ATOM earnings call analysis

NASDAQ:ATOM Q1 2026 Earnings Call Transcript Generated on 6/9/2026 Mike Bishop | Head of Investor Relations: Hello, everyone, and welcome to Atomera's first quarter 2026 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 one year. I'm Mike Bishop with the company's investor relations. As in prior quarters, we are using Zoom, and we will follow a similar presentation format with participants in the listen-only mode. We will open with prepared remarks from Scott Vivo, Atomera's president and CEO, and Frank Lorenzio, Atomera's CFO. Then we will open the call to questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the events and presentation section of our investor relations page on our website. Before we begin, I would like to remind everyone that during today's call, we will make forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of our filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 10-K filed with the SEC on February 24, 2026. Except as otherwise required by federal securities laws, Adam Merritt disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on our website. Now, with that, I'd like to turn the call over to our present CEO, Scott Vivo. Go ahead, Scott.

Scott Vivo | President and Chief Executive Officer

Thanks, Mike, and good afternoon, everyone. This quarter, we made solid progress with multiple customers across our highest value markets, while also expanding the breadth of applications where MST can solve real current pain points for the semiconductor industry. We're seeing strong customer pull in advanced logic, memory, in wideband gap materials like GAN and power, and in RF, areas that are being shaped by the rapid growth of AI infrastructure, which is driving the need for better power efficiency, signal integrity, and system performance. Today, I'll start with an update on GATE All-Around, where we've been working closely with customers and our strategic partners to validate MST in these advanced geometries. Then I'll touch on our customer pipeline and close with updates on GAN, giving insights on some exciting new technical results that are shaping near-term opportunities. As we've said before, the move to GATE All-Around at 2 nanometers and beyond is one of the most important architectural transitions in the industry, and it's also one of the most difficult manufacturing environments, since fabs must build incredibly complicated structures at line widths of 5,000 times smaller than a human hair, where a small amount of atomic migration can cause big problems. Gate-all-around transistors are the building blocks for AI infrastructure, and dopant diffusion control is critical to their effectiveness in terms of performance and reliability. Therefore, the industry is demanding clear proof that any new material can be deposited precisely and that it delivers measurable benefits in advanced silicon devices. Today, there are four companies in the world developing gate all-around transistors, TSMC, Samsung, Intel, and Rapidus. We know that each of them can use the capabilities of MST So it's our goal to achieve adoption at all four. Further, as these companies transition to the generation beyond gate all around called CFET, our technology becomes even more essential. So working with us now is in our best interest long term. In our last earnings call, we have just received measured silicon results that prove MST is the best solution for a critical source drain liner application in these small geometry transistors. At this point, we're actively working on evaluations of our technology with two of our target gate-all-around customers, and discussions are underway with the others. It is typical that a customer asks to conduct multiple demonstrations before agreeing to accept a new technology for implementation in the FAB's wafer flow. These demonstrations help to validate our claims while simultaneously addressing the detailed implementation and functionality questions these customers are focused on solving. We also expanded the scope of our work with our strategic development partner this quarter, which is important because it strengthens both our technical velocity and our credibility with the ecosystem. Their test and development infrastructure helps us generate the kind of data that advanced node customers insist on seeing before engaging, and their endorsement will certainly help us engage a broader set of teams within each target account. Each of the large memory manufacturers are facing similar challenges to the gate all around customers as they develop their next generation transistors in DRAMs and high bandwidth memories. Our team is in discussions with them right now, and we are currently working on multiple solutions using MSE to assist in this area. Right now, memory manufacturers would do almost anything to get greater fab capacity, and they have the resources to evaluate different methods of doing so. We hope to take advantage of that opportunity with solutions enabled by MSD. The momentum we're seeing in the advanced node transistor space is the result of many years' work targeting current market trends. The macro challenges that AI success has put front and center, capacity and performance of CPUs, GPUs, logic, and memory, the power demands of cloud providers, and the increased costs associated with these, are all areas that Adameric can help solve. For that reason, we believe that MST is a fundamental tool for the future of AI. Our customer pipeline remains very active across multiple domains. For example, our work with our large IDM customer continues to go well, and we expect additional results from wafer runs soon. Our efforts with STMicroelectronics are bearing fruit, and we are confident we will re-engage with them again in the near future, consistent with our view that MST can create value across multiple product lines, especially in a large, diversified IDM or foundry. In RFSOI, we are seeing strong results confirming our extensive TTAD simulations. The technical results we've been focused on, including for both PowerSwitch and LNA, have been confirmed through customer silicon runs. The near-term question is less about performance and more about the most efficient path to commercialization, particularly in cases involving fabulous licensees where aligning the business structure with the manufacturing flow can be complex. In power devices, we are seeing excellent potential in new development work being done to target MST at both trench bed and HVT transistors. useful in high-frequency, high-speed, and high-voltage applications. At the same time, wafers continue moving forward with our second JDA partner, and we'll keep pushing those efforts toward production pathway. Turning to GAN, we made meaningful advancements this quarter, including a breakthrough that could give us a technical leadership in RF GAN on silicon to augment the advances previously outlined for power GAN on silicon To explain the innovation, I need to give a little background. GAN on silicon is a much more economical growth method than alternatives built on exotic substrates like silicon carbide or sapphire. But when GAN on silicon is manufactured, due to the GAN stack growth process, gallium and aluminum ions gather at the silicon substrate interface, forming an unwanted sheet charge layer called a parasitic channel which is well known to limit RF performance in GaN on silicon applications. In fact, its elimination has been the subject of materials and growth studies for more than 20 years. In the past few weeks, we received preliminary performance data suggesting MST can dramatically reduce the parasitic channel. It does this by using MST's fundamental interface engineering to block the gallium and aluminum ions from getting into the silicon substrate. An industry veteran told us that in his 20 years, this is the best measured sheet charge data he has ever seen. We're continuing to validate this very promising discovery with our test and measurement partners. RF GAN on silicon is of value in the wireless infrastructure, military, defense, and satellite markets. It's also being actively evaluated for high integrated RF front ends such as those for 6G cellular. So the market potential is large and growing fast. We are actively engaging on both 200 millimeter and 300 millimeter wafer sizes in GaN depending on our customers' requests. That matters because the wafer size for GaN on silicon is one of its key advantages leading directly to a customer's path to high volume production, low cost structure, and a set of fabs that can support RAMP, including opening doors for new applications with conventional silicon fabrication methods and devices. We're seeing expanded interest in partnerships across the ecosystem, including engagements involving InSize, Synopsys, Texas State University, Sandia, and others. Those kinds of parallel paths, commercial customers plus research and ecosystem partners, can compress development cycles and accelerate the time from promising materials data to something customers can qualify and deploy. Work here is aimed at generating data that is both technically rigorous and directly translatable to customer device requirements. Finally, a quick note on our announcement last week about expanding our collaboration with Synopsys. We've worked with Synopsys for years to enable accurate modeling of MST inside the Centaurus keycat environment, through our MSD CAD tool set. This expanded collaboration extends that relationship into GAN workflows for both high-value RF and power devices. Practically, this means we're working closely with Synopsys to provide feedback on their GAN models, and we'll be jointly developing marketing materials so customers and partners can evaluate the physical and electrical effects of MSD and GAN more quickly and with higher confidence. To summarize, we're making progress where it matters, expanding and deepening gate-all-around engagements, broadening GAN from power into RF with concrete technical innovations, and continuing to advance multiple customer programs across our pipeline. We remain focused on converting technical validation into commercial structures that can drive repeatable revenue and are confident in our ability to do so. This is indeed an exciting time for AtomEra. With that, I'll turn the call over to Frank, our CFO, to review our financials.

Frank Lorenzio | Chief Financial Officer

Thank you, Scott. At the close of the market today, we issued a press release announcing our results for the first quarter of 2026, and this slide shows our summary financials. Our gap net loss for the first quarter of 2026 was $6.1 million, or 17 cents per share. compared to a net loss of $5.2 million, which was also 17 cents a share in Q1 of 2025. On a non-GAAP basis, net loss last quarter was $4.9 million, or 14 cents a share. And our Q1 2025 net loss was $4.4 million, or 15 cents a share. GAAP operating expenses were $6.2 million in Q1 of 2026, which was an increase of $742,000 from $5.5 million of GAAP operating expense in Q1 2025. Stock compensation expense, which is excluded from non-GAAP results, increased by $397,000, primarily due to new hires and our adoption in Q1 of 2025 of performance stock units, or PSUs, for executives. PSUs vest over three years, whereas the time-based options and RSUs that we had previously granted to executives vested over four years. Although the vesting period is shorter, PSUs vest only if our stock performs well relative to the Russell 2000. The first tranche of PSUs issued in Q1 2025 lapsed without vesting because we did not hit the required stock price performance threshold. With the exception of stock compensation expense, the drivers of GAAP and non-GAAP expenses are substantially the same. So I will drill down into other factors that impacted our expenses by focusing on non-GAAP numbers. Please refer to the slide presentation for reconciliation between GAAP and non-GAAP results. Non-GAAP operating expenses in the first quarter were $4.8 million. a year-over-year increase of $348,000 from $4.4 million in Q1 of 2025. Sales and marketing expense increased by $203,000, reflecting our two executive hires since October. R&D expenses increased by $127,000 from $2.8 million in Q1 of last year to $2.9 million in the first quarter of this year, primarily due to higher spending on outsourced engineering, to support the wafer runs for our gate-all-around engagements, our IDM customer, and our JDA customer, which drives spending on metrology. G&A expenses were basically flat from the first quarter of last year. Turning to sequential quarterly results, first quarter 2026 non-GAAP net loss was $4.9 million, or 14 cents a share, compared to net loss of $3.3 million, or $0.10 a share in Q4 of 2025. Operating expenses were $4.8 million in Q1, which is a $1.6 million increase from $3.2 million in Q4. Let me offer some color on the magnitude of this sequential increase. As I explained on our last quarterly call, our compensation committee elected not to pay the full 2025 executive bonus. withholding approximately $669,000, which normally would have been paid out in January. The committee provided the executive team the opportunity to earn back the withheld amount in 2026 upon achievement of commercial objectives. This led to us reversing accrued bonus expense in the fourth quarter, which skews the comparison of expenses between Q1 and Q4. Our balance of cash, cash equivalents, and short-term investments on March 31, 2026 was $41.1 million, compared to $19.2 million on December 31, 2025. We used $4.6 million of cash in operating activities during Q1, compared to $3.2 million in Q4, and $4.8 million in Q1 of last year. As is typical for us, cash use in the first quarter of every year is higher than other quarters due to payments for items that are expensed over the year. In February of this year, we closed on a $25 million registered direct stock offering, selling 5 million shares of common stock at $5 per share, netting us proceeds of $23.6 million after fees and expenses. Prior to this offering, we had also raised $3.2 million in Q1 by selling approximately 1.3 million shares under our ATM at an average price of $2.47. Currently, we have 38.7 million shares outstanding. With the proceeds of our equity offering, we feel that our current cash balance puts us in a strong position to execute on the opportunities ahead of us. but we will continue to be disciplined about controlling our costs. On our last call, I said that we expected our 2026 annual non-GAAP operating expense to be approximately $18.5 million, and we are holding to that number. To reiterate, the reason why the expense increase appears as large as it does over $15.9 million of OPEX in 2025 is is the bonus deferral, which essentially shifted expenses out of Q4 and moved them into 2026. Organic increases in spending mainly relate to the hiring of our VP of sales in Q4 last year and our VP of marketing in Q1. Revenue in Q1 was $11,000 and consisted of fees for wafer deliveries to the large IDM that Scott talked about. and we have $96,000 of deferred revenue on our balance sheet. Approximately $46,000 of revenue that we expected to recognize in Q1 pushed out to Q2 because wafer shipments that we anticipated making last quarter pushed out to early this quarter. Accordingly, we expect Q2 revenue to be in the range of $50,000 to $100,000. With that, I'll turn the call back over to Scott for a few summary remarks before we open the call up to questions.

