Atomera Inc 10-Q

Item 1. Financial Statements Atomera Incorporated Condensed Balance Sheets (in thousands, except per share data) September 30, December 31, 2023 2022 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 12,642 $ 21,184 Short-term investments 7,747 – Interest receivable 56 – Prepaid expenses and other current assets 392 418 Total current assets 20,837 21,602 Property and equipment, net 129 158 Long-term prepaid maintenance and supplies 91 91 Security deposit 14 14 Operating lease right-of-use asset 574 700 Financing lease right-of-use-asset 3,184 4,164 Total assets $ 24,829 $ 26,729 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 462 $ 397 Accrued expenses 230 173 Accrued payroll related expenses 698 967 Current operating lease liability 262 245 Current financing lease liability 1,299 1,126 Total current liabilities 2,951 2,908 Long-term operating lease liability 348 521 Long-term financing lease liability 2,066 2,986 Total liabilities 5,365 6,415 Commitments and contingencies (see Note 9) – – Stockholders’ equity: Preferred stock $ 0.001 par value, authorized 2,500 shares; none issued and outstanding as of September 30, 2023 and December 31, 2022 – – Common stock: $ 0.001 par value, authorized 47,500 shares; 25,804 shares issued and 25,784 outstanding as of September 30, 2023; and 23,973 shares issued and outstanding as of December 31, 2022 26 24 Additional paid in capital 217,946 203,585 Other comprehensive income (loss) ( 3 ) – Accumulated deficit ( 198,505 ) ( 183,295 ) Total stockholders’ equity 19,464 20,314 Total liabilities and stockholders’ equity $ 24,829 $ 26,729 The accompanying notes are an integral part of these condensed financial statements. 3 Atomera Incorporated Condensed Statements of Operations (Unaudited) (in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenue $ – $ 2 $ – $ 377 Cost of revenue – – – ( 81 ) Gross margin – 2 – 296 Operating expenses Research and development 3,305 2,743 9,533 7,515 General and administrative 1,683 1,567 5,200 4,882 Selling and marketing 365 347 1,147 1,019 Total operating expenses 5,353 4,657 15,880 13,416 Loss from operations ( 5,353 ) ( 4,655 ) ( 15,880 ) ( 13,120 ) Other income (expense) Interest income 177 113 528 151 Accretion income 112 – 221 – Interest expense ( 47 ) ( 60 ) ( 151 ) ( 200 ) Other income (expense), net 72 – 72 – Total other income (expense), net 314 53 670 ( 49 ) Net loss $ ( 5,039 ) $ ( 4,602 ) $ ( 15,210 ) $ ( 13,169 ) Net loss per common share, basic $ ( 0.20 ) $ ( 0.20 ) $ ( 0.62 ) $ ( 0.57 ) Net loss per common share, diluted $ ( 0.20 ) $ ( 0.20 ) $ ( 0.62 ) $ ( 0.57 ) Weighted average number of common shares outstanding, basic 25,255 23,294 24,536 23,029 Weighted average number of common shares outstanding, diluted 25,255 23,294 24,536 23,029 The accompanying notes are an integral part of these condensed financial statements. 4 Atomera Incorporated Condensed Statements of Comprehensive Loss (Unaudited) (in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net loss $ ( 5,039 ) $ ( 4,602 ) $ ( 15,210 ) $ ( 13,169 ) Unrealized gain (loss) on available-for-sale securities ( 1 ) – ( 3 ) – Net loss $ ( 5,040 ) $ ( 4,602 ) $ ( 15,213 ) $ ( 13,169 ) The accompanying notes are an integral part of these condensed financial statements. 5 Atomera Incorporated Statements of Stockholders’ Equity For the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited) (in thousands) Common Stock Additional Paid-in Other Comprehensive Accumulated Total Stockholders’ Shares Amount Capital Loss Deficit Equity Balance January 1, 2023 23,973 $ 24 $ 203,585 $ – $ ( 183,295 ) $ 20,314 Stock-based compensation 297 – 927 – – 927 Stock option exercise 10 – 39 – – 39 At-the-market sale of stock, net of commissions and expenses 50 – 274 – – 274 Net loss – – – – ( 5,019 ) ( 5,019 ) Unrealized gain (loss) on available-for-sale securities – – – ( 2 ) – ( 2 ) Balance March 31, 2023 24,330 $ 24 $ 204,825 $ ( 2 ) $ ( 188,314 ) $ 16,533 Stock-based compensation 60 – 1,030 – – 1,030 Stock option exercise 10 – 39 – – 39 At-the-market sale of stock, net of commissions and expenses 1,370 2 10,787 – – 10,789 Net loss – – – – ( 5,152 ) ( 5,152 ) Balance June 30, 2023 25,770 $ 26 $ 216,681 $ ( 2 ) $ ( 193,466 ) $ 23,239 Stock-based compensation – – 1,041 – – 1,041 Stock option exercise 10 – 39 – – 39 Forfeited restricted stock awards ( 20 ) – – – – – At-the-market sale of stock, net of commissions and expenses 24 – 185 – – 185 Net loss – – – – ( 5,039 ) ( 5,039 ) Unrealized gain (loss) on available-for-sale securities – – – ( 1 ) – ( 1 ) Balance September 30, 2023 25,784 $ 26 $ 217,946 $ ( 3 ) $ ( 198,505 ) $ 