Q2 2023 Atomera Incorporated Earnings Call
Okay.
Yeah.
Yeah.
Hello, everyone and welcome to admire second quarter fiscal year 2023 update call I'd like to remind everyone that this call and webinar are being recorded and a replay will be available on <unk> IR web site for one year I'm, Mike Bishop with the company's Investor Relations.
As in prior quarters, we're 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 vivo, Adam Arrows, President and CEO and Frank Florencio at Amira. 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&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 the <unk>.
<unk> annual report on Form 10-K filed with the SEC on February 15 2023.
Except as otherwise required by federal Securities laws that are married disclaims any obligation to update or make revisions to such forward looking statements contained herein or elsewhere to reflect changes and 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 posted on our website.
Now I would like to turn the call over to our President and CEO Scott BMO go ahead Scott.
Thanks, Mike.
Good afternoon, everyone welcome to <unk> second quarter 2023 update call.
We had a great quarter, continuing to build strong relationships with our customers performing wafer runs for those in phase III executing on compelling new R&D and building momentum with newer customers I look forward to telling you about the developments.
Capitalizing on momentum generated by our first commercial license deal in Q2 with SD micro we've been busy meeting with new and existing customers to emphasize the urgency of adopting and taking MSC to production.
We've made good progress both of those semiconductor companies already in our engagement pipeline and generating interest from new customers.
Efforts continue with our first JV partner and this quarter, we've been collaborating with them on a demonstration and testing of MSC solutions for their particularly challenging applications.
A lot of back and forth regarding those experiments has been taking place we continue to engage with the central engineering unit for the purpose of bringing much needed solutions to their business units with whom we are also speaking.
We believe these steps bring us closer to signing a license with a bu for our production project.
Likewise, we continue to work with our second J D. A customer on efforts focused around optimizing performance and their application. So we can initiate the milestone payments and associated licenses defined in the <unk> agreement.
Meetings with the JD customer and our other licensees about the specifics of MST integration in their devices or tea CAD analysis planning and executing wafer runs and implementation of the results have been happening with regularity and continue even today.
A quick update on ft micro.
We described the steps remaining for commercialization in detail last quarter.
Shortly after FTE signed the license agreement work began using MST CAD to create a new optimized design flow integrating MST and the ft's devices.
As described before SDN animated Adam era are cooperating closely to achieve the greatest possible performance and cost improvements using MST with a primary design responsibility for this effort being S T without merit and a supporting role.
The first revenue milestone under the contract will be triggered when estee installs our technology on an etsy deposition tool and one of their fabs.
The tea CAD work, that's already commenced will run in parallel with St's manufacturing of MST wafers.
The installation process is largely dependent on their effie tool vendor.
Due to logistics delays on the tool modification. We are currently expecting this to happen early in the fourth quarter.
Once the installation is complete and FTE has successfully dialed in the tool will be ready to build MST wafers.
When SCE has completed their work they will start wafer level qualification to create a high volume high yield manufacturing process, which will trigger another milestone payment and grant them the right to manufacture and sell products incorporating <unk> technology at that point.
SCE will enter volume production and we can expect to start seeing royalty payments.
Our announcement of the license agreement with S. T has definitely made waves in the industry. We've had excellent meetings with a number of potential customers, who designed and built analog and power products and who are interested in working with us on MST.
Some have already begun the process by commencing tea CAD work with us and we hope to add several new customers on this front in the near future.
Work on RFS II continues to show very good promise in cellular handsets.
Because of the large and expanding number of cellular frequency bands available in the world. The RF front end on mobile phones is becoming an increasingly complex and expensive piece of technology, which leverages advantages that specialized RF soi substrates can provide.
But those substrates also have some serious drawbacks related to dopant movement under the buried oxide layer.
MST can help to solve those problems by enabling lower cost and less complex front ends which should provide an excellent market for <unk> technology.
We are working with a number of customers on this today and expect to work with more in the near future.
I want to spend a little bit of time talking about how MST can provide a real benefit to smaller lithography nodes.
