0001683168-19-002518.txt : 20190809 0001683168-19-002518.hdr.sgml : 20190809 20190809160102 ACCESSION NUMBER: 0001683168-19-002518 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 46 CONFORMED PERIOD OF REPORT: 20190630 FILED AS OF DATE: 20190809 DATE AS OF CHANGE: 20190809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Atomera Inc CENTRAL INDEX KEY: 0001420520 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-37850 FILM NUMBER: 191012916 BUSINESS ADDRESS: STREET 1: 750 UNIVERSITY AVENUE STREET 2: SUITE 280 CITY: LOS GATOS STATE: CA ZIP: 95032 BUSINESS PHONE: 408-442-5248 MAIL ADDRESS: STREET 1: 750 UNIVERSITY AVENUE STREET 2: SUITE 280 CITY: LOS GATOS STATE: CA ZIP: 95032 FORMER COMPANY: FORMER CONFORMED NAME: MEARS TECHNOLOGIES INC DATE OF NAME CHANGE: 20071206 10-Q 1 atomera_10q-063019.htm QUARTERLY REPORT

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2019.

 

or

 

¨ Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

 

Commission file number: 001-37850

 

ATOMERA INCORPORATED

(Exact name of registrant as specified in its charter)

 

Delaware

30-0509586

(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

 

750 University Avenue, Suite 280

Los Gatos, California 95032

(Address, including zip code, of registrant’s principal executive offices)

 

(408) 442-5248

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock: Par value $0.001 ATOM Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one)

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer x Smaller reporting company x
  Emerging Growth Company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. x

 

Indicate by checkmark whether the registrant is a shell company (as defined in rule 12b-2 of the Exchange Act: Yes ¨ No x

 

The number of outstanding shares of the Registrant’s Common Stock, par value $.001 per share, as of August 5, 2019 was 17,073,971.

 

 

   
 

 

Atomera Incorporated

 

Index

 

    Page
PART I. Financial Information  
     
Item 1. Financial Statements 3
     
  Condensed Balance Sheets – June 30, 2019 (unaudited) and December 31, 2018 3
     
  Unaudited Condensed Statements of Operations - For the Three and Six Months Ended June 30, 2019 and 2018 4
     
  Unaudited Condensed Statements of Stockholders’ Equity - For the Three and Six Months Ended June 30, 2019 and 2018 5
     
  Unaudited Statement of Statements of Cash Flows - For the Six Months Ended June 30, 2019 and 2018 6
     
  Notes to the Unaudited Condensed Financial Statements 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 13
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 17
     
Item 4. Controls and Procedures 17
     
PART II. Other Information  
   
Item 1A. Risk Factors 18
     
Item 6. Exhibits 18
     
Signatures 19

 

 

 

 2 
 

 

PART I. Financial Information

 

Item 1. Financial Statements

 

Atomera Incorporated

Condensed Balance Sheets

(in thousands, except per share data)

 

   June 30,   December 31, 
   2019   2018 
   (Unaudited)     
ASSETS          
           
Current assets:          
Cash and cash equivalents  $19,118   $18,933 
Accounts receivable   18    185 
Unbilled contracts receivable   33     
Prepaid expenses and other current assets   304    170 
Total current assets   19,473    19,288 
           
Property and equipment, net   86    56 
Operating lease right-of-use asset   229     
Security deposit   13    13 
           
Total assets  $19,801   $19,357 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
Current liabilities:          
Accounts payable  $211   $348 
Accrued expenses   511    224 
Accrued payroll related expenses   385    984 
Current operating lease liability   143     
Deferred revenue   16    55 
Total current liabilities   1,266    1,611 
           
Long term operating lease liability   78     
           
Total liabilities   1,344    1,611 
           
Commitments and contingencies (see Note 8)          
           
Stockholders’ equity:          
Preferred stock, $0.001 par value, authorized 2,500 shares; none issued and outstanding at June 30, 2019 and December 31, 2018        
Common stock, $0.001 par value, authorized 47,500 shares; 17,074 and 15,034 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively.   17    15 
Additional paid-in capital   147,570    139,693 
Accumulated deficit   (129,130)   (121,962)
Total stockholders’ equity   18,457    17,746 
           
Total liabilities and stockholders’ equity  $19,801   $19,357 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 3 
 

 

Atomera Incorporated

Condensed Statements of Operations

(Unaudited)

(in thousands, except per share data)

 

  

Three Months ended

June 30,

  

Six Months ended

June 30,

 
   2019   2018   2019   2018 
Revenue  $70   $96   $141   $96 
Cost of revenue   (20)   (113)   (20)   (113)
Gross margin   50    (17)   121    (17)
                     
Operating expenses                    
Research and development   2,057    1,738    4,184    3,428 
General and administrative   1,488    1,254    2,809    2,457 
Selling and marketing   225    212    472    458 
Total operating expenses   3,770    3,204    7,465    6,343 
                     
Loss from operations   (3,720)   (3,221)   (7,344)   (6,360)
                     
Other income                    
Interest income   86    50    176    97 
Total other income   86    50    176    97 
                     
Net loss  $(3,634)  $(3,171)  $(7,168)  $(6,263)
Net loss per common share, basic and diluted  $(0.24)  $(0.26)  $(0.47)  $(0.52)
                     
Weighted average number of common shares outstanding, basic and diluted   15,423    12,078    15,104    12,060 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 4 
 

 

Atomera Incorporated

Statement of Stockholders’ Equity

For the Three and Six Months Ended June 30, 2019 and 2018

(Unaudited)

(in thousands)

 

 

   Common Stock  

Additional

Paid-in

   Accumulated   Total Stockholders’ 
   Shares   Amount   Capital   Deficit   Equity 
Balance January 1, 2019   15,034   $15   $139,693   $(121,962)  $17,746 
Stock-based compensation   298        694        694 
Net loss               (3,534)   (3,534)
Balance March 31, 2019   15,332   $15   $140,387   $(125,496)  $14,906 
Registered direct offering of common stock, net of commissions and other offering expenses   1,675    2    6,395        6,397 
Stock-based compensation   67        788        788 
Net loss               (3,634)   (3,634)
Balance June 30, 2019   17,074   $17   $147,570   $(129,130)  $18,457 

 

 

 

   Common Stock  

Additional

Paid-in

   Accumulated   Total Stockholders’ 
   Shares   Amount   Capital   Deficit   Equity 
Balance January 1, 2018   12,161   $12   $125,911   $(109,065)  $16,858 
Stock-based compensation   200        546        546 
Net loss               (3,092)   (3,092)
Balance March 31, 2018   12,361   $12   $126,457   $(112,157)  $14,312 
Stock-based compensation   48        621        621 
Net loss               (3,171)   (3,171)
Balance June 30, 2018   12,409   $12   $127,078   $(115,328)  $11,762 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

 

 5 
 

 

Atomera Incorporated

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

 

   Six Months Ended
June 30,
 
   2019   2018 
CASH FLOWS FROM OPERATING ACTIVITIES          
Net Loss  $(7,168)  $(6,263)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   21    16 
Stock-based compensation   1,482    1,166 
Loss on disposal of equipment       1 
Changes in operating assets and liabilities:          
Accounts receivable   167    14 
Prepaid expenses and other current assets   (180)   (48)
Accounts payable   (136)   141 
Accrued expenses   291    46 
Accrued payroll expenses   (599)   (174)
Deferred revenue   (39)    
Net cash used in operating activities   (6,161)   (5,101)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Acquisition of property and equipment   (51)   (14)
Net cash used in investing activities   (51)   (14)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from registered direct offering of common stock, net   6,397     
Net cash provided by financing activities   6,397     
           
Net decrease in cash and cash equivalents   185    (5,115)
           
Cash and cash equivalents at beginning of period   18,933    17,369 
           
Cash and cash equivalents at end of period  $19,118   $12,254 
           
Supplemental information:          
Cash paid for interest  $   $ 
Cash paid for taxes  $   $ 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 6 
 

 

ATOMERA INCORPORATED

NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS

For the Three and Six Months Ended June 30, 2019 and 2018

 

1. NATURE OF OPERATIONS

 

Atomera Incorporated (“Atomera” or the “Company”) was incorporated in the state of Delaware in March 2007 under the name MEARS Technologies, Inc. and is engaged in the development, commercialization and licensing of proprietary processes and technologies for the semiconductor industry. On January 12, 2016, the Company changed its name to Atomera Incorporated.

