Lightwave Logic, Inc. (LWLG) – 2026 財年第一季（截至 2026 年 3 月 31 日）10-Q 季度報告摘要

10-Q

 
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 --12-31
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

 

FORM 10-Q

____________________

(Mark One)

 
 ☒
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
 

For the quarterly period ended March 31, 2026

 

OR

 

 
 ☐
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 
 

For the transition period from _____________to
_____________

 

Commission File Number 001-40766

 

Lightwave Logic, Inc.

(Exact name of registrant as specified in its charter)

 

 
 
 Nevada

 (State or other jurisdiction of

 incorporation or organization)

 
 82-0497368

  (I.R.S. Employer Identification No.)

 
 
  

 369 Inverness Parkway, Suite 350

 Englewood, CO

 (Address of principal executive offices)

 
 80112

 (Zip Code)

 
 
  

 (720) 340-4949

 (Registrant’s telephone number, including
 area code)

 
 

Securities registered pursuant to Section 12(b)
of the Act:

 

 
 Title of each class
 Trading Symbol(s)
 Name of exchange on which registered

 
 Common Stock, $0.001 par value per share
 LWLG
 The Nasdaq Stock Market

 
 

Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting
company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

 
 Large accelerated filer ☐
 Accelerated filer                  ☐

 
 Non-accelerated filer   ☒
 Smaller reporting company ☒

 
  
 Emerging growth company ☐

 
 

 
 If
  
 an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 
 

Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ☐ No ☒

  

 
 The
 number of shares of the registrant’s common stock outstanding as of May 15, 2026 was 154,079,632.

 
   

  

  

 

 

TABLE OF CONTENTS

 

 
  
  
 Page 

 
  
  
  

 
 Part I
 Financial Information
 1

 
  
  
  
  

 
  
 Item 1
 Financial Statements
 1

 
  
  
  
  

 
  
 Item 2
 Management’s Discussion and Analysis of Financial Condition and Results of Operations
 24

 
  
  
  
  

 
  
 Item 3
 Quantitative and Qualitative Disclosures About Market Risk
 31

 
  
  
  
  

 
  
 Item 4
 Controls and Procedures
 31

 
  
  
  
  

 
 Part II
  Other Information
 32

 
  
  
  
  

 
  
 Item 1
 Legal Proceedings
 32

 
  
  
  
  

 
  
 Item 1A
 Risk Factors
 32

 
  
  
  
  

 
  
 Item 2
 Unregistered Sales of Equity Securities and Use of Proceeds
 32

 
  
  
  
  

 
  
 Item 3
 Defaults Upon Senior Securities
 32

 
  
  
  
  

 
  
 Item 4
 Mine Safety Disclosures
 32

 
  
  
  
  

 
  
 Item 5
 Other Information
 32

 
  
  
  
  

 
  
 Item 6
 Exhibits
 33

 
  
  
  
  

 
  
  
 Signatures
 34

 
  
  
  
  

 
 

 

  i

  

  

 

  

 Forward-Looking Statements

 

This report on Form 10-Q contains,
and our officers and representatives may from time to time make, “forward-looking statements” within the meaning of the safe
harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words
such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,”
“project,” “estimate,” “expect,” “continuing,” “ongoing,” “strategy,”
“future,” “likely,” “may,” “should,” “could,” “will” and similar
references to future periods. Examples of forward-looking statements include, among others, statements we make regarding expected operating
results, such as anticipated revenue; anticipated levels of capital expenditures for our current fiscal year; our belief that we have,
or will have, sufficient liquidity to fund our business operations during the next 12 months; strategy for gaining customers, growth,
product development, market position, financial results and reserves.

