ATOMERA INCORPORATED 10-Q
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section
13 or 15 (d) of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2025
or
☐ Transition Report Pursuant to Section
13 or 15 (d) of the Securities Exchange Act of 1934
For the transition period from __________ to
__________
Commission file number: 001-37850
ATOMERA INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
30-0509586
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
750 University Avenue , Suite 280
Los Gatos , California 95032
(Address, including zip code, of registrant’s
principal executive offices)
( 408 ) 442-5248
(Registrant’s telephone number, including
area code)
Securities registered pursuant to Section 12(b)
of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock: Par value $0.001
ATOM
Nasdaq Capital Market
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
☒ No ☐
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated Filer ☐
Non-accelerated Filer ☒
Smaller reporting company ☒
Emerging Growth Company ☐
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is
a shell company (as defined in rule 12b-2 of the Exchange Act: Yes ☐ No ☒
The number of outstanding shares of the Registrant’s
Common Stock, par value $.001 per share, as of May 1, 2025 is 30,704,132 .
Atomera Incorporated
Index
Page
PART I. Financial Information
Item 1.
Financial Statements
3
Condensed Balance Sheets – March 31, 2025 (Unaudited) and December 31, 2024
3
Unaudited Condensed Statements of Operations – For the Three Months Ended March 31, 2025 and 2024
4
Unaudited Condensed Statements of Comprehensive Loss – For the Three Months Ended March 31, 2025 and 2024
5
Unaudited Condensed Statements of Stockholders’ Equity – For the Three Months Ended March 31, 2025 and 2024
6
Unaudited Condensed Statements of Cash Flows –For the Three Months Ended March 31, 2025 and 2024
7
Notes to the Unaudited Condensed Financial Statements
8
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
16
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
19
Item 4.
Controls and Procedures
19
PART II. Other Information
Item 1A.
Risk Factors
20
Item 5.
Other Information
20
Item 6.
Exhibits
20
Signatures
21
2
PART I. Financial Information
Item 1. Financial Statements
Atomera Incorporated
Condensed Balance Sheets
(in thousands, except per share data)
March 31,
December 31,
2025
2024
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$ 24,123
$ 25,778
Short-term investments
–
995
Accounts receivable
–
6
Interest receivable
81
73
Prepaid expenses and other current assets
335
240
Total current assets
24,539
27,092
Property and equipment, net
52
59
Long-term prepaid maintenance and supplies
91
91
Security deposit
14
14
Operating lease right-of-use asset
218
280
Financing lease right-of-use-asset
1,338
1,588
Total assets
$ 26,252
$ 29,124
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 761
$ 492
Accrued expenses
195
239
Accrued payroll-related expenses
402
1,328
Current operating lease liability
184
260
Current financing lease liability
1,314
1,253
Deferred revenue
–
4
Total current liabilities
2,856
3,576
Long-term operating lease liability
–
22
Long-term financing lease liability
113
449
Total liabilities
2,969
4,047
Commitments and contingencies (see Note 9)
–
–
Stockholders’ equity:
Preferred stock $ 0.001 par value, authorized 2,500 shares; none issued and outstanding as of March 31, 2025 and December 31, 2024
–
–
Common stock: $ 0.001 par value, authorized 47,500 shares; 30,704 shares issued and outstanding as of March 31, 2025; and 30,540 shares issued and outstanding as of December 31, 2024
31
31
Additional paid in capital
249,981
246,565
Other comprehensive income
–
1
Accumulated deficit
( 226,729 )
( 221,520 )
Total stockholders’ equity
23,283
25,077
Total liabilities and stockholders’ equity
$ 26,252
$ 29,124
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
March 31,
2025
2024
Revenue
$ 4
18
Cost of revenue
–
( 33 )
Gross margin
4
( 15 )
Operating expenses
Research and development
3,255
2,858
General and administrative
2,088
1,811
Selling and marketing
124
350
Total operating expenses
5,467
5,019
Loss from operations
( 5,463 )
( 5,034 )
Other income (expense)
Interest income
270
205
Accretion income
6
46
Interest expense
( 21 )
( 39 )
Other expense, net
( 1 )
–
Total other income, net
254
212
Net loss
$ ( 5,209 )
( 4,822 )
Net loss per common share, basic
$ ( 0.17 )
( 0.19 )
Net loss per common share, diluted
$ ( 0.17 )
( 0.19 )
Weighted average number of common shares outstanding, basic
30,243
26,038
Weighted average number of common shares outstanding, diluted
30,243
26,038
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
March 31,
2025
2024
Net loss
$ ( 5,209 )
( 4,822 )
Unrealized loss on available-for-sale securities
( 1 )
( 1 )
Net loss
$ ( 5,210 )
( 4,823 )
The accompanying notes are an integral part of
these condensed financial statements.