 

The Company is in the development stage, having only recently begun limited revenue-generating activities, and is devoting substantially all of its efforts toward technology research and development. The Company has primarily financed operations through private placements of equity and debt securities and the Company’s Initial Public Offering (the “IPO”) which was consummated on August 10, 2016, its underwritten public offering of common stock consummated on October 15, 2018 and a registered direct offering of common stock consummated on May 30, 2019.

 

2. LIQUIDITY AND MANAGEMENT PLANS

 

At June 30, 2019, the Company had cash and cash equivalents of approximately $19.1 million and working capital of approximately $18.2 million. The Company has only generated limited revenues since inception and has incurred recurring operating losses. At June 30, 2019, the Company had an accumulated deficit of approximately $129.1 million.

 

The Company’s operating plans for the next 12 months include increased research and development headcount and increased spending on outsourced fabrication and testing. Based on the funds it has available as of the date of the filing of this report, the Company believes that it has sufficient capital to fund its current business plans and obligations over, at least, 12 months from the date that these financial statements have been issued. However, as the Company has generated only limited revenue from its principal operations, it is subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays in a new business. Accordingly, the Company may require additional capital, the receipt of which cannot be assured. In the event the Company requires additional capital, there can be no guarantee that funds will be available on commercially reasonable terms, if at all.

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Significant accounting policies

 

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 11, 2019 except those noted below under the caption “Adoption of recent accounting standards”.

 

Basis of presentation of unaudited condensed financial information

 

The unaudited condensed financial statements of the Company for the three and six months ended June 30, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2018 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2019. These financial statements should be read in conjunction with that report.

 

 

 

 

 7 
 

 

Adoption of recent accounting standards

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No 2016-02, Leases (Topic 842), establishing Accounting Standard Codification (“ASC”) Topic 842, which requires the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC Topic 842, the Company elected the adoption date of January 1, 2019, which is the date of initial application, using a modified retrospective approach for all leases existing at January 1, 2019 and elected to apply the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. ASC Topic 842 requires the Company to make significant judgments and estimates. Additionally, the Company has expanded data gathering procedures to comply with the additional disclosure requirements and ongoing contract review requirements. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases, which did not require the recognition of operating lease liabilities on the balance sheet, and is not comparative. Under ASC Topic 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The Company elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The adoption of ASC Topic 842 had an impact on the Company’s balance sheet, but did not have an impact on the Company’s statements of operations or statements of cash flows upon adoption. See Note 6 for more information.

 

In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The guidance in this ASU expands the scope of ASC Topic 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The Company adopted ASU No. 2018-07 effective January 1, 2019. The Company’s adoption of ASU No. 2018-07 did not have a material impact on its financial position, results of operations or financial statement disclosure.

 

4. REVENUE

 

The Company recognizes revenue when it satisfies a performance obligation by transferring the product or service to the customer, either at a point in time or over time. The Company usually recognizes revenue from integration service agreements at a point in time and integration license agreements over a period of time.

 

The Company has estimated that it will recognize approximately $32,000 during the rest of 2019 related to performance obligations that are partially unsatisfied at the end of the reporting period.

 

Disaggregation of revenue:

 

The following table provides information about disaggregated revenue by primary geographical markets and timing of revenue recognition for the three and six months ended June 30, 2019 (in thousands):

 

   Integration Services 
   Three Months Ended June 30, 2019   Six Months Ended June 30, 2019 
Primary geographic markets          
Europe  $33   $83 
Asia Pacific   37    58 
Total  $70   $141 
           
Timing of revenue recognition          
Products and services transferred at a point in time  $18   $18 
Products and services transferred over time   52    123 
Total  $70   $141 

 

 

 

 8 
 

 

Unbilled contracts receivable and deferred revenue:

 

Timing of revenue recognition may differ from the timing of invoicing customers. Accounts receivable includes amounts billed and currently due from customers. Unbilled contracts receivable represents unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed, and the right to receive payment is subject to the underlying contractual terms. Unbilled contracts receivable amounts may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. The Company has approximately $33,000 of unbilled contracts receivable as of June 30, 2019.

 

The Company records deferred revenue when revenue will be recognized after invoicing. During the three and six months ended June 30, 2019, the Company recognized approximately $18,000 and $39,000, respectively, of revenue that was included in deferred revenue as of December 31, 2018. The Company has approximately $16,000 in deferred revenue related to invoiced customers, but revenue has not yet been recognized as of June 30, 2019.

 

5. BASIC AND DILUTED LOSS PER SHARE

 

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants and (ii) vesting of restricted stock units and restricted stock awards, are only included in the calculation of diluted net loss per share when their effect is dilutive. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Accordingly, basic and diluted net loss per share are equal.

  

The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive (in thousands):

 

  

Three and Six Months Ended

June 30,

 
   2019   2018 
Stock Options   2,935    2,477 
Unvested restricted stock   521    299 
Warrants   765    765 
Total   4,221    3,541 

 

6. LEASES

 

The Company leases corporate office space in Los Gatos, California. This lease has a remaining term of 19 months as of June 30, 2019. This lease is accounted for under ASC Topic 842 and as a result, the most significant impact was the recognition of the operating lease right-of-use assets and the liability for operating leases. Upon adoption the Company recorded an operating lease right-of-use asset and the related lease liability. The lease liability is based on the present value of the remaining minimum lease payments, discounted using the Company’s estimated incremental borrowing rate of 10% at the effective date of January 1, 2019. As permitted under ASC Topic 842, the Company elected several practical expedients that permit it to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs.

 

 

 

 

 9 
 

 

The impact of the adoption of ASC Topic 842 on the balance sheet at January 1, 2019 was (in thousands):

 

   As reported December 31, 2018   Adoption of ASC Topic 842   Balance January 1, 2019 
Prepaid expenses and other current assets  $170   $(13)  $157 
Operating lease of right-of-use assets       295    295 
Total assets   19,357    282    19,639 
Other current liabilities   1,611    129    1,740 
Long-term liabilities operating leases       152    152 
Total liabilities   1,611    281    1,892 

 

The current lease accounted for under ASC Topic 842 contains escalating payments on the anniversary of the commencement. These additional lease components are included in the measurement of the initial lease liability. Additional payments based on a change in the Company’s share of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability. Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term.

 

Future minimum payments under non-cancellable leases as of June 30, 2019 were as follows (in thousands):

 

For the Year Ended December 31,  Amount 
Remaining 2019  $67 
2020   165 
2021   14 
Total future minimum lease payments   246 
Less imputed interest   (25)
Total lease liability   221 

 

The below table provides supplemental information and non-cash activity related to the Company’s operating leases are as follows (in thousands):

 

  

Three Months Ended

June 30, 2019

  

Six Months Ended

June 30, 2019

 
Operating cash flow information:          
Cash paid for amounts included in the measurement of lease liabilities  $40   $80 
Non-cash activity:          
Right-of-use assets obtained in exchange for the lease obligations (1)  $   $295 

 

  (1) Represents the initial right-of-use asset valuation of the Los Gatos lease on January 1, 2019

 

In October 2016, the Company entered into lease agreement for approximately 200 square feet of office space in Cambridge, Massachusetts. The lease with monthly payments of $2,074 per month commenced on October 24, 2016. The lease rate increased to $2,619 on January 1, 2019. Because the lease is month to month and can be cancelled with a 30-day notice, the future lease payments are not included in the Company’s lease accounting under ASC Topic 842.

 

 

 

 

 

 10 
 

 

7. STOCK BASED COMPENSATION

 

In May 2017, the Company’s shareholders approved its 2017 Stock Incentive Plan (“2017 Plan”) after its 2007 Stock Incentive Plan (“2007 Plan”) had expired in March 2017. The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock and for the grant of restricted and unrestricted shares. The 2017 Plan provides for the issuance of 3,750,000 shares of common stock. All of the Company’s employees and any subsidiary employees (including officers and directors who are also employees), as well as all of the Company’s nonemployee directors and other consultants, advisors and other persons who provide services to the Company are eligible to receive incentive awards under the 2017 Plan. Generally, stock options and restricted stock vest over a one to four-year period from the date of grant under the 2017 Plan.

 

The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the three and six months ended June 30, 2019 and 2018 for stock options and restricted stock granted under the 2017 Plan and the 2007 Plan (in thousands):

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2019   2018   2019   2018 
Research and development  $221   $148   $399   $260 
General and administrative   534    443    1,016    842 
Selling and Marketing   33    30    67    64 
   $788   $621   $1,482   $1,166 

 

As June 30, 2019, there was approximately $5.4 million of total unrecognized compensation expense related to unvested share-based compensation arrangements that are expected to vest. This cost is expected to be recognized over a weighted-average period of 2.6 years.