 

Forward-looking statements
are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations,
and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy
and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks
and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial
condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these
forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those
indicated in the forward-looking statements include, among others, the following: inability to generate significant revenue or to manage
growth; lack of available funding; lack of a market for or market acceptance of our products; competition from third parties; general
economic and business conditions; intellectual property rights of third parties; changes in the price of our stock and dilution; 
regulatory constraints and potential legal liability;  ability to maintain effective internal controls; security breaches, cybersecurity
attacks and other significant disruptions in our information technology systems; changes in technology and methods of marketing; delays
in completing various engineering and manufacturing programs; changes in customer order patterns and qualification of new customers; changes
in product mix; success in technological advances and delivering technological innovations; shortages in components; production delays
due to performance quality issues with outsourced components; other risks to which our Company is subject; and  other factors
beyond the Company’s control.  

 

These forward-looking statements
are subject to a number of risks, uncertainties and assumptions including without limitation our known material risks under Part I Item
1.A “Risk Factors” contained in our Company’s Annual Report on Form 10-K for the year ended December 31, 2025, and Part II,
Item 1.A “Risk Factors” in this report on Form 10-Q. Many factors could cause our actual results to differ materially from
the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor,
or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

The forward-looking statements
speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated
events.

 

 

ii

  

  

 

 

 

PART I – FINANCIAL INFORMATION

 

Item 1: Financial Statements

 

LIGHTWAVE LOGIC, INC.

 

FINANCIAL STATEMENTS

 

MARCH 31, 2026

 

 

(UNAUDITED)

 

 

 

  

  

 

 

CONTENTS

 

 

 
  
 PAGE

 
 BALANCE SHEETS
 2

 
 STATEMENTS OF COMPREHENSIVE LOSS
 3

 
 STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
 4

 
 STATEMENTS OF CASH FLOWS
 5

 
 NOTES TO FINANCIAL STATEMENTS
 6- 23

 
 

 

 

 

 1 

  

 

 

LIGHTWAVE LOGIC, INC.

BALANCE SHEETS

 
   
    
   

 
   
 March 31, 2026  
 December 31, 2025 

 
   
  (Unaudited)  
    

 
  ASSETS 
     
    

 
  CURRENT ASSETS 
     
    

 
  Cash and cash equivalents 
 $75,102,750  
 $69,017,354 

 
  Accounts Receivable 
  215,753  
  190,753 

 
  Prepaid expenses and other
 current assets 
  1,183,454  
  601,101 

 
 TOTAL
 CURRENT ASSETS  
  76,501,957  
  69,809,208 

 
   
     
    

 
  PROPERTY AND EQUIPMENT - net of accumulated
 depreciation of $8,277,725
 and $7,802,183,
 respectively 
  5,194,882  
  5,222,252 

 
   
     
    

 
  OTHER ASSETS 
     
    

 
  Intangible assets - net of accumulated amortization
 of $398,202
 and $473,771,
 respectively 
  1,829,433  
  1,713,420 

 
  Operating Lease - Right
 of Use - Building 
  2,386,792  
  2,440,369 

 
 TOTAL
 OTHER ASSETS 
  4,216,225  
  4,153,789 

 
   
     
    

 
  TOTAL ASSETS 
 $85,913,064  
 $79,185,249 

 
   
     
    

 
   
     
    

 
  LIABILITIES AND STOCKHOLDERS' EQUITY 
     
    

 
  CURRENT LIABILITIES 
     
    

 
  Accounts payable 
 $779,716  
 $477,939 

 
  Accrued bonuses and accrued expenses 
  1,266,857  
  1,400,008 

 
  Accounts payable and accrued expenses - related
 parties 
  —  
  56,250 

 
  Contract liability 
  2,375  
  6,541 

 
  Operating lease liability 
  201,821  
  194,770 

 
 TOTAL CURRENT LIABILITIES  
  2,250,769  
  2,135,508 

 
   
     
    

 
  LONG TERM LIABILITIES 
     
    

 
  Operating lease liability 
  2,350,388  
  2,403,911 

 
 TOTAL LONG TERM
 LIABILITIES  
  2,350,388  
  2,403,911 

 
   
