Atomera Incorporated (ATOM) on Q4 2022 Results - Earnings Call Transcript
Mike Bishop: Hello, everyone, and welcome to Atomera's Fourth Quarter Fiscal Year 2022 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 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, Atomeraâs CFO. Then, we will open the call for questions. If you are joining by telephone, you may follow a slide presentation to accompany our remarks on the Events and Presentations section of our Investor Relations page on our website. Before we begin, I would like to remind everyone that during todayâs 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 on the companyâs annual report filed on Form 10-K filed with the SEC today February 15th, 2023. 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 regard to those events, conditions, and circumstances. Also, please note that during this call, we will be discussing non-GAAP financial measures as defined by SEC Regulation G. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures are included in today's press release, which is posted on our website. Now, I'd like to turn the call over to our President and CEO, Scott Bibaud. Go ahead, Scott.
Scott Bibaud: Thanks Mike. Good afternoon, and welcome to Atomera's fourth quarter 2022 update call. I'd like to bring you all up to date on our progress in the last three months and summarize our accomplishments for 2022, which I considered to be a very strong year for at America. But first, let me give some context to the events happening in our industry. More so than in most areas, semiconductors have gone through a quite predictable business cycle ever since manufacturing started in the early 1960s with consistent sequences of very sharp growth, followed by an equally sharp decline happening roughly every four or five years. The last few years have been very high growth ones with the associated capacity crunches and ASP inflation that you would expect in that environment. Now, you're experiencing the downside with leading forecasters predicting greater than a 20% contraction in the industry for 2023. Semiconductor veterans understand the cycle and know how to react to it. So, what we're starting to see is a reduction in last year's aggressive capex forecasts and foundry prices moderating along with some announcements of layoffs and budget restrictions. But what is also in the standard playbook for this part of the cycle is to move to invest counter-cyclically to get first-mover advantage when the inevitable rebound happens. In other words, to double down on R&D and invent your way out of the problem. This part of the semiconductor economic cycle is where Atomera thrives. Due to fab over utilization, our customers have postponed their normal development efforts for the last few years, so there's now a pent up demand for improvements that must be executed, particularly in the application areas which experienced the greatest constraints. And that is exactly where at Atomera provide readily available solutions that are otherwise difficult for our customers to achieve. Our customers have the fab capacity to run wafers, and we have the technology to help them invent their way to long-term competitive advantage. Our business activity has absolutely accelerated to reflect the growth and new market opportunities you would expect in such an environment. New engagements do take time to work through the pipeline, so this chart on slide four unfortunately does not do a great job showing our progress. In searching for a metric that can illustrate our activity level better, I found that traveled to customers for new projects is up between 450% to 500% over the last three months versus the same period last year. This rate of close customer engagement is not letting up and I am confident it will result in more licensing opportunities over the next few quarters. As the first indicator. One of our customers in the pipeline who ran more tests in Phase IIs than is typical has now very enthusiastically moved on to Phase III based on the test results. Since this is another large customer, we expect it will lead to good thing. We continue to work very closely with our two JDA customers and collaborated with them to achieve fresh results in Q4, which we believe will start us on a path towards production with one or more business units. Likewise, we continue to work closely with our licensees, and are optimistic that the work we're doing together result in further licensing stages in a near-term path to production. Progress through our pipeline, especially over the last couple of years has been frustratingly slow. But I will reiterate, it is only a matter of time before improvements come to market and our degree of competence has increased over the past quarter. Cycles of learning are starting to speed up again now that fabs have the capacity to run wafers on shorter lead-time. We do expect to see a growing customer pipeline and to announce additional licensees in the months ahead. During the last quarter, we have seen unprecedented interest and activity in the leading digital nodes where our technology provides a number of benefits for 3D technologies as discussed on our last call and shown on this slide. We put out preliminary information on this topic in August, gave an important paper and IEEE Conference in November, and had many discussions with potential customers and ecosystem partners at the IEDM Show in December. Finally in January, put together all of our ideas on the topic and released a comprehensive white paper