 

The weighted average grant date fair value per share of the options granted under the Company’s 2017 Plan was $2.50 and $3.63 for the six months ended June 30, 2019 and 2018, respectively.

 

The following table summarizes stock option activity during the six months ended June 30, 2019 (in thousands except exercise prices and contractual terms):

 

  

Number of

Shares

  

Weighted-

Average

Exercise

Prices

  

Weighted-
Average

Remaining

Contractual

Term (In Years)

   Intrinsic
Value
 
Outstanding at January 1, 2019   2,477   $6.81          
Granted   458   $3.90          
Outstanding at June 30, 2019   2,935   $6.36    7.43   $552 
Exercisable at June 30, 2019   1,852   $6.89    6.79   $49 

 

During the six months ended June 30, 2019 the Company granted options under the 2017 Plan to purchase approximately 458,000 shares of its common stock to its employees. The fair value of these options was approximately $1.1 million at the time of grant.

  

The Company issues restricted stock to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant. The following table summarizes all restricted stock activity during the six months ended June 30, 2019 (in thousands except per share data):

 

  

Number of

Shares

  

Weighted-

Average

Grant Date
Fair Value

 
Outstanding at January 1, 2019   258   $6.04 
Granted   365   $3.95 
Vested   (102)  $5.55 
Outstanding non-vested shares at June 30, 2019   521   $4.67 

 

 

 

 11 
 

 

During the six months ended June 30, 2019 the Company granted approximately 365,000 restricted stock awards under the 2017 Plan to its employees and directors. The fair value of these awards was approximately $1.4 million at the time of grant.

 

8. COMMITMENTS AND CONTINGENCIES

  

Litigation, Claims and Assessments

 

The Company may be subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company is not party to any material litigation as of June 30, 2019, or through the date these financial statements have been issued.

  

9. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events and transactions through the date these financial statements were issued.

 

 

 

 

 

 

 

 

 

 12 
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion and analysis of the financial condition and results of operations of Atomera Incorporated should be read in conjunction with our unaudited condensed financial statements and the accompanying notes that appear elsewhere in this filing. Statements in this Quarterly Report on Form 10-Q include forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. Although forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by us. Consequently, forward-looking statements are inherently subject to risks, uncertainties, and changes in condition, significance, value and effect, including those risk factors set forth in our Prospectus Supplement with the SEC on May 30, 2019 and referenced under the heading “Risk Factors” within Part II, Item 1A of this Quarterly Report and other documents we subsequently file from time to time with the SEC, such as our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause our actual results to differ materially from those expressed herein and in ways not readily foreseeable. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report and are based on information currently and reasonably known to us. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this Quarterly Report. Readers are urged to carefully review and consider the various disclosures made in this Quarterly Report, which attempt to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

 

Overview

 

We are engaged in the business of developing, commercializing and licensing proprietary processes and technologies for the $450+ billion semiconductor industry. Our lead technology, named Mears Silicon TechnologyTM, or MST®, is a thin film of reengineered silicon, typically 100 to 300 angstroms (or approximately 20 to 60 silicon atomic unit cells) thick. MST can be applied as a transistor channel enhancement to CMOS-type transistors, the most widely used transistor type in the semiconductor industry. MST is our proprietary and patent-protected performance enhancement technology that we believe addresses a number of key engineering challenges facing the semiconductor industry. We believe that by incorporating MST, transistors can be smaller, with increased speed, reliability and energy efficiency. In addition, since MST is an additive and low-cost technology, we believe it can be deployed on an industrial scale, with machines commonly used in semiconductor manufacturing. We believe that MST can be widely incorporated into the most common types of semiconductor products, including analog, logic, optical and memory integrated circuits.

  

We do not intend to design or manufacture integrated circuits directly. Instead, we intend to develop and license technologies and processes that we believe will offer the designers and manufacturers of integrated circuits a low-cost solution to the industry’s need for greater performance and lower power consumption. Our customers and partners are expected to include:

 

  · foundries, which manufacture integrated circuits on behalf of fabless manufacturers;

 

  · integrated device manufacturers, or IDMs, which are the fully integrated designers and manufacturers of integrated circuits;

 

  · fabless semiconductor manufacturers, which are designers of integrated circuits who outsource the manufacture of their chips to foundries;

 

  · original equipment manufacturers, or OEMs, that manufacture the epitaxial, or EPI, machines used to deposit semiconductor layers, such as the MST, onto the base silicon wafer; and

 

  · electronic design automation companies, which make tools used throughout the industry to simulate performance of semiconductor products using different materials, design structures and process technologies.

 

 

 

 

 13 
 

 

We intend to generate revenue through licensing arrangements whereby foundries and IDMs pay us a license fee for their right to use MST technology in the manufacture of silicon wafers as well as a royalty for each silicon wafer or device that incorporates our MST technology. We also intend to enter into licensing arrangements with fabless semiconductor manufacturers pursuant to which we will charge them a royalty for each device they sell that incorporates our MST technology.

 

We were organized as a Delaware limited liability company under the name Nanovis LLC on November 26, 2001. On March 13, 2007, we converted to a Delaware corporation under the name Mears Technologies, Inc. On January 12, 2016, we changed our name to Atomera Incorporated.

 

On August 10, 2016, we closed our initial public offering of 3,680,000 shares of common stock at a public offering price of $7.50 per share. We received approximately $24.7 million in net proceeds after deducting underwriting discounts and commission and other offering expenses.

 

On October 15, 2018, we closed an underwritten public offering of 2,625,000 shares of common stock at a public offering price of $4.75 per share, resulting in approximately $11.4 million of net proceeds to us after deducting underwriting discounts and commission and other offering expenses.

 

On May 30, 2019, we closed a registered direct offering of 1,675,000 shares of common stock at a price of $4.00 per share, resulting in approximately $6.4 million of net proceeds to us after deducting placement agent fees and other offering expenses.

   

Results of Operations

 

Revenues. To date, we have only generated limited revenue from customer engagements for integration engineering services and integration license agreements. In the future, we expect to collect increased fees from license agreements as well as royalties from customer sales of products that incorporate our MST technology, subject to our ability to enter into manufacturing and distribution license agreements with our current and future licensees. Our integration services consist of depositing our MST film on semiconductor wafers, delivering such wafers to customers to finalize building devices, and performing tests for customers evaluating MST. The integration license agreements we have entered into to date grant the licensees the right to build products that integrate our MST technology deposited by us onto their semiconductor wafers, but the agreements do not grant the licensees the rights to manufacture on their site or to sell products incorporating MST. Revenue is recognized upon transfer of control of promised products, services or intellectual property (IP) rights in an amount that reflects the consideration that we expect to receive in exchange for those products, services or licensing of IP rights. The integration license agreements that we currently have in place do not specify the number of wafers to be delivered by us, so we recognize revenue over the period during which we estimate that we will deliver wafers under each contract.

 

Revenue for the three months ended June 30, 2019 and 2018 was approximately $70,000 and $96,000, respectively. Revenue for the six months ended June 30, 2019 and 2018 was approximately $141,000 and $96,000, respectively. Our revenue during these periods was generated from integration license agreements and integration services agreements.

 

Cost of Revenue. Cost of revenue from integration service agreements consists of costs of materials, as well as direct compensation and expenses incurred to provide such services. Cost of revenue from integration license agreements consists of third-party royalties, if any, incurred to grant such licenses. Cost of revenue for the three and six months ended June 30, 2019 approximately $20,000. Cost of revenue for the three and six months ended June 30, 2018 was approximately $113,000.

 

Operating Expenses. Operating expenses consist of research and development, general and administrative, and selling and marketing expenses. For the three months ended June 30, 2019 and 2018 our operating expenses totaled approximately $3.8 million and $3.2 million, respectively. The increase in operating expenses was due to an increase of approximately $319,000 in research and development expense and an increase of approximately $240,000 in general and administrative expense. For the six months ended June 30, 2019 and 2018 our operating expenses totaled approximately $7.5 million and $6.3 million, respectively. The increase in operating expenses was due to an increase of approximately $756,000 in research and development expense and an increase of approximately $358,000 in general and administrative expense.

 

 

 

 

 14 
 

 

Research and development expense. To date, our operations have focused on the research, development, patent protection, and commercialization of our processes and technologies, including our proprietary and patent-protected MST performance enhancement technology. Our research and development costs primarily consist of payroll and benefit costs for our engineering staff and costs of outsourced fabrication and metrology of semiconductor wafers incorporating our MST technology.

