Atomera - Earnings Call - Q1 2021

Transcript

Speaker 0

Hello, everyone,

Speaker 1

and welcome to Atomera's First Quarter Fiscal Year twenty twenty one Earnings Webinar. 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. After a positive experience last quarter, we are again using Zoom and we will follow a similar format to prior quarters with participants in a listen only mode. We will open with prepared remarks from Scott Bebo, Atomera's President and CEO and Frank Lourenco, 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 would 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 and 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 ks filed with the SEC on 02/19/2021.

Except as otherwise required by federal securities laws, Edamera 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, 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 measure are included in today's press release, which is posted on our website. Now I would like to turn the call over to our President and CEO, Scott Vibault. Go ahead, Scott.

Speaker 0

Thanks, Mike, and welcome all of you to our Q1 update call. The last three months have been very interesting for our industry with the economic rebound driving semiconductor demand to the point where it's constraining industrial production across many different market segments. Fabs are once again running at or beyond their rated capacity, which, as you might expect, has had an effect on Atomera's efforts. For existing customers with wafers in process right now, we are seeing no major changes. But for those planning new experiments, we're hearing of potential delayed starts or extended processing times as production backlog takes first priority.

That being said, all of our existing customers continue moving forward on their development work with us. During discussions of incremental or new customer projects, we have started to hear rumblings of restrictions on R and D wafers because of tight capacity. At the same time, we are seeing increased requests to understand how MST can grow production volumes through die size optimization. So current industry problems are a mixed blessing for us. It's helping to spread the word on the economic benefits of MST, while potential new customer work to validate our solutions is difficult to get started.

We were pleased during this last quarter to be able to show our first customer entering into Phase four. As a reminder, Phase four is defined as a customer installing MST in their own facility. For a customer to enter into Phase four, a number of factors have to be properly aligned. First, the customer has to conclude that MST is worth the time and expense of dedicating a very expensive tool to its use. Second, they need to have at least one chamber available to work on MST.

That either means doing some modifications to run MST in a dedicated chamber on an existing machine or buying and installing a new one so they can work with MST. Because tools dedicated to R and D are relatively rare in the industry, it's generally much easier for customers to introduce MST when building out a new fab or adding to an older one. So you can see that this Phase four installation we achieved is no small feat. Our licensees continue to move forward towards commercialization with MST, and we have several other Phase III customers who we hope will move in that direction soon. That being said, Atomera works with very large companies in an industry that can move quite slowly, even when excited about new technology.

We have consistently said in the past that Phase three is very unpredictable, which makes it difficult to provide guidance on when the next deal, be it a JDA or a standard license, will occur. Although we continue to discuss JDAs with several customers, we are not in the late stages of negotiations on any at this time. Beyond the JDA, all customer engagements continue moving forward. A focus on existing customers, ongoing travel restrictions and R and D wafer limitations will keep new customer growth from expanding significantly in the near term. However, we have been experiencing solid interest from both new and existing customers to learn how MST can be used to expand their production volume and help solve both current and future capacity issues.

It has been well reported in the news that many of the world's manufacturers have experienced production stoppages for lack of the semiconductor chips necessary to build their products. The automotive industry gets the most press, but the same thing is actually happening in many areas of manufacturing. Semiconductor industry veterans that I have spoken with say this is the single worst shortage condition they've experienced in careers of over thirty years. It's worth the effort to dig a little deeper into the cause of this situation to understand the potential opportunity. Semiconductor companies are very focused on building out process technology for the next generation of semiconductor chips.

Indeed, this year, we've heard about over $200,000,000,000 in investments to be made in semiconductor manufacturing, the vast majority focused on the bleeding edge. That will ensure that our mobile phones, PCs, and servers continue to get full supply of the fastest and most powerful chips needed for those applications. But what is plaguing the industry today is a shortage of capacity in older process generations that make the necessary chips for more mundane and less cutting edge applications like power management, sensors, microcontrollers, and transceivers for automobiles, industrial products, communication gear, and appliances. Typically, these products were designed in process nodes that went into production decades ago. For certain designs, using a lot of analog circuitry, it doesn't make sense to shrink to a smaller node.