called MST Benefits for Gate-All-Around, a document that is media enough for a semiconductor device engineer, but it's also comprehensible to a technology-savvy investor. I really encourage you to look it over. For customers under NDA, we can go into much greater depth on both the physics and the measured silicon results that backup are finding. Development of these next generation transistors is incredibly costly and difficult. It is widely held that an industry-wide cooperative approach is the only way forward. In other words, it will take an ecosystem of innovators composed of more than just the leading semiconductor players to bring the newest nodes to market. Advanced semiconductor equipment, materials, metrology, and development partners are all required. The US government has invested in the ecosystem through the CHIPS Act and creation of the National Semiconductor Technology Center, which will serve as the focal point for research and engineering here in the United States. This past quarter at Atomera announced a collaboration with Arizona State University, which we believe will become a regional hub of the DoD Microelectronics Commons Lab to Fab efforts. Due to its advanced macro technology works facility, which is where Atomera state-of-the-art epi deposition tool currently resides. We likewise intend to become active in other US regional initiatives, and with our university partners in areas related to CHIPS Act funding. And these are not just domestic efforts, we're also in discussions to engage with ecosystem partners overseas. Overall, we're very excited about the prospects for at Atomera in the most advanced semiconductor architectures. It's a perfect showcase for our technology. There are plenty of R&D dollars being devoted to it, and it will establish at Atomera's MST technology on the bleeding edge of transistor development. In 2022, we've made great advances on both our technologies focused on the mature process nodes. In particular, we're very excited by the benefits MST can bring to RF SOI devices, which are critical to 5G cellular phones and beyond. Our simulations and semiconductor test devices show great promise, although results have been taking longer than was expected. But we have learned things in our customers real-world test environments that will make MST even more successful in upcoming testing sessions. We are confident these new techniques will be considered a critical enabling step and development of optimized RF SOI devices, leading to licenses and royalty revenue from all the players in the industry. We'd continue to get traction with our MST SP product offerings due to the strong benefits we bring the 5-volt transistors. Customers also want to use MST for higher voltage transistors used in a wide set of applications requiring greater power. Over a year ago at Atomera started experiments to enhance these very hard to design devices. Although we have not rolled out the technology yet, our early test data shows very encouraging results that may open up a larger slice of the power market for us and one where we know there's widespread customer interest. We call this new technology MST SPX and I want to tell you more about it in the near future. 2022 was an extremely productive year for Atomera. We announced new licensing joint development agreements, we made very strong progress in each of our product focus areas to the point where we are involved in major conversations about how to enable the next generation of semiconductor transistor. We've deepened our relationships with many critical players and positioned ourselves to take advantage of this innovation cycle within the industry. Another thing we've been quietly doing has been strengthening our patent strategy. As you can see from this chart, we are now at 339 patents granted and pending, which is triple the patents we had at our IPO. Our efforts reflect the fact that Atomera is not just a materials technology inventor, we are also an expert and using this valuable material to make transistors work better in many applications. That is where our recent new patents have been focused. So, as some of our earliest fundamental patents start to sunset, we have built a portfolio of new patents that cover the device designs that can only be enabled by MST and that are in growing use today. Nobody understands better than Atomera how MST can make products better. So, we continue to continue create a portfolio of these competitive ideas well into the future. Not only does it strengthen our licensing potential, it also helps customers to understand the potential of MST. I know it can be frustrating for investors to gauge our progress. But big customer development activities often don't happen on a predictable schedule. Even when you've proven your technology is a winner. But our customers are seeing the advantages that they get from using MST and they will eventually get their programs on a path to production. I am confident we'll be able to make exciting customer announcements like that during the course of this year. In the meantime, morale inside at Atomera is running very high. We are so busy with customer projects and new developments, we're straining to keep up. There is no doubt that at this pace, we will need to add resources to handle all of our new opportunities. We continue to believe strongly in a future where licensing activity followed by commercialization will make Atomera a recognized innovation leader in the semiconductor industry. Now, let's have Frank review our financials.