 

For the three months ended June 30, 2019 and 2018, we incurred approximately $2.1 million and $1.7 million, respectively, of research and development expense, an increase of approximately $319,000 or 18%. The increase in research and development expense is primarily due to an increase of approximately $189,000 in spending on outsourced fabrication and metrology to support increased engagements with customers evaluating MST, an increase of approximately $71,000 in payroll expense reflecting an increase in engineering headcount and accrued bonuses and an increase in stock-based compensation expense of approximately $73,000.

 

For the six months ended June 30, 2019 and 2018, we incurred approximately $4.2 million and $3.4 million, respectively, of research and development expense, an increase of approximately $756,000 or 22%. The increase in research and development expense is primarily due to an increase of approximately $487,000 in spending on outsourced fabrication and metrology to support increased engagements with customers evaluating MST, an increase of approximately $143,000 in payroll expense reflecting an increase in engineering headcount and accrued bonuses and an increase in stock-based compensation expense of approximately $139,000.

 

General and administrative expense. General and administrative expenses consist primarily of payroll and benefit costs for administrative personnel, office-related costs and professional fees. General and administrative costs for the three months ended June 30, 2019 and 2018 were approximately $1.5 million and $1.3 million, respectively, representing an increase of approximately $240,000 or 19%. The increase in costs was primarily due to an increase of approximately $114,000 in legal fees for filing and maintaining patents and $90,000 in stock-based compensation as compared to the three months ended June 30, 2018.

 

General and administrative costs for the six months ended June 30, 2019 and 2018 were approximately $2.8 million and $2.5 million, respectively, representing an increase of approximately $358,000 or 15%. The increase in costs was primarily due to an increase of approximately $173,000 in stock-based compensation expense and an increase of approximately $40,000 in payroll related costs due to an increase in salaries and benefits as compared to the six months ended June 30, 2018. In addition, legal fees for filing and maintaining patents for the first six months of 2019 increased by approximately $122,000 over the same period of 2018.

 

Selling and marketing expense. Selling and marketing expenses consist primarily of salary and benefits for our sales and marketing personnel and business development services. Selling and marketing expenses for the three months ended June 30, 2019 and 2018 were approximately $225,000 and $212,000, respectively, representing an increase of approximately $13,000, or 6%.

 

Selling and marketing expenses for the six months ended June 30, 2019 and 2018 were approximately $472,000 and $458,000, respectively, representing an increase of approximately $14,000, or 3%.

 

Interest income. Interest income for the three months ended June 30, 2019 and 2018 was approximately $86,000 and $50,000, respectively. Interest income for the six months ended June 30, 2019 and 2018 was approximately $176,000 and $97,000, respectively. Interest income for each period related to interest earned on our cash and cash equivalents.

  

 

 

 15 
 

 

Liquidity and Capital Resources

 

On October 15, 2018 we closed an underwritten public offering of 2,625,000 shares of our common stock at a public offering price of $4.75 per share, pursuant to our Registration Statement on Form S-3. We received approximately $11.4 million of net proceeds, after deducting underwriting discounts and commissions and other offering expenses.

 

On May 30, 2019, we closed a registered direct offering of 1,675,000 shares of common stock at a price of $4.00 per share, resulting in approximately $6.4 million of net proceeds to us after deducting commission and other offering expenses.

 

As of June 30, 2019, we had cash and cash equivalents of approximately $19.1 million and working capital of approximately $18.20 million. For the six months ended June 30, 2019, we had a net loss of approximately $7.2 million and used approximately $6.2 million of cash and cash equivalents in operations. Since inception, we have incurred recurring operating losses. At June 30, 2019, we had an accumulated deficit of approximately $129.1 million.

 

 As of the date of this report, we believe that our available working capital is sufficient to fund our presently forecasted working capital requirements for, at least, the next 12 months following the date of the filing of this report. If we are unable to generate meaningful revenue from royalty-based manufacturing and distribution agreements or otherwise, we may need to raise additional capital. However, the semiconductor industry is generally slow to adopt new manufacturing process technologies and conducts long testing and qualification processes which we have limited ability to control, and there can be no assurance of the timing of our receipt of meaningful amounts of revenue.

 

If we are not able to generate sufficient revenue from engineering services, license fees and royalties in a timeframe that satisfies our cash needs, we will need to raise more capital. In the event we require additional capital, we will endeavor to acquire additional funds through various financing sources, including follow-on equity offerings, debt financing and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable to us to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. However, there can be no guarantees that additional capital, whether under the S-3 Registration Statement or otherwise, will be available on commercially reasonable terms, if at all. If such financing is not available on satisfactory terms, we may be unable to further pursue our business plan and we may be unable to continue operations.

 

Cash Flows from Operating, Investing and Financing Activities

  

Net cash used in operating activities of approximately $6.2 million for the six months ended June 30, 2019 resulted primarily from our net loss of approximately $7.2 million adjusted by approximately $1.5 million for stock-based compensation expense and a decrease in liabilities of approximately $483,000.

 

Net cash used in operating activities of approximately $5.1 million of the six months ended June 30, 2018 resulted primarily from our net loss of approximately $6.3 million adjusted by approximately $1.2 million for non-cash stock-based compensation expense.

 

Net cash used in investing activities of approximately $51,000 for the six months ended June 30, 2019 and approximately $14,000 for six months ended June 30, 2018 consisted of the purchase of computers and lab equipment.

 

Net cash provided by financing activities of approximately $6.4 million for the six months ended June 30, 2019 related to the net proceeds from our registered direct offering of common stock in May 2019. No cash was used in or provided by financing activities for the six months ended June 30, 2018.

 

Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements or issued guarantees to third parties.

 

 

 

 16 
 

 

Recent Accounting Standards

 

We are required to adopt certain new accounting standards including Accounting Standards Update (“ASU”) No 2016-02, Leases (Topic 842). See note 3 to the condensed financial statements included in Item 1 of this Form 10-Q.

 

Critical Accounting Policies

 

There have been no changes to our critical accounting policies from those included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on March 11, 2019 except for the adoption of ASC Topic 842 as noted above under the caption “Recent Accounting Standards.”

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our chief executive officer and principal financial and accounting officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on this evaluation, management concluded that our disclosure controls and procedures were effective as of June 30, 2019.

 

Changes in Internal Control over Financial Reporting

 

There have not been any changes to our internal controls over financial reporting (as defined by Rule 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the three-month period ended June 30, 2019 that have material affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

 

 

 

 

 

 

 

 17 
 

 

PART II. Other Information

 

Item 1A. Risk Factors

 

The primary risk factors affecting our business have not changed materially from the risk factors set forth in our Prospectus Supplement filed with the SEC on May 30, 2019.

 

Item 6. Exhibits

 

The following is a list of exhibits files as part of this Report on Form 10-Q:

 

Exhibit

No.

  Description   Method of Filing
31.1   Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   Filed electronically herewith
         
31.2   Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.   Filed electronically herewith
         
32.1   Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350).   Filed electronically herewith
         
101.INS   XBRL Instance Document   Filed electronically herewith  
         
101.SCH   XBRL Taxonomy Extension Schema Document   Filed electronically herewith
         
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document   Filed electronically herewith
         
101.LAB   XBRL Taxonomy Extension Label Linkbase Document   Filed electronically herewith
         
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document     Filed electronically herewith
         
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document     Filed electronically herewith

 

 

 

 

 

 

 18 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and the on the date indicated.

 

  ATOMERA INCORPORATED.  
     
