What changed in this filing

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Item 1. Business

2023-02-15 compared with 2022-02-15 · 234 added, 243 removed, 257 unchanged (65% of the section changed)

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We are engaged in the business

of developing, commercializing and licensing proprietary materials, processes and technologies for the $550+ billion semiconductor industry.

Our lead technology, named Mears Silicon Technology TM , or MST ® , is a thin film of reengineered silicon, typically

of developing, commercializing and licensing proprietary processes and technologies for the $550+ billion semiconductor industry.

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 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 smaller, with increased speed, reliability and energy efficiency.

MST is an additive

and low-cost technology that we believe semiconductor manufacturers can deploy on an industrial scale, with equipment commonly used in

their facilities.

We believe that MST can improve existing products due to the physical properties of the film and can also enable customers

to design products with performance, power and scaling characteristics that are not possible using their current process technologies.

We believe that MST can be widely incorporated into the most common types of semiconductor products, including analog, logic, optical

and memory integrated circuits.

We do not intend to design

or manufacture integrated circuits directly.

We believe that by incorporating MST, transistors can be made smaller, with increased speed, reliability and power efficiency.

since MST is an additive and low-cost technology, we believe it can be deployed on an industrial scale, with machines commonly used in

semiconductor manufacturing.

We believe that MST can be widely incorporated into the most common types of semiconductor products, including

analog, logic, optical and memory 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

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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 manufacture of their chips to foundries;

original equipment manufacturers, or OEMs, which manufacture the epitaxial, or EPI, deposition machines used to deposit semiconductor layers, such as the MST film onto the base silicon wafer;

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

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, machines used to deposit semiconductor layers, such as the MST film, onto silicon wafers;

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.

We currently generate revenue

through licensing arrangements whereby our customers initially pay us a fee for an integration license that provides them the right to

use MST technology in the manufacture of silicon wafers for internal testing and sampling.

Our goal is for each integration license to

be the first of a three-stage licensing process with the customer, with the first integration stage to be followed by one or more agreements

granting them manufacturing and distribution licenses.

Out manufacturing license grants our customer rights to manufacture MST-enabled

products for internal use only and the grant typically occurs when we deliver our MST film recipe to the customer.

A distribution license

grants the customer the rights to manufacture and sell products utilizing MST.

We expect that agreements granting manufacturing and distribution

licenses will provide for substantially larger upfront license fee payments than the integration licenses, and distribution agreements

will require licensees to make royalty payments to us based on the number and sales price of MST-enabled products they sell to their customers.

We also generate revenue through engineering services provided to customers during their evaluation of MST technology.

In December 2020,

we released MSTcad which enables customers to simulate the effects of MST on their products using Synopsys, Inc.’s technology computer-aided

design, or TCAD, software.

Starting in 2019, we began

to develop deeper relationships with several large potential customers who were evaluating MST across multiple manufacturing processes

use MST technology (with MST film deposited for the customer by Atomera) in the manufacture of silicon wafers for internal testing and

Our goal is for each integration license to be the first of a three-stage licensing process with the customer, with the first

integration stage to be followed by one or more agreements granting them manufacturing and distribution licenses.

Our manufacturing license

grants our customer rights to manufacture MST-enabled products for internal use only and the grant typically occurs when we deliver our

MST film recipe to the customer.

A distribution license grants the customer the rights to manufacture MST-enabled products for sale to

their customers.

Agreements granting manufacturing and distribution licenses provide for substantially larger upfront license fee payments

than the integration licenses, and distribution agreements will require licensees to make royalty payments to us based on the number and

sales price of MST-enabled products they sell to their customers.

We also generate revenue through engineering services provided to customers

during their evaluation of MST technology.

Starting in late 2020, we have been providing our MSTcad software which enables customers to

simulate the effects of MST on their products using Synopsys, Inc.’s technology computer-aided design, or TCAD, software.

Starting in 2019, we began to

develop deeper relationships with several potential large scale customers who were evaluating MST across multiple manufacturing processes

and product lines.