Frank Laurencio: Thank you, Scott. At the close of the market today, we issued a press release announcing our fourth quarter and full year to 2022 results. This slide shows our summary financials. Our GAAP net loss for the year ended December 31, 2022 was $17.4 million or $0.75 per share compared to a net loss of $15.7 million or $0.70 per share in 2021. Revenue in 2022 was $380,000 and consisted of the success fee earned on a completion of the technical objectives in the JDA with our first JDA customer and integration license fee from our foundry licensee and MST CAD revenue. GAAP operating expenses were $17.8 million and 2022, which was an increase of $1.9 million from $15.9 million in 2021. This increase was mainly due to a $1.3 million increase in R&D expenses, primarily reflecting lease payments for our EPI tool, as our payments commenced in August of 2021 and 2022 reflect a full year of the tool lease. Sales and marketing expenses increased by approximately $362,000 in general and administrative expenses increased by approximately $277,000. Non-GAAP net loss for 2022 was $14.1 million and reflected $14.4 million of non-GAAP operating expenses. In 2021, our non-GAAP net loss was $12.5 million reflecting $12.9 million of non-GAAP operating expenses. The differences between GAAP and non-GAAP operating expense in both years and accordingly between GAAP and non-GAAP net loss are almost entirely due to non-cash stock compensation expenses, which were $3.4 million in 2022 and $3 million in 2021. Turning now to our quarterly results, our Q4 2022. GAAP net loss was $4.3 million or $0.18 per share, compared to a net loss of $4.2 million in Q4 2021, which was also $0.18 per share. Q3 of 2021, our GAAP net loss was $4.6 million or $0.20 per share. Our cash balance on December 31st, 2022 was $21.2 million compared to $28.7 million at the end of 2021. Cash at the end of Q3 2022 was $23.3 million. During 2022, we use $12.5 million of cash in operating activities, $2.9 million of which was in Q4. On May 31st, 2022, we established an at-the-market or ATM equity financing facility. From the time we set up the ATM through the end of 2022, we sold a total of 527,093 shares at an average price of $11.68. Most of the cash from financing in 2022 came from ATM sales executed during Q3. During Q4, we sold 109,026 shares at an average price of $9.47. We have not sold any shares under the ATM since November. In fact, we have only used the ATM on four trading days in the past six months, evidence that we are using this tool judiciously. As of December 31st, 2022, we had 24 million shares outstanding. As usual, we have a good handle on our spending plans for the year. But it is still difficult to predict the timing of revenue, so we will not get revenue guidance beyond the current quarter and our Q1 revenue guide is zero. Turning to expenses, our non-GAAP OpEx in 2022 was $14.4 million and our 2023 guidance is a range of $16.25 million to $16.75 million. I want to stop and add some further color to our OpEx plan. Back in 2020, the first year of the pandemic, our non-GAAP OpEx was $11.7 million. This increased to $12.9 million in 2021 as some COVID-related restrictions eased off, and we brought our new EPI tool fully online in the second half of the year. Coming into 2022, I had given a range of around $15.5 million of non-GAAP objects for the year. But we hired and spent below our plan due to capacity shortages and a tight labor market. Looking forward to 2023, our plan to ramp up spending reflects the positive outlook. We're actively working on programs across the spectrum power and analog, RF SOI, and advanced logic and doing this, requires more human resources, more wafer processing, and more metrology to support the variety of opportunities we see in this in this environment. As Scott said in his remarks, we're confident that we will be able to make exciting customer announcements during the course of this year and we're making the investments needed to support them. With that, I will turn the call back over to Scott for a few summary remarks before we open the call for questions. Scott?
Scott Bibaud: Thanks Frank. Atomera is preparing now for growth driven by an industry-wide innovation cycle that we are perfectly positioned to take advantage of due to our strong R&D efforts in the last few years. Our offerings and legacy technologies have already been explored with a variety of customers, which we believe will soon lead to a path to production. And our work at the leading edge is now well-recognized and is gaining traction. Our team is executing well, building new product offerings and tools to help our customers get to production faster. Our IP portfolio and know-how have become a powerful asset for us to leverage across multiple segments and applications. This combination of attributes makes Atomera ideally positioned to partner with the industry's most successful semiconductor companies to innovate their way out of this downturn, and benefit both themselves and Atomera in the future. With that, Mike, we will now take questions.
A - Mike Bishop: Thank you, Scott. And right now, our first question comes from Richard Shannon of Craig-Hallum. Richard, if you're -- you can hear me, go ahead. We will move on to Cody Acree of Benchmark. Cody, go ahead.
