What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-05-05 compared with 2025-10-29 · 302 added, 300 removed, 279 unchanged (68% of the section changed)

3 unchanged sentences

(in thousands, except per share data)

September 30,

Current assets:

6 unchanged sentences

Property and equipment, net

Long-term prepaid maintenance and supplies

Security deposit

11 unchanged sentences

Long-term operating lease liability

Long-term financing lease liability

Total liabilities

2 unchanged sentences

Preferred stock $ 0.001 par value, authorized 2,500 shares;

none issued and outstanding as of September 30, 2025 and December 31, 2024

none issued and outstanding as of March 31, 2026 and December 31, 2025

Common stock:

$ 0.001 par value, authorized 47,500 shares;

31,510 shares issued and outstanding as of September 30, 2025;

38,723 shares issued and 38,716 outstanding as of March 31, 2026;

and 32,354 shares issued and outstanding as of December 31, 2025

4 unchanged sentences

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of

these condensed financial statements.

The accompanying notes are an integral part of these

condensed financial statements.

Atomera Incorporated

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

Cost of revenue

Gross (loss) margin

Gross profit (loss)

Operating expenses

8 unchanged sentences

Interest expense

Other income, net

Other income (expense), net

Total other income (expense), net

3 unchanged sentences

Weighted average number of common shares outstanding, diluted

The accompanying notes are an integral part of

these condensed financial statements.

The accompanying notes are an integral part of these

condensed financial statements.

Atomera Incorporated

2 unchanged sentences

Three Months Ended

September 30,

Nine Months Ended

September 30,

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

The accompanying notes are an integral part of

these condensed financial statements.

The accompanying notes are an integral part of these

condensed financial statements.

Atomera Incorporated

Statements of Stockholders’ Equity

For the Three and Nine Months Ended September

30, 2025 and 2024

For the Three Months Ended March 31, 2026 and 2025

(in thousands)

4 unchanged sentences

Stock-based compensation

Stock option exercises

Forfeiture of restricted stock award

Registered direct offering of common stock, net of commissions, expenses and other offering costs

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

2 unchanged sentences

$ ( 247,767 )

Stock-based compensation

Stock option exercises

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

Balance June 30, 2025

$ ( 231,696 )

Stock-based compensation

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

Balance September 30, 2025

$ ( 237,269 )

Comprehensive

3 unchanged sentences

Stock-based compensation

Stock option exercises

Forfeiture of restricted stock issuance

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

2 unchanged sentences

$ ( 226,729 )

Stock-based compensation

Forfeiture of restricted stock issuance

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

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

Balance June 30, 2024

$ ( 212,268 )

Stock-based compensation

Forfeiture of restricted stock issuance

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

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

Balance September 30, 2024

$ ( 216,863 )

The accompanying notes are an integral part of

these condensed financial statements.

The accompanying notes are an integral part of these

condensed financial statements.

Atomera Incorporated

1 unchanged sentence

(in thousands)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities

7 unchanged sentences

Accounts receivable

Unbilled contracts receivable

Interest receivable

10 unchanged sentences

Maturity of available-for-sale securities

Net cash provided by investing activities

Net cash provided by/(used in) investing activities

Cash flows from financing activities

Proceeds from registered direct offering of common stock net of commissions and expenses

Proceeds from at-the-market sale of stock, net of commissions and expenses

Proceeds from exercise of stock options

Proceeds from stock sale

Payments on principal of financing lease

Net cash provided by financing activities

Net increase/(decrease) in cash and cash equivalents

Net (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

3 unchanged sentences

Cash paid for taxes

The accompanying notes are an integral part of

these condensed financial statements.

The accompanying notes are an integral part of these

condensed financial statements.

ATOMERA INCORPORATED

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the Three and Nine Months Ended September

30, 2025 and 2024

For the Three Months Ended March 31, 2026 and 2025

NATURE OF OPERATIONS

4 unchanged sentences

12, 2016, the Company changed its name to Atomera Incorporated.

Atomera is an early-stage

company, having only limited revenue-generating activities, and is devoting substantially all its efforts toward technology research and

development and to commercially licensing its technology to designers and manufacturers of integrated circuits.

