Hello, everyone and welcome to Atomera’s Fourth Quarter and Fiscal Year 2024 Update Call. I’d like to remind everyone that this call and webinar are being recorded, and a replay will be available on Atomera’s IR website for one year. I am Mike Bishop with the company’s Investor Relations. As in prior quarters, we are using Zoom and we will follow a similar presentation format with participants in a listen-only mode. We will open with prepared remarks from Scott Bibaud, Atomera’s President and CEO; and Frank Laurencio, Atomera’s CFO. Then, we will open the call to questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the Events & Presentations section of our Investor Relations' page on our website. Before we begin, I’d like to remind everyone that during today’s call, we will make forward-looking statements. These forward-looking statements whether in prepared remarks or during the Q&A session, are subject to inherent risks and uncertainties. These risks and uncertainties are detailed in the Risk Factors section of our filings with the Securities and Exchange Commission, specifically in the company’s annual report on Form 10-K filed with the SEC on February 15th, 2024. Except as otherwise required by federal securities laws, Atomera disclaims any obligation to update or make revisions to such forward-looking statements contained herein or elsewhere to reflect changes in expectations with regards to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today’s press release, which is also posted to our website. Now, I would like to turn the call over to our President and CEO, Scott Bibaud. Go ahead, Scott.

Thanks Mike. This past year has been an incredibly productive one with Atomera advancing across all customer categories, building our stature as a technology pioneer, entering new segments, and getting closer to first production. Building on the strength of Q3, our fourth quarter has been filled with progress on every front with one setback, and I'll start off with the details there. Last quarter, we mentioned an active negotiation with a transformative customer. Discussions underway -- have been underway with them for some time with periods of very intense negotiation followed by lengthy delays on their part. At the time of our last call, we felt very close to concluding a deal, but it has dragged on much longer than expected. And at this point, we have to say it has stalled. We are confident that MST can deliver to this customer one and a half to two generations of performance improvement in a critical area, and we are asking for only a small fraction of the economic value they would be receiving, but they still have yet to move forward. Although disappointing, it is not surprising, since resistance to innovative ideas is expected, and in this case, we're providing two; an externally developed material delivered with low upfront cost and an ongoing royalty, a format which is new to some customers. We continue to believe there is strong support for our technology at the engineering level in this company. Indeed, in this market segment, all of their competitors are struggling with the same issues, and we believe one or more of them will adopt MST for this application. Furthermore, we believe their ability to achieve the improvements they need through other means will be limited and will take much longer than would be possible by adopting MST. So, we…

Thank you, Scott. At the close of the market today, we issued a press release announcing our fourth quarter and full year results for 2024. And this slide shows our summary financials. Revenue in 2024 was $135,000 and consisted of MST CAD licensing and NRE fees. Our GAAP net loss for the year ended December 31, 2024 was $18.4 million or $0.68 per share compared to a net loss of $19.8 million or $0.80 per share in 2023. GAAP operating expenses were $19.3 million in 2024, which was a decline of $1.9 million from $21.2 million of OpEx in 2023. The main driver of the decline in operating expense was a $1.5 million decrease in R&D expenses, which almost was almost entirely due to a decline in outsourced engineering spending resulting from the closure of TSI Semiconductor's services business after TSI was acquired by Bosch. Sales and marketing expenses declined by $546,000 due to lower headcount costs whereas G&A expenses increased by $191,000 due to higher payroll and legal costs offset in part by lower stock compensation expenses. Turning to our quarterly results, fourth quarter 2024 GAAP net loss was $4.7 million or $0.16 per share compared to a net loss of $4.6 million or $0.17 per share in Q3 and a net loss of also $4.6 million or $0.18 per share in Q4 2023. Revenue was $23,000 in Q4, $22,000 in Q3, and $550,000 in the fourth quarter of 2023. GAAP operating expenses were $4.9 million in Q4 2024 compared with $4.8 million in the previous quarter and $5.3 million in Q4 2023. Non-GAAP net loss in 2024 was $15.4 million compared to a loss of $16.6 million in 2023, reflecting a decline in non-GAAP OpEx from $17.1 million in 2023 to $15.4 million in 2024. The decline in…