Cody Acree: Yes. Thanks Mike and Frank, and Scott, good to see you all. Maybe if you can just talk a little bit more. Scott, on the optimism that you're portraying here, obviously, you're not optimistic enough to give us revenue guidance you yet. So, that's -- that would be nice. But can you talk about what it is that's giving you this, this optimistic level of engagements that you believe are filling a pipeline of activity? Is anything tangible to those to those comments? And that attitude will be helpful?
Scott Bibaud: Yes, let me just talk about that a little further, Cody. Our guys are all out on the road today and it seems like last several months, we've constantly been reacting to customer interest in our technology. And what we have is stuff that last few years, we've been telling people about it, they've been interested, but they haven't really been able to do much work on the R&D side, because they'd been all trying to figure out how to move more wafers through their fabs. But now they suddenly have the interest and the capacity be able to go and do some of that work. One of the things I've talked about in the past, but I'd like to really reiterate now is, a lot of times you work with a big customer, you get results that look really good, but they don't immediately move forward with it, because they just aren't funded to do an R&D pass or make a new process technology come out that year. So it sits on the bench, but at some point, they take it off the bench, and they say, okay, now we're ready to go. And so we -- with what we're seeing in the industry, and the interest we're seeing from new customers and existing customers, we're hopeful that some of those things will come off the bench, and we'll start to see things moving towards production now. That's what's driving a lot of the optimism.
Cody Acree: And I guess if you had to handicap the layer of, I guess, the rate of the discussions, do you feel like you're getting more towards fruition? Or I guess is do you have a funnel that you feel like you're filling? And how is that different today than it was 90 days ago?
Scott Bibaud : Yes, definitely, the wide mouth of the funnel is much more full. And so we're having a lot of conversations with new customers as well as renewing discussions about fresh experiments and paths forward with existing customers. And so all of those are positives. The other thing I would say is, we've kind of opened some new fronts to talk to people on, so I spoke a lot in this call about the kind of the bleeding edge, and gate-all-around devices. And I would say, across a whole range of what we consider customers that the most advanced nodes, which are not just the obvious big things, but also include memory manufacturers who are doing very advanced things. We're seeing a lot of interest in the technology that we've been writing these white papers on and giving presentations on it at conferences. And so there's a lot of back and forth to those types of customers too that we hope will lead towards big things in the future.
Cody Acree: And any color that you can provide on your existing customers or existing licensees, what their progress has been?
Scott Bibaud : Yes, I mean, as I mentioned in my remarks, we continue to be engaged with all of our existing licensees where we've been working on experiments with some with others where we're planning for new things. I think the only one that is still that one of our licensees that we're not really actively making new products for is AKM, which had the fab fire a couple of years ago, that's really kind of solved for them. But we are also in discussions with them about, about doing some innovative new things as well. So all of our licensees and all of our JDA partners are still quite active with us.
Cody Acree: Maybe last for you, Scott, and I'll get one Frank is the -- you're trying to positioning? Where do you fall in your engagements with China? And what are your thoughts about the US trade tensions and the limitations that that the governments are putting on technology transfer's?
Scott Bibaud: Yes. Right now, we have no exposure to China. We have a lot of interests around the world. And I think there's too much uncertainty about how far we'll be able to take our technology within China, for us to make that to move it up into the priority chain for us on our business development activities. If the United States and China kind of reached a quantum, and become a little more cooperative and semiconductor development in the near future, then we'll revisit that. But for now we have, we have very little activity in China.
Cody Acree: Okay, great. Thank you, Scott. And then Frank, just always back to the liquidity question. You've been very sparsely engaging in your ATM, which is good. But what is the minimum level of cash that you're comfortable running the operations at?
Frank Laurencio: Well, I think it's pretty well understood that, public companies keep well over a year's worth of cash on their balance sheet at all times. And that's sort of a fundamental audit issue, as a public company. And so, I think that you can draw your own conclusions about that, but also, because we've, I think, always been conscious and forward looking about maintaining that liquidity. The fact that we've been very sparing and what we've done, like I said, only active in the month of November, you know, over the last six months, We're obviously optimistic not only in terms of planning to spend more money and hire people this year, but also in feeling that we didn't need to load up on additional cash, when the stock and overall the equity markets, and particularly the, growth stocks and tech stocks were particularly doing poorly in the last six months. I think if we felt more concerned and needed to have, proactively fill up our balance sheet, then we probably would have been more active in the past few months. And so, I think, our hiring plans, and also the financing activities that we've done, reflect our optimism about 2023.
Cody Acree: Very good, Frank. And I'm sorry, what am I saying? Did I miss in your prepared remarks, cash burn target for 2023?
Frank Laurencio: Yes. Our target for 2023 and we always give it in non-GAAP operating expense, which is effectively our cash outflow. I don't give a net burn, because we don't give annual revenue guidance, but the target was $16.25 to $16.75 million for the year.
Cody Acree: All right. Great. Thank you guys. Appreciate it.
Mike Bishop: All right. Thank you, Cody. Okay, so some questions have been coming in through the through the chat and I'll just go ahead and ask some of those. First is, why do some Phase III customers pay for an integration license and others do not?
Scott Bibaud: Yes. So let me let me take that. Yes, so our -- there's no hard set of rules on this. If we have a customer that we think has incredibly high potential, and they push back very hard on the concept of an integration license, then we're probably going to be, we're probably going to be flexible for that. Because more important to us to get those very high potential customers going using our technology, and then to get the money from them. For others, especially ones where we've done multiple runs, at some point we can talk them into the integration license is not a matter of paying it or not paying it, it's only a matter of when you pay it. Because with all customers, they understand if they avoid paying it at the beginning, when they finally get to manufacturing license, then they will have to pay the integration licenses. Those pieces all add up to each other.
Cody Acree: Okay. And another one is goes the JDA, the first JDA licenses allow for limited sampling to their customers.
Scott Bibaud: Yes.
Cody Acree: And then -- let me follow-up because there's other questions about whether the JDA is our sampling in general to their customers?
Scott Bibaud: Yes. So let me first of all, I'll just talk about our JDA and licenses in general, because it can't talk about specifics for the individual JDA customers. But typically, when a customer gets to a manufacturing license level with us, and at least for our first JDA customer, it did include a manufacturing license, we do include the right for them to do limited sampling. Now remember, these guys are not typically making devices and selling them. They are working on process technology. So it's more likely that they'd be sampling. They'd be sampling wafers with, with the devices people could measure or even PDKs that have models that have the characteristics of the new transistors. But yes, that is a right that we give people once they reach a manufacturing license level is the sample. Now, I can't really comment on whether people have sampled under those that to say maybe only the first JDA customer would have had the right to do that so far.
Cody Acree: Okay. And then we had a question around MST CAD revenue. Can we elaborate on it? And if there's any metrics to measure?
Scott Bibaud: You want to take that Frank?
Frank Laurencio: Yes. Sure. So we, we offer MST CAD to customers under a free trial for 90 days, a lot of our customers take us up on that, after that, they may either decide not to continue doing the MST CAD themselves, or they convert to a paying customer. And so I think I saw the question come in saying that it was the first time we disclosed that we actually had a small amount of MST CAD revenue in Q3, which we disclosed in our 10Q for that quarter. So, let me also just add that just because the customer isn't paying for MST, CAD doesn't mean that they're not taking advantage of our T cat capabilities. Sometimes a customer will do the TCAD work themselves, because we've delivered the MST CAD scripts to them, in which case, it would be under that 90 day trial, and then a paid license thereafter. But in other cases, they sent us process details and we run the TCAD for them. There's a very big gamut of approaches that customers have some rely and much more heavily on TCAD and have internal TCAD resources. Others have very little, but they're willing to look at results on what we do. But as you can see from the scale of the numbers, we don't plan to rely on TCAD as a major revenue source. It's really an enabler for getting us to the right solution for a customer more quickly and targeting the development. Although I do you know, expect that we're going to see more, you know, customers who take advantage of the capability.
Mike Bishop: Okay. And in Richard Shannon joined us. Richard, if you want to go ahead and ask a question.
Richard Shannon: Can you hear me now Mike?
Mike Bishop: Yes, we can.
Richard Shannon: All right. Excellent. Policies up front here I'm traveling and cell coverage isn't great. So I'll hopefully the ambient noises too bad here. But that said, Scott, I think my first question here is, I'm going to paraphrase your language and your prepared remarks here. But you talked about more licensees in the months ahead. This sounds like modestly more certain, and maybe I could use the word aggressive statement that you've used in the past. So what exactly do you mean by this? Can you help us understand, what activities or actions you can publicly talk about that will happen in these months ahead?
John Kiernan: Yes. Thanks for the question, Richard. You know, of course, it's a little bit dicey, because I am not trying to announce something that doesn't hasn't happened yet. But I definitely would say, I think there's no doubt if you look at our customer pipeline over the last couple of years, we've had good traction with customers, we've been working with customers, but everything has been slowed down by this capacity crunch, the industry was in the -- I think we talked about a JDA customer taking nine months to get a sample. I think we talked about that early last year. And in fact, it's take it was taking more than 12 months, just because the fabs are so slow. Now, that's all changing, right? We're seeing much faster throughput times on our internal R&D lots, we're suddenly see a dramatic improvement in the throughputs we're getting. And we're seeing customers who are much more interested in starting to meet with us and talk about potential programs because they can get into those paths. That's one of the things that's driving our optimism. We also, we've got very good relationships with most of our licensees and JDA partners, and, we can see the progress they're making and we're hopeful that they'll get to I mean, I'm more optimistic than ever that they'll get to licensing options this year. Yes, it's always tricky. Because reason we don't pre-announce is that any decision by them that they want to do one more wafer run can take nine to 12 months more, but we've got a lot of shots on net here with all the customers in our pipeline, and we're hopeful that some of them come up with licenses in the near future.
Richard Shannon: Okay. Fair enough. I know you don't want to get essentially you negotiate against yourself by declaring something overly strong. But I just wanted to get a sense of the level of improvement of competence. And I think you portray that. So thanks for that. Scott, you in one of your early prepared remarks you talked about travel activity up 450% to 500%, I think quarter-on-quarter. How should we think about what this really means? I mean, is this a sign of activity in earlier stages? Or kind of my one of my follow-up questions here will be, I think one of the key things for your story and impact on your stack will be getting somebody over the finish line getting them to production that seems like a critical thing. Is this travel activity? Is this more early stage or potentially late stage such that could help you get over that finish line?
Scott Bibaud: Yes, I'm sure you won't be surprised that I say it's a mix of both, Richard?
Richard Shannon: No, no, I will not, Scott.
Scott Bibaud : That's okay. By the way, I just want to be clear, I'm comparing the three months from kind of the beginning of November until now, from last year to this year. And last year, it wasn't really that impacted by COVID. So it's pretty fair comparison. This is normally a time of year with the holidays, and everything that you don't see a ton of travel happening. But we are, I mean, we're just -- we have lots of irons in the fire. And it's a fun, kind of exciting atmosphere where we're constantly preparing for the next customer meeting and for the next set of data that we have to do to show to convince them to move in the application area that we'd like them to move in. So -- yes, so that's where all that comes from.
Richard Shannon: Okay. Okay, fair enough. And let's see here. Because you announced the customer moving into Phase III, and you're guiding to know revenues for the quarter. And it's obviously not a revenue generating event, or at least not immediately. What do you expect that at some point to happen with this relationship well in Phase III or not and can you characterize any sort of work technology product or et cetera, that you're working with them on?
Scott Bibaud : Yes. I don't think I can talk about the specific work area, but I can say, itâs a quite a large customer. We've been that in Phase III most of our customers go through Phase III in a month or two. This customer wanted to run some very expensive tests in Phase IIII because it helps them to understand what our technology can do. So they've been in it for a few quarters, got the final results in December, and then we're very excited by them and move very quickly into Phase III. Usually, when we start Phase III, it means a customer has to start running some new wafers on their side, build them up to a certain point and send them to us. And that can take a while for them to do in this case, the customer was so excited, they react extremely quickly and sent us the wafers quite rapidly. So it feels like this is something that's going to have a high priority, and hopefully, will, will move quickly through the development pipeline and get to a point we'll have something in natural.
Richard Shannon: Okay. Fair enough. And let's see, on the fourth quarter revenues, you recognize, obviously, a small amount here, which you guided for zero, there's something there. Can you describe the activity that triggered that? And did I understand correctly, this customer came from North America? Is this one of the licensees that you've been asked in the past?
Scott Bibaud : Well, what I can say about it is that it's MST TCAD revenue, which we disclosed. So it's MST TCAD revenue from North America.
Richard Shannon: Okay. But you can't say whether it's an announced licensee?
Scott Bibaud : No.
Richard Shannon: Okay. Okay. Fair enough. And let's see here, just scanning my question list here, make sure I didn't miss anything. Scott, maybe I'll just kind of finish up with a question here on leading edge. Just wondering kind of help us understand the importance of what you're doing to Gate-All-Around and other sorts of initiatives in leading edge. And if just any way that you characterize the probability of success and timeframe, I think most people on this call are expecting a fairly long period of time. Anyway, you characterize that would probably be helpful in that, I think that's all for me. Thank you.
Scott Bibaud : Yes. It's a very interesting situation. We do a lot of work in the legacy nodes. And in theory, the legacy nodes could, they're relatively simpler to work on. They're in volume production. So you'd think they would change over pretty quickly. But there's -- but what we do run into there is that even if we show a customer great benefit on the legacy nodes, sometimes they're not planning to make a change to their legacy nodes for some time, we have to wait for that time to come around. But on the leading edge on the gate-all-around, we know every big semiconductor company is working on it, they've got a ton of engineers dedicated to it. So when we bring in some ideas, there's a big crowd that's ready to listen. And if they like what they see, they're probably going to want to start running some experiments with us. And they'll have a ton of resources to do those experiments and get results quickly and hopefully, move fast. So the gate-all-around is, as I mentioned, my remarks is very complicated. People are taking ideas from a large number of industry players like the equipment OEMs, and universities. And we're also contributing a lot of ideas. So we're hopeful that if we're adopted by one or more of these players will become kind of a standard thing that gets added in to everybody's, that kind of goes on to the industry semiconductor roadmap. And that would be kind of a straightforward way for us to continue licensing our technology out to every one of the companies is developing those processes in the future. So, big opportunity. We have done a lot of science on it. And I think quite an exciting thing for us,
Richard Shannon: Scott, appreciate that perspective. That's all from me guys. Thank you.
Mike Bishop : All right. Thank you, Richard. And just two more quick questions here before we conclude the call. First one is has Atomera done any simulation, or MST TCAD work on 3-nanometers?
Scott Bibaud : Yes, for those of you who don't know about 3-nanometer, so in the semiconductor industry, the most advanced transistor that's being worked on right now is the 3-nanometer transistor. There's already work and thought going on beyond 3-nanometers, but 3-nanometers is the most advanced node and that's where they're using for the most part, the gate-all-around architecture that we talked about. There's a lot of challenges in 3-nanometers because everything is just so small. But our technology -- that's one of the things that our technology does is to help people to control dopant when you're trying to deposit them in very small areas and not have them go to other areas, and to help people with a number of other things, which I've spoken about in the past. But so I think the question about whether we've done simulation whether we've done MST TCAD on that level? Yes, we have. We don't a technicality when we run TCAD, we don't run a transistor on TCAD, we run areas that are even smaller than a transistors, but we've done a lot of simulations on how you would use MST in a gate-all-around 3-nanometer or smaller device so that we can go into customers and show them that type of thing. So, we talk frequently about our MST being a technology that's 100 angstroms thick, which is 1-nanometer. We experimented making it even thinner for these type of applications. And we've done those experiments on simulations using TCAD that we can show prospective customers, so yes.
Mike Bishop: All right. And then last question here is MST being applied to AI, Artificial Intelligence in any way?
Scott Bibaud : Yes, I mean, I would say there's hard to make a direct comparison. AI for the most part is software that runs on various kinds of processes, including some very advanced processors, that MST could help to optimize make better, but there's no direct connection between our MST technology and on AI so far.
Mike Bishop: Okay. All right, Scott. At this point, we'll just move to conclude the call. You may proceed with any closing comments.
Scott Bibaud : All right. Thanks a lot, Mike. And I want to thank everybody here for attending today's presentation. I'm really happy, we're able to share with you our recent progress and give you a sense of the optimism we're experiencing inside Atomera. Please continue to look for our news articles and blog posts to keep you up to date on our progress, which are available along with investor alerts on our website at atomera.com. We look forward to seeing some of you during our upcoming scheduled marketing activities. And should you have any questions in the meantime, 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.
Mike Bishop: Thank you. This concludes the Atomera fourth quarter 2022 conference call.