     
    

 
  TOTAL LIABILITIES 
  4,601,157  
  4,539,419 

 
   
     
    

 
  STOCKHOLDERS' EQUITY 
     
    

 
   
     
    

 
 Preferred stock, $0.001
 par value, 1,000,000
 authorized, no
 shares issued or outstanding 
  —  
  — 

 
 Common stock $0.001
 par value, 250,000,000
 authorized, 150,500,710
 and 146,050,506
 issued and outstanding at March 31, 2026 and December 31, 2025, respectively 
  150,502  
  146,051 

 
 Additional paid-in-capital 
  254,934,925  
  242,016,025 

 
 Deferred compensation 
  (160,192) 
  (203,458)

 
 Accumulated deficit 
  (173,613,328) 
  (167,312,788)

 
   
     
    

 
  TOTAL STOCKHOLDERS' EQUITY 
  81,311,907  
  74,645,830 

 
   
     
    

 
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 
 $85,913,064  
 $79,185,249
 

 

 

  

See accompanying notes to these financial statements.

 

 

 2 

  

 

 

 

LIGHTWAVE LOGIC, INC.

STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(UNAUDITED)

 
   
    
   

 
   
 2026  
 2025 

 
   
    
   

 
   
    
   

 
 NET SALES 
 $29,167  
 $22,917 

 
   
     
    

 
 COST AND EXPENSE 
     
    

 
 Cost of sales 
  1,336  
  2,028 

 
 Research and development 
  3,490,295  
  3,089,218 

 
 General and administrative 
  3,262,866  
  1,837,052 

 
 TOTAL COST AND EXPENSE  
  6,754,497  
  4,928,298 

 
   
     
    

 
 LOSS FROM OPERATIONS 
  (6,725,330) 
  (4,905,381)

 
   
     
    

 
 OTHER INCOME (EXPENSES) 
     
    

 
 Interest income 
  461,275  
  187,848 

 
 Commitment fee 
  —  
  (8,029)

 
 Gain (loss) on disposal of property and equipment and intangible assets 
  (36,409) 
  28,800 

 
 Other expense 
  (76) 
  (262)

 
   
     
    

 
   
     
    

 
 NET LOSS 
 $(6,300,540) 
 $(4,697,024)

 
   
     
    

 
 LOSS PER SHARE 
     
    

 
 Basic and diluted 
 $(0.04) 
 $(0.04)

 
   
     
    

 
 WEIGHTED AVERAGE NUMBER OF SHARES 
     
    

 
 Basic and diluted 
  148,086,169  
  123,931,841 

 

 

See accompanying notes to these financial statements

 

 

 3 

  

 

 

LIGHTWAVE LOGIC, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(UNAUDITED, RESTATED)

 
   
    
    
    
    
    
   

 
   
 Three Months Ended March 31, 2026 

 
   
    
    
    
    
    
   

 
  

  

  
  

  

  
  

  

  
  

 Number of

 Shares
  

  

  
  

  

  
  

  

  
  

  Common 

  Stock 
  

  

  
  

  

  
  

  

  
 Additional

  Paid-in 

  Capital 
  

  

  
  

  

  
  

  

  
  

  Deferred 

  Compensation 
  

  

  
  

  

  
  

  

  
  

 Accumulated

  Deficit 
  

  

  
  

  

  
  

  

  
  

  

  Total 
  

  

  

   
     
     
     
     
     
    

 
 BALANCE AT DECEMBER 31, 2025 
  146,050,506  
 $146,051  
 $242,016,025  
 $(203,458) 
 $(167,312,788) 
 $74,645,830 

 
   
     
     
     
     
     
    

 
 Common stock sales at the market by investment banking company 
  829,741  
  830  
  6,543,577  
  —  
  —  
  6,544,407 

 
 Common stock issued to investment bank 
  1,750,000  
  1,750  
  4,929,178  
  —  
  —  
  4,930,928 