One of the biggest challenges in semiconductors is to keep lowering power consumption as the nodes get smaller a phenomenon that prevents them from doing so is something called random dopant fluctuation our rds.
Which are variations and concentration of the implanted dopants and the impact of those variations becomes more significant as the nodes get size gets smaller.
It's the demon that few people understand increasing the cost and power consumption of advanced logic, DRAM and most other semiconductor devices.
The good news is that MSC is very adept at mitigating the problem of RDF.
One of the most effective ways to improve power consumption is to lower the minimum voltage of transistors and each node to do so you have to be able to manufacture each transistor with as little variation as possible.
The more variation in your manufacturing process the bigger the transistors, you must design and harder it is to scale down your voltage.
One of the big drivers of variation is RDF.
So to successfully scale to lower voltages RDF must be controlled.
Our analysis shows that in the latest gate all around transistors.
Single Dopant, Adam diffusing into the channel can significantly alter the transistors characteristics.
This is why the dopant control characteristics of MFC are so important for advanced node customers.
A big focus of our R&D activities today is around proving this capability in the two to four nanometer range.
And drams one of the most challenging limits on scaling is in the manufacturing margin of the critical circuits responsible for reading the memory bit which are called sense, Ams and typically make up 10% to 12% of the DRAM chip area.
Since DRAM capacitors leak the margin on these <unk> define how long the capacitor can leak before becoming unreadable. So this establishes the refresh interval and resulting power consumption.
By improving the variability of DRAM <unk> MST can help manufacturers make them smaller and use less power.
In this chart, we show a 50% improvement of variability between match transistors that use MSP. Another way of looking at this is that in MST transistor can be a quarter the size of a normal transistor at the same Sigma VT.
Again, mse's ability to control random dopant fluctuation is what drives this very significant improvement and variability.
The growth of AI has led to applications that are dramatically more memory intensive. So these type of power consumption improvements for drams are particularly important which is why we're starting to see very strong interest from players within the memory segment for using MST.
<unk> World Class team of engineers, and scientists continues to find ways of leveraging MST to advance the state of the art semiconductors Reese.
Recently, the eye Tripoli spectrum features segment on <unk> founder and his efforts early in his career to bring another key material advance to market the erbium doped fiber amplifier.
That invention went on to become one of the foundational technologies, enabling the internet age.
His technical leadership continues to drive our team to achieve a similarly groundbreaking result for today's semiconductor industry.
There is no doubt that <unk> is seeing wider interest across more applications than ever before.
With our recent announcement of the FTE licensing deal we are seeing tangible proof that customers are standing up and taking notice and we believe this will accelerate our time to revenue with more licensees.
Although it has been difficult for us to provide much public insight into specific opportunities I can tell you that the team is busier than ever our travel spending has doubled this year and that is because we see promising opportunities with new and existing customers around every corner and we're enthusiastic about closing them.
With that I'll ask Frank to now review our financials.
Thank you Scott.
At the close of the market today, we issued a press release announcing our results for the second quarter of 2023. This.
This slide shows our summary financials.
Our GAAP net loss for the three months ended June 32023 was $5 $2 million or 21 per share compared to a net loss of $4 5 million or <unk> 20 per share in the second quarter of 2022.
In Q1 of 2023, our GAAP net loss was $5 million or 21 per share.
GAAP operating expenses were $5 4 million in Q2 of 2023, which was an increase of approximately $913000 from $4 4 million of Opex in Q2 2022.
The biggest driver of the year on year increase was a $759000 increase in R&D expenses.
$423000 of which was due to higher spending with our contract foundry Tsi semiconductors, where we processed a substantially higher number of wafer lots than in recent years, and we absorbed price increases for wafers and engineering services.
The other main factor was payroll costs, which increased by $209000 in Q2 2023 compared to the second quarter of last year, reflecting new hires that came onboard last July .
General and administrative expenses increased by $108000 and sales and marketing increased by less than $50000.
