What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-04-27 compared with 2021-11-01 · 122 added, 241 removed, 232 unchanged (61% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

Current assets:

Cash and cash equivalents

Accounts receivable

Prepaid expenses and other current assets

1 unchanged sentence

Property and equipment, net

Operating lease right-of-use asset

Financing lease right-of-use asset

Long-term prepaid rent

Long-term prepaid maintenance and supplies

Security deposit

Operating lease right-of-use asset

Financing lease right-of-use-asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

12 unchanged sentences

Preferred stock $ 0.001 par value, authorized 2,500 shares;

none issued and outstanding at September 30, 2021 and December 31, 2020

none issued and outstanding at March 31, 2022 and December 31, 2021

Common stock:

$ 0.001 par value, authorized 47,500 shares;

23,145 and 22,375 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively;

23,393 and 23,207 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively;

Additional paid-in capital

8 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

11 unchanged sentences

Provision for income taxes

Net loss per common share, basic and diluted

Net loss per common share, basic and diluted (in dollars per share)

Weighted average number of common shares outstanding, basic and diluted

3 unchanged sentences

Statements of Stockholders’ Equity

For the Three and Nine Months Ended September

30, 2021 and 2020

For the Three Months Ended March 31, 2022 and

(in thousands)

3 unchanged sentences

Stock-based compensation

At-the-market sale of stock, net of commissions and expenses

Stock option exercise

Warrant Exercise

Forfeited restricted stock awards

Balance March 31, 2022

$ ( 169,940 )

Stock-based compensation

Stock option exercise

Balance at June 30, 2021

$ ( 157,486 )

Stock option exercise

Stock-based compensation

Forfeited restricted stock awards

Balance at September 30, 2021

$ ( 161,689 )

Total Stockholders’

Stockholders’

Balance January 1, 2021

1 unchanged sentence

Stock-based compensation

Warrant exercise

Warrant modification

Balance March 31, 2020

$ ( 138,907 )

Underwritten public offering of common stock, net of commissions and expenses

Stock option exercise

Stock-based compensation

Balance June 30, 2020

$ ( 142,686 )

At-the-market sale of stock, net of commissions and expenses

Stock option exercise

Stock-based compensation

Warrant Exercise

Balance September 30, 2020

Forfeited restricted stock awards

Balance March 31, 2021

$ ( 153,760 )

4 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Stock-based compensation

Warrant modification expense

Non cash interest expense

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Long-term prepaid rent

Accounts payable

2 unchanged sentences

Operating lease liability

Deferred revenue

Net cash used in operating activities

3 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from underwritten public offering, net of commission and expenses

Proceeds from at-the-market sale of stock, net of commissions and expenses

Proceeds from exercise of warrants

Proceeds from exercise of stock options

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Payments on principal of financing lease

Net cash provided (used) by financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

7 unchanged sentences

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September

30, 2021 and 2020

For the Three Months Ended March 31, 2022 and

NATURE OF OPERATIONS

5 unchanged sentences

Atomera is an early-stage

company, having only recently begun limited revenue-generating activities, and is devoting substantially all of its efforts toward technology

research and development and to commercially licensing its technology to manufacturers and designers of integrated circuits.

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.

has primarily financed operations through private placements of equity and debt securities, the Company’s Initial Public Offering

1 unchanged sentence

LIQUIDITY AND MANAGEMENT PLANS

At September 30, 2021, the

Company had cash and cash equivalents of approximately $ 31.8 million and working capital of approximately $ 29.3 million.

The Company has

generated only limited revenues since inception and has incurred recurring operating losses.

At March 31, 2022, the Company

had cash and cash equivalents of approximately $ 24.5 million and working capital of approximately $ 23.1 million.

The Company has generated

only limited revenues since inception and has incurred recurring operating losses.

The Company’s operating

plans for the next 12 months include increased spending on research and development headcount, outsourced fabrication and testing, and

sales and marketing expenses to drive customer adoption of the Company’s MST technology.

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.

However, as the Company has generated only limited

revenue, it is subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays in a new

plans for the next 12 months include increased research and development headcount and increased spending on outsourced fabrication and

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

However, as the Company has generated only limited revenue from its principal operations, 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.

Accordingly, the Company may require additional capital, the receipt of which cannot be assured.

In the event the Company requires

additional capital, there can be no guarantee that funds will be available on commercially reasonable terms, if at all.

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.

If the Company is unable to secure additional

capital, it may be required to curtail its research and development initiatives and take additional measures to reduce costs in order

to conserve its cash.

