ATOM filing — read by section

ATOMERA INCORPORATED 10-K 
 
 Table
of Contents 

 UNITED STATES 

 SECURITIES AND EXCHANGE COMMISSION 

 Washington, D.C. 20549 

 FORM 10-K 

 ☒ ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 For the fiscal year ended December 31 , 2025 

 or 

 ☐ TRANSITION
REPORT UNDER 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 Incorporation or Organization) 
 (I.R.S. Employer Identification Number) 

 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 

 Securities registered pursuant to Section 12(g)
of the Act: 

 None

 Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ☐ No ☒

 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 past 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, a smaller reporting company or an emerging growth company
(as defined 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 check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐ 

 Indicate by check mark whether the financial statements
of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ 

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

 Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒ 

 State the aggregate market value of voting and
non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average
bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal
quarter: $ 150,140,617 . Shares of the registrant’s common stock held by each executive officer, director and holder of 10% or more
of the outstanding common stock (as determined based on public filings) have been excluded in that such persons may be deemed to be affiliates.
This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose.

 As of February 24, 2026, there were 38,696,147 
shares of the registrant’s common stock outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 The registrant intends to file a definitive proxy
statement pursuant to Regulation 14A within 120 days after the end of the fiscal year ended December 31, 2025. Portions of such proxy
statement are incorporated by reference into Part III of this Form 10-K.

 ATOMERA INCORPORATED 

 TABLE OF CONTENTS 

 Page 

 PART I 
 
 Item 1. 
 Business 
 1 

 Item 1A. 
 Risk Factors 
 10 

 Item 1B. 
 Unresolved Staff Comments 
 18 

 Item 1C. 
 Cybersecurity 
 18 

 Item 2. 
 Properties 
 19 

 Item 3. 
 Legal Proceedings 
 19 

 Item 4. 
 Mine Safety Disclosures 
 19 

 PART II 
 
 Item 5. 
 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 
 20 

 Item 6. 
 Reserved 
 21 

 Item 7. 
 Management’s Discussion and Analysis of Financial Condition and Results of Operations 
 21 

 Item 7A. 
 Quantitative and Qualitative Disclosures About Market Risk 
 26 

 Item 8. 
 Financial Statements and Supplementary Data 
 27 

 Item 9. 
 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
 53 

 Item 9A. 
 Controls and Procedures 
 53 

 Item 9B. 
 Other Information 
 54 

 Item 9C. 
 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 
 54 

 PART III 
 
 Item 10. 
 Directors, Executive Officers and Corporate Governance 
 55 

 Item 11. 
 Executive Compensation 
 55 

 Item 12. 
 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 
 55 

 Item 13. 
 Certain Relationships and Related Transactions and Director Independence 
 55 

 Item 14. 
 Principal Accountant Fees and Services 
 55 

 PART IV 
 
 Item 15. 
 Exhibits, Financial Statement Schedules 
 56 

 Item 16. 
 Form 10-K Summary 
 58 

 Signatures 
 59 

 i 

 NOTE REGARDING FORWARD-LOOKING STATEMENTS 

 This Annual Report on Form
10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are intended to be covered by the “safe harbor”
created by those sections. The words “believe,” “may,” “will,” “potentially,” “estimate,”
“continue,” “anticipate,” “intend,” “could,” “would,” “should,”
“ongoing,” “project,” “plan,” “expect” and similar expressions that convey uncertainty
of future events or outcomes are intended to identify forward-looking statements. These forward-looking statements include, but are not
limited to, statements concerning the following:

 · 
 our future financial and operating results; 

 · 
 our intentions, expectations and beliefs regarding anticipated growth, technology adoption, market penetration and trends in our business; 

 · 
 the timing and success of our plan of commercialization; 

 · 
 our ability to operate our license and royalty-based business model; 

 · 
 the effects of market conditions on our stock price and operating results; 

 · 
 our ability to have our technology solutions gain market acceptance; 

 · 
 the effects of competition in our market and our ability to compete effectively; 

 · 
 our ability to maintain, protect and enhance our intellectual property; 

 · 
 costs associated with initiating and defending intellectual property infringement and other claims; 

 · 
 our expectations concerning our relationships with customers, potential customers, partners and other third parties; 

 · 
 the attraction and retention of qualified employees and key personnel; 

 · 
 future acquisitions of, or investments in, complementary companies or technologies; and 

 · 
 our ability to comply with evolving legal standards and regulations, particularly concerning requirements for being a public company. 

 These forward-looking statements
are subject to a number of risks, uncertainties and assumptions, including those described in “ Risk Factors ”
and elsewhere in this Annual Report and our subsequently filed Quarterly Reports on Form 10-Q. Moreover, we operate in a very competitive
and rapidly changing environment, and new risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess
the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions,
the forward-looking events and circumstances discussed in this Annual Report may not occur and actual results could differ materially
and adversely from those anticipated or implied in our forward-looking statements.

 You should not rely upon forward-looking
statements as predictions of future events. Although we believe that the expectations reflected in our forward-looking statements are
reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances described in the
forward-looking statements will be achieved or occur. Moreover, neither we nor any other person assumes responsibility for the accuracy
and completeness of the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any
reason after the date of this Annual Report to conform these statements to actual results or to changes in our expectations, except as
required by law.

 You should read this Annual
Report and the documents that we reference in this Annual Report and have filed with the Securities and Exchange Commission as exhibits
with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially
different from what we expect.

 ii 

 PART I 

 Item 1. 
 Business 

 Company Overview 

 We are engaged in the business
of developing, commercializing and licensing proprietary processes and technologies for the $700+ billion semiconductor industry. Our
lead technology, named Mears Silicon Technology™, or MST ® , is a thin film of reengineered silicon. MST is our proprietary
and patent-protected performance enhancement technology that we believe addresses a number of key engineering challenges facing the semiconductor
industry. MST provides multiple benefits to the semiconductor manufacturing process, enabling transistors to 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
wafers or integrated circuits directly. Instead, we develop and license technologies and processes that we believe offer the designers
and manufacturers of wafers and 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;

 · 
 manufacturers of semiconductor wafers, which provide the substrates upon which integrated circuits are fabricated; 

 · 
 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. 

 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
integration engineering services to customers evaluate the effects of MST as integrated into their manufacturing flow. Typically we offer
these services through paid evaluation arrangement, joint development agreements (JDAs) or integration license agreements.

 Our goal is that MSTcad licensing
and engineering service arrangements will be tools that demonstrate the benefits of MST when integrated into customers’ manufacturing
processes and will lead customers to enter into commercial license agreements. A “commercial license” consists of (i) an R&D
license, which grants our customer the rights to install MST on a tool in their fab and to manufacture MST-enabled products, but only
for internal use and limited customer sampling and (ii) a high-volume manufacturing, or HVM, license which grants the rights to manufacture
and sell MST-enabled products to their customers.

 1 

 Depending upon our customers’
business needs and how we initially engaged with them, we may make these license grants in one or more separate contracts. Our preferred
model is to charge our customers upfront license fees for each license grant. Under our licensing model, the R&D license fee is due
upon installation of MST in a tool at our customer’s fab and a larger HVM license fee will be due when our customer completes qualification
of MST in their process and before they can sell MST -enabled products to their customers. Upon the grant of an HVM license, our licensees
are also required to make royalty payments to us based on the number and/or sales price of MST-enabled products they sell. We have engaged
with certain customers under joint development agreements, or JDAs. Our JDAs include development, technology transfer, manufacturing and
licensing components.

 To date, applications of our
MST technology have primarily been for power devices, RFSOI devices and advanced CMOS integrated circuits including logic and memory.
CMOS integrated circuits are the most widely used type of integrated circuits in the semiconductor industry. We believe MST has the potential
to overcome the key challenges found in the implementation of next-generation nano-scale semiconductor devices incorporating CMOS type
transistors, namely enhancing drive current, reducing leakage and reducing variability. In addition, we believe that MST has the potential
to deliver these benefits through a single technology that requires relatively minor modifications to the industry-standard CMOS manufacturing
flow. Consequently, we believe that by incorporating MST, designers can make transistors with increased speed, reliability and energy
efficiency, without significantly altering the current fabrication process or cost of production.

 Starting in 2024, we began
applying our technology to wafers used for fabrication of “compound semiconductors” which are devices built using materials
other than silicon, such as gallium nitride (GaN), which have properties especially attractive to the power and radio frequency markets.
Currently, materials such as GaN suffer from a tradeoff between high-cost specialized wafers and defective, low-yielding wafers resulting
from the crystal lattice mismatch between heterogeneous materials. We believe MST can offer a cost-effective solution to these tradeoffs
by serving as a buffer layer between different materials, such as between GaN and a silicon wafer substrate.

 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. Shares of our common stock are listed
on the NASDAQ Capital Market under the symbol “ATOM”.

 Industry Overview 

 Semiconductors, Generally 

 The global semiconductor market
has experienced extraordinary acceleration, with Fortune Business Insights reporting that the market reached $681 billion in 2024, rebounding
sharply from the industry's 2023 downturn. The market is projected to grow to $755 billion in 2025 and continue expanding at an approximately
15% compound annual growth rate through 2032, driven almost entirely by artificial intelligence (AI) workloads. The explosive growth of
AI is fundamentally reshaping semiconductor demand. Data center infrastructure is expanding at an unprecedented rate to support large
language models, generative AI, and machine learning applications. Power delivery and thermal management have emerged as critical constraints,
as hyperscale data centers struggle with multi-megawatt power densities per rack. Meanwhile, high-speed wireless connectivity has become
ubiquitous, with 5G networks now widely deployed and driving demand for edge computing capabilities that bring processing closer to end
users and devices. This convergence of cloud-scale AI infrastructure and intelligent edge devices has significantly accelerated demand
for advanced semiconductors that can deliver orders of magnitude improvements in compute performance per watt, while supporting the bandwidth
and interconnect speeds required for workloads at every scale from data center to endpoint.

 2 

 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
commonly known as “Moore’s Law.” The semiconductor industry uses the term “node” to describe the minimum
line width or geometry on a semiconductor chip, expressed in nanometers, or nm, for today’s technologies. Historically, smaller
nodes enable more densely packed designs that produced less costly products on a per-transistor basis. Frequently, smaller nodes also
correspond to an improvement in chip performance, making them the mile markers of Moore’s Law, with each node marking a new generation
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 and rapid improvements in in lithography, which is the technology used
in patterning circuits. 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. Semiconductor makers also attempted
to obtain performance improvements through more exotic design architectures which frequently required material innovations to support
their manufacturability and reliability.

 The designers and manufacturers
of integrated circuits and systems — our targeted customers — are facing intense pressure to deliver innovative products while
constantly reducing their time-to-market and prices. We believe that MST can offer improved, performance, lower power consumption or better
trade-offs between power and performance at a time when the industry is under pressure to deliver on both fronts and in shorter timeframes
Our customers, partners and target customers have been increasingly adopting new innovations that extend the scaling formula, including
those based on the use of new engineered materials. The increased focus on new materials along with lithography scaling has been particularly
pronounced in the most advanced logic applications, where customers are employing a three-dimensional “Gate-All-Around” (GAA)
transistor architecture and in DRAM. Both of those markets are direct beneficiaries of trends in AI and they are market opportunities
that our MST technology seeks to address. Because shrinking geometries at the smaller nodes incurs higher capital and manufacturing costs,
only a limited number of companies can afford to continue investing in those nodes.

 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.

 Historically, most semiconductor
companies were vertically integrated. They designed, fabricated, packaged and tested their semiconductors using internally developed software
design tools and manufacturing processes and equipment. As the cost and skills required for designing and manufacturing complex semiconductors
have increased, the semiconductor industry has become disaggregated, with companies concentrating on one or more individual stages of
the semiconductor development and production process. This disaggregation has fueled the growth of fabless semiconductor companies, design
tool vendors, semiconductor equipment manufacturers, third-party semiconductor manufacturers (or foundries), semiconductor assembly, package
and test companies, and intellectual property companies that develop and license technology to others.

 While specialization has enabled
greater development and manufacturing efficiency, it has also created an opportunity for licensing companies, such as Atomera, that develop
and license technology to meet fundamental, industry-wide challenges. These intellectual property companies have been able to gain broad
adoption of their technology throughout the industry by working with companies within the semiconductor supply chain to evaluate and integrate
their technology. Manufacturers and designers of semiconductors increasingly find it more cost-effective to license technologies from
IP-based companies than to develop processes internally that are not their core competence. We believe this collaboration and integration
of externally-developed IP benefits semiconductor companies by enabling them to bring new technology to market faster and more cost-effectively.

 3 

 Applications of Mears Silicon Technology 

 Among the initial applications
for which MST can provide technology differentiation are in power devices, RFSOI devices and advanced CMOS integrated circuits. We offer
MST-SP (between 3-5 volts) and MST-SPX (up to 48V), which are types of MST-enabled power devices that offer what we believe to be industry-leading
on-resistance at comparable or improved breakdown voltage and reliability metrics, enabling reduced footprint and thus smaller devices.
We believe that 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. The higher voltage MST-SPX devices are applicable to the rapidly growing
automotive and data center power sectors. In 2025 we began offering a variant of MST-SPX optimized for a transistor architecture known
as “trenchFETs” which are specifically optimized to handle higher-voltage workloads and are increasingly deployed in data
center power supplies. These MST solutions fill a growing need for reducing power consumption and improving energy efficiency.

 Many RF design companies choose
to design their circuits on a specialized substrate called a Radio Frequency Silicon-On-Insulator or RFSOI wafer due to its attractive
properties for RF circuits. A large percentage of the RF front-end components in mobile phones today use products based on RFSOI wafers.
Although RFSOI has some performance advantages, RF designers are facing challenges in optimizing performance, power consumption, and die
size similar to the challenges faced in advanced logic and power products. We work with the RF design firms to optimize the use of MST
on their wafers to achieve industry-leading characteristics. We believe that MST enables designers to optimize both the RF switch and
Low Noise Amplifier (LNA) devices through a single implementation on an RFSOI wafer. We work with foundries, IDMs and fabless designers
as well as with the RFSOI wafer manufacturers themselves.

 We believe MST has the potential
to overcome key challenges found in the implementation of next generation nano-scale semiconductor devices incorporating CMOS-type transistors,
namely enhancing drive current, reducing leakage and reducing variability. Shown in the diagram below are two illustrative implementations
of MST in GAA transistors, the most advanced type of CMOS device architecture and the predominant one used in GPUs and CPUs in AI data
centers. The figure on the left shows incorporation of MST into the channel region of the transistor which can help to reduce gate leakage
(resulting in lower off-state power consumption) while the figure on the right shows MST incorporated into the source/drain region of
the transistor. This latter implementation helps control dopant diffusion into the channel which improves control of how the transistor
turns on and the variability of the transistor operation. GAA structures like those shown below are increasingly relying on epitaxial
deposition of materials to solve new challenges created by the small dimensions of these structures. MST is a material deposited epitaxially,
and as such we believe that MST can leverage tools and process steps that are already deployed in industry-standard manufacturing flows.
Consequently, we believe that by incorporating MST, designers can make transistors with increased speed, reliability and energy efficiency,
without significantly altering the current fabrication process or cost of production. These improvements are increasingly difficult to
achieve and important in next generation logic and memory devices.

 4 

 MST improvements are delivered
through our proprietary and patent-protected approach based on a deep understanding of the physics of modern semiconductor devices. Our
MST film can be used to create better controlled doping profiles for a wide variety of semiconductor device designs, including junctions,
contacts and channel regions. MST can thus enable more optimized device designs with improved current and voltage handling, lower variability
and improved 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 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 and is compatible with technologies currently
in use such as strained silicon and HKMG.

 Given the costs of moving
to more advanced technologies, we believe one of the most compelling aspects of MST is its cost/benefit profile. We believe that MST will
provide a lower cost of production due to our technology’s potential to reduce die size and/or improve yield while leveraging existing
manufacturing tools, thereby providing chip makers with increased performance at all process nodes with significantly 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; 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 2nm. 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.

