ATOM 10-K & 10-Q changes, risk factors and insider trading

While we have entered into into one commercial license agreement, four integration license agreements and two joint development agreements, there can be no assurance that any of these relationships will advance to further licensing stages or to royalty-based distribution license agreements. In September and October 2018, respectively, we entered into separate license agreements with AKM and ST, both of which are leading IDMs. In October 2019, we entered into a license agreement with a leading RF semiconductor supplier. In December 2021, we entered into a JDA with a leading semiconductor manufacturer. In February 2022, we entered into an integration license agreement with a semiconductor foundry. In April 2022 we entered into a JDA with a major semiconductor foundry. Our integration licensees have paid us licensing fees for the right to build products that integrate MST technology onto their semiconductor wafers, but the agreements do not grant the licensees the right to sell products incorporating MST. Such rights require our integration licensees to enter into additional license agreements that, if executed, would allow each licensee or their foundry to manufacture MST-enabled products and to sell them to their customers. R&D and HVM agreements such as our license agreement with ST provide for substantially larger upfront license fee payments than integration license fees and such agreements require licensees to make royalty payments to us based the number and sales price of MST-enabled products they sell to their customers. Our first JDA customer paid us for an R&D license in the first quarter of 2021 when we delivered our MST recipe to them. In February 2022, we successfully achieved all the development milestones in the JDA resulting in additional revenue. Nevertheless, neitherNeither of our JDAs commits the customers to take MST to production. ST has successfully installed our MST film recipe and they have accepted our film under thea commercial license agreement,agreement executed in April 2023, resulting in the grant of an R&D license to them enabling them to manufacture manufacture MST wafers for internal use,use. butHowever, therein October 2025 ST informed us that they would not complete the qualification of MST into their process after deciding to migrate their development of their targeted process to 300mm wafers. There can be no assurance thatwhether or ourwhen ST will re-commence qualification of MST technology or that, in the event they do proceed, that MST will deliver the performance, power or other requirements that ST or our other customers seek for their products or that the integration of our technology with our customers’ manufacturing process will be successful in high volume. In addition, even if our MST technology is successfully integrated into the licensees’ products, any or all of our licensees may decide, for reasons unrelated to the price or performance of our MST technology, not to enter the subsequent license phases or execute the additional license agreements required to take MST to commercial production.

We expect that our product qualification and licensing cycle will be lengthy and costly, and our marketing, engineering and sales efforts may be unsuccessful. We have incurred significant engineering, marketing and sales expenses during customer engagements without entering into license agreements, generating a license fee or establishing a royalty stream from the customer and we expect that such investments ahead of license revenue will continue to be necessary in the future. The introduction of any new process technology into semiconductor manufacturing is a lengthy process and we cannot forecast with any degree of assurance the length of time it takes to establish a new licensing relationship. However, based on our engagements with potential customers to date, we believe the time from initial engagement until our customers incorporate our technologies in their semiconductor products can take 18 to 36 months or longer. Our integration license agreements with our current licensees do not commit them to manufacturingR&D or distributionHVM licenses and we expect those licensees to perform additional tests on evaluation wafers wafers under their respective integration licenses before deciding whether to enter the next stages of licensing MST. As such, we will incur incur additional expenses in our engagements with our licensees before we receive license fees, if any, for manufacturing and distribution and and before any subsequent royalty stream begins. Although we have successfully completed the objectives of our first JDA and granted that customer a manufacturing license, the agreement does not commit our customer to a distribution license.begins.. While we believe our JDAs and our integration license agreements should accelerate licensing decisions by other customers, the evaluation process for new technologies in the semiconductor industry is inherently long and complex and there can be no assurance that we will successfully convert other customer prospects into paying customers or that any of these customers will generate sufficient revenue to cover our expenses.

Qualification of our MST MST technology requires access to our potential customers’ manufacturing tools and facilities, as well as to leased tools and facilities, which may not be available on a timely basis or at all. The qualification of a new process technology like MST entails the integration of our MST film into the complex manufacturing processes employed by our potential customers. In order to validate the benefits of MST, our customer engagement process involves fabrication of wafers that incorporate MST deposited by us using our epitaxial deposition tools and then completing the manufacturing of the wafers in our customers’ facilities using their tools. The semiconductor industry in 20242025 exceeded $550$700 billion in sales. OverThe combination of recovery from COVID-era supply-chain disruptions and the pastrapid threegrowth years,in demand driven by AI, some segments of the industry have been characterized by product shortages as strong demand has outstripped supply, resulting in tight capacity among our potential customers, while other segments have experienced softness and excess supplysupply. as part of the correction of COVID-era supply-chain disruptions . Although these supply/demand imbalances and uneven capacity conditions have started to normalize throughout 2024, weWe have experienced delays in completing the processing of evaluation wafers by our customers as those customers prioritize utilization of their equipment for production use. If our customers do not dedicate their equipment and facilities to testing our products in a timely fashion, we may experience delays that will increase our expenses and delay our customers’ decisions on entering into commercial licenses with us. Additionally, we conduct our ongoing research and development and portions of our customer evaluation activities using leased epitaxial (epi) deposition tools that we believe will accelerate internal development work and customer engagements. However, epi tools require ongoing, complex maintenance and they have been and will continue to be subject to both planned and unplanned downtime. Any interruption in our epi tool availability may negatively impact the progress of customer work as well as our internal research and development and accordingly could delay or prevent customers from entering into commercial licenses.

We may need additional financing financing to execute our business plan and fund operations, which additional financing may not be available on reasonable terms or at all. As of December 31, 2024,2025, we had total assets of approximately $29.1$21.1 million, cash, cash-equivalentscash and short-term investmentscash-equivalents of approximately $26.8$19.2 million and working capital of approximately $23.5$17.6 million. On February 24, 2026, we completed a registered direct offering of shares of our common stock to institutional investors that resulted in net proceeds to us of approximately $23.6 million after commissions and offering expenses. We believe that we have sufficient capital as of the date of this report to fund our current business plans and obligations over, at least, the 1224 months following the date of this Annual Report. However, even after installation of MST in a customer’s fab under a manufacturing license, the full production qualification of a new technology like MST can take more than an additional year, and we have limited ability to influence our customers’ testing and qualification processes. Accordingly, we may require additional capital prior to obtaining a royalty-based license or prior to such a license generating sufficient royalty income to cover our ongoing operating expenses. In the event we require additional capital over and above the amount of our presently available working capital, we will endeavor to seek additional funds through various financing sources, including the sale of our equity and debt securities, licensing fees for our technology and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve material revenue with a smaller amount of capital. However, there can be no guarantees that such funds 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.

Revenues. To date, date, we have only generated limited revenue from customer engagements for engineering services, integration license agreements, an R&D licenselicenses granted under a JDA,JDA and under our license agreement with ST and licensing of MSTcad. Our licenseMSTcad agreement with ST, which was executed in April 2023, is our first commercial manufacturing and distribution agreement and, assuming successful completion of contractual milestones and payments of associated fees, will entitle us to royalties on all MST-enabled products manufactured for commercial purposes. Our MSTcad licenses grant customers the right to use MSTcad software to simulate the effects of incorporating MST technology into their semiconductor manufacturing process. MSTcad licenses are granted on a monthly or yearly basis and revenue is recognized over time.

For recognizing integration service service revenue from integration license agreements, we assess (i) whether the license grant is distinct from or combined with the transfer of of goods or services and (ii) whether the license is a right to access intellectual property or a right to use the intellectual property. For licenses that are not distinct, but combined with other goods or services, the revenue is recognized at a point in time or over time as the obligations to perform the combined services and/or deliver the combined goods are satisfied. IntegrationOur licenseengineering service agreements contain contain a technology grant as well as a performance obligation to deliver wafers with our technology deposited on them. We have historically determined determined the grant of rights in these integration license agreements is not distinct from the integrationobligation service.to Accordingly,deliver wafers and accordingly, revenue from integration licensethese agreements is recognized asat the servicetime iswe provideddeliver to the customer.wafers. For manufacturingR&D licenses, revenue is recognized at the point in time when we deliver our MST recipe asbecause the license to manufacture products using MST technology is a right to use the Company’s technology technology and not a right to access the technology over time. However, in cases where our manufacturingR&D license grants include a customer acceptance requirement, revenue is recognized over time. Likewise, we recognize revenue from HVM licenses at the point in time when process qualification is complete because the license to sell MST-enabled products is a right to use the Company’s technology and not a right to access the technology over time.

Revenue for the years ended December December 31, 20242025 and 20232024 was approximately $135,000$65,000 and $550,000,$135,000, respectively. Our revenue in 2025 and 2024 consisted of MSTcad licensing and related consulting services revenue, and engineering services revenue from the delivery of MST wafers. Our revenue for 2023 consisted of revenue from a manufacturing license.

Cost of Revenue. Cost of revenue consists of costs of materials, as well as direct compensation and expenses incurred to provide integration engineering services, support for customer installation and qualification and MSTcad support. Cost of revenue was approximately $123,000$321,000 and $28,000$123,000 for the years ended December 31, 20242025 and 2023,2024, respectively. Cost of revenue is recorded when incurred and may not coincide with the recognition of revenue based on revenue recognition policies and guidance. We anticipate that our cost of revenue will vary substantially depending on the mix of license and engineering services revenues we receive and the nature of products and/or services delivered in each customer engagement.

For the years ended December 31, 31, 20242025 and 2023,2024, we incurred approximately $11.0$12.3 million and $12.5$11.0 million, respectively, of research and development expense, aan decreaseincrease of approximately $1.5$1.3 million, or 12%. This decreaseincrease was primarily due to aan declineincrease of approximately $1.6 million$676,000 in outsourced researchfabrication and developmentcosts as we discontinued working with TSI Semiconductorwell as increases of Januaryapproximately 31,$487,000 in stock-based compensation expenses and approximately $124,000 in employee-related expenses. Stock-based compensation expenses increased primarily due to our adoption of performance-based RSUs for executives, which have a higher valuation than time-based RSUs and options which had been our primary type of executive equity compensation issued in 2024.

General and administrative expenses. 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 years ended December 31, 20242025 and 20232024 were approximately $7.3$7.8 million and $7.1$7.3 million, respectively, representing an increase of approximately $191,000,$540,000, or 3%.7%. The increase in costs was primarily due to an increase in employee-relatedstock-based costscompensation expense of approximately $136,000$810,000 and an increase of approximately $332,000$114,000 increase in patent fees andcorporate legal feesfees, associated with our patents. These costs were partially offset by a decreasedecline of approximately $144,000$421,000 in stock-basedemployee-related costs. Stock-based compensation andexpenses increased primarily approximatelydue $90,000to an increase in corporatethe legalvaluation expenses.of performance based RSUs newly issued this year compared to time-based RSUs and options. The decrease in employee-related costs is primarily due to a reduction in executive annual bonus accrual.

Selling and marketing expenses. expenses. Selling and marketing expenses consist primarily of salary and benefits for our sales and marketing personnel and business development development consulting services. Selling and marketing expenses for the years ended December 31, 20242025 and 20232024 were approximately $758,000 and $1.1 million and $1.6 million, respectively, representing a decrease of approximately $546,000,$295,000, or 34%.28%. The decrease in costs is primarily related to a reduction in headcount which decreased employee relatedemployee-related costs, stock-based compensation and travel expenses.expenses, partially offset by increases in recruiting costs to fill open positions.

Interest income. Interest income for the years ended December 31, 20242025 and 20232025 was approximately $779,000$931,000 and $723,000,$779,000, respectively.respectively, an increase of approximately $152,000, or 20%. Interest income for each period related toreflects interest earned on our cash andcash, cash equivalents and theshort-term increaseinvestments wasand primarilyare dueimpacted to progressively higherby current interest rates and cashaverage balances duringover thesethe periods.periods presented.

Accretion income. Accretion income for the years ended December 31, 20242025 and 20232024 was approximately $178,000$6,000 and $283,000,$178,000, respectively. Accretion income relates to the increase in value of our available-for-sale securities from the purchase date through the maturity date. Accretion income relates to the increase in value of our available-for-sale securities from the purchase date through the maturity date. As of December 31, 2025, our cash and cash equivalents were held as cash and mutual funds.

As of December 31, 2024,2025, we had had cash,cash and cash equivalents and short-term investments of approximately $26.8$19.2 million and working capital of approximately $23.5$17.6 million. For the year ended December 31, 2024,2025, we had a net loss of approximately $18.4$20.2 million and used approximately $13.2$14.9 million of cash and cash equivalents in operations. Since inception, we have incurred recurring operating losses. On February 24, 2026, we closed on the sale of 5,000,000 shares of our common stock, at a price of $5.00 per share, in a registered direct offering for the net proceeds of approximately $23.6 million after commissions and offering expenses.

During the year ended December 31, 2024,2025, we sold approximately 4.11.6 million shares of our common stock pursuant to our 2022 and 2025 ATM facilities at an average price per share of approximately $5.38,$5.15, resulting in approximately $21.3$7.6 million of net proceeds to us after deducting commissions and other offering expenses.

We believe that our available working capital as of the date of this report, and after giving effect to our February 2026 registered direct offering, is sufficient to fund our presently forecasted working capital requirements for, at least, the next 1224 months following the date of the filing of this report. However, our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our MST technology, competing technological and market developments, and the need to enter into collaborations with other companies or acquire technologies to enhance or complement our current offerings. If we are not able to generate sufficient revenue from license fees and royalties in a time frame that satisfies our cash needs, we will need to raise more capital. In the event we require additional capital, we will endeavor to acquire additional funds through various financing sources, including our ATM Facility, follow-on equity offerings, debt financing and joint ventures with industry partners. In addition, we will consider alternatives to our current business plan that may enable us to achieve revenue-producing operations and meaningful commercial success with a smaller amount of capital. If we are unable to secure additional capital, we may be required to curtail our research and development initiatives and take additional measures to reduce costs in order to conserve itsour cash.

Net cash usedprovided in operatinginvesting activities activities of approximately $14.6 million$951,000 for year ended December 31, 20232025 resultedconsisted primarily fromof ourthe net lossmaturity of approximatelyshort-term $19.8available-for-sale investments, million,offset adjusted by approximatelythe $4.0 millionacquisition of stock-based compensation expenseproperty and amortization of right-of-use assets of approximately $1.4 million.equipment.

Net cash usedprovided inby investingfinancing activities activities of approximately $6.8$7.4 million andfor forthe year ended December 31, 20232025 consistedrelated primarily ofto net proceeds from our ATM Facility and the purchaseexercise of short-termstock available-for-sale investments,options, offset in part by theapproximately maturity$1.2 ofmillion short-termin available-for-saleprincipal investments.payments on our financing lease.

Our financial statements are prepared prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity conformity with those accounting principles requires us to use judgementjudgment in making estimates and assumptions based on the relevant information available available at the end of each period. These estimates and assumptions have a significant effect on reported amounts of assets, liabilities, sales sales and expenses as well as the disclosure of contingent assets and liabilities because they result primarily from the need to make estimates estimates and assumptions on matters that are inherently uncertain. Actual results could differ from our estimates.

We have stock-based compensation programs, which include restricted stock awards (“RSAs”), Restricted stock Units (“RSUs”) and stock options and an employee stock purchase plan. We account for stock-based compensation expense, including the expense for grants of RSAs and stock options that may be settled in shares of our common stock, based on the fair values of the equity instruments issued. The fair value is determined on the measurement date, which is the date of grant. The fair value of our RSAs is measured at the market price of our common stock on the measurement date amortized over the vesting period of the award. The fair value of our time-based RSUs is based on the closing price on the day of grant and they vest over zero to four years. Awards of performance-based restricted stock units we issue have a performance period of one, two and three years with the vesting of each award tranche dependent on our Total Shareholder Return (“TSR”) relative to the TSR of companies in the Russell 2000 Index over that tranche’s performance period. The fair value for performance-based awards is fixed at the grant date using a Monte Carlo simulation and the amount of compensation expense is not adjusted during the performance period regardless of changes in the level of TSR achievement. The fair value for our stock option awards is determined at the grant date using using the Black-Scholes Option Pricing Model and amortized over the vesting period of the option.

Our principal business objective is to enter into commercial license agreements that enable our customers to manufacture and sell MST-enabled products, generating license revenues and ongoing royalties. We also license our MSTcad® software to customers, enabling them to simulate the effects of MST on their products using Synopsys, Inc.’s technology computer-aided design, or TCAD, software. In addition, we offer fee-based integration engineering services to customers to evaluate the effects of MST as integrated into their manufacturing flow. Typically, we offer these services through paid evaluation arrangement,arrangements, joint development agreements (“JDAs”) or integration license agreements.

On May 27, 2025, we entered into into an Equity Distribution Agreement Craig-Hallum as agent, under which we may offer and sell, from time to time at our sole discretion, shares shares of our common stock in an “at-the-market” offering, (the “2025 ATM”) to or through the agent, having aggregate offering proceeds of up to $50.0 million. During the three months ended MarchJune 31,30, 2026, weno shares were sold pursuant to the 2025 ATM. During the six months ended June 30, 2026, approximately 1.3 million shares were sold pursuant to the 2025 ATM at an average price per share of approximately $2.47 resulting in approximately $3.1 million of net proceeds to us after deducting commissions and other offering expenses.

Revenue for the three and six months ended March 31,June 30, 2026 and 2025 was approximately $11,000$158,000 and $4,000,$169,000, respectively. Our revenue for the period ended March 31, 2026,Revenue consisted of engineering services revenue from the delivery of MST wafers. Revenue for the periodthree and six months ended MarchJune 31,30, 2025 consisted of approximately $0 and $4,000 and consisted of MSTcad licensing and related consulting services revenue.

Cost of revenue. Cost of of revenue consists of costs of materials, as well as direct compensation and expenses incurred to deliver wafers and perform services, and and consulting services provided for our MSTcad licenses. Cost of revenue for the three and six months ended MarchJune 31,30, 2026 was approximately $26,000 $126,000. Noand cost$152,000, respectively. Cost of revenue was recorded for the three and six months ended MarchJune 31,30, 2025.2025 was approximately $62,000 and $62,000, respectively. We anticipate that our cost of revenue will vary substantially depending on the mix of license and engineering services revenues we receive and the nature of products and/or services delivered in each customer customer’s engagement. Cost of revenue is expensed when incurred and may not correspond with revenue earned in the same period. Our cost of revenue in the three months ended March 31, 2026 is an example of this timing mismatch because our labor, wafer processing and metrology costs were incurred in advance of anticipated wafer shipments that will result in recognizing engineering services revenue in future periods.

Operating expenses. Operating expenses consist of research and development, general and administrative, and selling and marketing expenses. For the three months ended MarchJune 31,30, 2026 and 2025, our operating expenses totaled approximately $6.2$6.9 million and $5.5$5.2 million, respectively. For the six months ended June 30, 2026 and 2025, our operating expenses totaled approximately $13.1 million and $10.7 million, respectively.

For the three months ended June March 31,30, 2026 and 2025, we incurred approximately $3.5$3.3 million and $3.3$3.0 million, respectively, of research and development expenses, an increase increase of approximately $202,000,$283,000, or 6%.9%. This increase was primarily due to increases in payrollbonus accrual of approximately $146,000, stock-based compensation cost of approximately $96,000 and benefitstool lease costs of approximately $79,000 and stock-based compensation expenses of approximately $75,000.$40,000.

General and administrative expense. General and administrative expenses consist primarily of payroll and benefit costs for administrative personnel, office-related costs and professional fees. General and administrative costs were approximately $2.3 million and $2.1 million forFor the threesix months ended MarchJune 31,30, 2026 and 2025, we incurred approximately $6.8 million and $6.3 million, respectively, representingof research and development expenses, an increase of approximately $485,000, or 8%. This increase was primarily due to increases in bonus accrual of approximately $251,000, stock-based compensation cost of approximately $171,000 and an increase of approximately $245,000, or 12%. The increase is primarily related to increases of approximately $229,000$52,000 in stock-basedseverance compensation expenses and payroll and benefits costs of approximately $168,000 offset by a decrease of approximately $121,000 in intellectual property related expenses.costs.