Scott Vivo | President and Chief Executive Officer

Scott? Thanks, Frank. And before we take questions, I want to thank our employees, our customers, and our shareholders for their continued support. We're excited about the progress we're making, and we remain focused on translating our growing body of simulation and customer silicon evidence into commercial agreements that can drive long-term, repeatable revenue and a strong, sustainable business. Mike, we will now take questions.

Mike Bishop | Head of Investor Relations

Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the Zoom window, then feel free to type in a question. I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button, and we may call on you to ask your question live. And right now, it looks like Richard's ready to ask a first question. Richard, please go ahead.

Richard | Analyst

Mike, thanks, Scott, and Frank. Mike, can you hear me? I just want to make sure the audio is okay. Yeah, we can hear you, Richard. Thanks. Great. Scott, the get-all-around stuff here, you made some very interesting comments. I want to touch on a few of these things here. So you mentioned that you now have measured silicon results here, and your customers have said that they're better than the other solutions that they have here. Just want to make sure that that's what you said, and then a couple of follow-ups on that topic.

Scott Vivo | President and Chief Executive Officer

Yeah, maybe – are you talking about GAN or GATE all around?

Richard | Analyst

GATE all around.

Scott Vivo | President and Chief Executive Officer

On GATE all around, we do have measured silicon results, and we evaluated our results against another method that people in the industry are using to accomplish the same type of thing we're doing, and our results are a significant improvement. So, yes, we have definitely had that, and we're showing that to customers.

Richard | Analyst

To follow up on this, so I assume that the measured results are wafers run at one of these four targeted customers. Is that correct?

Scott Vivo | President and Chief Executive Officer

Or is it independent? The measured results are something that we did in conjunction with our strategic partner where they had, gate-all-around structures, and we use those devices to grow MST on those gate-all-around structures in the wafer, and then we're able to conduct this testing. Okay, so now if you think about how we approach customers, we go out and we show customers our simulation data, which we can do without a strategic partner, but then having silicon-tested data is They've been massive improvement over that. So that's been able to really open the doors for us to get into the customers. The next step from there is the customer will typically say, okay, we can see you did that on your strategic partner's structure. Now we want you to do it on our structure because our structure is different. Everybody's is different. And when I mentioned that we have work underway with two of the target customers there, doing demonstrations, that's the step we're at. We're trying to implement our technology on their structures and show them that. We believe that the step after that, Richard, will be that they'll have to install MSD in their fabs to do any further testing because these structures are so small and hard to manufacture that it's difficult to do a lot more work by having us run demonstrations in our fabs.

Richard | Analyst

Okay, so to that point, do you have a commitment to attempt to do this on your customer structures or is just the discussions to get that agreed to?

Scott Vivo | President and Chief Executive Officer

We're working on it with two of them, actually. I don't know what you mean by commitment, but I guess they're sending us wafers and we're putting our stuff on it. So, yeah, that's pretty committed.

Okay. Richard | Analyst

Okay, that sounds pretty good. So what's the timeframe for this work to get done? And then I assume, given what I've heard for the many years that I've followed you guys, that the analysis of these can often take a while. These are more complex than most. So I would assume that analysis takes a while. So what's kind of the turnaround time between getting that done, analyzing, and getting to that next step? What do you foresee that taking?

Scott Vivo | President and Chief Executive Officer

It's going to take several months, just us doing the work. we have to really do a lot of development work to just figure out how to grow things effectively in these tiny devices that they're sending us. And so normally when someone sends us wafers within three weeks to a month, we can turn those around and send them back. In this case, my guess is it might take us longer than that, two to three months. And then when we send them back, they have to put them in their fab and run them for several months. So it could be in the order of six months before we start to see results coming out of this. Now, I mentioned a few times on the call, both structural analysis, which is where they are looking at what we did for deposition in those structures and making sure that what we did was appropriate. They can do that pretty quickly because you're taking TEM images, like electron microscope images, and looking at what we did. Those results will come quickly, but the electrical results will be the result of running the wafers through the whole line.

Richard | Analyst

Got it. Okay. And so you're expecting to run wafers with wafers from two different GAA customers then over the next few months then?

spk00

Yes.

Richard | Analyst

Okay. Going back to my first question here and understanding the results you measured with the runs you did with your equipment partner, They want to get a sense of whether the customers agree that the comparisons you've done with, I think, an industry standard approach to dope and diffusion, they actually agree with that as well, that that is much better than what they can get internally, or is this just what your equipment partner has concluded for you?

Scott Vivo | President and Chief Executive Officer

I think there's no doubt that the customers that we've been able to engage with and get down to lots of details on it, they agree. they have been impressed enough that they want to move forward with these further demonstrations. So, yeah, they definitely saw the benefit of using MST to block the dopant diffusion in the areas that we're talking about and how it works better than what Richard | Analyst: Okay, fair enough. Some really interesting stuff going on there. Thanks for all that detail, Scott, here. Maybe a couple other quick questions. So on the DRAM side, it sounds like we've made some progress here, but if I'm to compare that with the progress on the logic side to the memory side, it sounds like the logic is reasonably farther ahead than memory. Is that a fair comparison?

Scott Vivo | President and Chief Executive Officer

Yes, that's true. We are talking with the memory manufacturers, and one thing Memory is quite a different architecture than logic that we're using gate all around, but in memory they're having the same type of dope and diffusion problems with their newer architectures as the gate all around folks are, and our technology is directly applicable to that. So we have a lot of interest in, from the DRM guys about that, we're also talking to them about some other technologies solutions that may be able to help them in different ways. So it's lots of different vectors of how we're engaged with ERAM guys. I should say with the memory guys because it's also in high bandwidth memory, not just ERAM. But we're further ahead with the gate-all-around customers than we are with them.

Richard | Analyst

Okay. All right. Fair enough. Maybe a question on the GAN side here. So I think my recollection is you're talking more about applications of GAN into the power space, but more recently it's been in RF here. How would you characterize kind of the – which one is kind of the leader in terms of getting to the next step here and, you know, getting, you know, installation licenses? I know that's not the right term, but it's kind of what I think of it. Installation licenses or using the wafers with that already built in there, which one's kind of in the lead here if either one is notably better?

Scott Vivo | President and Chief Executive Officer

Okay, so it's kind of interesting where you're right saying that we initially targeted the power market for our GaN on silicon work. The power market is actually much larger than the GaN on RF market today, and that's one of the reasons why we targeted it first. And for the power market, our big value that we've been talking about is to improve crystal quality and, therefore, to allow people to manufacture on larger wafers because they'd be less bow and warp as they were growing the GAN and fewer defects and therefore would have a lot of inherent value. Now the only challenge with that is to validate all that work you actually have to build wafers and build electrical devices and do a lot of testing. So that takes some time. And everybody's GAN growth Properties are different, so there's some tuning that has to happen. And so that takes time. The new things I just mentioned, GAN on RF, we got some test data, and we just spoke about it at a big compound semiconductor conference last week. And there is a huge amount of interest in the industry. And Just looking at this early data that we got, now it has to be validated and so forth, but just looking at that data could be enough for someone to adopt us because it's such a big breakthrough and such an area where the industry needs solutions. In RF, they don't actually have to do the full electrical testing before they can decide to move forward on something. So it could be that we're moving, although we're earlier into, again, on silicon for RF markets, that one could move faster.

Richard | Analyst

Okay. All right, fair enough. One last question for me. And maybe going back to STMicro here, and I'm not sure if this is who you're referring to, the IDM customer or not here, so maybe correct me if I'm misassuming that here. But maybe just kind of indicate where we're sitting here with those guys. And obviously, we'll put a pause on the power, stuff that you're hoping to move forward with. that you talked about late last year, how about any other applications with them? Are they still moving as full force as you had expected and had been seeing since the cessation of the power work with them?

Scott Vivo | President and Chief Executive Officer

Yeah, just to clarify, when I talk about the IBM, it's not SDMicro. SDMicro is another IBM, and we think we have a lot of different areas where we can engage with SDMicro, but that's a separate topic. engagement. So, yeah, we've been talking with multiple business units over there and been doing some work, some evaluation work, and we have recently got some results that lead us to believe that we're going to start re-engaging with them on developing a product. We aren't at the point where we can talk about that yet. NSD hasn't specifically given us any okay to talk about it, but But, yeah, we've been saying since we had to give that unfortunate news about the BCD program at ST that we were working with other groups and that our relationship with the company was great, and the thing is they really know and understand MSD technology and have seen it and they believe in it. So this is kind of an indication of those comments that we've been making, and I haven't been able to announce a new deal with them yet, but we hope to be able to do that in the future.