Yet the fabs that produce these chips are maxed out and have a very hard time adding equipment to supplement their capacity. All the tricks available to get a few more wafers per hour out of these facilities were implemented years ago. Nevertheless, they keep trying to marginally increase output. One way they could get significant relief would be to use MST. Let's look at a few different ways MST can be used to solve industry problems.

According to IC Insights, in 2020, more than 40% of monthly wafer capacity was for process nodes at 40 nanometers or above, with more than half of that in 180 nanometer or above, a manufacturing technology first introduced in the 1990s. Another 11% is in 20 to 40 nanometer, which the industry also categorizes as legacy nodes. These are the areas where the most help is needed, and MST is one of the only technologies with an ability to provide significant improvements in performance and die size for products in those process nodes. On this slide, we show how at 180 nanometers, MST SP is able to outperform an industry standard design by more than 30%. If we take those same mechanisms and direct them to die size reduction, MST is able to shrink a similar die by approximately 15% to 20%.

Our ongoing development work continues to find ways to use MST to improve these numbers and thus the expected savings. Now imagine an older fab that's very tightly restricted on the amount of wafers they can push through the building. The step function and costs to build a new facility is too large to consider. But by encouraging their engineers to make new designs using MST, they will get 15% to 20% more chips out of the same number of wafers produced without it. Our economic analysis shows this will have the effect of increasing both revenue and profits for the fabs and their customers while also providing a healthy royalty to Atomera.

Remarkably, MST should work even better at nodes smaller than the ones we talked about before. Why? Well, as the industry goes to smaller gate lengths, they typically use much higher levels of doping. As you may remember, one of the key characteristics of MST is that it helps to control dopant diffusion, which is more important as doping levels increase. Because of this, we believe MST can help to make transistors narrower in the nodes just above FinFETs, that is the 20 to 40 nanometer area I mentioned earlier.

This could likewise increase the amount of dye one could squeeze onto a wafer, increasing capacity once again. Recently, we completed an analysis of how MSD could be used to improve performance of 28 nanometer products. Using parametric improvements we found through silicon experiments, we modified an industry standard 28 nanometer PDK and ran SPICE simulations for several different types of designs. The results were compelling. MSD showed higher electron mobility and better gate oxide integrity, allowing higher overdrive, which resulted in more than a 30% performance improvement.

We then traded off the performance improvement for die size reduction using MST on a typical NAND two gate like the one shown here, it resulted in a 22% to 25% area reduction. Analog scaling with MST provided a 21% reduction. So overall, you can see how these results can really move the needle on capacity improvements. We have been in discussions with many potential customers about using MST to help solve their production problems. Now, it is true that for this to happen, MSD will have to be implemented and new chip designs will have to enter the pipeline.

So it's not a quick fix. But the capacity problems that we are seeing today are only slated to get worse in years ahead as the size of the market continues to expand, driving demand for these older process chips in factories that have very limited expansion options. Although the opportunity in legacy nodes is quite exciting for Atomera, MST technology is also very well positioned to solve problems for customers at the leading edge. As manufacturers attempt to make transistors of the smallest geometries, it's important that junctions are sharp and well defined. As Robert Mears' blog post pointed out last week, MST does a much better job of that than other methods the industry is currently trying.

We have previously been worried that MST, while very thin, may still be too thick for these applications, so we tried making it much thinner, and it still worked beautifully. Over the next few weeks, we will have more information about this development on our website, and you can be sure that our customers are going to be hearing about it as well. Efforts continue in the process of qualifying the new state of the art EPI capability at our facility in Tempe, Arizona. As part of this process, we have successfully demonstrated MST growth on our advanced epistaxial reactor, validating a tool that will be used for process development and customer support for both two hundred and three hundred millimeter wafers. With this new tool at our disposal, in addition to development, we will be able to conduct parallel testing and validation of MSD with customers in Phase four.

This industry standard approach has been proven to expedite learning and qualification by customers. We continue to be excited about the opportunities 300 millimeter tool will open to Atomera. Today, than 65% of semiconductor industry revenue is driven by 300 millimeter wafers, so having this capability will allow us to try some very innovative business experiments to advance MST in the market. Our MST CAD software continues to be well received by customers and partners. Just as important, it has opened up the ability for our engineers to experiment with different integration options without having to wait for silicon runs to validate them.

Here are three benefits we recently have realized with MST CAD. First, we've identified an improvement that we believe is significant for integrating MST with RF SOI by using a three-dimensional method of TCAD simulation. Second, MST CAD has helped us to advance our MST SP work much more quickly than we would have otherwise. Third, we are now also using it to evaluate different film types to optimize performance under different process conditions. Overall, the development work we've done on MSPCAD over the last several years is paying back giant dividends.

As you can see, our opportunities abound. It's critical that we not lose focus on the most important objective for Atomera, though, as we work to expand our efforts in multiple areas, and that is to get MST into production. It is for that reason that we spent time this year looking to supplement our team with an aggressive engineering manager with a reputation for execution, who also has the background to understand and guide our efforts in these many areas. We are very pleased to have Sudarshan Srinivasan join Atomera. His prior experiences at Applied Materials, Intel and Lam bring a wealth of experience that we believe will accelerate and focus our efforts.

He has only been on the job for a few weeks, but is already bringing some excellent insights that will help to drive better performance of Atomera in the future. Atomera continues to make strong progress on several fundamental applications we have been addressing for some time, but we also see more and more opportunities to tackle industry challenges with a film that brings a variety of benefits. With a strong technology base and a growing set of solutions it can provide, Atomera is currently very well positioned to navigate the road to a bright future. Now I will turn the call over to Frank to review our financials.

Speaker 2

Thank you, Scott. At the close of the market today, we issued a press release announcing our first quarter twenty twenty one results. This slide shows our summary financials, and I will now review them in more detail. Our GAAP net loss for the three months ended 03/31/2021, was $3,600,000 which is $0.16 per share. In the 2020, our GAAP net loss was also $3,600,000 and on a per share basis, it was $0.22 per share.

The flat net loss compared to Q1 twenty twenty was due to higher revenue, which offset an increase in operating expenses. The lower loss per share reflects an increase in weighted average shares outstanding to $22,100,000 in Q1 twenty twenty one from $16,800,000 in Q1 twenty twenty. Revenue in Q1 twenty twenty one was $400,000 compared to $62,000 in the 2020. GAAP operating expense in Q1 twenty twenty one was $4,000,000 compared to $3,700,000 in Q1 twenty twenty, an increase of $276,000 Research and development expenses increased by $167,000 while general and administrative and sales and marketing expenses increased by $68,000 and $41,000 respectively. Our press release and this slide contain a reconciliation between our GAAP and non GAAP results.

As has generally been the case for us, the biggest difference between GAAP and non GAAP expenses is stock compensation, which is a noncash item. Our stock compensation expenses were $731,000 in Q1 twenty twenty one compared to $629,000 in Q1 twenty twenty. Non GAAP adjusted EBITDA in Q1 twenty twenty one was a loss of $2,900,000 which is the same as in Q1 twenty twenty as increased revenue offset our higher operating expense. Total non GAAP operating expense was $3,300,000 in Q1 twenty twenty one compared to $3,000,000 in Q1 twenty twenty. Non GAAP R and D expense was $2,000,000 compared to $1,800,000 in Q1 twenty twenty, an increase of $171,000 This was primarily due to an increase of $330,000 in payroll and related expense based on new headcount and engineering, offset in part by lower outsourcing and travel costs.

Non GAAP G and A expense in Q1 twenty twenty one was $1,000,000 compared to $927,000 in Q1 twenty twenty. Non GAAP sales and marketing expenses were $213,000 in Q1 twenty twenty one compared to $192,000 in Q1 twenty twenty. Sequentially, our net loss of $3,600,000 in the first quarter of twenty twenty one was $256,000 lower than our Q4 net loss of $3,900,000 GAAP net loss per share was $0.16 in Q1 twenty twenty one compared to a loss of $0.19 per share in Q4 twenty twenty, reflecting a lower net loss as well as a higher share count. Non GAAP adjusted EBITDA in Q1 twenty twenty one was $2,900,000 compared to $3,000,000 in Q4 twenty twenty, reflecting our increased revenue, offset in part by the increase in operating expenses. Cash balance at 03/31/2021 was $36,700,000 compared to $37,900,000 at December 31.

Net cash consumption of $1,200,000 during Q1 reflects use of $3,900,000 in operating activities, offset in part by $2,800,000 in cash from financing activities, consisting of 2,500,000.0 of proceeds from the exercise of stock option and proceeds from the completion of our At the Market, or ATM, equity program in January. As in past years, our operating cash consumption is typically highest in the first quarter due to the timing of annual commitments, which are expensed quarterly. As of 03/31/2021, we had 23,100,000.0 shares outstanding. Our JDA customer entered into Phase four and obtained a manufacturing license, enabling them to deposit MST using a tool in their fab. This license grant, accompanied by delivery of our MST film recipe, resulted in $400,000 of license revenue for Atomera.

The JDA includes other milestones that could result in additional revenue in the future. But we do not have enough visibility to forecast the timing or likelihood of achieving those milestones. Consistent with past practice, we are only providing revenue guidance for this quarter, which we expect will be zero. Until we reach distribution license agreements to generate royalties, our quarterly revenues will remain choppy, and our visibility will continue to be limited. During periods of high capacity utilization, it can be even more challenging to schedule wafer runs to generate engineering services revenue.

And the timing of those transactions, like the closing of new licenses or signing JDAs, is hard to predict. We continue to expect that our non GAAP operating expenses for 2021 will be in the range of $14,000,000 to $14,500,000 for the full year. With that, I will turn the call back over to Scott for a few summary remarks before we open the call up for questions. Scott? Thanks,

Speaker 0

Frank. I'm glad to share with you our latest opportunities and the progress we've made to date. We are very excited about continuing to advance our JDA, MST SP and RSSOI customers and to begin work in the new areas highlighted on this call. We do see the current industry capacity challenges as creating an even stronger demand for MST technology, and we hope to take advantage of it over the next few quarters. As our new world class epi deposition tool comes online and MST CAD is adopted by more customers, we believe we'll be able to get customers through the integration process into market more quickly than ever before.

Inside Atomera, our teams are energized. We are working hard to realize the potential that MSP brings, and I look forward to sharing the results of those efforts with you in the future. Mike, we will now take questions.

Speaker 1

All right. Thanks, Scott. We will now enter the Q and A session. If you have a question, you can hit the raise hand button located in the lower menu bar of the Zoom. Alternatively, you can enter your question into the Q and A chat function, also found in the lower menu bar, and I will read it off and ask the management team your question.

Our first question comes from Cody Acree of The Benchmark Company. Cody, you want to turn your unmute and turn your camera on.

Speaker 0

Go ahead.

Speaker 3

Yes. Thank you, Mike. I guess, Scott, if we could go back to your discussions about the engagements with your customers and the delays or maybe it sounds like almost tabling of some of your efforts. I guess how direct have those customers been? Have they given you any quantification?

Is it been just kind of an engineer to engineer thing? Are you having communications at the C level or division level that is giving you pause as far as just their ability to split attention?

Speaker 0

Yeah, Cody. So far there's been no pausing or cabling of our efforts with customers. What's happened is if we have a customer that we are in Phase three with and we're running wafers with them and the wafers are already in the fab, typically those are they haven't really changed in priority and we'll get those wafers out and begin testing. But some customers who we were planning to do new wafer starts, let's say, in a few months, they've told us they're not sure they'll be able to start on time, and we'll see about that. My guess is on most of those, they'll probably start maybe with some delay and then move more slowly than we've seen in the past.

The bigger issue is for new engagements and new customers where they say, Wow, I think your technology is really interesting and we want to try it out in this area, but I can't get approval to start a new R and D program that will require wafers some time in the future. So, summary is that for our existing customers, existing programs is not a huge impact, maybe some slight delays, but for newer customers or even newer programs and existing customers, it's a little bit harder right now.

Speaker 3

Sure. And Scott, you had shifted your attention from new customer acquisition to monetization of your customer program. So are you seeing a material you said you're talking about slight impacts of your existing customers? Or are you counting on those customers to increase engagements and that maybe solidify their interest so that

Speaker 0

I think the most important thing for us with existing customers is to get programs that we're working on now to push to completion and get into production. Although, it's great to start new programs with existing customers because generally you can get started faster. There's lower barriers. You don't have to go through all the formal contracts and so forth. But given a choice, we'll try to push our existing programs to production as fast as we can rather than starting new ones.

Speaker 3

Sure. You said you put more on your blog about your MST developments. You mentioned a thinner layer. You expand on that at all here?

Speaker 0

Sure. Our MST is quite thin. I think we say in annual our report that it's on the order of 100 angstroms or less. That's quite small, 10 nanometers or less. But now the newest process nodes are talking about coming along at three nanometers, some fraction of that.

So even though MST is very, very thin, we had a question about whether it would be or some people had questions about whether it would be applicable at those levels. Because at those levels, they have a really dire need for the type of benefits that MSP brings. And so recently we started some development work on films that are very, very thin, and we found they still have a lot of they have very good effectiveness. And this is information that just really came out internally in the last week or week and a half, so we haven't had a chance to really publicize it and start to get out to new customers about it. But Robert wrote his blog and we're working on white papers and other information and then going out to the leading customers to talk about that.

Speaker 3

And then lastly for me, just the process, the recipe that you mentioned in the press release that you were able to deliver. Knowing that every customer is different, what has been the I guess, what have you learned from the delivery of that recipe that you can port to other customers? Or is that such a tailored process that that's not necessarily applicable across the board?

Speaker 0

No. In this case, we're delivering our really, in many ways, the company's crown jewel is our recipe for how you actually build the film in an EPI tool. Even if you look at all of our patents and they talk about how the film is constructed, it's very, very hard to build. There's a lot of know how involved. So that's what we deliver to the customer.

We've actually experimented in the past with delivering that to someone else to make sure we worked out the kinks, and so this one went very smoothly so far. I think we feel comfortable that we've put together a process and a package to be able to deliver that successfully to new customers in the future.

Speaker 3

Great. Thank you guys very much.

Speaker 1

All right. Thank you, Cody. Our next question comes from Richard Shannon of Craig Hallum. Richard, do you want to unmute and go ahead and ask your question? You feel free to turn

Speaker 3

on your camera as well. All right. Excellent. Thank you, Mike. And thanks, Scott and Frank, taking my question.

Unfortunately, missed a lot of the call. So I didn't get a lot of your prepared detail based on Cody's question. I'm probably going to broach what he was talking about a little bit here. But it sounds like you're seeing some limits to the pace of progress given that most of the fabs out there are so full that there's not much room to run any test wafers here. Is that a fair description of what you're seeing here in this current environment?

Speaker 0

Yeah. I was telling Cody that we are still able to run test wafers that were in progress, but getting new wafers, especially for new projects started, is becoming more challenging. And I would say on my last update call, which was in early February, we were not seeing that. So this has just been something that and we were watching for it because even at the beginning of the year, the industry was heating up. This is something we've just seen in the last couple of months.

Speaker 3

Okay. Are you able to run wafers on projects that have already been started and your customers are very interested, like your Phase four customer, as an example? There limits to doing that? Or can you push those through on the original timeframes you're expecting?

Speaker 0

So far, we haven't heard about any delays on any of those programs.

Speaker 3

Okay. Are you worried about that? Is that giving you some pause? Or do you feel pretty confident your customers are going to show your wafers through on schedule?

Speaker 0

Yeah, I mean, we've lived through this before. I think there were some delays. But to the extent that we were able to make people excited about it, they continued pushing it forward with some delays, I think. The fact is we're not super focused on bringing on new customers right now, and if we did, then that would be a bigger issue because starting a new R and D program that requires wafers is challenging. But I think the bigger the more interesting thing is that a lot of the engineering management of our customers has now turned their attention to trying to figure out how to expand their capacity through innovative means to help solve some of these capacity issues, not right now I mean, not only right now, but also out in the future.

As you know, there have been a number of forecasts for the semiconductor industry that we're going to grow from about a $450,000,000,000 to $500,000,000,000 market today to about a $750,000,000,000 market in 2027. And that type of growth is going to come with demand for these same type of chips that are having capacity problems today. So if the capacity problems don't get solved in the next six to nine months, they still are going to have to be solved over the next few years, and MST brings a lot of really strong tools to be able to do that for customers. I hope that during this capacity crunch, it drives demand to us to start working with customers to understand how MSC could be useful to them and then designing experiments that will run when the capacity becomes available again.

Speaker 3

Scott, are there anything that Atomera can do to make progress, particularly at the customers who are far along the pipe? I know that you've talked, I think, for just a couple of quarters about focusing more on those and less so on adding new customers at the early phases here. Is there anything else you can do or encourage your customers? Anything you can do to kind of keep that pace going, especially if you're leading or the farthest along edge of customer engagement?

Speaker 0

Yeah. One of the things that has been very helpful to us along those lines is our MSC CAD. A lot of the phases that we talk about when we talk about working with customers are designed around physically processing wafers and moving wafers through towards production. But you can do a lot of that with MST CAD just through simulation, and that's not something that we had available to us a few years ago. So now, even during a period when a customer says, Well, we can't it's going be a delay in running these wafers, well, that's going to give us a few more months to just be running simulations that can find better and better solutions.

So when we do get the wafers, we'll have a higher probability of having success. So yes, that's definitely one way that we can continue working with customers even into capacity issues.

Speaker 3

Okay. Fair enough. One last quick question for me is with your Phase four customer that as of today is unannounced in terms of name. Is there any thoughts on when this customer might be announced in terms of phase or what phase we're in or getting to production or anything like that? Trying to get a sense of when we might figure out who they

Speaker 0

This customer is extremely sensitive about confidentiality, and I'm not sure when they would actually start to loosen some of that up considering the amount of focus that they've had on that. At some point when we do go to production, think it will become intuitively obvious. But for now, I don't think they're going to want to say their name in the near term. And one of the things I should we never talk about specific customers and where they are in the development phase. All of them are sensitive to that type of thing.

One thing I want to make clear about this JDA customer is I've seen a lot of questions coming in about how fast they'll move from phase four and into phase five. But for a JDA customer like this, the work that we're doing is really a mixture of kind of Phase III and Phase IV. They've installed in their fab. That's great. That means they can deposit MST in half an hour as opposed to a month if they have to send it to us for us to process.

But they still are going be going into the Phase III process of trying MST in a number of different applications and proving it out before they decide to make it available to the business units so that they might be able to try it a little bit more and then take it into production. So I know you didn't really exactly ask for that level of detail, Rich, but I've just seen this little confusion out there and want to try to clear it up.

Speaker 3

Every little bit of help, so I appreciate the detail. That's all from me, Scott. Thank you.

Speaker 2

All right. All

Speaker 1

right, Scott, why don't we go ahead and move to the Q and A that's been typed into the chat here. And the first question comes from William Morrison, and he's asking if MST CAD is gaining traction with the customers, and is it accelerating the conversations and moving customers along the pipeline?

Speaker 0

Yeah. As a matter of fact, I'll tell you, one of the interesting things that's happening is it used to be we would go to customers and we'd have our first conversations. We'd get into kind of deep discussions about physics and how MST works and how it can be integrated in the product. And then we would start working on a plan to put it onto wafers so they could test them and see how well it worked in their fab. Today, when we go to customers and we have those same type of discussions, instead of talking about building wafers right away, we start talking about doing some MST CAD simulations.

So it's a much lower barrier for customers to try out our technology, and hopefully we'll get them to make, when they do make their wafer runs, higher probability of having success right from the start. So we've had really good luck with that, I think, on almost every discussion we have with new customers or with our existing customers now. We're leading off talking about MST CAD, and that's been very helpful for both sides.

Speaker 1

All right. And then we've had a number of questions on the EPI tool. Is it qualified? Where is it? Is it going to be used by your JDA partner?

And the timeline on that. So a number of investors have asked that question. Why we address those?

Speaker 0

Yeah. Okay. So our EPI tool is located at the Arizona State Macro Technology Works Center in Tempe, Arizona. It's a world class semiconductor facility. It used to be owned by Motorola, who I believe transferred it to Arizona State years ago.

Beautiful state of the art facility. Now why in Tempe, which is just outside of Phoenix? Phoenix is a little bit of an epitaxial center of excellence in the world. That's where there are a lot of engineering talent out there that does that. It's also a site of a number of fabs.

And when you run EPI, you need to have the infrastructure that you'd need for a semiconductor fab, including very large hydrogen tanks and other chemical suppliers that are nearby. Our tool is set up. We are actually processing wafers in there, and we're qualifying our film. All that being said, we haven't signed off 100% on the full facility requirements yet. I know it's been a long time.

It seems like we're always right around the corner. It's hard to understand. There's the wafer processing capability and then there's a whole bunch of surrounding equipment that has to do with metrology and cleaning tools and air handling and a whole bunch of other things that have to all be qualified before we take official possession of the tool. And I feel like we're very, very close on that, but it isn't quite fulfilled yet. I guess the upside of that is that we haven't started paying on our lease yet.

The downside is that we don't feel comfortable delivering wafers to customers until we've taken until it's met all of those criteria. When we do have that met and again, I do hope it's soon we will have the ability to run customer wafers there or even make well, we'll definitely be running our own internal R and D wafers there. And we'll have the ability to build wafers ahead of time and seed them into the market and other things to try new business approaches.

Speaker 1

All right. And the last category of question deals with the chip shortage and if it got the it seems to have gotten the attention of the federal government. And so the question is, do you see any federal government agencies that you're working with to help you advance your goal, or is that not on the radar at this point?

Speaker 0

Yeah, we haven't really approached government agencies regarding that. We are there's other reasons why we might be talking to government agencies about our technology for use in various applications, but to help solve the current capacity expansion, that hasn't been something that we've done up to now.

Speaker 1

Okay. So at this point, I think that concludes the Q and A session. I'll turn it back to you, Scott, for closing remarks.

Speaker 0

All right. Well, thank you, Mike, and thank you all for the good questions. And also, thank you for attending today's presentation. We are very pleased to be able to share with you the results of our last three months and provide a sense of the excitement we feel inside Atomera. Please continue to look for our news, articles and blog posts to keep you updated on our progress.

You can sign up with them along with investor alerts on our website at amera.com. Should you have additional questions, please contact Mike Bishop. We'll be happy to follow-up. We look forward to seeing some of you during our scheduled marketing activities, including the Stifel Cross Sector Insight, Needham Technology and Media, and Oppenheimer Emerging Growth Conferences. Thanks again for your support, and we look forward to our next update call.

Speaker 1

All right. And that concludes today's call. You may all disconnect.