5
Atomera Incorporated
Statements of Stockholders’ Equity
For the Three Months Ended March 31, 2025 and
2024
(Unaudited)
(in thousands)
Common Stock
Additional
Paid-in
Other
Comprehensive
Accumulated
Total
Stockholders’
Shares
Amount
Capital
Loss
Deficit
Equity
Balance January 1, 2025
30,540
$ 31
$ 246,565
$ 1
$ ( 221,520 )
$ 25,077
Stock-based compensation
–
–
1,009
–
–
1,009
At-the-market sale of stock, net of commissions and expenses
164
–
2,407
–
–
2,407
Net loss
–
–
–
–
( 5,209 )
( 5,209 )
Unrealized gain (loss) on available-for-sale securities
–
–
–
( 1 )
–
( 1 )
Balance March 31, 2025
30,704
$ 31
$ 249,981
$ –
$ ( 226,729 )
$ 23,283
Common Stock
Additional
Paid-in
Other
Comprehensive
Accumulated
Total
Stockholders’
Shares
Amount
Capital
Loss
Deficit
Equity
Balance January 1, 2024
26,107
$ 26
$ 221,229
$ –
$ ( 203,085 )
$ 18,170
Stock-based compensation
275
–
1,024
–
–
1,024
Stock option exercise
13
–
86
–
–
86
Forfeiture of restricted stock issuance
( 20 )
–
–
–
–
–
At-the-market sale of stock, net of commissions and expenses
510
1
3,949
–
–
3,950
Net loss
–
–
–
–
( 4,822 )
( 4,822 )
Unrealized gain (loss) on available-for-sale securities
–
–
–
( 1 )
–
( 1 )
Balance March 31, 2024
26,885
$ 27
$ 226,288
$ ( 1 )
$ ( 207,907 )
$ 18,407
The accompanying notes are an integral part of
these condensed financial statements.
6
Atomera Incorporated
Condensed Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2025
2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss
$ ( 5,209 )
$ ( 4,822 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
12
17
Operating lease right of use asset amortization
61
58
Financing lease right of use asset amortization
251
281
Stock-based compensation
1,009
1,024
Net accretion of discounts on available-for-sale securities
( 6 )
( 46 )
Changes in operating assets and liabilities:
Accounts receivable
6
–
Unbilled contracts receivable
–
550
Interest receivable
( 8 )
12
Prepaid and other current assets
( 95 )
( 84 )
Accounts payable
269
( 114 )
Accrued expenses
( 44 )
( 12 )
Accrued payroll expenses
( 926 )
( 928 )
Operating lease liability
( 98 )
( 102 )
Deferred revenue
( 4 )
17
Net cash used in operating activities
( 4,782 )
( 4,149 )
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment
( 4 )
–
Purchase of available-for-sale securities
–
( 1,479 )
Maturity of available-for-sale securities
1,000
4,000
Net cash provided by investing activities
996
2,521
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from at-the-market sale of stock, net of commissions and expenses
2,407
3,950
Proceeds from exercise of stock options
–
86
Payments on principal of financing lease
( 276 )
( 193 )
Net cash provided by financing activities
2,131
3,843
Net increase/(decrease) in cash and cash equivalents
( 1,655 )
2,215
Cash and cash equivalents at beginning of period
25,778
12,591
Cash and cash equivalents at end of period
$ 24,123
$ 14,806
Supplemental information:
Cash paid for interest
$ 21
$ 26
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 Months Ended March 31, 2025 and
2024
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 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 March 31, 2025, the Company
had cash and cash equivalents of approximately $ 24.1 million and working capital of approximately $ 21.7 million . The Company has generated
only limited revenues since inception and has incurred recurring operating losses. Accordingly, it is subject to all the risks inherent
in the initial organization, financing, expenditures, and scaling of a new business that is not generating positive cashflow.