Richard | Analyst

Okay. Okay. Excellent. I will jump on the line, guys.

Thank you very much. Mike Bishop | Head of Investor Relations

Thanks. Okay. Thanks, Richard. There are a few questions that have been asked in the Q&A line, and I'll just bring them up one by one. So, the first kind of question is about GATE all around, and it's that given the evaluation periods that we've seen in other Are there specific milestones that need to be hit to convert these get-all-around customers into JDA? And what's a realistic timeframe for such a conversion?

Scott Vivo | President and Chief Executive Officer

Yeah. At a high level, maybe I'll put a little bit more structure on what I showed. I talked about Richard before. It's typical of customers who want to see kind of four different levels. They want to see TCAD results that show that you have the potential to deliver performance, and they have to understand all the TCAD background and believe in it. Then they'll move ahead and say, we want to see that captured on silicon. So we've done those two steps and did all around. The next step, they say, okay, we want to see that captured in silicon, but on our silicon, on our structure, We're going to send you guys wafers. We want you to deposit it on our structure and send it back to us and we'll evaluate it. Now they know they're not going to get the most perfect performance out of that because, you know, this work we have to do together and tuning them up and getting everything to work fully integrated. But they're just trying to do a proof of concept on their platform, right? That's the stage we're at right now with two of the customers. Beyond that, the stage after that would be where they install and do the actual implementation on their device, tuning it all appropriately. So, yeah, it's a fair question to say when should we expect to see a JDA. Sometime during in this period of us doing the evaluation on their devices and when we get to the point where we'll install there, because that would involve a license. then we should be having a JDA in place. These companies do not move fast when you're talking about kind of legal agreements. But we're working hard to make those happen, and we hope to be able to announce them at some point in the near future.

Mike Bishop | Head of Investor Relations

Okay, thank you. And, Frank, the question regarding the equity raise, an investor asked, he is curious about the background and reasons for the third-party private placement issue. And given the stock price rise, could we have had better timing?

Frank Lorenzio | Chief Financial Officer

Right. Yeah, thanks for that. You know, one of the comments I've made in talking about the capital that we raised in Q1 was some funding that we got via the ATMs. And if you look at that, the average price on that was $2.47, which is roughly about where we were trading about a week and a half or two before we did the equity raise. And so the $5 price that we executed on there, you know, given what we had seen so far, not only in Q1, but really looking back over the last couple of years, it made us – look at this as a very good opportunity because sure, the stock had run up to $7 and now in the last couple of weeks, it's run up again. But, you know, given the past trading levels that we had, and again, a lot of, geopolitical uncertainty in the middle of February, you know, which we've kind of seen play out since then. Of course, you can't know how the equity market's going to perform, but on balance, it seems like a very good opportunity for us to execute on that and then, frankly, be able to work, you know, toward commercial outcomes and not worry about the day-to-day movements in the stock price to have to use the ATM to, to keep our balance sheet strong. So we've now strengthened the balance sheet. It's always kind of easier with the benefit of hindsight to second-guess the price, but I think it was a very good decision to execute then.

Mike Bishop | Head of Investor Relations

Okay. Thank you, Frank. Question on the tool partner. How has your relationship evolved with your tool partner, the strategic partner, and are they giving you more engineering personnel, and how has that relationship changed over time?

Scott Vivo | President and Chief Executive Officer

Yeah, that's a good question. We have been, you know, we try to be good partners with each of the big tool vendors. There's There's three main tool vendors that the industry uses for FE tools, and we typically want to be kind of an arm-stealer, work with whatever tool our customers want to work with, so we have good relationships with all of them. The tool vendor that we have the strategic partnership with, we've been working with for more than a decade and had a good relationship with, but now that we've entered into the strategic partnership, the level of co-development work that we're doing is at a whole new level. So we have weekly meetings with their engineering team where we are working on developing the test data that we need for marketing to customers. And as customers ask us questions and want to get more demos, then we dig in and do work on that together. So, yeah, on engineering, Cooperation level, it's at a whole new level. The second area is on the marketing and sales to customers, and that's something that we've never really done with them in the past, and that's where we would be, you know, developing the right materials for us to both go into target customers and talk about MST technology and what a good solution that is. Now, one thing I've calculated a number of times is that if we are successful licensing our technology to customers, in many cases, the tool vendor is going to make more money from us winning designs there than we will. So there's obvious advantages for them making us successful, and so they're not doing this out of the goodness of their heart. But the good news is I think they've recognized that in the last year since we started this, and we're really seeing the benefit as we're engaging with customers.

Mike Bishop | Head of Investor Relations

Okay, and this is a follow-up kind of to the when would we get a date all-around engagement, but an investor commented that the last call sounded like 2026. We would see several deals being made. Is it safe to say that now that sounds unlikely, or is there still hope for inking and agreement this year?

Scott Vivo | President and Chief Executive Officer

We're only in the fifth month of the year, and I'm I'm hopeful every month that we're going to be inking deals, so definitely would say there's definitely a very strong chance.

Mike Bishop | Head of Investor Relations

And, you know, if you look at all the areas in which you, you know, are working, which of the segments do you think is closest to producing a royalty-bearing license?

Scott Vivo | President and Chief Executive Officer

So I spoke a call or two ago about wafer-based products, and I think that... The development effort in a wafer-based product is relatively easier. So some of the areas where we're offering wafer-based solutions are in gallium nitride and in RFSOI. And we have wafer-based solutions that we're offering in the memory space. So I think one of those could be the fastest. But we also have been working on power and on RFSOI with customers for a very long time, so those could also be quick time to market. It's very hard to call with so many moving pieces.

Mike Bishop | Head of Investor Relations

All right. And with that, Scott, I'll turn the call to you for closing comments here.

Okay. Okay. Scott Vivo | President and Chief Executive Officer

Well, I want to just thank you all for joining us to hear the progress being made within Atomera. I hope you're feeling the excitement that we are. Please continue to look for our news, articles, and blog posts, which are available along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop. We'll be happy to follow up. Thanks again for your support, and we look forward to our next update call.

Mike Bishop | Head of Investor Relations

Thank you. This concludes the call. jsPDF 3.0.3 D:20260609231941-00'00'

NASDAQ:ATOM Q4 2025 Earnings Call Transcript Generated on 6/9/2026 Mike Bishop | Investor Relations: Hello, everyone, and welcome to Adam Ayers' fourth quarter and fiscal year 2025 update call. I'd like to remind everyone that this call and webinar are being recorded, and a replay will be available on Adam Ayers' IR website for one year. I'm Mike Bishop with the company's Investor Relations. As in prior quarters, we are using Zoom, and we will follow a similar presentation format with participants in a listen-only mode. We will open with prepared remarks from Scott Bebo, Adam Ayers' president and CEO, and Frank Lorenzio, Adam Ayers' CFO. Then we will open the call to questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the events and presentation section of our investor relations page on our website. Before we begin, I'd like to remind everyone that during today's call, we will make forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factors section of our filings with the Securities and Exchange Commission, specifically in the company's annual report on Form 10-K filed with the SEC on March 4, 2025. Except as otherwise required by federal securities laws, Adam Ayer disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on our website. Now, I would like to turn the call over to our President and CEO, Scott Vivo. Go ahead, Scott.

