What changed in this filing

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Item 1. Financial Statements

2023-04-26 compared with 2022-11-09 · 191 added, 145 removed, 264 unchanged (56% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

Current assets:

Cash and cash equivalents

Short-term investments

Prepaid expenses and other current assets

12 unchanged sentences

Current financing lease liability

Deferred revenue

Total current liabilities

5 unchanged sentences

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

none issued and outstanding at September 30, 2022 and December 31, 2021

none issued and outstanding at March 31, 2023 and December 31, 2022

Common stock:

$ 0.001 par value, authorized 47,500 shares;

23,854 and 23,207 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively;

24,330 and 23,973 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively;

Additional paid in capital

Other comprehensive income (loss)

Accumulated deficit

7 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

8 unchanged sentences

Interest expense

Other income (expense), net

Total other income (expense), net

Net loss before income taxes

Provision for income taxes

Net loss per common share, basic

5 unchanged sentences

Atomera Incorporated

Condensed Statements of Comprehensive Loss

(in thousands, except per share data)

Three Months Ended

Other comprehensive income (loss):

Unrealized gain (loss) on available-for-sale securities

Comprehensive income (loss)

The accompanying notes are an integral part of

these condensed financial statements.

Atomera Incorporated

Statements of Stockholders’ Equity

For the Three and Nine Months Ended September

30, 2022 and 2021

For the Three Months Ended March 31, 2023 and

(in thousands)

Comprehensive

Stockholders’

3 unchanged sentences

Stock option exercise

Balance March 31, 2022

$ ( 169,940 )

Stock-based compensation

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

Balance June 30, 2022

$ ( 174,421 )

Stock-based compensation

Stock option exercise

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

Balance September 30, 2022

$ ( 179,023 )

Unrealized gain (loss) on available-for-sale securities

Balance March 31, 2023

Stockholders’

2 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-based compensation

Stock option exercise

Forfeited restricted stock awards

Balance at September 30, 2021

$ ( 161,689 )

The accompanying notes are an integral part of

3 unchanged sentences

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Stock-based compensation

Non cash interest expense

Net accretion of discounts on available-for-sale securities

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

3 unchanged sentences

Operating lease liability

Deferred revenue

Net cash used in operating activities

1 unchanged sentence

Acquisition of property and equipment

Purchase of available-for-sale securities

Net cash used in investing activities

14 unchanged sentences

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September

30, 2022 and 2021

For the Three Months Ended March 2023 and 2022

NATURE OF OPERATIONS

8 unchanged sentences

LIQUIDITY AND MANAGEMENT PLANS

At September 30, 2022, the

Company had cash and cash equivalents of approximately $ 23.3 million and working capital of approximately $ 21.1 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.

At March 31, 2023, the Company

had cash, cash equivalents and short-term investments of approximately $ 17.1 million and working capital of approximately $ 14.9 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

The Company has primarily

5 unchanged sentences

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 price of up to $ 50.0 million (the “ATM Facility”).

offerings, (“ATM”), to or through the agent as its sales agent, having an aggregate offering price of up to $50.0 million.

During the three months ended March 31, 2023, the Company sold approximately 50 ,000 shares pursuant to our ATM at an average price per

share of approximately $ 6.40 , resulting in approximately $ 274 ,000 of net proceeds to us after deducting commissions and other offering

Based on the funds it has

5 unchanged sentences

or acquire technologies to enhance or complement its current offerings.

The Company’s operating plans for the next 12 months include

increased research and development expenses.

For capital needs beyond the next 12 months, the Company currently expects to rely on its

ATM, but the terms on which any future stock sales will occur will depend on both market conditions and the Company’s business performance,

so there can be no guarantee that funds will be available on commercially reasonable terms.

If 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 our research and development initiatives and take additional measures to reduce costs in order

to conserve cash.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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The unaudited condensed financial

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

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.

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

statements as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC

on February 15, 2023.