 MST technology is an advanced
material with many diverse applications. We are constantly conducting research to explore how MST can be used to improve materials and
disrupt markets. Recently our focus has been in the area of compound semiconductors where we see a variety of opportunities and have been
focusing in particular on GaN-on-Silicon substrates. Recent experiments indicate that MST substrates can be used to grow device-ready
GaN layers with enhanced crystalline quality and reduced defect density relative to conventional GaN-on-Si. This improved material quality
is expected to increase both wafer-level yield and device-level performance. Preliminary results from our collaboration with Texas State
University indicate that MST substrates enable improvements in GaN material quality over standard Si substrates. We are in the process
of developing this technology and testing it with first customers.

 Development Partnerships 

 Synopsys . 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, we developed 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 MSTcad by calibrating
our models against measured silicon results and we regularly release updates that incorporate calibrated results and new functionality.
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, reducing trial and error on silicon wafers and, we believe, accelerating the time to
a license decision. In the last three years, semiconductor fabs have generally been running at high capacity as demand is rapidly outpacing
capacity, which has made it challenging for us to run wafers through our customers’ fabrication lines. In addition, the cost of
wafers containing the most advanced devices has increased substantially due to the complexity of those devices, so MSTcad has been increasingly
used by existing and potential customers to identify applications where MST can have the greatest benefit.

 5 

 Epi Tool Leases. We
lease two epitaxial deposition reactors to deposit MST on both customer and internal R&D wafers. One of these tools is an Applied
Materials Centura reactor which handles both 200mm and 300mm wafers. This dual-chamber tool is leased from Applied Materials and is located
in a cleanroom in the same facility where we lease office space in Tempe, Arizona. Our other epi tool is a 200mm ASM Epsilon reactor leased
from Lawrence Semiconductor in Tempe Arizona. The terms of both tool leases include the lessor’s maintenance and support as well
as access to a cleanroom with advanced cleaning and inspection tools.

 Equipment Vendor Partnership 

 In April 2025, we entered
into a strategic marketing agreement with a global leader in chip fabrication technology aimed at accelerating the adoption of MST for
next-generation technologies. This collaboration is focused on GAA (leading-edge logic) and DRAM customers. Under the agreement, the two
companies are collaborating to perfect the implementation of Atomera’s MST technology on the tool vendor’s reactors, thereby
offering solutions that we believe are more targeted to customer requirements. As a result of this partnership, Atomera can now approach
customers alongside a trusted vendor to the largest semiconductor manufacturers in the world, thus increasing our market reach and accelerating
customer decisions on adoption of MST in commercial, high-volume manufacturing.

 MST Commercialization 

 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
of integrated circuits increased performance at a lower cost than currently available alternatives. Our customers and partners include
foundries, integrated device manufacturers, or IDMs, fabless semiconductor manufacturers, OEMs that manufacture epitaxial deposition tools
(also known as epi machines), wafer manufacturers, and electronic design automation software companies, such as Synopsys.

 Our business model is to enter
into licensing arrangements whereby foundries and IDMs pay us a license fee for their use of MST technology in manufacturing as well as
a royalty for each product sold. Depending on each customer’s business model and the negotiated terms of our license agreements,
those royalties may be calculated on the basis of wafers or products manufactured and sold that incorporate MST. The primary beneficiaries
of our commercialization activities are the IDMs and fabless semiconductor manufacturers, as 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 of the OEMs.

 In the semiconductor industry,
new technologies are vetted thoroughly and carefully by early adopters who are trying to achieve differentiation over competitors. After
the early adopters prove the technology in production, it then tends to be broadly and relatively quickly adopted by “followers”
who need to overcome their competitive disadvantage. Due to the cost and complexity of semiconductor manufacturing processes and the desire
to maintain a stable and repeatable process flow, new technologies tend to be adopted broadly by the industry and, wherever possible,
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:

 1. 
 Engineering Planning: In this phase we engage in a technical exchange of information under a non-disclosure agreement to understand the customer’s manufacturing process and to determine how best to integrate the deposition of MST film onto the customer’s semiconductor wafers. 

 6 

 2. 
 Set-up for MST Integration: We agree upon the technical evaluation details, including the expected rounds of evaluation testing, the parameters to be tested and allocation of costs. Customers provide us with wafers for our internal processing and physical characterization. Some customers work together with us to develop a TCAD model showing possible results of MST integration with their particular manufacturing process. 

 3. 
 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. 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. 

 4. 
 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 an R&D license which grants rights limited to manufacturing MST-enabled products for internal qualification but does not give the customer the right to distribute or sell products that use MST. After installation of MST into their fab, the customer will continue development work to perfect the integration of MST technology into their transistor manufacturing process flow. After integration, the customer will typically release a new Process Design Kit (PDK) which incorporates MST. Circuit designers will use the new PDK when developing new microchips for production. 

 5. 
 Technology qualification . The customer will conduct additional testing to ensure that products developed with the new PDK achieve manufacturing reliability under accelerated test conditions that simulate volume production. Upon successful completion of the qualification phase and execution of a high-volume manufacturing (HVM) license with Atomera, products can be built and shipped using this manufacturing process. 

 6. 
 Production . Upon commencement of sales of wafers or devices built using MST, our customer will be required to pay us a royalty that will be a percentage of the selling price of the wafer or device, depending on the terms agreed in the applicable license agreement. 

 While the above steps describe
a model customer engagement, we have engaged with some customers in ways that do not follow this precise order. JDAs are an example of
an engagement format that may combine engineering service, development, manufacturing, process optimization and other joint activities
that do not follow the order described above. 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.

 We have successfully deposited
MST using tools made by each of the leading epitaxial deposition equipment suppliers and we believe that if we are successful in our commercialization
efforts, these tool OEMs will promote the incorporation of our MST technology as an option to their standard offering. In particular,
we have a strategic marketing agreement in place with one of the leading semiconductor capital equipment vendors under which we are developing
joint solutions targeted at GAA and DRAM customers. We believe that our relationships with leading OEMs, especially the collaboration
under our strategic marketing agreement, will simultaneously drive additional sales of their capital equipment 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.
By creating TCAD software models, we can work with manufacturers to assess which of their product types would most benefit from MST. We
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.

 7 

 Customers 

 We have two JDAs in place.
The first is 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 Phase Four. This JDA also included development milestones that we achieved. We continue to work with this customer and, 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, each of which can provide license revenues and royalty streams. We also executed a JDA with a major semiconductor foundry
which contains technical targets which, if achieved, should result in paid licenses and engineering services revenue. As of the date of
this Annual Report, we are actively engaged running wafers with this second JDA customer to demonstrate MST benefits in their manufacturing
process.

 We have also entered
into integration license agreements with (i) a leading fabless RF semiconductor provider, (ii) a semiconductor foundry and (iii) Asahi
Kasei Microdevices, or AKM, which is an IDM and fabless vendor. Under these integration license agreements, 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. AKM, our fabless licensee and our foundry licensee are in our Phase Three (MST Integration).
We have ceased engaging with customers under the “integration license” format in recent years and now we generally commence
engaging with customers on evaluation of MST technology under either purchase orders or JDAs that incorporate grants of the rights we
had previously granted under integration licenses.

 We intend that each of engineering
service engagements will result in commercial license agreements with R&D license and HVM license grants that require larger upfront
fee payments and, at the HVM stage, royalties. However, our ability to enter into royalty-based agreements will depend on the performance
of devices our customers build using MST and the successful integration of our MST technology on a high-volume production scale. There
can be no assurance that MST will deliver the performance, power, cost reduction or other requirements our customers seek for their products
or that the integration of our technology with our customers’ manufacturing process will be successful in high volume. In addition,
even if our MST technology meets our customers’ technical objectives one or more of our licensees may decide, for reasons unrelated
to the price or performance of our MST technology, not to enter into R&D and HVM licenses.

 Competition 

 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, the 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.
The cost to develop such solutions is typically very high and requires many years of testing and modification to perfect. MST has gone
through this long, expensive development period and therefore we believe that it has the potential to be one of these low-cost additive
technologies, in which case MST would not be subject to significant direct competition from other technologies. We are not aware of another
technology being offered in the market which provides the same technical benefits as MST. Nevertheless, in some cases the engineering
teams in our customers, who are developing their own process improvements, may view MST as competitive with their internally-developed
solutions. Likewise, third parties like equipment OEMs, universities, or other material providers may offer solutions which have some
of the same benefits that MST offers. We believe that our technology can provide far more effective, well-developed and fully-supported
performance improvements than those offered by these third parties.

 8 

 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, 2025 and 2024, we incurred research and development
expenses of approximately $12.3 million and $11.0 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; 

 · 
 develop new technologies that meet the changing needs of the semiconductor industry; 

 · 
 improve our existing technologies to enable growth into new application areas; and 

 · 
 expand our intellectual property portfolio. 

 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
technology. We require our employees, consultants, and advisors to enter into confidentiality agreements. These agreements provide that
all confidential information developed or made known to the individual during the course of the individual’s relationship with us
is to be kept confidential and not disclosed to third parties except under specific circumstances. In the case of our employees and consultants,
the agreements provide that all of the technology that is conceived by the individual during the course of employment is our exclusive
property. The development of our technology and many of our processes are dependent upon the knowledge, experience, and skills of key
scientific and technical personnel.

 As of December 31, 2025, we
have been granted 119 patents in the U.S. and 130 abroad and we have 75 pending patent applications in the U.S. and 106 abroad. We believe
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
for us. 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,” “MST” and “MSTcad” and in China for the mark “Mears”.

 9 

 Employees and Human Capital Management 

 As of the date of this Annual
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.

 Available Information 

 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.
20549. 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.

 Item 1A. 
 Risk Factors 

 We are subject to various risks that may harm
our business, prospects, financial condition and results of operation or prevent us from achieving our goals. If any of these risks occur,
our business, financial condition or results of operation may be materially adversely affected. In such case, the trading price of our
common stock could decline and investors could lose all or part of their investment. 

 Risks Related to Our Business 

 We have generated limited
revenue to date, so it is difficult for potential investors to evaluate our business. To date, our operations have consisted of
technology research and development, testing, and joint development work with customers, potential customers and strategic partners. Our
business model is to derive our revenue primarily from license fees and royalties, but to date we have only recognized minimal revenues.
Our limited operating history makes it difficult to evaluate the commercial value of our technology, the viability of our licensing model
or our prospective operations. As an early-stage company, we are subject to all the risks inherent in the initial organization, financing,
expenditures, complications and delays in a new business, including, without limitation:

 · 
 the timing and success of our plan of commercialization; 

 · 
 our ability to replicate on a large commercial scale the benefits of our MST technology that we have demonstrated in preliminary testing; 

 · 
 our ability to execute joint development agreements with potential customers; 

 · 
 our ability to structure, negotiate and enforce license agreements that will allow us to operate profitably; 

 · 
 our ability to advance our license agreement with ST Microelectronics (ST) through the qualification phase, where it is currently on hold; 

 10 

 · 
 our ability to advance the licensing arrangements with our RF licensee and our foundry licensee to R&D and HVM licenses and to shipment of royalty-bearing products; 

 · 
 our success in capitalizing on the achievement of the technical milestones in our first JDA in order to enter into one or more distribution and royalty agreements with business units of that JDA customer as well as our success in meeting technical milestones in the JDA with our second JDA customer; 

 · 
 our ability to convert licensees of our MSTcad software to licenses of our MST technology under commercial license agreements and to successfully utilize MSTcad in both internal development and customer evaluations; 

 · 
 our ability to protect our intellectual property rights; and 

 · 
 our ability to raise additional capital as and when needed. 

 Investors should evaluate
an investment in us in light of the uncertainties encountered by developing companies in a competitive environment. There can be no assurance
that our efforts will be successful or that we will ultimately be able to attain profitability. 

 We have a history of
significant operating losses and anticipate continued operating losses for at least the near term. For the years ended December
31, 2025 and 2024, we have incurred net losses of approximately $20.2 million and $18.4 million, respectively, and our operations have
used approximately $14.9 million and $13.2 million of cash, respectively. As of December 31, 2025, we had an accumulated deficit of approximately
$241.7 million. We will continue to experience negative cash flows from operations until at least such time as we are able to secure R&D
and HVM license agreements with one or more foundries, IDMs or fabless semiconductor manufacturers and such customers ship sufficient
volumes of royalty-bearing products and pay upfront license fees to support our cash requirements. While management will endeavor to generate
positive cash flows from the commercialization of our MST technology, there can be no assurance that we will be successful in doing so.
If we are unable to generate positive cash flow within a reasonable period of time, we may be unable to further pursue our business plan
or continue operations.

 While we have entered
into one commercial license agreement, four integration license agreements and two joint development agreements, there can be no assurance
that any of these relationships will advance to further licensing stages or to royalty-based distribution license agreements .
Neither of our JDAs commits the customers to take MST to production. ST has successfully installed our MST film recipe and accepted our
film under a commercial license agreement executed in April 2023, resulting in the grant of an R&D license to them enabling them to
manufacture MST wafers for internal use. However, in October 2025 ST informed us that they would not complete the qualification of MST
into their process after deciding to migrate their development of their targeted process to 300mm wafers. There can be no assurance whether
or when ST will re-commence qualification of MST technology or that, in the event they do proceed, that MST will deliver the performance,
power or other requirements that ST or our other customers seek for their products or that the integration of our technology with our
customers’ manufacturing process will be successful in high volume. In addition, even if our MST technology is successfully integrated
into the licensees’ products, any or all of our licensees may decide, for reasons unrelated to the price or performance of our MST
technology, not to enter the subsequent license phases or execute the additional license agreements required to take MST to commercial
production.

 11 

 We expect that our product
qualification and licensing cycle will be lengthy and costly, and our marketing, engineering and sales efforts may be unsuccessful. We
have incurred significant engineering, marketing and sales expenses during customer engagements without entering into license agreements,
generating a license fee or establishing a royalty stream from the customer and we expect that such investments ahead of license revenue
will continue to be necessary in the future. The introduction of any new process technology into semiconductor manufacturing is a lengthy
process and we cannot forecast with any degree of assurance the length of time it takes to establish a new licensing relationship. However,
based on our engagements with potential customers to date, we believe the time from initial engagement until our customers incorporate
our technologies in their semiconductor products can take 18 to 36 months or longer. Our integration license agreements with our current
licensees do not commit them to R&D or HVM licenses and we expect those licensees to perform additional tests on evaluation wafers
under their respective integration licenses before deciding whether to enter the next stages of licensing MST. As such, we will incur
additional expenses in our engagements with our licensees before we receive license fees, if any, for manufacturing and distribution and
before any subsequent royalty stream begins.. While we believe our JDAs and our integration license agreements should accelerate licensing
decisions by other customers, the evaluation process for new technologies in the semiconductor industry is inherently long and complex
and there can be no assurance that we will successfully convert other customer prospects into paying customers or that any of these customers
will generate sufficient revenue to cover our expenses.

 Qualification of our
MST technology requires access to our potential customers’ manufacturing tools and facilities, as well as to leased tools and facilities,
which may not be available on a timely basis or at all. The qualification of a new process technology like MST entails the integration
of our MST film into the complex manufacturing processes employed by our potential customers. In order to validate the benefits of MST,
our customer engagement process involves fabrication of wafers that incorporate MST deposited by us using our epitaxial deposition tools
and then completing the manufacturing of the wafers in our customers’ facilities using their tools. The semiconductor industry in
2025 exceeded $700 billion in sales. The combination of recovery from COVID-era supply-chain disruptions and the rapid growth in demand
driven by AI, some segments of the industry have been characterized by product shortages as strong demand has outstripped supply, resulting
in tight capacity among our potential customers, while other segments have experienced softness and excess supply. We have experienced
delays in completing the processing of evaluation wafers by our customers as those customers prioritize utilization of their equipment
for production use. If our customers do not dedicate their equipment and facilities to testing our products in a timely fashion, we may
experience delays that will increase our expenses and delay our customers’ decisions on entering into commercial licenses with us.
Additionally, we conduct our ongoing research and development and portions of our customer evaluation activities using leased epitaxial
(epi) deposition tools that we believe will accelerate internal development work and customer engagements. However, epi tools require
ongoing, complex maintenance and they have been and will continue to be subject to both planned and unplanned downtime. Any interruption
in our epi tool availability may negatively impact the progress of customer work as well as our internal research and development and
accordingly could delay or prevent customers from entering into commercial licenses.