Sequentially, our GAAP operating expenses increased by $192000 from $5 2 million in Q1 of 2023 to $5 4 million in Q2.
Primarily due to a $156000 increase in R&D expenses.
Also due to higher spending at Tsi.
non-GAAP net loss in Q2, 2023 was $4 3 million versus $3 6 million in Q2 of 2022 and $4 2 million.
In Q1 2023.
The differences between GAAP and non-GAAP operating expenses in all the periods presented are almost entirely due to noncash stock compensation expenses, which were $1 million in Q2 of 2023 $927000 in Q1 and $859000 in Q2 of 2022.
Our balance with cash cash equivalents and short term investments on June 32023 was $23 8 million compared.
Compared to $17 1 million on March 31, 2023.
During Q2, we used $3 $9 million of cash in operating activities and we raised $10 $8 million of net proceeds from sales of approximately one 4 million shares under our ATM facility at an average price of $8 15 per share.
This compares to a very limited ATM activity in Q1 so.
So we feel we are carefully balancing liquidity and dilution.
As of June 32023, we had $25 8 million shares outstanding.
Moving to our guidance, we still expect non-GAAP operating expenses for 2023 will be in the range of $16, two 5% to $16 $75 million, but likely will be near the top end of that range, mainly due to higher spending with tsi.
In April of this year Tsi increase was prices while at the same time they are cycle times got substantially faster.
We benefit and we benefited from this through more cycles of learning but.
But the price increase and faster wafer processing combined to increase our R&D expenses.
Also our travel customers has snapped back to above pre COVID-19 levels, such that we expect nearly as much on travel in the first half of the year as we did in all of 2022.
This is a welcome development, because we're responding to greater customer interest, which should lead to additional licenses and faster commercialization.
As Scott mentioned, we expect that SCE will install MST in their tool in early Q4, which will trigger the first revenue milestone at that time.
St's commercial licenses already influencing other major players to move more quickly to evaluate and install MST.
Each commercial license involves upfront license fees with a list price over $3 million and.
<unk> and recurring royalty revenue when the customer goes to production.
So while our lack of revenue during the first half of the year is disappointing.
In the Big picture, we are confident that our investments in head count wafer processing and sales activities are building the foundation for a profitable recurring revenue business.
We do not give revenue guidance beyond the current quarter. So for Q3, we're guiding to zero revenue, though we may see some early recurring revenue for MSG CAD licenses during this quarter.
With that I'll turn the call back over to Scott for a few summary remarks before we open up the call to questions Scott.
Thanks, Frank once again this quarter. The <unk> team has built strong relationships by working closely with customers to develop a deeper commitment to MSC.
We believe our our large number of engagements our deep material in semiconductor expertise and the solutions MST provides that some of the industries hardest problems will ultimately be rewarding to shareholders.
Hope to share more successes on <unk> park, and announce more licenses and deals in the months ahead, Mike We will now take questions.
Okay. Thank you Scott if you wish to ask a question. Please click the Q&A button at the bottom of the zoom window, then feel free to typing. Your question I will do my best to aggregate the incoming queries and relay them to management. Alternatively, you can click the raise hand button and we may call on you to ask your questions live.
And right now our first question comes from Richard Shannon comes from Richard Shannon of Craig Hallum. Richard If you had kind of on mute and you may begin.
Great, Thanks, Mike and Scott and Frank Thanks for taking my questions.
The first one for Scott here just to start on S. T. Micro I appreciate the detail on the progress here and I'm sure you're a little disappointed in the timing here of of the tool.
Our progress here I guess my first question is is this something very specific tests, you micros or industry wide issue and what's your confidence in that being done by early fourth quarter.
Yeah.
Quick answer is it is an industry wide profits related to logistics issues that.
It started in Covid and continued through today.
Uh huh.
And.
<unk>.
Even in March they have been working to pull the sense of there's some chance that they'd be able to pull it in but that's really not in their hands, it's their vendor and theyre trying very hard to get accelerated.
I think theres, a chance that could happen in late Q3, but right now our expectation is it'll be very beginning of Q4.