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

Cash, cash equivalents, and short-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

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

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 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 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 Accounting Standards Codification (“ASC”) No.

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).

time to time, new accounting standards are issued by the FASB that are adopted by the Company as of the specified effective date.

new accounting standards, issued or effective during the period ended March 31, 2023, have had or are expected to have a significant impact

on the Company’s financial statements.

VALUE MEASUREMENTS

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 comprised 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.

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

Company’s cash, cash equivalents and short-term investments classified by security type as of March 31, 2023 and December 31, 2022

consisted of the following (in thousands):

Fair value measurements

March 31, 2023

December 31, 2022

Unrealized Gain/(Loss)

Unrealized Gain/Loss

Money market funds

US treasury bills

US agency bonds

Interest receivable of approximately

$ 46,000 as of March 31, 2023 is recorded in prepaids and other current assets in the condensed consolidated balance sheets.

This includes

approximately $ 14,000 of purchased accrued interest.

For the period ended December 31, 2022, there was $ 0 interest receivable recorded

in the condensed consolidated balance sheets.

The Company recognizes revenue

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

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).

The following table provides information about

1 unchanged sentence

Schedule of disaggregated revenue and timing of revenue

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended

Primary geographic markets

29 unchanged sentences

Schedule of anti dilutive shares

Three and Nine Months Ended

September 30,

Three Months Ended

Stock Options

12 unchanged sentences

per month for the period August 1, 2022 through July 31, 2023.

adjustment to the variable lease payments resulted in a reduction in ROU and corresponding lease liability.

The components of lease

costs were as follows (in thousands):

This adjustment to the variable lease payments resulted in a reduction

in ROU and corresponding lease liability.

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

Components of lease costs

Three Months Ended

September 30,

Nine Months Ended

September 30,

Financing lease costs:

7 unchanged sentences

Future minimum payments under non-cancellable leases

as of September 30, 2022 were as follows (in thousands):

as of March 31, 2023 were as follows (in thousands):

Schedule of future minimum lease payments

7 unchanged sentences

Total lease liability

The table above reflects minimum

payments used to calculate our liability under our leases but do not reflect future variable lease payment such as the modified monthly

payment under the terms of the financing lease for our tool, as discussed above.

The table above does not include

our short-term leases that are one-year or less.

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

Supplemental non-cash activity related to operating and

financing leases

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating cash flow information:

4 unchanged sentences

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

Remeasurement of right-of-use asset and liability in financing lease obligations

The weighted average remaining

2 unchanged sentences

for operating leases and 3.3 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 nine months ended September 30, 2022 is as follows (in thousands except per share amounts and contractual term):

Schedule of warrant activity

Outstanding at January 1, 2022

Outstanding and exercisable at September 30, 2022

Effective May 1, 2023,

the Company will lease an additional 404 square feet at its Tempe office location under an amendment to its current lease.

rent payment will increase from $1,277 per month to $2,365 per month and will be accounted for as a modification to the lease under ASC

842 at the time of commencement.

The Company recently terminated

its office lease in Cambridge, Massachusetts as of March 31, 2023.

The cost of the lease was $2,942 per month.

In December 2022, the Company

entered into a lease agreement for a tool in Tempe, Arizona.

The term of this lease is for six months beginning on January 1, 2023 with

an option to extend the lease for an additional six months.

The initial lease terms were $96,000 per month.

In March 2023, the Company

elected to extend the lease through December 31, 2023, the remaining lease payments will be reduced to $84,000 over the remainder of the

Since the lease and extension are not for more than one year, the future lease payments are not included in the lease obligations

on the Company’s condensed balance sheets.

STOCK BASED COMPENSATION

12 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

30, 2022 and 2021 for stock options and restricted stock granted under the 2017 Plan and 2007 Plan (in thousands):

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

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Selling and Marketing

As of September 30, 2022,

there was approximately $ 7.2 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 2.1 years.

