Atomera Incorporated — FY2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. The filing is an annual Form 10-K, not a standalone fourth-quarter filing. Atomera develops and licenses Mears Silicon Technology (MST), a proprietary semiconductor performance-enhancement material and process. The company does not manufacture integrated circuits and remains in the commercialization and customer-integration stage.
Financial performance and liquidity
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Revenue | $0.4 million | $0.062 million | +approximately 545% |
| Gross profit | $0.4 million | $0.049 million | Higher, primarily from license revenue |
| Gross margin | 100% | Approximately 79% | Improved |
| Operating expenses | $15.929 million | $14.969 million | +6% |
| Loss from operations | $(15.529) million | $(14.920) million | Loss increased |
| Net loss | $(15.714) million | $(14.878) million | Loss increased 6% |
| Basic and diluted loss per share | $(0.70) | $(0.79) | Improved due primarily to higher share count |
| Cash used in operating activities | $(12.441) million | $(12.067) million | Use increased modestly |
| Cash and cash equivalents | $28.699 million | $37.942 million | Decreased $9.243 million |
| Working capital | Approximately $26.3 million | Not clearly provided in the filing text | — |
Revenue in 2021 consisted entirely of a manufacturing-license fee under a January 2021 joint development agreement (JDA). One customer represented 100% of revenue. No royalty-based manufacturing or distribution revenue had been generated as of year-end.
Research and development expense was $8.779 million, up 4%; general and administrative expense was $6.164 million, up 10%; and selling and marketing expense was $0.986 million, up 7%. Stock-based compensation totaled $2.973 million. The company incurred $0.128 million of interest expense related to a new financing lease and recorded $0.066 million of income tax expense, primarily from foreign withholding taxes.
Investing activities used $0.109 million. Financing activities provided $3.307 million, consisting primarily of stock-option exercise proceeds, partly offset by $0.470 million of financing-lease principal payments. The company reported total assets of $36.060 million, total liabilities of $7.679 million, and stockholders’ equity of $28.381 million at December 31, 2021.
Material changes versus 2020
- Revenue increased from $0.062 million to $0.4 million, but remained immaterial relative to operating costs and was concentrated in one customer and one license transaction.
- Operating expenses increased by $0.960 million, led by higher personnel, insurance, stock-based compensation, and marketing costs.
- Net loss increased from $14.878 million to $15.714 million, while operating cash use increased from $12.067 million to $12.441 million.
- Cash declined by $9.243 million despite $3.307 million of financing inflows.
- Atomera began using a five-year leased epitaxial deposition tool in August 2021. The financing lease generated a $6.383 million right-of-use asset, approximately $5.553 million of lease liability at year-end, $0.532 million of amortization, and $0.128 million of interest expense.
- Customer activity remained pre-commercial: 15 engagements were in the MST integration phase and one was in process installation. No customer had reached the technology-qualification or production phase as of the filing date.
- Patent holdings expanded to 118 U.S. patents and 95 foreign patents. Core MST patents begin to expire in August 2023.
Outlook, commentary, risks, and unusual items
Management expects increased research and development headcount and spending on outsourced fabrication and testing. It believes available capital is sufficient to fund current plans and obligations for at least 12 months from the filing date, but acknowledges that additional financing may be required before royalty revenue becomes meaningful. No specific revenue, earnings, or commercialization guidance was provided.
In February 2022, after year-end, Atomera reported achieving all development milestones under the JDA, entitling it to additional revenue. The JDA still does not provide commercial distribution rights or commit the customer to production. Atomera also entered into an additional integration license agreement with a semiconductor foundry on February 3, 2022. These subsequent events should not be treated as 2021 revenue unless recognized under the applicable accounting rules.
Principal risks include continued operating losses and negative cash flow; dependence on successfully converting evaluation and integration engagements into manufacturing, distribution, and royalty agreements; lengthy customer qualification cycles; limited customer and revenue concentration; constrained access to customer fabrication capacity; COVID-19-related delays; reliance on key personnel and leased equipment; potential additional capital needs; patent expiration and intellectual-property disputes; and volatility in the common stock.
The company had an accumulated deficit of approximately $165.9 million at year-end and stated that it expects continued operating losses at least in the near term. It had no material litigation reported through the financial-statement issuance date and no off-balance-sheet arrangements. Management concluded that disclosure controls and internal control over financial reporting were effective; the auditor did not provide an internal-control attestation because Atomera qualifies for the applicable smaller-reporting-company exemption.
Important facts for investors to verify
- Whether any customer has advanced from integration or process installation into qualification and commercial production.
- The amount and timing of additional revenue from the JDA milestones achieved in February 2022.
- Whether the JDA customer or other licensees execute manufacturing and distribution agreements that generate royalties.
- Cash burn, remaining liquidity, financing needs, and the timing of any future equity or debt financing.
- The effect of the five-year equipment lease on future cash commitments and operating expenses.
- The status of Atomera’s core patent portfolio as patents begin expiring in August 2023.
- The impact of the AKM fab fire and semiconductor-fabrication capacity constraints on customer evaluations and commercialization timing.
- The degree of dilution from approximately 2.9 million shares reserved for outstanding options and warrants, in addition to other equity awards.