 The long-term success
of our business is dependent on a royalty-based business model, which is inherently risky. The long-term success of our business
is dependent on future royalties paid to us by licensee-customers, whose business require them to market products to their end customers.
Royalty payments under our licenses are generally expected to be based on a percentage of the selling price of wafers made using MST or
the selling price of MST-enabled semiconductor die sold, depending on the customer type and the negotiation of our full commercial license
agreements. We will depend upon our ability to structure, negotiate and enforce agreements for the determination and payment of royalties,
as well as upon our licensees’ compliance with their agreements. We face risks inherent in a royalty-based business model, many
of which are outside of our control, such as the following:

 · 
 the rate of adoption and incorporation of our technology by semiconductor designers and manufacturers and the manufacturers of semiconductor fabrication equipment; 

 · 
 customers’ willingness to agree to an ongoing royalty model, which may impact their product costs and margins; 

 · 
 customers’ ability to successfully market MST-enabled products to their end customers; 

 · 
 the length of the design cycle and the ability to successfully integrate our MST technology into integrated circuits; 

 · 
 the demand for products incorporating semiconductors that use our licensed technology; 

 12 

 · 
 the cyclicality of supply and demand for products using our licensed technology; 

 · 
 the impact of economic downturns; and 

 · 
 the timing of receipt of royalty reports and the applicable revenue recognition criteria, which may result in fluctuation in our results of operations. 

 We may need additional
financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at
all. As of December 31, 2025, we had total assets of approximately $21.1 million, cash and cash-equivalents of approximately
$19.2 million and working capital of approximately $17.6 million. On February 24, 2026, we completed a registered direct offering
of shares of our common stock to institutional investors that resulted in net proceeds to us of approximately $23.6 million after commissions
and offering expenses. We believe that we have sufficient capital as of the date of this report to fund our current business plans and
obligations over, at least, the 24 months following the date of this Annual Report. However, even after installation of MST in a customer’s
fab under a manufacturing license, the full production qualification of a new technology like MST can take more than an additional year,
and we have limited ability to influence our customers’ testing and qualification processes. Accordingly, we may require additional
capital prior to obtaining a royalty-based license or prior to such a license generating sufficient royalty income to cover our ongoing
operating expenses. In the event we require additional capital over and above the amount of our presently available working capital, we
will endeavor to seek additional funds through various financing sources, including the sale of our equity and debt securities, licensing
fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business
plan that may enable us to achieve material revenue with a smaller amount of capital. However, there can be no guarantees that such funds
will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable
to further pursue our business plan and we may be unable to continue operations.

 Unfavorable geopolitical
and macroeconomic developments could adversely affect our business, financial condition or results of operations. Our business
could be adversely affected by conditions in the U.S. and global economies, the United States and global financial markets, potential
imposition of tariffs, increased export controls and adverse geopolitical and macroeconomic developments, including inflation rates, the
Ukrainian/Russian and Israeli/Palestinian conflicts and related sanctions, bank failures, and economic uncertainties related to these
conditions.

 Recent efforts to create national
self-sufficiency of the semiconductor supply chain by various countries around the world creates new competitive and economic dynamics
that are difficult to predict and may lead to semiconductor industry instability. For example, the U.S. government has been imposing increasingly
strict export controls, particularly on exports to China, which have already impacted the financial performance and business outlook of
certain semiconductor vendors and vendors of semiconductor manufacturing equipment. Increased restrictions on the availability and use
of critical semiconductor IP and equipment by various foreign entities may limit Atomera’s ability to license our IP in some parts
of the world.

 Our
internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which
could result in a material disruption of our development programs. Our internal computer systems and those of our current and
any future collaborators and other contractors or consultants are vulnerable to damage from computer viruses, unauthorized access, natural
disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such material system failure,
accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a disruption
of our development programs and our business operations, whether due to a loss of our or our customers’ trade secrets or other proprietary
information or other similar disruptions. To the extent that any disruption or security breach were to result in a loss of, or damage
to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive
position could be harmed and the further development and commercialization of our technology could be delayed.

 13 

 We
could be subject to risks caused by misappropriation, misuse, leakage, falsification or intentional or accidental release or loss of information
maintained in the information systems and networks of our company and our vendors, including personal or confidential information of our
employees, customers and vendors. In addition, outside parties may attempt to penetrate our systems or those of our customers or vendors
or fraudulently induce our personnel or the personnel of our customers or vendors to disclose sensitive information in order to gain access
to our data and/or systems. We may experience threats to our data and systems, including malicious codes and viruses, phishing and other
cyberattacks. The number and complexity of these threats continue to increase over time. If a material breach of, or accidental or intentional
loss of data from, our information technology systems or those of our customers or vendors occurs, the market perception of the effectiveness
of our security measures could be harmed and our reputation and credibility could be damaged. We could be required to expend significant
amounts of money and other resources to repair or replace information systems or networks. In addition, we could be subject to regulatory
actions and/or claims made by individuals and groups in private litigation involving privacy issues related to data collection and use
practices and other data privacy laws and regulations, including claims for misuse or inappropriate disclosure of data, as well as unfair
or deceptive practices.

 Although we develop and maintain
systems and controls designed to prevent these events from occurring, and we have a process to identify and mitigate threats, the development
and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies change
and efforts to overcome security measures become increasingly sophisticated. Moreover, despite our efforts, the possibility of these events
occurring cannot be eliminated entirely. As we outsource more of our information systems to vendors, engage in more electronic transactions
with customers and vendors, and rely more on cloud-based information systems, the related security risks will increase and we will need
to expend additional resources to protect our technology and information systems. In addition, there can be no assurance that our internal
information technology systems or those of our third-party contractors, or our consultants’ efforts to implement adequate security
and control measures, will be sufficient to protect us against breakdowns, service disruption, data deterioration or loss in the event
of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security breach, industrial espionage
attacks or insider threat attacks which could result in financial, legal, business or reputational harm.

 Our revenues may be
concentrated in a few customers and if we lose any of these customers, or these customers do not pay us, our revenues could be materially
adversely affected.  If we are able to secure the adoption of our MST by one or more foundries, IDMs or fabless semiconductor
manufacturers, we expect that for at least the first few years substantially all of our revenue will be generated from license fees and
engineering services before customers commence royalty-bearing shipments. Due to the concentration and ongoing consolidation within the
semiconductor industry, we may also find that over the longer term our royalty-based revenues are dependent on a relatively few customers.
If we lose any of these customers, or these customers do not pay us, our revenues could be materially adversely affected.

 If we are unable to
manage future expansion effectively, our business, operations and financial condition may suffer significantly, resulting in decreased
productivity. If our MST proves to be commercially valuable, it is likely that we will experience a rapid growth phase that could
place a significant strain on our managerial, administrative, technical, operational and financial resources. Our organization, procedures
and management may not be adequate to fully support the expansion of our operations or the efficient execution of our business strategy.
If we are unable to manage future expansion effectively, our business, operations and financial condition may suffer significantly, resulting
in decreased productivity.

 It may be difficult
for us to verify royalty amounts owed to us under our licensing agreements, and this may cause us to lose revenues. We will
endeavor to provide that the terms of our license agreements require our licensees to document their use of our technology and report
related data to us on a regular basis. We will endeavor to provide that the terms of our license agreements give us the right to audit
books and records of our licensees to verify this information, however audits can be expensive, time consuming, and may not be cost justified
based on our understanding of our licensees’ businesses. We will endeavor to audit certain licensees to review the accuracy of the
information contained in their royalty reports in an effort to decrease the likelihood that we will not receive the royalty revenues to
which we are entitled under the terms of our license agreements, but we cannot give assurances that such audits will be effective to that
end.

 14 

 Our business operations
could suffer in the event of information technology systems’ failures or security breaches . While we believe that we have
implemented adequate security measures within our internal information technology and networking systems, our information technology systems
may be subject to security breaches, damages from computer viruses, natural disasters, terrorism, and telecommunication failures. Any
system failure or security breach could cause interruptions in our operations, including but not limited to our technology computer-aided
design, or TCAD, modeling using Synopsys software, in addition to the possibility of losing proprietary information and trade secrets.
To the extent that any disruption or security breach results in inappropriate disclosure of our confidential information, our competitive
position may be adversely affected, and we may incur liability or additional costs to remedy the damages caused by these disruptions or
security breaches.

 If integrated circuits
incorporating our technologies are used in defective products, we may be subject to product liability or other claims. If our
MST technology is used in defective or malfunctioning products, we could be sued for damages, especially if the defect or malfunction
causes physical harm to people. While we will endeavor to carry product liability insurance, contractually limit our liability and obtain
indemnities from our customers, there can be no assurance that we will be able to obtain insurance at satisfactory rates or in adequate
amounts or that any insurance and customer indemnities will be adequate to defend against or satisfy any claims made against us. The costs
associated with legal proceedings are typically high, relatively unpredictable and not completely within our control. Even if we consider
any such claim to be without merit, significant contingencies may exist, similar to those summarized in the above risk factor concerning
intellectual property litigation, which could lead us to settle the claim rather than incur the cost of defense and the possibility of
an adverse judgment. Product liability claims in the future, regardless of their ultimate outcome, could have a material adverse effect
on our business, financial condition and reputation, and on our ability to attract and retain licensees and customers.

 Risks Related to Intellectual Property 

 If we fail to protect
and enforce our intellectual property rights and our confidential information, our business will suffer.  We rely primarily
on a combination of nondisclosure agreements and other contractual provisions and patent, trade secret and copyright laws to protect our
technology and intellectual property. If we fail to protect our technology and intellectual property, our licensees and others may seek
to use our technology and intellectual property without the payment of license fees and royalties, which could weaken our competitive
position, reduce our operating results and increase the likelihood of costly litigation. The growth of our business depends in large part
on our ability to secure intellectual property rights in a timely manner, our ability to convince third parties of the applicability of
our intellectual property rights to their products, and our ability to enforce our intellectual property rights. In certain instances,
we attempt to obtain patent protection for portions of our technology, and our license agreements typically include both issued patents
and pending patent applications as well as our proprietary know-how. If we fail to obtain patents in a timely manner or if the patents
issued to us do not cover all of the inventions disclosed in our patent applications, others could use portions of our technology and
intellectual property without the payment of license fees and royalties.

 We also rely on trade secret
laws rather than patent laws to protect other portions of our proprietary technology. However, trade secrets can be difficult to protect.
The misappropriation of our trade secrets or other proprietary information could seriously harm our business. We protect our proprietary
technology and processes, in part, through confidentiality agreements with our employees, consultants, suppliers and customers. We cannot
be certain that these contracts have not been and will not be breached, that we will be able to timely detect unauthorized use or transfer
of our technology and intellectual property, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise
become known or be independently discovered by competitors. If we fail to use these mechanisms to protect our technology and intellectual
property, or if a court fails to enforce our intellectual property rights, our business will suffer. We cannot be certain that these protection
mechanisms can be successfully asserted in the future or will not be invalidated or challenged.

 Further, the laws and enforcement
regimes of certain countries do not protect our technology and intellectual property to the same extent as do the laws and enforcement
regimes of the U.S. In certain jurisdictions, we may be unable to protect our technology and intellectual property adequately against
unauthorized use, which could adversely affect our business.

 15 

 A court invalidation
or limitation of our key patents could significantly harm our business . Our patent portfolio contains some patents that are particularly
significant to our MST technology. If any of these key patents are invalidated, or if a court limits the scope of the claims in any of
these key patents, the likelihood that companies will take new licenses and that any current licensees will continue to agree to pay under
their existing licenses could be significantly reduced. The resulting loss in license fees and royalties could significantly harm our
business. Moreover, our stock price may fluctuate based on developments in the course of ongoing litigation.

 We may become involved
in material legal proceedings in the future to enforce or protect our intellectual property rights, which could harm our business. From
time to time, we may identify products that we believe infringe on our patents. In that event, we expect to initially seek to license
the manufacturer of the infringing products, however if the manufacturer is unwilling to enter into a license agreement, we may have to
initiate litigation to enforce our patent rights against those products. Litigation stemming from such disputes could harm our ability
to gain new customers, who may postpone licensing decisions pending the outcome of the litigation or who may, as a result of such litigation,
choose not to adopt our technologies. Such litigation may also harm our relationships with existing licensees, who may, because of such
litigation, cease making royalty or other payments to us or challenge the validity and enforceability of our patents or the scope of our
license agreements.

 In addition, the costs associated
with legal proceedings are typically high, relatively unpredictable and not completely within our control. These costs may be materially
higher than expected, which could adversely impair our working capital, affect our operating results and lead to volatility in the price
of our common stock. Whether or not determined in our favor or ultimately settled, litigation would divert our managerial, technical,
legal and financial resources from our business operations. Furthermore, an adverse decision in any of these legal actions could result
in a loss of our proprietary rights, subject us to significant liabilities, require us to seek licenses from others, limit the value of
our licensed technology or otherwise negatively impact our stock price or our business and financial position, results of operations and
cash flows.

 Even if we prevail in our
legal actions, significant contingencies may exist to their settlement and final resolution, including the scope of the liability of each
party, our ability to enforce judgments against the parties, the ability and willingness of the parties to make any payments owed or agreed
upon and the dismissal of the legal action by the relevant court, none of which are completely within our control. Parties that may be
obligated to pay us royalties could be insolvent or decide to alter their business activities or corporate structure, which could affect
our ability to collect royalties from such parties.

 Our technologies may
infringe on the intellectual property rights of others, which could lead to costly disputes or disruptions . The semiconductor
industry is characterized by frequent allegations of intellectual property infringement. Any allegation of infringement could be time
consuming and expensive to defend or resolve, result in substantial diversion of management resources, cause suspension of operations
or force us to enter into royalty, license, or other agreements rather than dispute the merits of such allegation. Furthermore, third
parties making such claims may be able to obtain injunctive or other equitable relief that could block our ability to further develop
or commercialize some or all of our technologies, and the ability of our customers to develop or commercialize their products incorporating
our technologies, in the U.S. and abroad. If patent holders or other holders of intellectual property initiate legal proceedings, we may
be forced into protracted and costly litigation. We may not be successful in defending such litigation and may not be able to procure
any required royalty or license agreements on acceptable terms or at all.

 Risks Related to Owning Our Common Stock 

 The market price of
our shares may be subject to fluctuation and volatility. You could lose all or part of your investment . The market price of our
common stock is subject to wide fluctuations in response to various factors, some of which are beyond our control. Between January 1,
2025 and February 20, 2026, the reported high and low sales prices of our common stock have ranged from $1.89 to $17.55. The market price
of our shares on the NASDAQ Capital Market may fluctuate as a result of a number of factors, some of which are beyond our control, including,
but not limited to:

 · 
 actual or anticipated variations in our results of operations and financial condition; 

 · 
 market acceptance of our MST technology; 

 · 
 success or failure of our research and development projects; 

 16 

 · 
 announcements of technological innovations by us; 

 · 
 failure by us to achieve a publicly announced milestone; 

 · 
 failure by us to meet expectations of investors, some of which may not be within our control or be related to our public announcements; 

 · 
 delays between our expenditures to develop and market new or enhanced technological innovations and the generation of licensing revenue from those innovations; 

 · 
 developments concerning intellectual property rights, including our involvement in litigation brought by or against us; 

 · 
 changes in the amounts that we spend to develop, acquire or license new technologies or businesses; 

 · 
 our sale or proposed sale, or the sale by our significant stockholders, of our shares or other securities in the future; 

 · 
 changes in our key personnel; 

 · 
 changes in earnings estimates or recommendations by securities analysts, if we continue to be covered by analysts; 

 · 
 the trading volume of our shares; and 

 · 
 general economic and financial market conditions and other factors, including factors unrelated to our operating performance. 