Atomera is an early-stage company,

having only limited revenue-generating activities, and is devoting substantially all its efforts toward technology research and development

and to commercially licensing its technology to designers and manufacturers of integrated circuits.

LIQUIDITY AND MANAGEMENT PLANS

At September 30, 2025, the

Company had cash and cash equivalents of approximately $ 20.3 million and working capital of approximately $ 18.1 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.

At March 31, 2026, the Company

had cash, cash equivalents and short-term investments of approximately $ 41.1 million and working capital of approximately $ 39.9 million.

The Company has generated only limited revenues since inception and has incurred recurring operating losses.

Accordingly, it is subject

to all the risks inherent in the initial organization, financing, expenditures, and scaling of a new business that is not generating positive

On May 31, 2022, Atomera entered

into an Equity Distribution Agreement with Oppenheimer & Co.

and Craig-Hallum Capital Group LLC (“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

in an at the market offering to or through the agents, having aggregate offering proceeds of up to $50.0 million (the “2022 ATM”).

in an at the market offering to or through the agents, having aggregate offering proceeds of approximately $44.8 million (the “2022

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 $ 0.001 par value 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 three months ended September 30, 2025 the Company sold

approximately 393,000 shares of common stock pursuant to 2025 ATM at an average price per share of approximately $ 5.23 resulting in approximately

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 $ 0.001 par value 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 three months ended March 31, 2026, the Company sold approximately

1.3 million shares of common stock pursuant to 2025 ATM at an average price per share of approximately $ 2.47 resulting in approximately

$ 3.1 million in net proceeds to the Company after deducting commissions and other offering expenses.

During the nine months ended

September 30, 2025, the Company sold approximately 742,000 shares pursuant to the 2022 ATM and the 2025 ATM at an average price per share

of approximately $ 7.42 , resulting in approximately $ 5.2 million of net proceeds to the Company after deducting commissions and other offering

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

On February 24, 2026, the Company

completed a registered direct offering (the “Offering”) of 5,000,000 shares of its $ 0.001 par value common stock at a purchase

price of $ 5.00 per share pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional

In connection with the Offering, the Company entered into a 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 actually incurred.

proceeds to the Company after deducting the placement agent fee and expenses were approximately $ 23.6 million.

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, 24 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

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Significant Accounting Policies

There have been no material

changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form

10-K filed with the Securities and Exchange Commission (“SEC”) on March 4, 2025.

There have been no material changes

in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K

filed with the Securities and Exchange Commission (“SEC”) on February 24, 2026.

Basis of Presentation of Unaudited Condensed Financial Information

The unaudited condensed

financial statements of the Company for the three and nine months ended September 30, 2025 and 2024 have been prepared in accordance with

accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant

to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all the information and

footnotes required by GAAP for complete financial statements.

However, such information reflects all adjustments (consisting solely of

normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the Company’s financial

position and its results of operations.

Results shown for interim periods are not necessarily indicative of the results to be obtained

for a full fiscal year.

The balance sheet information as of December 31, 2024 was derived from the audited financial statements included

in the Company's financial statements as of and for the year ended December 31, 2024, included in the Company’s Annual Report on

Form 10-K filed with the SEC on March 4, 2025.

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

The unaudited condensed financial

statements of the Company for the three months ended March 31, 2026 and 2025 have been prepared in accordance with accounting principles

generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements

for reporting on Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all the information and footnotes required

by GAAP for complete financial statements.

However, such information reflects all adjustments (consisting solely of normal recurring adjustments)

which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and its results

of operations.

Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year.

The balance sheet information as of December 31, 2025 was derived from the audited financial statements included in the Company’s financial

statements as of and for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the SEC

on February 24, 2026.

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

Cash, Cash Equivalents, and Short-Term Investments

The Company considers all

highly-liquid investments with an original maturity of three months or less, when purchased, to be cash equivalents.

Cash equivalents

may be invested in money market funds or U.S.

agency bonds.

Cash and cash equivalents are carried at cost, which approximates their fair

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, treasury bills or U.S.

government agency bonds.

