Atomera Inc quarterly report, Q1 FY2024

Atomera Incorporated — Q1 2024 Form 10-Q Summary

Business Context and Reporting Period

Atomera develops, commercializes, and licenses semiconductor process technologies, principally Mears Silicon Technology (MST) and MSTcad software. The company does not manufacture integrated circuits and remains an early-stage business with limited revenue and recurring operating losses. This filing covers the three months ended March 31, 2024; financial statements are unaudited and presented in accordance with U.S. GAAP.

Key Financial Metrics

Metric	Q1 2024	Q1 2023
Revenue	$18 thousand	$0
Cost of revenue	$33 thousand	$0
Gross margin/(loss)	$(15) thousand	$0
Operating expenses	$5.019 million	$5.167 million
Loss from operations	$(5.034) million	$(5.167) million
Net loss	$(4.822) million	$(5.019) million
Net loss per diluted share	$(0.19)	$(0.21)
Net cash used in operations	$(4.149) million	$(4.234) million

Revenue consisted of MSTcad license revenue and related consulting services and was recognized over time.
Research and development expense was $2.858 million, down 6% year over year, primarily because the company discontinued work with TSI Semiconductor as of January 31, 2024.
General and administrative expense increased 4% to $1.811 million, while selling and marketing expense declined 10% to $350 thousand.
Stock-based compensation increased to $1.024 million from $927 thousand and represented a significant non-cash expense.
Interest and accretion income totaled $251 thousand, partly offset by $39 thousand of interest expense.

Liquidity, Cash Flow, and Obligations

March 31, 2024 cash and cash equivalents were $14.806 million, and short-term investments were $4.458 million, for approximately $19.3 million of cash, cash equivalents, and short-term investments.
Working capital was approximately $16.8 million. Total assets were $22.934 million and total liabilities were $4.527 million.
Operating cash use was $4.149 million. Investing activities provided $2.521 million, primarily from maturity of short-term investments, and financing activities provided $3.843 million.
During the quarter, Atomera sold approximately 510,000 shares under its at-the-market facility at an average price of approximately $8.06 per share, generating approximately $4.0 million of net proceeds. Approximately $25.7 million remained available under the facility at March 31, 2024.
The company had financing lease liabilities of $2.788 million and operating lease liabilities of $457 thousand. The largest financing lease relates to a semiconductor development tool.
Management believes available capital is sufficient to fund current plans and obligations for at least 12 months from the financial statement issuance date, although planned operations include increased research and development spending.

Material Changes Versus the Prior Comparable Period

Revenue increased from zero to $18 thousand, but the company continued to operate substantially below breakeven and incurred a $15 thousand gross loss.
Net loss improved by $197 thousand, or approximately 4%, primarily because operating expenses declined and other income increased.
Operating cash use improved by $85 thousand, while the company’s cash balance increased by $2.215 million due primarily to ATM proceeds and investment maturities.
R&D expense declined following the termination of the TSI Semiconductor relationship; Atomera stated that it is seeking a replacement foundry services provider.
Shares outstanding increased materially, with approximately 26.885 million shares outstanding at March 31, 2024 versus 26.107 million at December 31, 2023, primarily reflecting the ATM offering and equity compensation activity.

Outlook, Commentary, Risks, and Unusual Items

Atomera’s commercialization model depends on license fees, engineering services, and future royalties from semiconductor products incorporating MST. The filing does not provide formal revenue or earnings guidance.
Under the April 2023 STMicroelectronics license, Atomera completed the first major milestone in the fourth quarter of 2023. ST must still complete process qualification before additional distribution-license fees and potential royalties can arise. The filing states there is no assurance that ST will complete qualification or commercialize MST-enabled products.
The company’s principal risks include limited operating history and revenue, recurring losses, continued cash burn, dependence on successful commercialization, competition and technological change, the need for additional financing, and dependence on customers, partners, and foundry service providers.
If license fees and royalties do not provide sufficient cash, Atomera may seek additional equity, debt, or joint-venture financing and may need to curtail research and development or reduce costs.
No material litigation was reported as of March 31, 2024 and through the financial statement issuance date. Management stated that the primary risk factors had not materially changed from the 2023 Form 10-K.
Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting.

Important Facts for Investors to Verify

Whether STMicroelectronics completes MST process qualification and whether the relationship produces additional fees or recurring royalties.
The timing and availability of a replacement foundry services provider after the TSI Semiconductor relationship ended.
Actual quarterly cash burn relative to the approximately $19.3 million liquidity balance and management’s stated 12-month funding assessment.
Future reliance on ATM or other equity financing, including potential dilution; approximately $25.7 million remained available under the ATM facility at quarter-end.
Progress toward converting limited license and MSTcad revenue into commercially meaningful recurring revenue.
Planned increases in R&D spending and the effect of stock-based compensation and lease obligations on cash requirements.