 These factors and any corresponding
price fluctuations may materially and adversely affect the market price of our shares and result in substantial losses being incurred
by our investors. In the past, following periods of market volatility, public company stockholders have often instituted securities class
action litigation. If we were involved in securities litigation, it could impose a substantial cost upon us and divert the resources and
attention of our management from our business. 

 We have not paid dividends
in the past and have no immediate plans to pay dividends. We plan to reinvest all of our earnings, to the extent we have earnings,
to cover operating costs and otherwise become and remain competitive. We do not plan to pay any cash dividends with respect to our securities
in the foreseeable future. We cannot assure you that we would, at any time, generate sufficient surplus cash that would be available for
distribution to the holders of our common stock as a dividend. Therefore, you should not expect to receive cash dividends on our common
stock.

 Our charter documents
and Delaware law may inhibit a takeover that stockholders consider favorable . Provisions of our certificate of incorporation
and bylaws and applicable provisions of Delaware law may delay or discourage transactions involving an actual or potential change in control
or change in our management, including transactions in which stockholders might otherwise receive a premium for their shares, or transactions
that our stockholders might otherwise deem to be in their best interests. The provisions in our certificate of incorporation and bylaws:

 · 
 limit who may call stockholder meetings; 

 · 
 do not permit stockholders to act by written consent; 

 · 
 allow us to issue blank check preferred stock without stockholder approval; 

 · 
 do not provide for cumulative voting rights; and 

 · 
 provide that all vacancies may be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum. 

 17 

 In addition, Section 203 of
the Delaware General Corporation Law may limit our ability to engage in any business combination with a person who beneficially owns 15%
or more of our outstanding voting stock unless certain conditions are satisfied. This restriction lasts for a period of three years following
the share acquisition. These provisions may have the effect of entrenching our management team and may deprive you of the opportunity
to sell your shares to potential acquirers at a premium over prevailing prices. This potential inability to obtain a control premium could
reduce the price of our common stock.

 Our bylaws designate
the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain litigation that may be initiated by our stockholders,
which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with the Company . Our
bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware
shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim
of breach of fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any action asserting
a claim against us or any our directors, officers or other employees arising pursuant to any provision of the Delaware General Corporation
Law or our certificate of incorporation or bylaws, or (iv) any action asserting a claim against us or any our directors, officers or other
employees governed by the internal affairs doctrine. This forum selection provision in our bylaws may limit our stockholders’ ability
to obtain a favorable judicial forum for disputes with us or any of our directors, officers or other employees.

 Our board of directors
may issue blank check preferred stock, which may affect the voting rights of our holders and could deter or delay an attempt to obtain
control of us. Our board of directors is authorized, without stockholder approval, to issue preferred stock in series and to fix
and state the voting rights and powers, designation, preferences and relative, participating, optional or other special rights of the
shares of each such series and the qualifications, limitations and restrictions thereof. Preferred stock may rank prior to our common
stock with respect to dividends rights, liquidation preferences, or both, and may have full or limited voting rights. If issued, such
preferred stock would increase the number of outstanding shares of our capital stock, adversely affect the voting power of holders of
our common stock and could have the effect of deterring or delaying an attempt to obtain control of us.

 Item 1B. 
 Unresolved Staff Comments 

 None.

 Item 1C. 
 Cybersecurity 

 Risk Management and Strategy .
Our cybersecurity program is built upon the National Institute for Standards and Technology (“NIST”), International Organization
for Standardization (“ISO”) and other best practice frameworks. We employ processes for assessing, identifying, and managing
material risks from cybersecurity threats, including engagement of an independent cybersecurity consultant to audit our systems and procedures,
make recommendations for improvement and monitor remediation of any identified risks. We also conduct random vulnerability testing including
network penetration, phishing and social engineering tests. In addition, we also request Systems and Organization Control (“SOC”)
type reports from several of our service providers including our payroll and human resources system provider and stock administration
provider. In addition, we provide awareness training to our employees to help identify, avoid and mitigate cybersecurity threats and to
remind them of the importance of handling and protecting our information.  

 Although we develop and maintain
systems and controls designed to prevent cybersecurity breaches from occurring, and we have a process to identify and mitigate threats,
the development and maintenance of these systems, controls and processes is costly and requires ongoing monitoring and updating as technologies
change and efforts to overcome security measures become increasingly sophisticated. Moreover, despite our efforts, the possibility of
a breach occurring cannot be eliminated entirely. As we outsource more of our information systems to vendors, engage in more electronic
transactions with service customers and vendors, and rely more on cloud-based information systems, the related security risks will increase
and we will need to expend additional resources to protect our technology and information systems. In addition, there can be no assurance
that our internal information technology systems or those of our third-party contractors, or our consultants’ efforts to implement
adequate security and control measures, will be sufficient to protect us against breakdowns, service disruption, data deterioration or
loss in the event of a system malfunction, or prevent data from being stolen or corrupted in the event of a cyberattack, security breach,
industrial espionage attacks or insider threat attacks which could result in financial, legal, business or reputational harm. 
 
 18 

 As of the date of this report,
we are not aware of cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected
or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. 
 
 Governance . Our senior
management team conducts the regular assessment and management of material risks from cybersecurity threats, including review with our
IT team and third-party service providers. All employees and consultants are directed to report to our senior management any irregular
or suspicious activity that could indicate a cybersecurity threat or incident. The Audit Committee of our Board of Directors has a cybersecurity
subcommittee which evaluates our cybersecurity assessment and management policies, including quarterly interviews with our senior officers. 
 Our Audit Committee meets at least quarterly with our independent registered accounting firm and communicates with them regarding any
cybersecurity related risks. 

 Item 2. 
 Properties 

 Our executive offices are
presently located in a 4,101 square foot facility in Los Gatos, California pursuant to a five-year lease extension, expiring on March
31, 2031. As part of the amended lease entered into in December 2025, our current lease payment is $17,019.

 Beginning in March 2021, we
began leasing 474 square feet of office space in Tempe, Arizona. The original lease had a two-year term, with an option to extend for
an additional three years. In February 2026, we extended this lease another three years, through February 2029, with the option to extend
for an additional two years. Our current monthly lease payment is now $2,509 and will increase to $2,526 in March 2026.

 Item 3. 
 Legal Proceedings 

 To our knowledge, as of the
date of this Annual Report, there are no pending legal proceedings to which we or our properties are subject.

 Item 4. 
 Mine Safety Disclosures 

 Inapplicable.

 19 

 PART II 

 Item 5. 
 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information 

 Our common stock trades on
the NASDAQ Capital Market under the symbol “ATOM”.

 Holders of Record 

 As of February 19, 2026, there were 106 holders
of record of our common stock.

 Dividend Policy 

 We have never declared or
paid cash dividends on our common stock. We presently intend to retain earnings, if any, to finance the operation and expansion of our
business.

 Equity Compensation Plan Information 

 Our 2007 Equity Incentive
Plan, or 2007 Plan, expired in March 2017, however all options outstanding at the time of the expiration remained outstanding
and exercisable by their term.

 In May 2017, we established
our 2017 Stock Incentive Plan, or 2017 Plan. The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options
to purchase shares of our common stock and for the grant of restricted and unrestricted share grants. We have reserved a total of 3,750,000
shares of common stock for issuance under the 2017 Plan. All employees, officers, directors, consultants, advisors and other persons who
provide services to us or any of our subsidiaries are eligible to receive incentive awards under the 2017 Plan. As of December 31, 2025,
awards of 3,735,394 shares of common stock had been granted under the 2017 Plan, net of forfeited restricted stock and option awards and
a total of 14,606 shares of common stock are reserved for issuance.

 In May 2023, we established
our 2023 Stock Incentive Plan, or 2023 Plan. The 2023 Plan provides for the grant of non-qualified stock options and incentive stock options
to purchase shares of our common stock and for the grant of restricted and unrestricted share grants. We have reserved a total of 2,000,000
shares of common stock for issuance under the 2023 Plan. In May 2025, our shareholders approved an amendment to the 2023 Plan, adding
an additional 1,750,000 shares to this plan. All employees, officers, directors, consultants, advisors and other persons who provide services
to us or any of our subsidiaries are eligible to receive incentive awards under the 2023 Plan. As of December 31, 2025, awards of 1,525,908
shares of common stock had been granted under the 2023 Plan, net of forfeited restricted stock and option awards and a total of 2,224,092
shares of common stock are reserved for issuance.

 20 

 The following table sets forth
certain information as of December 31, 2025 about our stock plans under which our equity securities are authorized for issuance.

 Plan Category 
 Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights
 (a) (2)(3) 
 Weighted-Average Exercise Price of Outstanding Options (1) 
 Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected In Column (a) (4) 

 Equity compensation plans approved by security holders 
 3,514,485 
 $ 6.53 
 2,238,698 

 Equity compensation plans not approved by security holders 
 – 
 – 
 – 

 Total 
 3,514,485 
 $ 6.53 
 2,238,698 

 (1) Restricted stock units issued under our equity compensation plans do not require payment by the recipient
to us at the time of vesting. As such, the weighted-average exercise price does not take these awards into account and only takes into
account outstanding stock options. 

 (2) Includes 2,906,527 shares of our common stock underlying stock options issued under the 2023 Plan, 2017
Plan and 2007 Plan. 

 (3) Includes 386,438 shares of common stock underlying time-based restricted stock units and 221,520 shares
of common stock underlying performance-based restricted stock units issuable assuming performance at target under the 2023 Plan and 2027
Plan. 

 (4) Includes awards issuable under the 2023 Plan and 2017 Plan. 

 Item 6. 
 Reserved 

 Item 7. 
 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 Annual Report. Statements in this Annual Report on Form 10-K 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 Annual
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 this Annual Report. 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 Annual 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 Annual Report. Readers are urged to carefully
review and consider the various disclosures made in this Annual Report, which attempt to advise interested parties of the risks and factors
that may affect our business, financial condition, results of operations and prospects. 

 21 

 Overview 

 We are engaged in the business
of developing, commercializing and licensing proprietary processes and technologies for the $700+ 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; 

 · 
 
 Manufacturers of semiconductor wafers, which provide
 the substrates upon which integrated circuits are fabricated:;

 · 
 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. 

 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 and 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 (“Craig-Hallum”),
as agents, under which we offered and sold, from time to time at our sole discretion, shares of our common stock in an at the market offering
to or through the agents, having aggregate offering proceeds of up to $50.0 million (the “2022 ATM”). The 2022 ATM expired
on March 18, 2025.

 22 

 On May 27, 2025, we entered
into an Equity Distribution Agreement with Craig-Hallum as agent, under which we may offer and sell, from time to time at our sole discretion,
shares of our common stock in an “at-the-market” offering to or through the agent, having aggregate offering proceeds of up
to $50.0 million (the “2025 ATM”).

 During the year ended December
31, 2025, we sold approximately 1.6 million shares pursuant to the 2022 ATM and the 2025 ATM at an average price per share of approximately
$5.15, resulting in approximately $7.6 million of net proceeds to us after deducting commissions and other offering expenses.

 On February 23, 2026, we entered
into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors pursuant to which we
agreed to issue and sell, in a registered direct offering (the “Offering”), an aggregate of 5,000,000 shares of our common
stock, at a purchase price of $5.00 per share, for gross proceeds from the Offering of $25 million, before deducting the placement agent
fee and estimated offering expenses. On February 24, 2026 we closed the Offering, resulting in net proceeds to us of approximately
$23.6 million after commissions and expenses.

 Results of Operations for the Years Ended December
31, 2025 and 2024 

 Revenues. To
date, we have only generated limited revenue from customer engagements for engineering services, integration license agreements, R&D
licenses granted under a JDA and under our license agreement with ST and licensing of MSTcad. 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.

 For recognizing integration
service revenue from integration license agreements, we assess (i) whether the license grant is distinct from or combined with the transfer
of goods or services and (ii) whether the license is a right to access intellectual property or a right to use the intellectual property.
For licenses that are not distinct, but combined with other goods or services, the revenue is recognized at a point in time or over time
as the obligations to perform the combined services and/or deliver the combined goods are satisfied. Our engineering service agreements
contain a technology grant as well as a performance obligation to deliver wafers with our technology deposited on them. We have historically
determined the grant of rights in these agreements is not distinct from the obligation to deliver wafers and accordingly, revenue from
these agreements is recognized at the time we deliver wafers. For R&D licenses, revenue is recognized at the point in time when we
deliver our MST recipe because the license to manufacture products using MST technology is a right to use the Company’s technology
and not a right to access the technology over time. However, in cases where our R&D license grants include a customer acceptance requirement,
revenue is recognized over time. Likewise, we recognize revenue from HVM licenses at the point in time when process qualification is complete
because the license to sell MST-enabled products is a right to use the Company’s technology and not a right to access the technology
over time.

 Revenue for the years ended
December 31, 2025 and 2024 was approximately $65,000 and $135,000, respectively. Our revenue in 2025 and 2024 consisted of MSTcad licensing
and related consulting services revenue, and engineering services revenue from the delivery of MST wafers.

 Cost of Revenue. Cost
of revenue consists of costs of materials, as well as direct compensation and expenses incurred to provide integration engineering services,
support for customer installation and qualification and MSTcad support. Cost of revenue was approximately $321,000 and $123,000 for the
years ended December 31, 2025 and 2024, respectively. Cost of revenue is recorded when incurred and may not coincide with the recognition
of revenue based on revenue recognition policies and guidance. 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
years ended December 31, 2025 and 2024, our operating expenses totaled approximately $20.9 million and $19.3 million, respectively.

 Research and development
expenses. To date, our operations have focused on the research, development, and commercialization of our MST technology and related
technologies such as MSTcad. Our research and development costs primarily consist of payroll and benefit costs for our engineering staff
and costs of outsourced fabrication (including epi tool leases) and metrology of semiconductor wafers incorporating our MST technology.

 23 

 For the years ended December
31, 2025 and 2024, we incurred approximately $12.3 million and $11.0 million, respectively, of research and development expense, an increase
of approximately $1.3 million, or 12%. This increase was primarily due to an increase of approximately $676,000 in outsourced fabrication
costs as well as increases of approximately $487,000 in stock-based compensation expenses and approximately $124,000 in employee-related
expenses. Stock-based compensation expenses increased primarily due to our adoption of performance-based RSUs for executives, which have
a higher valuation than time-based RSUs and options which had been our primary type of executive equity compensation issued in 2024.

 General and administrative
expenses. General and administrative expenses consist primarily of payroll and benefit costs for administrative personnel, office-related
costs and professional fees. General and administrative costs for the years ended December 31, 2025 and 2024 were approximately $7.8 million
and $7.3 million, respectively, representing an increase of approximately $540,000, or 7%. The increase in costs was primarily due to
an increase in stock-based compensation expense of approximately $810,000 and an approximately $114,000 increase in corporate legal fees,
partially offset by a decline of approximately $421,000 in employee-related costs. Stock-based compensation expenses increased primarily
due to an increase in the valuation of performance based

RSUs newly issued this year compared to time-based RSUs and options. The decrease in employee-related costs is primarily due to a reduction
in executive annual bonus accrual.

 Selling and marketing
expenses. 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 years ended December 31, 2025 and 2024 were approximately $758,000
and $1.1 million, respectively, representing a decrease of approximately $295,000, or 28%. The decrease in costs is primarily related
to a reduction in headcount which decreased employee-related costs, stock-based compensation and travel expenses, partially offset by
increases in recruiting costs to fill open positions.

 Interest income. Interest
income for the years ended December 31, 2025 and 2025 was approximately $931,000 and $779,000, respectively, an increase of approximately
$152,000, or 20%. Interest income reflects interest earned on our cash, cash equivalents and short-term investments and are impacted by
current interest rates and average balances over the periods presented.

 Accretion income. 
Accretion income for the years ended December 31, 2025 and 2024 was approximately $6,000 and $178,000, respectively. Accretion income
relates to the increase in value of our available-for-sale securities from the purchase date through the maturity date. Accretion
income relates to the increase in value of our available-for-sale securities from the purchase date through the maturity date. As of December
31, 2025, our cash and cash equivalents were held as cash and mutual funds.

 Other income/expense,
net. Other income for the years December 31, 2025 and 2024 was approximately $72,000 and $73,000, respectively. Other income consisted
primarily of a refundable state research and development tax credit, net of filing costs and tax consulting services for both years.

 Interest expense. Interest
expense for the years ended December 31, 2025 and 2024 was approximately $60,000 and $129,000, respectively. Interest expense is related
to the tool financing lease entered into in August 2021.

 Liquidity and Capital Resources 

 As of December 31, 2025, we
had cash and cash equivalents of approximately $19.2 million and working capital of approximately $17.6 million. For the year ended December
31, 2025, we had a net loss of approximately $20.2 million and used approximately $14.9 million of cash and cash equivalents in operations.
Since inception, we have incurred recurring operating losses. On February 24, 2026, we closed on the sale of 5,000,000 shares of our common
stock, at a price of $5.00 per share, in a registered direct offering for the net proceeds of approximately $23.6 million after commissions
and offering expenses.

 During the year ended December
31, 2025, we sold approximately 1.6 million shares of our common stock pursuant to our 2022 and 2025 ATM facilities at an average price
per share of approximately $5.15, resulting in approximately $7.6 million of net proceeds to us after deducting commissions and other
offering expenses.

 24 

 We believe that our available
working capital as of the date of this report, and after giving effect to our February 2026 registered direct offering, is sufficient
to fund our presently forecasted working capital requirements for, at least, the next 24 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 time frame 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 Facility,
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 our cash.

 Cash Flows from Operating, Investing and Financing
Activities: 

 Net cash used in operating
activities of approximately $14.9 million for year ended December 31, 2025 resulted primarily from our net loss of approximately $20.2
million, adjusted by approximately $5.0 million of stock-based compensation expense.

 Net cash used in operating
activities of approximately $13.2 million for year ended December 31, 2024 resulted primarily from our net loss of approximately $18.4
million, adjusted by approximately $3.9 million of stock-based compensation expense and amortization of right-of-use assets of approximately
$1.3 million.

 Net cash provided in investing
activities of approximately $951,000 for year ended December 31, 2025 consisted primarily of the maturity of short-term available-for-sale
investments, offset by the acquisition of property and equipment.

 Net cash provided in investing
activities of approximately $6.1 million and for year ended December 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 $7.4 million for the year ended December 31, 2025 related primarily to net proceeds from our ATM Facility
and the exercise of stock options, offset in part by approximately $1.2 million in principal payments on our financing lease.

 Net cash provided by financing
activities of approximately $20.3 million for the year ended December 31, 2024 related primarily to net proceeds from our ATM Facility,
offset in part by approximately $1.1 million in principal payments on our financing lease.

 Critical Accounting Estimates 

 Our financial statements are
prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in
conformity with those accounting principles requires us to use judgment in making estimates and assumptions based on the relevant information
available at the end of each period. These estimates and assumptions have a significant effect on reported amounts of assets, liabilities,
sales and expenses as well as the disclosure of contingent assets and liabilities because they result primarily from the need to make
estimates and assumptions on matters that are inherently uncertain. Actual results could differ from our estimates.

 25 

 Leases 

 We account for leases in accordance
with Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No 2016-02, Leases
 (Topic 842). We determine if a contract contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”)
assets represent our right to use an underlying asset for the lease term while lease liabilities represent our obligation to make lease
payments arising from the lease. All leases greater than 12 months result in the recognition of a ROU asset and a liability at the lease
commencement date based on the present value of the lease payments over the lease term. Lease expenses for operating leases is recognized
on a straight-line-basis over the lease term. Lease expenses for financing leases consists of amortization of the ROU assets over the
life of the lease and interest expense is recognized on the liability.

 Stock-based Compensation 

 We have stock-based compensation
programs, which include restricted stock awards (“RSAs”), Restricted stock Units (“RSUs”) and stock options and
an employee stock purchase plan. We account for stock-based compensation expense, including the expense for grants of RSAs and stock options
that may be settled in shares of our common stock, based on the fair values of the equity instruments issued. The fair value is determined
on the measurement date, which is the date of grant. The fair value of our RSAs is measured at the market price of our common stock on
the measurement date amortized over the vesting period of the award. The fair value of our time-based RSUs is based on the closing price
on the day of grant and they vest over zero to four years. Awards of performance-based restricted stock units we issue have a performance
period of one, two and three years with the vesting of each award tranche dependent on our 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 fair value for our stock option awards is determined at the grant date
using the Black-Scholes Option Pricing Model and amortized over the vesting period of the option.

 Assumptions
for the Black-Scholes valuation model used for employee stock awards include:

 · 
 Expected term – We derived the expected term for employee stock awards using historical information to develop expectations about future exercise patterns and behavior after employment termination. 

 · 
 Expected volatility – Volatility is estimated using Atomera’s historical volatility for similar terms. 

 · 
 Expected dividend rate – We have not declared or paid dividends to our stockholders and have no plans to pay dividends; therefore, we have assumed an expected dividend yield of 0%. 

 · 
 Risk-free interest rate – The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected terms of the associated awards. 

 · 
 The fair value of our common stock is measured at the market price on the measurement date. 

 Item 7A. 
 Quantitative and Qualitative Disclosures About Market Risk 

 Not applicable.

 26 

 Item 8. 
 Financial Statements and Supplementary Data 

 Index to Financial Statements 

 Page 
 
 Report of Independent Registered Public Accounting Firm (PCAOB ID Number 199 ) 
 
 28 
 
 Report of Independent Registered Public Accounting Firm (PCAOB ID Number 688 ) 
 
 29 
 
 Balance Sheets at December 31, 2025 and 2024 
 
 30 
 
 Statements of Operations for the years ended December 31, 2025 and 2024 
 
 31 
 
 Statements of Comprehensive loss for the years ended December 31, 2025 and 2024 
 
 32 
 
 Statements of Stockholders’ Equity for the years ended December 31, 2025 and 2024 
 
 33 
 
 Statements of Cash Flows for the years ended December 31, 2025 and 2024 
 
 34 
 
 Notes to the Financial Statements 
 
 35 
 
 27 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM 

 To the Stockholders and Board of Directors
of

 Atomera Incorporated 

 Opinion on the Financial Statements 

 We have audited the accompanying balance sheet
of Atomera Incorporated (the “Company”) as of December 31, 2025, the related statements of operations, comprehensive loss , 
stockholders’ equity and cash flows for the year ended December 31, 2025, and the related notes (collectively referred to as the
“financial statements”). In our opinion, based on our audit, the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended
December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion 

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audit included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 Critical Audit Matters 

 Critical audit matters are matters arising from
the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. We determined that there are no critical audit matters.

 /s/ CBIZ CPAs P.C. 

 CBIZ CPAs P.C. 

 We have served as the Company’s auditor
since 2015 (such date takes into account the acquisition of the attest business of Marcum llp 
by CBIZ CPAs P.C. effective November 1, 2024).

 Melville, NY 

February 24, 2026

 28 

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM 

 To the Stockholders and Board of Directors of

 Atomera Incorporated 

 Opinion on the Financial Statements 

 We have audited the accompanying balance sheet
of Atomera Incorporated (the “Company”) as of December 31, 2024 , the related statements of operations, comprehensive loss,
stockholders’ equity and cash flows for the year ended December 31, 2024, and the related notes (collectively referred to as the
“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31,
2024, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion 

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audit in accordance with the
standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess
the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond
to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 /s/ Marcum llp 

 Marcum LLP 

 We have served as the Company’s auditor from 2015 through 2025.

 Melville, NY 

March 4, 2025

 29 

 Atomera Incorporated 

 Balance Sheets 

 (in thousands, except per share data) 

 December 31, 

 2025 
 2024 

 ASSETS 
 
 Current Assets: 
 
 Cash and cash equivalents 
 $ 19,210 
 $ 25,778 

 Short-term investments 
 – 
 995 

 Accounts receivable 
 – 
 6 

 Interest receivable 
 54 
 73 

 Prepaid expenses and other current assets 
 338 
 240 

 Total current assets 
 19,602 
 27,092 

 Property and equipment, net 
 60 
 59 

 Long-term prepaid maintenance and supplies 
 – 
 91 

 Security deposit 
 14 
 14 

 Operating lease right-of-use-asset 
 884 
 280 

 Financing lease right-of-use-asset 
 533 
 1,588 

 Total assets 
 $ 21,093 
 $ 29,124 

 LIABILITIES AND STOCKHOLDERS’ EQUITY 
 
 Current liabilities: 
 
 Accounts payable 
 $ 608 
 $ 492 

 Accrued expenses 
 168 
 239 

 Accrued payroll related expenses 
 650 
 1,328 

 Current operating lease liability 
 147 
 260 

 Current financing lease liability 
 420 
 1,253 

 Deferred revenue 
 7 
 4 

 Total current liabilities 
 2,000 
 3,576 

 Long-term operating lease liability 
 712 
 22 

 Long-term financing lease liability 
 – 
 449 

 Total liabilities 
 2,712 
 4,047 

 Commitments and contingencies (see Note 9) 
 – 
 – 

 Stockholders’ equity: 
 
 Preferred stock, $ 0.001 par value, authorized 2,500 shares: none issued and outstanding at December 31, 2025 and 2024 
 – 
 – 

 Common stock, $ 0.001 par value, authorized 47,500 shares; 32,354 shares issued and outstanding at December 31, 2025 and 30,540 shares issued and outstanding at December 31, 2024 
 32 
 31 

 Additional paid-in capital 
 260,043 
 246,565 

 Other comprehensive income 
 – 
 1 

 Accumulated deficit 
 ( 241,694 ) 
 ( 221,520 ) 

 Total stockholders’ equity 
 18,381 
 25,077 

 Total liabilities and stockholders’ equity 
 $ 21,093 
 $ 29,124 

 The accompanying notes are an integral part of
these financial statements.

 30 

 Atomera Incorporated 

 Statements of Operations 

 (in thousands, except per share data) 

 Years Ended December 31, 

 2025 
 2024 

 Revenue: 
 $ 65 
 $ 135 

 Cost of revenue 
 ( 321 ) 
 ( 123 ) 

 Gross margin 
 ( 256 ) 
 12 

 Operating Expenses: 
 
 Research and development 
 12,303 
 11,029 

 General and administrative 
 7,806 
 7,266 

 Selling and marketing 
 758 
 1,053 

 Total operating expenses 
 20,867 
 19,348 

 Loss from operations 
 ( 21,123 ) 
 ( 19,336 ) 

 Other income (expense): 
 
 Interest income 
 931 
 779 

 Accretion income 
 6 
 178 

 Other income, net 
 72 
 73 

 Interest expense 
 ( 60 ) 
 ( 129 ) 

 Total other income, net 
 949 
 901 

 Net loss 
 $ ( 20,174 ) 
 $ ( 18,435 ) 

 Net loss per common share, basic 
 $ ( 0.65 ) 
 $ ( 0.68 ) 

 Net loss per common share, diluted 
 $ ( 0.65 ) 
 $ ( 0.68 ) 

 Weighted average number of common shares outstanding, basic 
 30,844 
 27,217 

 Weighted average number of common shares outstanding, diluted 
 30,844 
 27,217 

 The accompanying notes are an integral part of
these financial statements.

 31 

 Atomera Incorporated 

 Statements of Comprehensive Loss 

 (in thousands) 

 Years Ended 
 December 31, 
 
 2025 
 2024 

 Net loss 
 $ ( 20,174 ) 
 $ ( 18,435 ) 

 Unrealized gain (loss) on available-for-sale securities 
 ( 1 ) 
 1 

 Net comprehensive loss 
 $ ( 20,175 ) 
 $ ( 18,434 ) 

 The accompanying notes are an integral part of
these financial statements.

 32 

 Atomera Incorporated 

 Statements of Stockholders’ Equity 

 (in thousands) 

 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 
 340 
 – 
 3,867 
 – 
 – 
 3,867 

 Stock option exercises 
 31 
 – 
 197 
 – 
 – 
 197 

 Forfeiture of restricted stock issuance 
 ( 43 ) 
 – 
 – 
 – 
 – 
 – 

 At-the-market sale of stock, net of commissions and expenses 
 4,103 
 5 
 21,262 
 – 
 – 
 21,267 

 Other sale 
 2 
 – 
 10 
 – 
 – 
 10 

 Net loss 
 – 
 – 
 – 
 – 
 ( 18,435 ) 
 ( 18,435 ) 

 Unrealized gain on available-for-sale securities 
 – 
 – 
 – 
 1 
 – 
 1 

 Balance December 31, 2024 
 30,540 
 $ 31 
 $ 246,565 
 $ 1 
 $ ( 221,520 ) 
 $ 25,077 

 Stock-based compensation 
 78 
 – 
 4,963 
 – 
 – 
 4,963 

 Stock option exercises 
 173 
 – 
 905 
 – 
 – 
 905 

 At-the-market sale of stock, net of commissions and expenses 
 1,563 
 1 
 7,610 
 – 
 – 
 7,611 

 Net loss 
 – 
 – 
 
 – 
 ( 20,174 ) 
 ( 20,174 ) 

 Unrealized gain on available-for-sale securities 
 – 
 – 
 – 
 ( 1 ) 
 – 
 ( 1 ) 

 Balance December 31, 2025 
 32,354 
 $ 32 
 $ 260,043 
 $ – 
 $ ( 241,694 ) 
 $ 18,381 

 The accompanying notes are an integral part of
these financial statements.

 33 

 Atomera Incorporated 

 Statements of Cash Flows 

 (in thousands) 

 Years Ended December 31, 

 2025 
 2024 

 CASH FLOWS FROM OPERATING ACTIVITIES 
 
 Net Loss 
 $ ( 20,174 ) 
 $ ( 18,435 ) 

 Adjustments to reconcile net loss to net cash used in operating activities: 
 
 Depreciation and amortization 
 48 
 54 

 Operating lease right of use asset amortization 
 252 
 237 

 Financing lease right of use asset amortization 
 937 
 1,074 

 Stock-based compensation 
 4,963 
 3,867 

 Accretion of discounts on available-for-sales securities 
 ( 6 ) 
 ( 161 ) 

 Changes in operating assets and liabilities: 
 
 Accounts receivable 
 6 
 ( 6 ) 

 Unbilled contracts receivable 
 – 
 550 

 Interest receivable 
 20 
 16 

 Prepaid expenses and other current assets 
 ( 7 ) 
 4 

 Accounts payable 
 115 
 ( 126 ) 

 Accrued expenses 
 ( 71 ) 
 17 

 Accrued payroll expenses 
 ( 678 ) 
 ( 54 ) 

 Operating lease liability 
 ( 279 ) 
 ( 277 ) 

 Deferred revenue 
 3 
 4 

 Net cash used in operating activities 
 ( 14,871 ) 
 ( 13,236 ) 

 CASH FROM INVESTING ACTIVITIES 
 
 Acquisition of property and equipment 
 ( 49 ) 
 ( 14 ) 

 Purchase of available-for-sale securities 
 – 
 ( 5,268 ) 

 Maturity of available-for-sale securities 
 1,000 
 11,366 

 Net cash provided by investing activities 
 951 
 6,084 

 CASH FLOWS FROM FINANCING ACTIVITIES 
 
 Proceeds from at-the-market sale of stock, net of commissions and expenses 
 7,611 
 21,267 

 Proceeds from exercise of stock options 
 905 
 197 

 Proceeds from stock sales 
 – 
 10 

 Payments of principal for financing lease 
 ( 1,164 ) 
 ( 1,135 ) 

 Net cash provided by financing activities 
 7,352 
 20,339 

 Net increase (decrease) in cash and cash equivalents 
 ( 6,568 ) 
 13,187 

 Cash and cash equivalents at beginning of year 
 25,778 
 12,591 

 Cash and cash equivalents at end of year 
 $ 19,210 
 $ 25,778 

 Supplemental information: 
 
 Cash paid for interest 
 $ 60 
 $ 129 

 Cash paid for taxes 
 $ – 
 $ – 

 The accompanying notes are an integral part of
these financial statements.

 34 

 Atomera Incorporated 

 Notes to the Financial Statements 

 1. 
 NATURE OF OPERATIONS 

 Atomera Incorporated (“Atomera”
or the “Company”) was incorporated in the state of Delaware in March 2007 under the name MEARS Technologies, Inc. and is engaged
in the development, commercialization and licensing of proprietary processes and technologies for the semiconductor industry. On January
12, 2016, the Company changed its name to Atomera Incorporated.

 Atomera is an early-stage
company, having only recently begun limited revenue-generating activities, and is devoting substantially all its efforts toward technology
research and development and to commercially licensing its technology to designers and manufacturers of integrated circuits.

 2. 
 LIQUIDITY AND MANAGEMENT PLANS 

 At December 31, 2025, the
Company had cash and cash equivalents of approximately $ 19.2 million and working capital of approximately $ 17.6 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 offered and sold, from time to time at its sole discretion, shares of its $0.001 par value common stock
(“common stock”) in an at the market offering to or through the agents, having aggregate offering proceeds of up to $50.0
million (the “2022 ATM”). The 2022 ATM Facility expired on March 18, 2025.

 On May 27, 2025, Atomera entered
into an Equity Distribution Agreement with Craig-Hallum as agent, under which the Company may offer and sell, from time to time at its
sole discretion, shares of its common stock in an at-the-market offering to or through the agent, having aggregate offering proceeds of
up to $50.0 million (the “2025 ATM”).

 During the year ended December
31, 2025, the Company sold approximately 1.6 million shares of common stock pursuant to the 2022 ATM and the 2025 ATM at an average price
per share of approximately $ 5.15 , resulting in approximately $ 7.6 million of net proceeds to the Company after deducting commissions and
other offering expenses.

 Based on the funds it
has available as of the date of the filing of this report, the Company believes that it has sufficient capital to fund its current business
plans and obligations over, at least, 12 months from the date that these financial statements have been issued. The Company’s future
capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully
commercialize its technology, competing technological and market developments, and the need to enter into collaborations with other companies
or acquire technologies to enhance or complement its current offerings. The Company’s operating plans for the next 12 months include
increased research and development expenses.

 35 

 3. 
 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

 Basis of Presentation 

 The financial statements are
presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect
the financial position, results of operations and cash flows for all periods presented. The Company operates as one business segment.

 Fair Value of Financial Instruments 

 Authoritative guidance requires
disclosure of the fair value of financial instruments. The Company’s financial instruments consist of cash and cash equivalents,
short-term investments, accounts receivable and accounts payable, the carrying amounts of which approximate their estimated fair values
primarily due to the short-term nature of the instruments or based on information obtained from market sources and management estimates.
The Company measures the fair value of certain of its financial assets and liabilities on a recurring basis. A fair value hierarchy is
used to rank the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at
fair value which is not equivalent to cost will be classified and disclosed in one of the following three categories:

 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.

 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 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 statements
of operations when incurred. Unrealized gains and losses are included in other comprehensive income (loss) on the balance sheets.

 36 

 Concentration of Credit Risk and Major Customers 

 Financial instruments, which
potentially subject the Company to concentrations of credit risk, consist principally of cash, cash equivalents, short-term investments
and accounts receivable. One customer represented 77 % of revenue and another customer represented 23 % of the Company’s revenue during
the year ended December 31, 2025. One customer represented 63 % of revenue and another customer represented 37 % of the Company’s
revenue during the year ended December 31, 2024.

 At times, the amounts on deposit
at the financial institution exceed the federally insured limits. Management believes that the financial institution which holds the Company’s
cash is financially sound and, accordingly, that minimal credit risk exists. As of December 31, 2025 and 2024, the Company’s cash
balances were in excess of insured limits maintained at the financial institution.

 Accounts Receivable and Unbilled Contracts
Receivable 

 The Company grants credit
to its business customers. Collateral is generally not required for trade receivables. The Company maintains allowances for potential
credit losses when necessary. Trade accounts receivable and unbilled contracts receivable are recorded net of allowances for cash discounts
for prompt payment, doubtful accounts, and sales returns.

 The Company’s policy
is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable
and unbilled contracts receivable accounts under Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments
– Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . The Company periodically reviews these receivables
to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that
may indicate that the realization of an account may be in doubt. Other factors that the Company considers include its existing contractual
obligations, historical payment patterns of its customers and individual customer circumstances, and an analysis of days sales outstanding
by customer. Due to the Company’s low volume of customers, management reviews the receivable balances on a customer by customer
basis. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and
the potential for recovery is considered remote. The accounts receivable balance at December 31, 2025 was zero . At December 31, 2024,
there were no allowances for doubtful accounts as the Company deemed the balance fully collectible.

 Impairment of Long-lived Assets 

 The Company reviews long-lived
assets for impairment whenever events or changes in circumstances indicate that it is more likely than not that the asset’s carrying
amount may not be recoverable. The Company conducts its long-lived asset impairment analyses in accordance with authoritative guidance
which requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent
of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows.
If the undiscounted cash flows do not indicate the carrying amount of the asset is recoverable, an impairment charge is measured as the
amount by which the carrying amount of the asset group exceeds its fair value based on discounted cash flow analysis or appraisals. At
December 31, 2025 and 2024, the Company had noted no indicators of impairment.

 Property and Equipment 

 Items capitalized as property
and equipment are stated at cost. Maintenance and routine repairs are charged to operations when incurred, while betterments and renewals
are capitalized. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the respective
assets starting when the asset is placed in service.

 37 

 Revenue 

 The Company generates revenue
from integration engineering services, which it delivers either pursuant to integration license agreements or delivery of engineering
services and from the grant of R&D licenses to customers to use its technology in the manufacture of semiconductor wafers and/or devices
for the customer’s internal use. Revenue is recognized based on the following steps: (i) identification of the contract, or contracts,
with a customer, (ii) identification of the performance obligations in the contract, (iii) determination of the transaction price, (iv)
allocation of the transaction price to the performance obligations of the contract, and (v) recognition of revenue when, or as, the Company
satisfies a performance obligation. The Company’s integration services generally consist of depositing its proprietary technology
onto the customer’s semiconductor wafers and delivering such wafers back to the customer. Revenue from integration services is recognized
as the performance obligations are satisfied, which is upon transfer of control of the wafers to the customer (generally upon shipment).
Revenue from manufacturing licenses is recognized as the performance obligations are satisfied, which is generally upon delivery of the
Company’s MST recipe to the customer but is recognized over time if the performance obligation related to the grant of the license
includes customer acceptance.

 For recognizing integration
service revenue from integration license agreements, the Company assesses (i) whether the license grant is distinct from or combined with
the transfer of goods or services and (ii) whether the license is a right to access intellectual property or a right to use the intellectual
property. For licenses that are not distinct, but combined with other goods or services, the revenue is recognized at a point in time
or over time as the obligations to perform the combined services and/or deliver the combined goods are satisfied. The Company’s
integration license agreements contain a technology grant as well as a performance obligation to deliver wafers with its technology deposited
on them. The Company has determined the grant of rights in these integration license agreements is not distinct from the integration service.
Accordingly, revenue from integration license agreements is recognized as the service is provided to the customer. For manufacturing licenses,
revenue is recognized at the point in time when the Company delivers its MST recipe because this license confers a right to use the Company’s
technology and not a right to access the technology over time. However, in cases where the Company’s grant of a manufacturing license
includes a customer acceptance requirement, revenue is recognized over time. The Company’s MSTcad licenses grant customers the right
to use MSTcad software to simulate the effects of incorporating MST technology into their semiconductor manufacturing process. Such MSTcad
licenses are granted on a monthly basis and revenue is recognized over time.

 Deferred revenues consist
of unearned amounts that have been billed to the customer in advance of the Company’s performance obligations. These amounts have
not yet been recognized as revenue. Revenue for these items will be recognized in accordance with the Company’s revenue policy.

 Research and Development Expenses 

 In accordance with authoritative
guidance, the Company charges research and development costs to operations as incurred. Research and development expenses consist of personnel
costs for the design, development, testing and enhancement of the Company’s technology, and certain other allocated costs, such
as depreciation and other facilities related expenditures.

 Leases 

 The Company accounts for leases
in accordance with ASU No 2016-02, Leases (Topic 842). The Company determines if a contract contains a lease in whole or in part
at the inception of the contract. Right-of-use (“ROU”) assets represent its right to use an underlying asset for the lease
term while lease liabilities represent its obligation to make lease payments arising from the lease. All leases greater than 12 months
result in the recognition of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments
over the lease term. Leases are accounted for as operating leases unless it meets one of the following criteria: (a) the lease term accounts
for most of the remaining economic life of the underlying asset; (b) the present value of the lease payments is over 90% of the fair value
of the underlying asset; (c) the underlying asset would have no alternative use for the lessor at the end of the lease; or (d) ownership
of the underlying assets transfers to the Company at the end of the lease term. If the lease meets one of these criteria, then it would
be accounted for as financing lease and the ROU assets would be amortized over the life of the lease and interest expense is recognized
on the liability.

 38 

 Stock-based Compensation 

 The Company computes stock-based
compensation in accordance with authoritative guidance. The Company uses the Black-Scholes-Merton option-pricing model to determine the
fair value of its stock options. The Black-Scholes-Merton option-pricing model includes various assumptions, including the fair market
value of the common stock of the Company, expected life of stock options, the expected volatility and the expected risk-free interest
rate, among others. The fair value for performance-based restricted stock units is fixed at the grant date using a Monte Carlo simulation.
These assumptions reflect the Company’s best estimates, but they involve inherent uncertainties based on market conditions generally
outside the control of the Company. Forfeitures are recorded when they occur.

 As a result, if other assumptions
had been used, stock-based compensation cost, as determined in accordance with authoritative guidance, could have been materially impacted.
Furthermore, if the Company uses different assumptions on future grants, stock-based compensation cost could be materially affected in
future periods.

 Income Taxes 

 In accordance with authoritative
guidance, deferred tax assets and liabilities are recorded for temporary differences between the financial reporting and tax bases of
assets and liabilities using the current enacted tax rate expected to be in effect when the differences are expected to reverse. A valuation
allowance is recorded on deferred tax assets unless realization is considered more likely than not.

 The Company evaluates its
tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions
are “more-likely-than-not” of being sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not”
threshold are not recorded as a tax benefit or expense in the current year. The Company recognizes interest and penalties, if any, related
to uncertain tax positions in interest expense. No interest and penalties related to uncertain tax positions were accrued at either December
31, 2025 or 2024.

 The Company follows authoritative
guidance which requires the evaluation of existing tax positions. Management has analyzed all open tax years, as defined by the statute
of limitations, for all major jurisdictions, which includes both federal and states where the Company has operations. Open tax years are
those that are open for examination by taxing authorities.

 Use of Estimates 

 The preparation of financial
statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Significant estimates are used when accounting for the fair value
of stock-based compensation, borrowing rates used for lease accounting and valuation allowance against deferred tax assets. Actual results
could differ from those estimates.

 Subsequent Events 

 Management has evaluated
subsequent events and transactions occurring through the date these financial statements were issued. See Note 15.

 39 

 Adoption of Recent Accounting Standards 

 In December 2023,
the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income
Tax Disclosures (“ASU 2023-09”). 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. The Company adopted this ASU on January 1, 2025 and
it did not have a material impact on its financial position, results of operations or financial statement disclosure.

 Recent Accounting Standards 

 In November 2024, the FASB
issued ASU 2024-03, 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 fiscal years beginning after December 15,
2026, and for interim 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.

 In May 2025, the FASB issued
ASU 2025-04 Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications
to Share-Based Consideration Payable to a Customer (“ASU 2025-04”) which clarifies the guidance on the accounting
for share-based payment awards that are granted by an entity as consideration payable to its customer, with the intent to reduce diversity
in practice and improve existing guidance by revising the definition of a “performance condition” and eliminating a forfeiture
policy election for service conditions associated with share-based consideration payable to a customer. It also clarifies the
guidance in Topic 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer
“regardless of whether an award’s grant date has occurred”. ASU 2025-04 will be effective for the annual
periods beginning after December 15, 2026 with early adoption permitted. The Company does not believe ASU 2025-04 will have a material
impact on its financial position, results of operations or financial statement disclosure.

 In September 2025, the FASB
issued ASU 2025-06 Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the
Accounting for Internal-Use Software (“ASU 2025-06”) . The amendments require that an entity capitalize software
costs when both: management has authorized and committed to funding the software project; and it is probable that the project will be
completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”).
In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty
associated with the development activities of the software. ASU 2025-06 will be effective for the annual periods beginning after December
15, 2027. The Company does not expect ASU 2025-04 will have a material impact on its financial position, results of operations or financial
statement disclosure.

 In December 2025, the FASB
issued ASU 2025-11: Interim Reporting (Topic 270): Narrow-Scope Improvements . The guidance was issued to improve the guidance in
Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable.
The guidance also provides additional guidance on what disclosures should be provided in interim reporting periods. The guidance is effective
on a prospective or retrospective basis for financial statements issued for fiscal years beginning after December 15, 2027, and interim
reporting periods within fiscal years beginning after December 15, 2028. Early adoption of the guidance is permitted. The Company does
not expect ASU 2025-11 will have a material impact on its financial position, results of operations or financial statement disclosure.

 40 

 4. 
 CASH EQUIVALENTS AND INVESTMENTS 

 The
Company’s cash, cash equivalents and short-term investments that were measured at fair value on a recurring basis as Level 1 assets,
classified by security type as of December 31, 2025 and 2024 consisted of the following (in thousands):

 Schedule of cash equivalents and short-term investments 
 
 December 31, 2025 

 Cost 
 Unrealized 
 Gain/(Loss) 
 
 Accretion of 
 Discount 
 
 Fair 
 Value 
 
 Cash 
 $ 279 
 $ – 
 $ – 
 $ 279 

 Mutual funds 
 18,931 
 – 
 – 
 18,931 

 Total 
 $ 19,210 
 $ – 
 $ – 
 $ 19,210 

 December 31, 2024 

 Cost 
 Unrealized 
 Gain/(Loss) 
 
 Accretion of 
 Discount 
 
 Fair 
 Value 
 
 Cash 
 $ 1 
 $ – 
 $ – 
 $ 1 

 Mutual 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. 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 for the years ended December
31, 2025 and 2024 (in thousands):

 Schedule of disaggregated revenue by primary geographical markets and timing of revenue recognition 
 
 Year Ended December 31, 

 2025 
 2024 

 Primary geographic markets 
 
 North America 
 $ 65 
 $ 135 

 Europe 
 – 
 – 

 Total 
 $ 65 
 $ 135 

 Timing of revenue recognition 
 
 Products and services transferred at a point in time 
 $ 61 
 $ 50 

 Products and services transferred over time 
 4 
 85 

 Total 
 $ 65 
 $ 135 

 41 

 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. The Company had no unbilled contracts receivable as of December 31, 2025.

