What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-08-06 compared with 2026-05-05 · 248 added, 216 removed, 365 unchanged (56% of the section changed)

6 unchanged sentences

Short-term investments

Accounts receivable

Interest receivable

19 unchanged sentences

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

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

none issued and outstanding as of June 30, 2026 and December 31, 2025

Common stock:

$ 0.001 par value, authorized 47,500 shares;

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

39,024 shares issued and outstanding as of June 30, 2026;

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

Additional paid in capital

Other comprehensive income

Other comprehensive income (loss)

Accumulated deficit

1 unchanged sentence

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

Six Months Ended

Cost of revenue

Gross profit (loss)

Gross (loss) margin

Operating expenses

8 unchanged sentences

Interest expense

Other income (expense), net

Other income, 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

Condensed Statements of Comprehensive Loss

(in thousands, except per share data)

(in thousands)

Three Months Ended

Six Months Ended

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

The accompanying notes are an integral part of these

condensed financial statements.

Comprehensive net loss

The accompanying notes are an integral part of

these condensed financial statements.

Atomera Incorporated

Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2026 and 2025

For the Three and Six Months Ended June 30,

2026 and 2025

(in thousands)

1 unchanged sentence

Stockholders’

Income (Loss)

Balance January 1, 2026

3 unchanged sentences

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

Registered direct offering of common stock, net of commissions

and offering costs

At-the-market sale of stock, net of commissions and offering costs

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

1 unchanged sentence

$ ( 247,767 )

Stock-based compensation

Stock option exercises

At-the-market sale of stock, net of commissions and offering costs

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

Balance June 30, 2026

$ ( 254,103 )

Comprehensive

Stockholders’

Income (Loss)

Balance January 1, 2025

1 unchanged sentence

Stock-based compensation

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

At-the-market sale of stock, net of commissions and offering costs

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

1 unchanged sentence

$ ( 226,729 )

The accompanying notes are an integral part of these

condensed financial statements.

Stock-based compensation

Stock option exercises

At-the-market sale of stock, net of commissions and offering costs

Balance June 30, 2025

$ ( 231,696 )

The accompanying notes are an integral part of

these condensed financial statements.

Atomera Incorporated

1 unchanged sentence

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities

5 unchanged sentences

Net accretion of discounts on available-for-sale securities

Loss on asset disposal

Changes in operating assets and liabilities:

25 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 Months Ended March 31, 2026 and 2025

For the Three and Six Months Ended June 30,

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 March 31, 2026, the Company

At June 30, 2026, the Company

had cash, cash equivalents and short-term investments of approximately $ 38.4 million and working capital of approximately $ 36.7 million.

2 unchanged sentences

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.

On May 31, 2022, Atomera

entered into an Equity Distribution Agreement with Oppenheimer & Co.

and Craig-Hallum Capital Group LLC (“Craig-Hallum”),

2 unchanged sentences

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 March 31, 2026, the Company sold 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 six months ended June 30, 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.

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

The Company did no t sell any shares

of common stock pursuant to the 2025 ATM during the three months ended June 30, 2026.

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 investors.

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

Craig-Hallum served as the exclusive placement agent for the issuance and sale of securities of the Company pursuant to the Purchase

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.

Net proceeds to the Company after deducting the placement agent fee and expenses were

approximately $ 23.6

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

2 unchanged sentences

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 February 24, 2026.

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 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.

The unaudited condensed

financial statements of the Company for the three and six months ended June 30, 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 the 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, treasury bills or U.S.

The Company considers

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

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.

Cash and cash equivalents are

carried at cost, which approximates their fair value.

The Company may also purchase

20 unchanged sentences

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,

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

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.

1 unchanged sentence

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.

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”).

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

18 unchanged sentences

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 March 31, 2026 and December 31, 2025 consisted of the following

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 June 30, 2026 and December 31, 2025 consisted of the following

(in thousands):

Schedule of fair value measurements

March 31, 2026

June 30, 2026

Unrealized Gain/(Loss)

14 unchanged sentences

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 March 31

Three Months Ended June 30,

Six Months Ended June 30,

Primary geographic markets

12 unchanged sentences

received more than one year from the reporting date.

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

The Company had no unbilled contracts receivable as of June 30, 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 March 31, 2026, the Company has approximately $ 96,000 in deferred revenue that is expected to be recognized in the next

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 June 30, 2026, the Company had no deferred revenue.

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

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.

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

2 unchanged sentences

Schedule of anti-dilutive shares

Three Months Ended

Six Months Ended

Stock Options

1 unchanged sentence

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.

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.

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.

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

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.

This adjustment to the lease payments also

resulted in a reduction in the ROU asset and corresponding lease liability.

In December 2025, the Company

10 unchanged sentences

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.

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

8 unchanged sentences

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

during the three months ended March 31, 2026.

during the six months ended June 30, 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.

enteredz 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, 2026 for $95,000 per month.