SellingGeneral and marketingadministrative expense. expense. SellingGeneral and marketingadministrative expenses consist primarily of salarypayroll and benefitsbenefit costs for ouradministrative salespersonnel, office-related costs and marketingprofessional personnelfees. General and businessadministrative development consultingcosts services.were Sellingapproximately $3.2 million and marketing$2.0 expensesmillion for the three months ended June March 31,30, 2026 and 2025 were approximately $419,000 and $124,000,2025, respectively, representing an increase of approximately $295,000,$1.1 million, or 238%.55%. The increase is primarily related to aincreases $136,000 increase in employee related expenses,of approximately $92,000$541,000 in bonus accrual, stock-based compensation expenses of approximately $298,000 and an increase in legal stock based compensationcosts and recruitingfiling fees all related to anour increase inpatent headcountportfolio overof theapproximately prior year.$296,000.

Interest income. Interest income for the three months ended MarchJune 31,30, 2026 and 2025 was approximately $197,000$172,000 and $270,000,$234,000, respectively. Interest income for the six months ended June 30, 2026 and 2025 was approximately $369,000 and $504,000, respectively. Interest income reflects interest earned on our cash, cash equivalents and short-term investments and are impacted by current interest rates and average balances over the periods presented.

Accretion income. Accretion Accretion income for the three and six months ended MarchJune 31,30, 2062026 was approximately $178,000 and $235,000, respectively. Accretion income for the three and six months ended June 30, 2025 was approximately $57,000$0 and $6,000, respectively. Accretion income relates to the increase in value of our available-for-sale securities from the purchase date through the maturity date.

Interest expense. Interest Interest expenseexpenses for the three months ended MarchJune 31,30, 2026 and 2025,2025 waswere approximately $4,000$1,000 and $21,000,$18,000, respectively. Interest expenses for the six months ended June 30, 2026 and 2025 were approximately $5,000 and $39,000, respectively. Interest expense is related to the tool financing lease entered into in August 2021.

Net cash used in operating activities activities of approximately $4.8$8.5 million for the threesix months ended MarchJune 31,30, 20252026 resulted primarily from our net loss of approximately $5.2 $12.4 million and a decrease in our accrued payroll expenses of approximately $926,000, offset by approximately $1.0$3.2 million of stock-based compensationcompensation, amortization of our operating right-of-use assets of approximately $422,000 and an increase of approximately $269,000$468,000 in accountsaccrued payable.payroll which primarily consists of our annual bonus accrual.

Net cash providedused byin financingoperating activities of approximately $2.1$8.3 million for the threesix months ended MarchJune 31,30, 2025 resulted primarily relatedfrom to theour net proceedsloss fromof salesapproximately $10.2 under million and a decrease in our 2022accrued ATM,payroll expenses of approximately $979,000, offset by theapproximately principal$2.3 paymentsmillion onof our financing lease.stock-based compensation.

As of MarchJune 31,30, 2026, we had cash, cash, cash equivalents and short-term investments of approximately $41.1$38.4 million and working capital of approximately $39.9$36.7 million. For the the threesix months ended MarchJune 31,30, 2026 we had a net loss of approximately $6.1$12.4 million and used approximately $4.6$8.5 million of cash and cash equivalents in operations. Since inception, we have incurred recurring operating losses.

During the threesix months ended MarchJune 31,30, 2026, we sold approximately 1.3 million shares of commonscommon stock pursuant to the 2025 ATM at an average price per share of approximately $2.47,$2.47 resulting in approximately $3.1 million ofin net proceeds to the Company after deducting commissions and other offering expenses. No shares were sold under the 2025 ATM in the three months ended June 30, 2026.

DuringOn theFebruary three months ended March 31,24, 2026, we sold five million shares of common stock in a registered direct offering, at a purchase price of $5.00 per share. As compensation for such placement agent services, the Company paid Craig-Hallum an aggregate cash fee equal to 5.0% of the gross proceeds received by the Company from the Offering and agreed to reimburse up to $75,000 of legal and other expenses as actually incurred. Net proceeds to the Company after deducting the placement agent fee and expenses were approximately $23.6 million.