UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2026
or
☐ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the transition period from __________ to __________
Commission file number: 001-37850
ATOMERA INCORPORATED
(Exact name of registrant as specified in its charter)
|
Delaware |
30-0509586 | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
750 University Avenue, Suite 280
Los Gatos, California 95032
(Address, including zip code, of registrant’s principal executive offices)
(408) 442-5248
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common stock: Par value $0.001 | ATOM | Nasdaq Capital Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated Filer ☐ |
| Non-accelerated Filer ☒ | Smaller reporting company ☒ |
| Emerging Growth Company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act): Yes ☐ No ☒
The number of outstanding shares of the Registrant’s Common Stock, par value $.001 per share, as of October 27, 2026 is .
Atomera Incorporated
Index
| 2 |
PART I. Financial Information
Item 1. Financial Statements
Atomera Incorporated
Condensed Balance Sheets
(in thousands, except per share data)
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 23,268 | $ | 19,210 | ||||
| Short-term investments | 11,560 | – | ||||||
| Interest receivable | 152 | 54 | ||||||
| Prepaid expenses and other current assets | 456 | 338 | ||||||
| Total current assets | 35,436 | 19,602 | ||||||
| Property and equipment, net | 62 | 60 | ||||||
| Security deposit | 14 | 14 | ||||||
| Operating lease right-of-use asset | 2,731 | 884 | ||||||
| Financing lease right-of-use asset | 196 | 533 | ||||||
| Total assets | $ | 38,439 | $ | 21,093 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 868 | $ | 608 | ||||
| Accrued expenses | 522 | 168 | ||||||
| Accrued payroll-related expenses | 1,326 | 650 | ||||||
| Current operating lease liability | 1,908 | 147 | ||||||
| Current financing lease liability | 198 | 420 | ||||||
| Deferred revenue | – | 7 | ||||||
| Total current liabilities | 4,822 | 2,000 | ||||||
| Long-term operating lease liability | 823 | 712 | ||||||
| Total liabilities | 5,645 | 2,712 | ||||||
| Commitments and contingencies (see Note 9) | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock $ par value, authorized shares; issued and outstanding as of September 30, 2026 and December 31, 2025 | – | – | ||||||
| Common stock: $ par value, authorized shares; shares issued and outstanding as of September 30, 2026; and shares issued and outstanding as of December 31, 2025 | 39 | 32 | ||||||
| Additional paid in capital | 292,874 | 260,043 | ||||||
| Other comprehensive income (loss) | (10 | ) | – | |||||
| Accumulated deficit | (260,109 | ) | (241,694 | ) | ||||
| Total stockholders’ equity | 32,794 | 18,381 | ||||||
| Total liabilities and stockholders’ equity | $ | 38,439 | $ | 21,093 | ||||
The accompanying notes are an integral part of these condensed financial statements.
| 3 |
Atomera Incorporated
Condensed Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | – | $ | 11 | $ | 169 | $ | 15 | ||||||||
| Cost of revenue | – | (128 | ) | (152 | ) | (190 | ) | |||||||||
| Gross profit (loss) margin | – | (117 | ) | 17 | (175 | ) | ||||||||||
| Operating expenses | ||||||||||||||||
| Research and development | 3,647 | 3,304 | 10,391 | 9,563 | ||||||||||||
| General and administrative | 2,338 | 2,165 | 7,838 | 6,301 | ||||||||||||
| Selling and marketing | 343 | 207 | 1,199 | 472 | ||||||||||||
| Total operating expenses | 6,328 | 5,676 | 19,428 | 16,336 | ||||||||||||
| Loss from operations | (6,328 | ) | (5,793 | ) | (19,411 | ) | (16,511 | ) | ||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 254 | 232 | 623 | 736 | ||||||||||||
| Accretion income | 75 | – | 310 | 6 | ||||||||||||
| Interest expense | (7 | ) | (12 | ) | (12 | ) | (51 | ) | ||||||||
| Other income, net | – | – | 75 | 71 | ||||||||||||
| Total other income, net | 322 | 220 | 996 | 762 | ||||||||||||
| Net loss | $ | (6,006 | ) | $ | (5,573 | ) | $ | (18,415 | ) | $ | (15,749 | ) | ||||
| Net loss per common share, basic | $ | (0.15 | ) | $ | (0.17 | ) | $ | (0.49 | ) | $ | (0.51 | ) | ||||
| Net loss per common share, diluted | $ | (0.15 | ) | $ | (0.17 | ) | $ | (0.49 | ) | $ | (0.51 | ) | ||||
| Weighted average number of common shares outstanding, basic | 38,899 | 31,128 | 37,614 | 30,593 | ||||||||||||
| Weighted average number of common shares outstanding, diluted | 38,899 | 31,128 | 37,614 | 30,593 | ||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
| 4 |
Atomera Incorporated
Condensed Statements of Comprehensive Loss
(Unaudited)
(in thousands)
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | (6,006 | ) | $ | (5,573 | ) | $ | (18,415 | ) | $ | (15,749 | ) | ||||
| Unrealized gain (loss) on available-for-sale securities | 8 | – | (10 | ) | (1 | ) | ||||||||||
| Comprehensive net loss | $ | (5,998 | ) | $ | (5,573 | ) | $ | (18,425 | ) | $ | (15,750 | ) | ||||
The accompanying notes are an integral part of these condensed financial statements.
