Atomera Inc Q1 FY2024 Earnings Call

Hello, everyone, and welcome to Atomera's First Quarter 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'm Mike Bishop with the company's Investor Relations. As in prior quarters, we are using Zoom, and we will follow a similar presentation format with participants in a listen-only mode. We will open with prepared remarks from Scott 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 and 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 15, 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. Scott, go ahead.

Good afternoon, and welcome to Atomera's update call for the first quarter of 2024. In the past three months, we have seen more customer activity progressing to the proposal stage than ever before. This remarkable interest in our technology stems from announced customer commercialization, widespread acknowledgment of the effectiveness of our MSC technology, and our comprehensive solutions to the challenges present in today’s intricate transistors. After a brief comment on the semiconductor market, I will discuss customer progress in more detail. This year, the semiconductor industry is expected to grow moderately, driven by companies in the AI space. The pressure on leading-edge logic fabs to advance their latest nodes while enhancing performance per watt is intense. The majority of growth is occurring in this segment as well as in DRAM, which is rebounding strongly after a downturn in 2023. Additionally, Consumer Cellular is projected to see modest growth. The automotive sector, along with power and analog component companies, has softened as they manage inventory and respond to increasing competition from China. However, the consensus is that the outlook for the latter half of the year appears more promising. So what does this mean for Atomera? We benefit from modest capacity utilization at our IDM and foundry customers, allowing them to run R&D wafers. We anticipate this favorable environment will continue in the medium term, although the bleeding edge remains capacity-constrained, yet there is a strong push to enhance performance yield and reduce costs in those new manufacturing processes. Currently, industry dynamics and customer interest indicate a robust willingness to invest. Now, let's examine customer activity. Our first announced customer progressing towards production is STMicroelectronics, which is integrating MST into the design of its next-generation smart power products. We are collaborating closely with them, and their development timeline is on track for a production release, which will generate royalty revenue for Atomera. Smart Power products fall under the analog, power, and discrete MEMS and sensors category, which ST publicly reports. In their latest earnings announcement, ST reported $2.2 billion in APMS revenue for the first quarter of this year, highlighting the substantial potential of this business. Our primary focus remains on assisting ST in achieving the highest performance possible with MST and expediting its production. Our secondary focus is to guide other customers towards the same production path, and I believe we are making significant progress. In the last three months, we submitted a historically high number of proposals for licenses and joint ventures. While none have closed yet, we are actively pursuing more opportunities than in the past. However, we have yet to secure a deal with JDA1, despite proving that MST can meet their challenges. Experience tells us the decision to proceed with MST often hinges on the customer's transition to a new process or node. Therefore, I am optimistic that our ongoing discussions with JDA1 will eventually yield positive results. With JDA2, we recently received our first set of data, and initial findings are encouraging. Although comprehensive testing is still pending, early results indicate substantial improvements in some critical areas for the customer. If upcoming results continue to show promise, we aim to establish a license and commence development towards production. Similarly, at our previously announced fabless licensee, DOE, planning and wafer starts are increasing to determine if MST will be part of their next-generation RF products. If successful, this could represent a significant licensing and royalty opportunity for Atomera and may influence other RF SOI customers to license MST. Our foundry licensee recently completed a new round of MST CAD and is exploring the incorporation of MST into one of their next-generation process nodes, actively seeking approval to initiate a new set of wafers. Each of our licensees is striving to integrate MST into their upcoming technology releases, and we are also pursuing proposals with several companies that are not yet licensees. The proposals span our four focus areas, along with an entirely new high-potential area. Over the last quarter, we engaged in meaningful discussions with nearly all major firms in the advanced node and memory domains. In the advanced node sector, we are providing a variety of solutions for the complex gate-all-around structures required at the leading edge. Our silicon data and TCAD simulations validating these solutions are continuously improved to provide the detail necessary to win these customers. Moreover, we continue to secure patents around structures in this fast-evolving area. For instance, we were recently informed that our patent on a Gate-All-Around device, including a superlattice, has been approved and will formally issue next month. In memory, we are concentrating on enhancing DRAM performance to align with AI demands while still meeting the cost requirements that dominate this sector. This balance is challenging, but in memory applications, MST not only boosts performance but can also reduce the overall chip cost, resulting in a beneficial cost-benefit analysis. In the RF SOI segment, we have customers running or planning to run wafers at most of the major manufacturers, and our collaborative efforts with key players in the power semiconductor space continue. I recognize the frustration among investors that our internal progress has yet to translate into external business announcements. We are confident that this will change in due time. Our primary goal has been to convert these proposals into revenue, and I believe we are making solid progress. We expect to announce developments in several areas over the upcoming quarters. Before concluding, I want to introduce a market segment that represents a completely new source of potential IP-protected revenue for Atomera, extending beyond our core business. As part of our ongoing R&D efforts, we have developed new variations of our silicon lattice films, which have opened up opportunities in the rapidly growing compound semiconductor sector. We are investigating various applications, including silicon carbide, gallium nitride, silicon germanium, and other compounds that could enhance AI chips and quantum computing. I will highlight one specific area we are pursuing. Gallium nitride, or GaN, is a wide bandgap material used to fabricate devices that can function at higher temperatures, frequencies, and voltages compared to those based solely on silicon. The GaN market in power electronics is expanding swiftly, driven predominantly by mobile and consumer applications with promising prospects in the automotive sector. Many of you may have recently switched to a compact, faster wall charger, likely enabled by GaN technology. According to a recent report from the Yield Group, the Power GaN market grew 41% in 2023 and is projected to increase at a compound annual growth rate of 46% over the next five years, potentially exceeding $2 billion annually by 2028. Compound semiconductor materials have historically posed manufacturing challenges due to crystal defects, often caused by mismatches with nonnative substrates. Such mismatches create stresses at the interface, resulting in cracks and defects that limit both the size and yield of wafers, complicating economical manufacturing. Atomera's MST film has the capability to relax or de-strain the interface between differing crystal lattices, and we have filed several patents addressing this effect over the years. Recently, we began collaborating with Professor Edwin Pinar, a leading expert in compound semiconductor fabrication at Texas State University, to explore how MST can address these manufacturing challenges. A material that significantly enhances GaN wafer quality and allows for larger-size manufacturing could revolutionize the industry. Early experiments with GaN wafers using MST are showing promising results. Although we still have work ahead, if we maintain our current trajectory, we could penetrate the market and generate revenue much sooner than through traditional engagements with semiconductor customers, potentially even before the year concludes. There's a lot happening at Atomera right now. Alongside customer commercial activity and the potential expansion into the compound semiconductor realm, we are actively assessing numerous potential R&D foundry partners, recruiting new marketing talent, establishing critical partnerships, and increasing our participation in initiatives under the CHIPS & Science Act. We are very optimistic about the possibilities ahead, any one of which could significantly elevate our company. Our engagement with ST has the potential to become the cornerstone of revenue for our organization, and each area I've discussed can build upon that foundation. The compound semiconductors would introduce a new segment for us, one with a much quicker revenue generation timeline, while our traditional business continues to present a vast total addressable market filled with opportunities for MST. Although we are progressing on various fronts, our team remains intensely focused on converting these promising prospects into licenses that will position Atomera as a profitable and diversified technology leader in the semiconductor industry. Thank you for joining us on this journey. Now, Frank will go over our financials.