On May 31, 2022, Atomera entered
into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and Craig-Hallum Capital Group LLC (“Craig-Hallum”),
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 agents, having aggregate offering proceeds of up to $50.0 million (the
“ATM”). During the three months ended March 31, 2025, the Company sold approximately 164,000 shares pursuant to the ATM at
an average price per share of approximately $ 15.19 , resulting in approximately $ 2.4 million of net proceeds to the Company after deducting
commissions and other offering expenses. The Company’s ATM expired on March 18, 2025.
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.
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 March 4, 2025.
Basis of Presentation of Unaudited Condensed Financial Information
The unaudited condensed financial
statements of the Company for the three months ended March 31, 2025 and 2024 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, 2024 was derived from the audited financial statements included in the Company's financial
statements as of and for the year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K filed with the SEC
on March 4, 2025. These unaudited condensed financial statements should be read in conjunction with that report.
8
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 condensed balance sheets 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, net in the condensed
statements of operations when incurred. Unrealized gains and losses are included in other comprehensive income (loss) on the condensed
balance sheets.
Adoption of Recent Accounting Standards
In December 2023, the Financial
Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic
740): Improvements to Income Tax Disclosures (“ASU 2023-08”). This new guidance requires entities on an annual basis disclose
specific categories in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative
threshold. The guidance applies to annual periods beginning after December 15, 2024 on a prospective basis, (early adoption is permitted).
The Company adopted this standard on January 1, 2025 for the annual period ending December 31, 2025. While the standard requires additional
disclosures, the adoption did not have a material impact on the Company’s financial position, results of operations or financial
statement disclosures.
Recent Accounting Standards
In November 2024, the FASB
issued ASU 2024-03 (as clarified by ASU 2025-01 in January 2025), Income Statement-Reporting Comprehensive Income-Expense Disaggregation
Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ), requiring public entities to disclose additional information
about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for
annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December
15, 2027, with early adoption permitted. The Company does not believe ASU 2024-03 will have a material impact on its financial position,
results of operations or financial statement disclosure.
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.
9
The Company’s cash equivalents
and short-term investments 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 March 31, 2025 and December 31, 2024 consisted of the following
(in thousands):
Schedule of fair value measurements
March 31, 2025
Cost
Unrealized Gain/(Loss)
Accretion of Discount
Fair Value
Cash
$ 1
$ –
$ –
$ 1
Money market funds
24,122
–
–
24,122
Total
$ 24,123
$ –
$ –
$ 24,123
December 31, 2024
Cost
Unrealized Gain/(Loss)
Accretion of Discount
Fair Value
Cash
$ 1
$ –
$ –
$ 1
Money market funds
25,777
–
–
25,777
US agency bonds
976
1
18
995
Total
$ 26,754
$ 1
$ 18
$ 26,773
5.
REVENUE
The Company recognizes revenue
in accordance with ASC 606. 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 at the time when goods or services are transferred and/or delivered to its customers.
Revenue is recognized when the Company satisfies a performance obligation by transferring the product or service to the customer, either
at a point in time or over time. The Company usually recognizes revenue from integration service agreements and from manufacturing licenses
at a point in time unless the agreements provide for customer acceptance in which case revenue is recognized over time. Revenue from MSTcad
licenses is recognized over a period of time.
The following table provides
information about disaggregated revenue by primary geographical markets and timing of revenue recognition (in thousands):
Schedule of disaggregated revenue by primary geographical markets and timing of revenue recognition
Three Months Ended
March 31,
2025
2024
Primary geographic markets
North America
$ 4
$ 18
Asia Pacific
–
–
Total
$ 4
$ 18
Timing of revenue recognition
Products and services transferred at a point in time
$ –
$ 18
Products and services transferred over time
4
–
Total
$ 4
$ 18
10
Unbilled contracts receivable
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.
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, 2025, the Company did no t have any deferred revenue to recognize in the future.
