease liability  (139)  (83)
Net cash used in operating activities  (8,172)  (6,615)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Acquisition of property and equipment  (18)  (19)
Purchase of available-for-sale securities  (10,853)   
Net cash used in investing activities  (10,871)  (19)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from at-the-market sale of stock, net of commissions and expenses  11,063   185 
Proceeds from exercise of stock options  78   166 
Payments on principal of financing lease  (378)  (578)
Net cash provided (used) by financing activities  10,763   (227)
         
Net decrease in cash and cash equivalents  (8,280)  (6,861)
         
Cash and cash equivalents at beginning of period  21,184   28,699 
         
Cash and cash equivalents at end of period $12,904  $21,838 
         
Supplemental information:        
Cash paid for interest $104  $140 
Cash paid for taxes $  $ 

       
  Three Months Ended
March 31,
 
  2024  2023 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net Loss $(4,822) $(5,019)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  17   20 
Operating lease right of use asset amortization  58   52 
Financing lease right of use asset amortization  281   291 
Stock-based compensation  1,024   927 
Net accretion of discounts on available-for-sale securities  (46)  (3)
Changes in operating assets and liabilities:        
Unbilled contracts receivable  550    
Interest receivable  12   (46)
Prepaid and other current assets  (84)  168 
Accounts payable  (114)  26 
Accrued expenses  (12)  69 
Accrued payroll expenses  (928)  (675)
Operating lease liability  (102)  (44)
Deferred revenue  17    
Net cash used in operating activities  (4,149)  (4,234)
         
CASH FLOWS FROM INVESTING ACTIVITIES        
Acquisition of property and equipment     (15)
Purchase of available-for-sale securities  (1,479)  (4,942)
Maturity of available-for-sale securities  4,000    
Net cash provided by/(used in) investing activities  2,521   (4,957)
         
CASH FLOWS FROM FINANCING ACTIVITIES        
Proceeds from at-the-market sale of stock, net of commissions and expenses  3,950   274 
Proceeds from exercise of stock options  86   39 
Payments on principal of financing lease  (193)  (188)
Net cash provided by financing activities  3,843   125 
         
Net increase/(decrease) in cash and cash equivalents  2,215   (9,066)
         
Cash and cash equivalents at beginning of period  12,591   21,184 
         
Cash and cash equivalents at end of period $14,806  $12,118 
         
Supplemental information:        
Cash paid for interest $26  $53 
Cash paid for taxes $  $ 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

 7 

 

 

ATOMERA INCORPORATED

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30,March 31, 2024 and 2023 and 2022

 

1.NATURE OF OPERATIONS

 

Atomera Incorporated (“Atomera” or the “Company”) was incorporated in the state of Delaware in March 2007 under the name MEARS Technologies, Inc. and is engaged in the development, commercialization and licensing of proprietary processes and technologies for the semiconductor industry. On January 12, 2016, the Company changed its name to Atomera Incorporated.

 

Atomera is an early-stage company, having only recently begun limited revenue-generating activities, and is devoting substantially all its efforts toward technology research and development and to commercially licensing its technology to designers and manufacturers of integrated circuits.

 

2.LIQUIDITY AND MANAGEMENT PLANS

 

At June 30, 2023,March 31, 2024, the Company had cash, cash equivalents and short-term investments of approximately $23.819.3 million million and working capital of approximately $21.616.8 million million.. The Company has generated only limited revenues since inception and has incurred recurring operating losses. Accordingly, it is subject to all the risks inherent in the initial organization, financing, expenditures, and scaling of a new business that is not generating positive cashflow.

 

The Company has primarily financed operations through private placements of equity and debt securities, the Company’s Initial Public Offering (the “IPO”) which was consummated on August 10, 2016, and subsequent public offerings of its common stock. On May 31, 2022, Atomera entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and Craig-Hallum Capital Group LLC, as agents, under which the Company may offer and sell, from time to time at its sole discretion, shares of its $0.001 par value common stock, in “at the market” offerings to or through the agent as its sales agent, having an aggregate offering priceproceeds of up to $50.0 million (the “ATM Facility”). During the three monthsthree-month period ended June 30, 2023,March 31, 2024, the Company sold approximately 1.4510,000 million shares pursuant to ourthe ATM Facility at an average price per share of approximately $8.158.06, resulting in approximately $10.84.0 million of net proceeds to usthe Company after deducting commissions and other offering expenses. As of March 31, 2024, the Company has a remaining capacity on the ATM of approximately $25.7 million.