In the event the Company requires additional

capital, there can be no guarantee that funds will be available on commercially reasonable terms, if at all.

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.

If the Company is unable to secure additional capital, it may

be required to curtail its research and development initiatives and take additional measures to reduce costs in order to conserve its

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

The unaudited condensed financial

statements of the Company for the three and nine months ended September 30, 2021 and 2020 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

The balance sheet information as of December 31, 2020, was derived from the audited financial statements included in the Company's

financial statements as of and for the year ended December 31, 2020, included in the Company’s Annual Report on Form 10-K filed

with the SEC on February 19, 2021.

statements of the Company for the three months ended March 31, 2022 and 2021 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, 2021, was derived from the audited financial statements included in the Company's financial

statements as of and for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K filed with the SEC

on February 15, 2022.

These unaudited condensed financial statements should be read in conjunction with that report.

Adoption of recent accounting standards

In December 2019, the FASB

issued ASU No.

2019-12, Simplifying Accounting for Income Taxes .

This is part of the FASB’s overall initiative to reduce

complexity in accounting standards.

Amendments include removal of certain exceptions to the general principles of Accounting Standard

Codification (“ASC”) 740, Income taxes , and simplification in several other areas such as accounting for a franchise

tax (or similar tax) that is partially based on income.

The Company adopted this standard on January 1, 2021 and it did not have a material

impact on its financial position, results of operations or financial statement disclosure.

Recent accounting standards

In August 2020, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, Debt with Conversion

and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40).

guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends the accounting

for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions.

In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares

impact the diluted earnings per share computation.

This guidance is effective as of January 1, 2022 (Early adoption is permitted effective

January 1, 2021).

The Company is currently evaluating the effect the updated standard will have on its financial position, results of

operations or financial statement disclosure.

In August 2020, the

Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2020-06, Debt

with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40).

The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments.

It also amends

the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific

settlement provisions.

In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be

settled in cash or shares impact the diluted earnings per share computation The Company adopted this standard on January 1, 2022 and it

did not have a material impact on its financial position, results of operations or financial statement disclosure.

The Company recognizes revenue

in accordance with ASC 606.

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 at the time when goods or services are transferred and/or delivered to its customers.

Revenue is recognized when the Company satisfies a performance obligation by transferring the product or service to the customer.

Company generates revenues from engineering service contracts, integration license agreements and joint development agreements.

Company’s performance obligation is the promise to grant a license, revenue is recognized either at a point in time or over time.

in accordance with Accounting Standards Codification (“ASC”) No.

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 at the time when goods or services

are transferred and/or delivered to its customers.

Revenue is recognized when the Company satisfies a performance obligation by transferring

the product or service to the customer.

The Company generates revenues from engineering service contracts, integration license agreements

and joint development agreements.

When the Company’s performance obligation is the promise to grant a license, revenue is recognized

either at a point in time or over time.

The following table provides information about

disaggregated revenue by primary geographical markets and timing of revenue recognition (in thousands):

Information about disaggregated revenue and timing of revenue

Three Months Ended September 30,

Nine Months Ended September 30,

disaggregated revenue and timing of revenue

Three Months Ended March 31,

Primary geographic markets

12 unchanged sentences

received more than one year from the reporting date.

The Company records deferred

revenue when revenue will be recognized after invoicing.

During the nine months ended September 30, 2020, the Company recognized approximately

$ 37,000 of revenue that was included in deferred revenue as of December 31, 2019.

BASIC AND DILUTED LOSS PER SHARE

15 unchanged sentences

Schedule of anti dilutive shares

Three and Nine Months Ended

September 30,

Three Months Ended

Stock Options

Unvested restricted stock

The Company leases corporate

office space in Los Gatos, California.

In August 2020, the Company and its landlord amended the lease for this office.

This amendment

extends the expiration date of the operating lease from January 2021 to January 2026 and increases the space from 3,396 square feet to

4,101 square feet.

Under ASC 842, the lease amendment was treated as a separate lease for the new space and a modification of the lease

for the original space.

An additional right-of-use (“ROU”) asset and lease liability of approximately $ 681,000 were recorded

at the time of the amendment.

In January 2021 the additional space became available for use, and the Company recorded an additional

ROU asset and corresponding liability of approximately $ 144,000 .

The lease liability is based on the present value of the minimum lease

payments, discounted using the Company’s estimated incremental borrowing rate of 5.5 %.

The lease contains escalating payments on

the anniversary of the original commencement which are included in the measurement of the initial lease liability.

Additional payments

based on a change in the Company’s share of the operating expenses, including property taxes and insurance, are recorded as a period

expense when incurred.