Thank you, Scott. At the close of the market today, we issued a press release announcing our results for the first quarter of 2024, and this slide shows our summary financials. Our GAAP net loss for the three months ended March 31, 2024, was $4.8 million or $0.19 per share compared to a net loss of $5 million or $0.21 per share in the first quarter of 2023. In Q4 of 2023, our GAAP net loss was $4.6 million, which was $0.18 per share. Revenues were $18,000 in Q1 of 2024 compared to $550,000 in Q4 and $0 in Q1 of 2023. GAAP operating expenses were $5 million in Q1 of 2024, which was a decrease of approximately $148,000 from $5.2 million of OpEx in Q1 2023. This decrease in operating expense was mainly due to a $178,000 decline in R&D expenses, reflecting the closure of our outsourced foundry TSI semiconductor at the end of January. General and administrative expenses increased by $69,000 and sales and marketing expense decreased by $39,000. Sequentially, our GAAP operating expenses decreased by $300,000 from Q4 2023 to $5 million in Q1, reflecting a $134,000 decrease in R&D expenses also due to the TSI closure, a decline of $102,000 in sales and marketing expense due to lower headcount, and G&A expense declining by $64,000. Non-GAAP net loss in Q1 2024 was $4 million and compares to a loss of $4.2 million in Q1 2023. And as with our GAAP results, this was primarily due to lower R&D expenses. Sequentially, non-GAAP net loss increased by $228,000 from $3.8 million in Q4 as lower revenues were partly offset by the decline in operating expenses. The differences between GAAP and non-GAAP operating expenses in all periods presented are primarily due to noncash stock compensation expenses, which were approximately $1 million in both Q1 of 2024 and in Q4 2023 and compares to $927,000 in Q1 of 2023. Our balance of cash, cash equivalents and short-term investments on March 31, 2024, was $19.3 million compared to $19.5 million at the end of 2023. During Q1 2024, we used $4.1 million of cash in operating activities, and we sold approximately 510,000 shares under our ATM facility at an average price per share of $8.06, resulting in net proceeds of approximately $4 million. First quarter operating cash flow includes the collection of $550,000 of fees invoiced after meeting a key milestone in Q4 under our commercial license. As of March 31, 2024, we had 26.9 million shares outstanding. Revenue in Q1 was approximately $18,000 and consisted of recognizing three months of revenue under the MST CAD license to a large semiconductor manufacturer that we announced last quarter. We expect to recognize approximately that same $18,000 of MST CAD license revenue from this customer for the remainder of 2024. For Q2, we expect our total revenue will be approximately $50,000 consisting of the MST CAD license and engineering services. As I stated in our call last quarter, the next major revenue milestone under our agreement with ST will be the grant of the distribution license upon completion of the qualification process, which is largely under ST's control, so I cannot provide guidance on the timing for recognizing that revenue. Moving to our expense guidance. Given the lower operating expenses in Q1 due to the lower outsourced R&D spending, which will not ramp back up until we have a replacement for TSI, I am reducing our full-year guidance for non-GAAP operating expenses to a range of $16.5 million to $17.25 million. We also expect to add several headcount this year in sales and marketing and engineering, and our expense guidance reflects the impact of those planned new hires. With that, I'll turn the call back over to Scott for a few summary remarks before we open up the call to questions.

