What changed in this filing

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Item 1. Business

2024-02-15 compared with 2023-02-15 · 257 added, 261 removed, 230 unchanged (69% of the section changed)

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analog, logic, optical and memory integrated circuits.

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 we believe offer the designers

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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 (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

Our principal business objective

is to enter into commercial license agreements that enable our customers to manufacture and sell MST-enabled products, generating license

revenues and ongoing royalties.

We also license our MSTcad ® software to customers, enabling them to simulate the effects

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

In addition, we offer fee-based

engineering services to customers evaluating MST.

Our goal is that MSTcad licensing and engineering service arrangements will be tools

that demonstrate the benefits of MST and will lead customers to enter into full commercial licenses.

A “full commercial license”

involves a three-stage approach consisting of:

An integration license that provides our customer the right to use MST technology (with MST film deposited

for the customer by Atomera) in the manufacture of silicon wafers for internal testing and sampling;

A manufacturing license, granting our customer the rights to install MST on a tool in their fab and to

manufacture MST-enabled products for internal use only;

A distribution license which grants the rights to manufacture and sell MST-enabled products to their customers.

Depending on our customers’

business needs and how we initially engaged with them, we may make these license grants in one or more separate contracts.

license fee becomes larger at each stage.

Upon the grant of a distribution license our licensees would also be required to make royalty

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

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 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

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 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,

respectively, we entered into separate integration license agreements with Asahi Kasei Microdevices, or AKM, and STMicroelectronics, or

ST, both of which are leading IDMs.

In October 2019, we entered into an integration license agreement with a leading fabless RF semiconductor

In February 2022, we entered into an integration license agreement with a semiconductor foundry.

Under the integration license

agreements, these customers have paid us for the right to evaluate MST technology, which is integrated onto their semiconductor wafers.

We deposit MST onto the customers’ wafers and the customer has the right under the license agreement to complete the manufacturing

process, which enables them to evaluate our technology and to provide limited samples to their customers.

These agreements do not grant

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.

Accordingly, we have engaged with certain customers under joint development agreements, or JDAs.

Our JDAs include development,

technology transfer, manufacturing and licensing components.

To date, application of our

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

CMOS integrated circuits are the most

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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.

with the rollout of 5G cellular networks and associated devices, augmented and virtual reality technologies, cryptocurrencies, and especially

artificial intelligence technology, 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 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

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Historically, smaller

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

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

Frequently, smaller nodes also

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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.

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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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.

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.

The initial applications of

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

We offer MST-SP and MST-SPX, which are types of MST-enabled

power devices that offer 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 and MST-SPX 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

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.

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:

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 :

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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;

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.

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.

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.

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.

We believe this arrangement enables faster product development,

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

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

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

we regularly release updates to that software.

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.

In December 2020, we announced availability of our MSTcad 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 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

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 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 fabs.

Epi Tool Lease.

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.

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

August 2021 we entered into a five-year lease for an Applied Materials Centura epitaxial deposition reactor which handles both 200mm and

300mm wafers.

We utilize this tool to perform deposition on both customer and internal R&D wafers.

The terms of our tool lease include

the lessor’s maintenance and support as well as access to a cleanroom with advanced cleaning and inspection tools.

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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The primary beneficiaries of our commercialization activities are the IDMs and fabless semiconductor manufacturers, as

they produce and distribute the integrated circuit devices which are enhanced when they incorporate MST technology.

The foundries and

OEMs also play an important role in our commercialization strategy because these parties traditionally seek to provide new and improved

technologies to their customers – the fabless semiconductor manufacturers in the case of the foundries, and the IDMs and foundries

in the case of the OEMs.

they produce and distribute integrated circuit devices which are enhanced when they incorporate MST technology.

The foundries and OEMs

also play an important role in our commercialization strategy because these parties traditionally seek to provide new and improved technologies

to their customers – the fabless semiconductor manufacturers in the case of the foundries, and the IDMs and foundries in the case

In the semiconductor industry,

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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.

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.

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

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 .