Accordingly, we have begun proposing an engagement format called a joint development agreement, or JDA, to certain

We expect that JDAs will be customized to a particular customer’s goals but that generally they will include development,

technology transfer, manufacturing and licensing components.

In January 2021, we entered

into a JDA with a leading semiconductor provider for integration of our MST technology into their manufacturing process.

The JDA includes

the grant of an upfront, paid manufacturing license that allows the customer to install the recipe for our MST film into a tool in their

fab and to fabricate semiconductor wafers incorporating MST for internal use.

This JDA also includes development milestones that, if achieved,

would result in additional revenue to Atomera.

In February 2022, we successfully

achieved all these development milestones which entitles us to additional revenue.

Accordingly, we have begun engaging with certain customers under an engagement format called a joint development agreement,

or JDA, to certain customers.

Our JDAs are customized to each customer’s goals and they include development, technology transfer,

manufacturing and licensing components.

In January 2021, we entered into

a JDA with a leading semiconductor provider for integration of our MST technology into their manufacturing process.

Under this JDA, we

granted our customer a paid manufacturing license pursuant to which the customer installed the recipe for our MST film into a tool in

their fab and was authorized to fabricate semiconductor wafers incorporating MST for internal use.

This JDA also includes development

milestones that we achieved in February 2022, resulting in additional revenue to us.

Although this JDA does not confer commercial distribution

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additional license revenues and potential royalty streams.

In April 2022, we entered into a JDA with a major semiconductor foundry which

contains technical targets which, if achieved, should result in a paid licenses and engineering services revenue.

Although this JDA does

not confer commercial distribution rights, we believe that achievement of the JDA’s technical objectives would be a significant

step toward commercialization.

In September and October 2018,

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our customers the right to deposit MST at their site or to sell products incorporating MST.

To date, initial application

of our MST technology has been for power devices, RFSOI devices and advanced CMOS integrated circuits.

CMOS integrated circuits are the

most widely used type of integrated circuits in the semiconductor industry.

To date, initial application of

our MST technology has been for power devices, RFSOI devices and advanced CMOS integrated circuits.

CMOS integrated circuits are the most

widely used type of integrated circuits in the semiconductor industry.

As applied to CMOS-type transistors, MST functions as a transistor

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key requirements.

During 2020 and 2021, the global COVID-19 pandemic accelerated trends toward remote work, cloud computing and mobile

These trends coincided with the rollout of 5G cellular networks and 5G-enabled devices, growing popularity of augmented and virtual

reality technologies and the growth in popularity of cryptocurrencies, all of which require high levels of processing power.

These developments depend,

in large part, on integrated circuits, or microchips, which are sets of electronic circuits on a single chip of semiconductor material,

normally silicon.

It is common for a single semiconductor chip to combine many components (processor, communications, memory, custom logic,

input/output) resulting in highly complex chip designs.

Transistors are the building blocks of integrated circuits and the most complex

semiconductor chips today contain more than a billion transistors, each of which may have features that are much less than 1/1,000 th

the diameter of a human hair.

The COVID-19 pandemic accelerated trends toward remote work, cloud computing and mobile devices.

These trends coincided

with the rollout of 5G cellular networks and 5G-enabled devices, growing popularity of augmented and virtual reality technologies and

the growth in popularity of cryptocurrencies, all of which require high levels of processing power.

These developments depend, in

large part, on integrated circuits, or microchips, which are sets of electronic circuits on a single chip of semiconductor material, normally

It is common for a single semiconductor chip to combine many components (processor, communications, memory, custom logic, input/output)

resulting in highly complex chip designs.

Transistors are the building blocks of integrated circuits and the most complex semiconductor

chips today contain more than a billion transistors, each of which may have features that are much less than 1/1,000 th the

diameter of a human hair.

The most widely used transistors

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The Pursuit of Increased Semiconductor Performance

For years, the semiconductor

industry was able to almost double the number of transistors it could pack into a single microchip about every two years, a rate of improvement

For years, the semiconductor industry

was able to almost double the number of transistors it could pack into a single microchip about every two years, a rate of improvement

commonly known as “Moore’s Law.” The semiconductor industry uses the term “node” to describe the minimum

line width or geometry on a semiconductor chip, expressed in nanometers, or nm, for today’s technologies.

