Atomera(ATOM) - 2024 Q3 - Quarterly Report

PART I. Financial Information Financial Statements Unaudited condensed financial statements for the period ended September 30, 2024, showing a net loss of $13.8 million and decreased total assets, supported by ATM stock offering proceeds Condensed Financial Statements Financial statements show continued net loss of $13.8 million on minimal revenue, with assets declining and financing activities offsetting operational cash use Condensed Balance Sheet (in thousands) | Balance Sheet Items | Sep 30, 2024 (Unaudited) | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $13,757 | $12,591 | | Total current assets | $17,792 | $20,404 | | Total assets | $20,140 | $24,029 | | Total current liabilities | $3,386 | $3,814 | | Total liabilities | $4,247 | $5,859 | | Total stockholders' equity | $15,893 | $18,170 | Condensed Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $22 | $0 | $112 | $0 | | Total operating expenses | $4,811 | $5,353 | $14,466 | $15,880 | | Loss from operations | ($4,789) | ($5,353) | ($14,464) | ($15,880) | | Net loss | ($4,595) | ($5,039) | ($13,778) | ($15,210) | | Net loss per share, basic & diluted | ($0.18) | ($0.20) | ($0.52) | ($0.62) | Condensed Statement of Cash Flows (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($10,208) | ($11,649) | | Net cash provided by/(used in) investing activities | $3,476 | ($7,626) | | Net cash provided by financing activities | $7,898 | $10,733 | | Net increase/(decrease) in cash | $1,166 | ($8,542) | Notes to Financial Statements Notes detail Atomera's early-stage status, ATM reliance for liquidity, $17.3 million cash, $112 thousand revenue, and $7.2 million unrecognized stock compensation - As of September 30, 2024, the company had approximately $17.3 million in cash, cash equivalents, and short-term investments and believes it has sufficient capital to fund its plans for at least the next 12 months[17][19] - During the nine months ended September 30, 2024, the company sold approximately 1.9 million shares through its "at the market" (ATM) offering, raising net proceeds of about $8.5 million. As of quarter-end, approximately $20.9 million remained available under the ATM program[18] - Revenue for the nine months ended September 30, 2024, was $112 thousand, entirely from North America, with $62 thousand recognized over time and $50 thousand at a point in time. No revenue was recorded in the same period of 2023[32] - As of September 30, 2024, there was approximately $7.2 million of total unrecognized compensation expense related to unvested share-based arrangements, expected to be recognized over a weighted-average period of 2.8 years[47] Management's Discussion and Analysis (MD&A) MD&A focuses on MST technology commercialization via licensing, highlighting the ST Microelectronics agreement, decreased operating expenses, and reliance on ATM for liquidity Business Overview & Strategy Atomera's strategy involves licensing Mears Silicon Technology (MST) for revenue, with a key ST Microelectronics agreement currently in process qualification - The company's commercialization strategy is to generate revenue through licensing arrangements, where customers pay a license fee and a royalty for each silicon wafer or device incorporating MST technology[58] - The license agreement with ST Microelectronics, signed in April 2023, is the company's first grant of commercial manufacturing and distribution rights. ST is currently performing testing to qualify the MST-enabled process, which, if successful, will lead to additional license fees and royalties[59] Results of Operations Q3 2024 revenue was $22 thousand, with total operating expenses decreasing 17% to $4.8 million, primarily due to reduced R&D and selling/marketing costs Operating Expense Changes (Three Months Ended Sep 30, 2024 vs 2023) | Expense Category | Q3 2024 (approx. $M) | Q3 2023 (approx. $M) | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Research & Development | $2.8 | $3.3 | ▼ 17% | Decrease in outsourced R&D as foundry partner ceased services | | General & Administrative | $1.8 | $1.7 | ▲ 8% | Increased employee and patent legal costs | | Selling & Marketing | $0.25 | $0.37 | ▼ 32% | Reduction in headcount | - Revenue for Q3 2024 was approximately $22 thousand, derived from MSTcad licensing and related services. No revenue was recorded in the same period of 2023[63] Liquidity and Capital Resources Atomera held $13.8 million cash and $3.6 million investments, used $10.2 million in operations, raised $8.5 million via ATM, and expects sufficient capital for 12 months - The company had cash and cash equivalents of $13.8 million and short-term investments of $3.6 million as of September 30, 2024[82] - During the first nine months of 2024, the company raised approximately $8.5 million in net proceeds from its ATM offering. An additional $1.6 million was raised through the ATM after September 30, 2024[83] - Management believes that available working capital is sufficient to fund its forecasted requirements for at least the next 12 months[84] Controls and Procedures Management concluded disclosure controls and procedures were effective as of September 30, 2024, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2024[87] - No material changes were made to internal controls over financial reporting during the third quarter of 2024[88] PART II. Other Information Key Disclosures No material changes to risk factors from 2023 Annual Report; CTO Robert Mears adopted a Rule 10b5-1 trading plan for 18,530 shares - The primary risk factors affecting the business have not materially changed from those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2023[90] - On September 10, 2024, Robert Mears, the Chief Technology Officer, adopted a Rule 10b5-1 trading plan for the potential sale of up to 18,530 shares, set to expire on September 10, 2025[92]