 

Based on the funds it has available as of the date of the filing of this report, the Company believes that it has sufficient capital to fund its current business plans and obligations over, at least, 12 months from the date that these financial statements have been issued. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its technology, competing technological and market developments, and the need to enter into collaborations with other companies or acquire technologies to enhance or complement its current offerings. IfThe Company’s operating plans for the Company is not able to generate sufficient revenue from license fees and royalties in a timeframe that satisfies its cash needs, it will need to raise more capital. In the event it requires additional capital, it will endeavor to acquire additional funds through various financing sources, including the ATM Facility, follow-on equity offerings, debt financing and joint ventures with industry partners. In addition to use of the ATM Facility and other capital raising alternatives, the Company will consider alternatives to our current business plan that may enable it to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. If the Company is unable to secure sufficient additional capital, it may be required to curtail ournext 12 months include increased research and development initiatives and take additional measures to reduce costs in order to conserve cash.expenses.

 

8

3.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Significant accounting policiesAccounting Policies

 

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 15, 2023.2024.

8

 

Basis of presentationPresentation of unaudited condensed financial informationUnaudited Condensed Financial Information

 

The unaudited condensed financial statements of the Company for the three and six months ended June 30,March 31, 2024 and 2023 and 2022 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and its results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 20222023 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2022,2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 15, 2023.2024. These unaudited condensed financial statements should be read in conjunction with that report.

Cash, cash equivalents,Cash Equivalents, and short-term investmentsShort-Term Investments

 

The Company considers all highly liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents. Cash equivalents may be invested in money market funds or U.S. agency bonds. Cash and cash equivalents are carried at cost, which approximates their fair value.

 

The Company's portfolio of short-term investments is comprised solely of U.S. treasury bills and agency bonds with maturities of more than three months, but less than one year. The Company classifies these as available-for-sale at purchase date and will reevaluate such designation at each period end date. The Company may sell these marketable debt securities prior to their stated maturities depending upon changing liquidity requirements. These debt securities are classified as current assets in the consolidated balance sheet and recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive income (loss).

 

Gains and losses are recognized when realized. Gains and losses are determined using the specific identification method and are reported in other income (expense), net in the consolidated statements of operations.

 

Adoption of recent accounting standardsRecent Accounting Standards

 

From time to time, new accounting standards are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. No new accounting standards issued or effective during the period ended June 30, 2023,March 31, 2024 have had or are expected to have a significant impact on the Company’s financial statements.

 

4.9

4.FAIR VALUE MEASUREMENTS

 

Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”) states that fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, is comprisedconsists of:

  

Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities.

 

Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

 

9

The Company’s cash equivalents and short-term investments that were measured at fair value on a recurring basis as Level 1 assets.

 

The Company’s cash, cash equivalents and short-term investments classified by security type as of June 30, 2023March 31, 2024 and December 31, 20222023 consisted of the following (in thousands):

Schedule fair value measurements                                        
    June 30, 2023  December 31, 2022  March 31, 2024 
 Cost  Unrealized Gain/(Loss)  Accretion of Discount  Fair Value  Cost  Fair Value  Cost  Unrealized Gain/(Loss)  Accretion of Discount  Fair Value 
Cash $1  $  $  $1  $1  $1  $1  $  $  $1 
Money market funds  12,903         12,903   21,183   21,183   14,805         14,805 
US treasury bills  7,873   (2)  66   7,937         1,958      15   1,973 
US agency bonds  2,971      23   2,994         2,455   (1)  31   2,485 
Total $23,748  $(2) $89  $23,835  $21,184  $21,184  $19,219  $(1) $46  $19,264 

 

Interest receivable of approximately $50,000 as of June 30, 2023 includes approximately $8,000 of purchased accrued interest.

  December 31, 2023 
  Cost  Accretion of Discount  Fair Value 
Cash $157  $  $157 
Money market funds  12,434      12,434 
US treasury bills  2,931   50   2,981 
US agency bonds  3,938   21   3,959 
Total $19,460  $71  $19,531 

 

 

10

5.REVENUE

 

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”)ASC No. 606. The Company generates revenues from engineering service contracts, license agreements and joint development agreements. The amount of revenue that the Company recognizes reflects the consideration it expects to receive in exchange for goods or services and such revenue is recognized when the Company satisfies a performance obligation by transferring the product or service to the customer. When the Company’s performance obligation is the promise to grant a license, revenue is recognized either at a point in time (such as a right to use licensed technology that is under the customer’s control), or over time (typically a right to access technology without obtaining control). Revenue from integration license agreements and from MSTcad licenses are recognized over the length of the license.

 

The following table provides information about disaggregated revenue by primary geographical markets and timing of revenue recognition (in thousands):

Schedule of disaggregated revenue and timing of revenue                     
 Three Months Ended June 30,  Six Months Ended June 30,  

Three Months Ended

March 31,

 
 2023  2022  2023  2022  2024  2023 
Primary geographic markets                        
North America $  $  $  $75  $18  $ 
Asia Pacific           300       
Total $  $  $  $375  $18  $ 
                        
Timing of revenue recognition                        
Products and services transferred at a point in time $  $  $  $375  $  $ 
Products and services transferred over time              18    
Total $  $  $  $375  $18  $ 

10

 

Unbilled contracts receivable and deferred revenue

 

Timing of revenue recognition may differ from the timing of invoicing customers. Accounts receivable includes amounts billed and currently due from customers. Unbilled contracts receivable represents unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed, and the right to receive payment is subject to the underlying contractual terms. Unbilled contracts receivable amounts may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. All unbilled contracts receivable as of December 31, 2023 were billed and received during the three months ended March 31, 2024.