Prior to enabling a customer to install and use MST technology on epitaxial deposition machines in their own fab, we require execution of a manufacturing license which grants rights limited to manufacturing MST-enabled products for internal R&D and qualification, but does not give the customer the right to distribute or sell products that use MST.

The JDA that we announced in January 2021 granted a manufacturing license to our customer enabling the customer to install the MST film recipe in an epi tool in their fab for its internal use, at which point this customer entered Phase Four.

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

Installation .

Prior to enabling a customer to install and use MST technology on epitaxial deposition machines in their own fab,

we require execution of a manufacturing license which grants rights limited to manufacturing MST-enabled products for internal

R&D and qualification but does not give the customer the right to distribute or sell products that use MST.

After installation

of MST into the fab, the customer will continue development work to perfect the integration of MST technology into their transistor

manufacturing process flow.

Upon completion the customer will typically release a new Process Design Kit (PDK) which incorporates

Circuit designers will use the new PDK when developing new microchips for production.

Technology qualification .

After installation of MST in the fab, the customer will conduct additional testing to ensure manufacturing reliability under accelerated test conditions that simulate volume production.

The customer will conduct additional testing to ensure that the new products developed with the new PDK achieve manufacturing reliability under accelerated test conditions that simulate volume production.

Upon successfully completing the qualification phase, products can be built and shipped using this manufacturing process.

We have not had any customer move into Phase Five as of the date of this Annual Report.

We expect that our license agreements will provide that upon commencement of sales of wafers or devices built using MST, our customer will pay us a royalty that will be a percentage of the selling price of the wafer or device, depending on the type of customer.

Upon commencement of sales of wafers or devices built using MST, our customer will pay us a royalty that will be a percentage of the selling price of the wafer or device, depending on the type of customer.

While the above steps describe

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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.

As of the date of this Annual Report, MST was in the integration phase (Phase Three as described above) on 14 different

engagements and one engagement in Phase Four (process installation).

engagements and two engagements in Phase Four (process installation).

Subject to process and subsequent product qualifications that demonstrate,

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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.

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.

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 April 2023, we entered

into a full commercial license agreement with STMicroelectronics, or ST, that authorizes ST to manufacture and distribute MST-enabled

products to its customers.

This agreement provides for payment of license fees payable upon reaching milestones consistent with our standard

business model.

Under an integration license agreement that we entered into with ST in 2018, we granted them an integration license pursuant

to which they performed extensive evaluation of our MST technology.

The April 2023 license agreement is based around two major milestones,

namely the grant of a manufacturing license upon installation of MST in ST’s fab and qualification of an MST-enabled process.

process qualification is completed, ST will have the right to commercially distribute MST-enabled products and, assuming ST brings such

products to market, we will receive royalties on all MST-enabled products manufactured for commercial purposes.

This license agreement

with ST is our first grant of commercial manufacturing and distribution rights and, assuming the successful installation of MST and related

process qualification, would result in our first revenue from commercial use of MST-enabled products.

In the fourth quarter of 2023, we

completed the first major milestone under the ST license agreement by delivering our MST film recipe and ST accepting the film, resulting

in our recognizing license revenue associated with that milestone.

At that time, ST became our second customer to enter into Phase Four.

We expect that ST will now proceed to completing process qualification with MST which would result in additional license fees for the

distribution license upon completion of qualification, at which time ST would commence paying royalties on MST-enabled products they sell.

There can be no assurance, however, that ST will complete their qualification and proceed to commercial sale of MST-enabled products.

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, resulting in this customer entering

This JDA also included development milestones that we achieved in February 2022, resulting in additional revenue to us.

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 which contains technical targets which, if achieved, should result in 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,

respectively, we entered into separate integration license agreements with AKM and ST, both of which are leading IDMs.

In October 2019

we entered into an integration license agreement with a leading fabless RF semiconductor provider.

In February 2022 we entered into an

integration license agreement with a semiconductor foundry.

Under the integration license agreements, these customers have each agreed

to pay us for the right to evaluate MST technology which is integrated onto their semiconductor wafers.

respectively, we entered into separate integration license agreements with Asahi Kasei Microdevices, or AKM, and ST, both of which are

leading IDMs.