 
 Exercise of options 
  1,167,936  
  1,168  
  1,860,951  
  —  
  —  
  1,862,119 

 
 Cashless exercise of 200,000 options 
  186,030  
  186  
  (186) 
  —  
  —  
  — 

 
 Options issued for services 
  —  
  —  
  331,530  
  —  
  —  
  331,530 

 
 Restricted stock units issued for services, net of share settlement for taxes 
  516,497  
  517  
  (746,150) 
  —  
  —  
  (745,633)

 
 Deferred compensation 
  —  
  —  
  —  
  43,266  
  —  
  43,266 

 
 Net loss for the three months ended March 31, 2026 
  —  
  —  
  —  
  —  
  (6,300,540) 
  (6,300,540)

 
   
     
     
     
     
     
    

 
 BALANCE AT MARCH 31, 2026 (UNAUDITED) 
  150,500,710  
 $150,502  
 $254,934,925  
 $(160,192) 
 $(173,613,328) 
 $81,311,907 

 

 

 

 
   
    
    
    
    
    
   

 
   
 Three Months Ended March 31, 2025 

 
   
    
    
    
    
    
   

 
  

 

 
  

 

 
  

 

 
  

Number of

Shares
  

 

 
  

 

 
  

 

 
  

 Common 

 Stock 
  

 

 
  

 

 
  

 

 
 Additional

 Paid-in 

 Capital 
  

 

 
  

 

 
  

 

 
  

 Deferred 

 Compensation 
  

 

 
  

 

 
  

 

 
  

Accumulated

 Deficit 
  

 

 
  

 

 
  

 

 
  

 

 Total 
  

 

 

   
     
     
     
     
     
    

 
 BALANCE AT DECEMBER 31, 2024 (as restated) (see Note 2) 
  123,301,653  
 $123,302  
 $180,956,329  
 $(656,735) 
 $(146,998,991) 
 $33,423,905 

 
   
     
     
     
     
     
    

 
 Common stock issued to institutional investor 
  1,035,881  
  1,036  
  1,485,947  
  —  
  —  
  1,486,983 

 
 Common stock issued for commitment shares 
  5,046  
  5  
  8,024  
  —  
  —  
  8,029 

 
 Common stock sales at the market by investment banking company 
  50,000  
  50  
  116,385  
  —  
  —  
  116,435 

 
 Exercise of options 
  225,000  
  225  
  163,275  
  —  
  —  
  163,500 

 
 Cashless exercise of 50,000 options 
  16,942  
  17  
  20,483  
  —  
  —  
  20,500 

 
 Options issued for services 
  —  
  —  
  749,042  
  —  
  —  
  749,042 

 
 Options issued to settle accrued bonuses 
  —  
  —  
  48,068  
  —  
  —  
  48,068 

 
 Restricted stock awards issued for services 
  20,000  
  20  
  29,980  
  (30,000) 
  —  
  — 

 
 Deferred compensation 
  —  
  —  
  —  
  230,150  
  —  
  230,150 

 
 Net loss for the three months ended March 31, 2025 
  —  
  —  
  —  
  —  
  (4,697,024) 
  (4,697,024)

 
   
     
     
     
     
     
    

 
 BALANCE AT MARCH 31, 2025 (as restated) (UNAUDITED) 
  124,654,522  
 $124,655  
 $183,577,533  
 $(456,585) 
 $(151,696,015) 
 $31,549,588 

 

 

 

 

See accompanying notes to these financial statements

 

 

 4 

  

 

  

 

LIGHTWAVE LOGIC, INC.

STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2026 AND 2025

(UNAUDITED)

 
   
    
   

 
   
 2026  
 2025 

 
 CASH FLOWS FROM OPERATING ACTIVITIES 
     
    

 
 Net loss 
 $(6,300,540) 
 $(4,697,024)

 
 Adjustments to reconcile net loss to net cash used in operating activities 
     
    

 
 Stock options issued for services 
  331,530  
  749,042 

 
 Amortization of deferred compensation 
  43,266  
  230,150 

 
 Restricted stock units issued for services 
  1,342,733  
  — 

 
 Cashless option exercise 
  —  
  20,500 

 
 Common stock issued for commitment shares 
  —  
  8,029 

 
 Depreciation and amortization of patents 
  496,358  
  454,960 

 
 Amortization of right of use asset 
  53,577  
  50,043 

 
 (Gain) loss on disposal of property and equipment and intangible assets 
  36,409  
  (28,800)

 
 (Increase) decrease in assets 
     
    

 
 Accounts receivable 
  (25,000) 
  26,815 

 
 Prepaid expenses and other current assets 
  (582,353) 
  (86,608)

 
 (Decrease) increase in liabilities 
     
    

 
 Accounts payable 
  301,777  
  41,511 

 
 Accrued bonuses and accrued expenses 
  347,951  
  (271,457)

 
 Accounts payable and accrued expenses-related parties 
  (56,250) 
  56,945 

 
 Contract liability 
  (4,166) 
  (4,167)

 
 Operating lease liability 
  (46,471) 
  (40,070)

 
   
     
    

 
 Net cash used in operating activities 
  (4,061,179) 
  (3,490,131)

 
   
     
    

 
 CASH FLOWS FROM INVESTING ACTIVITIES 
     
    

 
 Cost of intangibles 
  (170,944) 
  (45,878)

 
 Purchase of property and equipment 
  (450,466) 
  (853,544)

 
   
     
    

 
 Net cash used in investing activities 
  (621,410) 
  (899,422)

 
   
     
    

 
 CASH FLOWS FROM FINANCING ACTIVITIES 
     
    

 
 Exercise of options 
  1,862,119  
  163,500 

 
 Tax payment on net issuance of vested restricted stock units 
  (2,088,366) 
  — 

 
 Tax payment on net issuance of performance stock units 
  (481,103) 
  — 

 
 Issuance of common stock, institutional investor 
  —  
  1,486,983 

 
 Issuance of common stock to investment bank 
  4,930,928  
  — 

 
 Common stock sales at the market by investment banking company 
  6,544,407  
  116,435 

 
   
     
    

 
 Net cash provided by financing activities 
  10,767,985  
  1,766,918 

 
   
     
    

 
 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 
  6,085,396  
  (2,622,635)

 
   
     
    

 
 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 
  69,017,354  
  27,667,964 

 
   
     
    

 
 CASH AND CASH EQUIVALENTS - END OF PERIOD 
 $75,102,750  
 $25,045,329 

 
   
     
    

 
   
     
    

 
 Supplemental Disclosure of Non-cash activities:  
     
    

 
 Options issued to settle accrued bonuses 
 $—  
 $48,068 

 
 Trade-in credit for purchase of property and equipment 
 $—  
 $28,800 

 
 Restricted stock awards issued for services 
 $—  
 $30,000 

 

 

 

See accompanying notes to these financial statements

 

 5 

  

 

 

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2026 AND 2025

 

NOTE 1 – NATURE OF BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES

 

As used herein, “we,” “us,”
“our,” and the “Company” refer to Lightwave Logic, Inc. 

 

Financial Statements

The accompanying unaudited financial statements
have been prepared by Lightwave Logic, Inc. These statements include all adjustments (consisting only of
its normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared
on a consistent basis using the accounting polices described in the Summary of Significant Accounting Policies included in the financial
statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, as originally
filed with the Securities and Exchange Commission on March 20, 2026 (the “2025 Annual Report”). Certain financial information
and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although
the Company firmly believes that the accompanying disclosures are adequate to make the information presented not misleading. The financial
statements should be read in conjunction with the financial statements and notes thereto included in the 2025 Annual Report. The interim
operating results for the three months ended March 31, 2026 may not be indicative of operating results expected for the full year.