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 (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
Three Months Ended
March 31,
2025
2024
Stock Options
3,582
3,670
Unvested restricted stock awards
423
620
Unvested restricted stock units
583
–
Total
4,588
4,290
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, 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 August 1, 2024, the lease payments for this tool
were adjusted to $124,071 per month for the period August 1, 2024 through July 31, 2025. This adjustment to the lease payments also resulted
in a reduction in the ROU and corresponding lease liability.
11
In December 2024, the Company
entered into a lease agreement for a tool in Tempe, Arizona. The term of this lease is for 12 months beginning on January 1, 2025 for
$95,000 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.
Lease expense for operating
leases consists of the lease payments recognized on a straight-line basis over the lease term. Expenses for financing leases consists
of the amortization expenses recognized on a straight-line basis over the lease term and interest expense. The components of lease costs
were as follows (in thousands):
Schedule of lease costs
Three Months Ended
March 31,
2025
2024
Financing lease costs:
Amortization of ROU assets
$ 251
$ 281
Interest on lease liabilities
21
39
Total financing lease costs
$ 272
$ 320
Operating lease costs
Fixed lease costs
$ 65
$ 66
Variable lease costs
1
–
Short-term lease costs
285
261
Total operating lease costs
$ 351
$ 327
Future minimum payments under non-cancellable leases
as of March 31, 2025 were as follows (in thousands):
Schedule of future minimum payments
For the Year Ended December 31,
Financing leases
Operating leases
Remaining 2025
$ 994
$ 166
2026
479
23
Total future minimum lease payments
1,473
189
Less imputed interest
( 46 )
( 5 )
Total lease liability
$ 1,427
$ 184
The table below provides supplemental
information and non-cash activity related to the Company’s operating and financing leases (in thousands):
Schedule of supplemental information and non-cash activity
Three Months Ended
March 31,
2025
2024
Operating cash flow information:
Cash paid for amounts included in the measurement of operating lease liabilities
$ 102
$ 110
Cash paid for amounts included in the measurement of financing lease liabilities
$ 297
$ 219
The table above does not include
short-term leases that are one-year or less. The weighted average remaining discount rate is 5.25 % for the Company’s financing leases
and 5.54 % for the Company’s operating leases. The weighted average remaining lease term is 1.3 years for the financing lease and
0.9 years for operating leases.
12
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 and units. The 2017 Plan provides for
the issuance of 3,750,000 shares of common stock. 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, restricted stock and restricted stock units issued under the 2017 Plan and 2023 Plan vest over a period of one
to three to four years from the date of grant. As of March 31, 2025, approximately 743,000 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 for stock options, restricted stock and restricted
stock units granted under the Company’s incentive plans (in thousands):
Schedule of stock-based compensation expense
Three Months Ended
March 31,
2025
2024
Research and development
$ 459
$ 377
General and administrative
599
583
Selling and marketing
( 49 )
64
Total
$ 1,009
$ 1,024
As of March 31,2025, there
was approximately $ 9.4 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 2.5 years.
Stock Options:
The weighted average grant
date fair value per share of the options granted under the Company’s Plans was $ 4.98 for the three months ended March 31, 2024.
There were no stock options issued in the three months ended March 31, 2025. The following table summarizes stock option activity during
the three months ended March 31, 2025 (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, 2025
3,793
$ 6.64
Forfeited
( 167 )
$ 3.50
Expired
( 44 )
$ 6.60
Outstanding at March 31, 2025
3,582
$ 6.79
3.90
$ 72
Exercisable at March 31, 2025
3,074
$ 6.74
3.16
$ 44
13
Restricted Stock Awards:
The Company has issued restricted
stock awards to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant. There
were no restricted stock awards issued in the three months ended March 31, 2025. The following table summarizes all restricted stock award
activity during the three months ended March 31, 2025 (in thousands except per share data):
Schedule of restricted stock activity
Number of
Shares
Weighted-Average
Grant Date Fair Value per Share
Outstanding at January 1, 2025
469
$ 7.17
Vested
( 46 )
$ 9.71
Outstanding non-vested shares at March 31, 2025
423
$ 6.89
Restricted Stock Units:
Beginning in January 2025,
the Company began issuing restricted stock units (“RSUs”) to employees, directors and consultants and a portion of the RSUs
issued are subject to time-based vesting and a portion are subject to performance-based vesting criteria. The fair value of time-based
RSUs is based on the closing price on the day of grant and they vest over three to four years. Awards of performance-based restricted
stock units by the Company have a performance period of one, two and three years with the vesting of each award tranche dependent on the
Company’s Total Shareholder Return (“TSR”) relative to the TSR of companies in the Russell 2000 Index over that tranche’s
performance period. The fair value for performance-based awards is fixed at the grant date using a Monte Carlo simulation and the amount
of compensation expense is not adjusted during the performance period regardless of changes in the level of TSR achievement.
