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Item 1. Financial Statements

2024-04-30 compared with 2023-11-01 · 111 added, 172 removed, 324 unchanged (47% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

Current assets:

1 unchanged sentence

Short-term investments

Unbilled contracts receivable

Interest receivable

13 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 as of September 30, 2023 and December 31, 2022

none issued and outstanding as of March 31 2024 and December 31, 2023

Common stock:

$ 0.001 par value, authorized 47,500 shares;

25,804 shares issued and 25,784 outstanding as of September 30, 2023;

26,905 shares issued and 26,885 outstanding as of March 31, 2024;

and 26,107 shares issued and outstanding as of December 31, 2023

10 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

Gross margin (loss)

Operating expenses

8 unchanged sentences

Interest expense

Other income (expense), net

Total other income (expense), net

9 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

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

Comprehensive income (loss)

The accompanying notes are an integral part of

2 unchanged sentences

Statements of Stockholders’ Equity

For the Three and Nine Months Ended September

30, 2023 and 2022

For the Three Months Ended March 31, 2024 and

(in thousands)

5 unchanged sentences

Stock option exercise

Forfeiture of restricted stock issuance

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

2 unchanged sentences

$ ( 207,907 )

Stock-based compensation

Stock option exercise

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

Balance June 30, 2023

$ ( 193,466 )

Stock-based compensation

Stock option exercise

Forfeited restricted stock awards

At-the-market sale of stock, net

of commissions and expenses

gain (loss) on available-for-sale securities

Balance September 30, 2023

$ ( 198,505 )

Comprehensive

Stockholders’

3 unchanged sentences

Stock option exercise

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

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

Balance March 31, 2023

$ ( 188,314 )

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 exercises

At-the-market sale of stock, net

of commissions and expenses

Balance September 30, 2022

$ ( 179,023 )

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

Accretion of discounts on available-for-sale securities

Net accretion of discounts on available-for-sale securities

Changes in operating assets and liabilities:

Unbilled contracts receivable

Interest receivable

Prepaid expenses and other current assets

Prepaid and other current assets

Accounts payable

8 unchanged sentences

Maturity of available-for-sale securities

Net cash used in investing activities

Net cash provided by/(used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

3 unchanged sentences

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

7 unchanged sentences

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September

30, 2023 and 2022

For the Three Months Ended March 31, 2024 and

NATURE OF OPERATIONS

8 unchanged sentences

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

At March 31, 2024, the Company

had cash, cash equivalents and short-term investments of approximately $ 19.3 million and working capital of approximately $ 16.8 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.

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

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

On May 31, 2022, Atomera entered

into an Equity Distribution Agreement with Oppenheimer & Co.

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 aggregate offering proceeds of up to $50.0 million (the “ATM Facility”).

During the three-month period ended March 31, 2024, the Company sold approximately 510,000 shares pursuant to the ATM at an average price

per share of approximately $ 8.06 , resulting in approximately $ 4 .0 million of net proceeds to the Company 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.

As of March 31, 2024, the Company has a remaining capacity on the ATM of approximately $ 25.7 million .

Based on the funds it has

5 unchanged sentences

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

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

increased research and development expenses.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

5 unchanged sentences

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

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.

statements of the Company for the three months ended March 31, 2024 and 2023 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, 2023 was derived from the audited financial statements included in the Company's financial

statements as of and for the year ended December 31, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC

on February 15, 2024.

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

18 unchanged sentences

in the consolidated statements of operations.

Adoption of recent accounting standards

Recent Accounting Standards

From time to time, new accounting

1 unchanged sentence

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.

No new accounting standards issued or effective during the period ended March 31, 2024 have had or are expected to have

a significant impact on the Company’s financial statements.

FAIR VALUE MEASUREMENTS

14 unchanged sentences

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 September 30, 2023 and December 31,

Company’s cash, cash equivalents and short-term investments classified by security type as of March 31, 2024 and December 31, 2023

consisted of the following (in thousands):

Schedule fair value measurements

September 30, 2023

December 31, 2022

March 31, 2024

Unrealized Gain/(Loss)

3 unchanged sentences

US agency bonds

December 31, 2023

Accretion of Discount

Money market funds

US treasury bills

US agency bonds

The Company recognizes revenue

7 unchanged sentences

technology without obtaining control).

Revenue from integration license agreements and from MSTcad licenses are recognized over the length

of the license.