| 5 |
Atomera Incorporated
Statements of Stockholders’ Equity
For the Three and Nine Months Ended September 30, 2026 and 2025
(Unaudited)
(in thousands)
| Common Stock | Additional Paid-in | Other Comprehensive Income | Accumulated | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | (Loss) | Deficit | Equity | |||||||||||||||||||
| Balance January 1, 2026 | 32,354 | $ | 32 | $ | 260,043 | $ | $ | (241,694 | ) | $ | 18,381 | |||||||||||||
| Stock-based compensation | 27 | 1,406 | 1,406 | |||||||||||||||||||||
| Stock option exercises | 22 | 124 | 124 | |||||||||||||||||||||
| Forfeiture of restricted stock award | (7 | ) | – | – | – | – | – | |||||||||||||||||
| Registered direct offering of common stock, net of commissions and offering costs | 5,000 | 5 | 23,591 | 23,596 | ||||||||||||||||||||
| At-the-market sale of stock, net of commissions and offering costs | 1,320 | 2 | 3,137 | 3,139 | ||||||||||||||||||||
| Net loss | – | (6,073 | ) | (6,073 | ) | |||||||||||||||||||
| Unrealized gain (loss) on available-for-sale securities | – | (23 | ) | (23 | ) | |||||||||||||||||||
| Balance March 31, 2026 | 38,716 | $ | 39 | $ | 288,301 | $ | (23 | ) | $ | (247,767 | ) | $ | 40,550 | |||||||||||
| Stock-based compensation | 139 | 1,741 | 1,741 | |||||||||||||||||||||
| Stock option exercises | 169 | 1,156 | 1,156 | |||||||||||||||||||||
| At-the-market sale of stock, net of commissions and offering costs | – | (41 | ) | (41 | ) | |||||||||||||||||||
| Net loss | – | (6,336 | ) | (6,336 | ) | |||||||||||||||||||
| Unrealized gain (loss) on available-for-sale securities | – | 5 | 5 | |||||||||||||||||||||
| Balance June 30, 2026 | 39,024 | $ | 39 | $ | 291,157 | $ | (18 | ) | $ | (254,103 | ) | $ | 37,075 | |||||||||||
| Stock-based compensation | 59 | 1,746 | 1,746 | |||||||||||||||||||||
| At-the-market sale of stock, net of commissions and offering costs | – | (29 | ) | (29 | ) | |||||||||||||||||||
| Net loss | – | (6,006 | ) | (6,006 | ) | |||||||||||||||||||
| Unrealized gain (loss) on available-for-sale securities | – | 8 | 8 | |||||||||||||||||||||
| Balance September 30, 2026 | 39,083 | $ | 39 | $ | 292,874 | $ | (10 | ) | $ | (260,109 | ) | $ | 32,794 | |||||||||||
| Common Stock | Additional Paid-in | Other Comprehensive Income | Accumulated | Total Stockholders’ | ||||||||||||||||||||
| Shares | Amount | Capital | (Loss) | Deficit | Equity | |||||||||||||||||||
| Balance January 1, 2025 | 30,540 | $ | 31 | $ | 246,565 | $ | 1 | $ | (221,520 | ) | $ | 25,077 | ||||||||||||
| Stock-based compensation | – | 1,009 | 1,009 | |||||||||||||||||||||
| At-the-market sale of stock, net of commissions and offering costs | 164 | 2,407 | 2,407 | |||||||||||||||||||||
| Net loss | – | (5,209 | ) | (5,209 | ) | |||||||||||||||||||
| Unrealized gain (loss) on available-for-sale securities | – | (1 | ) | (1 | ) | |||||||||||||||||||
| Balance March 31, 2025 | 30,704 | $ | 31 | $ | 249,981 | $ | $ | (226,729 | ) | $ | 23,283 | |||||||||||||
| Stock-based compensation | 28 | 1,278 | 1,278 | |||||||||||||||||||||
| Stock option exercises | 173 | 905 | 905 | |||||||||||||||||||||
| At-the-market sale of stock, net of commissions and offering costs | 185 | 792 | 792 | |||||||||||||||||||||
| Net loss | – | (4,967 | ) | (4,967 | ) | |||||||||||||||||||
| Balance June 30, 2025 | 31,090 | $ | 31 | $ | 252,956 | $ | $ | (231,696 | ) | $ | 21,291 | |||||||||||||
| Stock-based compensation | 27 | 1,342 | 1,342 | |||||||||||||||||||||
| At-the-market sale of stock, net of commissions and offering costs | 393 | 1 | 1,969 | 1,970 | ||||||||||||||||||||
| Net loss | – | (5,573 | ) | (5,573 | ) | |||||||||||||||||||
| Balance September 30, 2025 | 31,510 | $ | 32 | $ | 256,267 | $ | $ | (237,269 | ) | $ | 19,030 | |||||||||||||
The accompanying notes are an integral part of these condensed financial statements.
| 6 |
Atomera Incorporated
Condensed Statements of Cash Flows
(Unaudited)
(in thousands)
| Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (18,415 | ) | $ | (15,749 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 25 | 35 | ||||||
| Operating lease right-of-use asset amortization | 146 | 188 | ||||||
| Financing lease right-of-use asset amortization | 886 | 726 | ||||||
| Stock-based compensation | 4,893 | 3,629 | ||||||
| Net accretion of discounts on available-for-sale securities | (278 | ) | (6 | ) | ||||
| Loss on asset disposal | 2 | – | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | – | (131 | ) | |||||
| Interest receivable | (23 | ) | 10 | |||||
| Prepaid and other current assets | (77 | ) | (186 | ) | ||||
| Accounts payable | 260 | 124 | ||||||
| Accrued expenses | 354 | 5 | ||||||
| Accrued payroll expenses | 677 | (216 | ) | |||||
| Operating lease liability | (121 | ) | (218 | ) | ||||
| Deferred revenue | (7 | ) | 140 | |||||
| Net cash used in operating activities | (11,678 | ) | (11,649 | ) | ||||
| Cash flows from investing activities | ||||||||
| Acquisition of property and equipment | (29 | ) | (27 | ) | ||||
| Purchase of available-for-sale securities | (26,988 | ) | – | |||||
| Maturity of available-for-sale securities | 15,620 | 1,000 | ||||||
| Net cash provided by (used in) investing activities | (11,397 | ) | 973 | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from registered direct offering of common stock net of commissions and expenses | 23,596 | – | ||||||
| Proceeds from at-the-market sale of stock, net of commissions and expenses | 3,069 | 5,169 | ||||||
| Proceeds from exercise of stock options | 1,280 | 905 | ||||||
| Payments on principal of financing lease | (812 | ) | (854 | ) | ||||
| Net cash provided by financing activities | 27,133 | 5,220 | ||||||
| Net increase/(decrease) in cash and cash equivalents | 4,058 | (5,456 | ) | |||||
| Cash and cash equivalents at beginning of period | 19,210 | 25,778 | ||||||
| Cash and cash equivalents at end of period | $ | 23,268 | $ | 20,322 | ||||
| Supplemental information: | ||||||||
| Cash paid for interest | $ | 9 | $ | 51 | ||||
| Cash paid for taxes | $ | – | $ | – | ||||
The accompanying notes are an integral part of these condensed financial statements.
| 7 |
Atomera Incorporated
Notes to the Unaudited Condensed Financial Statements
For the Three and Nine Months Ended September 30, 2026 and 2025
| 1. | NATURE OF OPERATIONS |
Atomera Incorporated (“Atomera” or the “Company”) was incorporated in the state of Delaware in March 2007 under the name MEARS Technologies, Inc. and is engaged in the development, commercialization and licensing of proprietary processes and technologies for the semiconductor industry. On January 12, 2016, the Company changed its name to Atomera Incorporated.
Atomera is an early-stage company, having generated only limited revenue, and is devoting substantially all its efforts toward technology research and development and to commercially licensing its technology to designers and manufacturers of integrated circuits.
| 2. | LIQUIDITY AND MANAGEMENT PLANS |
At September 30, 2026, the Company had cash, cash equivalents and short-term investments of approximately $34.8 million and working capital of approximately $30.6 million. The Company has generated only limited revenues since inception and has incurred recurring operating losses. Accordingly, it is subject to all the risks inherent in the initial organization, financing, expenditures, and scaling of a new business that is not generating positive cashflow.
On May 31, 2022, Atomera entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and Craig-Hallum Capital Group LLC (“Craig-Hallum”), as agents, under which the Company offered and sold, from time to time at its sole discretion, shares of its $0.001 par value common stock in an at the market offering to or through the agents, having aggregate offering proceeds of approximately $44.8 million (the “2022 ATM”). The 2022 ATM expired on March 18, 2025.