Scott Bebo | President and CEO

Thanks, Mike, and good afternoon to everyone. In Admiral's fourth quarter, we made great progress moving existing customers forward in our targeted segment, achieving very strong technical advancements, commencing new customer engagements in non-traditional areas, and made our first foray into the world of government-funded collaborative developments, all positioning us strongly for commercial execution in 2026. Today, I'll give you an update on all of our activities as we set the table for our business prospects in the new year. Technology news recently has been dominated by the rapid advancement of artificial intelligence and the associated semiconductor challenges that AI entails, from the allocation of limited GPU supply, the enormous stresses put on our energy infrastructure, and the associated surge in memory prices. Atomera's technology is positioned to assist with each of these industry issues as we deliver materials which help to relieve each pain point. So let me start off with our recent exciting progress on gate all around transistor technology, which is the foundational architecture used in AI GPUs, CPUs, and bleeding edge network components. The challenges with manufacturing these next generation transistor devices at two nanometer and below are widespread. And a concerted effort by the full ecosystem of industry players is required to manufacture them at scale with economically viable throughput and yield. This has been the focus of our recently announced strategic partnership with a large equipment OEM. Target customers are TSMC, Samsung, and Intel, who are in production, and Rapidus, a new Japanese manufacturer which is deep in development. Atomair's MST technology delivers some very compelling solutions in this space, in particular for diffusion blocking. These tiny gate-all-around transistors require extremely high phosphorus doping levels constrained to a very small area in the source and drain of the nanosheet. Under the intense semiconductor manufacturing environment, It's difficult to keep these dopant atoms in their proper positions, and just a small amount of migration into the channel can severely impact performance, efficiency, and yield. AtomAres MST is uniquely well-suited to hold these roving phosphorus atoms in place. Although this MST characteristic is well proven in older technologies, implementing MST in devices that are around 2 nanometers while maintaining its efficacy is something that industry players insist must be validated on silicon at real-world scale, and we've been working hard to do so. Our target customers have been looking into two results to prove high-volume manufacturability. First, that MST can be effectively deposited into the actual nanosheet structure. And second, that the diffusion blocking characteristics are better than other methods the industry is currently evaluating or using. Obtaining these results is not straightforward and requires access to advanced structures that are not generally available, are very expensive, and frequently proprietary. but we've been able to make steady progress with the help of a gate all around customer and our strategic partner. Just in the last month, we obtained very exciting silicon results in both targeted areas, which we believe provides the definitive proof to drive adoption of MST at all four of the world's gate all around customers in the future. Not only can MST be deposited into those structures using existing tools and standard gases, But it is a far superior diffusion blocking material than those currently used by the industry. We anticipate that we will be able to implement this technology with leading industry players over the next few quarters. Of course, we're quite excited by these recent results since our advanced node, our gate all around business segment, has extremely high revenue potential. But we're also making convincing progress in our other customer areas. So let me provide a short update there. In DRAM, the technology roadmap is at a key inflection point as DRAM finally follows other logic and memory architectures in making better use of the vertical dimension. We are getting involved in offerings to enhance the performance of next-generation architectures, in addition to solutions for products currently in production by the major memory suppliers. During the last few months, we have had two major solution offerings that we're working hard to validate since their market potential is very high. Notably, these are both wafer-based solutions, which are easier to adopt and test, avoiding many of the integration complexities required in some of our other applications. And with the current robust market for memories, we believe our potential customers will have a generous R&D budget to pursue these ideas. Atomera is currently conducting many wafer runs with our various customers. Most of these are processing through their fabs, so we will expect more information soon. But one customer has just gotten preliminary results which look promising. But we will get a better view when the final data is available in about a month. If the results look good, we'll be pushing for a joint development agreement and a license to advance this technology to production. In the RF-SOI space, our offering is very strong, considering that it can provide performance improvements for multiple important areas, including for the RF switch and the low noise amplifier. Because we are working with so many of the key players in this industry, including foundry and fabless suppliers, we hope to drive adoption broadly. Again, in this space, our solution can be implemented with a wafer-based solution, meaning our customers can choose to deposit it on wafers themselves before starting their full manufacturing process, or they could even buy RFSOI MST wafers from a third-party supplier. Our license structure supports both of these approaches. In power, we are working with some very large players to ultimately be incorporated into their product offerings. Although we had a setback with ST last year, we continue to work with them on MST solutions across multiple business units. In addition to our traditional BCD business opportunities, this quarter we had several other inbound interest emerge for power applications. Through our own internal analysis and modeling, we have uncovered an opportunity for MST in trench vets, which are an important component in optimizing energy efficiency in AI data centers. Our simulations show the potential for MST to improve performance by more than 40%. We got this result after Christmas and already have a customer interested in kicking off development. Similarly, using our MST CAD simulation capability, we have demonstrated how MST can improve HVT devices, which are high-speed transistors frequently used for amplifying and switching signals in RF communication systems. Discussions are underway with a potential first customer in this application as well. In GAN, I'm happy to report that our first commercial customer has now started running wafers for GAN on silicon with MST technology. For many reasons, this is exciting. This large customer can grow their own GAN wafers and manufacture electrical devices on them, which means they can move even faster than our in-house work with Sandia National Labs and Texas State. So we expect that we will actually move ahead of our own internal development efforts over the next few quarters. Second, they are exploring GAN in both RF and power technologies. These independent efforts by multiple industry and scientific partners frequently can accelerate time to revenue, which is what we're hoping to accomplish. Last month, we announced that our GAN on silicon concept paper had been approved to move to the proposal stage for a project with Power America to advance the state-of-the-art on wideband gap materials. We announced this for a variety of reasons. First, we wanted to show the widespread interest from customers, the science community, and industrial organizations for an MST solution for GAN on silicon. Indeed, we've already received several letters of support from multiple future customers showing interest in this solution. Second, this concept paper was our first application for outside development funding. And although the funds sought for this first effort are modest, they put us in the pathway for a variety of future material development funding opportunities, which can provide us assistance going down a path we were planning to travel anyway. By engaging in these joint development opportunities, we are promoting our technology, receiving financial assistance, and assuring a customer base all in one project. To summarize, the past few months have been an incredibly productive time in terms of technical development and the buildup of a variety of new customer opportunities that I believe will lead to business deal announcements later this year. Finally, as we close up 2025, let me give you a few thoughts on our accomplishments. Last year, we took our early development and simulation results on gate all around and converted it into what I now believe is our greatest company opportunity. We did that through working with a lead customer and with a strategic partner who's also a major equipment OEM. This is a significant departure from how we've approached the market in the past. The industry has a long history of relying on this OEM to deliver them material solutions for their problems. So we truly believe that their influence will help us to convert our recent strong technical results to licenses and revenue. We make technical breakthroughs in our other core markets to enable killer applications like LNA for RFSOI, a new architecture for BCD, and next-gen DRAM solutions. Using AI, our development team has gotten better results more efficiently than ever before. We kicked off a record number of wafer runs with our leading customers, initiated several new projects, and solidified the business talent on our team, which should lead to further contract announcements over the course of this year. And much of this work was done emphasizing wafer-based products, which we believe will result in faster time to revenue. In short, 2025 efforts have set us up well for commercial announcements later this year. With that, I'll turn the call over to Frank to review our financials.

Frank Lorenzio | Chief Financial Officer

Thank you, Scott. At the close of the market today, we issued a press release announcing our fourth quarter and full year results for 2025. This slide shows our summary financials. Revenue in 2025 was $65,000 and consisted of NRE fees for wafer deliveries and MST CAD licensing. Our gap net loss for the year ended December 31, 2025 was 20.2 million or 65 cents per share compared to a net loss of $18.4 million or 68 cents per share in 2024. On a non-GAAP basis, 2025 net loss was $16.1 million or 52 cents per share. And 2024 net loss was 15.4 million or 57 cents per share. GAAP operating expenses were $20.9 million in 2025, which was an increase of approximately $1.5 million from $19.3 million of GAAP operating expense in 2024. The main driver of the increase in GAAP operating expense was a $1.1 million increase in stock compensation expense due to a change in our executive equity-based compensation. In Q1 2025, we implemented PSUs for executives, which vest based on the performance of our stock price as compared to the Russell 2000 Index. These PSUs vest over three years, whereas the options and time-based RSUs that had been granted to executives in prior years vested over four years. Although the vesting period is shorter, executives only vest in PSUs based upon our stock price performance. With the exception of stock compensation expense, the drivers of GAAP and non-GAAP expenses are substantially the same. And therefore, the rest of my remarks will only refer to non-GAAP results. Please refer to the slide presentation for a reconciliation between GAAP and non-GAAP expenses. Total operating expenses in 2025 were $15.9 million, an increase of $429,000 from $15.4 million in 2024. R&D expenses increased by $794,000 from $9.4 million in 2024 to $10.2 million in 2025, primarily due to a $676,000 increase in outsourced engineering as we utilize various new device fabrication vendors replacing TSI Semiconductor. G&A expenses decreased by $272,000 from $5.1 million to $4.8 million, primarily due to a $421,000 decrease in compensation expense, offset in part by $118,000 increase in professional fees for legal, IP, and audit fees. Sales and marketing expense decreased by $94,000, reflecting lower headcount, but offset by some recruiting fees. Company-wide, our compensation expense, again, on a non-GAAP basis, excluding stock compensation, declined by $582,000 in 2025 compared to 2024. The reduction in compensation expense reflects our board's pay for performance discipline. While we achieved important technical milestones in 2025, the compensation committee determined that payout of the full executive bonus was not justified by commercial progress made during the year. Therefore, the committee withheld approximately $669,000 in executive bonus compensation affecting the full executive team. The withheld amount may be earned in 2026 based on achieving rigorous commercial objectives. Turning to our quarterly results, Fourth quarter 2025 non-GAAP net loss was $3.3 million or 10 cents per share compared to a net loss of $4.4 million or 14 cents per share in Q3 and a net loss of $3.9 million or 14 cents per share in Q4 2024. Non-GAAP operating expenses decreased by $1.1 million to $4.3 million sorry, from 4.3 million in Q3 2025 to 3.2 million in Q4, primarily due to the reversal of our bonus accrual, which occurred in Q4. Our balance of cash, cash equivalents and short-term investments on December 31 was $19.2 million compared to 26.7 million at the end of 2024 and 20.3 million at the end of Q3, 2024. We used $14.9 million of cash in operating activities during 2025, 3.2 million of which was used in Q4. During 2025, we sold approximately 1.6 million shares under our ATM facility at an average price per share of $5.15, resulting in net proceeds of approximately $7.6 million after commissions and offering expenses. As of December 31, 2025, we had 32.4 million shares outstanding. After year end, we've raised an additional $3.2 million of net proceeds by selling approximately 1.3 million shares at an average price of $2.47. For Q1, we expect to recognize revenue in the range of 50 to $100,000 from shipment of MST wafers to customers. Consistent with our usual practice, we are not providing revenue guidance beyond this quarter. Our 2025 non-GAAP operating expense was $15.9 million, which is well below the guidance range I provided last quarter. That's primarily due to reversing $669,000 of accrued bonus. For 2026, we will continue to aggressively control costs And we've limited our expense growth to those areas directly related to revenue and near-term commercial progress. Those increases mainly consist of adding two senior go-to-market leaders. The first of those was our VP of sales, who came on board in October. And the next will be a new head of marketing. The comparison of our planned spending in 2026 versus 2025 looks distorted by the potential payout this year of the executive bonus withheld from 2025, because the withheld amount will have to be accrued this year on top of accruing 2026 bonus. As a result, we expect our non-GAAP operating expense to be approximately $18.5 million in 2026. Now on paper, this is a 17% increase, but if normalized for the timing of the executive bonus accrual, it is more in the range of 8%. I would point out also that earning back deferred executive bonuses, as well as earning 2026 bonus will require us to execute against aggressive, commercially focused milestones. With that, I will turn the call back over to Scott for a few summary remarks before we open the call up to questions.

Scott Bebo | President and CEO

Scott? Thank you, Frank. The entire focus of our efforts in 2025 is getting to commercial agreements. The work we've done up to now has positioned us well to close on those opportunities, and I look forward to sharing our successes with you as the year progresses. Mike, we will now take questions.

Mike Bishop | Investor Relations

Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the Zoom window, then feel free to type in your question. I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button and we may call on you to ask your question live. And right now, our first question comes from Richard Shannon of Craig Helm. Richard, go ahead. Great, Mike. Can you hear me? Yes, yes, we can.

Richard Shannon | Analyst, Craig-Hallum

Okay, great. I'm in the airport here. A little bit of noise, so apologies for that. I don't have a ton of time before I got to run to my plane here, but let me ask just a few questions here. Scott, some really interesting statements regarding gate all around here. If I caught your comments correctly here, you said that you're expecting some, I forgot the exact language you used, but some sort of important next steps here in the next few quarters. Typically, you've been reticent to give somewhat definitive timeframes for getting to major milestones, and yet you are here. So maybe give us a sense of why you're saying this. Your confidence level is clearly quite high. So help us understand this level of confidence and why.