The following table provides information about

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Primary geographic markets

3 unchanged sentences

Products and services transferred over time

Unbilled contracts receivable and deferred revenue

Unbilled contracts receivable

Timing of revenue recognition

6 unchanged sentences

received more than one year from the reporting date.

All unbilled contracts receivable as of December 31, 2023 were billed and received

during the three months ended March 31, 2024.

Deferred Revenue

The Company records deferred

revenue for customers that were issued invoices, but the Company has not yet recognized the revenue based on its revenue recognition policy.

As of March 31, 2024, the Company has approximately $ 17 ,000 of deferred revenue that it expects to recognize over the next 12 months.

BASIC AND DILUTED LOSS PER SHARE

5 unchanged sentences

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.

stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options 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.

3 unchanged sentences

Schedule of anti dilutive shares

Nine Months Ended

September 30,

Three Months Ended

Stock Options

11 unchanged sentences

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

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.

5 unchanged sentences

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

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 term of this lease is for 12 months beginning on January 1, 2024 for

$87,000 per month.

Since the lease term is not for more than one year and there are no extension provisions in the lease, the future lease

payments are not included in the lease obligations on the Company’s condensed balance sheets.

The Company terminated its

3 unchanged sentences

were as follows (in thousands):

Schedule components of lease costs

Three Months Ended

September 30,

Nine Months Ended

September 30,

Schedule of lease costs

Financing lease costs:

4 unchanged sentences

Fixed lease costs

Variable lease costs

Short-term lease costs

1 unchanged sentence

Future minimum payments under non-cancellable leases

as of September 30, 2023 were as follows (in thousands):

Schedule of future minimum lease payments

as of March 31, 2024 were as follows (in thousands):

Schedule of future minimum payments

For the Year Ended December 31,

2 unchanged sentences

Remaining 2024

2027 & thereafter

Total future minimum lease payments

3 unchanged sentences

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

Schedule of supplemental

Three Months Ended

September 30,

Nine Months Ended

September 30,

Operating cash flow information:

1 unchanged sentence

Cash paid for amounts included in the measurement of financing liabilities

Non-cash activity:

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

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

The table above does not include

12 unchanged sentences

of 3,750,000 shares of common stock.

As of September 30, 2023, approximately 25 ,000 shares remain available for issuance.

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.

In May 2023, the Company’s shareholders approved its 2023 Stock Incentive Plan (“2023

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.

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 March 31, 2024, approximately 1.4 million shares remain available for issuance under both available plans.

The following table summarizes

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

the stock-based compensation expense recorded in the Company’s results of operations during the three months ended March 31, 2024

and 2023 for stock options and restricted stock granted under the Company’s incentive plans (in thousands):

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

1 unchanged sentence

Selling and Marketing

As 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.

As of March 31, 2024, there

was approximately $ 8.6 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 3.1 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.

date fair value per share of the options granted under the Company’s Plans were $ 4.98 and $ 4.95 for the three March 31, 2024 and

2023, respectively.

The following table summarizes

stock option activity during the nine months ended September 30, 2023 (in thousands except exercise prices and contractual terms):

stock option activity during the three months ended March 31, 2024 (in thousands except exercise prices and contractual terms):

Schedule of stock option activity

2 unchanged sentences

Outstanding at January 1, 2024

Outstanding at September 30, 2023

Exercisable at September 30, 2023

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.

Outstanding at March 31, 2024

Exercisable at March 31, 2024

During the three months ended

March 31, 2024, the Company granted options under the 2017 and 2023 Plans to purchase approximately 366,000 shares of its common stock

to its employees and consultants.

The fair value of these options was approximately $ 1.8 million at the time of grant.

2 unchanged sentences

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

table summarizes all restricted stock activity during the three months March 31, 2024 (in thousands except per share data):

Schedule of restricted stock activity

Weighted-Average

1 unchanged sentence

Outstanding at January 1, 2024

Outstanding non-vested shares at September 30, 2023

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.

Outstanding non-vested shares at March 31, 2024

During the three months ended

March 31, 2024, the Company granted approximately 275,000 restricted stock awards under the 2017 and 2023 Plans.

The fair value of these

awards was approximately $ 1.8 million at the time of grant.

COMMITMENTS AND CONTINGENCIES

3 unchanged sentences

The Company is not party to any material

litigation as of September 30, 2023, or through the date these financial statements have been issued.

litigation as of March 31, 2024, 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 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.

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