 

History and Nature of Business

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 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.

 

Lightwave Logic, Inc. was organized under the
laws of the State of Nevada in 1997, and it commenced with its current business plan in 2024.

 

Fair Value of Financial Instruments

 

The carrying values of the Company’s short-term
financial instruments such as cash, accounts receivable, prepaid expenses and other assets, accounts payable and accrued expenses approximate
fair values due to the short-term nature of these instruments.

 

Revenue Recognition and Contract Liability

 

The Company recognizes revenue in accordance with
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606, Revenue from
Contracts with Customers. Under ASC 606, revenue is recognized when control of goods or services is transferred to a customer in an amount
that reflects the consideration to which the Company expects to be entitled.

 

 

 6 

 LIGHTWAVE LOGIC, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2026 AND 2025
 

 

 

  

NOTE 1 – NATURE OF BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

 Revenue Recognition and Contract Liability (Continued)

 

To achieve this, the Company applies the five-step model:

 

 
 1.
  
 Identify the contract with a customer.

 
 

 
 2.
  
 Identify the performance obligations in the contract.

 
 

 
 3.
  
 Determine the transaction price for the contract.

 
 

 
 4.
  
 Allocate the transaction price to the performance obligations.

 
 

 
 5.
  
 Recognize revenue as performance obligations are satisfied.

 
 

The Company’s primary revenue streams includes
technology license and material supply agreements and non-recurring engineering revenue from joint development agreements.

 

Technology License and Material Supply Agreements

 

The Company enters into technology license and
material supply agreements, under which it grants customers a non-exclusive, royalty-bearing license to use its patented electro-optic
polymer technology (the “Licensed Product”). The Company also supplies proprietary polymers to licensees for use in their
manufacturing of photonic devices.

 

The Company assesses whether the license and the
supply of proprietary polymers represent distinct performance obligations. Based on this assessment, the Company has determined that the
license and material supply are not distinct for financial reporting purposes because they are highly interdependent. Accordingly, the
Company accounts for these as a single performance obligation.

 

Revenue under these agreements is recognized as follows:

 

Upfront License Fees – Nonrefundable upfront
license fees are recorded as contract liability and recognized on a pro-rata basis over the contract term.

 

Minimum Annual Royalties – Fixed royalty
payments required under the contract are also recognized on a pro-rata basis over the contract term.

 

Variable Royalties – Royalties exceeding
the minimum annual amount are recognized when earned, typically when the licensee’s sales exceed the minimum threshold.

 

Milestone Payments – Recognized only when
the contractual milestone is achieved, such as when the licensee sells a specified number of units of the Licensed Product.

 

Joint Development Agreement

 

The Company entered into a memorandum of agreement
(“MOA”) with a customer to specify certain binding terms related to the joint development of electro-optical polymer-based
modulators on silicon photonics for use in communication applications. The MOA was executed in January 2026; however, the Company commenced
work under the arrangement during 2025. The development work consists of preparing reference documentation and support of a multi-project
wafer chip produced at a mutually agreed upon foundry, the design and post processing of fabricated chips, and complete product verification
and volume manufacturing preparation, with each party to the agreement having responsibility over various deliverables for each phase.

 

The Company evaluated the arrangement under ASC
808, Collaborative Arrangements, and concluded the arrangement meets the definition of a collaborative arrangement. The Company also concluded
that certain promised services within the arrangement represent units of account with a customer and therefore are within the scope of
ASC 606. Consideration received from the customer for such services is presented as net sales in the accompanying financial statements.

 

 

 7 

 LIGHTWAVE LOGIC, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2026 AND 2025
 

 

 

 

NOTE 1 – NATURE OF BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Revenue Recognition and Contract Liability (Continued)

 

The arrangement includes development services
to be performed in phases. The Company evaluated the promised goods and services within each phase and concluded they are not separately
identifiable because they are highly interdependent and represent inputs to a combined output that is delivered and accepted at the phase
level. Accordingly, each phase is accounted for as a single combined performance obligation. Phases 1 and 2 are within the scope of ASC
606.

Phase 1 consideration was $130,000, which the Company recognized in net sales upon completion and delivery to the customer of the Phase
1 products and services. Phase 2 consideration was $200,000, payable in installments subject to customer’s confirmation of completion
and acceptance of the related deliverables. Deliverables and consideration for Phase 3 have not been determined.

 

The Company recognizes revenue at a point in time upon completion
and customer acceptance of the phase deliverables, as applicable. Customer acceptance is considered the substantive indicator that control
of the completed phase deliverables has transferred.

  

Contract Costs

 

The Company capitalizes incremental costs to obtain
contracts if they are expected to be recoverable, in accordance with ASC 340-40, Other Assets and Deferred Costs – Contracts with
Customers. These capitalized costs are amortized over the expected contract term in a manner consistent with the related revenue recognition.
The Company evaluated costs to fulfill the joint development arrangement under ASC 340-40 and concluded such costs do not meet the capitalization
criteria because the costs are not expected to be recovered through the consideration payable under the arrangement.

 

The Company expenses costs to fulfill the development
arrangement as incurred, as the activities are not reimbursable and meet the definition of research and development under ASC 730. 

 

Contract Liability

 

Contract liability represents amounts received
in advance for performance obligations not yet satisfied, including nonrefundable upfront license fees. The Company recognizes contract
liability revenue as revenue when the related performance obligations are satisfied.

 

Cost of Sales

 

Cost of sales consists of labor costs, material
costs and manufacturing overhead costs associated with the production of materials transferred to the customer under the technology license
and material supply agreement at the Company’s facility.

 

Stock-based Payments

 

The Company accounts for stock-based compensation
under the provisions of FASB ASC 718, "Compensation - Stock Compensation," which requires the measurement and recognition
of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The
fair value of restricted stock awards and units is estimated by the market price of the Company’s common stock at the date of grant.
Restricted stock awards and units are being amortized to expense over the shorter of the requisite service period or the actual vesting
period. Performance stock units are subject to both performance-based and service vesting requirements. The grant-date fair value of performance
stock units is based on the fair value of the Company’s stock on a grant date and is recognized over the service period based on
an assessment of the likelihood that the applicable performance goals will be achieved, and compensation expense is periodically adjusted
based on actual and expected performance. The Company estimates the fair value of option and warrant awards on the date of grant using
the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the shorter
of the requisite service period or the actual vesting period, using the straight-line method. Consistent with the accounting requirement
for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date
fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered
and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

 

The Company has elected to account for forfeiture of stock-based awards
as they occur.

 

 

 8 

 LIGHTWAVE LOGIC, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2026 AND 2025
 

 

 

NOTE 1 – NATURE OF BUSINESS AND SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

 

Loss Per Share

The Company follows FASB ASC 260, “Earnings
per Share,” resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss in 2026
and 2025, common stock equivalents, including stock options and warrants were anti-dilutive; therefore, the amounts reported for basic
and dilutive loss per share were the same.

 

Comprehensive Loss

The Company
follows FASB ASC 220.10, “Reporting Comprehensive Income (Loss).” Comprehensive loss is a more inclusive financial reporting
methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of
net loss. Since the Company has no items of other comprehensive loss, comprehensive loss is equal to net loss. 

 

Recently Issued Accounting Pronouncements Not
Yet Adopted

 

ASU 2024-03 – Income Statement – Reporting
Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40) requires disclosure, in the notes to financial statements,
of specified information about certain costs and expenses, such as the amounts of purchases of inventory, employee compensation, depreciation,
intangible asset amortization, included in each relevant expense caption; disclosure of a qualitative description of the amounts remaining
in relevant expense captions that are not separately disaggregated quantitatively; and disclosure of the total amounts of selling expenses.
For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2026 and interim
reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact
of this ASU on its financial statement disclosures.