Date: August 9, 2019 By:   /s/ Scott A. Bibaud  
    Scott A. Bibaud
Chief Executive Officer,
 
    (Principal Executive Officer)  
    and Director  
       
       
Date: August 9, 2019 By: /s/ Francis B. Laurencio  
    Francis B. Laurencio  
    Chief Financial Officer  
    (Principal Financial and  
    Accounting Officer)  

 

 

 

 

 

 

 

 

 

 

 

 

 19 

EX-31.1 2 atomera_ex3101.htm CERTIFICATIONS

Exhibit 31.1

 

CERTIFICATIONS

 

I, Scott A. Bibaud, certify that:

 

  (1) I have reviewed this Form 10-Q of Atomera Incorporated (the “Company”);

 

  (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

  (4) The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d- 15(f)) for the company and have:

 

  (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the period covered by this report based on such evaluation; and

 

  (d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; And

 

  (5) The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

 

  (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

 

  (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

  ATOMERA INCORPORATED
     
     
Date: August 9, 2019 By: /s/ Scott A. Bibaud
    Scott A. Bibaud, Chief Executive Officer

 

 

 

EX-31.2 3 atomera_ex3102.htm CERTIFICATIONS

Exhibit 31.2

 

CERTIFICATIONS

 

I, Francis B. Laurencio, certify that:

 

  (1) I have reviewed this Form 10-Q of Atomera Incorporated (the “Company”);

 

  (2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

  (3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

 

  (4) The Company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d- 15(f)) for the company and have:

 

  (a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

  (b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

  (c) evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the period covered by this report based on such evaluation; and

 

  (d) disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the Company’s most recent quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; And

 

  (5) The Company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

 

  (a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

 

  (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

 

  ATOMERA INCORPORATED
     
     
Date: August 9, 2019 By: /s/ Francis B. Laurencio
   

Francis B. Laurencio, Chief Financial Officer

(Principal Financial Officer)

 

 

 

 

EX-32.1 4 atomera_ex3201.htm CERTIFICATION

Exhibit 32.1

 

CERTIFICATION PURSUANT TO 18

U.S.C. 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Atomera Incorporated (the “Company”) on Form 10-Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott A. Bibaud, the Chief Executive Officer, and Francis B. Laurencio, the Chief Financial Officer, of the Company, respectively, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

By: /s/ Scott A. Bibaud   Dated:  August 9, 2019
  Scott A. Bibaud    
  Title: President and Chief Executive Officer    
       
By: /s/ Francis B. Laurencio   Dated:  August 9, 2019
  Francis B. Laurencio    
  Title:  Chief Financial Officer    

 

This certification is made solely for the purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose.

 

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Working capital Assets, Current Liabilities, Current Stockholders' Equity Attributable to Parent Liabilities and Equity Cost of Revenue Gross Profit Operating Expenses Operating Income (Loss) Nonoperating Income (Expense) Shares, Outstanding Gain (Loss) on Disposition of Assets Increase (Decrease) in Accounts Receivable Increase (Decrease) in Prepaid Expense and Other Assets Increase (Decrease) in Accounts Payable Increase (Decrease) in Accrued Liabilities Increase (Decrease) in Deferred Revenue Net Cash Provided by (Used in) Operating Activities Payments to Acquire Property, Plant, and Equipment Net Cash Provided by (Used in) Investing Activities Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Unbilled Contracts Receivable Deferred Revenue, Current Operating Leases, Future Minimum Payments Due OperatingLeasesFutureMinimumPaymentsInterestIncludedInPayments Operating Lease, Liability Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period ShareBasedCompensationArrangementByShareBasedPaymentAwardNonOptionEquityInstrumentsCancelled Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value EX-101.PRE 10 atom-20190630_pre.xml XBRL PRESENTATION FILE XML 11 R1.htm IDEA: XBRL DOCUMENT v3.19.2
Document and Entity Information - shares
6 Months Ended
Jun. 30, 2019
Aug. 05, 2019
Document And Entity Information    
Entity Registrant Name Atomera Inc  
Entity Central Index Key 0001420520  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity's Reporting Status Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Common Stock, Shares Outstanding   17,073,971
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2019  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Transition Period true  
Interactive Data Current Yes  
Entity Incorporation State Country Code DE  
Entity File Number 001-37850  
XML 12 R2.htm IDEA: XBRL DOCUMENT v3.19.2
Condensed Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Current Assets:    
Cash and cash equivalents $ 19,118 $ 18,933
Accounts receivable 18 185
Unbilled contracts receivable 33 0
Prepaid expenses and other current assets 304 170
Total current assets 19,473 19,288
Property and equipment, net 86 56
Operating lease right-of-use asset 229 0
Security deposit 13 13
Total assets 19,801 19,357
Current liabilities:    
Accounts payable 211 348
Accrued expenses 511 224
Accrued payroll related expenses 385 984
Current operating lease liability 143 0
Deferred revenue 16 55
Total current liabilities 1,266 1,611
Long term operating lease liability 78 0
Total Liabilities 1,344 1,611
Commitments and contingencies (see Note 9)
Stockholders' equity:    
Preferred stock, $0.001 par value, authorized 2,500 shares; none issued and outstanding at June 30, 2019 and December 31, 2018 0 0
Common stock, $0.001 par value, authorized 47,500 shares; 17,074 and 15,034 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively. 17 15
Additional paid-in capital 147,570 139,693
Accumulated deficit (129,130) (121,962)
Total stockholders' equity 18,457 17,746
Total liabilities and stockholders' equity $ 19,801 $ 19,357
XML 13 R3.htm IDEA: XBRL DOCUMENT v3.19.2
Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares
shares in Thousands
Jun. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Preferred stock, par value (in dollars per share) $ 0.001 $ 0.001
Preferred stock, authorized 2,500 2,500
Preferred stock, issued 0 0
Preferred stock, outstanding 0 0
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, authorized 47,500 47,500
Common stock, issued 17,074 15,034
Common stock, oustanding 17,074 15,034
XML 14 R4.htm IDEA: XBRL DOCUMENT v3.19.2
Condensed Statements of Operations (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Revenue $ 70 $ 96 $ 141 $ 96
Cost of revenue (20) (113) (20) (113)
Gross margin 50 (17) 121 (17)
Operating Expenses:        
Research and development 2,057 1,738 4,184 3,428
General and administrative 1,488 1,254 2,809 2,457
Selling and marketing 225 212 472 458
Total operating expenses 3,770 3,204 7,465 6,343
Loss from operations (3,720) (3,221) (7,344) (6,360)
Other income:        
Interest income 86 50 176 97
Total other income 86 50 176 97
Net loss $ (3,634) $ (3,171) $ (7,168) $ (6,263)
Net loss per common share, basic and diluted $ (0.24) $ (0.26) $ (0.47) $ (0.52)
Weighted average number of common shares outstanding, basic and diluted 15,423 12,078 15,104 12,060
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.19.2
Statement of Stockholders' Equity (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Total
Beginning balance, shares at Dec. 31, 2017 12,161      
Beginning balance, value at Dec. 31, 2017 $ 12 $ 125,911 $ (109,065) $ 16,858
Stock-based compensation, shares 200      
Stock-based compensation   546   546
Net loss     (3,092) (3,092)
Ending balance, shares at Mar. 31, 2018 12,361      
Ending balance, value at Mar. 31, 2018 $ 12 126,457 (112,157) 14,312
Beginning balance, shares at Dec. 31, 2017 12,161      
Beginning balance, value at Dec. 31, 2017 $ 12 125,911 (109,065) 16,858
Net loss       (6,263)
Ending balance, shares at Jun. 30, 2018 12,409      
Ending balance, value at Jun. 30, 2018 $ 12 127,078 (115,328) 11,762
Beginning balance, shares at Mar. 31, 2018 12,361      
Beginning balance, value at Mar. 31, 2018 $ 12 126,457 (112,157) 14,312
Stock-based compensation, shares 48      
Stock-based compensation   621   621
Net loss     (3,171) (3,171)
Ending balance, shares at Jun. 30, 2018 12,409      
Ending balance, value at Jun. 30, 2018 $ 12 127,078 (115,328) 11,762
Beginning balance, shares at Dec. 31, 2018 15,034      
Beginning balance, value at Dec. 31, 2018 $ 15 139,693 (121,962) 17,746
Stock-based compensation, shares 298      
Stock-based compensation   694   694
Net loss     (3,534) (3,534)
Ending balance, shares at Mar. 31, 2019 15,332      
Ending balance, value at Mar. 31, 2019 $ 15 140,387 (125,496) 14,906
Beginning balance, shares at Dec. 31, 2018 15,034      
Beginning balance, value at Dec. 31, 2018 $ 15 139,693 (121,962) 17,746
Net loss       (7,168)
Ending balance, shares at Jun. 30, 2019 17,074      
Ending balance, value at Jun. 30, 2019 $ 17 147,570 (129,130) 18,457
Beginning balance, shares at Mar. 31, 2019 15,332      
Beginning balance, value at Mar. 31, 2019 $ 15 140,387 (125,496) 14,906
Registered direct offering of common stock, net of commissions and other offering expenses, shares 1,675      
Registered direct offering of common stock, net of commissions and other offering expenses, value $ 2 6,395   6,397
Stock-based compensation, shares 67      
Stock-based compensation   788   788
Net loss     (3,634) (3,634)
Ending balance, shares at Jun. 30, 2019 17,074      
Ending balance, value at Jun. 30, 2019 $ 17 $ 147,570 $ (129,130) $ 18,457
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.19.2
Condensed Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES    
Net Loss $ (7,168) $ (6,263)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 21 16
Stock-based compensation 1,482 1,166
Loss on disposal of equipment 0 1
Changes in operating assets and liabilities:    
Accounts receivable 167 14
Prepaid expenses and other current assets (180) (48)
Accounts payable (136) 141
Accrued expenses 291 46
Accrued payroll expenses (599) (174)
Deferred revenue (39) 0
Net cash used in operating activities (6,161) (5,101)
CASH FLOWS FROM INVESTING ACTIVITIES    
Acquisition of property and equipment (51) (14)
Net cash used in investing activities (51) (14)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from registered direct offering of common stock, net 6,397 0
Net cash provided by financing activities 6,397 0
Net decrease in cash and cash equivalents 185 (5,115)
Cash and cash equivalents at beginning of period 18,933 17,369
Cash and cash equivalents at end of period 19,118 12,254
Supplemental Information:    
Cash paid for interest 0 0
Cash paid for taxes $ 0 $ 0
XML 17 R7.htm IDEA: XBRL DOCUMENT v3.19.2
1. NATURE OF OPERATIONS
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF OPERATIONS
1. NATURE OF OPERATIONS

