Lightwave Logic, Inc.: Form 10-Q for the period ended Sep 30, 2025

*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”).

Overview

Lightwave Logic, Inc. is a technology platform company leveraging its proprietary engineered electro-optic (EO) polymers, named Perkinamine® to transmit data at higher speeds with less power in a small form factor. The Company’s high activity and high stability organic polymers allow it to create next-generation photonic EO devices that convert data from electrical signals into light/optical signals for applications in telecommunications, and for data transmission potentially used to support generative AI.

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.

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.

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.

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.

Unless the context otherwise requires, all references to the “Company,” “we,” “our” or “us” and other similar terms means Lightwave Logic, Inc. Also, this Form 10-Q Quarterly Report may include the names of various government agencies and the trade names of other companies. Unless specifically stated otherwise, the use or display by us of such other parties’ names and trade names in this report is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, any of these other parties.

Commencement of Commercial Operations

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 saw increased interest in our materials during 2024 and 2025, 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.

Business Strategy

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.

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:

• Further the development of proprietary organic electro-optic polymer material systems.
• Partner with PIC or packaged device design and manufacturing companies to further the development of PDKs for our polymer material.
• Develop proprietary intellectual property.
• Grow our commercial device design and development capabilities.
• Partner with silicon-based foundries who can scale volume quickly and integrate our materials into their infrastructure.
• Grow our product reliability and quality assurance capabilities.
• Grow our optoelectronic and RF testing capabilities.
• Grow our commercial material manufacturing capabilities.
• Maintain/develop strategic relationships with major telecommunications and data communications companies to further the awareness and commercialization of our technology platform.
• Add high-level personnel with industrial and manufacturing experience in key areas of our materials and process development programs.

Create Organic Polymer-Enabled Electro-Optic Modulators

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.

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.

Capital Requirements

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.

Results of Operations

Comparison of three months ended September 30, 2025 to three months ended September 30, 2024

Revenues

During the three months ended September 30, 2025, we recognized $29,166 of licensing and royalty revenue. During the three months ended September 30, 2024, we recognized $22,916 of licensing and royalty revenue.

During the three months ended September 30, 2025 and 2024, 100% of the Company’s net sales were generated internationally.

Cost of Sales

During the three months ended September 30, 2025, we recognized $0 in cost of sales. During the three months ended September 30, 2024, we recognized $1,236 in Cost of Sales.

Operating Expenses

Research and development expenses decreased for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to decreases in research and development non-cash stock option and restricted stock awards and units amortization expenses, research and development salary and employee benefits expenses, prototype device development expenses, and research and development travel expenses.

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.

General and administrative expenses increased for the three months ended September 30, 2025, as compared to the three months ended September 30, 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 legal expenses.

Other Income (Expense)

Other income increased for the three months ended September 30, 2025, as compared to the three months ended September 30, 2024, primarily due to a $175,849 decrease in loss due to retirement of certain expired patent applications and patents, offset by a $64,335 increase in commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement and a $29,063 decrease in interest income on money market account.

Net Loss

Net loss was $5,100,559 and $5,300,913 for the three months ended September 30, 2025 and 2024, respectively, for a decrease of $200,354 due primarily to decreases in prototype device development expenses, loss due to retirement of certain expired patent applications and patents, decreases in legal fees, non-cash stock option and restricted stock awards and units amortization expenses, and research and development travel expenses. These decreases were offset by increases in salary and employee benefits expenses, and 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.

Results of Operations

Comparison of nine months ended September 30, 2025 to nine months ended September 30, 2024

Revenues

During the nine months ended September 30, 2025, we recognized $77,688 of licensing and royalty revenue. 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.

For the nine months ended September 30, 2025, 100% of the Company’s net sales were generated internationally. For the nine months ended September 30, 2024, 19% of the Company's net sales were generated in the United States and 81% internationally. The Company has one customer that accounted for 10% or more of total revenue.

Cost of Sales

During the nine months ended September 30, 2025, we recognized $5,491 in Cost of Sales. During the nine months ended September 30, 2024, we recognized $6,411 in Cost of Sales.

Operating Expenses

Research and development expenses decreased for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily due to decreases in research and development non-cash stock option and restricted stock awards and units amortization expenses, research and development salary and employee benefits expenses, prototype device development expenses, wafer fabrication expenses, laboratory materials and supplies expenses, and research and development travel expenses.

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.

General and administrative expenses increased for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 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.