Thanks Frank. Atomera is extremely well-positioned to deliver important innovations to the hottest markets for semiconductors today. Our years of development mean that customers can rely on us to get them to market more quickly than internally developed solutions, providing an advantage to them which gives Atomera a solid business opportunity with a financial structure that's hard to beat. I appreciate your support as we work hard to turn this vision into reality. Mike, we can now take questions.

All right. Thank you, Scott. [Operator Instructions] And right now, our first question comes from Richard Shannon of Craig Hallum. Go ahead, Richard.

Great. Thanks Scott, Frank, and Mike for letting me ask a few questions here. Scott, I guess I'll ask on the, your leading comments here about the transformative opportunity here. Maybe if you can describe the dynamics here. It sounds like it's a -- mostly a pricing issue here as opposed to other things. It sounds like they got through all of their qualifications and answered all those questions as a pricing issue. Can you confirm and maybe elaborate on the sticking points there?

Yes. Of course, I can't provide full details, but let me say this. First of all, as I mentioned in my remarks, we believe that we're providing enormous value to them for what we were offering to work for the price that we were offering. And as I've said many times in the past, we are being very flexible with our early customers on pricing. I think whenever you're negotiating a contract with a big customer, there's a lot of different things that come into play, a lot of decision makers, each of whom may have a different thing. In this case, I don't think it came down to exclusively price. As we said in our remarks, we're trying to ask them to do something new and there may have been issues having that happen. The negotiation went through fits and starts where we'd have a lot of discussion followed by very long delays, which would lead me to believe that there was lots of discussion inside the company among many different people trying to reach decisions. So, ultimately, we are hopeful that we'll get this thing restarted. We feel and we had feedback from them that our technology really was providing an excellent solution for them. So, ultimately, we believe that if we're providing a really good value to customers and technology that we've done the work to prove will deliver, then we'll ultimately succeed.

Just to clarify, so it doesn't sound like there's any technological issues. You provided all the data, they asked for all the runs, et cetera, and it was more down to the business decision-making that you don't have a lot of visibility into, is that fair?

Yes, I'd say that's probably fair.

Okay, fair enough. Let's move on here. It sounded like from your prepared remarks here that the progress with leading edge, both in logic and memory, is really gaining some steam here. I mean, other than talking about this particular transformative opportunities, you're leading commentary here above power and RFS, so either we've historically talked about in the past. And if I caught the language right, it sounds like you're talking about multiple customers in both areas. I don't believe you said that before, correct me if I'm wrong, but maybe just kind of talk about the dynamics here, maybe describe in areas where it is accelerating? And the fact that you've talked about them adopting Epi more so -- and these guys move faster, and so there's a more frequent opportunity to intersect there. What does it feel like broadly speaking about the opportunities with leading edge, both logic and memory?

Yes, I mean, both logic and memory, the interesting thing is, now when we're working on RF and power, we're working with teams on kind of legacy nodes, they have smaller development teams, and sometimes it's -- we have to get their attention, they're being pulled in many different directions. But when we're working on advanced nodes or memory, the interesting thing is, most of the company is working on those technologies. So, when we start doing something that they find interesting, we're getting a lot of pull and a lot of interest. And they'll have a lot of resources to throw at it as well. As I really do believe the move to gate-all-around is a game changer, just because when -- if you had a wafer run with -- and you wanted to add MST and it was a new EPI step, then a customer has to think about, okay, I'm going to have to get a Epi tool, and I'm going to have to put a certain amount of time in to load that wafer in and do all of the process steps, and then unload it and put into another tool. But if that wafer is already in an Epi tool, doing another step, and you can see from the diagrams, they're doing a whole bunch of steps in EPI, and then they want to add on MST, it's a really, really quick, easy thing to do. So, that lowers the cost for them and it just allows us to have more opportunities to get easy entry. So, yes, I think it's a huge opportunity. And I would say that it's something -- the industry has really been moving to gate-all-around just in the last couple of years. And as luck would have it, we hired our business -- our new Head of Business Development, who's an expert in this area and kind of knows all the people that are doing that work in the big company. So, yes, I think we're getting good traction and we're offering solutions that I think will gain a lot of interest over time.