Thank you, Frank. I'm proud of the progress we've made in the last quarter, and I hope you get a sense of the momentum we have underway both in development and in new production opportunities. Our team is confident that it's only a matter of time before we can announce license deals that will further solidify the potential of Atomera's business for the future. In addition, it is great to give you a peek at our early compound semiconductor work, which could form a whole new revenue stream for the company. We are doing everything in our power to get ST to production quickly, while simultaneously building a diversified, sustained business around that first deal. Thanks as always for your support. Mike, we can now take questions.

Thank you, Scott. Our first question comes from Richard Shannon of Craig-Hallum. Richard, please unmute and turn on your camera. It's already on. Great. You may begin.

All right. Mike, can you hear me?

Yes.

Excellent. Hi, Scott and Frank, thank you for taking my questions. I would like to ask the first one regarding the new language you've been using, which you also included in your press release, about the record number of proposals this quarter compared to last. I want to understand the significance of this. To what extent are these proposals driven by your efforts versus demand from your customers? How should we interpret the true level of demand and interest here?

Yes, Mike, I'm glad you asked that question because it's important to understand, we don't push proposals out. We don't just generate proposals and send them to people. The only time we make a proposal is when we've gone far enough down the road with a customer in our work that they are interested in receiving a proposal from us. Of course, we share budgetary ideas about what doing business with us will be from the very first day. But creating a proposal, a term sheet, and everything around that is a lot of work. And what we're talking about is that type of proposal, not just a speculative send it out and hope they respond to a type of thing.

That's helpful. I want to clarify if there are specific technology areas where these proposals are being directed. Is it a different mix compared to what you've experienced before? We have certainly discussed RF SOI and power extensively.

No, I think I talked a little bit about it in my script, but the proposals are going out in almost all of our focused areas. Yes, I would say, all of our focused areas. And in addition, in one other area that we haven't talked about before, isn't something we've done a lot of work in so far, but it's something that we have been hoping to enter for some time. So, it's good potential.

Okay. That's helpful. Let's get to a question about STMicro. You mentioned in the last couple of quarters that one of the key steps is getting a PDK finalized. Do you have any insights from STMicro and expectations on the timing for that?

