Lightwave Logic, Inc.

Previous wording

The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following selected financial information is derived from our historical financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere within this Annual Report on Form 10-K and the "Forward-Looking Statements" explanation included elsewhere herein.

Current wording

The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following selected financial information is derived from our historical financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere within this Annual Report on Form 10-K and the "Forward-Looking Statements" explanation included elsewhere herein. For discussion and analysis pertaining to 2024 overview and highlights as compared to 2023, please refer to the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 18, 2025.

Previous wording

We commenced commercial operations in May 2023. Presently, our commercial operations consist of amaterial 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 proprietary device designs 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 sale of our electro-optic proprietary device designs.

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. During 2025, we entered into a non-recurring engineering joint development arrangement with a customer to develop an electro-optical polymer-based modulator chip for use in communication applications

Previous wording

We commenced commercial operations in May 2023, and we do not generate sufficient revenues to pay for our operating expenses. We have incurred substantial net losses since inception. We have satisfied our capital requirements since inception primarily through the issuance and sale of our common stock.

Current wording

We have satisfied our capital requirements since inception primarily through the issuance and sale of our common stock.

Previous wording

During the year ended December 31, 2024, we recognized $81,855 of licensing and royalty revenue and $13,750 of revenue for the device processing work on the device supplied by a customer. During the year ended December 31, 2023, we recognized $40,502 of licensing and royalty revenue.

Current wording

During the year ended December 31, 2025, we recognized $106,855 of licensing and royalty revenue and $130,000 of non-recurring engineering revenue. During the year ended December 31, 2024, we recognized $81,855 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 year ended December 31, 2024, we recognized $7,395 in cost of sales. During the year ended December 31, 2023, we recognized $2,513 in cost of sales.

Current wording

During the year ended December 31, 2025, we recognized $6,823 in cost of sales. During the year ended December 31, 2024, we recognized $7,395 in cost of sales.

Previous wording

Research and development expenses increased for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to increases in research and development salary and benefits expenses, research and development equipment depreciation expense, prototype device development and wafer fabrication expenses, research and development travel expenses, rent expenses, property tax expenses, research and development consulting expenses, software expenses, and laboratory and wafer fabrication materials and supplies expenses, offset by decreases in research and development non-cash stock option amortization expenses, research and development recruiting fees, and research and development employee relocation expenses in the year ended December 31, 2024, compared to the same period in 2023.

Current wording

Research and development expenses decreased for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to decreases in research and development non-cash stock option and restricted stock awards and units amortization expenses, prototype device development and wafer fabrication expenses, research and development salary and employee benefits expenses, and research and development travel expenses.

Previous 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.

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 because of accelerated development efforts 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 year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to increases in general and administrative salary and benefits expenses, consulting fees, depreciation expense, investor relations expenses, and sales and marketing 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 year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to increases in general and administrative salary and employee benefits expenses and general and administrative non-cash stock option and restricted stock awards and units amortization expenses, offset by a decrease in consulting expenses.

Previous wording

Other income increased for the year ended December 31, 2024, as compared to year ended December 31, 2023, primarily due to a $519,368 decrease in commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement, a $280,433 increase in interest income on money market account, and a recognition of a $210,274 loss on retirement of certain expired patent applications and patents.

Current wording

Other income decreased for the year ended December 31, 2025, as compared to year ended December 31, 2024, primarily due to an increase in commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement and a decrease in interest income on money market account, offset by a decrease in loss due to retirement of certain expired patent applications and patents.

Previous wording

Net loss was $22,535,041 and $21,038,032 for the year ended December 31, 2024 and 2023, respectively, for an increase of $1,497,009 due primarily to increases in salary and benefits expenses, depreciation expense, prototype device development and wafer fabrication expenses, and consulting fees, recognition of loss on retirement of certain expired patent applications and patents, travel expenses, rent expense, property tax expenses, software expenses, laboratory and wafer fabrication materials and supplies expenses, investor relations expenses, and sales and marketing expenses. These increases were offset by decreases in non-cash stock option amortization expense, commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement, recruiting fees, accounting fees, and employee relocation expenses, and an increase in interest income on money market account.

Current wording

Net loss was $20,313,797 and $22,535,041 for the year ended December 31, 2025 and 2024, respectively, for a decrease of $2,221,244 due primarily to decreases prototype device development and wafer fabrication expenses, and research and development travel expenses, offset by net increases in salaries and employee benefits expenses and an increase in commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement.

Previous wording

Our Company’s accounting policies are more fully described in Note 1 of Notes to Financial Statements. As disclosed in Note 1 of Notes to Financial Statements, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Although these estimates are based on our management’s best knowledge of current events and actions our Company may undertake in the future, actual results could differ from the estimates.

Current wording

Our Company’s accounting policies are more fully described in Note 1 of Notes to Financial Statements. As disclosed in Note 1 of Notes to Financial Statements, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures.

Previous 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 sale agreement with Roth Capital as described in Note 10 to the Financial Statements and (ii) proceeds received pursuant to the exercise of options and warrants.

Current wording

During the year ended December 31, 2025, our primary source of operating cash inflows was (i) proceeds from the sale of common stock to Titan Partners Group LLC (investment banker) (“Titan”), proceeds from the sale of common stock to Lincoln Park Capital Fund, LLC (institutional investor) (“Lincoln Park”) pursuant to purchase agreements with Lincoln Park and proceeds from sale of common stock by Roth Capital Partners, LLC (investment banking company) (“Roth Capital”) pursuant to the at-the-market sales agreement with Roth Capital as described in Note 10 to the Financial Statements and (ii) proceeds received pursuant to the exercise of options and warrants.

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, $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, subject to the conditions set forth therein. As of the date of this filing, $30 million remains on the 2025 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 million in shares of our registered common stock, from time to time through Roth Capital. As of the date of this filing, $31.5 million remains available to our Company pursuant to the at the market sale agreement.

Current wording

On February 28, 2023, we entered into a purchase agreement with Lincoln Park (the “2023 Purchase Agreement”) to sell up to $30 million of registered common stock over a 36-month period. On March 17, 2025, we entered into a new purchase agreement with Lincoln Park (the “2025 Purchase Agreement”) to sell up to $30 million of registered common stock over a 36-month period. On December 12, 2025, the 2025 Purchase Agreement was terminated in conjunction with the Titan Offering. On December 9, 2022, we entered into the at-the-market sales agreement with Roth Capital, as sales agent, (the “Roth Sales Agreement”) pursuant to which we 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, $12,235,261 remains available pursuant to the Roth Sales Agreement.

Previous wording

During the year ended December 31, 2024, the Company received $12,366,965 in proceeds pursuant to the 2023 Purchase Agreement with Lincoln Park, $1,779,976 in proceeds pursuant to the at the market sale agreement with Roth Capital, $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. 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 a contract liability as of December 31, 2023.

Current wording

During the year ended December 31, 2025, the Company received $1,486,983 in proceeds pursuant to the 2023 Purchase Agreement, $3,646,655 in proceeds pursuant to the 2025 Purchase Agreement, $18,785,657 in proceeds pursuant to the Roth Sales Agreement, $32,825,700 in proceeds from the Titan Offering, $355,583 in proceeds pursuant to the exercise of options and warrants, and $75,000 in cash collections from the material supply and license agreement.

Previous 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. 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, 2025, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to vendors including 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 $1,727,000 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 $2,400,000 of expenditures per month over the next 12 months. On December 31, 2025, our cash and cash equivalents totaled $69,017,354.

Previous wording

We expect the proceeds received pursuant to the 2023 and the 2025 Lincoln Park purchase agreements and, 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 April 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:

Current wording

We expect the proceeds received pursuant to the Titan Offering and the Roth Sales Agreement, 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 at least through December 2027 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 2026 and beyond because of the following planned activities:

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 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 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 Roth Sales 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.

Previous 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 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, which could result in our Company reducing some capital expenditures or reducing staff and discretionary costs.

Current wording

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 $12,236,024 for the year ended December 31, 2023, primarily attributable to the net loss of $21,038,032 adjusted by $6,459,387 in options issued for services, $262,697 amortization of deferred compensation, $673,578 in common stock issued for services, $1,119,141 in depreciation expenses and patent amortization expenses, $184,835 amortization of right of use asset, $215,509 gain on disposal of property and equipment, ($587,540) in prepaid expenses, $935,795 in accounts receivable, 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 $13,749,186 for the year ended December 31, 2025, primarily attributable to the net loss of $20,313,797 adjusted by $2,051,204 in options issued for services, $551,466 amortization of deferred compensation, $801,595 amortization of performance stock units, $1,278,403 amortization of restricted stock units, $370,311 in common stock issued as commitment shares under the 2023 and 2025 Purchase Agreements, $1,903,368 in depreciation expenses and patent amortization expenses, $205,354 amortization of right of use asset, $20,018 gain on disposal of property and equipment, $45,170 loss due to retirement of certain expired patent applications, ($145,188) in accounts receivable, ($199,360) in prepaid expenses and other current assets, and ($277,694) 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 by investing activities was $2,957,201 for the year ended December 31, 2023, consisting of $307,687 in cost for intangibles, $3,292,224 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 $1,817,202 for the year ended December 31, 2025, consisting of $485,429 in cost for intangibles and $1,331,773 in asset additions for the Colorado headquarter facility and labs.

Previous wording

On December 31, 2023, our cash and cash equivalents totaled $31,432,087, our assets totaled $41,783,585, our liabilities totaled $5,349,771 and we had stockholders’ equity of $36,433,814.

Current wording

On December 31, 2025, our cash and cash equivalents totaled $69,017,354, our assets totaled $79,185,249, our liabilities totaled $4,539,419 and we had stockholders’ equity of $74,645,830.

Previous wording

Net cash used in operating activities was $15,550,515 for the year ended December 31, 2024, primarily attributable to the net loss of $22,535,041 adjusted by $4,440,003 in options issued for services, $446,628 amortization of deferred compensation, $154,210 in common stock issued for services, $1,682,760 in depreciation expenses and patent amortization expenses, $192,487 amortization of right of use asset, $213,440 loss on disposal of property and equipment and retirement of certain expired patent applications and patents, $(15,189) in accounts receivable, $835,880 in prepaid expenses and other current assets, and ($965,693) 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, rent and other expenditures necessary to develop our business infrastructure.

Current wording

Net cash used in operating activities was $15,550,515 for the year ended December 31, 2024, primarily attributable to the net loss of $22,535,041 adjusted by $4,440,003 in options issued for services, $446,628 amortization of deferred compensation, $154,210 in common stock issued for commitment shares, $1,682,760 in depreciation expenses and patent amortization expenses, $192,487 amortization of right of use asset, $213,440 loss on disposal of property and equipment and retirement of certain expired patent applications and patents, $(15,189) in accounts receivable, $835,880 in prepaid expenses and other current assets, and ($965,693) 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, rent and other expenditures necessary to develop our business infrastructure.