What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-09 compared with 2023-05-10 · 388 added, 212 removed, 878 unchanged (41% of the section changed)

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in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission on March

is a development stage company moving toward commercialization of next generation electro-optic photonic devices made on its

P 2 IC™ technology platform which we have detailed as:

1) Polymer Stack™, 2) Polymer Plus™, and 3) Polymer

Our unique polymer technology platform uses in-house proprietary high-activity and high-stability organic polymers.

Electro-optical

devices called modulators convert data from electric signals into optical signals for multiple applications.

is a technology company focused on the development of next generation electro-optic photonic devices made on its P 2 IC™

technology platform which we have detailed as:

1) Polymer Stack™, 2) Polymer Plus™, and 3) Polymer Slot™.

polymer technology platform uses in-house proprietary high-activity and high-stability organic polymers.

Electro-optical devices called

modulators convert data from electric signals into optical signals for multiple applications.

Our differentiation

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platform become ubiquitous.

Commencement of Commercial Operations

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

Our Company is also in various stages of photonic device and materials development and evaluation with potential customers

and strategic partners.

We expect to obtain additional revenue from material supply and licensing agreements, technology transfer agreements

and the production and direct sale of our own photonic devices.

Materials Development

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Our advanced electro-optic polymer platform is creating a new class of modulators such as the Polymer Stack™,

™, Polymer Plus™, Polymer Slot™, and associated PIC platforms that can address higher data rates in a lower cost, lower

power consuming manner, smaller footprint (size) with much simpler data encoding techniques.

Our electro-optic polymer material will boost

the performance of standard PIC platforms such as silicon photonics and indium phosphide.

Polymer Plus™, Polymer Slot™, and associated PIC platforms that can address higher data rates in a lower cost, lower power

consuming manner, smaller footprint (size) with much simpler data encoding techniques.

Our electro-optic polymer material will boost the

performance of standard PIC platforms such as silicon photonics and indium phosphide.

Our electro-optic

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Add high-level personnel with industrial and manufacturing experience in key areas of our materials and device development programs.

commercial operations in May 2023 with our entry into a material supply license agreement to provide

Perkinamine ® chromophore materials for polymer based photonic devices and photonic integrated circuits (PICs).

Create Organic Polymer-Enabled

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Polymer Plus™

novel waveguide design, we are developing a more compact modulator to be implemented directly with existing integrated photonics platforms

our novel waveguide design, we are developing a more compact modulator to be implemented directly with existing integrated photonics platforms

such as silicon photonics and Indium Phosphide.

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Arsenide (GaAs), and other semiconductor manufacturing lines.

majority of commercial silicon photonics platforms utilize large silicon photonics foundries such as those that manufacture IC products

large majority of commercial silicon photonics platforms utilize large silicon photonics foundries such as those that manufacture IC products

for a number of applications such as communications, computing, consumer, etc.

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an engine for state-of-the-art pluggable transceiver modules such as the OSFP and the QSFP-DD.

combination of our proprietary electro-optic polymer material and the extremely high optical field concentration in the slot waveguide,

the combination of our proprietary electro-optic polymer material and the extremely high optical field concentration in the slot waveguide,

the test modulators demonstrated very low operating voltage.

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multiplexers, demultiplexers, detectors, fiber couplers.

polymer-based ridge waveguide and slot modulators are currently under development to be commercially viable products, our long-term device

development goal is to produce a platform for the 400 Gbps, 800 Gbps, 1600Gbps and beyond fiber optic transceiver market.

This has been

stated in our photonics product roadmap that is publicly available on our website.

The roadmap shows a progression in speed from 50 Gbaud

based modulators to 100 Gbaud based modulators.

The roadmap shows a progression in integration in which the modulators are arrayed to

create a flexible, multichannel P 2 IC™ platform that spans 100 Gbps, 400 Gbps, 800 Gbps, 1.6Tbps (or 1600Gbps), and a

scaling philosophy that will grow to 3.2Tbps line rates.

our polymer-based ridge waveguide and slot modulators are currently under development to be commercially viable products, our long-term

device development goal is to produce a platform for the 400 Gbps, 800 Gbps, 1600Gbps and beyond fiber optic transceiver market.

has been stated in our photonics product roadmap that is publicly available on our website.