Scott Bebo | President and CEO

Yeah, I would say on the gate all around technology, do you mind if I just share the slide to answer your question, Richard?

Richard Shannon | Analyst, Craig-Hallum

Please do.

Scott Bebo | President and CEO

Okay. Can't seem to share. Okay, here's the slide. On the right hand side, you can see where MST is deposited around these source and drain structures. that is an incredibly hard thing to do we've been talking with our our gate all around customers about using mst to block the dopant diffusion like where these little red arrows go in one of the biggest problems that people have is that the phosphorus dopants get into these channels here and the channels can only handle a couple of phosphorus atoms before they really start to grade very very significantly which affects yield and performance and so forth so All along, they've been saying, okay, that's interesting. We know MST can block phosphorus. But first of all, can you even deposit it in these tiny little structures that are, you know, they're two nanometers. And just to give you an idea, it takes about, 100 000 nanometers to get to the width of a hair that's how small these are and so we had to prove that and we spent a long time in the lab building uh devices like this to show that we can deposit mst with high quality there and we have done that second thing is when we put that tiny layer of mst does it really still block the phosphorus in that very very small space Because they're using something else right now that isn't very effective at blocking it, but are we better than that other thing? And the answer to that question is yes, as well. We've recently just gotten the technology gotten the test data to prove that. And so, you know, it's early days, we've gotten that in the last month, we haven't been able to get out and talk to each of the data all around customers yet. But with our partnership with our strategic partner, we really think we're going to talk to those guys, and they're going to immediately want to start testing this and trying it out. So I'd say that's why my confidence is much higher, we I would say we've rarely been as excited about some technology results inside the company as we are by what we have right now.

Richard Shannon | Analyst, Craig-Hallum

Okay, great deal. I'm sure I'll follow up a little bit on that one. Second question here is, you mentioned two things you have to prove you're better than alternative solutions. We haven't really heard you talk about what your potential customers are considering here. Anyway, you can describe what those are, whether they're internal developments or something looking from other research organizations and to what degree you have visibility into how well those are doing as well.

Scott Bebo | President and CEO

Yeah, so we're not really talking about some lineup of other technologies, but what the industry has tried using in the past is silicon arsenic. And silicon arsenic is effective at just putting a spacer between the phosphorus and the channel, but it doesn't really prevent the dopant diffusion very well at all. And so we've actually done a lot of testing of our MST technology against silicon arsenic. and proven that we have vastly better diffusion blocking results. And the second thing is that the industry does not like to use arsenic in its manufacturing process, but it can help it. It's expensive to use and dangerous, and therefore offering a solution that removes that material is probably considered good by the industry.

Richard Shannon | Analyst, Craig-Hallum

Okay, fair enough. Very interesting there. My last question before I've got to run here, Scott, is you talked about a number of inbound calls here in the power space, which I know it's a space that you've been pushing for for a while. And obviously STMicro was aiming towards that before it's, we'll call it a setback. You characterized this in the RFSOI space a few years ago about having significant coverage, I think more than half of the market share of the space here. Any way to characterize how much of the power space you're covering with when you add up all these new companies that are coming to you? Any way you characterize that?

Scott Bebo | President and CEO

Yeah, it's a little bit harder. I think on the RFSOI, it's a pretty compact space. group of companies and we feel very confident that we're working with the vast majority of them on power. It's a much bigger market. It's a much more diverse customer base. So I wouldn't say we're working with most of the people. Of course, we talked a little bit about the work we've done on TrenchFed when we did do some work on TrenchFed. We reached out to the leaders in TrenchFed and some other folks that we know are interested in advancing their technology and started talking to them. And that worked well and the same thing with HVT. And so, yeah, I think we're expanding. And then, you know, a lot of the GAN work that we're doing is in power as well. So we're talking to a lot of companies working in the power space, but I can't really give you, I can't really say it's the vast majority in that case.

Okay. Richard Shannon | Analyst, Craig-Hallum

I wasn't expecting the vast majority, but since the power space is very large, well, I thought if there was, I mean, if you even had 10 or 20%, that'd be pretty good coverage there. But appreciate that characterization. I've got to jump out of line, Scott. Thanks a lot. All right. Thank you, Richard.

Mike Bishop | Investor Relations

All right. Thank you, Richard. We have some questions coming in on the Q&A line. I will start with one, Scott. Can you give an update on the progress for your vice president of sales, Wei Na?

Scott Bebo | President and CEO

Sure. Wade joined in October and he's been coming up to speed and generally very, very helpful. I'm super enthusiastic about having someone that's pushing the team as hard as he is on the sales side. He's not only driving our ethics very specifically with existing customers and helping us find some new ones. He's also uh you know targeting a bunch of relationships that he's had in the past that he's bringing in with us and that does allow him to uh you know for us to engage with customers from kind of a different angle and that's been very positive so i think uh so far so good Mike Bishop | Investor Relations: Great, and thank you. And a number of questions about wafer activity at the fab and as it relates to general activity level, how would you characterize that?

Scott Bebo | President and CEO

Yeah, so I think just starting earlier in the middle of 2025, we started to get a lot of customers coming in with wafer runs simultaneously, which is quite busy for us to get them into our fab and deposit the MST. on a very high quality basis and they get it back out so they can start running the wafers. Today, we're still running things in our own fab, but for the most part, we've shipped out a lot of that stuff out to our customers. And now we're kind of in a waiting game. It takes six to nine months for customers to run their wafers once we've sent them back to them and then get the test results. And then we'll review those and we'll figure out the next steps from there. But we really feel confident that what we have done in these runs is is good stuff we use mst cad simulation software to figure out what we expect the outcome of these runs to be and we're you know we're really hopeful that our tcad has been accurate and if we get the results that we hope for that our customers will want to move forward into a productization effort Mike Bishop | Investor Relations: Okay. And generally speaking, I had a question here and I think we've covered it on prior calls, but can you describe why selling blank wafers makes it easier to go to market?

Scott Bebo | President and CEO

Yeah, absolutely. Okay. I just showed this graphic of a gate all around device, and that is a really, really hard device to integrate into. But you can imagine when, if we're trying to integrate into that device, the customer starts a starting wafer, they build up a whole bunch of structures. then at some point they make a hole in those structures and they say okay put your mst in here and then we'll have to figure out how to fill around it and all of the different layers that surround it affect it right that's that's called integration engineering it's very challenging but for many of our applications when we talk about wafer based products that would be when the customer buys a wafer And they put MST on immediately, the blank wafer. And then they start processing all of the rest of that process on top of it. Therefore, we don't have to work through all those challenging integration issues that we would have for something where MST gets deposited in the middle. So today I talked about a couple of applications we're looking at for DRAM that would be wafer-based products where we're shipping them the wafer. I mean, obviously, we won't be wafer manufacturers, but we would help them with a solution that would go right in the wafer. RFSOI are solutions that are wafer-based products, and also our gallium nitride, our GAN solutions are wafer-based products. So we've talked about it before. We're excited about those because they're easier to integrate, and therefore, we think faster time-to-revenue solutions. okay great uh here's another one can you please explain more about power saving in ai than how mst can help achieve that yeah so it's a lot of ways i just showed you the um the gate all around transistor so fundamentally in uh in semiconductor manufacturing like that, if you can bring a performance improvement, you could also probably trade that off to get lower power if you chose to do so. So that's one way. Another way is with our power solutions, like on our BCD products or our trench fed products or our GaN products. Those are targeted for the type of electronics that will be developed that go into an AI data center. to help lower the power in the racks. So I'll give you one industry dynamic that we're tracking in AI data centers. They have historically used the 12 volt power supply on the rack, but recently the industry is moving away from 12 volts and they're moving to 48 volts because 48 volts is four times more efficient That's saving power when you're providing power to the racks for all of those servers. The 48-volt power supplies use a lot of trench-fed devices. That's the primary device that they use in there. And so we are trying to offer solutions for trench-fed so we can help to address that. The other thing is gallium nitride is obviously a very power-efficient device. uh, devices, those of you who have the small power supplies that go into your, uh, backpack or, or suitcase, like they weren't able to do before you understand that those are much more efficient. And that's why we're trying to engage in gallium nitride.

Mike Bishop | Investor Relations

Interesting. Thank you. Okay. Um, can you give us an update on, uh, your JDA one and JDA two?

Scott Bebo | President and CEO

Yeah. So, uh, JDA1 and JDA2, JDA1, I have to be careful that I'm not kind of divulging too much about what they're working on, but, you know, we continue to be working with JDA1, and I'm hopeful that some of the technologies that I talked about today will kick them into high gear. in a business unit to kind of move that forward towards a production development effort like we've been waiting for, honestly, for a little bit too long. JDA2 is one of the customers that is currently running wafers with us. And so I can't say too much about exactly where they are right now, but they're running wafers.

Mike Bishop | Investor Relations

Great. Great. And going back to the gate all around, is MST being evaluated at the customer's fab at this point?

Scott Bebo | President and CEO

Yeah, so we mentioned that we're working with one gate all around customer today who helped us. So when I showed that structure and I showed that we had to do deposits inside there, You really need to work with someone to get access to those wafers, to try out things on those structures. And the good news is we have been working with one of the gate all around potential customers to evaluate MST today. So yes, we are in one of them. I hope to be in all four of them.

Mike Bishop | Investor Relations

Okay. And when do you expect, you know, an evaluation to be completed of, of the waivers?

Scott Bebo | President and CEO

uh for gate all around or yeah for for gate all around ah okay for gate all around uh it's very hard to say with some of the customers we uh you know we're planning our visit to show them all this data that we have we believe that the data that we have is good enough that they may not even require us to do deposition inside their gate all around structure because we've proven that we can physically do it. And then what we'd be trying to do is to convince those customers to install MST in their fabs and have their R&D team take over and start implementing this. How fast that will happen is hard to say, but I will say the people that are working on Gait all around are working very fast. And if they adopt, they're going to be pushing us as hard as we've ever been pushed by a customer in the past.

Mike Bishop | Investor Relations

OK, great. And just one last question here is on how MST can help or improve quantum computing.