Cash and cash equivalents are carried at cost, which approximates

their fair value.

The Company may also purchase

short-term investments comprised of U.S.

treasury bills and agency bonds with maturities of more than three months, but less than one

The Company classifies these as available-for-sale at purchase date and will reevaluate such designation at each period end date.

The Company may sell these marketable debt securities prior to their stated maturities depending upon changing liquidity requirements.

These debt securities are classified as current assets in the condensed balance sheets and recorded at fair value, with unrealized gains

or losses included in accumulated other comprehensive income (loss).

treasury bills and U.S.

government agency bonds with maturities of more than three months, but

less than one year.

The Company classifies these as available-for-sale at their purchase date and will reevaluate such designation at

each period end date.

The Company may sell these marketable debt securities prior to their stated maturities depending upon changing liquidity

requirements.

These debt securities are classified as current assets in the condensed balance sheets and recorded at fair value, with

unrealized gains or losses included in accumulated other comprehensive income (loss).

Gains and losses are recognized

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balance sheets.

Adoption of Recent Accounting Standards

In December 2023, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic

Improvements to Income Tax Disclosures .

This new guidance requires entities on an annual basis to disclose specific categories

in the income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold.

guidance applies to annual periods beginning after December 15, 2024 on a prospective basis, (early adoption is permitted).

adopted this standard on January 1, 2025 for the annual period ending December 31, 2025.

While the standard requires additional disclosures,

the adoption did not have a material impact on the Company’s financial position, results of operations or financial statement disclosures.

Recent Accounting Standards

In November 2024, the FASB

issued ASU 2024-03 (as clarified by ASU 2025-01 in January 2025), Income Statement-Reporting Comprehensive Income-Expense Disaggregation

Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses ) (“ASU 2023-03”), requiring public entities

to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual

ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within annual

reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company does not believe ASU 2024-03 will have

a material impact on its financial position, results of operations or financial statement disclosure.

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.

In November 2024, the Financial

Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 (as clarified by ASU 2025-01

in January 2025), Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation

of Income Statement Expenses ) (“ASU 2023-03”), requiring public entities to disclose additional information about specific

expense categories in the notes to the financial statements on an interim and annual basis.

ASU 2024-03 is effective for annual reporting

periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027,

with early adoption permitted.

The Company does not believe ASU 2024-03 will have a material impact on its financial position, results

of operations or financial statement disclosure.

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 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.

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 believe ASU 2025-04 will have a material impact on its financial position, results of operations or financial

statement disclosure.

The Company does not believe

ASU 2025-06 will have a material impact on its financial position, results of operations or financial statement disclosure.

FAIR VALUE MEASUREMENTS

Accounting Standards Codification

(“ASC”) 820, Fair Value Measurements (“ASC 820”) states that fair value represents the amount that would

be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value

is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or

The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, consists of:

(“ASC”) 820, Fair Value Measurements states that fair value represents the amount that would be received to sell an

asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement

that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The three-tiered

fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, consists of:

Level 1 — Quoted prices (unadjusted)

in active markets for identical assets and liabilities.

Level 2 — Inputs other than

Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted

Level 2 — Inputs other than Level

1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted

quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data

for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs

that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s cash

equivalents and short-term investments were measured at fair value on a recurring basis as Level 1 assets.

The Company’s cash,

cash equivalents and short-term investments classified by security type as of September 30, 2025 and December 31, 2024 consisted of the

following (in thousands):

Level 3 — Unobservable inputs that

are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s cash equivalents

and short-term investments were measured at fair value on a recurring basis as Level 1 assets.

The Company’s cash, cash

equivalents and short-term investments classified by security type as of March 31, 2026 and December 31, 2025 consisted of the following

(in thousands):

Schedule of fair value measurements

September 30, 2025

March 31, 2026

Unrealized Gain/(Loss)

Accretion of Discount

Money Market Funds

US Treasury Bills

US Agency Bonds

December 31, 2025

1 unchanged sentence

Accretion of Discount

US agency bonds

Money Market Funds

The Company recognizes revenue

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Revenue from MSTcad licenses is recognized over a period of time.