 

NOTE 2 - CORRECTION OF PRIOR-PERIOD ERRORS

 

Error Identified in the Year Ended December
31, 2021

 

During the year ended December 31, 2021, the Company
incorrectly expensed a portion of the value of the net shares issued by the Company in non-cash stock option exercises as compensation
expense. The Company determined that the value of the net shares issued in non-cash option exercises was incorrectly expensed in the original
filing, resulting in an overstatement of compensation expense. The correction of this error resulted in a decrease to accumulated deficit
by $3,407,443 and a corresponding decrease to additional paid-in capital as of December 31, 2021. The cumulative impact of this correction has been reflected as
an adjustment to opening accumulated deficit and additional paid-in capital in the Statements of Changes in Stockholders’ Equity
as of December 31, 2024 (the beginning of the earliest period presented), and the March 31, 2025 ending balances presented in this filing.

 

Restated Financial Information

 

The following table presents the effects of the
restatement on the Company’s previously reported statements of stockholders’ equity as of December 31, 2024 and as of March
31, 2025:

 
 Schedule of restated financial information 
    
    
   

 
   
 As
 Previously Reported  
 Adjustment  
 As
 Restated 

 
 As of December 31, 2024 
     
     
    

 
 Additional paid-in-capital 
 $184,363,772  
 $(3,407,443) 
 $180,956,329 

 
 Accumulated deficit 
 $(150,406,434) 
 $3,407,443  
 $(146,998,991)

 

 

 
  
     
     
    

   
 As Previously Reported  
 Adjustment  
 As Restated 

 
 As of March 31, 2025 
     
     
    

 
 Additional paid-in-capital 
 $186,984,976  
 $(3,407,443) 
 $183,577,533 

 
 Accumulated deficit 
 $(155,103,458) 
 $3,407,443  
 $(151,696,015)

 
   
     
     
    

 

 

 

 9 

 LIGHTWAVE LOGIC, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2026 AND 2025
 

 

 

 

NOTE 3 – MANAGEMENT’S PLANS

 

The Company’s future expenditures and capital
requirements will depend on numerous factors, including: the progress of our research and development efforts; the rate at which the
Company can, directly or through arrangements with original equipment manufacturers, introduce and sell its polymer materials technology;
the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; market acceptance
of the Company’s products and competing technological developments; and the Company’s ability to establish joint development,
joint venture and licensing arrangements.  The Company’s current cash position enables it to finance its operations through
at least December 2027. 

 

On December 15, 2025, the Company entered into
an underwriting agreement with an investment bank to sell 13,416,667 shares of its common stock. The net proceeds to the Company from
this offering were $37,756,628, after deducting underwriting discounts and commissions and other offering expenses payable by the Company.
On March 17, 2025, the Company entered into a purchase agreement with an institutional investor to sell up to $30,000,000 of common stock
over a 36-month period (described in Note 10). This purchase agreement was terminated on December 15, 2025. As of the termination date,
pursuant to the purchase agreement, the Company had received $3,646,655 under this agreement. On December 9, 2022, the Company entered
into a sales agreement with an investment banking company whereby the Company may offer and sell shares of its common stock having an
aggregate offering price of up to $35,000,000 from time to time through or to the investment banking company, as sales agent or principal
(described in Note 10). On April 20, 2026, the Company entered into an amendment to the sales agreement to increase the amount of shares
of common stock that may be sold under this agreement to $51,404,500. As of the date of this filing, pursuant to the sales agreement,
the Company has sold $51,401,115 in shares of common stock and has $3,385 in shares remaining available to the Company per the agreement.
The Company's first commercial agreement occurred in May 2023 from a material supply and license agreement that incorporates the Company's
patented electro-optic polymer materials for use in manufacturing photonic devices (described in Note 4). For the three months ended March
31, 2026, the Company recognized $29,167 in revenue related to this agreement. The C