2 unchanged sentences

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 March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Financing lease costs:

7 unchanged sentences

Total operating lease costs

Future minimum payments under non-cancellable leases

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

Future minimum payments under non-cancellable

leases as of June 30, 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 are as follows (in thousands):

Schedule of supplemental information and non-cash activity

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Operating cash flow information:

3 unchanged sentences

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.

The table above does not include short-term leases

that are one-year or less.

The weighted average remaining discount rate is 0.0 % for the Company’s financing leases and 8.75 % for

the Company’s operating leases.

The weighted average remaining lease term is 0 years for the financing lease and 4.7 years for operating

leases as of June 30, 2026.

STOCK BASED COMPENSATION

8 unchanged sentences

The 2023 plan provides for the issuance of 2,000,000 shares of common stock.

In May 2025, Company’s shareholders approved an amendment to the 2023 Plan, adding an additional 1,750,000 shares to this plan.

In May 2025, the Company’s shareholders approved an amendment to the 2023 Plan, adding an additional 1,750,000 shares to this plan.

All employees (including officers and directors who are also employees), as well as all of the nonemployee directors and other consultants,

2 unchanged sentences

to four years from the date of grant.

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

As of June 30, 2026, a total of approximately 729,000 shares remain available for issuance under

The following table summarizes

3 unchanged sentences

Three Months Ended

Six Months Ended

Research and development

1 unchanged sentence

Selling and marketing

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.

As of June 30, 2026, there

was approximately $ 12 .0 million of total unrecognized compensation expense related to unvested share-based compensation.

expected to be recognized over a weighted-average period of 2.16 years.

Time-Based Stock Options:

2 unchanged sentences

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):

was estimated using the Black-Scholes method and the average grant date fair value was estimated to be $ 5.00 for both three and six months

ended June 30, 2025 and $ 8.54 and $ 4.45 for the three and six months ended June 30, 2026, respectively.

The following table summarizes

time-based stock option activity during the six months ended June 30, 2026 (in thousands except exercise prices and contractual terms):

Schedule of time based stock option activity

2 unchanged sentences

Outstanding at January 1, 2026

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.

Outstanding at June 30, 2026

Exercisable at June 30, 2026

The intrinsic value is based

on the Company’s closing stock price of $ 8.71 on June 30, 2026.

Performance-based Stock Options:

In March 2026, the Company began

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

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

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 were $ 7.50 , $ 12.50 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.

Approximately 184,000 options achieved the

performance criteria and will begin vesting one year after the grant date.

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

The following table summarizes PSO activity during the six months ended June 30, 2026 (in thousands except exercise

prices and contractual terms):

4 unchanged sentences

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.

Outstanding at June 30, 2026

Exercisable at June 30, 2026

The intrinsic value is based

on the Company’s closing stock price of $ 8.71 on June 30, 2026.

Restricted Stock Awards:

1 unchanged sentence

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 three months ended March 31, 2026 (in thousands except per share

following table summarizes all restricted stock award activity during the six months ended June 30, 2026 (in thousands except per share

Schedule of restricted stock activity

2 unchanged sentences

Outstanding at January 1, 2026

Outstanding non-vested shares at March 31, 2026

Outstanding non-vested shares at June 30, 2026

Restricted Stock Units:

11 unchanged sentences

The following table summarizes all restricted stock unit activity during

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

the six months ended June 30, 2026 (in thousands except per share data):

Schedule of restricted stock unit activity

2 unchanged sentences

Outstanding at January 1, 2026

Outstanding at March 31, 2026

Outstanding at June 30, 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 March 31, 2026, or through the date these financial statements have been issued.

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 June 30, 2026, or through the date these financial statements have been issued.

SEGMENT INFORMATION

The Company operates as a single

operating segment.

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

officer who review financial information.

The CODM uses total operating expense, operating margin and related impact on cash consumption

to assess financial performance and allocate resources.

These financial metrics are used by the CODM to make key operating decisions,

such as the determination of the overall headcount, allocation of headcount, research and development expenditures, licensing and royalty

rates offered to customers and capital expenditure commitments.

The measure of assets is reported on the accompanying condensed balance

sheets as total assets.

The following table presents selected

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

The Company operates as a

single operating segment.

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

financial officer who review financial information.

The CODM uses total operating expense, operating margin and related impact on cash

consumption to assess financial performance and allocate resources.

These financial metrics are used by the CODM to make key operating

decisions, such as the determination of the overall headcount, allocation of headcount, research and development expenditures, licensing

and royalty rates offered to customers and capital expenditure commitments.

The measure of assets is reported on the accompanying condensed

balance sheets as total assets.

The following table presents

selected financial information with respect to the Company’s single operating segment for the three and six months ended June 30,

2026 and 2025:

Schedule of selected financial information

Three Months Ended

Three Months Ended June,

Six Months Ended June,

Less expenses (1) :

1 unchanged sentence

Stock-based compensation

Travel and entertainment

Tool related expenses

3 unchanged sentences

Other operating items (2)

Loss from operations

Operating margin

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.

1 unchanged sentence

SUBSEQUENT EVENTS

Management has evaluated subsequent

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

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