Historically, the smaller

the node, the smaller the transistors and the more closely they are packed together, producing chips that are denser and thus less costly

on a per-transistor basis.

Frequently, smaller nodes also correspond to an improvement in chip performance, making them the mile markers

of Moore’s Law, with each node marking a new generation of chip-manufacturing technology.

Until recently, the industry

succeeded at maintaining the rate of improvement predicted by Moore’s Law by scaling the key transistor parameters, such as shrinking

feature sizes and reducing operating voltages, thereby allowing more transistors to be packed onto a single microchip.

This trend was

facilitated in large part by the development of CMOS technologies.

However, a discontinuity in the rate of improvement delivered by scaling

appeared when transistor technology reached feature sizes below 100 nanometers.

The industry responded with advanced materials to supplement

the ongoing geometry shrinks.

Historically, smaller

nodes enables more densely packed designs that produced less costly products on a per-transistor basis.

Frequently, smaller nodes also

correspond to an improvement in chip performance, making them the mile markers of Moore’s Law, with each node marking a new generation

of chip-manufacturing technology.

Until recently, the industry succeeded

at maintaining the rate of improvement predicted by Moore’s Law by scaling the key transistor parameters, such as shrinking feature

sizes and reducing operating voltages, thereby allowing more transistors to be packed onto a single microchip.

This trend was facilitated

in large part by the development of CMOS technologies.

However, a discontinuity in the rate of improvement delivered by scaling appeared

when transistor technology reached feature sizes below 100 nanometers.

The industry responded with advanced materials to supplement the

ongoing geometry shrinks.

Some of those materials advances included strained silicon, Silicon-on-Insulator and High-K/Metal Gate.

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The designers and manufacturers

of integrated circuits and systems — our targeted customers — are facing intense pressure to deliver innovative products at

ever shorter times-to-market, as well as at lower prices.

of integrated circuits and systems — our targeted customers — are facing intense pressure to deliver innovative products while

constantly reducing their time-to-market and prices.

In other words, innovation in chip and system design today often hinges on “better,

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Vertical Disaggregation of the Industry

In trying to keep research

and development costs manageable, while attempting to satisfy the demand for increasingly complex semiconductors, certain designers and

manufacturers of integrated circuits have transitioned to a more open innovation model in which competing companies and third-party providers

actively collaborate to address performance issues through various alliances, joint ventures, and licensing of externally developed technology.

In trying to keep research and

development costs manageable, while attempting to satisfy the demand for increasingly complex semiconductors, certain designers and manufacturers

of integrated circuits have transitioned to a more open innovation model in which competing companies and third-party providers actively

collaborate to address performance issues through various alliances, joint ventures, and licensing of externally developed technology.

Historically, most semiconductor

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Applications of Mears Silicon Technology

The initial applications of

MST are for power devices, RFSOI devices and advanced CMOS integrated circuits.

In November 2021 we announced the release of MST-SP, which

is a type of MST-enabled power device that offers what we believe to be industry-leading on-resistance (also referred to as Rsp) and reduced

footprint (enabling smaller devices).

We believe that the MST-SP devices will have immediate application in power management integrated

circuits (or PMICs) which are pervasive in hand-held, battery-powered devices and elsewhere.

We also believe that insertion of MST can

provide higher current and improved control of dopants, leading to improved device scaling.

The initial applications of MST

are for power devices, RFSOI devices and advanced CMOS integrated circuits.

We offer MST-SP, which is a type of MST-enabled power device

that offers what we believe to be industry-leading on-resistance (also referred to as Rsp) and reduced footprint (enabling smaller devices).

We believe that the MST-SP devices will have immediate application in power management integrated circuits (or PMICs) which are pervasive

in hand-held, battery-powered devices and elsewhere.

We also believe that insertion of MST can provide higher current and improved control

of dopants, leading to improved device scaling.