The roadmap shows a progression in speed from

50 Gbaud based modulators to 100 Gbaud based modulators.

The roadmap shows a progression in integration in which the modulators are arrayed

to create a flexible, multichannel P 2 IC™ platform that spans 100 Gbps, 400 Gbps, 800 Gbps, 1.6Tbps (or 1600Gbps), and

a scaling philosophy that will grow to 3.2Tbps line rates.

showed bandwidths of polymer-based modulator devices at a major international conference (ECOC – European Conference on Optical

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distance transceiver optical links.

the things needed to achieve the scaling performance of polymers in integrated photonics platforms is within sight today:

of the things needed to achieve the scaling performance of polymers in integrated photonics platforms is within sight today:

Increased r33 (which leads to very low Vpi in modulator devices) and we are currently optimizing our polymers for this.

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Our Polymer Plus™ platform seeks to be additive to standard silicon photonics circuits .

Reduction of optical packaging costs by integration at the

chip level of multiple modulators and also with other optical devices.

Our P 2 IC™ platform seeks to address device

integration .

Reduction of optical packaging costs by integration at the chip level of multiple modulators and also with other optical devices.

Our P 2 IC™ platform seeks to address device integration .

Recent Significant Events and Milestones Achieved

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we prepare to enter the 400Gbps integrated photonics marketplace with a highly competitive, scalable alternative to installed legacy systems.

June 2018, our Company promoted polymer PICs and Solidified Polymer PICs as Part of the Photonics Roadmap at the World Technology Mapping

Forum in Enschede, Netherlands, which includes our Company’s technology of polymers and polymer PICs that have the potential to

drive not only 400Gbps aggregate data rate solutions, but also 800Gbps and beyond.

during June 2018, our Company promoted polymer PICs and Solidified Polymer PICs as Part of the Photonics Roadmap at the World Technology

Mapping Forum in Enschede, Netherlands, which includes our Company’s technology of polymers and polymer PICs that have the potential

to drive not only 400Gbps aggregate data rate solutions, but also 800Gbps and beyond.

2018 we announced the completion (ahead of schedule) of our fully equipped on-site fabrication facility, where we are expanding our high-speed

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and polymer businesses.

March 2019, our Company received the “Best Achievement in PIC Platform” award for our 100 GHz polymer platform from the PIC

International Conference.

in March 2019, our Company received the “Best Achievement in PIC Platform” award for our 100 GHz polymer platform from the

PIC International Conference.

The award recognizes innovative advances in the development and application of key materials systems driving

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The link contained

a plasmonic modulator using electro-optic polymer material as well as a novel metamaterial enhanced graphene photodetector featuring a

200 nm spectral window and a setup-limited 1 bandwidth of 500 GHz.

a plasmonic modulator using electro-optic polymer material as well as a novel metamaterial enhanced graphene photodetector featuring

a 200 nm spectral window and a setup-limited 1 bandwidth of 500 GHz.

The EOE link achieved a world record and unprecedented

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on Optical Communications (ECOC) in Basel, Switzerland on September 22, 2022.

limited' indicates that the measurement was limited by the testing equipment.

University of Kiel, Germany supported the digital signal processor (DSP), and ETHZ supported the photodetector.

November 15, 2022, we announced the receipt of U.S.

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and materials therefor.”

___________________________

Set-up limited' indicates that the measurement

was limited by the testing equipment.

of Kiel, Germany supported the digital signal processor (DSP), and ETHZ supported the photodetector.

December 12, 2022, we announced the receipt of U.S.

patent number 11,506,918 B2 entitled “Hybrid

electro-optic polymer modulator with atomic layer deposition (ALD) sealant layer,” which allows our proprietary polymers to be sealed

to moisture and atmospheric gases in a very low temperature and quasi-hermetic environment through the use of a chip-scale packaging approach

that can be applied in parallel at wafer level (i.e.

in volume) and that eliminates the need for a separate hermetic enclosure or "gold

box." Specifically, our electro-optic polymer modulators will be sealed with low-temperature conformal atomic layer deposition dielectric

layers that are supported on a silicon substrate with passive silicon photonics waveguides.

The sealant process will enable lower cost

system implementation in a high-volume foundry environment.

December 13, 2022, we provided a world-class figure-of merit performance for modulators using electro-optical polymers and a plasmonic

device design in conjunction with Polariton Technologies.

