Overview

Atomera Incorporated is a company engaged in developing, commercializing, and licensing proprietary processes and technologies for the semiconductor industry, which is a $550+ billion market. Their lead technology, Mears Silicon Technology (MST), is a thin film of reengineered silicon that can be used to enhance the performance of semiconductor devices.

Atomera does not design or manufacture integrated circuits directly. Instead, they develop and license technologies and processes to semiconductor manufacturers, including foundries, integrated device manufacturers (IDMs), fabless semiconductor companies, and original equipment manufacturers (OEMs). Their commercialization strategy is to generate revenue through licensing arrangements, where customers pay a license fee and royalties for using MST technology in the manufacture of silicon wafers.

Atomera was originally founded as Nanovis LLC in 2001 and later converted to a Delaware corporation under the name Mears Technologies, Inc. in 2007. The company changed its name to Atomera Incorporated in 2016.

In May 2022, Atomera entered into an Equity Distribution Agreement, or “at-the-market” (ATM) offering, under which the company may offer and sell up to $50 million in shares of its common stock. During 2023 and 2024, the company sold approximately 1.8 million and 4.1 million shares, respectively, through the ATM offering, resulting in net proceeds of $13.5 million and $21.3 million, respectively.

Results of Operations for the Years Ended December 31, 2024 and 2023

Revenues: Atomera has only generated limited revenue to date, primarily from customer engagements for engineering services, integration license agreements, an R&D license granted under a joint development agreement (JDA), a license agreement with ST Microelectronics (ST), and licensing of their MSTcad software. The table below summarizes Atomera’s revenue for the past two years:

The decrease in revenue from 2023 to 2024 was due to the recognition of revenue from a manufacturing license in 2023, which was not repeated in 2024.

Cost of Revenue: Atomera’s cost of revenue, which consists of the costs of materials, direct compensation, and expenses incurred to provide integration engineering services, support for customer installation and qualification, and MSTcad support, was $123,000 and $28,000 for the years ended December 31, 2024 and 2023, respectively.

Operating Expenses: Atomera’s total operating expenses for the years ended December 31, 2024 and 2023 were $19.3 million and $21.2 million, respectively. The decrease in operating expenses was primarily due to a decline in research and development expenses, partially offset by increases in general and administrative and selling and marketing expenses.

Research and development expenses decreased from $12.5 million in 2023 to $11.0 million in 2024, a 12% reduction, primarily due to a decline in outsourced research and development activities.

General and administrative expenses increased from $7.1 million in 2023 to $7.3 million in 2024, a 3% increase, primarily due to higher employee-related costs and increased patent and legal fees, partially offset by decreases in stock-based compensation and corporate legal expenses.

Selling and marketing expenses decreased from $1.6 million in 2023 to $1.1 million in 2024, a 34% reduction, primarily due to a decrease in headcount and related employee-related costs, stock-based compensation, and travel expenses.

Other Income and Expenses: Atomera generated interest income of $779,000 and $723,000 in 2024 and 2023, respectively, primarily from interest earned on cash and cash equivalents. Accretion income, which relates to the increase in value of Atomera’s available-for-sale securities, was $178,000 and $283,000 in 2024 and 2023, respectively. Interest expense, related to a tool financing lease, was $129,000 and $194,000 in 2024 and 2023, respectively.

Liquidity and Capital Resources

As of December 31, 2024, Atomera had cash, cash equivalents, and short-term investments of approximately $26.8 million and working capital of $23.5 million. The company incurred a net loss of $18.4 million and used $13.2 million of cash in operations during 2024.

During 2024, Atomera raised $21.3 million in net proceeds from the sale of approximately 4.1 million shares through its ATM offering. The company believes its available working capital is sufficient to fund its forecasted working capital requirements for at least the next 12 months.

However, Atomera’s future capital requirements and the adequacy of its available funds will depend on its ability to successfully commercialize its MST technology, as well as competing technological and market developments. If the company is unable to generate sufficient revenue from license fees and royalties, it may need to raise additional capital through various financing sources, such as follow-on equity offerings, debt financing, or collaborations with industry partners.

Cash Flows

Atomera’s net cash used in operating activities was $13.2 million and $14.6 million for the years ended December 31, 2024 and 2023, respectively, primarily due to their net losses, adjusted for non-cash items such as stock-based compensation and amortization of right-of-use assets.

Net cash provided by (used in) investing activities was $6.1 million and $(6.8) million for the years ended December 31, 2024 and 2023, respectively, primarily due to the maturity and purchase of short-term available-for-sale investments.

Net cash provided by financing activities was $20.3 million and $12.7 million for the years ended December 31, 2024 and 2023, respectively, primarily due to net proceeds from Atomera’s ATM offering, offset by principal payments on their financing lease.

Critical Accounting Estimates

Atomera’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP) in the United States. The preparation of these financial statements requires the company to use judgement in making estimates and assumptions that have a significant effect on the reported amounts of assets, liabilities, sales, expenses, and the disclosure of contingent assets and liabilities.

Two critical accounting estimates for Atomera are:

1. Leases: Atomera accounts for leases in accordance with Accounting Standards Codification (ASC) Topic 842, “Leases,” which requires the recognition of right-of-use assets and lease liabilities for leases greater than 12 months.

2. Stock-based Compensation: Atomera has stock-based compensation programs, including restricted stock awards and stock options, which are accounted for based on the fair values of the equity instruments issued. The fair value is determined on the measurement date using the Black-Scholes Option Pricing Model and amortized over the vesting period of the award.