The following table provides

information about disaggregated revenue by primary geographical markets and timing of revenue recognition (in thousands):

The following table provides information

about disaggregated revenue by primary geographical markets and timing of revenue recognition (in thousands):

Schedule of disaggregated revenue by primary geographical markets and timing of revenue recognition

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31

Primary geographic markets

12 unchanged sentences

received more than one year from the reporting date.

The Company had no unbilled contracts receivable as of September 30, 2025.

The Company had no unbilled contracts receivable as of March 31, 2026.

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

As of September 30, 2025, the Company has approximately $ 144,000 in deferred revenue that is expected to be recognized in the

next 12 months.

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

As of March 31, 2026, the Company has approximately $ 96,000 in deferred revenue that is expected to be recognized in the next

BASIC AND DILUTED LOSS PER SHARE

Basic net loss per share

is calculated by dividing the net loss by the weighted-average number of shares outstanding for the period.

Diluted net loss per share

is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common

stock outstanding and the dilutive common stock equivalent shares outstanding during the period.

The Company’s potentially dilutive

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

(ii) vesting of restricted stock units and (iii) 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):

Basic net loss per share is calculated

by dividing the net loss by the weighted-average number of shares outstanding for the period.

Diluted net loss per share is computed by

dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding

and the dilutive common stock equivalent shares outstanding during the period.

The Company’s potentially dilutive common stock equivalent

shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and (ii) vesting of restricted

stock units and (iii) restricted stock awards, are only included in the calculation of diluted net loss per share when their effect is

Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive.

basic and diluted net loss per share are equal.

The following potential common

stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive

(in thousands):

Schedule of anti-dilutive shares

Nine Months Ended

September 30,

Three Months Ended

Stock Options

Unvested restricted stock units

Unvested restricted stock awards

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.

Unvested restricted stock units

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, 2024,

the lease payments for this tool were adjusted to $124,071 per month for the period August 1, 2024 through July 31, 2025.

adjustment to the lease payments also resulted in a reduction in the right-of-use asset (“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

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.

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.

This adjustment

to the lease payments also resulted in a reduction in the right-of-use (“ROU”) asset and corresponding lease liability.

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 asset and corresponding lease liability.

In December 2025, the Company

entered into a lease agreement for an expitaxial deposition tool in Tempe, Arizona, distinct form the tool previously mentioned.

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 was 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 February 2026, the Company

and its landlord amended the lease of its Tempe office location.

The lease also contains a performance standard for research collaboration

with Arizona State University.

The agreement requires a minimum value of collaboration in each year of the lease.

The lease is accounted

for under ASC 842 and accordingly, the research payments are included in the ROU and lease liability.

The lease is for three years with

an option to extend the lease for an additional two years.

The lease liability is based on the present value of the minimum lease payments,

discounted using an estimated incremental borrowing rate of 8.75 %.

An ROU asset and lease liability of approximately $ 342,000 was recorded

during the three months ended March 31, 2026.

In December 2025, the Company

entered into a lease agreement for an epitaxial deposition tool in Tempe, Arizona, distinct from the tool previously mentioned.

of this lease is for 12 months beginning on January 1, 2025 for $95,000 per month.

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condensed balance sheets.

Lease expense for operating

leases consists of the lease payments recognized on a straight-line basis over the lease term.

Expenses for financing leases consists

of the amortization expenses recognized on a straight-line basis over the lease term and interest expense.

The components of lease costs

were as follows (in thousands):

Lease expense for operating leases

consists of the lease payments recognized on a straight-line basis over the lease term.

Expenses for financing leases consists of the

amortization expenses recognized on a straight-line basis over the lease term and interest expense.

The components of lease costs were

as follows (in thousands):

Schedule of lease costs

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Financing lease costs:

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Total operating lease costs

Future minimum payments under non-cancellable

leases as of September 30, 2025 were as follows (in thousands):

Future minimum payments under non-cancellable leases

as of March 31, 2026 were as follows (in thousands):

Schedule of future minimum payments

6 unchanged sentences

Total lease liability

The table below provides

supplemental information and non-cash activity related to the Company’s operating and financing leases (in thousands):

The table below provides supplemental

information and non-cash activity related to the Company’s operating and financing leases (in thousands):

Schedule of supplemental information and non-cash activity

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating cash flow information:

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Non-cash activity:

Remeasurement of right-of-use assets and liabilities in financing lease

table above does not include short-term leases that are one-year or less.