Building from the world record performance and demonstration of a 250 GHz super

high bandwidth electro-optical-electrical (EOE) link that was presented at the 2022 European Conference on Optical Communications ( ECOC) 3 through

a collaboration with ETH Zurich, these latest figure of merit results show the potential for extreme power savings for optical network

equipment and demonstrated clearly that polymer-based technology platforms are positioned well for general implementation.

These results

were achieved using Polariton's electro-optic polymer-based plasmonic devices with Lightwave's electro-optic materials, with a bandwidth

greater than 250 GHz.

While these high-speed results have been reported previously, here Lightwave Logic reported for the first time that

the voltage-length product Figure of Merit (FoM) for this modulator is just 60 Vum, which is approximately 10X better than the performance

of the optical semiconductor modulators that are incumbent in the optical network and internet today.

This figure of merit will allow

ultra-low voltage operation and, enabled by Polariton's plasmonic modulator, the ability to carry significantly more data per modulator

while consuming much less power.

The net positive effect on system level equipment is expected not only to be significant, but perhaps

more importantly, also a strong driver of a ''green photonics" platform.

These results position our Company extremely well for next

generation ultra-high-capacity interconnects for the hyper-scale market.

The combination of electro-optic polymers and plasmonics is becoming

an ideal sunrise technology platform to address the 'Achilles heel' of the data industry:

electro-optic polymer modulator with atomic layer deposition (ALD) sealant layer,” which allows our proprietary polymers to be

sealed to moisture and atmospheric gases in a very low temperature and quasi-hermetic environment through the use of a chip-scale packaging

approach that can be applied in parallel at wafer level (i.e.

in volume) and that eliminates the need for a separate hermetic enclosure

or "gold box." Specifically, our electro-optic polymer modulators will be sealed with low-temperature conformal atomic layer

deposition dielectric layers that are supported on a silicon substrate with passive silicon photonics waveguides.

The sealant process

will enable lower cost system implementation in a high-volume foundry environment.

On December 13, 2022, we provided a world-class figure-of

merit performance for modulators using electro-optical polymers and a plasmonic device design in conjunction with Polariton Technologies.

Building from the world record performance and demonstration of a 250 GHz super high bandwidth electro-optical-electrical (EOE) link

that was presented at the 2022 European Conference on Optical Communications (ECOC) 3 through a collaboration with ETH

Zurich, these latest figure of merit results show the potential for extreme power savings for optical network equipment and demonstrated

clearly that polymer-based technology platforms are positioned well for general implementation.

These results were achieved using Polariton's

electro-optic polymer-based plasmonic devices with Lightwave's electro-optic materials, with a bandwidth greater than 250 GHz.

these high-speed results have been reported previously, here Lightwave Logic reported for the first time that the voltage-length product

Figure of Merit (FoM) for this modulator is just 60 Vum, which is approximately 10X better than the performance of the optical semiconductor

modulators that are incumbent in the optical network and internet today.

This figure of merit will allow ultra-low voltage operation

and, enabled by Polariton's plasmonic modulator, the ability to carry significantly more data per modulator while consuming much less

The net positive effect on system level equipment is expected not only to be significant, but perhaps more importantly, also a

strong driver of a ''green photonics" platform.

These results position our Company extremely well for next generation ultra-high-capacity

interconnects for the hyper-scale market.

The combination of electro-optic polymers and plasmonics is becoming an ideal sunrise technology

platform to address the 'Achilles heel' of the data industry:

high power consumption.

As the industry contemplates

the implementation of PAM4 200G lanes for 2023 and 2024, these optical devices already have shown capability for at least 2X these lane

As the industry contemplates the implementation

of PAM4 200G lanes for 2023 and 2024, these optical devices already have shown capability for at least 2X these lane speeds.

January 12, 2023, our Chief Executive Officer, Dr.

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industry as well as the opportunity to meet many other key players within the community.

In addition to

serving as co-chair of the event, Dr.

Lebby hosted a presentation for in-person attendees within the "Scaling PICs in Volume Using

Foundries" track, focusing on the industry's consideration of electro-optic polymer modulators due to their increased modulation

speed, lower power consumption, and potential for future multi-Tbps aggregated data-rates in the next decade.

In addition to serving as co-chair of the event,

Lebby hosted a presentation for in-person attendees within the "Scaling PICs in Volume Using Foundries" track, focusing

on the industry's consideration of electro-optic polymer modulators due to their increased modulation speed, lower power consumption,

and potential for future multi-Tbps aggregated data-rates in the next decade.

