Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations

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 2025 Form 10-K for the fiscal year ended December 31, 2025 ("2025 Form 10-K").

Overview

Lightwave Logic, Inc. is a specialty materials and intellectual property company focused on the development and commercialization of proprietary electro-optic ("EO") polymer materials designed to enable high-speed optical modulators for data communications and other photonic applications.

Our Perkinamine® family of EO polymer materials is engineered for integration into silicon photonics ("SiPh") and other photonic integrated circuit ("PIC") platforms. When incorporated into device architectures, these materials are designed to support high-speed, high-bandwidth optical modulation with lower drive voltage requirements relative to certain conventional silicon-based approaches and certain other traditional photonic material systems, including III-V-based compound semiconductor technologies. The electro-optic properties of these materials can allow shorter interaction lengths in modulator designs, which can contribute to more compact device footprints and increased integration density. In addition, our materials are intended to be compatible with complementary metal-oxide-semiconductor ("CMOS") fabrication processes, which may facilitate integration into established semiconductor foundry workflows. Reduced drive voltage operation may enable lower system-level power consumption and simplified driver electronics in specific implementations.

We do not manufacture optical transceivers, photonic devices, or complete optical modules. Instead, our strategy is to commercialize our technology through a combination of material sales, intellectual property licensing, process design kit ("PDK") enablement, and royalty or other fee-based arrangements tied to customer production.

Our customers and prospective customers include semiconductor foundries, silicon photonics device designers, optical module manufacturers, and system integrators serving artificial intelligence ("AI"), cloud computing, data center, and telecommunications markets. We pursue customer adoption through a structured commercialization process designed to support evaluation, integration, qualification, and production readiness within established semiconductor manufacturing ecosystems.

As of August 2026, multiple customer programs are progressing through defined development stages under our commercialization framework. The timing and scale of potential production revenue depend on customer product qualification and adoption cycles, technical validation, manufacturing readiness, end-market demand, and broader industry conditions.

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. 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.

Our Electro-Optic Polymer Technology

Our technology platform is based on the design, synthesis, and integration of proprietary electro-optic polymer materials engineered to exhibit strong electro-optic ("EO") activity, optical transparency in relevant wavelength bands, and compatibility with semiconductor fabrication processes.

Electro-optic polymers utilize engineered chromophore molecules embedded within a polymer matrix. When an electric field is applied, the optical properties of the material change in a manner that can be used to modulate light propagating through a waveguide structure. The strength of this electro-optic response, combined with the material's processability, is central to device performance and manufacturability.

Our Perkinamine® materials are designed to:

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Support high-speed optical modulation suitable for advanced data rate standards,

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Enable high-bandwidth performance through strong electro-optic coefficients,

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Operate at relatively low drive voltages,

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Be deposited and patterned using processes compatible with semiconductor manufacturing environments, and

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Maintain stability under operational and environmental stress conditions required by customer applications.

Because electro-optic polymers can be applied directly within waveguide structures, they may allow modulator architectures with shorter interaction lengths compared to certain alternative material systems. Shorter interaction lengths can contribute to more compact device geometries and increased integration density within photonic integrated circuits.

The compatibility of our materials with complementary metal oxide semiconductor ("CMOS") fabrication processes, including back-end-of-line integration flows, is designed to facilitate incorporation into silicon photonics platforms using established foundry infrastructure rather than requiring dedicated fabrication facilities.

We continue to invest in material optimization, including improvements in electro-optic efficiency, thermal stability, wavelengths expansion, environmental robustness, and process integration parameters. Material formulation, device architecture, and integration techniques are developed in parallel to support customer-specific performance and reliability requirements.

Commercial deployment of devices incorporating our materials depends on successful integration within customer and foundry process flows, achievement of reliability standards, and attainment of yield and cost targets.

Business Model - Material + IP Licensing

Our business model is centered on the commercialization of proprietary electro-optic polymer materials and related intellectual property through material supply and licensing arrangements.

We do not currently intend to manufacture finished optical transceivers, discrete photonic devices, or complete optical modules. Our strategy is to enable customers to incorporate our materials into their own device platforms and manufacturing ecosystems, leveraging established semiconductor foundry infrastructure.

Our revenue model may include one or more of the following components:

Material Sales

We supply EO polymer materials to customers for evaluation, prototyping, and potential commercial production. Material sales may occur during development phases as well as during volume manufacturing, subject to customer qualification and demand.

If customer programs transition to commercial production incorporating our materials, material revenue would be expected to scale with device volumes.

Intellectual Property Licensing

We may enter into licensing agreements covering aspects of our polymer compositions, device designs, integration processes, and related intellectual property. Licensing arrangements may include: upfront license fees, development or milestone-based payments, and field-of-use or application-specific licenses.