Thanks for that. Maybe a few more questions. Let me just touch on GaN, it's a topic you brought up about a year ago. It sounds like there's a lot of interest there and I think you've characterized this as something that could be a faster time to revenue than your kind of your typical business model. Maybe you can kind of couch the progress in the last quarter. What's been going on there?

Yes. So, really, GaN is pretty new. It wasn't even a year ago that we got our first test results on GaN. It was like, I think, in April of last year that showed this. I mean, we had been theorizing about what we'd be able to get out of GaN, but that was the first time that we ever saw data on it. So, we did some more runs, working with outside partners. And then in the fall, we announced this deal with Sandia, where they're going to take our wafers and start doing electrical characterization on those. So, we've been working on that over the course of the fall and we haven't gotten the results on those electrical runs yet, but we do expect them imminently here. And if they look very good, then we'll have -- I mean, the challenge is starting to work with customers. We're going out and we're showing them the physical data we have today, showing that we're making these wafers with lower stress than other wafers and that should lead to higher quality. But ultimately, what people need is electrical results that show improvement. And so that's what we're striving for right now. If we get the good electrical results, then we'll have a full data set that we can take out to customers and start really engaging with them. And you -- I'll answer a second question that was in the middle of your other question, which is about, you mentioned the faster time to market. If our technology really works out well for GaN, people should be able to make higher quality GaN starting wafers, like GaN on silicon starting wafers for manufacturers. And although there is certainly a qualification process for a new wafer going into a fab, it's shorter than the full integration and qualification and everything that we have to do with our traditional business. So, that's why we keep saying we think it might be faster time to market. There's still a few question marks there. I mean, we have to prove the technology electrically and we have to get the customer signed up. But if we can do that, I think this might be a way to really supplement our other business that we have.

Okay, fair enough. Thanks for that. Let me touch on STMicro, I want to make sure I understood your comments there. So, once you hit this, I think it was process qualification, that's what you expect that to be a typical nine-month cycle, after which you would expect to go production soon after and we haven't gotten to that point. So, going back in history here, when you announced ST, I think in April or May of 2023, you're expecting 18 to 24 month process. And so if we haven't started this nine-month clock, we're going to extend a little bit beyond that. Maybe give us some flavor of the dynamics here as you understand it? And obviously, I imagine there's probably some restrictions on what you can talk about with this, but understanding why the process seems to be longer than what you had expected before? And do you expect that nine-month process qualification to start soon?

Yes, so let me say everything I can say without talking about their schedule. So, first of all, when I announced the deal, we didn't have a schedule from them. I gave an assessment of what I thought was typical for the industry, and what I said was if everything goes really well, it could happen in the 18 to 24-month range with -- if everything went perfectly, maybe as early as 18 months. I think there's been -- yes, I believe that was exactly what I said as a quote. Subsequent to that, we found out that it was about a six-month delay for ST to announce -- I mean to actually install MST onto their tool and that was because of logistics issues that had nothing to do with MST or ST themselves, it was a third-party that had to do the installation for them. During that period, we did a bunch of work and we were hopeful that they could make up for it, but I would say right now that that was a bit of a setback that ultimately slowed down the process. Inside the workings of us and ST, I can't say enough about how well the teams are working together, how much priority there is on this. At ST, they're doing all the right things. Our team is putting it as first priority, and hopefully they get to the start of qualifications soon, but I can't give you insight into when that'll happen.

Okay. We'll look forward to that timeframe. I think that’s all the questions for me. I'll jump out of line. Thanks Scott.

Okay. Thanks Richard.

Thank you, Richard. Our next question comes from Cody Acree of Benchmark. Hey Cody, go ahead.

Thanks. Glad to be back. It's been a few quarters since I have been on this call. And I just wanted to -- coming back to this from taking a step away for a few quarters, I guess one thing struck me this morning on the prepared remarks that things have not -- they've progressed, things have changed, details have changed, but the overall workings of the company have not changed, and the ins and outs with the customers have not changed. You're still juggling of opportunities, your customers are throwing up their roadblocks, and you're making some fits and starts of progress, but nothing has really come to percolation just yet. Can you maybe just characterize your optimism on the differing opportunities that you have? You mentioned a lot of them between GaN and advanced nodes and memory and SOI and power. You're juggling a lot. Can you just prioritize your optimism on those opportunities?

Sure. And I don't know if I agree with your assessment of the no change, Cody. The difference is, first of all, we're -- we've moved very close to production with ST. We have gone from kind of talking in general with the advanced node and memory guys about what our technology can do to being very, very specific about exactly what we can do and where in their architecture and how we can help them, and that's what I've tried to illustrate in those diagrams. And so I would say today, our level of engagement with the advanced node and memory guys is at a whole different level than it was the last time you were here. Our work with power customers has been spreading out wider. So, -- and then on RF-SOI, I would say we are still working with a similar group of people. We've added a couple there, but yes that one is getting closer, but I would say similar to where we were before. Then the other thing is that this whole opportunity with GaN, which is bringing in a kind of fifth market segment to us that we didn't have before, and so that's another new addition since you were here before. Did that answer the question? I'm sorry, am I...

No, it did, Scott. Thanks. And maybe one of the newer areas that I heard about was your data center opportunity, I don't think that was talked about before. Can you maybe just characterize your opportunity there, your go-to-market strategy and the customers -- the types of customers that you're engaged with?

Yes. So, we announced -- we didn't talk about it specifically on this call, but the last call we had it as a bit of a focus topic was our new MST-SPX, which is not a new technology for us, but we've developed in particular a focus around 48 volts. And 48 volts is a critical voltage that they're transferring all of the data center racks to 48 volts. In hyperscalers that they're building now, they're starting to build them all around 48 volts. So, there's a big effort underway to replace what previously were 12-volt racks and upgrade them to 48-volt racks. And there's big fights in the market between -- I don't necessarily want to name all of the competitors there because I'm going to miss some, but I know it's an area that, for example, Monolithic Power is very strong in, and there's a few other companies that they're competing. So, those are the type of people that we go and try to engage with.

And maybe, Frank, when you're looking at juggling your resources with that many opportunities going on, and it sounds like there's no lack of ways to spend money, how are you managing to address all the opportunities?

Yes, I think one of the things that came to mind as you were asking the question of Scott was thinking about what our workflow is like, and that's something where we've had a lot of learnings after the engagement with STMicro where we had folks go on site to help with an installation and subsequently have helped to work on the manufacturability of the film and get through all of that. And I'd say the one area where we could get some resource contention is if we were installing MST in multiple sites sort of simultaneously, while also running wafers for either ones that we're processing in Arizona for customers or for our own R&D purposes. And so we talked about -- the headcount in R&D didn't actually change, but actually we added a resource in Epitaxy there to make sure that if we're installing something at a customer or needing to support them, we don't have a fall off on site. That's probably the most sort of labor-intensive because it tends to involve hands-on, kind of, teaching of the customer to get the recipe installed. It's not just sort of installing the recipe, but what metrologies they use to assure uniformity of the film and everything else. So, I'd say if we were to be personnel constrained as business grew, it would probably be in Epi engineers doing that, but we haven't found that to be the case. And like I said, we were able to beef up that team last year. I would also say in terms of reducing our spend with TSI, that was kind of forced on us involuntarily, but we reacted really well to it. We're doing a lot more work with our TCAD tools that is proven to be really valuable. I think…

Great. Thanks for the update guys. I appreciate it. Thank you.