And there's some chance that could move but my my belief is that all the urgency is there to get it done now.
One thing I would like to point out, though is when we talked about this win.
NFC CAD, we're doing a lot of work with them today. So we're doing the development work that's necessary to happen in parallel with the wafers getting up and running so even though the installation has been delayed a bit.
I'm not sure it has an impact on the overall schedule yet.
Okay. All right. That's fair enough you answered my follow on there.
The only other question related S T Micros and I asked you. This last quarter, obviously with just the hours or days.
After really engaging on this on your license with them, but if you get a sense of what the Tam for their smart power products looks like I may be able to find any good answer to that in the last quarter I'm wondering if you've gotten any more detail that would help us frame that a little bit better.
Yeah.
I don't think we have anything new from what we provided kind of last quarter, which is that.
The smart power resides inside there.
Analog sensor and.
Mems.
Group, which was about $1 $1 billion.
Therefore about a <unk>.
<unk> of the total revenue for.
For ft, micro, but beyond that we don't have any.
We don't we can't really provide any more granularity on the Tam.
Okay fair enough.
Scott, Let me jump to a topic here of advance nodes and I appreciate all the detail here and in the past few calls you. It sounds like activity is picking up here made a specific.
<unk> comment about.
Duke.
Work on notes between two and four nanometers.
302 are ones upcoming but theres, one foundry out there that has what they call a four nanometer note I'm not sure it's actually four but maybe 5%.
But if you were intersecting with our four nanometers seemingly could happen fairly soon.
I guess I wanted to I didn't want to talk to you up and maybe even want to be talked down here about.
Expecting kind of the progress there and the potential timeframe for intersection with advanced nodes, but a 40 nanometer node may come up in the not too distant future. So wanted to get your sense of whether that is a possibility or not.
Yeah.
Search Ed first let me make a clarification.
The.
We're working on MST film implementations that would be at.
The range. The total size of two to four nanometers of course anybody who's working on those very small nodes would want to be working with in MST film that was very very thin like that.
I My reference was not to a specific node like a four nanometer node or two nanometer node, but its implementations that would be small enough to be appropriate in that.
Kind of range of notes.
So obviously, we haven't made any kind of.
Guidance about us being adopted by either an existing.
Finfet node or an upcoming data all around node, but that's something that we're working very hard to achieve.
Okay.
Okay fair enough. Thanks for that clarification I'm glad I asked that question wouldn't want that thing too.
Proliferate beyond the calls so thanks for that unless you're one or two more questions I guess, but I think both for Scott here.
In the last few calls and frankly for more than just a year or two you've been talking about the opportunity for RF Soi.
Yeah.
One of your statements made I think it was roughly $3 to $3 five years ago, you talked about engaging with customers who had a fairly sizable share of the total market for RF Soi. This seems like engagement has widened since then would you want to update what that percentage looks like.
<unk> is I think he was a majority even back then is that something that.
I think what I said back then was that we were working with the majority of the installed base of RF Soi.
Device manufacturers and that's still the case.
You talked on this call about expanding that further we have started working with more since I made that comment.
And we continue to work with all the ones. We are working with back then so yeah.
<unk>.
It continues to expand as a matter of fact, we're making.
We're continuing to make really good R&D progress in that area and partner with some important players.
In RF Soi space So I'm.
I am very hopeful that that will turn into.
Some licenses and revenue for us in the near future.
Okay Alright.
Alright fair enough and then maybe just a last quick question I'll jump out of line just on DRAM I know you've talked about this a little bit in the past. It seems like your comments are a little bit more forceful and certainly well placed not only from an AI dynamic, but just from a I think DRAM has been known vacant slowing down.
And many different ways here in the past it sounds like you can have a dramatic effect would you characterize the work here with DRAM makers to have accelerated.
Meaningfully in the last six months or so, especially since it looks like a lot of the DRAM makers have plenty of capacity available for testing.
How would you characterize the change in engagement with those guys I.
