Lightwave Logic(LWLG) - 2025 Q1 - Quarterly Report

Part I Financial Information This section presents the company's unaudited financial statements, management's analysis of financial condition, market risk disclosures, and internal controls for the reporting period Item 1. Financial Statements This section presents Lightwave Logic's unaudited financial statements for Q1 2025 and 2024, detailing a $4.7 million net loss and $25.0 million cash position Balance Sheets This subsection details the company's financial position, including assets, liabilities, and equity, as of March 31, 2025, and December 31, 2024 Balance Sheet Summary | Category | March 31, 2025 | December 31, 2024 | | :-------------------------------- | :------------- | :---------------- | | ASSETS | | | | Cash and cash equivalents | $25,045,329 | $27,667,964 | | Total Current Assets | $25,552,428 | $28,115,270 | | Property and Equipment - net | $6,116,637 | $5,691,545 | | Total Assets | $35,639,560 | $37,807,983 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total Current Liabilities | $1,537,763 | $1,785,396 | | Total Long Term Liabilities | $2,552,209 | $2,598,682 | | Total Liabilities | $4,089,972 | $4,384,078 | | Total Stockholders' Equity | $31,549,588 | $33,423,905 | Statements of Comprehensive Loss This subsection presents the company's revenues, expenses, and net loss for the three months ended March 31, 2025, and 2024 Statements of Comprehensive Loss (Three Months Ended March 31) | Metric | 2025 | 2024 | | :-------------------------- | :----------- | :----------- | | NET SALES | $22,917 | $30,417 | | COST AND EXPENSE | $4,928,298 | $5,881,287 | | LOSS FROM OPERATIONS | $(4,905,381) | $(5,850,870) | | OTHER INCOME (EXPENSE) | $208,357 | $170,959 | | NET LOSS | $(4,697,024) | $(5,679,911) | | Basic Loss Per Share | $(0.04) | $(0.05) | | Diluted Loss Per Share | $(0.04) | $(0.05) | | Weighted Average Shares (Basic) | 123,931,841 | 118,950,591 | | Weighted Average Shares (Diluted) | 123,931,841 | 118,950,591 | Statements of Stockholders' Equity This subsection outlines changes in stockholders' equity, reflecting net loss and common stock issuances, for the three months ended March 31, 2025 - Total stockholders' equity decreased from $33,423,905 at December 31, 2024, to $31,549,588 at March 31, 2025, primarily due to the net loss of $4,697,024, partially offset by common stock issuances[21] Changes in Stockholders' Equity (Three Months Ended March 31, 2025) | Item | Amount | | :------------------------------------------------ | :------------- | | Balance at December 31, 2024 | $33,423,905 | | Common stock issued to institutional investor | $1,486,983 | | Common stock issued for commitment shares | $8,029 | | Common stock sales at the market by investment banking company | $116,435 | | Exercise of options | $163,500 | | Cashless exercise of options | $20,500 | | Options issued for services | $749,042 | | Options issued to settle accrued bonuses | $48,068 | | Restricted stock awards issued for future services | $0 | | Deferred compensation | $230,150 | | Net loss for the three months ended March 31, 2025 | $(4,697,024) | | Balance at March 31, 2025 | $31,549,588 | Statements of Cash Flows This subsection summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 Cash Flow Summary (Three Months Ended March 31) | Activity | 2025 | 2024 | | :----------------------------------- | :------------- | :------------- | | Net cash used in operating activities | $(3,490,131) | $(4,772,208) | | Net cash used in investing activities | $(899,422) | $(828,474) | | Net cash provided by financing activities | $1,766,918 | $5,677,653 | | Net (Decrease) Increase in Cash | $(2,622,635) | $76,971 | | Cash and Cash Equivalents - End of Period | $25,045,329 | $31,509,058 | Notes to Financial Statements This subsection provides detailed explanations of the company's accounting policies, business operations, and financial position - The accompanying unaudited financial statements include all adjustments necessary for a fair presentation and are prepared on a consistent basis with the Company's 2024 Annual Report on Form 10-K, with interim operating results for Q1 2025 not indicative of full-year results[25] - Lightwave Logic, Inc. is a technology platform company utilizing proprietary electro-optic (EO) polymers, Perkinamine®, for high-speed, low-power data transmission in photonic EO devices, targeting telecommunications and generative AI applications[26] - The company's primary revenue stream is from technology material supply and licensing agreements for its patented electro-optic polymer materials, with future revenue expected from technology transfer agreements and direct material sales[27] - The company expects monthly expenditures of approximately $1,796,000 over the next 12 months and has sufficient cash to finance operations through May 2026, supplemented by available funds from purchase agreements with institutional investors and at-the-market sales agreements[48][149][150] Key Financial Highlights (Three Months Ended March 31) | Metric | March 31, 2025 | March 31, 2024 | | :-------------------------------- | :------------- | :------------- | | Net Sales | $22,917 | $30,417 | | Total Cost and Expense | $4,928,298 | $5,881,287 | | Loss from Operations | $(4,905,381) | $(5,850,870) | | Other Income (Expense) | $208,357 | $170,959 | | Net Loss | $(4,697,024) | $(5,679,911) | | Basic Loss Per Share | $(0.04) | $(0.05) | | Diluted Loss Per Share | $(0.04) | $(0.05) | | Cash and Cash Equivalents (End of Period) | $25,045,329 | $31,509,058 | | Total Assets | $35,639,560 | $41,737,807 | | Total Liabilities | $4,089,972 | $4,538,563 | | Total Stockholders' Equity | $31,549,588 | $37,199,244 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Lightwave Logic's Q1 2025 financial condition, highlighting improved net loss from reduced operating expenses and ongoing reliance on equity financing - Lightwave Logic leverages its proprietary Perkinamine® electro-optic polymers to create next-generation photonic EO devices for high-speed, low-power data transmission, targeting telecommunications and generative AI applications[120] - The company's differentiation lies in higher speed, lower power consumption, manufacturing simplicity, small footprint, and reliability of its modulator devices, with ongoing advances in integrating materials with commercial foundries[121] - The company's business model includes polymer materials development, patent licensing, and technology transfers to foundries, with a strategic focus on EO Polymer materials development and manufacturing since December 2024[122][126] Revenue and Cost of Sales (Three Months Ended March 31) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :---------------- | :------- | :------- | :--------- | :--------- | | Licensing & Royalty Revenue | $22,917 | $16,667 | $6,250 | 37.5% | | Device Processing Revenue | $0 | $13,750 | $(13,750) | -100% | | Total Net Sales | $22,917 | $30,417 | $(7,500) | -24.6% | | Cost of Sales | $2,028 | $5,175 | $(3,147) | -60.8% | Operating Expenses (Three Months Ended March 31) | Expense Category | 2025 | 2024 | Change ($) | Change (%) | | :------------------------ | :----------- | :----------- | :----------- | :--------- | | Research and development | $3,089,218 | $4,620,662 | $(1,531,444) | -33% | | General and administrative | $1,837,052 | $1,255,450 | $581,602 | 46% | | Total Operating Expenses | $4,926,270 | $5,876,112 | $(949,842) | -16% | - Research and development expenses decreased by 33% primarily due to reductions in prototype device development, wafer fabrication, salary and benefits, travel, materials and supplies, testing, and non-cash stock option/restricted stock amortization expenses, partially offset by increased depreciation[136][138] - General and administrative expenses increased by 46% mainly due to higher non-cash stock option amortization, salary and benefits, and legal expenses, partially offset by decreases in accounting, depreciation, recruiting, travel, consulting, and insurance expenses[139][144] - Net loss decreased by 17% from $5,679,911 in Q1 2024 to $4,697,024 in Q1 2025, driven by reduced R&D and other operating expenses, and a gain on disposal of property and equipment[141] - The company's liquidity is supported by proceeds from common stock sales through purchase agreements with Lincoln Park (up to $30 million remaining on 2025 agreement) and an at-the-market sales agreement with Roth Capital (up to $31.5 million remaining), and exercise of options[142][143] - Cash and cash equivalents totaled $25,045,329 as of March 31, 2025, with the company anticipating sufficient funds to finance operations through May 2026, but requiring additional financing thereafter to support increasing operational and R&D expenditures[149][150][160] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section assesses the company's market risk, primarily interest rate sensitivity, concluding a 10% interest rate change would not materially affect its $25.0 million cash portfolio - As of March 31, 2025, the company held $25.0 million in cash and cash equivalents, primarily in highly liquid instruments with maturities of three months or less[167] - The company's primary market risk exposure is interest rate sensitivity, but it does not use market risk sensitive instruments for hedging or speculative purposes[168] - A hypothetical 10% change in interest rates as of March 31, 2025, would not have a material effect on the fair value of the company's investment portfolio, indicating a low material financial market risk exposure[168][169] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as of March 31, 2025, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were evaluated as effective as of March 31, 2025, ensuring timely and accurate reporting of information[170] - There were no material changes in the company's internal control over financial reporting during the quarter ended March 31, 2025[171] Part II Other Information This section provides additional information including legal proceedings, risk factors, equity sales, defaults, and exhibits Item 1. Legal Proceedings This section confirms the absence of any material legal proceedings affecting the company - No material legal proceedings were reported[173] Item 1A. Risk Factors This section details significant risks, including ongoing operating losses, the need for additional capital beyond May 2026, and potential shareholder dilution or operational limitations - The company has incurred substantial operating losses since inception, with a net loss of $4.7 million for Q1 2025, and expects to continue incurring losses through at least 2025[175] - Additional capital will be required to fund operations beyond May 2026, and there is no assurance that sufficient financing will be available on acceptable terms, potentially leading to substantial limitations on operations or shareholder dilution[177][179] - The company currently has $29.9 million available under the 2025 Purchase Agreement with Lincoln Park and $31.5 million available under the Roth Sales Agreement, but cannot assure full utilization of these agreements[177] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or use of proceeds during the reporting period - No unregistered sales of equity securities or use of proceeds were reported[180] Item 3. Defaults Upon Senior Securities This section confirms no defaults upon senior securities occurred during the reporting period - No defaults upon senior securities were reported[181] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable[183] Item 5. Other Information This section reports no adoption or termination of Rule 10b5-1 trading plans by directors or officers during Q1 2025 - No directors or officers adopted or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 arrangements during Q1 2025[184] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including certifications, organizational documents, and key agreements - The exhibits include certifications (Rule 13a-14(a), 18 U.S.C. Section 1350), organizational documents (Articles of Incorporation, Bylaws), key agreements (Purchase Agreement and Registration Rights Agreement with Lincoln Park), and Inline XBRL documents[185]