Other Income

Other income decreased for the nine months ended September 30, 2025, as compared to the nine months ended September 30, 2024, primarily due to a $202,206 increase in commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement and a $178,029 decrease in interest income on money market account, offset by a $207,815 decrease in loss due to retirement of certain expired patent applications and patents and trade in and retirement of property and equipment.

Net Loss

Net loss was $15,469,715 and $17,000,508 for the nine months ended September 30, 2025 and 2024, respectively, for a decrease of $1,530,793 due primarily to decreases in non-cash stock option and restricted stock awards and units amortization expenses, prototype device development expenses, wafer fabrication expenses, laboratory materials and supplies expenses, research and development travel expenses, and loss due to retirement of certain expired patent applications and patents. These decreases were offset by increases in salary and employee benefits expenses, and 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.

Liquidity and Capital Resources

Our primary source of operating cash inflows was (i) 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 9 to the Financial Statements and (ii) proceeds received pursuant to the exercise of options.

On July 26, 2024, we filed a $100 million universal shelf registration statement which became effective on August 5, 2024. 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. As of the date of this filing, $0 remains available pursuant to the 2023 Purchase Agreement. On March 17, 2025, we entered into a purchase agreement with Lincoln Park (the “2025 Purchase Agreement”) to sell up to $30 million of registered common stock over a 36-month period. As of the date of this filing, $26,762,995 remains available pursuant to the 2025 Purchase Agreement. 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.

During the nine months ended September 30, 2025, the Company received $1,486,983 in proceeds pursuant to the 2023 Purchase Agreement, $3,006,505 in proceeds pursuant to the 2025 Purchase Agreement, $14,377,542 in proceeds pursuant to the Roth Sales Agreement, $250,679 in proceeds pursuant to the exercise of options, and $75,000 in cash collections from the material supply and license agreement.

During the nine months ended September 30, 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.

Sources and Uses of Cash

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 $2,200,000 of expenditures per month over the next 12 months. On September 30, 2025, our cash and cash equivalents totaled $34,942,070.

We expect the proceeds received pursuant to the 2025 Purchase Agreement and any future purchase agreements with Lincoln Park, 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 through March 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 2025 and beyond because of the following planned activities:

• The addition of management, sales, marketing, technical, production and other staff to our workforce;
• Increased spending for the expansion of our research and development efforts, including purchases of additional laboratory and production equipment;
• Increased spending in marketing as our products are introduced into the marketplace;
• Partnering with commercial foundries to implement our electro-optic polymers into accepted PDKs by the foundries;
• Developing and maintaining collaborative relationships with strategic partners;
• Developing and improving our manufacturing processes and quality controls; and
• Increases in our general and administrative activities related to our operations as a reporting public company and related corporate compliance requirements.

2023 and 2025 Purchase Agreements with Lincoln Park

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.

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.

Roth Sales Agreement – Roth Capital

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.

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 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.

Analysis of Cash Flows

For the nine months ended September 30, 2025

Net cash used in operating activities was $10,436,426 for the nine months ended September 30, 2025, primarily attributable to the net loss of $15,469,715 adjusted by $1,693,640 in options issued for services, $482,613 amortization of deferred compensation, $556,575 amortization of performance stock units, $488,978 amortization of restricted stock units, $705,500 non-cash compensation expense from stock option exercises, $324,040 in common stock issued as commitment shares under the 2023 and 2025 Purchase Agreements, $1,434,610 in depreciation expenses and patent amortization expenses, $152,702 amortization of right of use asset, $28,800 gain on disposal of property and equipment, $34,425 loss due to retirement of certain expired patent applications, $9,812 in accounts receivable, ($80,950) in prepaid expenses and other current assets, and ($739,856) 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.

Net cash used by investing activities was $1,226,376 for the nine months ended September 30, 2025, consisting of $273,192 in cost for intangibles and $953,184 in asset additions for the Colorado headquarter facility and labs.

Net cash provided by financing activities was $18,936,908 for the nine months ended September 30, 2025, and consisted of $250,679 in proceeds from exercise of options, $171,926 cashless option exercise tax payments, $12,875 cashless tax payment on vested restricted stock awards, $4,493,488 in proceeds from the sale of common stock pursuant to the 2023 and 2025 Purchase Agreements and $14,377,542 in proceeds from the sale of common stock pursuant to the Roth Sales Agreement.

On September 30, 2025, our cash and cash equivalents totaled $34,942,070, our assets totaled $44,786,666, our liabilities totaled $3,596,154 and we had stockholders’ equity of $41,190,512.

For the nine months ended September 30, 2024

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.

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.

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 the sale of common stock pursuant to the 2023 Purchase Agreement and $714,901 in proceeds from the sale of common stock pursuant to the Roth Sales Agreement.

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.

Contractual Obligations

There have been no material changes outside the ordinary course of business in our contractual commitments during the nine months ended September 30, 2025. See Note 7 - Leases to the financial statements herein for a discussion of our operating lease for office and laboratory space.

Significant Accounting Policies

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.

At September 30, 2025, we had $34.9 million in cash and cash equivalents. For the purposes of this Item 3 we consider all highly liquid instruments with maturities of three months or less at the time of purchase to be cash equivalents. The fair value of all our cash equivalents is determined based on “Level 1” inputs, which are based upon quoted prices for identical or similar instruments in markets that are active. We do not use any market risk sensitive instruments to hedge any risks, and we hold no market risk sensitive instruments for trading or speculative purposes. We place our cash investments in instruments that meet credit quality standards. At September 30, 2025, we had deposits with a financial institution that exceeded the Federal Depository Insurance coverage.

Market Interest Rate Risk

We are exposed to market risk related to changes in interest rates. Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest rates. If a 10% change in interest rates had occurred on September 30, 2025, this change would not have had a material effect on the fair value of our investment portfolio as of that date.

Due to the short holding period of our investments and the nature of our investments, we have concluded that we do not have a material financial market risk exposure.

Evaluation of Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2025. Based on this evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that, as of September 30, 2025 the Company’s disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to the Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition to the information set forth in this Form 10-Q, you should carefully consider the risk factors discussed in Part I, Item 1A. Risk Factors in our 2024 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in this Form 10-Q and in our 2024 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition or future results .

We have incurred substantial operating losses since our inception and will continue to incur substantial operating losses for the foreseeable future.

Since our inception, we have been engaged primarily in the research and development of our electro-optic polymer materials technologies and products. As a result of these activities, we have incurred significant losses and experienced negative cash flow since our inception. We incurred a net loss of $15.5 million for the nine months ended September 30, 2025, and a net loss of $22.5 million for the year ended December 31, 2024, and $21.0 million for the year ended December 31, 2023. As of September 30, 2025, we had an accumulated deficit of $165.9 million. We anticipate that we will continue to incur operating losses through at least 2026.

We may not be able to generate significant revenue either through customer contracts for our existing or future products or technologies or through development contracts from the U.S. government or government subcontractors. We expect to continue to make significant operating and capital expenditures for research and development and to improve and expand production, sales, marketing and administrative systems and processes. As a result, we will need to generate significant revenue to achieve profitability. We cannot assure you that we will ever achieve profitability.

We will require additional capital to continue to fund our operations and if we do not obtain additional capital, we may be required to substantially limit our operations.

Our business does not presently generate the cash needed to finance our current and anticipated operations. Based on our current operating plan and budgeted cash requirements, we believe that we have sufficient funds to finance our operations through March 2027; however, we will need to obtain additional future financing after that time to finance our operations until such time that we can conduct profitable revenue-generating activities. We expect that we will need to seek additional funding through public or private financings, including equity financings, and through other arrangements, including collaborative arrangements. Poor financial results, unanticipated expenses or unanticipated opportunities could require additional financing sooner than we expect. Other than with respect to (i) the 2025 Purchase Agreement for up to $30 million we entered into with Lincoln Park on March 17, 2025; and (ii) Roth Sales Agreement for up to $35 million we entered into with Roth Capital on December 9, 2022; we have no plans or arrangements with respect to the possible acquisition of additional financing, and such financing may be unavailable when we need it or may not be available on acceptable terms. We currently have a remaining amount of $26.8 million pursuant to the 2025 Purchase Agreement with Lincoln Park, subject to the conditions set forth therein, and $12.2 million that is available to our Company pursuant to the Roth Sales Agreement with Roth Capital.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in our 2024 Form 10-K and in this Form 10-Q. We have based this estimate on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect.

Additional financing may not be available to us, due to, among other things, our Company not having a sufficient credit history, income stream, profit level, asset base eligible to be collateralized, or market for its securities. If we raise additional funds by issuing equity or convertible debt securities, the percentage ownership of our existing shareholders may be reduced, and these securities may have rights superior to those of our common stock. If adequate funds are not available to satisfy our long-term capital requirements, or if planned revenues are not generated, we may be required to substantially limit our operations.