Thanks Cody. All right. Seeing some questions come in on the chat here and I'll just go ahead and fire them off at you. So, can you please provide an update on the progress with a major analog company that we referenced in prior quarters utilizing MST CAD?

Yes. Actually, I'll connect some dots on that. We -- that is one of the two transformative customers I spoke about today where they've gone from getting really fantastic results to really planning a very comprehensive set of wafer runs to prove them out on silicon. And that's the first step to getting licenses and going to production, so we're very excited about what we've done there. And we think -- I mean this is a great example. Frank was talking about how productive we've become with our TCAD, but in this case, we licensed MST CAD to the customer. The customer did all the work themselves and they came up with very, very impressive results that's driving them to do more R&D work with us.

Another one. Is STMicro going to be the first opportunity for product revenues for Atomera or might there be another opportunity that would percolate sooner?

It's hard to say, of course. We -- most likely, it would be STMicro, but we do work with some customers on applications that could go to market relatively quickly. In particular, if we're working with a customer on a yield enhancement type of technology, that means that they're already in volume production and to the extent that our technology could help improve the yield of those products in production, they might be able to implement it and get that to happen very quickly. Could that happen earlier than STMicro? I'm not really sure. I think there's also -- I saw a question about -- last year, I made a statement that we may even be able to get revenue on gallium nitride in 2024 and what I -- and we didn't do that, and I'll give you my take on why. One thing you learn in technology is that any amount of data that you look at makes you believe you'd like to see more data. So, when we announced our GaN work in the spring, I said there's a possibility we may even be able to get revenue in 2024. That would have been revenue from selling some MST wafers to people to evaluate, so it was not going to be high-volume production revenue by any stretch, but I was hopeful that we'd be able to do that. As we went out to the market and showed them our physical data, they asked for electrical data. When we were able to show them a little bit of electrical data, they asked for more electrical data, and so there's kind of this ongoing request for more, but we do believe that we're getting close to the point where we'd have enough data to be able to get people to start buying MST wafers to do GaN building on and that will start with sampling type of revenue, and then ultimately we think we can get that to volume production fast. So, not sure how fast that would be. Could it be faster than STMicro? That would probably be difficult, but if everything went super, then possibly.

Thank you. And one sort of final set of questions before we turn the call to closing comments. What is the current stage of the collaboration with a DRAM customer or customers? And are there any potential benefits for HBM, high bandwidth memory?

First of all, we are continue to be engaged with multiple memory customers, and I can't say a lot more than that about where we are with them, but yes, high bandwidth memory. I think when I talk about how MST has got great benefits for the artificial intelligence market. I'm talking about gate-all-around for the processing side, but I'm also talking about memories. There's nothing that is more important than getting memories that are higher throughput and burn less power for these AI infrastructures. And the hyperscaler, I think I've seen that 40% of the power consumed in hyperscalers is associated with memory. So, to the extent that we could do work with high bandwidth memory devices to help get their power down to be a lower level and that would be very significant, or to improve their performance so they have higher bandwidth, again, it would be transformative. We really hope that we can make some of that happen in partnership with a memory maker out there today.

All right. Great. And at this point, this concludes the Q&A session, Scott, if you want to conclude with any closing comments.

Sure. All right. Well, thanks. I want to say thanks to all of you for joining us to listen to our Q4 and 2024 update, and to get kind of an update on the progress being made within Atomera. Please continue to look for our news, articles, and blog posts, which are available along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop, who will be happy to follow-up. Thanks again for your support and we look forward to our next update call.

Thank you. This concludes the conference call.