On May 27, 2025, Atomera entered into an Equity Distribution Agreement with Craig-Hallum as agent, under which the Company may offer and sell, from time to time at its sole discretion, shares of its $0.001 par value common stock in an at-the-market offering to or through the agent, having aggregate offering proceeds of up to $50.0 million (the “2025 ATM”). During the nine months ended September 30, 2026, the Company sold approximately million shares of common stock pursuant to the 2025 ATM at an average price per share of approximately $ resulting in approximately $3.1 million in net proceeds to the Company after deducting commissions and other offering expenses. The Company did t sell any shares of common stock pursuant to the 2025 ATM during the three months ended September 30, 2026.
On February 24, 2026, the Company completed a registered direct offering (the “Offering”) of shares of its $0.001 par value common stock at a purchase price of $ per share pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors. In connection with the Offering, the Company entered into a placement agent agreement with Craig-Hallum, pursuant to which Craig-Hallum served as the exclusive placement agent for the issuance and sale of securities of the Company pursuant to the Purchase Agreement. As compensation for such placement agent services, the Company paid Craig-Hallum an aggregate cash fee equal to 5.0% of the gross proceeds received by the Company from the Offering and agreed to reimburse up to $75,000 of legal and other expenses actually incurred. Net proceeds to the Company after deducting the placement agent fee and expenses were approximately $23.6 million.
Based on the funds it has available as of the date of the filing of this report, the Company believes that it has sufficient capital to fund its current business plans and obligations over, at least, 12 months from the date that these financial statements have been issued. The Company’s future capital requirements and the adequacy of its available funds will depend on many factors, including the Company’s ability to successfully commercialize its technology, competing technological and market developments, and the need to enter into collaborations with other companies or acquire technologies to enhance or complement its current offerings.
| 8 |
| 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Significant Accounting Policies
There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 24, 2026.
Basis of Presentation of Unaudited Condensed Financial Information
The unaudited condensed financial statements of the Company for the three and nine months ended September 30, 2026 and 2025 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and its results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for the full fiscal year. The balance sheet information as of December 31, 2025 was derived from the audited financial statements included in the Company’s financial statements as of and for the year ended December 31, 2025, included in the Company’s Annual Report on Form 10-K filed with the SEC on February 24, 2026. These unaudited condensed financial statements should be read in conjunction with that report.
Cash, Cash Equivalents, and Short-Term Investments
The Company considers all highly-liquid investments with an original maturity date of three months or less, when purchased, to be cash equivalents. Cash equivalents may be invested in money market funds, treasury bills or U.S. government agency bonds. Cash and cash equivalents are carried at cost, which approximates their fair value.
The Company may also purchase short-term investments comprised of U.S. treasury bills and U.S. government agency bonds with maturities of more than three months, but less than one year. The Company classifies these as available-for-sale at their purchase date and will reevaluate such designation at each period end date. The Company may sell these marketable debt securities prior to their stated maturities depending upon changing liquidity requirements. These debt securities are classified as current assets in the condensed balance sheets and recorded at fair value, with unrealized gains or losses included in accumulated other comprehensive income (loss).
Gains and losses are recognized when realized. Gains and losses are determined using the specific identification method and are reported in other income, net in the condensed statements of operations when incurred. Unrealized gains and losses are included in other comprehensive income (loss) on the condensed balance sheets.
Recent Accounting Standards
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03 (as clarified by ASU 2025-01 in January 2025), Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company does not believe ASU 2024-03 will have a material impact on its financial position, results of operations or financial statement disclosure.
| 9 |
In May 2025, the FASB issued ASU 2025-04 Compensation - Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer which clarifies the guidance on the accounting for share-based payment awards that are granted by an entity as consideration payable to its customer, with the intent to reduce diversity in practice and improve existing guidance by revising the definition of a “performance condition” and eliminating a forfeiture policy election for service conditions associated with share-based consideration payable to a customer. It also clarifies the guidance in Topic 606 on the variable consideration constraint does not apply to share-based consideration payable to a customer “regardless of whether an award’s grant date has occurred”. ASU 2025-04 will be effective for the annual periods beginning after December 15, 2026 with early adoption permitted. The Company does not believe ASU 2025-04 will have a material impact on its financial position, results of operations or financial statement disclosure.
In September 2025, the FASB issued ASU 2025-06 Intangibles—Goodwill and Other— Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments require that an entity capitalize software costs when both: management has authorized and committed to funding the software project; and it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). In evaluating the probable-to-complete recognition threshold, an entity is required to consider whether there is significant uncertainty associated with the development activities of the software. ASU 2025-06 will be effective for the annual periods beginning after December 15, 2027. The Company does not believe ASU 2025-06 will have a material impact on its financial position, results of operations or financial statement disclosure.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow Scope Improvements to improve the navigability of the interim reporting guidance in ASC 270 and clarify when it applies. For public business entities, the amendments in this update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company does not believe ASU 2025-11 will have a material impact on its financial position, results of operations or financial statement disclosure.
| 4. | FAIR VALUE MEASUREMENTS |
Accounting Standards Codification (“ASC”) 820, Fair Value Measurements states that fair value represents the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The three-tiered fair value hierarchy, which prioritizes which inputs should be used in measuring fair value, consists of:
Level 1 — Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as unadjusted quoted prices for similar assets and liabilities, unadjusted quoted prices in the markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company’s Money Market Funds and U.S. Treasury securities are valued using quoted prices in active markets and are classified as Level 1. The Company’s U.S. government agency securities are valued using prices obtained from a third-party pricing service, which uses observable market inputs such as benchmark yields, reported trades and quoted prices for similar securities, and are classified as Level 2.
| 10 |
The Company’s cash, cash equivalents and short-term investments classified by security type as of September 30, 2026 and December 31, 2025 consisted of the following (in thousands):
| September 30, 2026 | ||||||||||||||||
| Cost | Unrealized Gain/(Loss) | Accretion of Discount | Fair Value | |||||||||||||
| Cash | $ | 316 | $ | – | $ | – | $ | 316 | ||||||||
| Money Market Funds | 22,952 | – | – | 22,952 | ||||||||||||
| U.S. Treasury Securities | 9,272 | (9 | ) | 44 | 9,307 | |||||||||||
| U.S. Agency Bonds | 2,224 | (1 | ) | 30 | 2,253 | |||||||||||
| Total | $ | 34,764 | $ | (10 | ) | $ | 74 | $ | 34,828 | |||||||
| December 31, 2025 | ||||||||||||||||
| Cost | Unrealized Gain/(Loss) | Accretion of Discount | Fair Value | |||||||||||||
| Cash | $ | 279 | $ | – | $ | – | $ | 279 | ||||||||
| Money Market Funds | 18,931 | – | – | 18,931 | ||||||||||||
| Total | $ | 19,210 | $ | – | $ | – | $ | 19,210 | ||||||||
| 5. | REVENUE |
The Company recognizes revenue in accordance with ASC 606. The amount of revenue that the Company recognizes reflects the consideration it expects to receive in exchange for goods or services and such revenue is recognized at the time when goods or services are transferred and/or delivered to its customers. Revenue is recognized when the Company satisfies a performance obligation by transferring the product or service to the customer, either at a point in time or over time. Revenue from MSTcad licenses is recognized over a period of time.