Additionally, Dr.

discussed the latest results on foundry fabricated EO polymers, as well as the latest work in photonics roadmaps on both the integrated

photonics (PIC) level as well as PIC packaging level.

In May 2023, we announced, that in conjunction

with our research partners at the Karlsruhe Institute of Technology and Solarix, the achievement of record optical modulator performance

using our Company's latest Perkinamine ® Series 5 material at extremely low cryogenic temperatures, delivering the

potential to revolutionize applications in supercomputers, quantum circuits and advanced computing systems.

Building from the world

record performance and demonstration of super high bandwidth, and super low voltage electro-optic modulators with Karlsruhe Institute

of Technology and Silorix over the past year, the results have the potential to enable supercomputing and quantum systems to be more

competitive than standard computational systems given its faster speeds at low temperatures.

Lebby discussed the latest results on

foundry fabricated EO polymers, as well as the latest work in photonics roadmaps on both the integrated photonics (PIC) level as well

as PIC packaging level.

_____________________________

The groundbreaking

results were presented by Stefan

Koepfli (ETH Zurich) as part of a peer-reviewed post-deadline paper presented at the prestigious

2022 European Conference on Optical Communications (ECOC) in Basel, Switzerland on September 22, 2022.

The post-deadline

paper is titled ">500 GHz Bandwidth Graphene Photodetector Enabling Highest-Capacity Plasmonic-to-Plasmonic Links."

On May 4, 2023, we announced,

that in conjunction with our research partners at the Karlsruhe Institute of Technology and Solarix, the achievement of record optical

modulator performance using our Company's latest Perkinamine ® Series 5 material at extremely low cryogenic temperatures,

delivering the potential to revolutionize applications in supercomputers, quantum circuits and advanced computing systems.

Building from

the world record performance and demonstration of super high bandwidth, and super low voltage electro-optic modulators with Karlsruhe

Institute of Technology and Silorix over the past year, the results have the potential to enable supercomputing and quantum systems to

be more competitive than standard computational systems given its faster speeds at low temperatures.

This achievement opens huge opportunities

to our Company in the areas of supercomputing and quantum systems by giving access to very high data rate, low power optical modulators.

The groundbreaking results were presented by Stefan Koepfli (ETH Zurich)

as part of a peer-reviewed post-deadline paper presented at the prestigious 2022 European Conference on Optical Communications (ECOC)

in Basel, Switzerland on September 22, 2022.

The post-deadline paper is titled ">500 GHz Bandwidth Graphene Photodetector

Enabling Highest-Capacity Plasmonic-to-Plasmonic Links."

forward to diligently meet our goals, we continue to work closely with our packaging and foundry partners for 112Gbaud prototypes, and

we are advancing our reliability and characterization efforts to support our prototyping.

Depending on electrical encoding schemes such

as PAM4, or PAM8, or wavelength optical multiplexing, these Gigabaud rates roughly translate to 200Gbps and 300Gbps per lane, and are

the key speed rates for emerging 800Gbps to future possible 1200Gbps applications.

Our partnership with silicon-based foundries will allow

us to scale commercial volumes of electro-optic polymer modulator devices using large silicon wafers, and we are currently working to

have our fabrication processes accepted into foundry PDKs (process development kits).

On May 18, 2023, we announced

the receipt of U.S.

patent number 11,614,670 B2 entitled "Electro-optic

polymer devices having high performance claddings and methods of preparing the same," which is a cutting-edge design technique, enhancing

the performance of polymer modulators through the use of innovative polymer cladding design that is amenable for high-volume foundry fabrication

when integrated with silicon photonics.

The patent details a novel fabrication process that allows our proprietary polymers to perform

more effectively and to be fabricated by silicon foundries in a high-volume manufacturing environment.

It also introduces a more efficient

process for improving the performance of the polymer claddings, leading to increased poling efficiency and lower losses in both optical

and RF aspects.

This patent is helping us move forward with our commercial discussions through the enabling of enhanced performance and

simplified manufacturing of our polymer modulators with silicon photonics.

25, 2023, we announced our Company's first commercial material supply license agreement for our Perkinamine ® chromophore

This agreement is to provide Perkinamine ® chromophore materials for polymer based photonic devices

and photonic integrated circuits (PICs).