The structure and economics of such agreements vary depending on customer requirements and the scope of intellectual property granted.

Royalty or Production-Based Fees

In certain arrangements, we may receive royalties or other production-based payments tied to the manufacture or sale of devices incorporating our materials or licensed technology. The structure, rate, and duration of such payments depend on negotiated terms and customer product lifecycles.

There can be no assurance that any given customer program will result in royalty-bearing production.

Revenue Timing Considerations

Customer engagements typically progress through multi-stage development cycles. During early stages, revenue may consist primarily of material sales, non-recurring engineering ("NRE") fees, prototype-related activities, or development support.

Based on the current status of customer programs, we anticipate that revenues, if any, recognized during 2026 would primarily relate to material supply, NRE arrangements, or prototype and development activities. We do not currently expect significant revenue from volume commercial production of customer products until 2027 at the earliest. The timing and magnitude of any production-related revenue depend on successful product qualification, yield validation, customer adoption decisions, end-market demand, and broader industry conditions.

There can be no assurance that development-stage programs will transition to volume production, that anticipated timelines will be achieved, or that commercial revenues will occur as expected.

Strategic Flexibility

While our current strategy is focused on materials supply and intellectual property licensing, we may evaluate selective opportunities to participate more directly in device-level development in limited circumstances. Such participation, if pursued, would likely be application-specific and would depend on market conditions, partnership opportunities, capital requirements, and strategic considerations.

We have not committed to entering device manufacturing as a core component of our business model, and any such activity would be evaluated in the context of our overall capital allocation priorities and commercialization strategy.

Operating Leverage

Our model is designed to leverage existing semiconductor fabrication infrastructure rather than require capital-intensive wafer fabrication facilities. By integrating into established foundry process flows, we seek to enable scalable production through customer and foundry manufacturing capacity.

If customer programs advance to high-volume production, incremental material demand and royalty streams may provide operating leverage due to the intellectual property-driven nature of our model. However, realization of such leverage depends on successful qualification, customer adoption, competitive dynamics, and end-market demand.

Commercialization Process (Design Win Cycle)

We pursue customer adoption through a structured, multi-stage engagement framework that we refer to as our Design Win Cycle. This process is designed to guide customer programs from initial technology evaluation through potential production ramp within established semiconductor manufacturing ecosystems.

While program timelines vary based on customer requirements, foundry schedules, application complexity, and market conditions, the Design Win Cycle typically spans approximately 18 to 24 months.

Progression between stages depends on the achievement of defined technical and commercial milestones. Advancement to later stages does not assure commercial production.

Stage 1 - Technology Selection

(Typically 3-6 Months)

Stage 2 - Product Design

(Typically 3-6 Months)

Stage 3 - Prototype to Final Product

(Typically 12-18 Months)

Stage 4 - Production Ramp to High Volume

Commercial production typically requires achievement of customer-defined qualification milestones, acceptable manufacturing yields, cost targets, and confirmed end-market demand.

Based on the current status of customer programs, we anticipate that revenues, if any, recognized during 2026 would primarily relate to material supply, NRE arrangements, or prototype and development activities. We do not currently expect significant revenue from high-volume commercial production of customer products until 2027 at the earliest.

There can be no assurance that programs currently in development will successfully transition to commercial production, that foundry capacity will be available as anticipated, or that projected timelines will be achieved.

Capital Requirements

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 June 30, 2026 and June 30, 2025

Revenues

During the three months ended June 30, 2026, we recognized $32,751 of licensing and royalty revenue. During the three months ended June 30, 2025, we recognized $25,605 of licensing and royalty revenue.

Cost of Sales

During the three months ended June 30, 2026, we recognized $0 in cost of sales. During the three months ended June 30, 2025, we recognized $3,463 in cost of sales.

Operating Expenses

		Three Months Ended				Three Months Ended June 30, 2025								Percent
		June 30, 2026				(Restated)				Change				Change
Research and development		$	3,878,703			$	2,621,441			$	1,257,262				48	%
General and administrative			3,423,188				2,300,884				1,122,304				49	%
		$	7,301,891			$	4,922,325			$	2,379,566				48	%

Research and development expenses increased for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to increases in salary and employee benefits expenses and non-cash stock compensation 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 June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to increases in non-cash stock-based compensation expenses, salary and employee benefits expenses and payroll taxes, professional services fees, recruiting fees, legal fees, and director fees.

Other Income (Expenses), net

		Three Months Ended				Three Months Ended June 30, 2025								Percent
		June 30, 2026				(Restated)				Change				Change
Other (Expense) Income		$	655,343			$	(66,450	)		$	721,793				1086	%

Other income increased for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to an increase in interest income earned on higher cash balances and investments in marketable securities, offset by a loss due to disposal of certain expired patents and patent applications.

Net Loss

		Three Months Ended				Three Months Ended June 30, 2025								Percent
			June 30, 2026				(Restated)				Change			Change
Net Loss		$	6,613,797			$	4,966,633			$	1,647,164			33	%

Net loss was $6,613,797 and $4,966,633 for the three months ended June 30, 2026 and 2025, respectively, for an increase of $1,647,164 due primarily to increases in entity-wide salary and employee benefits expenses and payroll taxes, non-cash stock compensation expenses, professional services fees, recruiting fees, legal fees, director fees, and loss due to disposal of certain expired patents and patent applications, offset by an increase in interest income.

Comparison of six months ended June 30, 2026 and June 30, 2025

Revenues

During the six months ended June 30, 2026, we recognized $61,918 of licensing and royalty revenue. During the six months ended June 30, 2025, we recognized $48,522 of licensing and royalty revenue.

Cost of Sales

During the six months ended June 30, 2026, we recognized $1,336 in cost of sales. During the six months ended June 30, 2025, we recognized $5,491 in cost of sales.

Operating Expenses

		Six Months Ended				Six Months Ended June 30, 2025								Percent
		June 30, 2026				(Restated)				Change				Change
Research and development		$	7,368,998			$	5,710,659			$	1,658,339				29	%
General and administrative			6,686,054				4,137,936				2,548,118				62	%
		$	14,055,052			$	9,848,595			$	4,206,457				43	%

Research and development expenses increased for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to increases in salary and employee benefits expenses, non-cash stock compensation expenses, laboratory materials and supplies expenses, and prototype device development and wafer fabrication 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 six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to increases in non-cash stock-based compensation expenses, salary and employee benefits expenses and payroll taxes, recruiting fees, professional services fees, director fees, legal fees, and travel expenses.

Other Income, net

		Six Months Ended				Six Months Ended June 30, 2025								Percent
			June 30, 2026				(Restated)				Change				Change
Other Income		$	1,080,133			$	141,907			$	938,226				-661	%

Other income increased for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to an increase in interest income earned on higher cash balances and investments in marketable securities, offset by a loss due to disposal of certain expired patents and patent applications.

Net Loss

		Six Months Ended				Six Months Ended June 30, 2025								Percent
			June 30, 2026				(Restated)				Change				Change
Net Loss		$	12,914,337			$	9,663,657			$	3,250,680				34	%

Net loss was $12,914,337 and $9,663,657 for the six months ended June 30, 2026 and 2025, respectively, for an increase of $3,250,680 due primarily to increases in entity-wide salary and employee benefits expenses and payroll taxes, non-cash stock compensation expenses, recruiting fees, professional services fees, directors fees, legal fees, laboratory materials and supplies expenses, prototype device development and wafer fabrication expenses, travel expenses, and loss due to disposal of certain expired patents and patent applications, offset by an increase in interest income.

Liquidity and Capital Resources

Our primary source of operating cash inflows was (i) 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 11 to the Financial Statements, (ii) proceeds from the sale of common stock to Titan Partners Group LLC (investment banker) ("Titan"), and (iii) proceeds received pursuant to the exercise of options and warrants.

On December 15, 2025, we entered into an underwriting agreement (the "Underwriting Agreement") with Titan Partners Group LLC, a division of American Capital Partners, LLC, as the underwriter (the "Underwriter"), relating to an underwritten public offering of 11,666,667 shares of the Company's common stock, par value $0.001 per share, at a price to the public of $3.00 per share (the "Titan Offering"). Pursuant to the Underwriting Agreement, we granted to the Underwriter an option, exercisable not later than thirty (30) days after the date of the closing of the Offering, to purchase from us up to 1,750,000 additional shares of common stock for the purpose of covering over-allotments, if any. The Offering closed on December 17, 2025. On January 8, 2026, the Company closed on the Underwriter's exercise of the option, and issued an additional 1,750,000 shares of its common stock. The net proceeds to us from the Offering were approximately $32.8 million during the year ended December 31, 2025, and approximately $4.9 million in January 2026, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us. We intend to use the net proceeds from the Offering for working capital and other general corporate purposes and may use a portion of the net proceeds to accelerate our commercialization timeline, accelerate and expand our U.S. production capacity to support customer partnerships and design-ins, to pursue strategic mergers and acquisitions or to invest in complementary technologies or businesses. Pursuant to the Underwriting Agreement, we agreed to issue to the Underwriter warrants to purchase up to 350,000 shares of Common Stock, or three percent (3%) of the total number of shares of Common Stock sold in the Offering, as well as additional underwriter warrants to purchase up to an aggregate of 52,500 shares of common stock, which were issued upon the exercise by the Underwriter of its over-allotment option. The underwriter warrants were immediately exercisable at an exercise price of $3.45 per share during the five-year period following the date of the Underwriting Agreement. On April 14, 2026, all 402,500 underwriter warrants were exercised for proceeds of $1,388,625.