In October 2019, we entered into an integration license agreement with a leading fabless RF semiconductor provider.

2022, we entered into an integration license agreement with a semiconductor foundry.

Under the integration license agreements, these customers

have paid us for the right to evaluate MST technology, which is integrated onto their semiconductor wafers.

We deposit MST onto the customers’

wafers and the customer has the right under the license agreement to complete the manufacturing process, which enables them to evaluate

our technology.

These agreements do not grant the customer the right to deposit MST at their site or to sell products incorporating MST

and all of our licensees are in our Phase Three (MST Integration).

We intend that each integration

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

our technology and to provide limited samples to their customers.

AKM, our fabless licensee and our foundry licensee are in our Phase

Three (MST Integration).

We intend that each of our

integration license agreements and JDAs will result in full commercial licenses like our April 2023 agreement with ST which provides for

substantially larger upfront license fee payments for grants of manufacturing and distribution rights than the integration licenses and

will require royalty payments to us based on sales of MST-enabled products they sell to their customers.

However, our ability to enter

into royalty-based manufacturing and distribution agreements with licensees under our integration license agreements and JDAs 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.

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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.

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.

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, 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:

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, 2023 and 2022, we incurred research and development

expenses of approximately $12.5 million and $10.0 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.

We rely 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.

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.

6 unchanged sentences

scientific and technical personnel.

As of December 31, 2022, we have

been granted 126 patents in the U.S.

As of December 31, 2023, we

have been granted 103 patents in the U.S.

and 113 abroad and we have 35 pending patent applications in the U.S.

and 71 abroad.

Our core patents relating to MST cover materials, physical structures and manufacturing

Our core patents relating to MST were filed beginning on August 22, 2003 and have grant dates beginning on December 14, 2004.

Our MST patent portfolio begins to expire commencing August 22, 2023.

Our patent portfolio has grown significantly over the last five

years and during 2022 we were issued 20 new patents worldwide, an annual increase of 9%.

We believe our core patents adequately block

competitors from using our MST technology without our approval and our patent activity over the past five years has focused on extending

the scope of our portfolio through a variety of means, including but not limited to patenting new structures, materials and methods uniquely

enabled by MST technology.

However, there can be no assurance that one or more of our patents would survive a legal challenge to their

scope, validity, or enforceability, or provide significant protection for us.

The failure of our patents, or the failure of trade secret

laws, to adequately protect our technology, might make it easier for our competitors to offer similar products or technologies or for

our potential customers to build products with methods and materials similar to MST without paying us a license fee.

In addition, patents

may not issue from any of our current or future applications.

our patents adequately block competitors from using our MST technology without our approval and our patent activity over the past five

years has focused on extending the scope of our portfolio through a variety of means, including but not limited to patenting new structures,

materials and methods uniquely enabled by MST technology.

In addition, our MST film recipe is confidential know-how, which is only disclosed

to customers who have been, at a minimum, a manufacturing licensee and who have executed the appropriate legal agreements.

Unlike patents,

know-how has no expiration and our film recipe is necessary in order to utilize MST technology.

However, there can be no assurance that

one or more of our patents would survive a legal challenge to their scope, validity, or enforceability, or provide significant protection

Protection of our film know-how depends on our licensee’s compliance with the terms of their contracts including non-disclosure

provisions thereof.

The failure of our patents, or the failure of trade secret laws, to adequately protect our technology, might make

it easier for our competitors to offer similar products or technologies or for our potential customers to build products with methods

and materials similar to MST without paying us a license fee.

In addition, patents may not issue from any of our current or future applications.

We also hold registered trademarks

in the United States for the marks “Atomera” and “MST” and in China for the mark “Mears”.

applied with the U.S.

Patent and Trademark Office for the registration of the mark “MSTcad” in the United States.

in the United States for the marks “Atomera,” “MST” and “MSTcad” and in China for the mark “Mears”.

Employees and Human Capital Management

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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.

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.

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.

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.

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.

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.

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