The weighted average remaining discount rate is 5.25 % for the

Company’s financing leases and 5.57 % for the Company’s operating leases.

The weighted average remaining lease term is 0.8

years for the financing lease and 0.3 years for operating leases.

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

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 8.75 % for the Company’s operating leases.

The weighted average remaining lease term is 0.3 years for the financing lease and

5.0 years for operating leases as of March 31, 2026.

STOCK BASED COMPENSATION

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to four years from the date of grant.

As of September 30, 2025, a total of approximately 2.5 million shares remain available for issuance

under the plans.

As of March 31, 2026, a total of approximately 777,000 shares remain available for issuance under

The following table summarizes

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Three Months Ended

September 30,

Nine Months Ended

September 30,

Research and development

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Selling and marketing

As of September 30, 2025,

there was approximately $ 7.4 million of total unrecognized compensation expense related to unvested share-based compensation arrangements.

This cost is expected to be recognized over a weighted-average period of 2.0 years.

Stock Options:

The weighted average grant

date fair value per share of the options granted under the Company’s Plans was $ 3.19 and $ 4.01 for the three and nine months ended

September 30, 2025, respectively.

The weighted average grant date fair value per share of the options granted under the Company’s

Plans was $ 2.70 and $ 4.26 for the three and nine months ended September 30, 2024, respectively.

The following table summarizes stock option

activity during the nine months ended September 30, 2025 (in thousands except exercise prices and contractual terms):

Schedule of stock option activity

As of March 31, 2026, there was

approximately $ 13.2 million of total unrecognized compensation expense related to unvested share-based compensation.

This cost is expected

to be recognized over a weighted-average period of 2.3 years.

Time-Based Stock Options:

The Company records compensation

expense for time-based stock options over the vesting term using the straight-line method.

The fair value of employee stock options issued

was estimated using the Black-Scholes method and the average grant date fair value was estimated to be $ 4.39 for three months ended March

There were no time-based stock options issued in the three months ended March 31, 2025.

The following table summarizes time-based

stock option activity during the three months ended March 31, 2026 (in thousands except exercise prices and contractual terms):

Schedule of time based stock option activity

Prices per Share

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Outstanding at January 1, 2026

Outstanding at September 30, 2025

Exercisable at September 30, 2025

Outstanding at March 31, 2026

Exercisable at March 31, 2026

The intrinsic value is based on

the Company’s closing stock price of $ 3.81 on March 31, 2026.

Performance-based Stock Options:

In March 2026, the Company began

issuing performance-based stock options (“PSOs”) to certain employees.

The PSOs include both time-based and stock-price-based

vesting thresholds, with 25% of the PSO time-vesting one year after the grant date and the remaining PSOs time-vesting over the next

three years, but the PSOs only vest and become exercisable if the volume-weighted average price of the Company’s common stock as

quoted on the Nasdaq Stock Market over any 30 consecutive trading days during the five-year period from the date of grant exceeds the

stock-price hurdles specified in the PSO awards.

The stock-price hurdles for PSOs granted during the three months ended March 31, 2026

were $ 7.50 ,

and $ 20.00 .

The fair value of these PSOs was estimated using a Monte Carlo simulation and the stock compensation expense is amortized over the requisite

service period for each tranche, which is the longer of the derived service period or the explicit service period.

The average grant

date fair value was determined to be $ 3.87

on the day of grant.

The following table summarizes PSO activity during the three months ended March 31, 2026 (in thousands except exercise

prices and contractual terms):

Schedule of performance based

stock option activity

Prices per Share

Term (In Years)

Outstanding at January 1, 2026

Outstanding at March 31, 2026

The intrinsic value is based on

the Company’s closing stock price of $ 3.81 on March 31, 2026.