The following table provides information about disaggregated revenue by primary geographical markets and timing of revenue recognition (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Primary geographic markets | ||||||||||||||||
| North America | $ | – | $ | 11 | $ | 127 | $ | 15 | ||||||||
| Asia Pacific | – | – | 42 | – | ||||||||||||
| Total | $ | – | $ | 11 | $ | 169 | $ | 15 | ||||||||
| Timing of revenue recognition | ||||||||||||||||
| Products and services transferred at a point in time | $ | – | $ | 11 | $ | 169 | $ | 11 | ||||||||
| Products and services transferred over time | – | – | – | 4 | ||||||||||||
| Total | $ | – | $ | 11 | $ | 169 | $ | 15 | ||||||||
| 11 |
Unbilled contracts receivable
Timing of revenue recognition may differ from the timing of invoicing customers. Accounts receivable includes amounts billed and currently due from customers. Unbilled contracts receivable represents unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed, and the right to receive payment is subject to the underlying contractual terms. Unbilled contracts receivable amounts may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. The Company had no unbilled contracts receivable as of September 30, 2026.
Deferred Revenue
The Company records deferred revenue for customers that were issued invoices, but from which the Company has not yet recognized the revenue based on its revenue recognition policy. As of September 30, 2026, the Company had no deferred revenue.
| 6. | BASIC AND DILUTED LOSS PER SHARE |
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and (ii) vesting of restricted stock units and (iii) restricted stock awards, are only included in the calculation of diluted net loss per share when their effect is dilutive. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Accordingly, basic and diluted net loss per share are equal.
The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive (in thousands):
Nine Months Ended September 30, | ||||||||
| 2026 | 2025 | |||||||
| Stock Options | 3,407 | 3,327 | ||||||
| Unvested restricted stock awards | 124 | 278 | ||||||
| Unvested restricted stock units | 1,055 | 608 | ||||||
| Total | 4,586 | 4,213 | ||||||
| 12 |
| 7. | LEASES |
The Company accounts for leases over one year under ASC 842. Lease expense for the Company’s operating leases consists of the lease payments recognized on a straight-line basis over the lease term. Expenses for the Company’s financing leases consists of the amortization expenses recognized on a straight-line basis over the lease term and interest expense.
The Company’s lease agreement for a 300mm epitaxial deposition tool used in the development and marketing of the Company’s technology established a monthly lease payment of $150,000 per month. The lease contains a provision for an annual adjustment of lease payments based on tool availability and usage during the preceding 12 months and the adjusted payment is calculated on August 1 of each year of the lease. Effective August 1, 2024, the lease payments for this tool were adjusted to $124,071 per month for the period August 1, 2024 through July 31, 2025. This adjustment to the lease payments also resulted in a reduction in the right-of-use (“ROU”) asset and corresponding lease liability. Effective August 1, 2025, the lease payments for this tool were adjusted to $133,125 per month for the period August 1, 2025 through April 30, 2026. The final three months of the lease were prepaid at the commencement of the lease. This adjustment to the lease payments also resulted in a reduction in the ROU asset and corresponding lease liability. In August 2026, the lease was extended for an additional three months through October 2026 at a rate of $250,000 per month. Due to the modification, an additional ROU and lease liability of approximately $590,000 was recorded during the three months ended September 30, 2026. The lease liability is based on the present value of the minimum lease payments, discounted using an estimated incremental borrowing rate of 8.75%.
In December 2025, the Company and its landlord amended the lease of the corporate headquarters in Los Gatos, California. The amendment extends the expiration date of the lease from January 2026 to March 2031. An additional ROU asset and lease liability of approximately $856,000 was recorded during the year ended December 31, 2025. The lease liability is based on the present value of the minimum lease payments, discounted using an estimated incremental borrowing rate of 8.75%. The lease contains escalating payments on the anniversary of the original commencement of the lease which are included in the measurement of the lease liability. Additional payments based on a change in the Company’s share of the operating expenses, including property taxes and insurance are recorded as a period expense when incurred.
In February 2026, the Company and its landlord amended the lease of its Tempe office location. The lease also contains a performance standard for research collaboration with Arizona State University. The agreement requires a minimum value of collaboration in each year of the lease. The lease is accounted for under ASC 842 and accordingly, the research payments are included in the ROU and lease liability. The lease is for three years with an option to extend the lease for an additional two years. The lease liability is based on the present value of the minimum lease payments, discounted using an estimated incremental borrowing rate of 8.75%. An ROU asset and lease liability of approximately $342,000 was recorded during the nine months ended September 30, 2026.
In December 2025, the Company entered into a lease agreement for a 200mm epitaxial deposition tool in Tempe, Arizona, distinct from the tool previously mentioned. The term of this lease is for 12 months beginning on January 1, 2026 for $95,000 per month. At inception, the lease term was not for more than one year and there were no extension provisions in the lease, and therefore, the future lease payments were not included in the lease obligations on the Company’s condensed balance sheets. In September 2026, the Company agreed to extend the lease through December 31, 2027. The lease included a lump sum payment of approximately $1.4 million due and paid on October 1, 2026 for all of 2027. Lease payments for October 2026 through December 2026 remained at $95,000 per month. At the time of the modification, the Company recorded an ROU asset and current lease liability of approximately $1.7 million. The lease liability is based on the present value of the minimum lease payments, discounted using an estimated incremental borrowing rate of 8.75%.
| 13 |
Lease expense for operating leases consists of the lease payments recognized on a straight-line basis over the lease term. Expenses for financing leases consists of the amortization expenses recognized on a straight-line basis over the lease term and interest expense. The components of lease costs were as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Financing lease costs: | ||||||||||||||||
| Amortization of ROU assets | $ | 464 | $ | 225 | $ | 886 | $ | 726 | ||||||||
| Interest on lease liabilities | 7 | 12 | 12 | 51 | ||||||||||||
| Total financing lease costs | $ | 471 | $ | 237 | $ | 898 | $ | 777 | ||||||||
| Operating lease costs: | ||||||||||||||||
| Fixed lease costs | $ | 74 | $ | 65 | $ | 218 | $ | 196 | ||||||||
| Variable lease costs | – | 7 | – | 9 | ||||||||||||
| Short-term lease costs | 285 | 287 | 855 | 858 | ||||||||||||
| Total operating lease costs | $ | 359 | $ | 359 | $ | 1,073 | $ | 1,063 | ||||||||
Future minimum payments under non-cancellable leases as of September 30, 2026 were as follows (in thousands):
| For the Year Ended December 31, | Financing leases | Operating leases | ||||||
| Remaining 2026 | $ | 198 | $ | 1,704 | ||||
| 2027 | – | 292 | ||||||
| 2028 | – | 299 | ||||||
| 2029 | – | 306 | ||||||
| 2030 | – | 314 | ||||||
| 2031 | – | 64 | ||||||
| Total future minimum lease payments | 198 | 2,979 | ||||||
| Less imputed interest | – | (248 | ) | |||||
| Total lease liability | $ | 198 | $ | 2,731 | ||||
| 14 |
The table below provides supplemental information and non-cash activity related to the Company’s operating and financing leases are as follows (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating cash flow information: | ||||||||||||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 108 | $ | 63 | $ | 192 | $ | 227 | ||||||||
| Cash paid for amounts included in the measurement of financing liabilities | $ | 398 | $ | 311 | $ | 823 | $ | 905 | ||||||||
| Non-cash activity: | ||||||||||||||||
| Right-of-use assets obtained in exchange for operating lease obligations | $ | 1,651 | $ | – | $ | 1,993 | $ | – | ||||||||
| Remeasurement of right-of-use assets and liabilities in financing lease | $ | – | $ | (119 | ) | $ | – | $ | (119 | ) | ||||||
| Right-of-use assets obtained in exchange for financing lease obligations | $ | 590 | $ | – | $ | 590 | $ | – | ||||||||
The table above does not include short-term leases that are one-year or less. The weighted average remaining discount rate is 8.75% for the Company’s financing and operating lease. The weighted average remaining lease term is 1 month for the financing lease and 1.9 years for operating leases as of September 30, 2026.
| 8. | STOCK-BASED COMPENSATION |
In May 2017, the Company’s shareholders approved its 2017 Stock Incentive Plan (“2017 Plan”) after its 2007 Stock Incentive Plan (“2007 Plan”) had expired in March 2017. The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock and for the grant of restricted and unrestricted shares of common stock and restricted stock units. The 2017 Plan provides for the issuance of shares of common stock. In May 2023, the Company’s shareholders approved its 2023 Stock Incentive Plan (“2023 Plan”). The 2023 plan provides for the issuance of shares of common stock. In May 2025, the Company’s shareholders approved an amendment to the 2023 Plan, adding an additional shares to this plan. All employees (including officers and directors who are also employees), as well as all of the nonemployee directors and other consultants, advisors and other persons who provide services to the Company are eligible to receive incentive awards under the 2017 Plan and 2023 Plan. Generally, stock options, restricted stock and restricted stock units issued under the 2017 Plan and 2023 Plan vest over a period of one to four years from the date of grant. As of September 30, 2026, a total of approximately shares remain available for issuance under the plans.
| 15 |
The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations for stock options, restricted stock awards and restricted stock units granted under the Company’s incentive plans (in thousands):
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Research and development | $ | 639 | $ | 542 | $ | 1,804 | $ | 1,537 | ||||||||
| General and administrative | 1,034 | 796 | 2,901 | 2,135 | ||||||||||||
| Selling and marketing | 73 | 4 | 188 | (43 | ) | |||||||||||
| Total | $ | 1,746 | $ | 1,342 | $ | 4,893 | $ | 3,629 | ||||||||
As of September 30, 2026, there was approximately $ million of total unrecognized compensation expense related to unvested share-based compensation. This cost is expected to be recognized over a weighted-average period of years.
Time-Based Stock Options:
The Company records compensation expense for time-based stock options over the vesting term using the straight-line method. The fair value of employee stock options issued was estimated using the Black-Scholes method and the average grant date fair value was estimated to be $ and $ for three and nine months ended September 30, 2025, respectively, and $ for the nine months ended September 30, 2026. The Company did t issue any stock option in the three months ended September 30, 2026. The following table summarizes time-based stock option activity during the nine months ended September 30, 2026 (in thousands except exercise prices and contractual terms):
Number of Shares | Weighted- Average Exercise Prices per Share | Weighted- Remaining Contractual Term (In Years) | Intrinsic Value | |||||||||||||
| Outstanding at January 1, 2026 | 2,907 | $ | 6.53 | |||||||||||||
| Granted | 110 | $ | 5.30 | |||||||||||||
| Exercised | (190 | ) | $ | 6.73 | ||||||||||||
| Forfeited | (1 | ) | $ | 9.91 | ||||||||||||
| Expired | (155 | ) | $ | 7.84 | ||||||||||||
| Outstanding at September 30, 2026 | 2,671 | $ | 6.38 | $ | 533 | |||||||||||
| Exercisable at September 30, 2026 | 2,189 | $ | 6.71 | $ | 308 | |||||||||||
The intrinsic value is based on the Company’s closing stock price of $ on September 30, 2026.
| 16 |
Performance-based Stock Options:
In March 2026, the Company began issuing performance-based stock options (“PSOs”) to certain employees. The PSOs include both time-based and stock-price-based vesting thresholds, with 25% of the PSO time-vesting one year after the grant date and the remaining PSOs time-vesting over the next three years, but the PSOs only vest and become exercisable if the volume-weighted average price of the Company’s common stock as quoted on the Nasdaq Stock Market over any 30 consecutive trading days during the five-year period from the date of grant exceeds the stock-price hurdles specified in the PSO awards. The stock-price hurdles for PSOs granted were $, $ and $. The fair value of these PSOs was estimated using a Monte Carlo simulation and the stock compensation expense is amortized over the requisite service period for each tranche, which is the longer of the derived service period or the explicit service period. Approximately options achieved the performance criteria and will begin vesting one year after the grant date. The average grant date fair value was determined to be $ on the day of grant. The following table summarizes PSO activity during the nine months ended September 30, 2026 (in thousands except exercise prices and contractual terms):
Number of Shares | Weighted- Average Exercise Prices per Share | Weighted- Remaining Contractual Term (In Years) | Intrinsic Value | |||||||||||||
| Outstanding at January 1, 2026 | – | $ | – | |||||||||||||
| Granted | 736 | $ | 5.10 | |||||||||||||
| Outstanding at September 30, 2026 | 736 | $ | 5.10 | $ | – | |||||||||||
| Exercisable at September 30, 2026 | – | $ | – | – | $ | – | ||||||||||
The intrinsic value is based on the Company’s closing stock price of $ on September 30, 2026.
Restricted Stock Awards:
The Company has issued restricted stock awards to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant. The following table summarizes all restricted stock award activity during the nine months ended September 30, 2026 (in thousands except per share data):
Number of Shares | Weighted-Average Grant Date Fair Value per Share | |||||||
| Outstanding at January 1, 2026 | 234 | $ | 6.90 | |||||
| Vested | (103 | ) | $ | 7.42 | ||||
| Forfeited | (7 | ) | $ | 6.49 | ||||
| Outstanding non-vested shares at September 30, 2026 | 124 | $ | 6.48 | |||||
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Restricted Stock Units:
The Company issues restricted stock units (“RSUs”) to employees, directors and consultants and a portion of the RSUs issued are subject to time-based vesting and a portion are subject to performance-based vesting criteria. The fair value of time-based RSUs is based on the closing price on the day of grant and they vest over zero to four years. Awards of performance-based restricted stock units by the Company have a performance period of one, two or three years with the vesting of each award tranche dependent on the Company’s Total Shareholder Return (“TSR”) relative to the TSR of companies in the Russell 2000 Index over that tranche’s performance period. The fair value for performance-based awards is fixed at the grant date using a Monte Carlo simulation and the amount of compensation expense is not adjusted during the performance period regardless of changes in the level of TSR achievement. The following table summarizes all restricted stock unit activity during the nine months ended September 30, 2026 (in thousands except per share data):
| Time-Based Units | Performance- Based Units | Total Restricted Stock Units | Weighted-Average Grant Date Fair Value per Share | |||||||||||||
| Outstanding at January 1, 2026 | 387 | 221 | 608 | $ | 7.62 | |||||||||||
| Granted | 517 | 277 | 794 | $ | 6.93 | |||||||||||
| Vested | (226 | ) | – | (226 | ) | $ | 6.34 | |||||||||
| Forfeited | (47 | ) | (74 | ) | (121 | ) | $ | 7.07 | ||||||||
| Outstanding at September 30, 2026 | 631 | 424 | 1,055 | $ | 7.44 | |||||||||||
| 9. | COMMITMENTS AND CONTINGENCIES |
Litigation, Claims and Assessments
The Company may be subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company is not party to any material litigation as of September 30, 2026, or through the date these financial statements have been issued.
| 10. | SEGMENT INFORMATION |
The Company operates as a operating segment. The Company’s chief operating decision maker (“CODM”) is its chief executive officer and chief financial officer who review financial information. The CODM uses total operating expense, operating margin and related impact on cash consumption to assess financial performance and allocate resources. These financial metrics are used by the CODM to make key operating decisions, such as the determination of the overall headcount, allocation of headcount, research and development expenditures, licensing and royalty rates offered to customers and capital expenditure commitments. The measure of assets is reported on the accompanying condensed balance sheets as total assets.
| 18 |
The following table presents selected financial information with respect to the Company’s single operating segment for the three and nine months ended September 30, 2026 and 2025:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | – | $ | 11 | $ | 169 | $ | 15 | ||||||||
| Less expenses (1): | ||||||||||||||||
| Employee related expenses | 1,611 | 1,690 | 6,320 | 4,993 | ||||||||||||
| Stock-based compensation | 1,746 | 1,342 | 4,893 | 3,629 | ||||||||||||
| Tool related expenses | 877 | 588 | 2,091 | 1,811 | ||||||||||||
| Consulting expenses | 138 | 158 | 467 | 414 | ||||||||||||
| Metrology and other outsourced research expenses | 474 | 614 | 1,419 | 1,516 | ||||||||||||
| Intellectual property related expenses | 426 | 339 | 1,254 | 992 | ||||||||||||
| Other operating items(2) | 1,056 | 1,073 | 3,136 | 3,171 | ||||||||||||
| Operating margin | (6,328 | ) | (5,793 | ) | (19,411 | ) | (16,511 | ) | ||||||||
| Other income, net | 322 | 220 | 996 | 762 | ||||||||||||
| Net loss | $ | (6,006 | ) | $ | (5,573 | ) | $ | (18,415 | ) | $ | (15,749 | ) | ||||
| (1) |
Expenses classified as cost of revenue are included in the line items presented and not as a separate category. |
| (2) | Other operating expenses include items not listed above separately. These include travel and entertainment, professional development, information technology costs, office related costs, depreciation, other research and development costs, other sales and marketing costs and other general and administrative costs. |
| 11. | SUBSEQUENT EVENTS |
Management has evaluated subsequent events and transactions through the date these financial statements were issued.
| 19 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the financial condition and results of operations of Atomera Incorporated should be read in conjunction with our financial statements and the accompanying notes that appear elsewhere in this Quarterly Report on Form 10-Q. Statements in this Quarterly Report include forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 24, 2026. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
Overview
We are engaged in the business of developing, commercializing and licensing proprietary processes and technologies for the $700+ billion semiconductor industry. Our lead technology, named Mears Silicon Technology™, or MST®, is a thin film of reengineered silicon. MST is our proprietary and patent-protected transistor enhancement technology that we believe addresses a number of key engineering challenges facing the semiconductor industry. MST provides multiple benefits to the semiconductor manufacturing process, enabling transistors to be made smaller, with increased speed, reliability and power efficiency. In addition, since MST is an additive and low-cost technology, we believe it can be deployed on an industrial scale, with machines commonly used in semiconductor manufacturing. We believe that MST can be widely incorporated into the most common types of semiconductor products, including analog, logic, optical and memory integrated circuits.
We do not design or manufacture wafers or integrated circuits directly. Instead, we develop and license technologies and processes that we believe offer the designers and manufacturers of wafers and integrated circuits a low-cost solution to the industry’s need for greater performance and lower power consumption. Our customers and partners include:
| · | foundries, which manufacture integrated circuits on behalf of fabless manufacturers; | |
| · | integrated device manufacturers, or IDMs, which are the fully-integrated designers and manufacturers of integrated circuits; | |
| · |
fabless semiconductor manufacturers, which are designers of integrated circuits that outsource the manufacturing of their chips to foundries; | |
| · | manufacturers of semiconductor wafers, which provide the substrates upon which integrated circuits are fabricated; | |
| · | original equipment manufacturers, or OEMs, that manufacture the epitaxial, or epi, machines used to deposit semiconductor layers, such as the MST film, onto silicon wafers; and | |
| · | electronic design automation companies, which make tools used throughout the industry to simulate performance of semiconductor products using different materials, design structures and process technologies. |
| 20 |
Our principal business objective is to enter into commercial license agreements that enable our customers to manufacture and sell MST-enabled products, generating license revenues and ongoing royalties. We also license our MSTcad® software to customers, enabling them to simulate the effects of MST on their products using Synopsys, Inc.’s technology computer-aided design, or TCAD, software. In addition, we offer fee-based integration engineering services to customers to evaluate the effects of MST as integrated into their manufacturing flow. Typically, we offer these services through paid evaluation arrangements, joint development agreements (“JDAs”) or integration license agreements.
Our goal is that MSTcad licensing and engineering service arrangements will be tools that demonstrate the benefits of MST when integrated into customers’ manufacturing processes and will lead customers to enter into commercial license agreements. A “commercial license” consists of (i) an R&D license, which grants our customer the rights to install MST on a tool in their fab and to manufacture MST-enabled products, but only for internal use and limited customer sampling and (ii) a high-volume manufacturing, or HVM, license which grants the rights to manufacture and sell MST-enabled products to their customers.
Depending upon our customers’ business needs and how we initially engaged with them, we may make these license grants in one or more separate contracts. Our preferred model is to charge our customers upfront license fees for each license grant. Under our licensing model, the R&D license fee is due upon installation of MST in a tool at our customer’s fab and a larger HVM license fee will be due when our customer completes qualification of MST in their process and before they can sell MST -enabled products to their customers. Upon the grant of an HVM license, our licensees are also required to make royalty payments to us based on the number and/or sales price of MST-enabled products they sell. We have engaged with certain customers under joint development agreements, or JDAs. Our JDAs include development, technology transfer, manufacturing and licensing components.