Scott Bebo | President and CEO

Uh, you know, it's interesting. That's something we're working on right now. I don't really, I can't really talk about the, uh, the way that our MST technology will, will address quantum, but I can tell you that's something we're working very hard on right now. Uh, in the past we had a theory about MST's ability to, um, improve the, the, uh, purity and availability at a cheaper price of silicon 28 which is a critical wafer type that's used for uh quantum wells but we yeah that really just didn't pan out so we're we're uh working on other technologies right now and i hope to be able to talk to you guys about that later this year thank you and scott you can uh proceed with with any closing comments All right. Well, I guess, thanks. I want to just thank you all for joining us to hear the progress being made here at Atomera. Continue to look for our news articles and blog posts, which are available along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop, who will be happy to follow up. Thanks again for your support, and we look forward to our next update call.

Mike Bishop | Investor Relations

Thank you. This concludes the Atom Air fourth quarter conference call. jsPDF 3.0.3 D:20260609232101-00'00'

NASDAQ:ATOM Q3 2025 Earnings Call Transcript Generated on 6/6/2026 Mike Bishop | Investor Relations: Hello, everyone, and welcome to Adam Ayer's third quarter 2025 update call. I'd like to remind everyone that this call and webinar are being recorded and a replay will be available on Adam Ayer's IR website for one year. I'm Mike Bishop with the company's investor relations. As in prior quarters, we are using Zoom, and we will follow a similar presentation format with participants in a listen-only mode. We will open with prepared remarks from Scott Bebo, Atomera's President and CEO, and Frank Lorenzio, Atomera's CFO. Then we will open the call to questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the Events and Presentations section of our Investor Relations page on our website. Before we begin, I would like to remind everyone that during today's call, we will make forward-looking statements. These forward-looking statements, whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the risk factor section of our filings with the Securities and Exchange Commission, specifically in the company's end report on Form 10-K filed with the SEC on March 4th, 2025. except as otherwise required by federal securities laws. Atom Air disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on our website. Now, I'd like to turn the call over to our President and CEO, Scott Bebo. Go ahead, Scott.

Scott Bebo | President and CEO

Thanks a lot, Mike, and good afternoon, all. This has been a quarter of both challenge and validation. one that underscores the reality of bringing a new material technology to market and the opportunities that come when you solve fundamental problems for the semiconductor industry. I'll start by addressing our update with SE Microelectronics, then depart from our regular format to review the broader picture, the momentum we're building with new customers and the different market opportunities that Atomer's technology is being used to address. As many of you have seen in our announcement, our work with SU Microelectronics on their smart power platform reached an inflection point this quarter. During this program, we were tackling a very difficult performance trade-off for their 200 millimeter platform. We achieved what we set out to do, significant performance improvements in key device metrics. However, that higher performance came with a corresponding reduction in device lifetime, often referred to as reliability, which failed to meet all of ST's specifications. Over many months, our two teams worked closely to resolve this trade-off. Then ST, as part of a reshaping of its manufacturing footprint, announced they would discontinue development on 200 millimeter wafers to focus exclusively on 300 millimeter for the next generation BCD110 platform. At about the same time, Adam Ayer discovered a new MST implementation validated through our TCAD simulations that doubled our performance improvement without the associated reduction in device lifetime. In other words, we found a way around the trade-off, an improvement only made possible by using MST. Over the last few months, ST validated our findings for the new implementation. However, because this new version required a device architecture change that would take multiple learning cycles to validate, they determined that they could not incorporate it and still meet their aggressive BCD 110 launch schedule. Therefore, ST informed us that they will take BCD 110 to market without MST, and currently they have no plan for a future variant that includes it. That means we no longer have a line of sight to royalty revenue at ST for this particular program. While that outcome is certainly disappointing, there are several important positives I want to emphasize. First, at STMicro, we demonstrated significant performance gains and proved MST's integration capability inside a tier one production fab. Second, we've now developed a very high performance solution that eliminates the performance reliability trade-off, which is a significant new differentiator for us going forward. One that we are already actively discussing with other players in this market. And third, ST has reiterated their intent to continue working with us in other technology areas where MST could add value. Under their license with us, they continue to run experiments across several different businesses. This chapter with ST underscores that moving a new material into mass production is rarely linear. The learning from this effort gives us a stronger foundation as we engage with others in the same power market segment, including with a very large existing customer and even a new engagement that began this past quarter. Customers are now evaluating MST for power devices between 5 and 48 volts. It's important to keep in perspective that ST is only one of many large customers we're working with today to take MST into production in the power area. We also have three other very active technology focus areas. In the gate all around space, there are three large competitors and one that's still emerging. We're working with or in discussions with all three of them. I mean, all four of them. In the DRAM space, there are three large manufacturers and we are engaged with two of them right now and have a good relationship with the third. In the RFSOI area, we're doing integration work with four different fabs and a fabless player right now with many of them running wafers. So you can see that we have no lack of opportunities across several different segments. Indeed, during the last three months, we processed a record number of wafers for our customers. When we look at all these opportunities, it's helpful to understand how we prioritize our business in terms of revenue potential. The first being the fastest time to market, second being the highest return on investment, and the third being breakthrough long-term growth. One of the fastest ways to get Atomera's technology to market is through applications which use MST deposited on top of the starting wafer rather than inserted into the middle of the manufacturing line. There are many reasons why this can accelerate revenue. First, customers can simply acquire an MST starting wafer and run it through their standard production flow with very few process modifications for an easy experiment. They don't have to install MST, deal with the complications of wafers being transferred in and out of their fab, make major changes to their process to integrate it, or complete a license agreement. The price of MST can be built into the cost of the starting wafer, which gives Atomera the same revenue, but the customer will not view the cost as a royalty. And it's certainly faster to get MST starting wafers qualified than something integrated into the middle of the process. Today, we use MST starting wafers in our work in RFSOI, in GAN, and possibly soon in next generation DRAM. we actively seek out these implementations because of the relatively easier integration and shorter path to revenue. The second set of applications have enormous revenue potential, but the development process can be more demanding because MSD is inserted into the middle of a complex set of production steps. It is worth it though, because the upside represents a massive return on investment, including in the areas of data around logic, DRAM, power devices, and other memory products. One design win here will ensure the future success of the company. And as I mentioned earlier, we have at least six or seven of those efforts underway today. In GATE All-Around and Advanced Memory, our partnership with a leading capital equipment company announced earlier this year is showcasing our competence at advanced nodes. Using their test infrastructure, we've been able to validate MST's ability to reduce contact resistance, improve channel reliability, and be deposited in the tiny structures of nanosheet transistors. We are very excited by the deep cooperation and customer interest generated through this partnership. This quarter will be hitting the road on joint visits with our customers to persuade them that issues in the manufacturing process can be solved using MST. The weight of our partners endorsement cannot be overstated. Finally, we have an abundance of new breakthrough materials enabled by MST under development in the background through commercial partnerships and university collaborations. For many of them, we've already filed fundamental patents and we're now in the process of making prototypes and understanding their capabilities. This is the type of program, for instance, which launched our GAN work. We have a dozen similar initiatives in early investigation, several of which might become near-term disruptive technology announcements in areas like quantum computing, AI server power, high bandwidth memory architectures, piezoelectric devices, optical networking, and a variety of other areas which have the potential to enable entirely new applications. Farming out the early R&D whenever possible allows Atomera's core team to keep a laser focus on the nearer-term revenue opportunities and apply more resources only when we see the potential of these innovations coming to fruition. Our gallium nitride initiative continues to deliver exciting progress. In collaboration with Sandia National Labs, we're in the process of completing device fabrication to highlight our improved electrical performance. Prior results have confirmed MST's ability to enhance GAN growth on silicon substrates, a major barrier for high-volume production, and have garnered interest from our first commercial customers. We hope to release a complete dataset publicly later this year, which will be the precursor to a full-scale rollout. As we continue our GAN work with Sandia, they are now seeking to expand the areas of R&D engagement on a range of Atomera technologies, corresponding to their highest priority development areas. The semiconductor industry is clearly entering a new materials innovation cycle. Across logic, memory, power, and RF, engineers are hitting the limits of conventional scaling. They're searching for material solutions that can boost performance, improve reliability, and reduce variability, exactly where MSD delivers value. This is particularly true in AI infrastructure and data centers. where the demand for power efficiency and thermal management is driving renewed focus on device-level innovation, which MST can deliver. One of our principal challenges is to ensure that potential customers know about MST, and that is why I'm so excited to welcome Wei Na as our new VP of Sales. Wei has had experience growing a semiconductor technology licensing business, very much like Atomera, from scratch. selling to the exact same customers we are addressing, and we believe his leadership will help us both grow sales and convert existing opportunities into licenses. Our priorities remain clear. Emphasize MSD starting wafer products like RFSOI and existing engagements to get to production and revenue as quickly as possible. Two, leverage our strategic OEM partnership to advance active engagements in gate all-around logic memory, and power through our comprehensive silicon test results and early licenses. Three, bring MST for GAN technology to a customer-ready stage with shareable electrical data. And four, maintain fiscal discipline as we transition from R&D validation and integration to revenue-generating licenses. Our mission hasn't changed. It's to enable better, faster, and more efficient semiconductors through advanced materials engineering. That mission remains as relevant as ever. I want to thank our employees, our customers, and our shareholders for their continued confidence and support. Every quarter, we move closer to the point where MST's impact will be felt across multiple product lines and foundries worldwide. With that, I'll turn the call over to our CFO, Frank Lorenzio, to review our financials.