 

Atomera Incorporated (“Atomera” or the “Company”) was incorporated in the state of Delaware in March 2007 under the name MEARS Technologies, Inc. and is engaged in the development, commercialization and licensing of proprietary processes and technologies for the semiconductor industry. On January 12, 2016, the Company changed its name to Atomera Incorporated.

 

The Company is in the development stage, having only recently begun limited revenue-generating activities, and is devoting substantially all of its efforts toward technology research and development. The Company has primarily financed operations through private placements of equity and debt securities and the Company’s Initial Public Offering (the “IPO”) which was consummated on August 10, 2016, its underwritten public offering of common stock consummated on October 15, 2018 and a registered direct offering of common stock consummated on May 30, 2019.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.19.2
2. LIQUIDITY AND MANAGEMENT PLANS
6 Months Ended
Jun. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
LIQUIDITY AND MANAGEMENT PLANS

2. LIQUIDITY AND MANAGEMENT PLANS

 

At June 30, 2019, the Company had cash and cash equivalents of approximately $19.1 million and working capital of approximately $18.2 million. The Company has only generated limited revenues since inception and has incurred recurring operating losses. At June 30, 2019, the Company had an accumulated deficit of approximately $129.1 million.

 

The Company’s operating plans for the next 12 months include increased research and development headcount and increased spending on outsourced fabrication and testing. Based on the funds it has available as of the date of the filing of this report, the Company believes that it has sufficient capital to fund its current business plans and obligations over, at least, 12 months from the date that these financial statements have been issued. However, as the Company has generated only limited revenue from its principal operations, it is subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays in a new business. Accordingly, the Company may require additional capital, the receipt of which cannot be assured. In the event the Company requires additional capital, there can be no guarantee that funds will be available on commercially reasonable terms, if at all.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.19.2
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Significant accounting policies

 

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 11, 2019 except those noted below under the caption “Adoption of recent accounting standards”.

 

Basis of presentation of unaudited condensed financial information

 

The unaudited condensed financial statements of the Company for the three and six months ended June 30, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2018 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2019. These financial statements should be read in conjunction with that report.

 

Adoption of recent accounting standards

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No 2016-02, Leases (Topic 842), establishing Accounting Standard Codification (“ASC”) Topic 842, which requires the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC Topic 842, the Company elected the adoption date of January 1, 2019, which is the date of initial application, using a modified retrospective approach for all leases existing at January 1, 2019 and elected to apply the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. ASC Topic 842 requires the Company to make significant judgments and estimates. Additionally, the Company has expanded data gathering procedures to comply with the additional disclosure requirements and ongoing contract review requirements. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases, which did not require the recognition of operating lease liabilities on the balance sheet, and is not comparative. Under ASC Topic 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The Company elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The adoption of ASC Topic 842 had an impact on the Company’s balance sheet, but did not have an impact on the Company’s statements of operations or statements of cash flows upon adoption. See Note 6 for more information.

 

In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The guidance in this ASU expands the scope of ASC Topic 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The Company adopted ASU No. 2018-07 effective January 1, 2019. The Company’s adoption of ASU No. 2018-07 did not have a material impact on its financial position, results of operations or financial statement disclosure.

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.19.2
4. REVENUE
6 Months Ended
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]  
REVENUE

4. REVENUE

 

The Company recognizes revenue when it satisfies a performance obligation by transferring the product or service to the customer, either at a point in time or over time. The Company usually recognizes revenue from integration service agreements at a point in time and integration license agreements over a period of time.

 

The Company has estimated that it will recognize approximately $32,000 during the rest of 2019 related to performance obligations that are partially unsatisfied at the end of the reporting period.

 

Disaggregation of revenue:

 

The following table provides information about disaggregated revenue by primary geographical markets and timing of revenue recognition for the three and six months ended June 30, 2019 (in thousands):

 

   Integration Services 
   Three Months Ended June 30, 2019   Six Months Ended June 30, 2019 
Primary geographic markets          
Europe  $33   $83 
Asia Pacific   37    58 
Total  $70   $141 
           
Timing of revenue recognition          
Products and services transferred at a point in time  $18   $18 
Products and services transferred over time   52    123 
Total  $70   $141 

 

Unbilled contracts receivable and deferred revenue:

 

Timing of revenue recognition may differ from the timing of invoicing customers. Accounts receivable includes amounts billed and currently due from customers. Unbilled contracts receivable represents unbilled amounts expected to be received from customers in future periods, where the revenue recognized to date exceeds the amount billed, and the right to receive payment is subject to the underlying contractual terms. Unbilled contracts receivable amounts may not exceed their net realizable value and are classified as long-term assets if the payments are expected to be received more than one year from the reporting date. The Company has approximately $33,000 of unbilled contracts receivable as of June 30, 2019.

 

The Company records deferred revenue when revenue will be recognized after invoicing. During the three and six months ended June 30, 2019, the Company recognized approximately $18,000 and $39,000, respectively, of revenue that was included in deferred revenue as of December 31, 2018. The Company has approximately $16,000 in deferred revenue related to invoiced customers, but revenue has not yet been recognized as of June 30, 2019.

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.19.2
5. BASIC AND DILUTED LOSS PER SHARE
6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
BASIC AND DILUTED LOSS PER SHARE

5. BASIC AND DILUTED LOSS PER SHARE

 

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding and the dilutive common stock equivalent shares outstanding during the period. The Company’s potentially dilutive common stock equivalent shares, which include incremental common shares issuable upon (i) the exercise of outstanding stock options and warrants and (ii) vesting of restricted stock units and restricted stock awards, are only included in the calculation of diluted net loss per share when their effect is dilutive. Since the Company has had net losses for all periods presented, all potentially dilutive securities are anti-dilutive. Accordingly, basic and diluted net loss per share are equal.

  

The following potential common stock equivalents were not included in the calculation of diluted net loss per common share because the inclusion thereof would be anti-dilutive (in thousands):

 

  

Three and Six Months Ended

June 30,

 
   2019   2018 
Stock Options   2,935    2,477 
Unvested restricted stock   521    299 
Warrants   765    765 
Total   4,221    3,541 

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.19.2
6. LEASES
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Leases

6. LEASES

 

The Company leases corporate office space in Los Gatos, California. This lease has a remaining term of 19 months as of June 30, 2019. This lease is accounted for under ASC Topic 842 and as a result, the most significant impact was the recognition of the operating lease right-of-use assets and the liability for operating leases. Upon adoption the Company recorded an operating lease right-of-use asset and the related lease liability. The lease liability is based on the present value of the remaining minimum lease payments, discounted using the Company’s estimated incremental borrowing rate of 10% at the effective date of January 1, 2019. As permitted under ASC Topic 842, the Company elected several practical expedients that permit it to not reassess (1) whether a contract is or contains a lease, (2) the classification of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs.

 

The impact of the adoption of ASC Topic 842 on the balance sheet at January 1, 2019 was (in thousands):

 

   As reported December 31, 2018   Adoption of ASC Topic 842   Balance January 1, 2019 
Prepaid expenses and other current assets  $170   $(13)  $157 
Operating lease of right-of-use assets       295    295 
Total assets   19,357    282    19,639 
Other current liabilities   1,611    129    1,740 
Long-term liabilities operating leases       152    152 
Total liabilities   1,611    281    1,892 

 

The current lease accounted for under ASC Topic 842 contains escalating payments on the anniversary of the commencement. These additional lease components are included in the measurement of the initial lease liability. Additional payments based on a change in the Company’s share of the operating expenses, including real estate taxes and insurance, are recorded as a period expense when incurred. Lease modifications result in remeasurement of the lease liability. Lease expense for operating leases consists of the lease payments plus any initial direct costs, primarily brokerage commissions, and is recognized on a straight-line basis over the lease term.