 Deferred Revenue 

 The Company records deferred
revenue for customers that were issued invoices, but from which the Company has not yet recognized the revenue based on its revenue recognition
policy. As of December 31, 2025, the Company has approximately $ 7,000 in deferred revenue that is expected to be recognized in the next
12 months.

 6. 
 BASIC AND DILUTED LOSS PER SHARE 

 Basic net loss per share is
calculated by dividing the net loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is
computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common stock
outstanding and the dilutive common stock equivalent shares outstanding during the period. The Company’s potentially dilutive common
stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants
and (ii) vesting of restricted stock units and restricted stock awards, are only included in the calculation of diluted net loss per share
when their effect is dilutive. Since the Company has had net losses for all periods presented, all potentially dilutive securities are
anti-dilutive. Accordingly, basic and diluted net loss per share are equal.

 The following potential common
stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive
(in thousands):

 Schedule of anti-dilutive shares 
 
 Year Ended December 31, 

 2025 
 2024 

 Stock Options 
 2,907 
 3,793 

 Unvested restricted stock units 
 234 
 – 

 Unvested restricted stock awards 
 608 
 469 

 Total 
 3,749 
 4,262 

 42 

 7. 
 PROPERTY AND EQUIPMENT 

 Property and equipment consisted
of the following (in thousands):

 Schedule of property and equipment 
 
 December 31, 

 2025 
 2024 

 Laboratory equipment 
 $ 187 
 $ 163 

 Computers equipment 
 176 
 169 

 Furniture and fixtures 
 92 
 92 

 Leasehold improvements 
 24 
 24 

 Office equipment 
 7 
 4 

 Software 
 4 
 4 

 490 
 456 

 Less: Accumulated depreciation and amortization 
 ( 430 ) 
 ( 397 ) 

 Total net assets 
 $ 60 
 $ 59 

 Depreciation and amortization
expense relating to property and equipment was approximately $ 48,000 and $ 54,000 for the years ended December 31, 2025 and 2024, respectively.
The Company depreciates computer equipment, laboratory equipment and office equipment on straight-line basis over three years. Furniture
and fixtures are depreciated on a straight-line basis over five years. The Company amortizes software on straight-line basis over three
years. Leasehold improvements are amortized over the remaining life of the lease.

 8. 
 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 an epitaxial deposition 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. Effective August 1, 2025, the lease payments
for this tool were adjusted to $133,125 per month for the period August 1, 2025 through April 30, 2026. The final three months of the
lease were prepaid at the commencement of the lease. This adjustment to the lease payments also resulted in a reduction in the ROU and
corresponding lease liability.

 In December 2025, the Company
and its landlord amended the lease of the corporate headquarters in Los Gatos, California. The amendment extends the expiration date of
the lease from January 2026 to March 2031. An additional ROU asset and lease liability of approximately $ 856,000 were recorded during
the year ended December 31, 2025. The lease liability is based on the present value of the minimum lease payments, discounted using an
estimated incremental borrowing rate of 8.75 %. The lease contains escalating payments on the anniversary of the original commencement
of the lease which are included in the measurement of the lease liability. Additional payments based on a change in the Company’s
share of the operating expenses, including property taxes and insurance are recorded as a period expense when incurred.

 In December 2025, the
Company entered into a lease agreement for an epitaxial deposition tool in Tempe, Arizona, distinct from the tool previously mentioned.
The term of this lease is for 12 months beginning on January 1, 2026 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 balance sheets. 

 43 

 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 
 
 Year Ended December 31, 

 2025 
 2024 

 Financing lease costs: 
 
 Amortization of ROU assets 
 $ 937 
 $ 1,074 

 Interest on lease liabilities 
 60 
 129 

 Total financing lease costs 
 $ 997 
 $ 1,203 

 Operating lease costs 
 
 Fixed lease costs 
 $ 262 
 $ 262 

 Variable lease costs 
 10 
 3 

 Short-term lease costs 
 1,143 
 1,044 

 Total operating lease costs 
 $ 1,415 
 $ 1,309 

 Future minimum payments under non-cancellable leases
as of December 31, 2025 were as follows (in thousands):

 Schedule of future minimum payments 
 
 For the Year Ended December 31, 
 Financing leases 
 Operating leases 

 2026 
 $ 425 
 $ 155 

 2027 
 – 
 210 

 2028 
 – 
 216 

 2029 
 – 
 223 

 2030 & thereafter 
 – 
 288 

 Total future minimum lease payments 
 425 
 1,092 

 Less imputed interest 
 ( 5 ) 
 ( 233 ) 

 Total lease liability 
 $ 420 
 $ 859 

 The below table 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 
 
 Year Ended December 31, 

 2025 
 2024 

 Operating cash flow information: 
 
 Cash paid for amounts included in the measurement of operating lease liabilities 
 $ 289 
 $ 302 

 Cash paid for amounts included in the measurement of financing lease liabilities 
 $ 1,224 
 $ 1,263 

 Non-cash activity: 
 
 Right-of-use assets obtained in exchange for operating lease obligations 
 $ 856 
 $ – 

 Remeasurement of right-of use asset and liability in financing lease obligations 
 $ ( 119 ) 
 $ ( 241 ) 

 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 8.74 % for the Company’s operating leases. The weighted average remaining lease term is. .7 months for the financing lease and
 4.6 years for operating leases.

 44 

 9. 
 COMMITMENTS AND CONTINGENCIES 

 Legal 

 The Company may be involved,
from time to time, in legal proceedings and claims arising in the ordinary course of its business. Such matters are subject to many uncertainties
and outcomes and are not predictable with assurance. While management believes that such matters are currently insignificant, matters
arising in the ordinary course of business for which the Company is or could become involved in litigation may have a material adverse
effect on its business and financial condition. The Company is not party to any material litigation as of December 31, 2025 or through
the date these financial statements have been issued.

 10. 
 STOCKHOLDERS’ EQUITY 

 The Company is authorized
to issue up to 2,500,000 shares of preferred stock, $ 0.001 par value. As of December 31, 2025, and 2024, no shares have been designated
and no shares are issued and outstanding. Preferred stock may rank prior to common stock with respect to dividends rights, liquidation
preferences, or both, and may have full or limited voting rights.

 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 offered and sold, from time to time at its sole discretion, shares of its common stock in an at the
market offering to or through the agents, having aggregate offering proceeds of up to $50.0 million (the “2022 ATM”). The
2022 ATM Facility expired on March 18, 2025.

 On May 27, 2025, Atomera entered
into an Equity Distribution Agreement with Craig-Hallum as agent, under which the Company may offer and sell, from time to time at its
sole discretion, shares of its common stock in an at-the-market offering to or through the agent, having aggregate offering proceeds of
up to $50.0 million (the “2025 ATM”).

 During the year ended December
31, 2025, the Company sold approximately 1.6 million shares of common stock pursuant to the 2022 ATM and the 2025 ATM at an average price
per share of approximately $ 5.15 , resulting in approximately $ 7.6 million of net proceeds to the Company after deducting commissions and
other offering expenses. As of December 31, 2025, the Company has remaining gross capacity on the ATM of approximately $ 44.4 million and
proceeds to the Company would be reduced by commissions and other offering costs.

 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 .

 As of December 31, 2025, the
Company has reserved approximately 6 .0 million shares of common stock for issuance pursuant to outstanding stock options and restricted
stock units.

 45 

 11. 
 SEGMENT REPORTING 

 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 are reported on the accompanying balance sheets
as total assets.

 The following table presents
selected financial information with respect to the Company’s single operating segment for the years ended December 31, 2025 and
2024 (in thousands):

 Schedule of selected financial information 
 
 Year Ended December 31, 

 2025 
 2024 

 Revenue: 
 $ 65 
 $ 135 

 Less expenses (1) : 
 
 Employee related expenses 
 5,825 
 6,407 

 Stock-based compensation 
 4,963 
 3,867 

 Travel and entertainment 
 313 
 368 

 Tool related expenses 
 2,388 
 2,438 

 Consulting expenses 
 591 
 725 

 Metrology and other outsourced research expenses 
 1,989 
 1,099 

 Intellectual property related expenses 
 1,319 
 1,312 

 Other operating items (2) 
 3,800 
 3,255 

 Operating margin 
 ( 21,123 ) 
 ( 19,336 ) 

 Other income (expense), net 
 949 
 901 

 Net loss 
 $ ( 20,174 ) 
 $ ( 18,435 ) 

 (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. 
 STOCK-BASED COMPENSATION 

 The Company’s 2007 Equity
Incentive Plan (the “2007 Plan) expired in March 2017, however all options and warrants outstanding at the time of the expiration
remained outstanding and exercisable by their term. As of December 31, 2025, options to purchase approximately 668,000 shares of common
stock remain outstanding under the 2007 Plan.

 In May 2017, the Company’s
shareholders approved its 2017 Stock Incentive Plan (the “2017 Plan”). 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
share grants. The Company reserved a total of 3,750,000 shares of common stock for issuance under the 2017 Plan. All employees, officers,
directors, consultants, advisors and other persons who provide services to the Company or any subsidiaries of the Company are eligible
to receive incentive awards under the 2017 Plan. As of December 31, 2025, awards of approximately 3.7 million shares of common stock had
been granted under the 2017 Plan, net of forfeited restricted stock and option awards and approximately 15,000 shares of common stock
are reserved for issuance.

 46 

 In May 2023, the Company’s
shareholders approved its 2023 Stock Incentive Plan (the “2023 Plan”). 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
share grants. The Company originally reserved a total of 2,000,000 shares of common stock for issuance under the 2023 Plan. In May 2025,
Company’s shareholders approved an amendment to the 2023 Plan, adding an additional 1,750,000 shares to this plan. All employees,
officers, directors, consultants, advisors and other persons who provide services to the Company or any subsidiaries of the Company are
eligible to receive incentive awards under the 2023 Plan. As of December 31, 2025, awards of approximately 1.5 million shares of common
stock had been granted under the 2023 Plan, net of forfeited restricted stock and option awards and approximately 2.2 million shares of
common stock are reserved for issuance.

 The following table summarizes
the stock-based compensation expense recorded in the Company’s results of operations during the years ended December 31, 2025 and
2024 for stock options and restricted stock (in thousands):

 Schedule of stock-based compensation expense 
 
 Year Ended December 31, 

 2025 
 2024 

 Research and development 
 $ 2,053 
 $ 1,566 

 General and administrative 
 2,930 
 2,120 

 Selling and Marketing 
 ( 20 ) 
 181 

 Total 
 $ 4,963 
 $ 3,867 

 As of December 31, 2025, there
was approximately $ 6.6 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements
that are expected to vest. This cost is expected to be recognized over a weighted-average period of 2.0 years.

 Stock Options: 

 The Company records compensation
expense for employee stock options over the vesting term using the straight-line method. The fair value of employee stock options issued
was estimated using the following weighted-average assumptions:

 Schedule of weighted-average assumptions 
 
 Year Ended December 31, 

 2025 
 2024 

 Exercise price: 
 $ 3.25 
 $ 5.39 

 Grant date fair value per share: 
 $ 2.65 
 $ 4.16 

 Assumptions: 
 
 Expected volatility 
 90.92 % 
 84.42 % 

 Weighted average expected term (in years) 
 7.55 
 7.00 

 Risk-free interest rate 
 3.82 
 4.29 

 Expected dividend yield 
 0.0 % 
 0.0 % 

 The risk-free interest rate
was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the historical
volatility of the Company. The expected life of the Company’s options was estimated using historical data of the Company’s
option activity. The dividend yield considers that the Company has not historically paid dividends and does not expect to pay dividends
in the foreseeable future.

 47 

 The fair value of options
issued during the year ended December 31, 2025 was approximately $ 517,000 . The following table summarizes stock option activity during
the year ended December 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 
 
 Granted 
 195 
 $ 3.25 
 
 Exercised 
 ( 173 ) 
 $ 5.23 
 
 Forfeited 
 ( 167 ) 
 $ 3.50 
 
 Expired 
 ( 741 ) 
 $ 7.23 
 
 Outstanding at December 31, 2025 
 2,907 
 $ 6.53 
 4.55 
 $ – 

 Exercisable at December 31, 2025 
 2,383 
 $ 6.78 
 4.55 
 $ – 

 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. Time
based awards are expenses using the straight-line method. . The following table summarizes all restricted stock award activity during
the year ended December 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 
 ( 231 ) 
 $ 7.41 

 Forfeited 
 ( 4 ) 
 $ 8.77 

 Outstanding non-vested shares at December 31, 2025 
 234 
 $ 6.90 

 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 compensation expenses are recorded on a straight-line method. 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 RSUs are 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 compensation expense is recognized using the accelerated expense attribution method for each award, which generally equals the vesting
term for each performance period.

 48 

 The following table summarizes
all restricted stock unit activity during the year ended December 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 
 503 
 251 
 754 
 $ 7.52 

 Vested 
 ( 82 ) 
 – 
 ( 82 ) 
 $ 6.34 

 Forfeited 
 ( 34 ) 
 ( 30 ) 
 ( 64 ) 
 $ 8.08 

 Outstanding at December 31, 2025 
 387 
 221 
 608 
 $ 7.62 

 13. 
 401(k) PLAN 

 During 2002, the Company established
a plan under Section 401(k) of the Internal Revenue Code (the 401(k) Plan). The 401(k) Plan covers substantially all of its employees
who have attained 18 years of age. Employees may elect to contribute part of their annual compensation to the 401(k) Plan, up to the maximum
deferral allowance for individuals by the Internal Revenue Service under Code Section 401(k), and the Company may make a matching contribution.
During the years ended December 31, 2025 and 2024, the Company made matching contributions of approximately $ 72,000 and $ 83,000 , respectively.

 14. 
 INCOME TAXES 

 The loss before provision for income taxes consisted of the following (in thousands): 

 Schedule of provision for income taxes 
 
 Year Ended December 31, 

 2025 
 2024 

 Domestic 
 $ ( 20,174 ) 
 $ ( 18,435 ) 

 International 
 – 
 – 

 Total 
 $ ( 20,174 ) 
 $ 18,435 ) 

 The Company had $ 0 current
income tax expense for the years ended December 31, 2025 and 2024, respectively. The Company accounts for income taxes in accordance with
ASC 740, which requires that the tax benefit of net operating losses, temporary differences and credit carryforwards be recorded as an
asset to the extent that management assesses that realization is “more likely than not.” Realization of the future tax benefits
is dependent on the Company's ability to generate sufficient taxable income within the carryforward period. Because of the Company's recent
history of operating losses, management believes that recognition of the deferred tax assets arising from the above-mentioned future tax
benefits is currently not likely to be realized and, accordingly, has provided a full valuation allowance. The valuation allowance increased
by approximately $ 4 .0 million and $ 3.6 million during the years ended December 31, 2025 and 2024, respectively.