In March 2021, the

Company began leasing 474 square feet of office space in Tempe, Arizona.

The new lease is classified as an operating lease with an

initial term of two years and an option to extend for an additional three years through February 2026.

The lease also contains a

performance standard for research collaboration with Arizona State University.

The agreement requires a minimum value of

collaborative research in each year of the lease.

The lease is accounted for under ASC 842 and accordingly, the research payments

are included in the ROU and lease liability at the commencement.

In March 2021, the Company recorded an ROU and associated lease

liability of approximately $ 238,000 .

The lease liability is based on the present value of the minimum lease payments, discounted using the Company’s estimated

incremental borrowing rate of 5.25 %

over five years, as the Company expects to lease the space through the three-year extension.

The lease also contains escalating

payments on the anniversary of the original commencement which are included in the measurement of the initial lease liability.

In October 2019, the Company

entered into an agreement to lease a tool for use in the development of the Company’s technology.

The lease is for five 5 years

at $ 150,000 per month and commenced on August 1, 2021.

A prepayment of $ 450,000 was made in the nine months ended September 30, 2020 which

represents the final three monthly payments under the lease and was recorded as a long-term prepaid until the lease commencement.

At commencement,

the Company recorded an ROU asset of approximately $ 6.4 million and a corresponding lease liability of approximately $ 6 .0 million.

lease was classified as a financing lease and accordingly, amortization is recorded as a research and development expense in the Company’s

condensed statement of operations.

Interest expense is also recorded and included in other income or expense in the Company’s condensed

statement of operations.

The lease liability is based on the present value of the minimum lease payments, discounted using the Company’s

estimated incremental borrowing rate of 5.25 % at the time of commencement.

The lease payment of $150,000 per month includes approximately

$30,000 in supplies and maintenance that is recorded as an operating expense and is not included in the valuation of the lease liability.

The Company elected to exclude these costs from the asset and related lease liability valuation for this class of assets.

will be expensed as operating expenses in the period incurred.

Lease expense for operating

leases consists of the lease payments recognized on a straight-line basis over the lease term.

Expenses for financing leases consists

of the amortization expenses recognized on a straight-line basis over the lease term and interest expense.

The components of lease costs

were as follows (in thousands):

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 and interest expense.

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

Components of lease costs

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Financing lease costs:

1 unchanged sentence

Interest on lease liabilities

Total financing lease costs

Operating lease costs

3 unchanged sentences

Total operating lease costs

Future minimum payments under

non-cancellable leases as of September 30, 2021 were as follows (in thousands):

Future minimum payments under non-cancellable

leases as of March 31, 2022 were as follows (in thousands):

Schedule of future minimum lease payments

7 unchanged sentences

Total lease liability

The following table provides supplemental information and non-cash

activity related to the Company’s operating and financing leases (in thousands):

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 leases

Three Months Ended

September 30,

Nine Months Ended

September 30,

Three Months Ended December 31,

Operating cash flow information:

Cash paid for amounts included in the measurement of operating lease liabilities

Cash paid for amounts included in the measurement of financing lease

Cash paid for amounts included in the measurement of financing lease liabilities

Non-cash activity:

1 unchanged sentence

Right-of-use assets obtained in exchange for financing lease obligations

The weighted average

remaining discount rate is 5.25 % for the Company’s operating and financing leases.

The weighted average remaining lease term is

4.4 years for operating leases and 4.8 years for financing leases.

The weighted average remaining

discount rate is 5.25 % for the Company’s operating and financing leases.

The weighted average remaining lease term is 3.9 years

for operating leases and 4.3 years for the financing lease.

In October 2016, the Company

entered into a lease agreement for approximately 200 square feet of office space in Cambridge, Massachusetts.

The lease, with current

monthly payments of $ 2,942 per month, commenced on October 24, 2016.

Because the lease is month to month and can be cancelled with a 30-day

notice, the future lease payments are not included in the Company’s lease accounting under ASC Topic 842.

A summary of warrant activity

for the nine months ended September 30, 2021 is as follows (in thousands except per share amounts and contractual term):

for three months ended March 31, 2022 is as follows (in thousands except per share amounts and contractual term):

Schedule of warrant activity

Term (In Years)

Outstanding at January 1, 2022

Outstanding at September 30, 2021

The warrants outstanding at

September 30, 2021 had an intrinsic value of $ 0 based on a per-share stock price of $ 23.09 as of September 30, 2021.

On March 17, 2020, 196,602

warrants with an exercise price of $3.75 were set to expire.