 

Future minimum payments under non-cancellable leases as of June 30, 2019 were as follows (in thousands):

 

For the Year Ended December 31,  Amount 
Remaining 2019  $67 
2020   165 
2021   14 
Total future minimum lease payments   246 
Less imputed interest   (25)
Total lease liability   221 

 

The below table provides supplemental information and non-cash activity related to the Company’s operating leases are as follows (in thousands):

 

  

Three Months Ended

June 30, 2019

  

Six Months Ended

June 30, 2019

 
Operating cash flow information:          
Cash paid for amounts included in the measurement of lease liabilities  $40   $80 
Non-cash activity:          
Right-of-use assets obtained in exchange for the lease obligations (1)  $   $295 

 

  (1) Represents the initial right-of-use asset valuation of the Los Gatos lease on January 1, 2019

 

In October 2016, the Company entered into lease agreement for approximately 200 square feet of office space in Cambridge, Massachusetts. The lease with monthly payments of $2,074 per month commenced on October 24, 2016. The lease rate increased to $2,619 on January 1, 2019. Because the lease is month to month and can be cancelled with a 30-day notice, the future lease payments are not included in the Company’s lease accounting under ASC Topic 842.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.19.2
7. STOCK BASED COMPENSATION
6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
STOCK BASED COMPENSATION

7. STOCK BASED COMPENSATION

 

In May 2017, the Company’s shareholders approved its 2017 Stock Incentive Plan (“2017 Plan”) after its 2007 Stock Incentive Plan (“2007 Plan”) had expired in March 2017. The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock and for the grant of restricted and unrestricted shares. The 2017 Plan provides for the issuance of 3,750,000 shares of common stock. All of the Company’s employees and any subsidiary employees (including officers and directors who are also employees), as well as all of the Company’s nonemployee directors and other consultants, advisors and other persons who provide services to the Company are eligible to receive incentive awards under the 2017 Plan. Generally, stock options and restricted stock vest over a one to four-year period from the date of grant under the 2017 Plan.

 

The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the three and six months ended June 30, 2019 and 2018 for stock options and restricted stock granted under the 2017 Plan and the 2007 Plan (in thousands):

 

   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2019   2018   2019   2018 
Research and development  $221   $148   $399   $260 
General and administrative   534    443    1,016    842 
Selling and Marketing   33    30    67    64 
   $788   $621   $1,482   $1,166 

 

As June 30, 2019, there was approximately $5.4 million of total unrecognized compensation expense related to unvested share-based compensation arrangements that are expected to vest. This cost is expected to be recognized over a weighted-average period of 2.6 years.

 

The weighted average grant date fair value per share of the options granted under the Company’s 2017 Plan was $2.50 and $3.63 for the six months ended June 30, 2019 and 2018, respectively.

 

The following table summarizes stock option activity during the six months ended June 30, 2019 (in thousands except exercise prices and contractual terms):

 

  

Number of

Shares

  

Weighted-

Average

Exercise

Prices

  

Weighted-
Average

Remaining

Contractual

Term (In Years)

   Intrinsic
Value
 
Outstanding at January 1, 2019   2,477   $6.81          
Granted   458   $3.90          
Outstanding at June 30, 2019   2,935   $6.36    7.43   $552 
Exercisable at June 30, 2019   1,852   $6.89    6.79   $49 

 

During the six months ended June 30, 2019 the Company granted options under the 2017 Plan to purchase approximately 458,000 shares of its common stock to its employees. The fair value of these options was approximately $1.1 million at the time of grant.

  

The Company issues restricted stock to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant. The following table summarizes all restricted stock activity during the six months ended June 30, 2019 (in thousands except per share data):

 

  

Number of

Shares

  

Weighted-

Average

Grant Date
Fair Value

 
Outstanding at January 1, 2019   258   $6.04 
Granted   365   $3.95 
Vested   (102)  $5.55 
Outstanding non-vested shares at June 30, 2019   521   $4.67 

 

During the six months ended June 30, 2019 the Company granted approximately 365,000 restricted stock awards under the 2017 Plan to its employees and directors. The fair value of these awards was approximately $1.4 million at the time of grant.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.19.2
8. COMMITMENTS AND CONTINGENCIES
6 Months Ended
Jun. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

8. COMMITMENTS AND CONTINGENCIES

  

Litigation, Claims and Assessments

 

The Company may be subject to periodic lawsuits, investigations and claims that arise in the ordinary course of business. The Company is not party to any material litigation as of June 30, 2019, or through the date these financial statements have been issued.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.19.2
9. SUBSEQUENT EVENTS
6 Months Ended
Jun. 30, 2019
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

9. SUBSEQUENT EVENTS

 

Management has evaluated subsequent events and transactions through the date these financial statements were issued.

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.19.2
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Significant accounting policies

Significant accounting policies

 

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 11, 2019 except those noted below under the caption “Adoption of recent accounting standards”.

Basis of presentation of unaudited condensed financial information

Basis of presentation of unaudited condensed financial information

 

The unaudited condensed financial statements of the Company for the three and six months ended June 30, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and pursuant to the requirements for reporting on Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for the fair presentation of the Company’s financial position and the results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The balance sheet information as of December 31, 2018 was derived from the audited financial statements included in the Company's financial statements as of and for the year ended December 31, 2018 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 11, 2019. These financial statements should be read in conjunction with that report.

Adoption of recent accounting standards

Adoption of recent accounting standards

 

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No 2016-02, Leases (Topic 842), establishing Accounting Standard Codification (“ASC”) Topic 842, which requires the recognition of the right-of-use assets and related operating and finance lease liabilities on the balance sheet. As permitted by ASC Topic 842, the Company elected the adoption date of January 1, 2019, which is the date of initial application, using a modified retrospective approach for all leases existing at January 1, 2019 and elected to apply the available practical expedients and implemented internal controls and key system functionality to enable the preparation of financial information on adoption. ASC Topic 842 requires the Company to make significant judgments and estimates. Additionally, the Company has expanded data gathering procedures to comply with the additional disclosure requirements and ongoing contract review requirements. As a result, the consolidated balance sheet prior to January 1, 2019 was not restated, continues to be reported under ASC Topic 840, Leases, which did not require the recognition of operating lease liabilities on the balance sheet, and is not comparative. Under ASC Topic 842, all leases are required to be recorded on the balance sheet and are classified as either operating leases or finance leases. The Company elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a term of 12 months or less. The adoption of ASC Topic 842 had an impact on the Company’s balance sheet, but did not have an impact on the Company’s statements of operations or statements of cash flows upon adoption. See Note 6 for more information.

 

In June 2018, the FASB issued ASU No. 2018-07, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The guidance in this ASU expands the scope of ASC Topic 718 to include all share-based payment arrangements related to the acquisition of goods and services from both nonemployees and employees. The Company adopted ASU No. 2018-07 effective January 1, 2019. The Company’s adoption of ASU No. 2018-07 did not have a material impact on its financial position, results of operations or financial statement disclosure.

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.19.2
4. REVENUE (Tables)
6 Months Ended
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenue from contracts
   Integration Services 
   Three Months Ended June 30, 2019   Six Months Ended June 30, 2019 
Primary geographic markets          
Europe  $33   $83 
Asia Pacific   37    58 
Total  $70   $141 
           
Timing of revenue recognition          
Products and services transferred at a point in time  $18   $18 
Products and services transferred over time   52    123 
Total  $70   $141 
XML 28 R18.htm IDEA: XBRL DOCUMENT v3.19.2
5. BASIC AND DILUTED LOSS PER SHARE (Tables)
6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
Schedule of potential common stock equivalents not included in the calculation of diluted net loss per common share
  

Three and Six Months Ended

June 30,

 
   2019   2018 
Stock Options   2,935    2,477 
Unvested restricted stock   521    299 
Warrants   765    765 
Total   4,221    3,541 
XML 29 R19.htm IDEA: XBRL DOCUMENT v3.19.2
6. LEASES (Tables)
6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Impact of ASC Topic 842
   As reported December 31, 2018   Adoption of ASC Topic 842   Balance January 1, 2019 
Prepaid expenses and other current assets  $170   $(13)  $157 
Operating lease of right-of-use assets       295    295 
Total assets   19,357    282    19,639 
Other current liabilities   1,611    129    1,740 
Long-term liabilities operating leases       152    152 
Total liabilities   1,611    281    1,892 
Schedule of future minimum lease payments
For the Year Ended December 31,  Amount 
Remaining 2019  $67 
2020   165 
2021   14 
Total future minimum lease payments   246 
Less imputed interest   (25)
Total lease liability   221 
Supplemental non-cash actiity related to operating leases
  