 49 

 The Company’s deferred
tax assets are as follows (in thousands):

 Schedule of deferred tax assets 
 
 Year Ended December 31, 

 2025 
 2024 

 Deferred tax assets: 
 
 Net operating loss carryforwards 
 $ 33,206 
 $ 29,678 

 Tax credit 
 3,123 
 2,742 

 Fixed assets and intangibles 
 345 
 427 

 Stock compensation 
 1,556 
 1,471 

 Accruals and other 
 136 
 284 

 Lease liability 
 273 
 428 

 Capitalized research and development 
 4,964 
 4,714 

 Total deferred tax assets 
 43,603 
 39,744 

 Deferred tax liabilities: 
 
 Right of use asset 
 ( 303 ) 
 ( 403 ) 

 Total deferred tax assets 
 ( 303 ) 
 ( 403 ) 

 Valuation allowance 
 ( 43,300 ) 
 ( 39,341 ) 

 Net deferred tax asset 
 $ – 
 $ – 

 Net operating losses and tax
credit carryforwards as of December 31, 2025, are as follows (in thousands):

 Schedule of net operating losses and tax credit carryforwards 
 
 Amount 
 Expiration in years 

 Net operating losses, federal 
 $ 112,763 
 No expiration 

 Net operating losses, federal 
 $ 34,791 
 2027-2037 

 Net operating losses, state 
 $ 40,653 
 2030-2044 

 Tax credits, federal 
 $ 2,709 
 2036-2044 

 Tax credits, state 
 $ 1,204 
 No expiration 

 Tax credits, state 
 $ 974 
 2031-2040 

 The effective tax rate
of the Company’s provision (benefit) for income taxes differs from the federal statutory rate after adoption of ASU 2023-09 as
follows (dollars in thousands):

 Schedule of effective tax rate 
 
 Year Ending December 31, 2025 

 $ 
 
 % 
 
 Statutory rate 
 
 $ 
 ( 4,237 
 ) 
 
 21.00 % 
 
 State and local income taxes, net of federal income tax 
 
 ( 68 
 ) 
 
 0.34 % 
 
 Enactment of new tax laws 
 
 – 
 
 – % 
 
 Enactment of cross-border tax laws 
 
 – 
 
 – % 
 
 Tax Credits 
 
 ( 335 
 ) 
 
 1.66 % 
 
 Change in valuation allowance 
 
 3,843 
 
 ( 19.05 ) % 
 
 Stock based compensation 
 
 625 
 
 ( 3.10 ) % 
 
 Officer’s compensation 
 
 33 
 
 ( 0.16 ) % 
 
 Other 
 
 5 
 
 ( 0.03 ) % 
 
 Worldwide changes in unrecognized tax benefits 
 
 134 
 
 ( 0.66 ) % 
 
 Total 
 
 $ 
 – 
 
 – % 
 
 50 

 The effective tax rate of
the Company’s provision (benefit) for income taxes differs from the federal statutory rate before the adoption of ASU 2023-09 as
follows:

 Year Ending

 December 31, 2024
 
 Statutory rate 
 21.00 % 

 State rate 
 ( 0.37 ) % 

 Change in valuation allowance 
 ( 19.55 ) % 

 Other non-deductible items 
 0.04 % 

 Change in tax credits 
 0.95 % 

 Section 162(m) limitation 
 – % 

 Stock based compensation excess windfall 
 ( 2.07 ) % 

 Total 
 – % 

 Utilization of U.S. net operating
losses and tax credit carryforwards may be limited by “ownership change” rules, as defined in Section 382 and Section
383 of the Internal Revenue Code. Similar rules may apply under state tax laws. Under those sections of the Code, if a corporation undergoes
an “ownership change,” the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change
attributes, such as research tax credits, to offset its post-change income or tax may be limited. In general, an “ownership change”
will occur if there is a cumulative change in ownership by “5% stockholders” that exceeds 50 percentage points over a rolling
three-year period. The Company rolled forward its Section 382 study through the period ended December 31, 2024. The Company did not trigger
an ownership change through this period. Although the Company has not rolled its Section 382 through December 31, 2025, an ownership change
during the 2025 is not expected as there have been limited amounts of equity activity.

 The Company establishes reserves
for uncertain tax positions based on the largest amount that is more-likely-than-not to be sustained. An uncertain income tax position
will not be recognized if it has less than a 50% likelihood of being sustained. It is the Company’s policy to recognize interest
and penalties related to income tax matters in income tax expense. As of December 31, 2025 and 2024, respectively, the Company has no 
accrued interest or penalties related to uncertain tax positions.

 The Company files income tax
returns in the U.S. federal jurisdiction and various state jurisdictions. In the normal course of business, the Company is subject to
examination by their respective taxing authorities. The Company is not currently under audit by the Internal Revenue Service or other
similar state or local authority. The statute of limitations remains effectively open for all tax years since inception (2007). Tax years
outside the normal statute of limitations remain open to examination by tax authorities due to tax attributes generated in earlier years
which have been carried forward and may be examined and adjusted in subsequent years when utilized.

 The following table summarizes
the activity related to the Company’s gross unrecognized tax benefits for the years ended December 31, 2025 and 2024 (in thousands):

 Schedule of unrecognized tax benefits 
 
 2025 
 2024 

 Balance at beginning of year 
 $ 1,298 
 $ 1,219 

 Increases (decreases) – prior year tax positions 
 ( 29 ) 
 ( 72 ) 

 Increases – current year tax positions 
 177 
 151 

 Balance at end of year 
 $ 1,446 
 $ 1,298 

 51 

 The following table summarizes
the activity in the Company’s Valuation Allowance and Qualifying Accounts for the years ended December 31, 2025 and 2024 (in thousands):

 Schedule of valuation allowance 
 
 2025 
 2024 

 Balance at beginning of year 
 $ 39,341 
 $ 35,738 

 Additions 
 4,496 
 3,816 

 Deductions 
 ( 537 ) 
 ( 213 ) 

 Balance at end of year 
 $ 43,300 
 $ 39,341 

 15. 
 SUBSEQUENT EVENTS 

 Management has evaluated subsequent
events and transactions through the date these financial statements were issued.

 Since December 31, 2025, the
Company has issued 1.3 million additional shares of common stock through its ATM offering at an average price per share of $2.47 resulting
in additional net proceeds of approximately $3.2 million, after deduction of commissions and expenses.

 On February 24, 2026, the
Company completed a registered direct offering (the “Offering”) of 5,000,000 shares of the Company’s common stock, par
value $0.001 per share common stock at a purchase price of $5.00 per share (the “Shares”) pursuant to a Securities Purchase
Agreement (the “Purchase Agreement”) with certain institutional investors (the “Investors”). In connection with
the Offering, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with Craig-Hallum, pursuant
to which Craig-Hallum served as the exclusive placement agent for the issuance and sale of securities of the Company pursuant to the Purchase
Agreement. As compensation for such placement agent services, the Company paid Craig-Hallum an aggregate cash fee equal to 5.0% of the
gross proceeds received by the Company from the Offering and agreed to reimburse up to $75,000 of legal and other expenses as actually
incurred. Net proceeds to the Company after deducting the placement agent fee and expenses were approximately $23.6 million.

 52 

 Item 9. 
 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 

 Not applicable.

 Item 9A. 
 Controls and Procedures 

 (a) 
 Evaluation of Disclosure Controls and Procedures . 

 Our management maintains disclosure
controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that
we file with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms,
and that such information is accumulated and communicated to our management, including our Chief Executive Officer (principal executive
officer) and Chief Financial Officer) principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance
of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible
controls and procedures. Our management, with the participation of our chief executive officer and chief financial officer, evaluated
the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Exchange Act. Based upon that evaluation,
our management, including our chief executive officer and chief financial officer, concluded that our disclosure controls and procedures
were effective as of December 31, 2025.

 (b) 
 
 Remediation of Material Weakness 

 A material weakness is a deficiency,
or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis. During the
year ended December 31, 2024, we identified a material weakness in internal control over the review and approval of journal entries into
our general ledger.

 The Company has concluded
that the material weakness described above was fully remediated as of December 31, 2025, due to the implementation of a journal entry
review process. These controls were tested and determined to be operating effectively as of December 31, 2025. The remediation efforts
are complete and address the previously identified deficiencies and enhance our overall internal control environment.

 (d) 
 
 Changes in internal control over financial reporting. 

 Except for the remediation
of the material weakness described above, there were no changes to our internal control over financial reporting, as defined in Rules
13a-15(f) under the Exchange Act that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

 (e) 
 Management’s report on internal controls over financial reporting. 

 Our management is responsible
for establishing and maintaining adequate internal controls over financial reporting, as defined under Rule 13a-15(f) under the Exchange
Act. Our management has assessed the effectiveness of our internal controls over financial reporting (“ICFR”) as of December
31, 2025 based on the framework established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 Framework) (“COSO”). Based on this assessment, management has concluded that our internal
control over financial reporting was effective , at the reasonable assurance level as of December 31, 2025. 

 53 

 This report does not include
an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s
report was not subject to attestation by our registered public accounting firm pursuant to the rules of the Securities and Exchange Commission
that permit us to provide only management’s report in this Annual Report.

 Item 9B. 
 
 Other Information 

 During the quarter ended December
31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule
10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K 

 Item 9C. 
 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 
 
 Not applicable.

 54 

 PART III 

 The information required by
Part III is omitted from this report because we will file a definitive proxy statement within 120 days after the end of our 2025 fiscal
year pursuant to Regulation 14A for our 2026 Annual Meeting of Stockholders, or the 2026 Proxy Statement, and the information to be included
in the 2026 Proxy Statement is incorporated herein by reference.

 Item 10. 
 Directors, Executive Officers and Corporate Governance 

 The information required under
this item will be contained in the 2026 Proxy Statement and is hereby incorporated by reference.

 Item 11. 
 Executive Compensation 

 The information required under this item will be
contained in the 2026 Proxy Statement and is hereby incorporated by reference.

 Item 12. 
 Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters 

 The information required under this item will be
contained in the 2026 Proxy Statement and is hereby incorporated by reference.

 Item 13. 
 Certain Relationships and Related Transactions, and Director Independence 

 The information required under this item will be
contained in the 2026 Proxy Statement and is hereby incorporated by reference.

 Item 14. 
 Principal Accountant Fees and Services 

 The information required under this item will be
contained in the 2026 Proxy Statement and is hereby incorporated by reference.

 55 

 PART IV 

 Item 15. 
 Exhibits and Financial Statement Schedules 

 (a) 
 Financial Statements 

 (1) 
 Financial statements for our company are listed in the index under Item 8 of this document 

 (2) 
 All financial statement schedules are omitted because they are not applicable, not material or the required information is shown in the financial statements or notes thereto. 

 Exhibit 
 
 No. 
 
 Description 
 
 Method of Filing 

 3.1 
 
 Amended and Restated Certificate of Incorporation of the Registrant 
 
 Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. 

 3.2 
 
 Second Amended and Restated Bylaws of the Registrant 
 
 Incorporated by reference from the Registrant’s Registration Form 8-K filed on February 11, 2026. 

 3.3 
 
 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant 
 
 Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. 

 3.4 
 
 Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant 
 
 Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. 

 4.1 
 
 Description of Capital Stock 
 
 Incorporated by reference from the Registrant’s Annual Report on Form 10-K filed on February 19, 2021. 

 10.1 
 
 Assignment of Patent Rights dated April 3, 2009 between Dr. Robert Mears and the Registrant 
 
 Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. 

 10.2+ 
 
 2007 Stock Incentive Plan 
 
 Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. 

 10.3 
 
 Lease Agreement dated January 19, 2016 between 750 University, LLC and the Registrant 
 
 Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. 

 10.4+ 
 
 Form of Restricted Stock Agreement 
 
 Incorporated by reference from the Registrant’s Amendment No. 1 to Registration Statement on Form S-1 filed on July 29, 2016. 

 10.5+ 
 
 2017 Stock Incentive Plan 
 
 Incorporated by reference from the Registrant’s Definitive Proxy Statement filed on April 10, 2017. 

 56 

 10.6 
 
 First Amendment to Lease Agreement dated January 19, 2016 between 750 University, LLC and the Registrant 
 
 Incorporated by reference from the Registrant’s Annual Report on Form 10-K filed on March 6, 2018. 

 10.7 
 
 Second Amendment to Lease Agreement dated January 19, 2016 between 750 University, LLC and the Registrant 
 
 Incorporated by reference from the Registrant’s Annual Report on Form 10-K filed on February 19, 2021. 

 10.8 
 
 Third Amendment to Lease Agreement dated December 19, 2025 between 750 University, LLC and the Registrant 
 
 Filed electronically herewith 

 10.9 
 
 Equity Distribution Agreement dated May 27, 2025 between the Company and Craig-Hallum Capital Group LLC 
 
 Incorporated by reference from the Company’s Registration Statement on Form S-3 filed on May 27, 2025. 

 10.10+ 
 
 2023 Stock Incentive Plan, as amended 
 
 Incorporated by reference from Registrant’s Definitive Proxy Statement Form 14A filed on March 19, 2025. 

 10.11+ 
 
 Amended and Restated Employment Agreement dated May 5, 2025 between Scott Bibaud and the Registrant 
 
 Incorporated by reference from the Registrant’s Current Report on Form 8-K filed on May 5, 2025. 

 10.12+ 
 
 Employment Agreement dated March 3, 2025 between Francis Laurencio and the Registrant 
 
 Incorporated by reference from the Registrant’s Annual Report on Form 10-K filed on March 4, 2025. 

 10.13+ 
 
 Employment Agreement dated March 3, 2025 between Dr. Robert Mears and the Registrant 
 
 Incorporated by reference from the Registrant’s Annual Report on Form 10-K filed on March 4, 2025. 

 10.14 
 
 Form of Securities Purchase Agreement dated February 23, 2026 between the Registrant and the purchasers thereto 
 
 Incorporated by reference from the Registrant’s Form 8-K filed on February 24, 2026. 

 10.15 
 
 Placement Agent Agreement dated February 23, 2026 between the Registrant and Craig-Hallum Capital Group, LLC 
 
 Incorporated by reference from the Registrant’s Form 8-K filed on February 24, 2026. 

 10.16 
 
 Form of Lock Up Agreement 
 
 Incorporated by reference from the Registrant’s Form 8-K filed
on February 24, 2026. 

 19.1 
 
 Insider Trading Policy 
 
 Incorporated by reference from the Registrant’s Annual Report on Form 10-K filed on March 4, 2025. 

 21.1 
 
 List of Subsidiaries 
 
 Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. 

 23.1 
 
 Consent of CBIZ CPAs P.C., Independent Registered Public Accounting Firm 
 
 Filed electronically herewith 

 23.2 
 
 Consent of Marcum LLP, Independent Registered Public Accounting Firm 

 Filed electronically herewith 

 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 

 57 

 97.1 
 
 Atomera, Incorporated Executive Officer Clawback Policy 
 
 Incorporated by reference from the Registrant’s Form 10-K filed on February 15, 2024. 

 101.INS 
 
 XBRL Instance Document 
 
 Filed electronically herewith 

 101.SCH 
 
 XBRL Taxonomy Extension Schema Document 
 
 Filed electronically herewith 

 101.CAL 
 
 XBRL Taxonomy Extension Calculation Linkbase Document 
 
 Filed electronically herewith 

 101.LAB 
 
 XBRL Taxonomy Extension Label Linkbase Document 
 
 Filed electronically herewith 

 101.PRE 
 
 XBRL Taxonomy Extension Presentation Linkbase Document 
 
 Filed electronically herewith 

 101.DEF 
 
 XBRL Taxonomy Extension Definition Linkbase Document 
 
 Filed electronically herewith 

 104 
 
 Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 11 
 
 Files electronically herewith 

 + Indicated
management compensatory plan, contract or arrangement.

 Item 16 . 
 Form 10-K Summary 

 None provided. 

 58 

 SIGNATURES 

 Pursuant to the requirements of Section 13 or
15(d) 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: February 24, 2026 
 By: 
 /s/ Scott A. Bibaud 

 Scott A. Bibaud

Chief Executive Officer, 

 (Principal Executive Officer) 

 and Director 

 Date: February 24, 2026 
 By: 
 /s/ Francis B. Laurencio 

 Francis B. Laurencio 

 Chief Financial Officer 

 (Principal Financial and 

 Accounting Officer) 

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

 Signature 
 
 Title 
 
 Date 

 /s/ Scott A. Bibaud 
 
 Chief Executive Officer and Director 
 
 February 24, 2026 

 Scott A. Bibaud 
 
 (Principal Executive Officer) 
 
 /s/ John D. Gerber 
 
 Director and Chairman 
 
 February 24, 2026 

 John Gerber 
 
 /s/ Steven K. Shevick 
 
 Director 
 
 February 24, 2026 

 Steven K. Shevick 
 
 /s/ Duy-Loan Le 
 
 Director 
 
 February 24, 2026 

 Duy-Loan Le 
 
 /s/ Suja Ramnath 
 
 Director 
 
 February 24, 2026 

 Suja Ramnath 
 
 59
Atomera Inc 10-K