19,464 Common Stock Additional Paid-in Accumulated Total Stockholders’ Shares Amount Capital Deficit Equity Balance January 1, 2022 23,207 $ 23 $ 194,212 $ ( 165,854 ) $ 28,381 Stock-based compensation 161 – 726 – 726 Stock option exercise 25 – 166 – 166 Net loss – – – ( 4,086 ) ( 4,086 ) Balance March 31, 2022 23,393 $ 23 $ 195,104 $ ( 169,940 ) $ 25,187 Stock-based compensation 33 – 859 – 859 At-the-market sale of stock, net of commissions and expenses 31 – 185 – 185 Net loss – – – ( 4,481 ) ( 4,481 ) Balance June 30, 2022 23,457 $ 23 $ 196,148 $ ( 174,421 ) $ 21,750 Stock-based compensation – – 889 – 889 Stock option exercises 10 – 39 39 At-the-market sale of stock, net of commissions and expenses 387 1 4,602 – 4,603 Net loss – – – ( 4,602 ) ( 4,602 ) Balance September 30, 2022 23,854 $ 24 $ 201,678 $ ( 179,023 ) $ 22,679 The accompanying notes are an integral part of these condensed financial statements. 6 Atomera Incorporated Condensed Statements of Cash Flows (Unaudited) (in thousands) Nine Months Ended September 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES Net Loss $ ( 15,210 ) $ ( 13,169 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 60 58 Operating lease right of use asset amortization 159 149 Financing lease right of use asset amortization 865 938 Stock-based compensation 2,998 2,474 Accretion of discounts on available-for-sale securities ( 198 ) – Changes in operating assets and liabilities: Interest receivable ( 13 ) – Prepaid expenses and other current assets 26 ( 288 ) Accounts payable 65 186 Accrued expenses 57 2 Accrued payroll expenses ( 269 ) 193 Operating lease liability ( 189 ) ( 125 ) Deferred revenue – 1 Net cash used in operating activities ( 11,649 ) ( 9,581 ) CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property and equipment ( 31 ) ( 26 ) Purchase of available-for-sale securities ( 16,595 ) – Maturity of available-for-sale securities 9,000 – Net cash used in investing activities ( 7,626 ) ( 26 ) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from at-the-market sale of stock, net of commissions and expenses 11,248 4,788 Proceeds from exercise of stock options 117 205 Payments on principal of financing lease ( 632 ) ( 798 ) Net cash provided by financing activities 10,733 4,195 Net decrease in cash and cash equivalents ( 8,542 ) ( 5,412 ) Cash and cash equivalents at beginning of period 21,184 28,699 Cash and cash equivalents at end of period $ 12,642 $ 23,287 Supplemental information: Cash paid for interest $ 151 $ 200 Cash paid for taxes $ – $ – The accompanying notes are an integral part of these condensed financial statements. 7 ATOMERA INCORPORATED NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS For the Three and Nine Months Ended September 30, 2023 and 2022 1. NATURE OF OPERATIONS Atomera Incorporated (“Atomera” or the “Company”) was incorporated in the state of Delaware in March 2007 under the name MEARS Technologies, Inc. and is engaged in the development, commercialization and licensing of proprietary processes and technologies for the semiconductor industry. On January 12, 2016, the Company changed its name to Atomera Incorporated. Atomera is an early-stage company, having only recently begun limited revenue-generating activities, and is devoting substantially all its efforts toward technology research and development and to commercially licensing its technology to designers and manufacturers of integrated circuits. 2. LIQUIDITY AND MANAGEMENT PLANS At September 30, 2023, the Company had cash, cash equivalents and short-term investments of approximately $ 20.4 million and working capital of approximately $ 17.9 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 financing and scaling of a business that is not generating positive cashflow. The Company has primarily financed operations through private placements of equity and debt securities, the Company’s Initial Public Offering (the “IPO”) which was consummated on August 10, 2016, and subsequent public offerings of its common stock. On May 31, 2022, Atomera entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and Craig-Hallum Capital Group LLC, as agents, under which the Company may offer and sell, from time to time at its sole discretion, shares of its $0.001 par value common stock, in “at the market” offerings to or through the agent as its sales agent, having an aggregate offering price of up to $50.0 million (the “ATM Facility”). During the nine months ended September 30, 2023, the Company sold approximately 1.4 million shares pursuant to its ATM Facility at an average price per share of approximately $ 8.11 , resulting in approximately $ 11.2 million of net proceeds after deducting commissions and other offering expenses. These sales include approximately 24,000 shares sold during the three months ended September 30, 2023 at an average price of $ 9.17 , resulting in net proceeds of approximately $ 185,000 after deducting commissions and other offering expenses. Based on the funds it has available as of the date of the filing of this report, the Company believes that it has sufficient capital to fund its current business plans and obligations over, at least, 12 months from the date that these financial statements have been issued. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its technology, competing technological and market developments, and the need to enter into collaborations with other companies or acquire technologies to enhance or complement its current offerings. 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. 8 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Significant accounting policies There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 15, 2023. Basis of presentation of unaudited condensed financial information The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 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 value. The Company's portfolio of short-term investments is comprised solely of U.S. treasury bills and agency bonds with maturities of more than three months, but less than one year. The Company classifies these as available-for-sale at purchase date and will reevaluate such designation at each period end date. The Company may sell these marketable debt securities prior to their stated maturities depending upon changing liquidity requirements. These debt securities are classified as current assets in the consolidated balance sheet and recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive income (loss). Gains and losses are recognized when realized. Gains and losses are determined using the specific identification method and are reported in other income (expense), net in the consolidated statements of operations. Adoption of recent accounting standards From time to time, new accounting standards are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. No new accounting standards, issued or effective during the period ended September 30, 2023, have had or are expected to have a significant impact on the Company’s financial statements. 9 4. FAIR VALUE MEASUREMENTS Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC 820”) states that fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, consists 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. The Company’s cash equivalents and short-term investments that were measured at fair value on a recurring basis as Level 1 assets. The Company’s cash, cash equivalents and short-term investments classified by security type as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands): Schedule fair value measurements September 30, 2023 December 31, 2022 Cost Unrealized Gain/(Loss) Accretion of Discount Fair Value Cost Fair Value Cash $ – $ – $ – $ – $ 1 $ 1 Money market funds 11,649 – – 11,649 21,183 21,183 US treasury bills 4,902 ( 1 ) 61 4,962 – – US agency bonds 3,763 ( 2 ) 17 3,778 – – Total $ 20,314 $ ( 3 ) $ 78 $ 20,389 $ 21,184 $ 21,184 5. REVENUE The Company recognizes revenue in accordance with ASC No. 606. The Company generates revenues from engineering service contracts, license agreements and joint development agreements. The amount of revenue that the Company recognizes reflects the consideration it expects to receive in exchange for goods or services and such revenue is recognized when the Company satisfies a performance obligation by transferring the product or service to the customer. When the Company’s performance obligation is 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). 10 The following table provides information about disaggregated revenue by primary geographical markets and timing of revenue recognition (in thousands): Schedule of disaggregated revenue and timing of revenue Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Primary geographic markets North America $ – $ 2 $ – $ 77 Asia Pacific – – – 300 Total $ – $ 2 $ – $ 377 Timing of revenue recognition Products and services transferred at a point in time $ – $ – $ – $ 375 Products and services transferred over time – 2 – 2 Total $ – $ 2 $ – $ 377 Unbilled contracts receivable and deferred revenue Timing of revenue recognition may differ from the timing of invoicing customers. Accounts receivable includes amounts billed and currently due from customers. Unbilled contracts receivable represents unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed, and the right to receive payment is subject to the underlying contractual terms. Unbilled contracts receivable amounts may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. 