Supplying licensed materials is one prong of our Company's three-prong revenue model and business

strategy that includes polymer modulator products as well as technology transfer.

This agreement recognizes market acceptance and competitive

advantage of our technology and validates the first prong of our business model.

Further, it represents tangible commercial progress for

electro-optic polymers as part of our business plan.

31, 2023, we announced the receipt of U.S.

patent number

11,661,428 entitled "Nonlinear Optical Chromophores, Nonlinear Optical Materials Containing the Same, and Uses Thereof in Optical

Devices," which details an innovative organic chromophore design using a novel 'thiophene bridge' to significantly improve material

performance in a production environment.

This is accomplished by designing thiophene-containing bridging groups that are positioned between

the electron-donating and electron-accepting ends of the chromophore.

These designs provide nonlinear optical chromophores with significantly

improved optical properties and improved stability.

We expect this patent will help us progress our commercial discussions with potential

June 2023, we announced the publication of World International

Property Organization (WIPO) PCT Patent Publication - PCT Patent No.

WO 2023/102066 entitled “Nonlinear Optical Materials Containing

High Boiling Point Solvents, and Methods of Efficiently Poling The Same,” which illustrates

novel organic chemical structural designs that offer increased poling efficiency, as well as thermal stability for electro-optic materials.

These designs provide non-linear optical chromophores with significantly improved material properties and stability for processing and

fabrication by commercial foundries.

Specifically, the patent teaches material processing and poling methods that directly leads to significantly

enhanced electro-optic efficiency (r33) as compared to previous poling techniques.

We consider this WIPO

PCT Patent Publication to be a strong step forward in the scaling and volume commercialization of

our polymer technology platform.

August 1, 2023, we appointed respected industry executive Laila Partridge to our Board of Directors.

Partridge brings

over 30 years of executive experience in technology, corporate innovation and finance to our Board – having worked with a wide range

of technologies, including telecommunications, internet infrastructure, AI, internet of things and more.

She was named by Boston Business

Journal as one of the ten "2017 Women to Watch in Science and Technology".

She currently serves as Founder and Chief Executive

Officer of The HardTech Project, a new venture with a novel approach to early-stage hardware investing.

Previously, she was Managing Director

of the STANLEY + Techstars Accelerator where she directed a global effort for Stanley Black & Decker's Chief Technology

Officer to identify and invest in innovative technologies for industrial applications with an emphasis on electrification, sustainability

and advanced manufacturing.

Prior to that, she began her technology career at Intel Capital, serving as a Director of Strategic Investments.

Partridge began her career at Wells Fargo, where she ultimately achieved the role of VP of Corporate Banking, having led complex corporate

finance transactions for the company's senior secured debt agencies in the Midwest.

Partridge brings significant board experience

to the Board of Directors, including at Intel Capital serving privately-held technology companies, and in her current role as an independent

Director at Cambridge Trust (NASDAQ:

She holds a Bachelor's degree with Honors from Wellesley College.

move forward to diligently meet our goals, we continue to work closely with our packaging and foundry partners for 112Gbaud prototypes,

and we are advancing our reliability and characterization efforts to support our prototyping.

Depending on electrical encoding schemes

such as PAM4, or PAM8, or wavelength optical multiplexing, these Gigabaud rates roughly translate to 200Gbps and 300Gbps per lane, and

are the key speed rates for emerging 800Gbps to future possible 1200Gbps applications.

Our partnership with silicon-based foundries will

allow us to scale commercial volumes of electro-optic polymer modulator devices using large silicon wafers, and we are currently working

to have our fabrication processes accepted into foundry PDKs (process development kits).

These are the recipes that foundries use to manufacture

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Capital Requirements

As a development

stage company, we do not generate revenues.

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.

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 March 31, 2023

to three months ended March 31, 2022

As a development stage company,

we had no revenues during the three months ended March 31, 2023 and March 31, 2022.

The Company is in various stages of photonic device

and materials development and evaluation with potential customers and strategic partners.

The Company expects to obtain a revenue stream

from technology licensing agreements, technology transfer agreements and the production and direct sale of its own electro-optic device

Comparison of three months

ended June 30, 2023 to three months ended June 30, 2022

Company's first commercial agreement occurred in May 2023 from a material supply and license agreement (the “License Agreement”)

that incorporates the Company's patented electro-optic polymer materials for use in manufacturing photonic devices.

are recognized over time commencing with the License Agreement.