Prior to the expiration, the Company entered into an agreement with the warrant

holders, whereby it modified the terms of the warrants to extend the expiration date until September 17, 2020 in exchange for the removal

of a cashless exercise provision.

No other terms were modified.

Due to this modification, the Company incurred a modification expense

of approximately $ 139,000 that is included in general and administrative expenses on the Condensed Statement of Operations for the nine

months ended September 30, 2020.

All of the modified warrants were exercised on August 6, 2020.

In January 2021, warrants

for 317,488 shares were presented for cashless exercises resulting in the issuance of 223,487 shares of common stock.

Outstanding and exercisable at March 31, 2022

STOCK BASED COMPENSATION

5 unchanged sentences

The 2017 Plan provides for the issuance

of 3,750,000 shares of common stock.

of 3,750,000 .

shares of common stock.

All of the Company’s employees and any subsidiary employees (including officers and directors

4 unchanged sentences

The following table summarizes

the stock-based compensation expense recorded in the Company’s results of operations during the three and nine months ended September

the stock-based compensation expense recorded in the Company’s results of operations during the three months ended March 31, 2022

and 2021 for stock options and restricted stock granted under the 2017 Plan and the 2007 Plan (in thousands):

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Selling and Marketing

As September 30, 2021, there

As of March 31, 2022, there

was approximately $ 8.4 million of total unrecognized compensation expense related to unvested share-based compensation arrangements.

1 unchanged sentence

The weighted average grant

date fair value per share of the options granted under the Company’s 2017 Plan was $ 13.77 and $ 15.29 for the three and nine months

ended September 30, 2021, respectively.

The weighted average grant date fair value per share of the options granted under Company’s

2017 plan was $ 7.64 and $ 2.80 for the three and nine months ended September 30, 2020, respectively.

date fair value per share of the options granted under the Company’s 2017 Plan was $ 10.60 and $ 15.94 for the three months ended

March 31, 2022 and 2021, respectively.

The following table summarizes

stock option activity during the nine months ended September 30, 2021 (in thousands except exercise prices and contractual terms):

stock option activity during the three months ended March 31, 2022 (in thousands except exercise prices and contractual terms):

Schedule of stock option activity

2 unchanged sentences

Outstanding at January 1, 2022

Outstanding at September 30, 2021

Exercisable at September 30, 2021

During the nine months ended

September 30, 2021, the Company granted options under the 2017 Plan to purchase approximately 153,000 shares of its common stock to its

Outstanding at March 31, 2022

Exercisable at March 31, 2022

During the three months ended

March 31, 2022, the Company granted options under the 2017 Plan to purchase approximately 175,000 shares of its common stock to its employees.

The fair value of these options was approximately $ 1.9 million at the time of grant.

2 unchanged sentences

The following

table summarizes all restricted stock activity during the nine months ended September 30, 2021 (in thousands except per share data):

table summarizes all restricted stock activity during the three months ended March 31, 2022 (in thousands except per share data):

Schedule of restricted stock option activity

1 unchanged sentence

Outstanding at January 1, 2022

Outstanding non-vested shares at September 30, 2021

During the nine months ended

September 30, 2021 the Company granted approximately 89,000 restricted stock awards under the 2017 Plan to its employees and directors.

Outstanding non-vested shares at March 31, 2022

During the three months ended

March 31, 2022 the Company granted approximately 161,000 restricted stock awards under the 2017 Plan to its employees and directors.

The fair value of these awards was approximately $ 2.4 million at the time of grant.

During the nine months ended

September 30, 2021, approximately 63,000 restricted stock awards were forfeited and reissued under the Company’s equity compensation

PROVISION FOR INCOME TAXES

The Company recorded a provision

for income taxes of approximately $ 17,000 and $ 48,000 during the three and nine months ended September 30, 2021, respectively.

The provision

is for withholding of income taxes accrued in foreign jurisdictions where we have income.

The Company recorded the provision in accordance

with ASC 740 using its estimated annual tax rate and applied it to the net loss for the three and nine months ended September 30, 2021.

The Company recorded a

provision for income taxes of approximately $ 14,000

during the months ended March 31, 2021.

The provision is for withholding of income taxes accrued in foreign jurisdictions where we

The Company recorded the provision in accordance with ASC 740 using its estimated annual tax rate and applied it to the

net loss for the three months ended March 31, 2021.

The Company did not incur withholding of income taxes for the three months ended

March 31, 2022.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

The Company is not party to any material

litigation as of September 30, 2021, or through the date these financial statements have been issued.

litigation as of March 31, 2022, or through the date these financial statements have been issued.

SUBSEQUENT EVENTS

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements