Atomera Incorporated (NASDAQ:ATOM) Q1 2022 Results Conference Call April 27, 2022 5:00 PM ET Company Participants Mike Bishop - IR Scott Bibaud - President and CEO Frank Laurencio - CFO Conference Call Participants Richard Shannon - Craig-Hallum Cody Acree - The Benchmark Company Mike Bishop Hello, everyone, and welcome to Atomera’s First Quarter Fiscal Year 2022 Update Call. I’d like to remind everyone that this call and webinar are being recorded, and a replay will be available on Atomera’s IR website for ...

Atomera Incorporated (NASDAQ:ATOM) Q4 2021 Earnings Conference Call February 15, 2022 5:00 PM ET Company Participants Mike Bishop - Investor Relations. Scott Bibaud - President and Chief Executive Officer Frank Laurencio - Chief Financial Officer Conference Call Participants Richard Shannon - Craig-Hallum Capital Mike Bishop Hello, everyone, and welcome to Atomera's Fourth Quarter Fiscal Year 2021 Update Call. I would like to remind everyone that this call and webinar are being recorded, and a replay will b ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Atomera licenses its proprietary MST® semiconductor technology to generate revenue through fees and royalties [Company Overview](index=6&type=section&id=Company%20Overview) The company licenses its MST performance-enhancing film via a multi-stage process, aiming for royalty revenue - Atomera's core business is developing and licensing its proprietary Mears Silicon Technology (MST), a thin film of reengineered silicon (100-300 angstroms thick) that enhances transistor performance, speed, reliability, and energy efficiency[17](index=17&type=chunk) - The company's business model is to license its technology to foundries, IDMs, and fabless manufacturers, rather than designing or manufacturing integrated circuits itself[18](index=18&type=chunk) - Revenue is generated through a multi-stage licensing process, starting with integration licenses, followed by manufacturing and distribution licenses that are expected to include larger fees and royalty payments[19](index=19&type=chunk)[20](index=20&type=chunk) - In January 2021, Atomera entered into a JDA with a leading semiconductor provider, which included an upfront, paid manufacturing license, with all development milestones achieved by February 2022[21](index=21&type=chunk) [Industry Overview](index=7&type=section&id=Industry%20Overview) The semiconductor industry's shift from Moore's Law creates opportunities for IP licensing companies like Atomera - The semiconductor industry faces challenges in maintaining the pace of Moore's Law, as shrinking transistor geometries below 100 nanometers has become increasingly difficult and expensive[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) - The industry has become vertically disaggregated, with specialized companies focusing on different stages of production, creating an opportunity for IP companies like Atomera to license broadly applicable technologies[32](index=32&type=chunk)[33](index=33&type=chunk) [MST Commercialization](index=11&type=section&id=MST%20Commercialization) The company follows a six-phase customer engagement model, with 15 customers in integration and one in installation - The customer engagement and adoption process for MST technology generally follows a six-phase model: 1 Engineering Planning, 2 Set-up for Integration, 3 MST Integration, 4 Process Installation, 5 Technology Qualification, and 6 Production[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - A manufacturing license is required for a customer to install MST technology in their own fab for R&D and qualification (Phase 4), while a separate distribution license is needed for commercial sales and royalty payments[52](index=52&type=chunk)[53](index=53&type=chunk) - As of the report date, Atomera had **15 customer engagements in Phase 3** (MST Integration) and **one engagement in Phase 4** (Process Installation)[55](index=55&type=chunk) [Competition](index=14&type=section&id=Competition) Atomera views its MST technology as an additive solution with no direct competition, facing only internal customer efforts - The company believes MST is a low-cost, additive technology that does not have significant direct competition, similar to other widely adopted industry advances like CMP and High-K/Metal-Gate[64](index=64&type=chunk) - Atomera is not aware of another technology on the market that provides the same technical benefits as MST but may face competition from internally-developed solutions at customer companies[64](index=64&type=chunk) [Intellectual Property Rights](index=14&type=section&id=Intellectual%20Property%20Rights) The company protects its technology with 118 U.S. and 95 foreign patents, with core patents expiring from August 2023 Patent Portfolio as of Dec 31, 2021 | Patent Jurisdiction | Count | | :--- | :--- | | U.S. Granted | 118 | | Foreign Granted | 95 | - The company's core patents related to MST cover materials, physical structures, and manufacturing processes, with the portfolio beginning to expire on **August 22, 2023**[69](index=69&type=chunk) - In 2021, the company was issued **34 new patents** worldwide, representing a **14% annual increase** in its portfolio[69](index=69&type=chunk) [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from operating losses, an unproven royalty model, and lengthy customer qualification cycles - The company has a history of significant operating losses, with net losses of approximately **$15.7 million in 2021** and **$14.9 million in 2020**, and an accumulated deficit of **$165.9 million**[77](index=77&type=chunk) - There is no assurance that existing integration licenses or the JDA will advance to royalty-based distribution licenses[78](index=78&type=chunk) - The product qualification and licensing cycle is lengthy and costly, estimated to take **18 to 36 months** or longer from initial engagement to potential product incorporation[81](index=81&type=chunk) - A fire at the fab of licensee AKM has disrupted their business and interrupted the integration and testing of MST, casting doubt on the timing for a potential manufacturing license[80](index=80&type=chunk) - The long-term success of the business depends on a royalty-based model, which is inherently risky and subject to factors outside the company's control[86](index=86&type=chunk) [Unresolved Staff Comments](index=23&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments - None[115](index=115&type=chunk) [Properties](index=24&type=section&id=Item%202.%20Properties) The company leases its principal executive offices in California and has smaller leased spaces in Massachusetts and Arizona - The company's executive offices are in Los Gatos, California, under a five-year lease expiring January 31, 2026[116](index=116&type=chunk) - Additional leased facilities include shared office space in Cambridge, Massachusetts, and a small office in Tempe, Arizona[116](index=116&type=chunk) [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently subject to any pending legal proceedings - The company reports no pending legal proceedings[117](index=117&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Inapplicable[117](index=117&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ under "ATOM", with 169 holders of record and no history of dividends - The company's common stock trades on the NASDAQ Capital Market under the symbol "ATOM"[118](index=118&type=chunk) - As of February 9, 2022, there were **169 holders of record** of the common stock[119](index=119&type=chunk) - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[120](index=120&type=chunk) [Reserved](index=25&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue grew significantly in 2021 due to a license fee, though operating expenses and net loss also increased [Results of Operations](index=26&type=section&id=Results%20of%20Operations) Revenue rose to $400,000 in 2021, while higher operating expenses led to a slightly wider net loss of $15.7 million Key Financial Metrics | Financial Metric | 2021 (in thousands) | 2020 (in thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Revenue | $400 | $62 | +545% | | Total Operating Expenses | $15,929 | $14,969 | +6% | | Net Loss | ($15,714) | ($14,878) | +6% | - The increase in 2021 revenue was primarily due to a manufacturing license fee paid pursuant to the company's JDA[129](index=129&type=chunk) - Research and development expense increased by **4% to $8.8 million**, mainly due to higher payroll costs from headcount growth[131](index=131&type=chunk) - General and administrative expense increased by **10% to $6.2 million**, driven by higher insurance costs, stock-based compensation, and payroll expenses[132](index=132&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company holds $28.7 million in cash, bolstered by recent equity offerings, ensuring sufficient near-term liquidity Liquidity Metrics | Metric (as of Dec 31, 2021) | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $28.7 | | Working capital | $26.3 | - The company raised approximately **$9.4 million** in net proceeds from an underwritten public offering in May 2020[136](index=136&type=chunk) - An at-the-market (ATM) offering conducted between September 2020 and January 2021 raised approximately **$24.2 million** in net proceeds[137](index=137&type=chunk) - Management believes that available working capital is sufficient to fund its forecasted requirements for at least the next 12 months from the filing date[138](index=138&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Not applicable[145](index=145&type=chunk) [Financial Statements and Supplementary Data](index=30&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section includes audited financial statements, with the auditor highlighting lease accounting as a critical audit matter Balance Sheet Highlights | Balance Sheet (in thousands) | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Total Assets | $36,060 | $39,395 | | Total Liabilities | $7,679 | $2,050 | | Total Stockholders' Equity | $28,381 | $37,345 | Statement of Operations Highlights | Statement of Operations (in thousands) | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Revenue | $400 | $62 | | Loss from operations | ($15,529) | ($14,920) | | Net loss | ($15,714) | ($14,878) | | Net loss per share | ($0.70) | ($0.79) | - The independent auditor identified the application of lease accounting standard ASC 842 to a new equipment tool lease as a **critical audit matter** due to its material amount and significant management estimates[155](index=155&type=chunk)[156](index=156&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=50&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This item is not applicable - Not applicable[250](index=250&type=chunk) [Controls and Procedures](index=50&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal controls over financial reporting were effective - Management concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2021[251](index=251&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2021[253](index=253&type=chunk) - **No material changes** to internal control over financial reporting occurred during the quarter ended December 31, 2021[252](index=252&type=chunk) [Other Information](index=50&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[255](index=255&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=50&type=section&id=Item%209C%3A%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not applicable[255](index=255&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=51&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the company's forthcoming 2022 Proxy Statement - Information for this section is incorporated by reference from the forthcoming 2022 Proxy Statement[257](index=257&type=chunk)[258](index=258&type=chunk) [Executive Compensation](index=51&type=section&id=Item%2011.%20Executive%20Compensation) Required information is incorporated by reference from the company's forthcoming 2022 Proxy Statement - Information for this section is incorporated by reference from the forthcoming 2022 Proxy Statement[257](index=257&type=chunk)[259](index=259&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=51&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Required information is incorporated by reference from the company's forthcoming 2022 Proxy Statement - Information for this section is incorporated by reference from the forthcoming 2022 Proxy Statement[257](index=257&type=chunk)[259](index=259&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=51&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Required information is incorporated by reference from the company's forthcoming 2022 Proxy Statement - Information for this section is incorporated by reference from the forthcoming 2022 Proxy Statement[257](index=257&type=chunk)[260](index=260&type=chunk) [Principal Accountant Fees and Services](index=51&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Required information is incorporated by reference from the company's forthcoming 2022 Proxy Statement - Information for this section is incorporated by reference from the forthcoming 2022 Proxy Statement[257](index=257&type=chunk)[260](index=260&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=52&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all financial statements and exhibits filed with the Form 10-K - This section provides a list of all financial statements, schedules, and exhibits filed as part of the Annual Report[262](index=262&type=chunk) [Form 10-K Summary](index=54&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary was provided - None provided[267](index=267&type=chunk)

111111 mer Investor Presentation November 2021 Atomera Incorporated 1 Safe Harbor This presentation contains forward-looking statements concerning Atomera Incorporated (""Atomera," the "Company," "we," "us," and "our"). The words "believe," "may," "will," "potentially," "estimate," "continue," "anticipate," "intend," "could," "would," "project," "plan," "expect" and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward- looking statements. These forward-lo ...

Financial Data and Key Metrics Changes - The GAAP net loss for Q3 2021 was $4.2 million, or $0.19 per share, compared to a net loss of $3.6 million, also $0.19 per share, in Q3 2020 [22][23] - Sequentially, the GAAP net loss increased from $3.7 million in Q2 2021 to $4.2 million in Q3 2021, reflecting a $424,000 increase in operating expenses [23] - Non-GAAP net loss in Q3 2021 was $3.4 million, up from $2.7 million in Q3 2020, indicating a $606,000 increase in non-GAAP operating expenses [26] Business Line Data and Key Metrics Changes - The company reported an increase in R&D expenses to $2.2 million in Q3 2021, up by $163,000 from Q2 2021, primarily due to amortization expenses related to new tools [26] - General and administrative expenses increased by $315,000 year-over-year, mainly due to higher legal expenses for patent filings [25] Market Data and Key Metrics Changes - The total IC market is forecasted to grow by 24% in 2021, indicating strong demand and investment in semiconductor technologies [9] - Industry CapEx growth in the next five years is expected to be 60% higher than the previous five years, driven by significant investments from major players [9] Company Strategy and Development Direction - The company aims to leverage the current semiconductor supply shortages to promote its MST technology, which is expected to be adopted more readily as companies invest in new fabs [10][12] - Atomera is focusing on expanding its customer base through joint development agreements (JDAs) and enhancing its patent portfolio, which has grown to 298 patents issued and pending worldwide [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the semiconductor industry's investment cycle, which is expected to create opportunities for MST adoption [21] - The company noted that customer engagement has been positive, with many customers eager to start work with MST technology despite current supply constraints [12][13] Other Important Information - The company has finalized the acceptance of a new Epi deposition tool, which will enhance its capabilities in delivering MST wafers to customers [19] - Cash balance as of September 30, 2021, was $31.8 million, down from $34.3 million at the end of Q2 2021, reflecting cash used in operating activities [27] Q&A Session Summary Question: What is driving the expanded pipeline in JDAs? - The expansion is driven by interest in key technologies like RF-SOI and MST SP, with customers wanting to start work ahead of the capacity crunch ending [32][33] Question: How do you characterize the phases of new JDAs? - There is a mix of customers in different phases, with some in Phase 3 and others in Phase 1 [35][36] Question: What is the expected timeline for moving to Phase 5? - The timeline is difficult to predict, but once the JDA is completed, it could take about nine months to move into production [57] Question: How does the fab build-out impact Atomera? - The build-out presents opportunities for Atomera as companies will need to differentiate and maximize capacity utilization, which MST can help achieve [50][52] Question: What is the motivation for hiring a PR firm? - The PR firm is intended to expand outreach beyond foundries and IDMs to fabless players, enhancing visibility in the market [53][54] Question: How long is the anticipated royalty stream? - The company expects to negotiate royalty streams that could last for eight to ten years or more, similar to industry practices [63]