Three Months Ended

June 30, 2019

  

Six Months Ended

June 30, 2019

 
Operating cash flow information:          
Cash paid for amounts included in the measurement of lease liabilities  $40   $80 
Non-cash activity:          
Right-of-use assets obtained in exchange for the lease obligations (1)  $   $295 
XML 30 R20.htm IDEA: XBRL DOCUMENT v3.19.2
7. STOCK BASED COMPENSATION (Tables)
6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
Schedule of stock-based compensation expense
   Three Months Ended
June 30,
   Six Months Ended
June 30,
 
   2019   2018   2019   2018 
Research and development  $221   $148   $399   $260 
General and administrative   534    443    1,016    842 
Selling and Marketing   33    30    67    64 
   $788   $621   $1,482   $1,166 
Schedule of stock option activity
  

Number of

Shares

  

Weighted-

Average

Exercise

Prices

  

Weighted-
Average

Remaining

Contractual

Term (In Years)

   Intrinsic
Value
 
Outstanding at January 1, 2019   2,477   $6.81          
Granted   458   $3.90          
Outstanding at June 30, 2019   2,935   $6.36    7.43   $552 
Exercisable at June 30, 2019   1,852   $6.89    6.79   $49 
Schedule of restricted stock option activity
  

Number of

Shares

  

Weighted-

Average

Grant Date
Fair Value

 
Outstanding at January 1, 2019   258   $6.04 
Granted   365   $3.95 
Vested   (102)  $5.55 
Outstanding non-vested shares at June 30, 2019   521   $4.67 
XML 31 R21.htm IDEA: XBRL DOCUMENT v3.19.2
2. LIQUIDITY AND MANAGEMENT PLANS (Details Narrative) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Jun. 30, 2018
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]        
Cash and cash equivalents $ 19,118 $ 18,933 $ 12,254 $ 17,369
Working capital 18,200      
Accumulated deficit $ (129,130) $ (121,962)    
XML 32 R22.htm IDEA: XBRL DOCUMENT v3.19.2
4. REVENUE (Details) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Revenue $ 70 $ 96 $ 141 $ 96
Transferred at Point in Time [Member]        
Revenue 18   18  
Transferred Over Time [Member]        
Revenue 52   123  
Europe [Member]        
Revenue 33   83  
Asia Pacific [Member]        
Revenue $ 37   $ 58  
XML 33 R23.htm IDEA: XBRL DOCUMENT v3.19.2
4. REVENUE (Details Narrative) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Revenue from Contract with Customer [Abstract]      
Expected revenue from performance obligations that are unsatisfied or partially unsatisfied at the end of this reporting period.     $ 32
Unbilled contracts receivable $ 33   33
Revenue previously included in deferred revenue 18 $ 39  
Deferred revenue $ 16   $ 16
XML 34 R24.htm IDEA: XBRL DOCUMENT v3.19.2
5. BASIC AND DILUTED LOSS PER SHARE (Details) - shares
shares in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Potential common stock equivalents 4,221 3,541
Stock Options [Member]    
Potential common stock equivalents 2,935 2,477
Unvested Restricted Stock [Member]    
Potential common stock equivalents 521 299
Warrants [Member]    
Potential common stock equivalents 765 765
XML 35 R25.htm IDEA: XBRL DOCUMENT v3.19.2
6. LEASES (Details - Adoption of ASC 842) - USD ($)
$ in Thousands
Jun. 30, 2019
Jan. 02, 2019
Dec. 31, 2018
Prepaid expenses and other current assets $ 304   $ 170
Operating lease of right-of-use assets 229   0
Total assets 19,801   19,357
Other current liabilities     1,611
Long-term liabilities operating leases 78   0
Total liabilities $ 1,344   1,611
Adoption of ASC Topic 842 [Member]      
Prepaid expenses and other current assets     (13)
Operating lease of right-of-use assets     295
Total assets     282
Other current liabilities     129
Long-term liabilities operating leases     152
Total liabilities     $ 281
Balance January 1, 2019 [Member]      
Prepaid expenses and other current assets   $ 157  
Operating lease of right-of-use assets   295  
Total assets   19,639  
Other current liabilities   1,740  
Long-term liabilities operating leases   152  
Total liabilities   $ 1,892  
XML 36 R26.htm IDEA: XBRL DOCUMENT v3.19.2
6. LEASES (Details - Minimum lease payments)
$ in Thousands
Jun. 30, 2019
USD ($)
Leases [Abstract]  
Remaining period in 2019 $ 67
2020 165
2021 14
Total future minimum payments due 246
Less imputed interest (25)
Total lease liability $ 221
XML 37 R27.htm IDEA: XBRL DOCUMENT v3.19.2
6. LEASES (Details - Cash flow effect) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2018
Jun. 30, 2019
Operating cash flow information:    
Cash paid for amounts included in the measurement of lease liabilities $ 40 $ 80
Non-cash activity:    
Right-of-use assets obtained in exchange for the lease obligations (1) $ 0 $ 295
XML 38 R28.htm IDEA: XBRL DOCUMENT v3.19.2
7. STOCK BASED COMPENSATION (Details - Compensation Expense) - USD ($)
$ in Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Allocated stock-based compensation $ 788 $ 621 $ 1,482 $ 1,166
Research and Development [Member]        
Allocated stock-based compensation 221 148 399 260
General and Administrative [Member]        
Allocated stock-based compensation 534 443 1,016 842
Selling and Marketing [Member]        
Allocated stock-based compensation $ 33 $ 30 $ 67 $ 64
XML 39 R29.htm IDEA: XBRL DOCUMENT v3.19.2
7. STOCK BASED COMPENSATION (Details - Stock Option Activity) - Options [Member]
$ / shares in Units, shares in Thousands, $ in Thousands
6 Months Ended
Jun. 30, 2019
USD ($)
$ / shares
shares
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]  
Options outstanding, beginning balance | shares 2,477
Options granted | shares 458
Options outstanding, ending balance | shares 2,935
Options exercisable | shares 1,852
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Prices [Roll Forward]  
Weighted average exercise price, options outstanding beginning balance | $ / shares $ 6.81
Weighted average exercise price, options granted | $ / shares 3.90
Weighted average exercise price, options outstanding, ending balance | $ / shares 6.36
Weighted average exercise price, options exercisable | $ / shares $ 6.89
Share-based Compensation Arrangement by Share-based Payment Award, Options, Weighted-Average Remaining Contractual Term [Roll Forward]  
Weighted average remaining contractual term, options outstanding 7 years 5 months 5 days
Weighted average remaining contractual term, options exercisable 6 years 9 months 14 days
Share-based Compensation Arrangement by Share-based Payment Award, Options, Intrinsic Value [Roll Forward]  
Intrinsic value, options outstanding ending balance | $ $ 552
Intrinsic value, options exercisable | $ $ 49
XML 40 R30.htm IDEA: XBRL DOCUMENT v3.19.2
7. STOCK BASED COMPENSATION (Details - Restricted stock) - Restricted Stock [Member]
shares in Thousands
6 Months Ended
Jun. 30, 2019
$ / shares
shares
Number of shares  
Restricted stock outstanding, beginning balance | shares 258
Restricted stock granted | shares 365
Restricted stock vested | shares (102)
Restricted stock outstanding, ending balance | shares 521
Weighted-Average Grant Date Fair Value  
Restricted stock outstanding, beginning balance | $ / shares $ 6.04
Restricted stock granted | $ / shares 3.95
Restricted stock vested | $ / shares 5.55
Restricted stock outstanding, ending balance | $ / shares $ 4.67
XML 41 R31.htm IDEA: XBRL DOCUMENT v3.19.2
7. STOCK BASED COMPENSATION (Details Narrative) - USD ($)
$ / shares in Units, shares in Thousands, $ in Thousands
6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
2017 Plan [Member]    
Shares authorized for issuance 3,750  
Restricted Stock [Member]    
Restricted stock granted 365  
Fair value of restricted stock granted $ 1,400  
Options [Member]    
Unrecognized compensation expense $ 5,400  
Unrecognized compensation weighted average period 2 years 7 months 6 days  
Options granted 458  
Fair value of options granted $ 1,100  
Weighted average grant date fair value per share $ 2.50 $ 3.63
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