6. BASIC AND DILUTED LOSS PER SHARE Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants and (ii) vesting of restricted stock units and restricted stock awards, are only included in the calculation of diluted net loss per share when their effect is dilutive. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Accordingly, basic and diluted net loss per share are equal. The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive (in thousands): Schedule of anti dilutive shares Nine Months Ended September 30, 2023 2022 Stock Options 3,370 3,019 Unvested restricted stock 481 403 Total 3,851 3,422 11 7. LEASES The Company accounts for leases over one year under ASC 842. Lease expense for the Company’s operating leases consists of the lease payments recognized on a straight-line basis over the lease term. Expenses for the Company’s financing leases consists of the amortization expenses recognized on a straight-line basis over the lease term and interest expense. The Company’s lease agreement for a tool used in the development and marketing of the Company’s technology established a monthly lease payment of $150,000 per month. The lease contains a provision for an annual adjustment of lease payments based on tool availability and usage during the preceding 12 months and the adjusted payment is calculated on August 1 of each year of the lease. Effective August 1, 2022, the lease payments for this tool were reduced to $100,824 per month for the period August 1, 2022 through July 31, 2023. This adjustment to the lease payments resulted in a reduction in the ROU and corresponding lease liability. Effective August 1, 2023, the lease payments for this tool were adjusted to $137,650 per month for the period August 1, 2023 through July 31, 2024. This adjustment to the lease payments also resulted in a reduction in the ROU and corresponding lease liability. Effective May 1, 2023, the Company leased an additional 404 square feet at its Tempe office location under an amendment to its current lease. The monthly rent payment increased from $1,277 per month to $2,365 per month and the increased rent under the amended lease is accounted for as a modification to the lease under ASC 842 at the time of commencement. At the effective date of the lease amendment, a right-of-use asset of approximately $ 33 ,000 was recorded along with a short-term operating lease liability of approximately $ 12 ,000 and long-term operating lease liability of approximately $ 21 ,000. The amended lease ends in February 2026. 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 and in consideration for this extension the remaining lease payments were reduced to $84,000. 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. The Company terminated its office lease in Cambridge, Massachusetts as of March 31, 2023. The cost of the lease was $2,942 per month. The components of lease costs were as follows (in thousands): Schedule components of lease costs Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Financing lease costs: Amortization of ROU assets $ 284 $ 300 $ 865 $ 938 Interest on lease liabilities 47 60 151 200 Total financing lease costs $ 331 $ 360 $ 1,016 $ 1,138 Operating lease costs: Fixed lease costs $ 66 $ 62 $ 192 $ 186 Variable lease costs 1 – 1 – Short-term lease costs 251 9 792 29 Total operating lease costs $ 318 $ 71 $ 985 $ 215 12 Future minimum payments under non-cancellable leases as of September 30, 2023 were as follows (in thousands): Schedule of future minimum lease payments For the Year Ended December 31, Financing leases Operating leases Remaining 2023 $ 329 $ 39 2024 1,367 291 2025 1,436 298 2026 478 24 2027 & thereafter – – Total future minimum lease payments $ 3,610 $ 652 Less imputed interest ( 245 ) ( 42 ) Total lease liability $ 3,365 $ 610 The below table provides supplemental information and non-cash activity related to the Company’s operating and financing leases are as follows (in thousands): Supplemental non-cash activity related to operating and financing leases Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating cash flow information: Cash paid for amounts included in the measurement of operating lease liabilities $ 55 $ 53 $ 216 $ 161 Cash paid for amounts included in the measurement of financing liabilities $ 300 $ 280 $ 782 $ 998 Non-cash activity: Right-of-use assets obtained in exchange for operating lease obligations $ – $ – $ 33 $ – Remeasurement of right-of-use asset and liability in financing lease $ ( 114 ) $ ( 458 ) $ ( 114 ) $ ( 458 ) The table above does not include short-term leases that are one-year or less. The weighted average remaining discount rate is 5.48 % for the Company’s operating leases and 5.25 % for the financing lease. The weighted average remaining lease term is 2.4 years for the Company’s operating leases and 2.8 years for the financing lease. 