To date, applications of our MST technology have primarily been for power devices, RFSOI devices and advanced CMOS integrated circuits including logic and memory. CMOS integrated circuits are the most widely used type of integrated circuits in the semiconductor industry. We believe MST has the potential to overcome the key challenges found in the implementation of next-generation nano-scale semiconductor devices incorporating CMOS-type transistors, namely enhancing drive current, reducing leakage and reducing variability. In addition, we believe that MST has the potential to deliver these benefits through a single technology that requires relatively minor modifications to the industry-standard CMOS manufacturing flow. Consequently, we believe that by incorporating MST, designers can make transistors with increased speed, reliability and energy efficiency, without significantly altering the current fabrication process or cost of production.
Starting in 2024, we began applying our technology to wafers used for fabrication of “compound semiconductors” which are devices built using materials other than silicon, such as gallium nitride (GaN), which have properties especially attractive to the power and radio frequency markets. Currently, materials such as GaN suffer from a tradeoff between high-cost specialized wafers and defective, low-yielding wafers resulting from the crystal lattice mismatch between heterogeneous materials. We believe MST can offer a cost-effective solution to these tradeoffs by serving as a buffer layer between different materials, such as between GaN and a silicon wafer substrate.
We were organized as a Delaware limited liability company under the name Nanovis LLC on November 26, 2001. On March 13, 2007, we converted to a Delaware corporation under the name Mears Technologies, Inc. On January 12, 2016, we changed our name to Atomera Incorporated. Shares of our common stock are listed on the NASDAQ Capital Market under the symbol “ATOM”.
On May 31, 2022, we entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc. and Craig-Hallum Capital Group LLC (“Craig-Hallum”), as agents, under which we offered and sold, from time to time at our sole discretion, shares of our common stock in an at the market offering to or through the agents, having aggregate offering proceeds of up to $50.0 million (the “2022 ATM”). The 2022 ATM expired on March 18, 2025.
| 21 |
On May 27, 2025, we entered into an Equity Distribution Agreement with Craig-Hallum as agent, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock in an “at-the-market” offering, (the “2025 ATM”) to or through the agent, having aggregate offering proceeds of up to $50.0 million. During the three months ended September 30, 2026, no shares were sold pursuant to the 2025 ATM. During the nine months ended September 30, 2026, approximately 1.3 million shares were sold pursuant to the 2025 ATM at an average price per share of approximately $2.47 resulting in approximately $3.1 million of net proceeds to us after deducting commissions and other offering expenses.
On February 24, 2026, we completed a registered direct offering (the “Offering”) of 5,000,000 shares of our common stock at a purchase price of $5.00 per share pursuant to a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors. In connection with the Offering, the Company entered into a placement agent agreement with Craig-Hallum, pursuant to which Craig-Hallum served as the exclusive placement agent for the issuance and sale of securities of the Company pursuant to the Purchase Agreement. As compensation for such placement agent services, the Company paid Craig-Hallum an aggregate cash fee equal to 5.0% of the gross proceeds received by the Company from the Offering and agreed to reimburse up to $75,000 of legal and other expenses actually incurred. Net proceeds to the Company after deducting the placement agent fee and expenses were approximately $23.6 million.
Results of Operations
Revenues. To date, we have generated only limited revenue from customer engagements for engineering services, integration license agreements, R&D licenses granted under a JDA and under our license agreement with ST Microelectronics and from licensing of MSTcad. Our MSTcad licenses grant customers the right to use MSTcad software to simulate the effects of incorporating MST technology into their semiconductor manufacturing process. MSTcad licenses are granted on a monthly or yearly basis and revenue is recognized over time.
Revenue for the three and nine months ended September 30, 2026 was approximately $0 and $169,000, respectively. Revenue consisted of engineering services revenue from the delivery of MST wafers. Revenue for the three and nine months ended September 30, 2025 of approximately $11,000 and $15,000 and consisted of MSTcad licensing and delivery of MST wafers.
Cost of revenue. Cost of revenue consists of costs of materials, as well as direct compensation and expenses incurred to deliver wafers and perform services, and consulting services provided for our MSTcad licenses. Cost of revenue for the three and nine months ended September 30, 2026 was approximately $0 and $152,000, respectively. Cost of revenue for the three and nine months ended September 30, 2025 was approximately $128,000 and $190,000, respectively. We anticipate that our cost of revenue will vary substantially depending on the mix of license and engineering services revenues we receive and the nature of products and/or services delivered in each customer’s engagement. Cost of revenue is expensed when incurred and may not correspond with revenue earned in the same period.
Operating expenses. Operating expenses consist of research and development, general and administrative, and selling and marketing expenses. For the three months ended September 30, 2026 and 2025, our operating expenses totaled approximately $6.3 million and $5.7 million, respectively. For the nine months ended September 30, 2026 and 2025, our operating expenses totaled approximately $19.4 million and $16.3 million, respectively.
Research and development expense. To date, our operations have focused on research, development, patent prosecution, and commercialization of our MST technology and related technologies such as MSTcad. Our research and development costs primarily consist of payroll and benefits costs for our engineering staff and costs of outsourced fabrication (including epi tool leases) and metrology of semiconductor wafers incorporating our MST technology.
For the three months ended September 30, 2026 and 2025, we incurred approximately $3.6 million and $3.3 million, respectively, of research and development expenses, an increase of approximately $343,000, or 10%. This increase was primarily due to an approximately $325,000 increase in tool lease costs under the lease extension for our 300mm epitaxial deposition tools in August 2026.
| 22 |
The lease extension that resulted in these increased costs runs through October 31, 2026 and negotiations for continued usage of this tool or a similar one are ongoing so future tool usage costs may be higher or lower than the rates under our past lease and the related extension.
For the nine months ended September 30, 2026 and 2025, we incurred approximately $10.4 million and $9.6 million, respectively, of research and development expenses, an increase of approximately $828,000, or 9%. This increase is primarily related to an increase in tool related costs of approximately $524,000, which consisted of increased costs for the amended tool lease in August 2026 and a cancellation fee relating to a planned purchase of a lab infrastructure tool. Additionally, there were increases in stock-based compensation of approximately $267,000, and an increase in accrued bonus expense of approximately $137,000.
General and administrative expense. General and administrative expenses consist primarily of payroll and benefit costs for administrative personnel, office-related costs and professional fees. General and administrative costs were approximately $2.3 million and $2.2 million for the three months ended September 30, 2026 and 2025, respectively, representing an increase of approximately $173,000, or 8%. The increase is primarily related to increases in stock-based compensation expenses of approximately $239,000 and increase of approximately $86,000 in legal costs and filing fees related to our patent portfolio. These increases were partially offset by a decrease in employee related costs of approximately $139,000, mainly related to a reduction in our bonus accrual.
For the nine months ended September 30, 2026 and 2025, general and administrative costs were approximately $7.8 million and $6.3 million, respectively, representing an increase of approximately $1.5 million, or 24%. The increase is primarily related to increases of approximately $505,000 in bonus accrual, stock-based compensation expenses of approximately $766,000 and an increase in legal costs and filing fees related to our patent portfolio of approximately $262,000.
Selling and marketing expense. Selling and marketing expenses consist primarily of salary and benefits for our sales and marketing personnel and business development consulting services. Selling and marketing expenses for the three months ended September 30, 2026 and 2025 were approximately $343,000 and $207,000, respectively, representing an increase of approximately $136,000, or 66%. The increase is primarily related to a $186,000 increase in employee-related expenses and approximately $69,000 increase in stock-based compensation, all related to an increase in headcount over the prior year. These costs were partially offset by a decrease in recruiting fees of approximately $130,000.
Selling and marketing expenses for the nine months ended September 30, 2026 and 2025 were approximately $1.2 million and $472,000, respectively, representing an increase of approximately $727,000, or 154%. The increase is primarily related to a $595,000 increase in employee-related expenses, approximately $232,000 increase in stock-based compensation offset by a decrease in recruiting fees of approximately $159,000.
Interest income. Interest income for the three months ended September 30, 2026 and 2025 was approximately $254,000 and $232,000, respectively. Interest income for the nine months ended September 30, 2026 and 2025 was approximately $623,000 and $736,000, respectively. Interest income reflects interest earned on our cash, cash equivalents and short-term investments and are impacted by current interest rates and average balances over the periods presented.
Accretion income. Accretion income for the three and nine months ended September 30, 2026 was approximately $75,000 and $310,000, respectively. Accretion income for the three and nine months ended September 30, 2025 was approximately $0 and $6,000, respectively. Accretion income relates to the increase in value of our available-for-sale securities from the purchase date through the maturity date.
Interest expense. Interest expenses for the three months ended September 30, 2026 and 2025 were approximately $7,000 and $12,000, respectively. Interest expenses for the nine months ended September 30, 2026 and 2025 were approximately $12,000 and $51,000, respectively. Interest expense is related to the tool financing lease entered into in August 2021 and extended for an additional three months in August 2026.
Other income, net. Other income for the three months ended September 30, 2026 and 2025 was $0, and for the nine months ended September 30, 2026 and 2025 was approximately $75,000 and $71,000, respectively. For all periods presented, these amounts consist primarily of a refundable state research and development tax credit, net of filing costs and tax consulting services.
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Cash Flows from Operating, Investing and Financing Activities
Net cash used in operating activities of approximately $11.7 million for the nine months ended September 30, 2026 resulted primarily from our net loss of approximately $18.4 million offset by approximately $4.9 million of stock-based compensation, amortization of our right-of-use assets of approximately $1.0 million and an increase of approximately $677,000 in accrued payroll which primarily consists of our annual bonus accrual.
Net cash used in operating activities of approximately $11.6 million for the nine months ended September 30, 2025 resulted primarily from our net loss of approximately $15.7 million offset by approximately $3.6 million of stock-based compensation and approximately $914,000 in amortization of right-of-use assets.
Net cash used in investing activities of approximately $11.4 million for the nine months ended September 30, 2026 consisted primarily of the purchase of short-term available-for-sale investments offset by the maturity of short-term investments.
Net cash provided by investing activities of approximately $973,000 for the nine months ended September 30, 2025 consisted primarily of the maturity of short-term available-for-sale investments.
Net cash provided by financing activities of approximately $27.1 million for the nine months ended September 30, 2026 primarily related to the net proceeds from sales under our registered direct offering of common stock, sales under the 2025 ATM and stock option exercises, offset by the principal payments on our financing lease.
Net cash provided by financing activities of approximately $5.2 million for the nine months ended September 30, 2025 primarily related to the net proceeds from sales under our ATM and stock option exercises, offset by the principal payments on our financing lease.
Liquidity and Capital Resources
As of September 30, 2026, we had cash, cash equivalents and short-term investments of approximately $34.8 million and working capital of approximately $30.6 million. For the nine months ended September 30, 2026 we had a net loss of approximately $18.4 million and used approximately $11.7 million of cash and cash equivalents in operations. Since inception, we have incurred recurring operating losses.
During the nine months ended September 30, 2026, we sold approximately 1.3 million shares of common stock pursuant to 2025 ATM at an average price per share of approximately $2.47 resulting in approximately $3.1 million in net proceeds after deducting commissions and other offering expenses. No shares were sold under the 2025 ATM in the three months ended September 30, 2026.
On February 24, 2026, we sold five million shares of common stock in a registered direct offering, at a purchase price of $5.00 per share. As compensation for such placement agent services, the Company paid Craig-Hallum an aggregate cash fee equal to 5.0% of the gross proceeds received by the Company from the Offering and agreed to reimburse up to $75,000 of legal and other expenses as actually incurred. Net proceeds to the Company after deducting the placement agent fee and expenses were approximately $23.6 million.
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We believe that our available working capital is sufficient to fund our presently forecasted working capital requirements for, at least, the next 12 months following the date of the filing of this report. However, our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our MST technology, competing technological and market developments, and the need to enter into collaborations with other companies or acquire technologies to enhance or complement our current offerings. If we are not able to generate sufficient revenue from license fees and royalties in a timeframe that satisfies our cash needs, we will need to raise more capital. In the event we require additional capital, we will endeavor to acquire additional funds through various financing sources, including our ATM, follow-on equity offerings, debt financing and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve cash.
Critical Accounting Estimates
There have been no changes to our critical accounting estimates from those included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 24, 2026.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and principal financial and accounting officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on this evaluation, management concluded that our disclosure controls and procedures were effective as of September 30, 2026.
Changes in Internal Control over Financial Reporting
There have not been any changes to our internal controls over financial reporting (as defined by Rule 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the three-month period ended September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
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PART II. Other Information
Item 1A. Risk Factors
The primary risk factors affecting our business have not changed materially from the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the SEC on February 24, 2026.
Item 5. Other Information
During the quarter ended September 30, 2026, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits
The following is a list of exhibits filed as part of this Report on Form 10-Q:
| Exhibit No. | Description | Method of filing | ||
| 3.1 | Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. | ||
| 3.2 | Second Amended and Restated Bylaws of the Registrant | Incorporated by reference from the Registrant’s Form 8-K filed on February 11, 2026. | ||
| 3.3 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. | ||
| 3.4 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Registration Statement on Form S-1 filed on June 30, 2016. | ||
| 3.5 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant | Incorporated by reference from the Registrant’s Form 10-Q filed on August 6, 2026. | ||
| 31.1 | Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed electronically herewith | ||
| 31.2 | Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | Filed electronically herewith | ||
| 32.1 | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) | Filed electronically herewith | ||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Filed electronically herewith | ||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed electronically herewith | ||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed electronically herewith | ||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed electronically herewith | ||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed electronically herewith | ||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed electronically herewith | ||
| 104 | Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101). | Filed electronically herewith |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ATOMERA INCORPORATED | |||
| Date: October 30, 2026 | By: | /s/ Scott A. Bibaud | |
| Scott A. Bibaud Chief Executive Officer, |
|||
| (Principal Executive Officer) | |||
| and Director | |||
| Date: October 30, 2026 | By: | /s/ Francis B. Laurencio | |
| Francis B. Laurencio | |||
| Chief Financial Officer | |||
| (Principal Financial and | |||
| Accounting Officer) | |||
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