The weighted average grant
date fair value per share of the RSUs granted was $ 7.81 .
The following table summarizes all restricted stock unit activity during the three months ended March 31, 2025 (in thousands except per
share prices data):
Schedule of restricted stock unit activity
Time-Based
Units
Performance-
Based Units
Total Restricted Stock Units
Weighted-Average Grant Date Fair Value per Share
Outstanding at January 1, 2025
–
–
–
$ –
Granted
392
251
643
$ 7.81
Forfeited
( 30 )
( 30 )
( 60 )
$ 8.21
Outstanding at March 31, 2025
362
221
583
$ 7.77
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 March 31, 2025, or through the date these financial statements have been issued.
14
10.
EQUITY
On April 28, 2024, the Company
sold 2,247 shares of its common stock to the Chief Executive Officer, Scott Bibaud, at a price of $ 4.45 per share, which was determined
to be the fair market value on the date of the transaction. The total proceeds from the sale amounted to approximately $ 10,000 .
11.
SEGMENT INFORMATION
The Company operates as a
single operating segment. The Company's chief operating decision maker ("CODM") is its chief executive officer and chief financial
officer who review financial information. The CODM uses total operating expense, operating margin and related impact on cash consumption
to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions,
such as the determination of the overall headcount, allocation of headcount, research and development expenditures, licensing and royalty
rates offered to customers and capital expenditure commitments. The measure of assets is reported on the accompanying condensed balance
sheets as total assets.
The following table presents
selected financial information with respect to the Company’s single operating segment for the three months ended March 31, 2025
and 2024:
Schedule of selected financial information
Three Month Ended March 31,
2025
2024
Revenue:
$ 4
$ 18
Less expenses (1) :
Employee related expenses
1,787
1,823
Stock-based compensation
1,009
1,024
Tool related expenses
611
626
Consulting expenses
150
166
Metrology and other outsourced research expenses
461
196
Intellectual property related expenses
351
194
Other operating items (2)
1,098
1,023
Operating margin
( 5,463 )
( 5,034 )
Other income (expense), net
254
212
Net loss
$ ( 5,209 )
$ ( 4,822 )
(1) Expenses
classified as cost of revenue are included in the line items presented and not as a separate category.
(2) Other
operating expenses include items not listed above separately. These include travel and entertainment, professional development, information
technology costs, office related costs, depreciation, other research and development costs, other sales and marketing costs and other
general and administrative costs.
12. SUBSEQUENT
EVENTS
Management has evaluated subsequent
events and transactions through the date these financial statements were issued.
15
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion
and analysis of the financial condition and results of operations of Atomera Incorporated should be read in conjunction with our financial
statements and the accompanying notes that appear elsewhere in this Quarterly Report on Form 10-Q. Statements in this Quarterly Report
include forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives,
expectations and intentions. We use words such as “anticipate,” “estimate,” “plan,” “project,”
“continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,”
“will,” “should,” “could,” and similar expressions to identify forward-looking statements. Although
forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based
on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and
changes in condition, significance, value and effect, including those risk factors set forth in our Annual Report on Form 10-K for the
year ended December 31, 2024 filed with the SEC on March 4, 2025. Such risks, uncertainties and changes in condition, significance, value
and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers
are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and
are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements
in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review
and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of operations and prospects.