We believe MST has the potential

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enabling optimized device designs, lower variability and improved production yield.

We believe the enhancements

enabled by MST, as demonstrated in simulations and on our own and our customers’ test chips, are approximately equivalent to the

enhancements enabled by one-half to a full node of improvement and, therefore, can extend the productive life of capital equipment and

wafer fabrication facilities.

We believe the enhancements enabled

by MST, as demonstrated in simulations and on our own and our customers’ test chips, are approximately equivalent to the enhancements

enabled by one-half to a full node of improvement and, therefore, can extend the productive life of capital equipment and wafer fabrication

The extent of MST-enabled enhancement depends on the device technology and application.

We believe that

MST compares favorably to other alternatives for enhancing performance of CMOS-type transistors as follows:

Strained Silicon and

Silicon-on-Insulator, or SOI :

Unlike strained silicon or SOI, we believe that MST delivers multiple benefits in a single film in

a cost-effective manner, including enhanced transistor drive current, reduced leakage, and reduced variability.

Also, strained

silicon tends to lose much of its effectiveness below 45nm, constraining its scalability, while our results to date indicate that

the MST thin-film approach is scalable to the leading-edge nodes used for three-dimensional transistor devices using FinFET and

“gate-all-around” structures.

Based on our own research and development and third-party evaluations, we believe that MST

can deliver improved cost-benefit performance, in most cases in an additive manner, compared to already successful strain

technologies, such as dual stress liners and SiGe.

Work with our foundry partners and fabless licensee shows potential for additive

improvements on specialized SOI wafers used to manufacture radio frequency, or RF, devices, which are also referred to as RFSOI

We believe that MST compares favorably

to other alternatives for enhancing performance of CMOS-type transistors as follows:

Strained Silicon and Silicon-on-Insulator, or SOI :

Unlike strained silicon or SOI, we believe that MST delivers multiple benefits in a single film in a cost-effective manner, including enhanced transistor drive current, reduced leakage, and reduced variability.

Also, strained silicon tends to lose much of its effectiveness below 45nm, constraining its scalability, while our results to date indicate that the MST thin-film approach is scalable to the leading-edge nodes used for three-dimensional transistor devices using FinFET and “gate-all-around” structures.

Based on our own research and development and third-party evaluations, we believe that MST can deliver improved cost-benefit performance, in most cases in an additive manner, compared to already successful strain technologies, such as dual stress liners and SiGe.

Work with our foundry partners and fabless licensee shows potential for additive improvements on specialized SOI wafers used to manufacture radio frequency, or RF, devices, which are also referred to as RFSOI wafers.

High-K/Metal Gate, or HKMG :

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fewer disruptions to manufacturing processes and less incremental cost than other advanced technologies.

We believe MST can improve

transistor performance in a variety of device types including microprocessors;

We believe MST can improve transistor

performance in a variety of device types including microprocessors;

logic products;

analog, RF, and mixed-signal devices;

well as DRAM, SRAM, and other memory integrated circuits.

We have therefore developed different MST product options that can be applied

to the critical industry segments and technology nodes.

As of the date of this Annual Report, we have done technology simulation work

with universities and leading industry players at nodes from 180nm to 5nm.

We have also simulated devices with leading industry research

facilities and built and electrically verified test chips using MST in customer manufacturing facilities which have produced results that

demonstrate many of the benefits described above.

as well as DRAM,

SRAM, and other memory integrated circuits.

We have therefore developed different MST product options that can be applied to the critical

industry segments and technology nodes.

As of the date of this Annual Report, we have done technology simulation work with universities

and leading industry players at nodes from 180nm to 5nm.

We have also simulated devices with leading industry research facilities and

built and electrically verified test chips using MST in customer manufacturing facilities which have produced results that demonstrate

many of the benefits described above.

Development Partnerships

TSI Semiconductors.