 

Deferred Revenue

11

The Company records deferred revenue for customers that were issued invoices, but the Company has not yet recognized the revenue based on its revenue recognition policy. As of March 31, 2024, the Company has approximately $17,000 of deferred revenue that it expects to recognize over the next 12 months.

 

6.BASIC AND DILUTED LOSS PER SHARE

 

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants and (ii) vesting of restricted stock units and restricted stock awards, are only included in the calculation of diluted net loss per share when their effect is dilutive. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Accordingly, basic and diluted net loss per share are equal.

 

The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive (in thousands):

Schedule of anti dilutive shares             
 

Six Months Ended

June 30,

  

Three Months Ended

March 31,

 
 2023  2022  2024  2023 
Stock Options  3,364   3,008   3,670   3,374 
Unvested restricted stock  555   456   620   582 
Total  3,919   3,464   4,290   3,956 

 

 

7.LEASES

 

The Company accounts for leases over one year under ASC 842. Lease expense for the Company’s operating leases consists of the lease payments recognized on a straight-line basis over the lease term. Expenses for the Company’s financing leases consists of the amortization expenses recognized on a straight-line basis over the lease term variable lease costs and interest expense. The Company’s lease agreement for a tool used in the development and marketing of the Company’s technology established a monthly lease payment of $150,000 per month. The lease contains a provision for an annual adjustment of lease payments based on tool availability and usage. The potential leaseusage during the preceding 12 months and the adjusted payment adjustment is determinedcalculated on August 1 of each year of the lease and is calculated based on the tool availability and usage for the preceding 12 months. lease. Effective August 1, 2022,2023, the lease payments for this tool were reducedadjusted to $100,824$137,650 per month for the period August 1, 20222023 through July 31, 2023.2024. This adjustment to the variable lease payments also resulted in a reduction in the ROU and corresponding lease liability.liability.

11

 

Effective May 1, 2023, the Company leased an additional 404 square feet at its Tempe office location under an amendment to its current lease. The monthly rent payment increased from $1,277 per month to $2,365 per month and the increased rent under the amended lease is accounted for as a modification to the lease under ASC 842 at the time of commencement. At the effective date of the lease amendment, a right-of-use asset of approximately $3333,000,000 was recorded along with a short-term operating lease liability of approximately $1212,000,000 and long-term operating lease liability of approximately $2121,000,000.. The amended lease ends in February 2026.

 

12

In December 2022,2023, the Company entered into a lease agreement for a tool in Tempe, Arizona. The term of this lease is for six12 months beginning on January 1, 2023 with an option to extend the lease2024 for an additional six months. The initial lease terms were $96,000$87,000 per month. In March 2023, the Company elected to extend the lease through December 31, 2023 and in consideration for this extension the remaining lease payments were reduced to $84,000. Since the lease and extension areterm is not for more than one year and there are no extension provisions in the lease, the future lease payments are not included in the lease obligations on the Company’s condensed balance sheets.

 

The Company terminated its office lease in Cambridge, Massachusetts as of March 31, 2023. The cost of the lease was $2,942 per month.

 

The components of lease costs were as follows (in thousands):

Schedule components of lease costs                
Schedule of lease costs     
 Three Months Ended June 30,  Six Months Ended June 30,  

Three Months

March 31,

 
 2023  2022  2023  2022  2024  2023 
Financing lease costs:                        
Amortization of ROU assets $290  $319  $581  $638  $281  $291 
Interest on lease liabilities  51   69   104   140   39   53 
Total financing lease costs $341  $388  $685  $778  $320  $344 
                        
Operating lease costs:                 
Fixed lease costs $64  $62  $126  $124  $66  $62 
Variable lease costs            
Short-term lease costs  244   9   541   20   261   297 
Total operating lease costs $308  $71  $667  $144  $327  $359 

 

Future minimum payments under non-cancellable leases as of June 30, 2023March 31, 2024 were as follows (in thousands):

Schedule of future minimum lease payments         
For the Year Ended December 31,  Financing leases  Operating leases 
Remaining 2023  $679  $98 
2024   1,436   291 
2025   1,436   298 
2026   478   23 
2027 & thereafter        
Total future minimum lease payments  $4,029  $710 
Less imputed interest   (296)  (51)
Total lease liability  $3,733  $659 

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Schedule of future minimum payments        
For the Year Ended December 31, Financing leases  Operating leases 
Remaining 2024 $1,037  $181 
2025  1,436   298 
2026  478   24 
Total future minimum lease payments  2,951   503 
Less imputed interest  (163)  (46)
Total lease liability $2,788  $457 

 

The below table provides supplemental information and non-cash activity related to the Company’s operating and financing leases are as follows (in thousands):

Supplemental non-cash activity related to operating and financing leases         
Schedule of supplemental information     
 Three Months Ended June 30,  Six Months Ended June 30,  

Three Months Ended

March 31,

 
 2023  2022  2023  2022  2024  2023 
Operating cash flow information:                        
Cash paid for amounts included in the measurement of operating lease liabilities $55  $54  $111  $108  $110  $56 
Cash paid for amounts included in the measurement of financing liabilities $241  $359  $482  $718  $219  $241 
Non-cash activity:                
Right-of-use assets obtained in exchange for operating lease obligations $33  $  $33  $ 

 

The table above does not include short-term leases that are one-year or less.

 

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The weighted average remaining discount rate is 5.485.50% for the Company’s operating leases and 5.25% for the financing lease. The weighted average remaining lease term is 2.62.3 years for the Company’s operating leases and 3.11.9 years for the financing lease.

  

 

8.STOCK BASED COMPENSATION

 

In May 2017, the Company’s shareholders approved its 2017 Stock Incentive Plan (“2017 Plan”) after its 2007 Stock Incentive Plan (“2007 Plan”) had expired in March 2017. The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock and for the grant of restricted and unrestricted shares. The 2017 Plan provides for the issuance of 3,7503,750,000,000 shares of common stock. As of June 30, 2023, approximately 5,000 shares remain available for issuance. In May 2023, the Company’s shareholders approved its 2023 Stock Incentive Plan (“2023 Plan”). The 2023 plan provides for the issuance of 2,0002,000,000,000 shares of commonscommon stock. All employees and employees of any subsidiary (including officers and directors who are also employees), as well as all of the nonemployee directors and other consultants, advisors and other persons who provide services to the Company are eligible to receive incentive awards under the 2017 Plan and 2023 Plan. Generally, stock options and restricted stock issued under the 2017 Plan and 2023 Plan vest over a period of one to four years from the date of grant.

As of March 31, 2024, approximately 1.4 million shares remain available for issuance under both available plans.

 

The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the three and six months ended June 30,March 31, 2024 and 2023 and 2022 for stock options and restricted stock granted under the Company’s incentive plans (in thousands):

Schedule of stock-based compensation expense            
  

Three Months Ended

June 30,

  Six Months Ended
June 30,
 
  2023  2022  2023  2022 
Research and development $372  $295  $700  $539 
General and administrative  570   499   1,095   928 
Selling and Marketing  88   65   162   118 
Total $1,030  $859  $1,957  $1,585 

Schedule of stock-based compensation expense      
  Three Months Ended
March 31,
 
  2024  2023 
Research and development $377  $328 
General and administrative  583   525 
Selling and Marketing  64   74 
Total $1,024  $927 

 

As of June 30, 2023,March 31, 2024, there was approximately $8.78.6 million million of total unrecognized compensation expense related to unvested share-based compensation arrangements. This cost is expected to be recognized over a weighted-average period of 2.73.1 years.

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The weighted average grant date fair value per share of the options granted under the Company’s 2017 Plan wasPlans were $4.98 and $4.95 and $10.60for the six months ended June 30,three March 31, 2024 and 2023, and 2022, respectively.No options were issued in the three months ended June 30, 2023 and 2022 from the Company’s 2017 or 2023 Plan and no options were issued from the Company’s 2023 Plan during the periods presented.

 

The following table summarizes stock option activity during the sixthree months ended June 30, 2023March 31, 2024 (in thousands except exercise prices and contractual terms):

Schedule of stock option activity                  
 

Number of

Shares

 

Weighted-

Average

Exercise

Prices per Share

 

Weighted-
Average

Remaining

Contractual

Term (In Years)

  Intrinsic
Value
  

Number of

Shares

 

Weighted-

Average

Exercise

Prices per Share

 

Weighted-
Average

Remaining

Contractual

Term (In Years)

  Intrinsic
Value
 
Outstanding at January 1, 2023   3,009  $7.07         
Outstanding at January 1, 2024  3,369  $7.04         
Granted   375  $6.56           366  $6.46         
Exercised   (20) $3.90           (13) $6.60         
Outstanding at June 30, 2023   3,364  $7.03   5.13  $8,401 
Exercisable at June 30, 2023   2,716  $6.56   4.25  $7,157 
Forfeited  (52) $10.43         
Outstanding at March 31, 2024  3,670  $6.93   4.82  $2,093 
Exercisable at March 31, 2024  2,926  $6.68   3.70  $2,093 

13

 

During the sixthree months ended June 30, 2023,March 31, 2024, the Company granted options under the 2017 Planand 2023 Plans to purchase approximately 375366,000,000 shares of its common stock to its employees and consultants. The fair value of these options was approximately $1.91.8 million million at the time of grant.

  

The Company issues restricted stock to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant. The following table summarizes all restricted stock activity during the sixthree months ended June 30, 2023March 31, 2024 (in thousands except per share data):

Schedule of restricted stock option activity      
  

Number of

Shares

  

Weighted-Average

Grant Date Fair Value per Share

 
Outstanding at January 1, 2023  340  $10.78 
Granted  357  $7.00 
Vested  (142) $8.91 
Outstanding non-vested shares at June 30, 2023  555  $8.83 
Schedule of restricted stock activity      
  

Number of

Shares

  

Weighted-Average

Grant Date Fair Value per Share

 
Outstanding at January 1, 2024  419  $9.21 
Granted  275  $6.46 
Forfeited  (20) $8.24 
Vested  (54) $8.35 
Outstanding non-vested shares at March 31, 2024  620  $8.09 

 

During the sixthree months ended June 30, 2023,March 31, 2024, the Company granted approximately 357275,000,000 restricted stock awards under the 2017 Plan and 2023 Plan to its employees and directors.Plans. The fair value of these awards was approximately $2.51.8 million million at the time of grant.

  

 

9.COMMITMENTS AND CONTINGENCIES

 

Litigation, Claims and Assessments

 

The Company may be subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company is not party to any material litigation as of June 30, 2023,March 31, 2024, or through the date these financial statements have been issued.

  

 

10.SUBSEQUENT EVENTS

 

Management has evaluated subsequent events and transactions through the date these financial statements were issued.

 

Since June 30, 2023, the Company has issued approximately 24,000 additional shares through its ATM offering at an average price per share of $9.17 resulting in additional net proceeds of approximately $214,000.

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of the financial condition and results of operations of Atomera Incorporated should be read in conjunction with our financial statements and the accompanying notes that appear elsewhere in this Quarterly Report. Statements in this Quarterly Report on Form 10-Q include forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 20222023 filed with the SEC on February 15, 2023.2024. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

Overview

 

We are engaged in the business of developing, commercializing and licensing proprietary processes and technologies for the $550+ billion semiconductor industry. Our lead technology, named Mears Silicon Technology™, or MST®, is a thin film of reengineered silicon, typically 100 to 300 angstroms (or approximately 20 to 60 silicon atomic unit cells) thick. MST can be applied as a transistor channel enhancement to CMOS-type transistors, the most widely used transistor type in the semiconductor industry. MST is our proprietary and patent-protected performance enhancement technology that we believe addresses a number of key engineering challenges facing the semiconductor industry. We believe that by incorporating MST, transistors can be made smaller, with increased speed, reliability and power efficiency. In addition, since MST is an additive and low-cost technology, we believe it can be deployed on an industrial scale, with machinesequipment commonly used in semiconductor manufacturing. We believe that MST can be widely incorporated into the most common types of semiconductor products, including analog, logic, opticalmemory and memoryoptical integrated circuits.

 

We do not intend to design or manufacture integrated circuits directly. Instead, we develop and license technologies and processes that we believe offer the designers and manufacturers of integrated circuits a low-cost solution to the industry’s need for greater performance and lower power consumption. Our customers and partners include:

 

· foundries, which manufacture integrated circuits on behalf of fabless manufacturers;

· integrated device manufacturers, or IDMs, which are the fully-integrated designers and manufacturers of integrated circuits;

· fabless semiconductor manufacturers, which are designers of integrated circuits that outsource the manufacturing of their chips to foundries;

· original equipment manufacturers, or OEMs, that manufacture the epitaxial, or epi, machinesequipment used to deposit semiconductor layers, such as the MST film, onto silicon wafers; and

· electronic design automation companies, which make tools used throughout the industry to simulate performance of semiconductor products using different materials, design structures and process technologies.

 

 

 

 1615 

 

 

Our commercialization strategy is to generate revenue through licensing arrangements whereby foundries, IDMs and fabless semiconductor manufacturers pay us a license fee for their right to use MST technology in the manufacture of silicon wafers as well as a royalty for each silicon wafer or device that incorporates our MST technology. We also license our MSTcadTM(r) software to our customers for use in simulating the effects of using MST technology on their wafers and/or devices. To date, we have generated revenue from (i) licensing agreements with two IDMs, one fabless manufacturer and one foundry, (ii) a joint development agreement, or JDA, with a leading semiconductor provider, (iii) engineering services provided to foundries, IDMs and fabless companies and (iv) licensing MSTcad.

 

In April 2023, we entered into a license agreement with ST Microelectronics (“ST”) that authorizes ST to manufacture and distribute MST-enabled products to its customers. This agreement provides for payment of license fees payable upon reaching milestones consistent with Atomera’s standard business model. Our standard model is based around two major milestones, namely the installation of MST in a customer’s fab and qualification of an MST-enabled process. After process qualification is completed, ST will have the right to commercially distribute MST-enabled products and, assuming ST brings such products to market, we will receive royalties on all MST-enabled products manufactured for commercial purposes. This license agreement with ST is our first grant of commercial manufacturing and distribution rightsrights. In the fourth quarter of 2023, we completed the first major milestone under the ST license agreement by delivering our MST film recipe and assumingST accepting the successful installation offilm, resulting in our recognizing license revenue associated with that milestone. We expect that ST will now proceed to completing process qualification with MST and related process qualification,which would result in our first revenue from commercial useadditional license fees for the distribution license upon completion of qualification, at which time ST would commence paying royalties on MST-enabled products.products they sell. There can be no assurance, however, that ST will complete its process qualification and pursue the licensed rights through development to the manufacture and commercial sale of MST-enabled wafers.products.

 

We were organized as a Delaware limited liability company under the name Nanovis LLC on November 26, 2001. On March 13, 2007, we converted to a Delaware corporation under the name Mears Technologies, Inc. On January 12, 2016, we changed our name to Atomera Incorporated.

 

On May 31, 2022, we entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc and Craig-Hallum Capital Group LLC, as agents, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” offering or “ATM”, to or through the agents. During the three months ended June 30, 2023,March 31, 2024, we sold approximately 1.4 million510,000 shares pursuant to our ATM at an average price per share of approximately $8.15,$8.06, resulting in approximately $10.8$4.0 million of net proceeds to us after deducting commissions and other offering expenses.

 

Results of Operations

 

Revenues. To date, we have only generated limited revenue from customer engagements for integration engineering services, integration license agreements, a manufacturing license granted under a JDA and licensing of MSTcad. Our license agreement with ST, which was executed in April 2023, is our first commercial manufacturing and distribution agreement and, assuming successful completion of contractual milestones and payments of associated fees, will entitle us to royalties on all MST-enabled products manufactured for commercial purposes. Our integration services consist of depositing our MST film on semiconductor wafers, delivering such wafers to customers to finalize building devices, and performing tests for customers evaluating MST. The integration license agreements we have entered intoMSTcad licenses grant the licensees the right to build products that integrate our MST technology deposited by us onto their semiconductor wafers, but the agreements do not grant the licensees the rights to manufacture MST-enabled wafers in their facilities or to sell products incorporating MST. Our JDA included the grant of a manufacturing license to our customer and we were paid for such license upon delivery of our IP transfer package which enabled our customer to install MST in a tool in their facility and to use it to manufacture wafers for internal use. This JDA also contained targeted technical specifications that, if met, would result in payment of a success fee to us. Those technical objectives were met and we have collected the success fee.

17

For revenue recognition purposes, we have determined that the grant of rights in integration licenses is not distinct from the delivery of integration services, and therefore revenue from both integration licenses and integration services is recognized as the services are provided to the customer. In general, this is proportionate to the delivery of MST processed wafers to the customer, but if the agreements do not specify a time and quantity of wafer delivery, we will record revenue over the period of time in which we anticipate delivering an estimated quantity of wafers. We have also determined that the grant of our manufacturing license under the JDA confers a right to use our technology and accordingly revenue was recognized at the point in time when we delivered our IP transfer package. The success fee under our JDA was treated as engineering services revenue and recognized upon our customer’s confirmation that the JDA’s technical objectives had been met. Our licensing of MSTcad grants customers the right to use MSTcad software to simulate the effects of incorporating MST technology into their semiconductor manufacturing process. MSTcad licenses are granted on a monthly or yearly basis and revenue is recognized over time.

 

Revenue was not recorded for the three months ended June 30,March 31, 2024 and 2023 was approximately $18,000 and 2022. Revenue for the six month period ended June 30, 2023 and 2022 was $0, and $375,000, respectively. Our revenue in 20222024 consisted of a success fee pursuantMSTcad License revenue and consulting services related to our first JDA and a license fee paid under an integration license agreement.MSTcad.

 

16

Cost of revenue. Cost of revenue consists of costs of materials, as well as direct compensation and expenses incurred to provide deliverables that resultedresult in payment of our success fee andfees, delivery of wafers delivered as part of the integration license agreement.agreements and consulting services provided for our MSTcad License. Cost of revenue is expensed when incurred and may not correspond with revenue earned. Cost of revenue for the sixthree months ended June 30,March 31, 2024 and 2023 was approximately $33,000 and 2022 was $0, and approximately $81,000, respectively. We anticipate that our cost of revenue will vary substantially depending on the mix of license and engineering services revenues we receive and the nature of products and/or services delivered in each customer engagement. Cost of revenue expenses were not recorded for the three months ended June 30, 2023 and 2022.

 

Operating expenses. Operating expenses consist of research and development, general and administrative, and selling and marketing expenses. For the three months ended June 30,March 31, 2024 and 2023, and 2022, our operating expenses totaled approximately $5.4$5.0 million and $4.4 million, respectively. For the six months ended June 30, 2023 and 2022, our operating expenses totaled approximately $10.5 million and $8.8$5.2 million, respectively.

 

Research and development expense. To date, our operations have focused on the research, development, patent prosecution, and commercialization of our MST technology and related technologies such as MSTcad. Our research and development costs primarily consist of payroll and benefitbenefits costs for our engineering staff and costs of outsourced fabrication (including epi tool leases) and metrology of semiconductor wafers incorporating our MST technology.

 

For the three months ended June 30,March 31, 2024 and 2023, and 2022, we incurred approximately $3.2$2.9 million and $2.4$3.0 million, respectively, of research and development expenses, an increasea decrease of approximately $759,000,$178,000, or 31%6%. This increasedecrease was primarily due to increasesdecrease of approximately $482,000$241,000 in outsourced research and development mainly due to price increases for outsourcedas we discontinued working with our foundry services combined with an increaseprovider, TSI Semiconductor, as of January 31. 2024. We are currently seeking a replacement provider of foundry services. This decrease was offset by increases in the number of wafers processed. The increase in researchboth employee related expenses and development expenses also reflected increases of approximately $209,000 in employee-related expenses resulting from new hires, and approximately $78,000 in stock-based compensation costs.

For the six months ended June 30, 2023 and 2022, we incurredtotaling approximately $6.2 million and $4.8 million, respectively, of research and development expense, an increase of approximately $1.5 million, or 31%. The increase was primarily due to outsourced research and development of approximately $622,000 due to price increases and increased number of wafers processed. Additional increases were due to approximately $413,000 in employee costs for new hires and approximately $111,000 in wafer purchases to support our research efforts. The price increases by our outsourced foundry service provider will continue to affect our research and development expenses going forward, but the magnitude of the increase seen in the first half of 2023 should not recur in the second half due to the larger number of wafer lot starts as cycle time improved.$92,000.

18

 

General and administrative expense. General and administrative expenses consist primarily of payroll and benefit costs for administrative personnel, office-related costs and professional fees. General and administrative costs were approximately $1.8 million and $1.7 million for the three months ended June 30,March 31, 2024 and 2023, and 2022, respectively, representing an increase of approximately $108,000,$69,000, or 6%4%. The increase is primarily related to an increaseincreases of approximately $107,000 in payroll and benefits costs and approximately $57,000 in stock-based compensation costscompensation. These increases were partly offset by a decrease of approximately $71,000 and an increase of approximately $26,000$74,000 in IT support services.

General and administrative costs were approximately $3.5 million and $3.3 million for the six months ended June 30, 2023 and 2022, respectively, representing an increase of approximately $202,000, or 6%. The increase is primarily related to an increase in stock-based compensation costs of approximately $167,000 and an increase of approximately $53,000 in IT support services. corporate legal expenses.

 

Selling and marketing expense. Selling and marketing expenses consist primarily of salary and benefits for our sales and marketing personnel and business development consulting services. Selling and marketing expenses for the three months ended June 30,March 31, 2024 and 2023 and 2022 were approximately $393,000$350,000 and $347,000,$389,000, respectively, representing an increasea decrease of approximately $46,000,$39,000, or 13%10%. The increasedecrease in costs is primarily related to increased travel and stock-based compensation costs.

Selling and marketing expenses for the six months ended June 30, 2023 and 2022 were approximately $782,000 and $672,000, respectively, representing an increase of approximately $110,000, or 16%. The increasea reduction in costs is primarily related to increased travel and stock-based compensation costs.head count.

 

Interest income. Interest income for three months ended June 30,March 31, 2024 and 2023 and 2022 was approximately $152,000$205,000 and $35,000, respectively. Interest income for six months ended June 30, 2023 and 2022 was approximately $351,000 and $38,000,$199,000, respectively. Interest income for the periods presented related to interest earned on our cash, cash equivalents and short-term investments.

 

Accretion income. Accretion income for the three and six months ended June 30,March 31, 2024 and 2023 was approximately $107,000$46,000 and $109,000$2,000, respectively. Accretion income relates to the increase in value of our available-for-sale securities from the purchase date through the maturity date. There was no income from accretion for the three or six months ended June 30, 2022.

 

Interest expense. Interest expense for the three months June 30,ended March 31, 2024 and 2023 and 2022 was approximately $51,000$39,000 and $69,000, respectively. Interest expense for the six months June 30, 2023 and 2022 was approximately $104,000 and $140,000,$53,000, respectively. Interest expense is related to the tool financing lease entered into in August 2021.

 

Cash Flows from Operating, Investing and Financing Activities

 

Net cash used in operating activities of approximately $8.2$4.1 million for the sixthree months ended June 30,March 31, 2024 resulted primarily from our net loss of approximately $4.8 million offset by approximately $1.0 million of stock-based compensation and approximately $550,000 of collected contracts receivable offset by the payment of accrued payroll expenses of approximately $928,000.

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Net cash used in operating activities of approximately $4.2 million for the three months ended March 31, 2023 resulted primarily from our net loss of approximately $10.2$5.0 million offset by approximately $2.0 million of$927,000 stock-based compensation.

 

Net cash used in operatingprovided by investing activities of approximately $6.6$2.5 million and for the sixthree months ended June 30, 2022 resultedMarch 31, 2024 consisted primarily from our net loss of approximately $8.6 million and an increase in prepaid expenses,the maturity of short-term available-for-sale investments, offset by stock-based compensation and amortizationthe purchase of right-of-use assets.short-term available-for-sale investments.

 

Net cash used in investing activities of approximately $10.9$5.0 million and for the sixthree months ended June 30,March 31, 2023 consisted primarily of the purchase of short-term investments. Net cash used in investing activities of approximately $19,000 for the six months ended June 30, 2022 consisted of the purchase of computers and lab tools in Tempe, AZ. 

 

Net cash provided by financing activities of approximately $10.8$3.8 million for the sixthree months ended June 30, 2023March 31, 2024 primarily related to the net proceeds from our ATM offering, offset by the principal payments on our financing lease.

 

Net cash usedprovided by financing activities of approximately $227,000$125,000 for the sixthree months ended June 30, 2022March 31, 2023 primarily related to the net proceeds from our ATM offering, offset by the principal payments on our financing lease offset by proceeds from the exercise of stock options and net proceeds from our ATM offering.lease.

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Liquidity and Capital Resources

 

As of June 30, 2023,March 31, 2024, we had cash and cash equivalents of approximately $12.9$14.8 million, short-term investments of approximately $11.0$4.5 million and working capital of approximately $21.6$16.8 million. For sixthree months ended June 30, 2023,March 31, 2024, we had a net loss of approximately $10.2$4.8 million and used approximately $8.2$4.1 million of cash and cash equivalents in operations. Since inception, we have incurred recurring operating losses.

 

During the sixthree months ended June 30, 2023,March 31, 2024, we sold approximately 1.4 million510,000 shares pursuant to our ATM at an average price per share of approximately $8.09,$8.06, resulting in approximately $11.1$4.0 million of net proceeds to us after deducting commissions and other offering expenses. Since June 30, 2023 we have issued approximately 24,000 additional shares through our ATM offering at an average price per share of $9.17 resulting in additional net proceeds of approximately $214,000.

 

We believe that our available working capital is sufficient to fund our presently forecasted working capital requirements for, at least, the next 12 months following the date of the filing of this report. However, our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our MST technology, competing technological and market developments, and the need to enter into collaborations with other companies or acquire technologies to enhance or complement our current offerings. If we are not able to generate sufficient revenue from license fees and royalties in a timeframe that satisfies our cash needs, we will need to raise more capital. In the event we require additional capital, we will endeavor to acquire additional funds through various financing sources, including our ATM Facility, follow-on equity offerings, debt financing and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve cash.

 

Critical Accounting Estimates

 

There have been no changes to our critical accounting estimates from those included in our Annual Report on Form 10-K for the year ended December 31, 20222023 filed with the SEC on February 15, 2023.2024.

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

Not applicable.

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Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our chief executive officer and principal financial and accounting officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on this evaluation, management concluded that our disclosure controls and procedures were effective as of June 30, 2023.March 31, 2024.

 

Changes in Internal Control over Financial Reporting

 

There have not been any changes to our internal controls over financial reporting (as defined by Rule 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the three-month period ended June 30, 2023March 31, 2024 that have materialmaterially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

 

 

 

 2019 

 

PART II. Other Information

 

Item 1A. Risk Factors

 

The primary risk factors affecting our business have not changed materially from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 20222023 filed with the SEC on February 15, 2023.2024.

Item 5. Other Information

During the quarter ended March 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

 

Item 6. Exhibits

 

The following is a list of exhibits filed as part of this Report on Form 10-Q:

 

Exhibit

No.

 Description Method of filing

 

31.1 Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed electronically herewith
     
31.2 Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed electronically herewith
     
32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) Filed electronically herewith
     
101.INS Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) Filed electronically herewith
     
101.SCH Inline XBRL Taxonomy Extension Schema Document Filed electronically herewith
     
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed electronically herewith
     
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed electronically herewith
     
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed electronically herewith
     
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document Filed electronically herewith
     
104 Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101). Filed electronically herewith

 

 

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and the on the date indicated.

 

 ATOMERA INCORPORATED. 
   
Date: August 2, 2023April 30, 2024By:/s/ Scott A. Bibaud 
  Scott A. Bibaud
Chief Executive Officer,
 
  (Principal Executive Officer) 
  and Director 
    
    
Date: August 2, 2023April 30, 2024By:/s/ Francis B. Laurencio 
  Francis B. Laurencio 
  Chief Financial Officer 
  (Principal Financial and 
  Accounting Officer) 

 

 

 

 

 

 

 

 

 

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