I definitely would say Thats the case Richard.
We have been talking to DRAM manufacturers for years. We've had these variability results that I showed today. This is some new data, but we've had data in the past that showed we had good variability improvements.
But.
Hi, I'm not sure if it's driven by AI, because AI is absolutely driving DRAM manufacturers try to figure out how to solve some problems. They can see a tsunami of demand coming there and they're going to need some solutions on power consumption and other things.
But we certainly have seen an uptick in interest from our technologies in the DRAM space and.
And in the last six months and so.
We're hopeful that leads to something good.
Okay, well certainly would be a big market if that were to happen. So it seems like there'd be a wholesale change if that were adopted even by one so that would be very interesting steep so excellent while I.
Appreciate the time guys I'll jump at a line. Thank you alright, thanks Richard.
All right. Our next question comes from Cody Acree of benchmark Tony go ahead.
Thanks, guys for taking my questions.
Maybe can you just go back to the.
SG micro implementation.
You mentioned some of the delays or can you talk more about that those delays nor there is something that you expected or are those new findings this quarter.
No.
I think when we announced the FC deal back in May.
We said that.
They had to convert their tool there are just some logistics issues, having to do with parts that are long lead items and then just getting some people that do the actual work and at the time, we didn't know.
What date that was going to be scheduled were hopeful it could be scheduled.
Sooner, but it looks like it's going to be a little bit longer than we hoped.
It's not.
Anything to do with our technology or STS commitment or anything. This is just a case where.
Need some parts that are in short supply and are not going to be available for a little while.
And I guess with.
With that those delays I guess.
Can you talk about what Youre doing with subsequent engagements to make sure that you are.
Streamlining the process best you can.
Yes, I mean, this one is a little bit of a unique situation for the most part.
People have epic tools, and it's a very minor change to switchover to.
<unk> puts the two lower to support our technology does not require any kind of.
Major.
Operations. They typically have to change a few different gas spigot that they've put into the tool and then they can run MSC in this case, it's a little bit of it I don't want to explain the details of what it is because it's confidential, but it involves the unusual tool set up.
Little bit harder to just modify quickly than what we would normally see so I don't think it's a.
Systemic problem, we've had people due to conversions.
Very rapidly within weeks in the past and in our labs and Phoenix, We can do a tool conversion in a day or two so this is not a systemic problem.
And.
And can you talk about the.
Single Adam Dopant.
<unk>.
Impact yeah that.
That sounds like more of a of a newer issue that has come up yeah. So our analysis shows that gate all around transistors, which are as you as you know theyre going to be adopted by.
The foundries at very small process now, it's probably in the three and two nanometer level.
Those those are <unk>.
<unk> are highly doped in their sourcing brain regions and a challenge is that with the random dopant fluctuation.
Some of those open items can move out into the channel, but in this case. The channel is so small that one or two atoms moving into the channel increases the concentration of Dopants and that channel significantly and they want the channel to be as clear of opens as they can possibly make it so by implementing MST, which.
Really improves the chances that they wont see random dopant dopants going into the channel. We we can bring a big.
Improvement in reliability from that perspective and performance.
Yeah.
And Frank you talked about the <unk>.
Engagement.
Commitments that you're.
If you are involved with.
What is that plan for spending.
Impacts your outlook.
Yeah like I said.
We're not changing sort of the full year guidance to be sort of.
Okay.
Around.
The mid 16 million kind of range, which we gave at the beginning of the year.
One of the things that we saw at the beginning of the year was there was a price increase that was imposed by tier.
Tsi, we're sort of now used to that.
We also have quite a number of lots that were waiting in the queue because we've been talking about in years past.
At times there are cycle times were slow and then there was also a contention with commercial business because of all of the constraints that existed in the supply chain. So during the first half of the year.
We were able to really clear a lot of backlog of running wafers that we have been planning on doing and we got I would say a head start on.
Lots that we're going to be analyzing in the second half of the year. So while I would say the first part of the year is really front end loaded in terms of tsi spending.