Since 2016 we have worked under a Master R&D Services Agreement with TSI Technology Development & Commercialization Services LLC

2016 we have worked under a Master R&D Services Agreement with TSI Technology Development & Commercialization Services LLC (or

Under this agreement, TSI provides us with engineering services in their semiconductor manufacturing facility in California.

By running tests in TSI's facility, which we utilize to run tests on a contract basis, we are able to build and test devices that incorporate

running tests in TSI's facility, which we utilize to run tests on a contract basis, we are able to build and test devices that incorporate

MST much more quickly than when we test in our potential customers' facilities.

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test, and integration, and should accelerate our time to market.

we have worked in collaboration with Synopsys, Inc., a provider of the most broadly used TCAD simulation software in the semiconductor

As a result of our collaboration, Synopsys’ software now supports modeling of MST, which enables semiconductor manufacturers

and designers to model the interaction of MST with other process steps.

Since 2017 we

have worked in collaboration with Synopsys, Inc., a provider of the most broadly used TCAD simulation software in the semiconductor industry.

As a result of our collaboration, Synopsys’ software now supports modeling of MST, which enables semiconductor manufacturers and

designers to model the interaction of MST with other process steps.

In December 2020, we announced availability of our MSTcad TM

v1.0 software which runs on Synopsys’ Sentaurus TCAD software and enables semiconductor engineers to simulate the benefits of integrating

software which runs on Synopsys’ Sentaurus TCAD software and enables semiconductor engineers to simulate the benefits of integrating

MST in a variety of devices.

We believe these capabilities are helping us focus integration efforts for potential customers more quickly

on those areas most likely to deliver benefits, thus shortening test cycles and, we believe, accelerating the time to a license decision.

In the last two years, semiconductor fabs have generally been running at high capacity to keep up with industry supply shortages which

has made it challenging for us to run wafers through our customers’ fabrication lines.

MSTcad has been increasingly used by existing

and potential customers to identify applications where MST can have the greatest benefit, without requiring access to customer fabs.

We continually refine our MSTcad software by calibrating our models against measured silicon results and

we regularly release updates to that software.

We believe these capabilities are helping us focus integration efforts for potential customers

more quickly on those areas most likely to deliver benefits, thus shortening test cycles and, we believe, accelerating the time to a license

In the last three years, semiconductor fabs have generally been running at high capacity to keep up with industry supply shortages

which has made it challenging for us to run wafers through our customers’ fabrication lines.

MSTcad has been increasingly used by

existing and potential customers to identify applications where MST can have the greatest benefit, without requiring access to customer

Epi Tool Lease.

August 2021 we completed the acceptance process of an Applied Materials Centura epitaxial deposition reactor which handles both 200mm

and 300mm wafers.

2021 we completed the acceptance process of an Applied Materials Centura epitaxial deposition reactor which handles both 200mm and 300mm

We utilize this tool under a five-year lease and perform deposition on both customer and internal R&D wafers.

terms of our tool lease include the lessor’s maintenance and support as well as access to a clean-room with advanced cleaning and

inspection tools.

our tool lease include the lessor’s maintenance and support as well as access to a clean-room with advanced cleaning and inspection

MST Commercialization

We do not intend to design

or manufacture integrated circuits directly.

We do not intend to design or

manufacture integrated circuits directly.

Instead, we develop and license technologies and processes that offer the designers and manufacturers

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exploited for several generations until they are fully optimized and adoption costs are fully absorbed.

Although each customer or

potential customer follows an evaluation and adoption model that is particular to its business model and product focus, our engagements

generally consist of the following phases:

Although each customer or potential

customer follows an evaluation and adoption model that is particular to its business model and product focus, our engagements generally

consist of the following phases:

Engineering Planning:

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MST Integration.

Typically, this phase includes several rounds of tests that involve

building test devices on a semiconductor wafer using our MST technology within the customer’s manufacturing process flow.

this phase, we perform the MST deposition on customer wafers, so wafers must be shipped back and forth between the customer and Atomera.

We believe that this phase will continue to be the longest in our customer engagement process because integrating into a customer’s

flow frequently requires us to conduct subsequent tests based on the result of earlier test runs.