Overview
We are engaged in the business
of developing, commercializing and licensing proprietary processes and technologies for the $550+ billion semiconductor industry. Our
lead technology, named Mears Silicon Technology™, or MST ® , is a thin film of reengineered silicon, typically 100
to 300 angstroms (or approximately 20 to 60 silicon atomic unit cells) thick. MST is our proprietary and patent-protected performance
enhancement technology that we believe addresses a number of key engineering challenges facing the semiconductor industry. We believe
that by incorporating MST, transistors can be made smaller, with increased speed, reliability and power efficiency. In addition, since
MST is an additive and low-cost technology, we believe it can be deployed on an industrial scale, with machines commonly used in semiconductor
manufacturing. We believe that MST can be widely incorporated into the most common types of semiconductor products, including analog,
logic, optical and memory integrated circuits.
We do not design or manufacture
integrated circuits directly. Instead, we develop and license technologies and processes that we believe offer the designers and manufacturers
of integrated circuits a low-cost solution to the industry’s need for greater performance and lower power consumption. Our customers
and partners include:
·
foundries, which manufacture integrated circuits on behalf of fabless manufacturers;
·
integrated device manufacturers, or IDMs, which are the fully-integrated designers and manufacturers of integrated circuits;
·
fabless semiconductor manufacturers, which are designers of integrated circuits that outsource the manufacturing of their chips to foundries;
·
original equipment manufacturers, or OEMs, that manufacture the epitaxial, or epi, machines used to deposit semiconductor layers, such as the MST film, onto silicon wafers; and
·
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.
16
Our commercialization strategy
is to generate revenue through licensing arrangements whereby foundries, IDMs and fabless semiconductor manufacturers pay us a license
fee for their right to use MST technology in the manufacture of silicon wafers as well as a royalty for each silicon wafer or device that
incorporates our MST technology. We also license our MSTcad software to our customers for use in simulating the effects of using MST technology
on their wafers and/or devices. To date, we have generated revenue from (i) licensing agreements with ST Microelectonics (ST) and Asahi
Kasei Microdevices (AKM), both of which are IDMs, one fabless manufacturer and one foundry, (ii) a joint development agreement, or JDA,
with a leading semiconductor provider, (iii) engineering services provided to foundries, IDMs and fabless companies and (iv) licensing
MSTcad.
We were organized as a Delaware
limited liability company under the name Nanovis LLC on November 26, 2001. On March 13, 2007, we converted to a Delaware corporation under
the name Mears Technologies, Inc. On January 12, 2016, we changed our name to Atomera Incorporated.
On May 31, 2022, we entered
into an Equity Distribution Agreement with Oppenheimer & Co. Inc and Craig-Hallum Capital Group LLC, as agents, under which we may
offer and sell, from time to time at our sole discretion, shares of our common stock having aggregate offering proceeds of up to $50.0
million in an “at-the-market” or ATM offering, to or through the agents. During the three months ended March 31, 2025, we
sold approximately 164,000 shares pursuant to the ATM at an average price per share of approximately $15.19, resulting in approximately
$2.4 million of net proceeds after deducting commissions and other offering expenses.
Results of Operations
Revenues . To date,
we have only generated limited revenue from customer engagements for engineering services, integration license agreements, a manufacturing
license granted under a JDA, our license agreement with ST and licensing of MSTcad. Our license agreement with ST, which was executed
in April 2023, is our first commercial manufacturing and distribution agreement and, assuming successful completion of contractual milestones
and payments of associated fees, will entitle us to royalties on all MST-enabled products manufactured for commercial purposes. Our MSTcad
licenses grant customers the right to use MSTcad software to simulate the effects of incorporating MST technology into their semiconductor
manufacturing process. MSTcad licenses are granted on a monthly or yearly basis and revenue is recognized over time.
Revenue for the three months
ended March 31, 2025 and 2024 was approximately $4,000 and $18,000 respectively. Our revenue consisted of MSTcad licensing and related
consulting services revenue.
Cost of revenue . Cost
of revenue consists of costs of materials, as well as direct compensation and expenses incurred to provide deliverables that result in
payment of success fees, delivery of wafers in connection with integration license agreements and consulting services provided for our
MSTcad licenses. Cost of revenue is expensed when incurred and may not correspond with revenue earned in the same period. Cost of revenue
was not recorded during the three months ended March 31, 2025. Cost of revenue for the three months ended March 31, 2025 and 2024 was
$0 and approximately $3,000, respectively. We anticipate that our cost of revenue will vary substantially depending on the mix of license
and engineering services revenues we receive and the nature of products and/or services delivered in each customer engagement.