Yes. We definitely have insight into their development process. However, we do not have a clear view of their exact schedule. Even if we did, they have requested that we not share that information publicly, so we are unable to provide guidance on the specific timing of their milestones. I can confirm that we are on track. In previous presentations, we showcased a timeline and process, which is standard practice in the industry. I still believe that timeline remains reasonable. Both we and ST have agreed that we can state we are on track with that process.

Okay. All right. Fair enough then. Scott, I probably missed writing down the exact language you had on the topic of RF SOI, but I think you said something along the lines of you're running wafers at most of the manufacturers out there. Maybe if you can repeat that passage and then help us understand the point of that comment, please.

Yes. So, the RF SOI market has got a certain amount of manufacturers that really constitute the bulk of the capacity that's available in the industry. And today, we're working with the vast majority of them and starting wafers with a lot of them.

Let's move on to the large analog player for which you have a licensing agreement for MST CAD. What do you anticipate as the outcome of this work? Frank mentioned that you expect to generate license revenues this year. Does this mean that the revenues will stop after this year? What do you hope the outcome will be, and when do you expect it to materialize? Does Frank's comment about revenues lasting throughout this year suggest that there won't be any revenue next year? I would like to clarify these points and understand the overall dynamics.

Yes. Okay. I apologize if that was a little confusing. So just our MST CAD tools, we licensed to customers just like Cadence or Synopsys would license their tools to customers. In this case, we have this customer who has signed up for a one-year license with it. It doesn't mean they're going to stop at the end of the year. It just means that, that is a contract that we have in place that would be extended as we got closer, just like most simulation model licenses. And what does that mean? Well, what it means is this large customer is doing work on their next-generation process, and they're adding MST in to see if that makes sense for them. And they're adding it in at the simulation level and so then it's easy for them to try a bunch of different things. We can give them advice on different ways of integrating to get different levels of performance improvement. And when they have seen results that they think they like then our next goal would be to get them to take a manufacturing license and install it in their fab and actually start running wafers inside their own fab. They could actually do demos with us where they send us wafers and then they run wafers in their fab, but we'd be really encouraging them to install. So that TCAD license is kind of a first step in that direction.

Got it. Okay. That's helpful. Maybe moving over to the first JDA partner here. It's obviously been in place for two or three years now. Last quarter, you mentioned some strong engagement that was slowed down by the holidays, and it seems like there's strong interest from business units, but no decision has been made. Perhaps you could provide some insight into any back and forth or additional iterations that are happening that you weren't expecting? Or maybe clarify where you seemed to be getting fairly close to a next step several months ago?

Yes, I think it's a very frustrating situation. We entered into a joint development agreement with them a couple of years ago, and they provided us with specific requirements, which we met. They indicated they would present this to their business units for consideration. We've been collaborating with several of those units, and last year, they gave us additional tests and specifications for us to validate with wafer runs and simulations, which we completed by the end of last year. We have almost provided all the test data they requested, and they reviewed it and confirmed that we met the expectations. Now we're in a challenging position where they acknowledge that our solutions work well, but until they determine when they will implement changes in that area, they won't decide on adoption or licensing. We have been in continuous discussions with them for months. It may seem to outsiders that there's a lack of progress because we can't provide many updates, but we are actively communicating with them. Unfortunately, we haven't reached the point of announcing an agreement yet. This situation is frustrating for us and likely for investors as well. It may appear that we're not making progress, but we are, and we just haven't finalized the deal. This kind of delay isn't unusual; if you look back at our engagement with STMicro, we provided all necessary data by 2020, but it wasn't until 2023 that they licensed our technology and started the installation. So, one must be prepared and ready when they choose to implement a solution.

Okay. Fair enough.

When we typically enter into a license agreement with a customer, we require them to pay an upfront fee at the time of signing. Therefore, if the customer intends to use the technology within a year, there's little incentive for them to secure a license immediately. This could also be a factor causing some delays.

Okay. Okay. Fair enough. I will jump out of line here but probably come back in, but thanks for all the details, Scott.

Okay, Richard, thank you. Looking at some of the questions coming in on the Q&A chat. The first one regards STMicro, which is when ST makes the next milestone, what will the scale of fees that Atomera will receive?