This phase also requires

investment of time and resources by customers.

In order to progress beyond this phase, we must demonstrate benefits at a commercially

significant level.

It is difficult for both customers and for Atomera to estimate the amount of time a customer will be in

the integration phase.

Typically, this phase includes several rounds of tests that involve building test devices on a semiconductor wafer using our MST technology within the customer’s manufacturing process flow.

In this phase, we perform the MST deposition on customer wafers, so wafers must be shipped back and forth between the customer and Atomera.

We believe that this phase will continue to be the longest in our customer engagement process because integrating into a customer’s flow frequently requires us to conduct subsequent tests based on the result of earlier test runs.

This phase also requires investment of time and resources by customers.

In order to progress beyond this phase, we must demonstrate benefits at a commercially significant level.

It is difficult for both customers and for Atomera to estimate the amount of time a customer will be in the integration phase.

Process Installation .

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potential customers may run tests on wafers containing MST prior to further engagement with us to integrate MST into their manufacturing

We believe that our success

is dependent upon the adoption of our MST technology through to commercial production by at least one IDM, foundry, or fabless semiconductor

We believe that our success is

dependent upon the adoption of our MST technology through to commercial production by at least one IDM, foundry, or fabless semiconductor

manufacturer.

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and encourage more customers to adopt MST.

Through our collaboration

with Synopsys, we enable potential customers of MST to more quickly assess the potential benefits of MST to their semiconductor devices.

By creating TCAD software models, we can work with manufacturers to assess which of their product types would most benefit from MST.

believe this modeling capability has shortened the time required for us to engage with new potential customers and should ultimately lead

to a faster decision process by the customer regarding licensing MST.

We market our MST technology

directly to the semiconductor industry through our significant industry contacts and relationships.

We also sponsor academic research

and participate in industry conferences and associations.

In certain foreign jurisdictions, we engage sales representatives to assist

us in establishing relationships with local customers.

In January 2021, we entered

into a JDA with a leading semiconductor provider for integration of our MST technology into their manufacturing process.

The JDA includes

the grant of an upfront, paid manufacturing license that allows the customer to install the recipe for our MST film into a tool in their

fab and to fabricate semiconductor wafers incorporating MST for internal use.

This JDA also includes development milestones that, if achieved,

would result in additional revenue to Atomera.

In February 2022 we achieved all these development milestones which entitles us to additional

Although this JDA does not confer commercial distribution rights, we believe that successful achievement of the JDA milestones

is a significant step toward commercialization as it should facilitate progress toward integrating MST into one or more of our customer’s

multiple production lines and thus provide opportunities for additional license revenues and potential royalty streams.

Through our collaboration with

Synopsys, we enable potential customers of MST to more quickly assess the potential benefits of MST to their semiconductor devices.

creating TCAD software models, we can work with manufacturers to assess which of their product types would most benefit from MST.

this modeling capability has shortened the time required for us to engage with new potential customers and should ultimately lead to a

faster decision process by the customer regarding licensing MST.

We market our MST technology directly

to the semiconductor industry through our significant industry contacts and relationships.

We also sponsor academic research and participate

in industry conferences and associations.

In certain foreign jurisdictions, we engage sales representatives to assist us in establishing

relationships with local customers.

In January 2021, we entered into

a JDA with a leading semiconductor provider for integration of our MST technology into their manufacturing process.

Under this JDA we

granted our customer a paid manufacturing license pursuant to which the customer installed the recipe for our MST film into a tool in

their fab and was authorized to fabricate semiconductor wafers incorporating MST for internal use.

This JDA also includes development

milestones that we achieved in February 2022, resulting in additional revenue to us.

Although this JDA does not confer commercial distribution

rights, we believe that successful achievement of the JDA milestones is a significant step toward commercialization as it should facilitate

progress toward integrating MST into one or more of our customer’s multiple production lines and thus provide opportunities for

additional license revenues and potential royalty streams.

In April 2022, we entered into a JDA with a major semiconductor foundry.