Operating expenses.
Operating expenses consist of research and development, general and administrative, and selling and marketing expenses. For the three
months ended March 31, 2025 and 2024, our operating expenses totaled approximately $5.5 million and $5.0 million, respectively.
Research and development
expense . To date, our operations have focused on research, development, patent prosecution, and commercialization of our MST technology
and related technologies such as MSTcad. Our research and development costs primarily consist of payroll and benefits costs for our engineering
staff and costs of outsourced fabrication (including epi tool leases) and metrology of semiconductor wafers incorporating our MST technology.
For the three months ended
March 31, 2025 and 2024, we incurred approximately $3.3 million and $2.9 million, respectively, of research and development expenses,
an increase of approximately $397,000, or 14%. This increase was primarily due to increases in device fabrication costs of approximately
$182,000, employee costs of approximately $90,000 and outside metrology increases of approximately $84,000.
17
General and administrative
expense. General and administrative expenses consist primarily of payroll and benefit costs for administrative personnel, office-related
costs and professional fees. General and administrative costs were approximately $2.1 million and $1.8 million for the three months ended
March 31, 2025 and 2024, respectively, representing an increase of approximately $277,000, or 15%. The increase is primarily related to
increases of approximately $174,000 in legal costs and fees related to our patent portfolio and approximately $56,000 in corporate legal
expenses.
Selling and marketing expense.
Selling and marketing expenses consist primarily of salary and benefits for our sales and marketing personnel and business development
consulting services. Selling and marketing expenses for the three months ended March 31, 2025 and 2024 were approximately $124,000 and
$350,000, respectively, representing a decrease of approximately $226,000, or 65%. The decrease in costs is primarily due to a reduction
in headcount.
Interest income. Interest
income for three months ended March 31, 2025 and 2024 was approximately $270,000 and $205,000, respectively. Interest income for the periods
presented reflected interest earned on our cash, cash equivalents and short-term investments.
Accretion income. Accretion
income for the three months ended March 31, 2025 and 2024 was approximately $6,000 and $46,000, respectively. Accretion income relates
to the increase in value of our available-for-sale securities from the purchase date through the maturity date.
Interest expense. Interest
expense for the three months ended March 31, 2025 and 2024 was approximately $21,000 and $39,000, respectively. Interest expense is related
to the tool financing lease entered into in August 2021.
Other income (expense),
net. Other expense for the three months ended March 31, 2025 and 2024 was approximately $1,000 and $0, respectively, and consisted
of losses on foreign currency between the date of receipt of goods or services and the date the payment was made.
Cash Flows from Operating, Investing and Financing
Activities
Net cash used in operating
activities of approximately $4.8 million for the three months ended March 31, 2025 resulted primarily from our net loss of approximately
$5.2 million and a decrease in our accrued payroll expenses of approximately $926,000, offset by approximately $1.0 million of stock-based
compensation and an increase of approximately $269,000 in accounts payable.
Net cash used in operating activities of
approximately $4.1 million for the three months ended March 31, 2024 resulted primarily from our net loss of approximately $4.8 million
and payment of accrued payroll expenses of approximately $928,000, offset by approximately $1.0 million of stock-based compensation and
approximately $550,000 of collected contracts receivable.
Net cash provided by investing
activities of approximately $996,000 for the three months ended March 31, 2025 consisted primarily of the maturity of short-term available-for-sale
investments.
Net cash provided by investing
activities of approximately $2.5 million for the three months ended March 31, 2024 consisted primarily of the maturity of short-term available-for-sale
investments, offset by the purchase of short-term available-for-sale investments.
Net cash provided by financing
activities of approximately $2.1 million for the three months ended March 31, 2025 primarily related to the net proceeds from sales under
our ATM, offset by the principal payments on our financing lease.
Net cash provided by financing
activities of approximately $3.8 million for the three months ended March 31, 2024 primarily related to the net proceeds from sales under
our ATM, offset by the principal payments on our financing lease.