I didn't change our full year guidance, because I think this will will.
It will not revert back to the levels that they were in 2022 and before that because those were.
Actually things are moving too slowly, we werent processing enough wafers, but it's going to be more normalized for the year.
So yes in terms of what's driving the head count some of it is with tsi cost than we've had.
<unk> added a couple heads last year and we still have open positions that are in our budget and are reflected in the full year guidance that we are looking to hire.
Between now and we ended the year.
So if you have the personnel today, what do you think youre spending could look like or what's the optimal level of spending that youre looking for.
Well I mean, the sort of the full year has a set about formula.
Four to $4 $2 million a quarter.
And.
I think it's hard to say whether thats optimal.
Because obviously as the business scales.
It's it's certainly likely that we would add.
Additional head count, but if you go back about 12 or 18 months.
We're mentioning that we were feeling constrained in terms of human resources to do the work that we needed to do to support customers.
I'd say, we're still a little bit understaffed relative to.
The work that needs to be done.
But it's not as severe as it was in the past. So I think we'll continue to provide annual guidance and Yale.
The spending will increase but I don't see anything happening at a step function right.
What the tsi.
The price increase does show, though is.
We save in the Big picture, a lot of money by not owning our own.
Sort of mini fab, that's that's very prohibitive thing to do.
But we rely on a number of vendors on the outside where we.
We have to continually try to keep them honest because it is it does have an impact on us if there are price increases in some of these.
Some of these providers.
And Scott I guess.
You mentioned the.
Signing and the progress bestie micro encouraging others to move forward can you give us any color there as to what that might have spurred in and are you also looking at.
Greater engagement with NFC microwave expansion of that engagement.
Yes.
So.
I think we've spoken about this coding before the guidance we work with are incredibly.
<unk>.
Technically.
Sound.
Very thorough in their analysis of our technology and make decisions, but in fact in the end a lot of them are afraid of being first movers.
So when we can go into a customer and say hey, Here's SD micro very well respected company and we're going to go to production with them that seems to immediately like.
Cause a reaction on people's parts like Oh, Okay, now I really have to get serious.
We've seen this.
This past quarter well of course, when we made the announcement, we proactively reached out to all of our customers who are in.
Power and.
Analog spaces, and we said.
You better start taking this seriously and I think that had a very positive effect that we have.
We have started working with some of them as I said in my commentary.
But it also works with other folks.
Who just want to see that we will be in production in that.
That forces them to think they need to be there as well.
And any expansion of the FC engagement.
Okay.
Not.
That we can announce yet SCE has a number of different business units, where our technology would be interesting outside of the one that we're working on and obviously thats something that we will hope to do with them over time, but we yes we.
We can't announce anything now.
Alright. Thank you guys appreciate the help.
Okay, and it looks like Richard Shannon has a follow up question.
Thanks, Mike Scott just one quick follow up for me.
Supporting <unk>.
Certain areas, which you talked about initially like RF Soi and obviously power gets a little bit bigger are one thing, but when you talk about leading edge nodes in DRAM, you're talking about really large markets. How does how do things have to change from a head count resource R&D wafer sort of view to make that a reality, especially as you get.
Close to that point in time, we're a some sort of <unk>.
Contractual license agreement will be signed.
Yeah.
If we hit on all of those simultaneously do you think we will have to expand head count a little bit.
But I do but it may impact our R&D budget.
More than just on a headcount basis.
One of the challenges that we have in the market, especially for the most advanced nodes as that.
The potential customers are used to working with the equipment manufacturers like applied materials are.
S M R.
The elektron and when they come in and talk about an improvement they want to see a lot of data wafers run to actual show the improvement.
They kind of is the same standard with us.
So the good news is we have our own tools and we can do a lot of <unk> work.
To prove the technologies that.
Like the chart that I showed on this page earlier was actual silicon test. The data is not stimulation, we do a lot of simulation work and.
And we do a lot of.
Advanced work that we can on the ERP tool with lots of advanced metrology outside but if we continue doing more and more work with these advanced nodes guys. I think we're going to have to start contracting with outside companies.
To do expensive wafer level type of work that could start to drive up some of our costs. We don't see that I mean, we don't have any of that right now in our headlights, Richard I mean, the most part our customers understand that we.
We could give them so much data and at some point they have to take over and start writing their own wafers to generate the rest but to be competitive I think we will have to take on more of that over time.
Okay.
But I still for the most part I still feel very strongly in this engagement. This.
Business model that we've established that we will be able to leverage our relatively small team and small burn to generate.
Enormous business opportunities, even if it goes up a little.
Alright.
Okay.
Perfect that was my only follow up question. That's all for me. Thank you Scott.
Yes, if I could if I could just continue on that because I saw a question kind of in the chocolate or thought.
Yes.
Very closely what Richard was just asking someone was questioning why do we run wafers for Tsi, we've worked with tsi for over seven years and.
As Scott was saying, it's not always easy to go and build a complete device.
And test the benefits is on a C on it and Tsi gives us a very cost effective way to do that and that is the benefit that we've been able to prove out technology is like MST SP and SPX for power devices.
And see the impact on the full device and have silicon data. It also helps us to keep our <unk> calibrated so we want to run.
Wafers periodically and see how.
Devices run with MST over time, so there's a lot of benefits there in terms of both our own internal R&D work and then trying to simulate and silicon things that customers are doing but in the future.
Scott was alluding to when you get some really advanced geometries, that's harder for us to do in house and those are areas, where in the future there could be cost I alluded to that in the last earnings call.
That as we have.
Participate in kind of advanced node ecosystems, those can be more expensive places to outsource R&D too to test on the STR.
Alright, great.
And Frank just so.
On the Q&A chat a couple theres a number of good questions that have come in so let me just there's a couple that maybe you could answer relatively quickly.
First is the expected quarterly cash burn.
Going forward, given the increase in head count and cost away for rents.
Yes.
The guidance, we give is always non-GAAP operating expense because that.
Because we're not giving forward revenue guidance beyond the current quarter, but.
But we expect for the year like I said 16, five to $16 75.
Which implies.
Four to four and a quarter million dollars.
Of operating non-GAAP operating expense very close to cash.
Per quarter, and I would stand by that for the second half of the year.
And how much is left on the aftermarket facility right. When we established the ATM facility was the $50 million facility.
And we.
We started using it in the middle of 2022.
We've done.
<unk>.
A.
Total of.
<unk>.
A $17 $3 million on that so there is.
32.
32.
$7 million remaining on that after the end of last quarter.
Okay.
And then.
We got a question here that S. How did the relationship with Arizona State University come about.
And if there's any other color there whether other universities are under consideration.
Or what's the nature.
How did that generally have that relationship come about.
Yeah. Okay. So this started a while ago back end.
Probably 2017 2018 shortly after we went public we.
We needed to get access to a 300 millimeter tool on a more regular basis up to that point, we had leased it.
It's very expensive to lease and the problem is that you get it and it takes a while to get calibrated and you can use up almost value lease time, just getting it calibrated and ready to run some wafers and then you lose it start all over again, if you lease it again.
So we were looking around the world for places too.
To be able to.
Maybe by a tool and put it in.
And there's just not that many available this has to be kind of a world class clean room.
And be.
Be flexible enough to allow us to.
Lease and install a tool.
I wanted to say that we work with lots of universities, we've had a long term relationship with with UC, Berkeley with Notre Dame with University of Pennsylvania with.
A little bit with Georgia Tech with University of Texas Austin with.
With ASU so.
We're doing some R&D that puts us in touch with a lot of folks out there in the University space.
So it wasn't necessarily that we are out looking for universities, but we did.
As you know we have an <unk> installation 200 millimeter in Arizona and we heard about this other facility that ASU had and so we approached them about actually.
About.
Using their facility, there and and over time that worked out to the point, where we were able to actually lease and MP tool in that facility, which is <unk>.
Excellent for us.