Restricted Stock Awards:

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stock awards to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant.

following table summarizes all restricted stock award activity during the nine months ended September 30, 2025 (in thousands except per

following table summarizes all restricted stock award activity during the three months ended March 31, 2026 (in thousands except per share

Schedule of restricted stock activity

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Outstanding at January 1, 2026

Outstanding non-vested shares at September 30, 2025

Outstanding non-vested shares at March 31, 2026

Restricted Stock Units:

Beginning in January 2025,

the Company began issuing restricted stock units (“RSUs”) to employees, directors and consultants and a portion of the RSUs

issued are subject to time-based vesting and a portion are subject to performance-based vesting criteria.

The fair value of time-based

RSUs is based on the closing price on the day of grant and they vest over zero to four years.

Awards of performance-based restricted stock

units by the Company have a performance period of one, two and three years with the vesting of each award tranche dependent on the Company’s

Total Shareholder Return (“TSR”) relative to the TSR of companies in the Russell 2000 Index over that tranche’s performance

The fair value for performance-based awards is fixed at the grant date using a Monte Carlo simulation and the amount of compensation

expense is not adjusted during the performance period regardless of changes in the level of TSR achievement.

The weighted average grant

date fair value per share of the RSUs granted was $ 7.75 .

The following table summarizes all restricted stock unit activity during the

nine months ended September 30, 2025 (in thousands except per share prices data):

The Company issues restricted

stock units (“RSUs”) to employees, directors and consultants and a portion of the RSUs issued are subject to time-based vesting

and a portion are subject to performance-based vesting criteria.

The fair value of time-based RSUs is based on the closing price on the

day of grant and they vest over zero to four years.

Awards of performance-based restricted stock units by the Company have a performance

period of one, two or three years with the vesting of each award tranche dependent on the Company’s Total Shareholder Return (“TSR”)

relative to the TSR of companies in the Russell 2000 Index over that tranche’s performance period.

The fair value for performance-based

awards is fixed at the grant date using a Monte Carlo simulation and the amount of compensation expense is not adjusted during the performance

period regardless of changes in the level of TSR achievement.

The following table summarizes all restricted stock unit activity during

the three months ended March 31, 2026 (in thousands except per share data):

Schedule of restricted stock unit activity

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Outstanding at January 1, 2026

Outstanding at September 30, 2025

Outstanding at March 31, 2026

COMMITMENTS AND CONTINGENCIES

Litigation, Claims and Assessments

The Company may be subject

to periodic lawsuits, investigations and claims that arise in the ordinary course of business.

The Company is not party to any material

litigation as of September 30, 2025, or through the date these financial statements have been issued.

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 .

The Company may be subject to

periodic lawsuits, investigations and claims that arise in the ordinary course of business.

The Company is not party to any material litigation

as of March 31, 2026, or through the date these financial statements have been issued.

SEGMENT INFORMATION

The Company operates as

a single operating segment.

The Company operates as a single

operating segment.

The Company’s chief operating decision maker (“CODM”) is its chief executive officer and chief financial

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sheets as total assets.

The following table presents

selected financial information with respect to the Company’s single operating segment for the three and nine months ended September

30, 2025 and 2024:

The following table presents selected

financial information with respect to the Company’s single operating segment for the three months ended March 31, 2026 and 2025:

Schedule of selected financial information

Three Months Ended

September 30,

Nine Months Ended

September 30,

Less expenses (1) :

1 unchanged sentence

Stock-based compensation

Travel and entertainment

Tool related expenses

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Other operating items (2)

Operating margin

Loss from operations

Other income (expense), net

Expenses classified as cost of revenue

are included in the line items presented and not as a separate category.

Expenses classified as cost of revenue are

included in the line items presented and not as a separate category.

Other operating expenses include items not listed above separately.

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SUBSEQUENT EVENTS

Management has evaluated

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

Since September 30, 2025,

the Company has issued approximately 171,000 additional shares through its ATM offering at an average price per share of $5.03 resulting

in additional net proceeds of approximately $836,000, after deductions of commissions and expenses.

Management has evaluated subsequent

events and transactions through the date these financial statements were issued.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements