Lightwave Logic(LWLG) - 2019 Q2 - Quarterly Report

Financial Performance - The net loss for the six months ending June 30, 2019, was $3,634,607, compared to a net loss of $3,011,471 for the same period in 2018, indicating a 21% increase in losses[18]. - Basic and diluted loss per share for the six months ending June 30, 2019, was $(0.04), consistent with the loss per share for the same period in 2018[18]. - The net loss for the three months ended June 30, 2019 was $1,615,829, an increase of $117,757 compared to the same period in 2018[142]. - Net loss increased by $623,136, from $3,011,471 to $3,634,607, due to higher commitment fees, salaries, and other expenses[165]. Revenue and Sales - The company reported no net sales for the three and six months ending June 30, 2019, maintaining the same status as in 2018[18]. - The company had no revenues during the three months ended June 30, 2019 and June 30, 2018, and expects the next revenue stream to come from product development agreements and prototype devices[124][143]. Assets and Liabilities - Total assets increased to $6,815,015 as of June 30, 2019, compared to $5,451,592 at December 31, 2018, representing a growth of 25%[17]. - Total liabilities rose to $1,991,138 as of June 30, 2019, compared to $544,530 at December 31, 2018, marking a significant increase of 266%[17]. - Cash and cash equivalents increased to $2,203,015 as of June 30, 2019, from $2,174,625 at December 31, 2018, a rise of 1.3%[17]. - Total stockholders' equity decreased to $4,823,877 as of June 30, 2019, from $4,907,062 at December 31, 2018, reflecting a decline of 1.7%[17]. Research and Development - Research and development expenses for the six months ending June 30, 2019, were $2,221,514, up 20% from $1,846,025 in the same period of 2018[18]. - The company expects to continue incurring substantial research and development expenses to support the commercialization of its photonic devices and materials platform[128][147]. - The company has made significant progress in integrating new polymer technology into its photonic integrated circuit (PIC) platform since acquiring intellectual property assets in June 2018[115]. - Research and development expenses rose from $944,353 in Q2 2018 to $1,069,460 in Q2 2019, reflecting increased salaries and laboratory materials[126]. Operating Expenses - Operating expenses increased from $1,454,225 in Q2 2018 to $1,573,687 in Q2 2019, primarily due to increases in salaries, non-cash stock option amortization, and laboratory supplies[125]. - For the six months ended June 30, 2019, operating expenses totaled $3,294,171, up from $2,930,492 in the same period of 2018, driven by higher salaries and consulting expenses[144]. - Wages and salaries increased by $184,407 from $838,798 for the six months ended June 30, 2018, to $1,023,205 for the six months ended June 30, 2019, primarily due to an increase in full-time technical personnel[148]. Financing Activities - The company issued 3,575,000 shares to institutional investors, raising approximately $2,819,210 in additional paid-in capital during the six-month period[21]. - The company reported a net cash provided by financing activities of $2,597,723 for the six months ending June 30, 2019, compared to $2,013,906 in the same period of 2018, reflecting a 28.9% increase[30]. - The company entered into a purchase agreement with Lincoln Park Capital Fund, LLC, to purchase up to $25,000,000 of common stock over a 36-month period[172]. Lease and Rent Expenses - Operating lease liability increased to $885,094 as of June 30, 2019, reflecting the adoption of new lease accounting standards[17]. - The Company entered into a lease for approximately 13,420 square feet of office and research space in Colorado, with a base rent of approximately $168,824 for the first year, increasing by 3% annually[55]. - Rent expenses for the six months ended June 30, 2019, included $56,818 in research and development and $18,939 in general and administrative expenses[59]. Employee Compensation - The Company recognized total share-based compensation of $391,652 for the six months ended June 30, 2019, compared to $290,208 for the same period in 2018[72]. - For the six months ending June 30, 2019 and 2018, the company charged $21,157 and $9,763 to expense for 401(k) retirement plan contributions for eligible non-executive participants[81]. Future Outlook - The company is focused on developing next-generation photonic devices and expects to generate revenue from datacom and telecom devices, as well as sales of non-linear optical polymers[33]. - Future expenditures are expected to be approximately $570,000 per month over the next 12 months, with cash requirements increasing in line with revenue growth[170]. - The company is targeting cloud computing and data centers, which require high-performance interconnects over distances greater than 10 km[110]. Internal Controls and Compliance - The Company's management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2019, concluding they were effective[182]. - There were no changes in internal control over financial reporting during the quarter ended June 30, 2019, that materially affected internal controls[183].