It's got two chambers has kind of taken around me to chamber and a $200 million of chamber and so we can run both wafer simultaneously in there and it allows us to do some of that very advanced work that I talked about.
For like the two two to four nanometer work that I was speaking about.
At ASU, we have developed a good relationship with the University, we're doing research work with them as well.
And.
And for the most part the partnerships that we.
Have working at ASU.
Our customers that we bring in to work with us some things there.
But overall I think it's a positive.
Positive relationship Alright.
Alright. Thanks.
And outside.
Outside of S T and the <unk> looking at the engagement pipeline that we publish.
The comment here is that theres not been any movement in the pipeline and so can you kind of provided a little bit more detail as to.
Potentially moving customers along the pipeline.
And.
The level of activity there.
Yeah.
Yeah.
I share your frustration with that I think in.
And the Covid timeframe, we saw a slowdown in.
<unk>.
I mean, we have a lot of activities going on but we didn't see a lot of people moving through the phases.
We're really getting much more active with customers and with new customers and I think that will start to see growth in the pipeline I will say that in phase one.
Phase one is more like the beginning of the funnel for someone to enter into phase one they have signed an NDA with us which in some cases can be a really big hurdle.
And they have to be actively planning on doing a wafer run with us and so sometimes.
We rotate people out of phase one because we had.
Lots of discussions with them and then it became less active but we always have tried to upgrade the quality of the people that we have in there.
So I think we'll start to see that grow more in the near future.
Of course my bigger.
Our bigger focus is trying to get people in the later stages to move.
Further along into stage four and hopefully into stage five and so we will keep really focusing on trying to make that happen more than just growing the numbers in the pipe.
And of course there is.
More requests for detail on the J D a.
Relationships.
And.
And so just wanted to see if there was any additional commentary you can make about JD eight one and moving toward their business units.
Yes.
About 88, one was about.
<unk>.
Discussions with Central Engineering group versus the business units I want to emphasize we speak with both alright.
We talk with the guys in the business seemed to understand what their challenges are with their process nodes, what theyre trying to achieve in the market and a lot of times, they will give us some guidance on what they.
What they need to do work on we go off we do simulations and we do some.
Experiments, but usually we do simulations and we come back and share that with them and then they say okay work with the Central Engineering group do some experiments you guys work together on the experiments and then we will look at the results and see what the next steps are and so that has really been happening continuously it's a dialogue between us and the central engineer.
Our <unk> group and the business units and I would say in terms of roles to the business units are the ones that are saying, what they really need and the central engineering groups are kind of administering the.
Relationship of setting up experiments of testing are viewing the results with us but.
I know, it's frustrating that you guys can't see the results and I feel like.
People say nothing has happened in that last.
Two years with that JD, but in fact, we have been working on continuously with these guys and lots of new.
Tests and experiments.
I guess the way that we can.
We can most judge that it will be bad if we stopped being asked to do experiments and as long as they continue to ask them. We're always chasing something that we hope will be able to achieve.
Embody soon.
Okay and.
One final question here before we adjourn.
There was a.
We announced a license with a foundry partner a while back in last update was that they were waiting for the second run data.
Wondering if you can provide an update with that.
Yes, we don't have that data.
Yes.
And I.
I don't think im in a position to really give schedules on that but I can tell you that we we have looked at the results of the first run and have been working with them.
On defining an extra on and then.
<unk> got a really compelling.
Plan that we hope to see some results on soon.
Okay.
I think that wraps up the questions here, So I'll turn it back to you Scott for closing comments.
Alright, Thanks, Mike.
I want to thank everyone for attending today's presentation I'm happy we're able to share with you some of our recent progress.
And our potential and some new technology areas.
Please continue to look for 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 <unk> Dot Com, we are planning to attend a number of investor conferences in the coming months.
So please look out for those announcements as well. So do you have any additional questions. Please contact Mike Bishop who will be happy to follow up and thanks again for your support and we look forward to our next update call.
This concludes the Edinburgh webinar.
The recording has stopped.