Liquidity and Capital Resources
As of March 31, 2025, we had
cash and cash equivalents of approximately $24.1 million and working capital of approximately $21.7 million. For the three months ended
March 31, 2025 we had a net loss of approximately $5.2 million and used approximately $4.8 million of cash and cash equivalents in operations.
Since inception, we have incurred recurring operating losses.
During the three months ended
March 31, 2025, we sold approximately 164,000 shares of common stock pursuant to the ATM at an average price per share of approximately
$15.19, resulting in approximately $2.4 million of net proceeds to the Company after deducting commissions and other offering expenses.
18
We believe that our available
working capital is sufficient to fund our presently forecasted working capital requirements for, at least, the next 12 months following
the date of the filing of this report. However, our future capital requirements and the adequacy of our available funds will depend on
many factors, including our ability to successfully commercialize our MST technology, competing technological and market developments,
and the need to enter into collaborations with other companies or acquire technologies to enhance or complement our current offerings.
If we are not able to generate sufficient revenue from license fees and royalties in a timeframe that satisfies our cash needs, we will
need to raise more capital. In the event we require additional capital, we will endeavor to acquire additional funds through various financing
sources, including our ATM, follow-on equity offerings, debt financing and joint ventures with industry partners. In addition, we will
consider alternatives to our current business plan that may enable us to achieve revenue-producing operations and meaningful commercial
success with a smaller amount of capital. If we are unable to secure additional capital, we may be required to curtail our research and
development initiatives and take additional measures to reduce costs in order to conserve cash.
Critical Accounting Estimates
There have been no changes
to our critical accounting estimates from those included in our Annual Report on Form 10-K for the year ended December 31, 2024 filed
with the SEC on March 4, 2025.
Item 3. Quantitative and Qualitative Disclosure about Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation
of our chief executive officer and principal financial and accounting officer, has evaluated the effectiveness of the design and operation
of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on this
evaluation, management concluded that our disclosure controls and procedures were not effective as of March 31, 2025 because of the material
weakness described below.
Changes in Internal Control over Financial Reporting
As disclosed in our Annual
Report on Form 10-K for the year ended December 31, 2024, management previously identified a material weakness in our internal controls
because we did not design and implement effective controls over the review and approval of journal entries into our general ledger. We
have implemented enhanced controls during the three months ended March 31, 2025 to review and approve journal entries and are currently
testing the operational effectiveness of these controls.
19
PART II. Other Information
Item 1A. Risk Factors
The primary risk factors affecting
our business have not changed materially from the risk factors set forth in our Annual Report on Form 10-K for the year ended December
31, 2024 filed with the SEC on March 4, 2025.
Item 5. Other Information
The table below summarizes
the terms of arrangements adopted or terminated by officers or directors during the three months ended March 31, 2025. All of the trading
arrangements listed below are intended to satisfy the affirmative defense conditions of Rule 10b5-1c.
Name and Position
Adoption or
Termination Date
Total Number of
Shares to be Sold (1)
Expiration Date
Robert Mears ,
Amended
Up to 25,122
September 10, 2025
Chief Technology Officer
March 12, 2025
(1) The actual
number of shares sold will depend on the vesting of restricted stock awards and the number of shares withheld by the Company to satisfy
its income tax withholding obligations, and may vary from the approximate number provided.
Item 6. Exhibits
The following is a list of
exhibits filed as part of this Report on Form 10-Q:
Exhibit
No.
Description
Method of filing
31.1
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed electronically herewith
31.2
Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Filed electronically herewith
32.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
Filed electronically herewith
101.INS
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
Filed electronically herewith
101.SCH
Inline XBRL Taxonomy Extension Schema Document
Filed electronically herewith
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Filed electronically herewith
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
Filed electronically herewith
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
Filed electronically herewith
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Filed electronically herewith
104
Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).
Filed electronically herewith
20
SIGNATURES
Pursuant to the requirements
of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
ATOMERA INCORPORATED.
Date: May 7, 2025
By:
/s/ Scott A. Bibaud
Scott A. Bibaud
Chief Executive Officer,
(Principal Executive Officer)
and Director
Date: May 7, 2025
By:
/s/ Francis B. Laurencio
Francis B. Laurencio
Chief Financial Officer
(Principal Financial and
Accounting Officer)
21
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.