Lightwave Logic, Inc.

Previous wording

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. This information should also be read in conjunction with our audited historical financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 29, 2024.

Current wording

The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. This information should also be read in conjunction with our audited historical financial statements which are included in our 2024 Form 10-K for the fiscal year ended December 31, 2024, as amended (“2024 Form 10-K”).

Previous wording

Our differentiation at the modulator device level is in higher speed, lower power consumption, simplicity of manufacturing, small footprint (size), and reliability. We have demonstrated higher speed and lower power consumption in packaged devices, and during 2023, we continued to make advances in techniques to translate our world class material properties to efficient, reliable modulator devices with commercial foundries. We are currently focused on testing and demonstrating the simplicity of manufacturability and reliability of our devices, including in conjunction with the silicon photonics manufacturing ecosystem. In 2023 we worked with silicon-based foundry partners to help scale in volume our polymer modulator devices and we received working modulator chips from these foundries. We have advanced and matured our interactions with our foundry partners and we continue to receive working modulator chips for prototyping. Silicon-based foundries are large semiconductor fabrication plants developed for the electronics IC business, that are now engaging with silicon photonics to increase their wafer throughput. Partnering with silicon-based foundries not only demonstrates that our polymer technology can be transferred into standard production lines using standard equipment, it also allows us to efficiently utilize our capital. The foundry partnerships will allow us to scale our high-performance polymer optical engines quickly and efficiently. We have now received silicon wafers that range up to 200mm in diameter, which aligns well with foundry manufacturing. Using 200mm silicon wafers, we showed packaged polymer modulators operating with open (clean) eye diagrams at 100GBaud PAM4 (or 200Gbps PAM4) at voltage drive levels at 1V at the 2024 Optical Fiber Conference in San Diego, California in March 2024 (“OFC 2024"). OFC is a leading international conference bringing together the complete value chain of fiber communications, datacentric, and telecommunications industrial players. We also showed polymer modulators with voltage drive levels that were below 1V. Driving voltage levels of around 1V is important as it allows our polymer modulators to be driven directly from CMOS ICs (as opposed to dedicated driver integrated circuit chips). This performance is ideal to enable 4 lanes at 200Gbps per lane pluggable transceivers that can operate at an aggregate data rate of 800Gbps. Since the invited talk at OFC 2024, several Tier 1 pluggable transceiver companies have both reviewed our technical results and viewed operating packaged polymer slot modulators at 200Gbps PAM4 with drive voltages at 1V. Further, we have recently demonstrated drive levels below 0.5V which represents the highest performance commercially designed Electro-Optic polymer modulators to date. The impact of driving optical modulators significantly below 1V is significant not only from the impact of directly driving modulators from electronic ICs to save driver costs, but more importantly, …

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Current wording

Our differentiation at the modulator device level is in higher speed, lower power consumption, simplicity of manufacturing, small footprint (size), and reliability. We have demonstrated the electro-optic polymers potential for higher speed and lower power consumption in packaged devices, and during 2024 and continuing into 2025, we continued to make advances in techniques to translate our world class material properties to efficient, reliable modulator devices with commercial foundries. We are currently focused on: a) working with potential and existing customers to integrate our proprietary materials into our customers’ specific PIC and device architecture; b) testing and demonstrating the superior performance, simplicity of manufacturability and reliability of our devices, including in conjunction with the silicon photonics manufacturing ecosystem; and c) providing our potential and existing customers with the proper Process Development Kits (PDKs) to enable the efficient and fast integration of our materials into their own design and manufacturing plans. Silicon-based foundries are semiconductor fabrication plants developed for the electronics IC business that are now engaging with silicon photonics to increase their wafer throughput. Partnering with silicon-based foundries not only demonstrates that our polymer technology can be transferred into standard production lines using standard equipment, it also allows us to efficiently utilize our capital. The foundry partnerships will allow us to scale our high-performance polymer optical engines more quickly and efficiently. We have now received silicon wafers that range up to 200mm in diameter, which aligns well with foundry manufacturing.

Previous wording

Our extremely strong and broad patent portfolio allows us to optimize our business model in three areas: 1) Traditional focus on product development, 2) Patent licensing and 3) Technology transfer to foundries. We are continually looking to strengthen our patent portfolio both by internal inventions and acquisition of intellectual property.

Current wording

Our strong and broad patent portfolio allows us to optimize our business model in three areas: 1) Traditional focus on polymer materials development, 2) Patent licensing and 3) Technology transfers to foundries. We are continually looking to strengthen our patent portfolio both by internal inventions and acquisition of intellectual property.

Previous wording

We are initially targeting applications in fiber optic data communications and telecommunications markets and are exploring other applications that include automotive/LIDAR, sensing, displays etc., for our polymer technology platform. Our goal is to have our unique polymer technology platform become ubiquitous across many market verticals over and above the optical fiber optic communications markets.

Current wording

We are initially targeting applications in fiber optic data communications and telecommunications markets, in particular ultra-high bandwidth optical connections deployed inside and between datacenters and/or AI clusters. In addition, we are exploring other applications that include automotive/LIDAR, sensing, displays, storage, aerospace and defense, satellites, and quantum computing, for our polymer technology platform. Our goal is to have our innovative polymer technology platform become ubiquitous across multiple market verticals over and above the optical fiber optic communications markets.

Previous wording

Generative Artificial Intelligence (G-AI) has been integrating deeper within our daily activities with applications to make us more efficient and possibly smarter. The impact on the internet is huge, and the internet is based on an optical network that utilizes data centers to route and switch traffic or information to and from destinations. Data centers are being upgraded today in a fashion that the industry has not seen before with significant investments of capital. The expected demands of increased traffic, information, and data driven by G-AI is changing the way the internet is being operated. G-AI is now creating new and interesting market opportunities to upgrade the internet. Three of these opportunities are important today: density, speed, and low power and these are very well aligned with our high performance electro-optic polymers modulator platform. We are designing high performance polymer modulator optical engines to support the rise and growth of G-AI as it generates more information that will travel through the internet and optical network. While we are not directly a G-AI company designing electronic processors, we do see immediate benefits of enabling higher levels of information to cross the internet using our optical polymer modulator platform.

Current wording

Artificial Intelligence (AI) has been integrating deeper within our daily activities with applications to make us more efficient and possibly smarter. The impact on the internet is significant, and the internet is based on an optical network that utilizes data centers to route and switch traffic or information to and from destinations. Data centers are being upgraded today in a fashion that the industry has not seen before with significant investments of capital. The expected demands of increased traffic, information, and data driven by AI is changing the way the internet is being operated. AI is now creating new and interesting market opportunities to upgrade the internet. Three of these opportunities are important today: density, speed, and low power and these are very well aligned with our high performance electro-optic polymers modulator platform. We are designing high performance polymer modulator optical engines to support the rise and growth of AI as it generates more information that will travel through the internet and optical network. While we are not directly an AI company designing electronic processors, we do see immediate benefits of enabling higher levels of information to cross the internet using our optical polymer modulator platform.

Previous wording

We commenced commercial operations in May 2023. Presently, our commercial operations consist of a material supply license agreement to provide Perkinamine® chromophore materials for polymer based photonic devices and photonic integrated circuits (PICs). The license agreement represents tangible commercial progress for electro-optic polymers as part of our Company's business plan. Our Company is also in various stages of photonic device and materials development and evaluation with potential customers and strategic partners. We expect to continue to obtain a revenue stream from technology licensing agreements, and to obtain additional revenue streams from technology transfer agreements and direct sale of our electro-optic device components. We have seen increased interest in our materials during 2023, which has continued into 2024 and we are in discussions on future license agreements. Additionally, during 2024, our Company performed device processing work for a customer.

Current wording

We commenced commercial operations in May 2023. Presently, our commercial operations consist of a material supply license agreement to provide Perkinamine® chromophore materials for polymer based photonic devices and photonic integrated circuits (PICs). The license agreement represents tangible commercial progress for electro-optic polymers as part of our Company's business plan. Our Company is also in various stages of new materials development and evaluation with potential customers and strategic partners. We expect to continue to obtain a revenue stream from technology licensing agreements, and to obtain additional revenue streams from technology transfer agreements and direct sale of our electro-optic materials. We have seen increased interest in our materials during 2024, driven by the need for higher speed connections to scale the AI-enabled network infrastructure and we are in discussions on future license agreements. In December 2024, we made the decision to focus our commercial and R&D efforts on the EO Polymer materials development and manufacturing. Although we continue to develop full Photonic Integrated Circuits and packaged device designs as part of our internal technology and process development roadmap, we are not actively promoting the sale of such PICs and/or packaged devices to external customers, but rather EO Polymer materials supply and license agreements.

Previous wording

Our first revenue stream was obtained from our entry into a material supply license agreement to provide Perkinamine® chromophore materials for polymer based photonic devices and photonic integrated circuits (PICs). Our Company is also in various stages of photonic device and materials development and evaluation with potential customers and strategic partners that include Tier 1 players in the fiber optic communications industry. We expect to continue to obtain a revenue stream from technology licensing agreements, and to obtain additional revenue streams from technology transfer agreements and direct sale of our electro-optic device components.

Current wording

Our first revenue stream was obtained from our entry into a material supply license agreement to provide Perkinamine® chromophore materials for polymer based photonic devices and photonic integrated circuits (PICs). Our Company is also in various stages of materials development and evaluation with potential customers and strategic partners. We expect to continue to obtain a revenue stream from technology licensing agreements, and to obtain additional revenue streams from technology transfer agreements and direct sale of our electro-optic Perkinamine® chromophore material.

Previous wording

Specifically, our business strategy provides that our revenue stream will be derived from one or some combination of the following: (i) technology licensing for specific product application; (ii) joint venture relationships with significant industry leaders; and (iii) the production and direct sale of our own electro-optic device components. Our objective is to be a leading provider of proprietary technology and know-how in the electro-optic device market. In order to meet this objective, we intend to continue to:

Current wording

Specifically, our business strategy provides that our revenue stream will be derived from one or some combination of the following: (i) technology licensing for specific product application; (ii) joint venture relationships with significant industry leaders; and (iii) the production and direct sale of our own electro-optic materials. Our objective is to be a leading provider of proprietary technology and know-how in the electro-optic device market. In order to meet this objective, we intend to continue to:

Previous wording

We intend to utilize our proprietary optical polymer technology to create an initial portfolio of commercial electro-optic polymer product devices with applications for various markets, including telecommunications, data communications and data centers. These product devices will be part of our proprietary photonics integrated circuit (PIC) technology platform.

Current wording

We intend to utilize our proprietary optical polymer technology to enable the creation by our customers of a portfolio of commercial electro-optic polymer product devices with applications for various markets, including telecommunications, data communications and data centers.

Previous wording

We expect our initial modulator products will operate at symbol rates at least 112 Gigabaud which is roughly 200Gbps when utilized with PAM4 encoding schemes that aligns with our recent package polymer slot modulator results presented at OFC 2024. Our devices are highly linear, and can also enable the performance required to take advantage of more advance complex encoding schemes if required.

Current wording

We expect our -polymer material to be used initially in modulator products that will operate at symbol rates at least 112 Gigabaud which is roughly 200Gbps when utilized with PAM4 encoding schemes. Our devices are highly linear and can also enable the performance required to take advantage of more advanced complex encoding schemes if required.

Previous wording

During the nine months ended September 30, 2024, we recognized $58,938 of licensing and royalty revenue and $13,750 revenue for the device processing work on the device supplied by a customer. As a development stage company, during the nine months ended September 30, 2023, we had no revenues.

Current wording

During the three months ended March 31, 2025, we recognized $22,917 of licensing and royalty revenue. During the three months ended March 31, 2024, we recognized $16,667 of licensing and royalty revenue and $13,750 of revenue for the device processing work on the device supplied by a customer.

Previous wording

During the nine months ended September 30, 2024, we recognized $6,411 in Cost of Sales, and $0 in Cost of Sales during the nine months ended September 30, 2023.

Current wording

During the three months ended March 31, 2025, we recognized $2,028 in cost of sales. During the three months ended March 31, 2024, we recognized $5,175 in cost of sales.

Previous wording

Research and development expenses decreased for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to decreases in research and development non-cash stock option amortization expenses, prototype device development and wafer fabrication expenses, and laboratory and wafer fabrication materials and supplies expenses, offset by increases in research and development salary expenses, research and development equipment depreciation expense, research and development travel expense, and software expense.

Current wording

Research and development expenses decreased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to decreases in prototype device development and wafer fabrication expenses, research and development salary and benefits expenses, research and development travel expenses, laboratory and wafer fabrication materials and supplies expenses, research and development testing expenses, and research and development non-cash stock option and restricted stock amortization expenses, offset by an increase in research and development equipment depreciation expense.

Previous wording

We expect to continue to incur substantial research and development expense developing and commercializing our photonic devices, and electro-optic materials platform. These expenses will increase because of accelerated development effort to support commercialization of our non-linear optical polymer materials technology; to build photonic device prototypes; working with semiconductor foundries; hiring additional technical and support personnel; engaging senior technical advisors; pursuing other potential business opportunities and collaborations; customer testing and evaluation; and incurring related operating expenses.

Current wording

We expect to continue to incur substantial research and development expenses developing and commercializing our electro-optic materials platform. These expenses will increase as a result of accelerated development effort to support commercialization of our non-linear optical polymer materials technology and create next-generation photonic EO device designs; working with semiconductor foundries; hiring additional technical and support personnel; engaging senior technical advisors; pursuing other potential business opportunities and collaborations; customer testing and evaluation; and incurring related operating expenses.

Previous wording

General and administrative expenses increased for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to increases in general and administrative salary expenses, consulting fees, depreciation expense, sales and marketing expenses, general and administrative recruiting fees, travel expenses, rent expenses, directors’ fees, and software expenses, offset by decreases general and administrative non-cash stock option amortization expenses, and accounting expenses

Current wording

General and administrative expenses increased for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to increases in general and administrative non-cash stock option amortization expenses, general and administrative salary and benefits expenses, and legal expenses, offset by decreases in accounting and auditing expenses, depreciation expense, general and administrative recruiting expenses, travel expenses, consulting expenses, and insurance expenses.

Previous wording

Our primary source of operating cash inflows was (i) proceeds from the sale of common stock to Lincoln Park, an institutional investor, pursuant to purchase agreements with Lincoln Park (the institutional investor)and proceeds from sale of common stock by Roth Capital pursuant to the at the market sale agreement with the investment banking company as described in Note 10 to the Financial Statements and (ii) proceeds received pursuant to the exercise of options and warrants.

Current wording

Our primary source of operating cash inflows was (i) proceeds from the sale of common stock to Lincoln Park (institutional investor) pursuant to purchase agreements with Lincoln Park and proceeds from sale of common stock by Roth Capital (investment banking company) pursuant to the at the market sales agreement with Roth Capital as described in Note 9 to the Financial Statements and (ii) proceeds received pursuant to the exercise of options.

Previous wording

On July 2, 2021, our Company filed a $100 million universal shelf registration statement which became effective on July 9, 2021 and expired on July 8, 2024. On July 26, 2024, the Company filed a new $100 million universal shelf registration statement which became effective on August 5, 2024. On October 4, 2021, our Company entered into the 2021 purchase agreement with Lincoln Park to sell up to $33 million of registered common stock over a 36-month period. All of the registered shares under the October 4, 2021 purchase agreement with Lincoln Park have been issued as of December 31, 2023. On February 28, 2023, our Company entered into the 2023 purchase agreement with Lincoln Park to sell up to $30 million of registered common stock over a 36-month period. As of the date of this filing, $2.8 million remain on the 2023 Purchase Agreement. On December 9, 2022, our Company entered into the at the market sale agreement with Roth Capital, as sales agent, whereby pursuant to the at the market sale agreement, our Company may offer and sell up to $35,000,000 in shares of our registered common stock, from time to time through Roth Capital. As of the date of this filing, $31.9 million remains available to our Company pursuant to the at the market sale agreement.

Current wording

On July 26, 2024, the Company filed a $100 million universal shelf registration statement which became effective on August 5, 2024. On February 28, 2023, our Company entered into the 2023 purchase agreement with Lincoln Park to sell up to $30 million of registered common stock over a 36-month period. As of the date of this filing, $0 remains on the 2023 Purchase Agreement. On March 17, 2025, our Company entered into the 2025 purchase agreement with Lincoln Park to sell up to $30 million of registered common stock over a 36-month period. As of the date of this filing, $29,914,035 remains on the 2025 Purchase Agreement. On December 9, 2022, our Company entered into the at the market sales agreement with Roth Capital, as sales agent, pursuant to which our Company may offer and sell up to $35 million in shares of our registered common stock, from time to time through Roth Capital. As of the date of this filing, $31,482,032 remains available to our Company pursuant to the Roth Sales Agreement.

Previous wording

During the nine months ended September 30, 2024, the Company received $9,175,900 in proceeds pursuant to the 2023 purchase agreement with Lincoln Park, $714,901 in proceeds pursuant to the at the market sale agreement with Roth Capital, $252,450 in proceeds pursuant to the exercise of options and warrants and $63,884 in cash collections from customer contracts, of which $50,000 related to the proceeds received under a material supply and license agreement and $13,884 – to the proceeds received for a contact for processing work on the devices supplied by a customer. During the year ended December 31, 2023, the Company received $19,993,359 in proceeds pursuant to the 2021 purchase agreement and 2023 purchase agreement with Lincoln Park, $1,515,878 in proceeds pursuant to the at the market sale agreement with Roth Capital, $1,013,924 in proceeds pursuant to the exercise of options and warrants and $50,000 in a proceed received under a material supply and license agreement of which $39,875 is recorded as deferred revenue as of December 31, 2023.

Current wording

During the year ended December 31, 2024, the Company received $12,366,965 in proceeds pursuant to the 2023 Purchase Agreement, $1,779,976 in proceeds pursuant to the Roth Sales Agreement, $337,350 in proceeds pursuant to the exercise of options and warrants and $63,884 in cash collections from customer contracts, of which $50,000 related to the proceeds received under a material supply and license agreement and $13,884 – to the proceeds received for a contact for processing work on the devices supplied by a customer.

Previous wording

During the nine months ended September 30, 2024, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to vendors including prototypes development and foundries expenses, laboratory and wafer fabrication materials and supplies expenses, and third-party service providers. During the year ended December 31, 2023, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to vendors including prototypes development and foundries expenses and third-party service providers.

Current wording

During the year ended December 31, 2024, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to vendors including prototypes development and foundries expenses, laboratory and wafer fabrication materials and supplies expenses, and third-party service providers.

Previous wording

Our future expenditures and capital requirements will depend on numerous factors, including: the progress of our research and development efforts; the rate at which we can, directly or through arrangements with original equipment manufacturers, introduce and sell products incorporating our polymer materials technology; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; market acceptance of our products and competing technological developments; and our ability to establish cooperative development, joint venture and licensing arrangements. We expect that we will incur approximately $1,687,000 of expenditures per month over the next 12 months.

Current wording

Our future expenditures and capital requirements will depend on numerous factors, including: the progress of our research and development efforts; the rate at which we can, directly or through arrangements with original equipment manufacturers, introduce and sell our products; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; market acceptance of our products and competing technological developments; and our ability to establish cooperative development, joint venture and licensing arrangements. We expect that we will incur approximately $1,796,000 of expenditures per month over the next 12 months.

Previous wording

We expect the proceeds received pursuant to the 2023 purchase agreement and any future purchase agreements with Lincoln Park, the at the market sale agreement with Roth Capital, the exercise of options and warrants and commercial operations to provide us with sufficient funds to maintain our operations over the next 12 months. Our current cash position enables us to finance our operations through February 2026 before we will be required to replenish our cash reserves. Our cash requirements are expected to increase at a rate consistent with our Company’s revenue growth as we expand our activities and operations with the objective of increasing our revenue stream from the commercialization of our electro-optic polymer technology. We currently have no debt to service.

Current wording

We expect the proceeds received pursuant to the 2025 purchase agreement and any future purchase agreements with Lincoln Park, the at the market sale agreement with Roth Capital, the exercise of options and warrants, and commercial operations to provide us with sufficient funds to maintain our operations over the next 12 months. Our current cash position enables us to finance our operations through May 2026 before we will be required to replenish our cash reserves. Our cash requirements are expected to increase at a rate consistent with our Company’s revenue growth as we expand our activities and operations with the objective of increasing our revenue stream from the commercialization of our electro-optic polymer technology. We currently have no debt to service. We expect that our cash used in operations will continue to increase during 2025 and beyond because of the following planned activities:

Previous wording

On February 28, 2023, our Company entered into the 2023 purchase agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $30 million of our common stock (subject to certain limitations) from time to time over a 36-month period. Pursuant to the 2023 purchase agreement, Lincoln Park is obligated to make purchases as the Company directs in accordance with the purchase agreement, which may be terminated by the Company at any time, without cost or penalty. Sales of shares will be made in specified amounts and at prices that are based upon the market prices of our common stock immediately preceding the sales to Lincoln Park. We expect this and any future purchase agreements with Lincoln Park to provide us with sufficient funds to maintain our operations for the foreseeable future. With the additional capital, we expect to achieve a level of revenues attractive enough to fulfill our development activities and adequate enough to support our business model for the foreseeable future.

Current wording

On February 28, 2023, our Company entered into the 2023 Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $30 million of our common stock (subject to certain conditions) from time to time over a 36-month period. On March 17, 2025, our Company entered into the 2025 Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $30 million of our common stock (subject to certain conditions) from time to time over a 36-month period. Pursuant to the 2025 Purchase Agreement, subject to the conditions set forth therein, Lincoln Park is obligated to make purchases as the Company directs in accordance with the 2025 Purchase Agreement, which may be terminated by the Company at any time, without cost or penalty. Sales of shares will be made in specified amounts and at prices that are based upon a look back formula for market prices of our common stock immediately preceding the sales to Lincoln Park.

Previous wording

There are no trading volume requirements or restrictions under the 2023 purchase agreement, and we will control the timing and amount of any sales of our common stock to Lincoln Park. Lincoln Park has no right to require any sales by us but is obligated to make purchases from us as we direct in accordance with the 2023 purchase agreement. We can also accelerate the amount of common stock to be purchased under certain circumstances. There are no limitations on the use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions on the Company’s ability to enter into a similar type of agreement or equity line of credit during the term, excluding an at-the-market transaction with a registered broker-dealer), rights of first refusal, participation rights, penalties or liquidated damages under the 2023 purchase agreement.

Current wording

There are no trading volume requirements or restrictions on the 2025 Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Lincoln Park. Lincoln Park has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with the 2025 Purchase Agreement. We can also accelerate the amount of common stock to be purchased under certain circumstances. There are no limitations on the use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions on the Company’s ability to enter into a similar type of agreement or equity line of credit during the term, excluding an at-the-market transaction with a registered broker-dealer), rights of first refusal, participation rights, penalties or liquidated damages in the 2025 Purchase Agreement.

Previous wording

On December 9, 2022, we entered into the at the market sale agreement with Roth Capital, as sales agent. Pursuant to the at the market sale agreement, our Company may offer and sell up to $35,000,000 in shares of our common stock, from time to time through Roth Capital. Upon delivery of a placement notice based on our Company’s instructions and subject to the terms and conditions of the at the market sale agreement, Roth Capital may sell the shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through The Nasdaq Capital Market, on any other existing trading market for the Company’s common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by law, including negotiated transactions, subject to the prior written consent of our Company. We are not obligated to make any sales of shares under this agreement. The Company or Roth Capital may suspend or terminate the offering of shares upon notice to the other party, subject to certain conditions. Roth Capital will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq. We have agreed to pay Roth Capital commissions for its services of acting as agent of 3.0% of the gross proceeds from the sale of the shares pursuant to the at the market sale agreement.

Current wording

On December 9, 2022, we entered into the Roth Sales Agreement with Roth Capital, as sales agent. Pursuant to the at the market sale agreement, our Company may offer and sell up to $35 million in shares of our common stock, from time to time through Roth Capital. Upon delivery of a placement notice based on our Company’s instructions and subject to the terms and conditions of the Roth Sales Agreement, Roth Capital may sell the shares by methods deemed to be an "at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through The Nasdaq Capital Market, on any other existing trading market for the Company’s common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by law, including negotiated transactions, subject to the prior written consent of our Company. We are not obligated to make any sales of shares under this agreement. The Company or Roth Capital may suspend or terminate the offering of shares upon notice to the other party, subject to certain conditions. Roth Capital will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq. We have agreed to pay Roth Capital commissions for its services of acting as agent of 3.0% of the gross proceeds from the sale of the shares pursuant to the Roth Sales Agreement.

Previous wording

The amount of proceeds we receive from the at the market sale agreement, if any, will depend upon the number of shares of our common stock sold and the market price at which they are sold. There can be no assurance that we will be able to sell any shares under or fully utilize this agreement. Roth Capital is not required to sell any specific number of shares of our common stock under the agreement. We intend to use net proceeds from the at the market sale agreement for general corporate purposes, including, without limitation, sales and marketing activities, product development, making acquisitions of assets, businesses, companies or securities, capital expenditures, and for working capital needs.

Current wording

The amount of proceeds we receive from the Roth Sales Agreement, if any, will depend upon the number of shares of our common stock sold and the market price at which they are sold. There can be no assurance that we will be able to sell any shares under or fully utilize this agreement. Roth Capital is not required to sell any specific number of shares of our common stock under the agreement. We intend to use net proceeds from the Roth Sales Agreement for general corporate purposes, including, without limitation, sales and marketing activities, product development, making acquisitions of assets, businesses, companies or securities, capital expenditures, and for working capital needs.

Previous wording

We cannot assure you that we will meet the conditions of the 2023 purchase agreements with Lincoln Park in order to obligate Lincoln Park to purchase our shares of common stock, and we cannot assure you that we will be able to sell any shares under or fully utilize the at the market sale agreement with Roth Capital. In the event we fail to do so, and other adequate funds are not available to satisfy long-term capital requirements, or if planned revenues are not generated, we may be required to substantially limit our operations. This limitation of operations may include reductions in capital expenditures and reductions in staff and discretionary costs.

Current wording

We cannot assure you that we will meet the conditions of the 2025 Purchase Agreement with Lincoln Park in order to obligate Lincoln Park to purchase our shares of common stock, and we cannot assure you that we will be able to sell any shares under or fully utilize the Roth Sales Agreement with Roth Capital. In the event we fail to do so, and other adequate funds are not available to satisfy long-term capital requirements, or if planned revenues are not generated, we may be required to substantially limit our operations, which could result in our Company reducing some capital expenditures or reducing staff and discretionary costs.

Previous wording

Net cash used in operating activities was $9,913,798 for the nine months ended September 30, 2023, primarily attributable to the net loss of $16,098,356 adjusted by $5,085,114 in options issued for services, $198,253 amortization of deferred compensation, $607,728 in common stock issued for services, $797,500 in depreciation expenses and patent amortization expenses, $138,502 amortization of right of use asset, $581 loss on disposal of property and equipment, $87,058 in prepaid expenses and ($730,178) in accounts payable, accrued expenses, deferred revenue and other liabilities. Net cash used in operating activities consisted of payments for research and development, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business infrastructure.

Current wording

Net cash used in operating activities was $3,490,131 for the three months ended March 31, 2025, primarily attributable to the net loss of $4,697,024 adjusted by $749,042 in options issued for services, $230,150 amortization of deferred compensation, $20,500 cashless options exercise, $8,029 in common stock issued as commitment shares, $454,960 in depreciation expenses and patent amortization expenses, $50,043 amortization of right of use asset, $28,800 gain on disposal of property and equipment, $26,815 in accounts receivable, ($86,608) in prepaid expenses and other current assets, and ($217,238) in accounts payable, accrued bonuses, accrued expenses, contract liability and other liabilities. Net cash used in operating activities consisted of payments for research and development, legal, professional and consulting expenses, salaries, rent and other expenditures necessary to develop our business infrastructure.

Previous wording

Net cash used in investing activities was $2,278,649 for the nine months ended September 30, 2024, consisting of $343,233 in cost for intangibles and $1,935,416 in net asset additions for the Colorado headquarter facility and labs.

Current wording

Net cash used by investing activities was $899,422 for the three months ended March 31, 2025, consisting of $45,878 in cost for intangibles and $853,544 in asset additions for the Colorado headquarter facility and labs.

Previous wording

Net cash provided by financing activities was $18,074,457 for the nine months ended September 30, 2023 and consisted of $632,074 in proceeds from exercise of options and warrants, $16,063,909 in proceeds from resale of common stock to an institutional investor and $1,378,474 in proceeds from at the market sale of common stock by an investment banking company.

Current wording

Net cash provided by financing activities was $1,766,918 for the three months ended March 31, 2025, and consisted of $163,500 in proceeds from exercise of options, $1,486,983 in proceeds from the sale of common stock pursuant to the 2023 Purchase Agreement and $116,435 in proceeds from the sale of common stock pursuant to the Roth Sales Agreement.

Previous wording

On September 30, 2024, our cash and cash equivalents totaled $26,882,467, our assets totaled $37,236,197, our liabilities totaled $3,764,627 and we had stockholders’ equity of $33,471,570.

Current wording

On March 31, 2025, our cash and cash equivalents totaled $25,045,329, our assets totaled $35,639,560, our liabilities totaled $4,089,972 and we had stockholders’ equity of $31,549,588.

Previous wording

Net cash used in operating activities was $12,414,222 for the nine months ended September 30, 2024, primarily attributable to the net loss of $17,000,508 adjusted by $3,468,243 in stock options issued for services, $304,937 amortization of deferred compensation, $121,833 in common stock issued for commitment shares, $1,240,639 in depreciation expenses and patent amortization expenses, $143,239 amortization of right of use asset, $213,440 loss on disposal of property and equipment and retirement of certain expired patent applications and patents, $3,562 in accounts receivable, $675,537 in prepaid expenses and other current assets and ($1,585,144) in accounts payable, accrued bonuses, accrued expenses, deferred revenue and other liabilities. Net cash used in operating activities consisted of payments for research and development, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business infrastructure.

Current wording

Net cash used in operating activities was $4,772,208 for the three months ended March 31, 2024, primarily attributable to the net loss of $5,679,911 adjusted by $626,512 in options issued for services, $64,199 amortization of deferred compensation, $76,977 in common stock issued as commitment shares, $386,498 in depreciation expenses and patent amortization expenses, $47,011 amortization of right of use asset, $3,166 loss on disposal of property, plant and equipment, ($26,384) in accounts receivable, $540,932 in prepaid expenses and other current assets and ($811,208) in accounts payable, accrued bonuses, accrued expenses, deferred revenue and other liabilities. Net cash used in operating activities consisted of payments for research and development, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business infrastructure.

Previous wording

Net cash used by investing activities was $1,386,164 for the nine months ended September 30, 2023, consisting of $215,061 in cost for intangibles, $1,813,813 in asset additions for the Colorado headquarter facility and labs offset by $642,120 in a loan repayment and $590 in proceeds on sale of property and equipment.

Current wording

Net cash used by investing activities was $828,474 for the three months ended March 31, 2024, consisting of $53,097 in cost for intangibles and $775,377 in asset additions for the Colorado headquarter facility and labs.

Previous wording

Net cash provided by financing activities was $10,143,251 for the nine months ended September 30, 2024, and consisted of $252,450 in proceeds from exercise of options and warrants, $9,175,900 in proceeds from resale of common stock to an institutional investor and $714,901 in proceeds from at the market sale of common stock by an investment banking company.

Current wording

Net cash provided by financing activities was $5,677,653 for the three months ended March 31, 2024 and consisted of $194,850 in proceeds from exercise of options and warrants, $5,152,350 in proceeds from the sale of common stock pursuant to the 2023 Purchase Agreement and $330,453 in proceeds from the sale of common stock pursuant to the Roth Sales Agreement.

Previous wording

On September 30, 2023, our cash and cash equivalents totaled $30,876,646, our assets totaled $39,104,017, our liabilities totaled $3,683,798 and we had stockholders’ equity of $35,420,219.

Current wording

On March 31, 2024, our cash and cash equivalents totaled $31,509,058, our assets totaled $41,737,807, our liabilities totaled $4,538,563 and we had stockholders’ equity of $37,199,244.

Previous wording

There have been no material changes outside the ordinary course of business in our contractual commitments during the nine months ended September 30, 2024. See Note 8 to the financial statements herein for a discussion of our contractual commitments.

Current wording

There have been no material changes outside the ordinary course of business in our contractual commitments during the three months ended March 31, 2025. SeeNote 8 - Leases to the financial statements herein for a discussion of our operating lease for office and laboratory space.

Previous wording

We believe our significant accounting policies affect our more significant estimates and judgments used in the preparation of our financial statements. Our Annual Report on Form 10-K for the year ended December 31, 2023, contains a discussion of these significant accounting policies. The Company’s significant accounting policies have not materially changed since that report was filed.

Current wording

We believe our significant accounting policies affect our more significant estimates and judgments used in the preparation of our financial statements. Our 2024 Form 10-K contains a discussion of these significant accounting policies. The Company’s significant accounting policies have not materially changed since that report was filed.