As of March 31, 2023, there

was approximately $ 9.2 million of total unrecognized compensation expense related to unvested share-based compensation arrangements.

cost is expected to be recognized over a weighted-average period of 2.9 years.

The weighted average grant

date fair value per share of the options granted under the Company’s 2017 Plan was $ 8.48 and $ 10.37 for the three and nine months

ended September 30, 2022, respectively.

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

2017 Plan was $ 13.77 and $ 15.29 for the three and nine months ended September 30, 2021, respectively.

date fair value per share of the options granted under the Company’s 2017 Plan was $ 4.95 and $ 10.60 for the three months ended March

31, 2023 and 2022, respectively.

The following table summarizes

stock option activity during the nine months ended September 30, 2022 (in thousands except exercise prices and contractual terms):

stock option activity during the three months ended March 31, 2023 (in thousands except exercise prices and contractual terms):

Schedule of stock option activity

2 unchanged sentences

Outstanding at January 1, 2023

Outstanding at September 30, 2022

Exercisable at September 30, 2022

During the nine months ended

September 30, 2022, the Company granted options under the 2017 Plan to purchase approximately 196 ,000 shares of its common stock to its

Outstanding at March 31, 2023

Exercisable at March 31, 2023

During the three months ended

March 31, 2023, the Company granted options under the 2017 Plan to purchase approximately 375 ,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, 2022 (in thousands except per share data):

table summarizes all restricted stock activity during the three months ended March 31, 2023 (in thousands except per share data):

Schedule of restricted stock option activity

2 unchanged sentences

Outstanding at January 1, 2023

Outstanding non-vested shares at September 30, 2022

During the nine months ended

September 30, 2022 the Company granted approximately 194 ,000 restricted stock awards under the 2017 Plan to its employees and directors.

Outstanding non-vested shares at March 31, 2023

During the three months ended

March 31, 2023, the Company granted approximately 297 ,000 restricted stock awards under the 2017 Plan to its employees and directors.

The fair value of these awards was approximately $ 2.0 million at the time of grant.

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 did not incur withholding of income taxes for the three or nine months ended September 30, 2022.

On February 23, 2023, the

Company’s Board of Directors approved the Atomera Incorporated 2023 Stock Incentive Plan (“2023 Plan”).

The 2023 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 2023 Plan, as amended in April 2023, provides for the issuance of 2,000 ,000

shares of common stock.

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

employees), as well as all of the Company’s nonemployee directors and other consultants, advisors and other persons who provide

services to the Company will be eligible to receive incentive awards under the 2023 Plan.

The 2023 Plan has been submitted to the stockholders

for approval at the Company’s 2023 annual meeting of stockholders to be held on May 4, 2023.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

The Company is not party to any material

litigation as of September 30, 2022, or through the date these financial statements have been issued.

litigation as of March 31, 2023, or through the date these financial statements have been issued.

SUBSEQUENT EVENTS

1 unchanged sentence

events and transactions through the date these financial statements were issued.

Since March 31, 2023 the Company has issued an

additional 82,322 shares through its ATM offering at an average price per share of $5.73 resulting in additional net proceeds of approximately

On April 17, 2023 the Company

amended the lease agreement related to its office space in Tempe, Arizona to add 404 square feet to its existing office lease effective

on May 1, 2023 through February 28, 2026 (coterminous with the current Tempe lease) and will bring the total leased office space in Tempe

to 878 square feet.

License Agreement.

On April 26, 2023,

the Company announced the execution of a commercial license agreement with STMicroelectronics (“ST”).

This agreement enables

ST to install the Company’s Mears Silicon Technology™, or MST ® , in its facilities and authorizes ST to manufacture

and distribute MST-enabled products to its customers.

The license agreement with ST provides for license fees payable upon reaching milestones

consistent with Atomera’s standard business model.

After those milestones are reached, ST will pay a royalty to Atomera

based on the number of MST-enabled products manufactured for commercial purposes.

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