We're pleased to address that question. Since we signed and announced the deal, we've indicated that it aligns with our licensing model, and we anticipate that the total fees will be around $3 million across all licensing stages. This aligns with our previous revenue recognition, which included $550,000 last quarter and an initial $150,000 from an integration license we granted several years ago. This represents a significant revenue opportunity. Regarding my earlier comments about the inability to provide revenue guidance, it wasn't that we lack an estimate, but rather that we cannot predict when that revenue will be recognized. Our policy has always been to provide guidance only for the upcoming quarter until we have better visibility, which we currently do not have. However, as we approach that time and if it aligns with our confidentiality agreements, we will offer further guidance.

Okay. That answered the next question about timing for ST. You answered that quite well. So, another question that came in. Are the record number of commercial proposals for manufacturing and production licenses, are they for manufacturing and production or just integration license?

Yes, I'll address that. Generally, we are encouraging customers to install our products, although many of them are accustomed to working with established tool manufacturers. Typically, when a tool manufacturer introduces a new tool that can address certain issues, they request to conduct several demonstrations first. The manufacturer would perform these demos at their facility and provide wafers. Some customers approach us with this same expectation. In those cases, we would need to pursue an integration license before moving on to manufacturing. However, our primary objective is to have customers install our products in their facilities and begin wafer production as quickly as possible. I believe all of our current proposals include manufacturing licenses, but it's possible that we may need to conduct some demonstrations beforehand.

Okay. Have there been serious talks with wafer suppliers about a deal for blanket MST wafers on RF SOI?

Yes, we have been in discussions with various wafer suppliers for some time. While we don’t have any announcements at this moment, we believe that when one of our RF SOI customers is ready to move into production—which may take at least another year to a year and a half—we will be able to coordinate with a wafer supplier to provide MST RF SOI wafers, should they choose that route. We have already done the necessary groundwork for this. Additionally, we offer our RF SOI customers the option to purchase RF SOI wafers and apply MST themselves, after which they can license it from us. There are definitely multiple ways this can be implemented.

Okay. And a question, maybe you can comment on the replacement for TSI. I think you addressed it a little bit in the prepared comments, but has a replacement for TSI been signed?

Yes, we've engaged with nearly a dozen companies, or perhaps just under that, and there's a significant pool of strong options available. We have potential suppliers that offer much better process technology than what TSI previously had, along with others that have specialized processes we seek. I believe we are very close to collaborating with one or more of these suppliers, and I am confident that we will end up partnering with several, not just one. However, I anticipate that we will begin working with the first one very soon. So, the replacement for TSI is progressing well.

Okay. Great. And then Richard Shannon had a follow-up question. Richard, if you would unmute and turn on your camera.

It will not let me turn on my camera, but can you hear me?

Yes, we can hear you. Go ahead.

Okay. Now that we can proceed, Scott, I wanted to follow up on your earlier response regarding STMicro. You mentioned that all the data they requested back in 2020 was provided, but they didn't begin using it until 2023 when they decided to revisit it. How many other customers have you fully satisfied with the data they've asked for, but are still inactive? Do you think it's normal to experience a significant delay between meeting technical specifications and waiting several years, like in STMicro's case, to reach production? Is that an expectation you have, or does it seem unusually lengthy? How do you relate this to your experiences with other customers you haven't reached that production stage with, but where you've made notable progress?

It's a difficult question to answer, Richard. To be honest, ST surprised me and everyone else. We provided them with results they were very pleased with, but they didn't move forward. We stayed in touch and would have meetings every few months, and they would just say to keep waiting. We have several other customers we've worked with who have seen positive results, but they are also not in production yet. I can't specify how many or if it's typical for them to delay. However, there are many customers we've shown good results to, and while we continue discussions, they tend to postpone decisions. We believe we will engage with them soon, with JDA1 being one good example, and there are many others like it. The frustrating part is that if they could just see the results and make a decision, it would be beneficial. Typically, in a business like ours, a customer issues a request for quotes for a specific product, and we show them our offering, and when they decide ours is the best, we win the contract. That’s been my experience in semiconductors throughout my career. However, this business model is different. We proactively tell customers that using our technology can enhance their products. Even after we convince them of this, we often still have to wait until they plan to change their processes or nodes before they can implement it. I can't say whether that waiting period will be long or short since we do not have enough experience in this area.

Okay. It seems like in all the conversations we've had on these conference calls and offline as well, it just smells like RF SOI kind of is mirroring STMicro and a way where it seems like you've suggested or outright told us that you satisfied the requirements. And I think once or more than once you've even talked about some requirements to changing at some point. But it seems like RF SOI mirrors a lot of what you described with STMicro. Is that a fair comparison?

Yes, let’s consider a customer we don't initially engage with but connect with as soon as possible to pique their interest in testing our technology. They might have a plan to launch a new version in two years, and while they're developing this new process, we're trying to demonstrate the effectiveness of our technology. Even if, with just one year left before their launch, they realize that our technology is excellent, it may be too late to integrate it into their existing process since they have been working on it for over two years. In that situation, they miss the opportunity to adopt our technology. We'll have to wait for their current process to go into production and for it to be stable for a few years before they can consider a new version. This is a challenge we sometimes encounter, but I believe that if we continue to seize enough opportunities, we will align our timing with some of them, and the others will eventually return.

Okay. Fair enough perspective. One last question for me, Scott. Just touching on the topic of leading edge, and I think I've even asked this in past calls here, but it sounds like you've got some long period of engagement with multiple players at leading edge. I guess my essential question here is, do you think that work is mature enough here that you have the possibility of intersecting with the first generation of a new technology coming out? You're talking about nanosheet Gate-All-Around here, which I think is being implemented first on the two-nanometer node with one or more guys out there. Do you think you're going to be early enough to do that? Or does that seem like it might be more of a follow-on derivative process later in the timeframe?

It's hard to say. I can mention that the leading-edge companies are aware of our technology and understand how it could benefit them. If any of them had made a definitive decision to proceed, they would have needed to license our technology. The production of Gate-All-Around and the new nodes is incredibly complex, making it impossible for them to simply run tests, send us the wafers, and have us apply our technology before returning them. For Gate-All-Around, due to its complexity, we must install our technology at the customer's site, which requires them to sign a license. We will definitely announce any licenses signed, but we haven't done so yet. I believe we are well positioned to engage with a leading-edge company. Furthermore, I think both the Gate-All-Around and the most advanced FinFET nodes are currently operating at relatively low yields compared to more mature nodes. This presents an opportunity for us to improve yield in those designs. So, I'm hopeful that we can achieve this.

Okay. Fair enough. That's all my questions again, Scott. Thank you.

Okay. And just one last question here from the Q&A line and that is, could you describe how the business model for entering the GaN market would be different from your approach to licensing of MST?

The GaN market is intriguing, and our interest in compound semiconductors has been ongoing for several years. Although we've just made our first announcement, this is not a new area for us. There are various ways our business model can be applied to GaN. One option is licensing our MST technology, similar to how we currently work with traditional semiconductor manufacturers to adopt MST on wafers and subsequently produce GaN wafers. We may also consider licensing our GaN technology separately due to its potential high value. Another possibility is taking on the role of a manufacturer for GaN wafers, even in modest quantities, which could generate revenue and potentially offer attractive gross margins to support our overall business. However, we have not yet made a final decision on this front. We maintain a strong philosophy focused on a business model that leverages our bottom line, and becoming a manufacturer would require significantly more capital expenditure, which might not align with our strategy. We could explore smaller-scale manufacturing, but for customers looking to enter high-volume production, direct licensing would be more probable. We have been examining the GaN market for some time and conducting various marketing studies on how to engage with it, though we have yet to finalize our approach. I believe entering this market could expedite our time to market, and I'm quite enthusiastic about the possibilities for MST and other areas within the compound semiconductor sector.

Great. Okay, Scott, that concludes the Q&A session. If you could proceed with any closing comments.

Okay. Sure. Well, I hope today we've given you a good picture of the compelling prospects which Atomera is pursuing. We will be at the Oppenheimer 9th Annual Emerging Growth one-on-one conference on May 9. If you're planning to attend, I would welcome the opportunity to meet. Please continue to look for our news, articles, and blog posts, which are available, along with investor alerts on our website, atomera.com. Should you have additional questions, please contact Mike Bishop, who'll be happy to follow up. Thank you again for your support, and we look forward to our next update call.

Great. Thanks, Scott. This concludes the Atomera call.