8. STOCK BASED COMPENSATION In May 2017, the Company’s shareholders approved its 2017 Stock Incentive Plan (“2017 Plan”) after its 2007 Stock Incentive Plan (“2007 Plan”) had expired in March 2017. The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock and for the grant of restricted and unrestricted shares. The 2017 Plan provides for the issuance of 3,750 ,000 shares of common stock. As of September 30, 2023, approximately 25 ,000 shares remain available for issuance. In May 2023, the Company’s shareholders approved its 2023 Stock Incentive Plan (“2023 Plan”). The 2023 plan provides for the issuance of 2,000 ,000 shares of common stock. All employees and employees of any subsidiary (including officers and directors who are also employees), as well as all of the nonemployee directors and other consultants, advisors and other persons who provide services to the Company are eligible to receive incentive awards under the 2017 Plan and 2023 Plan. Generally, stock options and restricted stock issued under the 2017 Plan and 2023 Plan vest over a period of one to four years from the date of grant. As of September 30, 2023, approximately 1.9 million shares remain available for issuance. 13 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, 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, 2023 2022 2023 2022 Research and development $ 364 $ 305 $ 1,064 $ 844 General and administrative 588 518 1,683 1,446 Selling and Marketing 89 66 251 184 Total $ 1,041 $ 889 $ 2,998 $ 2,474 As of September 30, 2023, there was approximately $ 7.6 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 2.6 years. The weighted average grant date fair value per share of the options granted under the Company’s Plans were $ 4.68 and $ 4.94 for the three and nine months ended September 30, 2023, respectively. The weighted average grant date fair value per share of the options granted under the Company’s Plans were $ 8.48 and $ 10.37 for the three and nine months ended September 30, 2022, respectively. The following table summarizes stock option activity during the nine months ended September 30, 2023 (in thousands except exercise prices and contractual terms): Schedule of stock option activity Number of Shares Weighted- Average Exercise Prices per Share Weighted- Average Remaining Contractual Term (In Years) Intrinsic Value Outstanding at January 1, 2023 3,009 $ 7.07 Granted 391 $ 6.54 Exercised ( 30 ) $ 3.90 Outstanding at September 30, 2023 3,370 $ 7.03 4.9 $ 2,234 Exercisable at September 30, 2023 2,788 $ 6.60 4.1 $ 2,087 During the nine months ended September 30, 2023, the Company granted options under the 2017 Plan to purchase approximately 391 ,000 shares of its common stock to its employees and consultants. The fair value of these options was approximately $ 2 .0 million at the time of grant. 14 The Company issues restricted stock to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant. The following table summarizes all restricted stock activity during the nine months ended September 30, 2023 (in thousands except per share data): Schedule of restricted stock option activity Number of Shares Weighted-Average Grant Date Fair Value per Share Outstanding at January 1, 2023 340 $ 10.78 Granted 357 $ 7.00 Forfeited ( 20 ) $ 8.63 Vested ( 196 ) $ 8.63 Outstanding non-vested shares at September 30, 2023 481 $ 8.94 During the nine months ended September 30, 2023, the Company granted approximately 357,000 restricted stock awards under the 2017 and 2023 Plans. The fair value of these awards was approximately $ 2.5 million at the time of grant. 9. COMMITMENTS AND CONTINGENCIES Litigation, Claims and Assessments The Company may be subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company is not party to any material litigation as of September 30, 2023, or through the date these financial statements have been issued. 10. SUBSEQUENT EVENTS Management has evaluated subsequent events and transactions through the date these financial statements were issued. Since September 30, 2023, the Company has issued approximately 15,000 additional shares through its ATM offering at an average price per share of $7.13 resulting in additional net proceeds of approximately $104,000. 15