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 could offer and sell up to $35,000,000 in shares of our registered common stock, from time to time through Roth Capital. On April 20, 2026, the Company entered into an amendment to its sales agreement with Roth Capital to increase the amount of shares of common stock that may be sold under the Roth Sales Agreement to $51,404,500. As of the date of this filing, $3,385 remains available pursuant to the Roth Sales Agreement.

During the six months ended June 30, 2026, the Company received $27,883,978 in net proceeds pursuant to the Roth Sales Agreement, $4,930,928 in net proceeds from the exercise of over-allotment option from the Titan Offering, $1,362,932 in net proceeds from the exercise of underwriter warrants, and $6,946,686 in proceeds from the exercise of options.

During the six months ended June 30, 2026, 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 consultants and professional services 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. On June 30, 2026, our cash and cash equivalents totaled $47,209,148 and our liquid investments in marketable securities totaled $48,701,814.

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 finance our operations at least through December 2027. 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:

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The addition of management, sales, marketing, technical, production and other staff to our workforce;

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Increased spending for the expansion of our research and development efforts, including purchases of additional laboratory and production equipment;

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Increased spending in marketing as our products are introduced into the marketplace;

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Partnering with commercial foundries to implement our electro-optic polymers into accepted PDKs by the foundries;

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Developing and maintaining collaborative relationships with strategic partners;

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Developing and improving our manufacturing processes and quality controls; and

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Increases in our general and administrative activities related to our operations as a reporting public company and related corporate compliance requirements.

Analysis of Cash Flows

For the six months ended June 30, 2026

Net cash used in operating activities was $9,882,537 for the six months ended June 30, 2026, primarily attributable to the net loss of $12,914,337 adjusted by $950,449 in stock options issued for services, $182,219 amortization of deferred compensation, $2,371,949 amortization of restricted stock units, $987,257 in depreciation expenses and patent amortization expenses, $108,140 amortization of right of use asset, ($33,726) in interest accretion on marketable securities, $41,679 loss due to disposal of certain expired patents and patent applications, $174,624 in accounts receivable, ($1,547,998) in prepaid expenses and other current assets, and ($202,793) 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 $50,478,319 for the six months ended June 30, 2026, consisting of $245,398 in cost for intangibles, $1,518,336 in asset additions for the Colorado headquarters' facility and labs, and $48,714,585 in investments in marketable securities.

Net cash provided by financing activities was $38,555,054 for the six months ended June 30, 2026, and consisted of $6,946,686 in proceeds from exercise of options, $1,362,932 in proceeds from the exercise of underwriter warrants under the Titan agreement, ($2,088,366) tax payment on net issuance of vested restricted stock units, ($481,103) tax payment on net issuance of performance stock units in the prior period, $4,930,928 in proceeds from the exercise of the overallotment option from the Titan Offering, and $27,883,978 in proceeds from the sale of common stock pursuant to the Roth Sales Agreement.

On June 30, 2026, our cash and cash equivalents totaled $47,209,148, our assets totaled $108,078,889, our liabilities totaled 3,855,523 and we had stockholders' equity of $104,223,366.

For the six months ended June 30, 2025

Net cash used in operating activities was $7,260,222 for the six months ended June 30, 2025, primarily attributable to the net loss of $9,663,657 adjusted by $1,282,692 in options issued for services, $401,863 amortization of deferred compensation, $384,925 amortization of performance stock units, $11,113 amortization of restricted stock units, $243,830 in common stock issued as commitment shares under the 2023 and 2025 Purchase Agreements, $943,089 in depreciation expenses and patent amortization expenses, $100,938 amortization of right of use asset, $28,800 gain on disposal of property and equipment, $34,812 in accounts receivable, ($237,115) in prepaid expenses and other current assets, and ($733,913) 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 $1,002,226 for the six months ended June 30, 2025, consisting of $108,332 in cost for intangibles and $893,894 in asset additions for the Colorado headquarters' facility and labs.

Net cash provided by financing activities was $2,701,430 for the six months ended June 30, 2025, and consisted of $204,000 in proceeds from exercise of options, ($171,926) cashless option exercise tax payments, ($12,875) cashless tax payment on vested restricted stock awards, $2,174,983 in proceeds from the sale of common stock pursuant to the 2023 and 2025 Purchase Agreements and $507,248 in proceeds from the sale of common stock pursuant to the Roth Sales Agreement.

On June 30, 2025, our cash and cash equivalents totaled $22,106,946, our assets totaled $32,436,267, our liabilities totaled $3,602,097 and we had stockholders' equity of $28,834,170.

Contractual Obligations

See "Note 9-Leases" of the notes 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 2025 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.