Frank Lorenzio | Chief Financial Officer

Thanks, Scott. At the close of the market today, we issued a press release announcing our results for the third quarter of 2025. Our summary financials are shown on this slide. Our gap net loss for the third quarter of 2025 was $5.6 million, or 17 cents per share, compared to a net loss of $4.6 million, which was also 17 cents per share in Q3 of last year. Gap operating expenses in the third quarter of this year were $5.7 million, an increase of $857,000 from $4.8 million in Q3 of 2024. This was due to a $544,000 increase in R&D expenses, reflecting both higher outsourced device fabrication work and increased compensation expenses, and a $353,000 increase in G&A expenses, primarily consisting of higher stock compensation expense. Sales and marketing expenses were basically flat. Non-GAAP net loss in Q3 2025 was $4.4 million compared to a loss of $3.9 million in Q3 of last year due to a $423,000 increase in non-GAAP operating expense, primarily reflecting the higher R&D expenses I just discussed. Stock compensation expense, which is the main difference between GAAP and non-GAAP operating expenses, was $1.3 million in Q3 of 2025 and $907,000 in Q3 2024. The increase in stock compensation expense, which is non-cash, reflects the adoption of performance-based RSUs or PSUs for executive equity-based compensation in March of last year. PSUs vest over three years rather than four years, as is the case for time-based RSUs. However, PSUs will only vest if we deliver shareholder returns that meet minimum targets relative to the Russell 2000 Index. Sequentially, Q3 2025 non-GAAP net loss of $4.4 million compares to a $4 million net loss in Q2, primarily due to higher R&D expenses. Our balance of cash and cash equivalents as of September 30th, 2025 was $20.3 million compared to $22 million as of June 30, 2025. We used $3.4 million of cash in operating activities during Q3 compared to 3.5 million in the second quarter of this year. During Q2, sorry, during Q3, we raised approximately $2 million under our ATM facility net of commissions and expenses by selling approximately 393,000 shares at an average price of $5.23. Since the end of the quarter, we've raised an additional $836,000 from sales of approximately 171,000 shares at an average price of $5.03. As of today's date, we have 31.7 million shares outstanding. In Q4, we expect to recognize between $75,000 and $125,000 of NRE revenue from wafer shipments to customers running the demos that Scott mentioned in his remarks. Those shipments and the associated revenue recognition will happen in Q4 as well as into next year. Gross margin was negative this quarter because a portion of the cost for MST deposition on those wafers was incurred during this quarter, but the revenue will be recognized as we ship the wafers going forward. Moving to expenses, I expect our non-GAAP operating expense for the full year 2025 to be in the range of 17 and a quarter to 17 and a half million dollars. Sales and marketing expenses ticked up last quarter in connection with recruiting for both sales and marketing leadership roles. The compensation expenses associated with those roles are built into our plan. Our recruiting efforts have started to pay off with the hiring of Wei Na as our VP of sales. With that, I'll turn the call back over to Scott for a few summary remarks before we open the call up to questions. Scott?

Scott Bebo | President and CEO

Sorry, a little trouble with the Zoom controls here. Thanks, Frank. Across all of our technology focus areas, we have strong developments underway with the leaders of the industry. I hope today we've given you a sense of our wide and deep potential to deliver important material solutions that will ultimately make Atomera a financially successful technology provider across many different semiconductor segments. I appreciate you taking the journey with us. Mike, we will now take questions.

Mike Bishop | Investor Relations

All right. Thank you, Scott. If you wish to ask a question, please click the Q&A button at the bottom of the Zoom window. Then feel free to type in your question. I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button and we may call on you to ask your question live. Right now, our first question comes from Richard Shannon of Craig Helm. Richard, if you would kindly unmute and you may begin.

Richard Shannon | Analyst, Craig-Hallum

All right, great. Hopefully, am I muted here, Mike? You got it. Thanks. All right, excellent. Thanks, Scott. Frankfurt, let me ask a few questions here. Scott, maybe let's do a redux on STMicro. So I guess my first question here is, so it sounds like you did a new design on 300 millimeters that you validated in your simulations, but there would have been multiple cycles of learning to validate for ST. So is that trying to match your simulation to, you know, the real world and to their simulations to make sure that it worked and that cycle time was just too much, uh, to fit within their timeframe and getting to 300 millimeter. Is that the kind of the dynamic here that led them to their decision?

Scott Bebo | President and CEO

Yeah. So first of all, the work, the, uh, the new implementation we came up with, uh, would have worked on 200 millimeter or 300 millimeter. Um, um, And actually, if you let me digress one second here, Richard, because I've gotten a number of questions that have come in where people were asking, you know, when did you know about this trade-off between the reliability and performance? Every time you do a development, it's about trade-offs. you're doing a trade-off on one thing. I mean, you get, that's why we always talk about cycles of learning. You get some big improvement in one area, it breaks something else. And then you have to go in and you have to work to fix the other thing and try to get to a point where it's all balanced out. So this trade-off work that we were doing is not at all unusual. It's what we do with every customer all the time. What is unusual is that because they made the transition from 200 to 300, we lost the ability to bring in that ultimate solution and get it done for them in time. Because the 300 delayed their development efforts and then they needed to get into production fast. And so they just didn't have time to run the validation runs to get our new thing proven out. I'm not sure that answered your whole question.

Let me know. Richard Shannon | Analyst, Craig-Hallum

You know, I guess the point here is that it sounded like they were confident that this solved not only the performance, but the reliability issue that you discovered in 200 millimeter. And it was just the timeframe that was too tight for them to want to continue right now.

Scott Bebo | President and CEO

Yeah, that's right. Originally you asked about the simulation work. So we do simulation based on what we believe a customer's process needs manufacturing processes, but that's usually very secretive. They don't give anybody that information exactly. We can make our best approximation. And so we made a TCAD simulation that showed, yeah, we really got this great improvement. And we gave it to them in this summer. And then they spent the next two months running their own simulations. Their simulations are very exact to their own manufacturing process. And so what they did was they put in all the improvements we saw, we proposed, and they came back and they said, you know what, when we run our simulation, it also brings that level of improvement. So ultimately, I mean, the good news here is that they confirmed it. It makes us feel very confident to bring it out into the market as a new product. And it also makes us confident that at some point in time, we're hopeful we can re-engage with SD on that particular product and have them uh you know take it forward and make it put it into their uh process Richard Shannon | Analyst, Craig-Hallum: All right, fair enough. Let me follow up on one other comment you made related to STMicro and then we'll move on to some other topics here. So what seems obvious and you just commented on is the ability to take some of the learnings from the process with ST and take it to other customers in the power space here. What have you been able to do so far? Can you use similar kind of structures that you've built with ST and use those with other power customers? Maybe just kind of give us a sense of the benefits you can see from the situation.

Scott Bebo | President and CEO

Yeah. Sorry. Exactly. So what we did with ST, there's a technique in architecture that the industry has known about for some time, but it hasn't been implementable. When someone builds it, it causes too many things to break, and nobody's ever been able to get it to work. But because of the way MST works, because of the way it prevents dopants from diffusing uncontrollably, we believed that we could get that process to work so this is not like something no one's ever heard of it's it's something that one of those theoretical things that no one has been able to get work working well and now we can get it to work well and so yeah it's we're not taking anything from like any proprietary st information this is like a standard tech design technique that we can suddenly make work because of mst and so yeah we can take that out to other customers and they kind of understand the concept immediately Richard Shannon | Analyst, Craig-Hallum: All right, fair enough. Let's move on here. The last number of quarters, you've talked about transformative customers here. And unless I missed something, you didn't use naturally use that phrase here today in your prepared remarks. But I think you did mention a large demo run, which I think refers to one of them. And I think it's also contributing to some of the revenues this year. I will ask a question of Frank on the revenue side here in a second here, but maybe it's kind of detail where we're sitting with the transformative customers. And I do want to hit on one specific point that I had a question on actually asked Mike Bishop offline early today. And he said to ask this question of you, which is you've talked about. two or maybe three of these customers i want to make sure how many we're talking about and which ones are still ongoing versus any ones that may be stalled so if you can if you can enumerate that first and then discuss uh what's going on with this large demonstration you talked about last quarter and i think you briefly mentioned today that would be great okay yeah uh i know everybody is frustrated with the code words and i am too but we so in Scott Bebo | President and CEO: In January or February, we unfortunately had to announce that one customer that we had called transformative had discontinued our, we were negotiating a deal and they had backed out of the deal. And that customer, we continue to have good relations with them. We talk with them regularly, but we are not on an active engagement with that customer right now. In that same call, which I think was early, was in February, we mentioned two new transformative customers that were getting underway. And yes, we are working very actively with them. When we talked about a record number of wafers that we're processing, it includes those two customers that we called transformative back then. And so... Now, today, I mentioned these four different segments and how we're working with a lot of customers. And then I broke it down by revenue potential. And the folks in the middle, folks that are doing gate all around, folks that are doing DRAM, the really big players who are doing power and other memory architectures, they are all massive. And they're all customers that I would call transformative and So we're working with more than just those two that I mentioned on the call.

Richard Shannon | Analyst, Craig-Hallum

More than just the two that you would refer to as transformative? Is that what you're saying, Scott?

Yeah. Scott Bebo | President and CEO

To discontinue the term transformative, these two customers I spoke about as transformative in February are just very, very large revenue potential customers with very big processes that we hope to get going on. But we're also working with other customers who are also very large and have the potential to be transformative.

Richard Shannon | Analyst, Craig-Hallum

Okay. Well, let's talk about the specific transformative customer you talked about last quarter that you're doing a large demo run here. What's the update on what's going there? And is that leading to at least some contribution to the revenues you're guiding to this quarter?

Scott Bebo | President and CEO

Yes. Maybe I'll let Frank answer that. But so one of the there's some trickiness about about when we book revenues. And so we have a lot of customers, the revenue that we're putting out this quarter is based on several customers. I can't answer whether that specific one is, is in Q3 or it will be in the guidance that Frank gave for Q4, but it's, but it's, you know, we're getting revenue from wafer runs with that customer.

Frank Lorenzio | Chief Financial Officer

Yeah, that's right. I mean, the revenue guidance actually covers multiple customers, three different customers, and it's spaced out over time. And while I don't like to... show negative gross margin, the timing issue gives a little bit more visibility in the sense that we do a bunch of the deposition work, which is when we incur the costs of our tools, the metrology, and the labor associated with it. And oftentimes, these can get matched up pretty quickly with the revenue because it's a small number of wafer runs. And that's been true in the past. But we've been talking now for a couple of calls that we've been working with a very large customer on the largest wafer run that we've ever done. And we also have other customers. So now what you're seeing is we do a lot of that work. We don't ship all of those wafers out. We don't necessarily do all the deposition because the nature of these engagements is it can be iterative. You may do some wafers for setup. You run a series of tests, the customer validates those, you get some feedback, you then do another run with slightly different conditions, either, you know, on the MST or how the customer processes it with implants and things of that nature. So you can get, you know, a lot of activity in one quarter and then the wafers will ship out, you know, over time. And, you know, one of the challenges in sort of giving guidance is it isn't set in a schedule of we're going to ship, you know, 25 wafers this month and 25 wafers two months after that. Sometimes it really depends on what the customer learns in the process of evaluating that, setting up a new set of experiments, and then we ship out more. So yeah, there's multiple customers here, and these are important engagements in different application areas.

Richard Shannon | Analyst, Craig-Hallum

Okay. All right, that's helpful, Frank. I'll probably follow up with you a little later on that one. Maybe two more questions, I will jump out of line here. First of all, Scott, in your prepared remarks here, and I'm sure we'll review these in detail when the transfer comes out here, but you talked about kind of segmenting your opportunity based on where in the stack your MST is applied here, and you're talking about on top of the wafer versus somewhere in the middle. Certainly, it's layers in the middle, or I think it's fairly understood, especially for me who's not a device guy per se, that that's very complicated, but vice versa, if you can apply just on the top, That seems to be a much simpler process, which also implies it might be an area whereby which you might expect to see or hope to see your first license here just from a time to market perspective. So two questions for you is, I think I miss the applications areas that that specifically applied for. And B, would you agree that that's a very... a somewhat likely or very likely situation by which you first reach, first, you know, manufacturing, licensing, commercial production?

Scott Bebo | President and CEO

Yeah. So first of all, yeah, you're right about being deposited on top of the wafer makes it much easier. The applications that we specifically spoke about that do that is RFSOI and gallium nitride and also In the future, we have some ideas on next generation DRAM that could use it. So one thing to understand very briefly is when we deposit MST in the bottom layer, it has to be on a process that doesn't use incredibly high heat for long periods of time. So if, if we deposited if it was on a MST starting wafer, and then someone put the wafer into an annealing step that was 1100 degrees for an hour, then that would really damage the MST itself, and it wouldn't work. So the only time we use MST on the starting on the start of a wafer is on manufacturing processes are going to be lower temperature. And there's a lot of those, like RFSOI is run at very low temperatures. The new gate all around lys processes, they're trying to run them at very low temperatures. So in theory, MST could be on the base, on the starting wafer for those. Gallium nitride, we put MST on bottom before it grows the gallium nitride on top of it. That one isn't quite as low temperature, but it doesn't matter. The MST still works as a starting wafer. So I think... A layman might say, well, why don't you just do every process as a starting wafer if it's much easier and faster time to revenue? Well, it has to fit a certain dynamic, which has to do with this temperature range. You had a second half of your question and I've talked all this time and forgotten it.

Richard Shannon | Analyst, Craig-Hallum

You hit the applications. I think you've answered most of it. So I think that's very helpful. Last question for me, I'll jump out of line. You talked about this large capital equipment partner. And I think today you mentioned about going on a roadshow here. Maybe just kind of give us a sense of how broad the engagements are with this company. I think in the past you've mentioned too, I don't know if that was the limit or there were more you just didn't mention, but how do we understand the scope and breadth of your interaction with customers through or with them?

Scott Bebo | President and CEO

Okay, so the stated aim of our partnership is in the gate all around market. And that was what we announced in our press release. However, I have to say that there's great value in this partner working with us in everything. And there's value in us working with them in everything. So we have talked to them a lot and done some work on DRAM as well. So basically, yeah, I would say our primary focus right now is gate all around and DRAM. And when we go out on the road, that's who we'll be really targeting most closely.

Richard Shannon | Analyst, Craig-Hallum

OK, fair enough. That makes sense. I will jump on the line, guys.

Thank you. Mike Bishop | Investor Relations

OK, thanks, Richard. A number of questions have come in on the Q&A line, and I will aggregate them and ask some of the more common ones. So first one is about the gate all around projects and when, you know, there's a number of current projects underway that are expected to launch soon. And how many years do you expect the target process you are currently collaborating on to enter production?

Scott Bebo | President and CEO

Yeah. So first of all, working with a few different customers, so there might be a different answer for each customer. In general, The guys working on GATE all around, the great news is it's amazing working with them because they have armies of people working on this stuff, lots and lots of resources to test out your material. And the bad news on that is that they come back with a ton of requests for more information and more testing. But they're almost always working towards some kind of a launch that you would be built into. Some of them, I would say the the majority are looking at a launch that's still a few years out. There's some of them that are actually looking at using MST to improve yield on processes that are in production today. I can't exactly say, well, if or how long it would take to get into production on those processes, but my guess is if they integrated MST, they would have to do some qualification work on it. But if it did indeed improve their yield, which I think is what the majority of them are looking at for the current timing processes, they would try to move it into production very quickly. As long as it didn't break anything in the specifications of their production wafers, they would have every incentive to get it into production as soon as possible to improve yield.

Mike Bishop | Investor Relations

All right. In the past, you've talked about JDA1 and the Fabless RF licensee. Have you been doing wafer runs for those? And what do those results look like?

Scott Bebo | President and CEO

Yeah. So the answer is yes, we are doing wafer runs with them. Unfortunately, we don't have the results yet. I can't really commit that I'll be able to give you results from each customer. But generally, what happens is when the results come out, that's the timing when we'll be able to start driving towards licenses and transitions to production. Generally speaking, we have a number of different customers with wafers underway right now. None of them are coming out in the next few months. I would say we might have some coming out at the end of the year, but more likely into the first quarter before we'd start seeing a lot of results from those runs.

Mike Bishop | Investor Relations

Okay. And one for Frank. So the InSize partnership for GAN testing, can you talk about the economics there of who's paying for the runs or for the testing? You shed a little light on that.

Frank Lorenzio | Chief Financial Officer

Yeah. I mean, at this stage, this is a... an arrangement with RFN says where we're each bearing our own costs and we'll, you know, hopefully achieve a result that would lead us to some, you know, further activity. But right now it's, you know, we're not paying them to run testing, nor are they, you know, paying us for wafers. So it's, you know, it's early stage. And I think our hope right now would be to generate good RF data because that's something notoriously difficult. RF testing is complex. It's not something that we can typically do ourselves. So a lot of the work on RF SOI that we can do is kind of physical characteristics of, you know, our film. But when you get into, you know, some of the testing of actual devices on, you know, kind of RF feed, different figures of merit, then those are more specialized tests. And so getting more insight into that is very helpful from a marketing standpoint. And, you know, our view is, you know, there's some question on, you know, work with soy tech and wafer based products. The more information that we have to market to, you know, the ultimate customers of RFSOI devices, you know, the better it is in terms of building a relationship with SoyTech, who's a wafer manufacturer. So, you know, the more end demand that they see, the closer the collaboration is with us. So I kind of see it as a means to an end there.

Mike Bishop | Investor Relations

Okay. And then, Scott, going back to a topic we've touched on in the past, but is there an update on JDA2?

Scott Bebo | President and CEO

JDA2 is running way first with us. And they're one of the ones that I talked about that we, you know, we'd hope to get some results at the beginning of the year and hopefully see if we can turn that into a license and then plan to go to production.

Mike Bishop | Investor Relations

Okay. And then with regard to the STM news, we had a number of questions on Disclosure Channel. And can you talk about, you know, why you chose to put the news out on a blog post?

Scott Bebo | President and CEO

Yeah. Um, yeah. And we, we, we went back and forth on that. So I just want to be clear, you know, we, we were in discussions with, uh, with ST all through, um, you know, August, September, and into October about, about implementing this new, uh, uh, version of new architecture we had. and moving forward on 300 millimeter. And we were waiting to find out from them what the plan was, when that work would start, when they planned that it would be tried to take it to production. And it was really just a week and a half ago that we had a call with them. And that's when they told us that they did not have a plan in place to use MST to do that new architecture. So immediately after that call, we got off the phone and we started talking about, okay, we have an earnings call in a week and a half, but it seems too long to wait for a week and a half before we notify investors. And so on the following Monday, we actually started speaking with ST to make sure that when we disclose this, we would be following their internal guidelines on what we could say and couldn't say. And then on Tuesday, we put out the blog post. We could have put out a press release, but press releases tend to be, at least in our opinion, much more black and white about news that you're giving. In this case, we see it as a much more nuanced message. STU is telling us we don't have a plan to use you guys on this next run. Yeah, very bad news because I know all the investors want to know when the royalties will start flowing, and so do we. But they didn't say they'll never use us. And they also reassured us again and again that they are continuing work using our technology on other projects. on other process areas. So we felt that using a blog would allow us to give a little more nuance than a press release. And we know that the channels of communication that we have with a blog, we push it immediately out to all of our investors that are at least registered with us. And so we felt it was a good channel of communication in this particular case. And the most important thing to us was to get it out there as soon as we can within the restrictions of making sure we were working everything out with ST and so forth.

Mike Bishop | Investor Relations

All right, thanks. And one more question here. Is there any chance of government funding now that Atomair has been working with Sandia for a while?

Scott Bebo | President and CEO

You know, I talked a little bit on this call, which I've never done much about in the past, about all of the different R&D efforts that we have underway. And You know, many of them are, as I mentioned, through academia, through outside commercial partners so that we don't have to burden our internal team with too much of it. But Sandia is very interested in many of those technologies, and they have government programs that are interested in implementing things that would use those. So, yes, there's a lot of interest through Sandia. And we also continue to work with the government and with the CHIPS Act, infrastructure such as it is to see what we can do to kind of deliver some of our technology in through that channel and get some near-term revenue that way as well.

Mike Bishop | Investor Relations

Okay. Thank you, Scott. At this time, we'll turn the call to Scott for closing comments.

Scott Bebo | President and CEO

Oh, gee, thanks, Mike. Okay. Yeah, thanks for joining us and listening to our progress that we've been making here at Atomera. Next month, we'll be attending the Craig Hallam Alpha Select Conference in New York, and we look forward to seeing some of you there if you'll also be attending. Please continue to look for our news articles and blog posts, which are available along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop, who'll be happy to follow up. Thanks again for your support, and we look forward to our next update call.

Mike Bishop | Investor Relations

Thank you. This concludes the conference call. jsPDF 3.0.3 D:20260606085956-00'00'