In September and October 2018,

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We intend that each integration

license agreement will be the first of a three-stage licensing process with each of AKM, ST and our RF licensee, to be followed by manufacturing

and distribution license agreements with each of them.

Those manufacturing and distribution license agreements, if executed, will allow

each licensee to manufacture – or in the case of our RF licensee, to have its foundry partner manufacture – MST-enabled products

and to sell them to their customers.

We expect that the manufacturing and distribution agreements will provide for substantially larger

upfront license fee payments than the integration license fees and will require the respective licensees to make royalty payments to us

based on the number and sales price of MST-enabled products they sell to their customers.

However, our ability to enter into royalty-based

manufacturing and distribution agreements with AKM, ST and our RF licensee will depend, in large part, on the performance of devices they

build using MST and the successful integration of our MST technology on a high-volume production scale.

There can be no assurance that

our MST technology will deliver the performance, power, cost reduction or other requirements our customers seek for their products or

that the integration of our technology with our customers’ manufacturing process will be successful in high volume.

even if our MST technology meets our customers’ technical objectives one or more of our licensees may decide, for reasons unrelated

to the price or performance of our MST technology, not to enter into manufacturing and distribution license agreements.

Our lead product, MST, is

a proprietary and patent-protected performance enhancement technology that we believe addresses a number of key engineering challenges

facing the semiconductor industry.

Historically, development of a new material technology for the semiconductor industry has taken 10-20

years from conceptualization to volume production.

Atomera’s MST technology has followed a similar trajectory, from early patents,

publications and presentations to the industry to early evaluations and installation at customers.

We compete with IDMs, OEMs,

foundries, fabless manufacturers of semiconductors and semiconductor IP licensing companies for the development and commercialization

of technologies that improve the performance of semiconductors.

Historically, when a new fabrication process proves to be a low-cost improvement

to the standard fabrication process, and is additive, rather than in place of other performance technologies, it has been successfully

adopted industry-wide.

license agreement will be the first of a three-stage licensing process with each of AKM, ST, our RF licensee and our foundry licensee,

to be followed by manufacturing and distribution license agreements with each of them.

Those manufacturing and distribution license agreements,

if executed, will allow each licensee to manufacture – or in the case of our RF licensee, to have its foundry partner manufacture

– MST-enabled products and to sell them to their customers.

We expect that the manufacturing and distribution agreements will provide

for substantially larger upfront license fee payments than the integration license fees and will require the respective licensees to make

royalty payments to us based on the number and sales price of MST-enabled products they sell to their customers.

However, our ability

to enter into royalty-based manufacturing and distribution agreements with our licensees under our integration license agreements will

depend, in large part, on the performance of devices they build using MST and the successful integration of our MST technology on a high-volume

production scale.

There can be no assurance that our MST technology will deliver the performance, power, cost reduction or other requirements

our customers seek for their products or that the integration of our technology with our customers’ manufacturing process will be

successful in high volume.

In addition, even if our MST technology meets our customers’ technical objectives one or more of our

licensees may decide, for reasons unrelated to the price or performance of our MST technology, not to enter into manufacturing and distribution

license agreements.

Our lead product, MST, is a proprietary

and patent-protected performance enhancement technology that we believe addresses a number of key engineering challenges facing the semiconductor

Historically, development of a new material technology for the semiconductor industry has taken 10-20 years from conceptualization

to volume production.

Atomera’s MST technology has followed a similar trajectory, from early patents, publications and presentations

to the industry to early evaluations and installation at customers.

We compete with IDMs, OEMs, foundries,

fabless manufacturers of semiconductors and semiconductor IP licensing companies for the development and commercialization of technologies

that improve the performance of semiconductors.

Historically, when a new fabrication process proves to be a low-cost improvement to the

standard fabrication process, and is additive, rather than in place of other performance technologies, it has been successfully adopted

industry-wide.

Good examples of such advances have been chemical mechanical polishing (or CMP), strained silicon and High-K/Metal-Gate.

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Research and Development

The principal focus of our

research and development efforts is on enabling existing and prospective customers to integrate MST into their manufacturing processes

and enable them to commercialize MST-enabled semiconductor products.

We also dedicate research and development resources to evolving and

expanding our technology to address new process technologies in the semiconductor industry roadmap.

Our research and development is conducted

internally, but we work closely with third parties in the semiconductor industry to evaluate and qualify our technology for incorporation

into semiconductor products and fabrication equipment.

During the years ended December 31, 2021 and 2020, we incurred research and development

expenses of approximately $8.8 million and $8.4 million, respectively.

We believe that our success

depends in part on our ability to achieve the following in a cost-effective and timely manner:

The principal focus of our research

and development efforts is on enabling existing and prospective customers to integrate MST into their manufacturing processes and enable

them to commercialize MST-enabled semiconductor products.

We also dedicate research and development resources to evolving and expanding

our technology to address new process technologies in the semiconductor industry roadmap.

Our research and development is conducted internally,

but we work closely with third parties in the semiconductor industry to evaluate and qualify our technology for incorporation into semiconductor

products and fabrication equipment.

During the years ended December 31, 2022 and 2021, we incurred research and development expenses of

approximately $10.0 million and $8.8 million, respectively.

We believe that our success depends

in part on our ability to achieve the following in a cost-effective and timely manner:

enable customers to integrate MST into their products;

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Intellectual Property Rights

We regard the protection of

our technologies and intellectual property rights as an important element of our business operations and crucial to our success.

primarily on a combination of patent laws, trade secret laws, confidentiality procedures, and contractual provisions to protect our proprietary

We regard the protection of our

technologies and intellectual property rights as an important element of our business operations and crucial to our success.

We rely primarily

on a combination of patent laws, trade secret laws, confidentiality procedures, and contractual provisions to protect our proprietary

We require our employees, consultants, and advisors to enter into confidentiality agreements.

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is to be kept confidential and not disclosed to third parties except under specific circumstances.

In the case of our employees and certain

consultants, the agreements provide that all of the technology that is conceived by the individual during the course of employment is

our exclusive property.

The development of our technology and many of our processes are dependent upon the knowledge, experience, and

skills of key scientific and technical personnel.

As of December 31, 2021, we

have been granted 118 patents in the U.S.

In the case of our employees and consultants,

the agreements provide that all of the technology that is conceived by the individual during the course of employment is our exclusive

The development of our technology and many of our processes are dependent upon the knowledge, experience, and skills of key

scientific and technical personnel.

As of December 31, 2022, we have

been granted 126 patents in the U.S.

and 107 abroad.

22 unchanged sentences

Report, we employ 21 people on a full-time basis.

Our human capital resources

objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees.

principal purposes of our equity incentive plans are to attract, retain and reward personnel through the granting of stock-based compensation

awards that align their compensation with our business objectives and with creation of shareholder value.

Our human capital resources objectives

include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees.

The principal

purposes of our equity incentive plans are to attract, retain and reward personnel through the granting of stock-based compensation awards

that align their compensation with our business objectives and with creation of shareholder value.

Available Information

Our website is located at

www.atomera.com.

Our website is located at www.atomera.com.

The information on or accessible through our website is not part of this Annual Report on Form 10-K.

Copies of our Annual

Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant

to Section 13(a) or 15(d) of the Exchange Act are available free of charge, on our investor relations website as soon as reasonably practicable

after we file such material electronically with or furnish it to the Securities and Exchange Commission, or the SEC.

A copy of this Annual

Report on Form 10-K is also located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.

on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

The SEC also maintains an internet

site that contains reports and other information regarding our filings at www.sec.gov.

Copies of our Annual Reports on Form

10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section

13(a) or 15(d) of the Exchange Act are available free of charge, on our investor relations website as soon as reasonably practicable after

we file such material electronically with or furnish it to the Securities and Exchange Commission, or the SEC.

A copy of this Annual Report

on Form 10-K is also located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C.

Information on the

operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.

The SEC also maintains an internet site that

contains reports and other information regarding our filings at www.sec.gov.

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-K

Item 1. Business