No revenues were recognized for the three-month period ending June 30,

2023, since the licensee did not requisition material as of June 30, 2023.

Pursuant to the License Agreement, an up-front licensing fee

in the amount of $50,000 was paid during the three-month period ending June 30, 2023 and is recorded in short term liability deferred

revenue in the Company’s balance sheet as of June 30, 2023.

Operating Expenses

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Months Ending

June 30, 2023

June 30, 2022

Research and development

General and administrative

Research and development expenses

increased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to increases

in research and development non-cash stock option amortization, prototype device development expenses, research and development salary

expenses, recruiting fees, research and development consulting expenses, testing expenses, laboratory and wafer fabrication materials

and supplies, depreciation and research and development travel expenses.

Research and development non-cash

stock option amortization expenses increased by $426,778 in the three months ended March 31, 2023, compared to the same period in 2022.

Prototype device development expenses increased by $223,856 in the three months ended March 31, 2023, compared to the same period in 2022.

Research and development salary expenses increased by $143,675 in the three months ended March 31, 2023, compared to the same period in

Recruiting fees increased by $106,830 in the three months ended March 31, 2023, compared to the same period in 2022.

development consulting expenses increased by $62,674 in the three months ended March 31, 2023, compared to the same period in 2022.

Testing expenses increased by $62,597 in the three months ended March 31, 2023, compared to the same period in 2022.

Laboratory and wafer

fabrication materials and supplies increased by $48,832 in the three months ended March 31, 2023, compared to the same period in 2022.

Depreciation expenses increased by $36,152 in the three months ended March 31, 2023, compared to the same period in 2022.

development travel expenses increased by $33,484 in the three months ended March 31, 2023, compared to the same period in 2022.

Research and development

expenses increased for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily due to increases

in research and development salary expenses, prototype device development expenses, research and development non-cash stock option amortization,

employee relocation expenses, chemistry and wafer fabrication materials and supplies, recruiting fees and research and development consulting

Research and development

salary expenses increased by $498,383 in the three months ended June 30, 2023, compared to the same period in 2022.

Prototype device development

expenses increased by $207,601 in the three months ended June 30, 2023, compared to the same period in 2022.

Research and development

non-cash stock option amortization expenses increased by $204,269 in the three months ended June 30, 2023, compared to the same period

Employee relocation expenses increased by $178,626 in the three months ended June 30, 2023, compared to the same period

Chemistry and wafer fabrication materials and supplies increased by $66,533 in the three months ended June 30, 2023, compared

to the same period in 2022.

Recruiting fees increased by $60,397 in the three months ended June 30, 2023, compared to the same period

Research and development consulting expenses increased by $49,020 in the three months ended June 30, 2023, compared to the same

period in 2022.

We expect to continue to incur

substantial research and development expense developing and commercializing our photonic devices, and electro-optic materials platform.

substantial research and development expenses developing and commercializing our photonic devices, and electro-optic materials platform.

These expenses will increase as a result of accelerated development effort to support commercialization of our non-linear optical polymer

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General and administrative expenses

decreased for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to increases

in legal fees, general and administrative non-cash stock option amortization, insurance, consulting fees and general and administrative

travel expenses.

Legal expenses increased by $239,406

in the three months ended March 31, 2023, compared to the same period in 2022.

General and administrative non-cash stock option amortization

increased by $80,700 in the three months ended March 31, 2023, compared to the same period in 2022.

increased for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily due to increases in

insurance, general and administrative consulting fees, legal fees, shareholder meeting expenses and accounting expenses offset by a decrease

in general and administrative non-cash stock option amortization.

Insurance expenses increased by

in the three months ended March 31, 2023, compared to the same period in 2022.

Consulting fees increased by $35,000 in the three months

ended March 31, 2023, compared to the same period in 2022.

General and administrative travel expenses increased by $22,886 in the three

months ended March 31, 2023, compared to the same period in 2022.

$38,452 in the three months ended June 30, 2023, compared to the same period in 2022.

General and administrative consulting fees increased

by $31,500 in the three months ended June 30, 2023, compared to the same period in 2022.

Legal expenses increased by $26,716 in the three

months ended June 30, 2023, compared to the same period in 2022.

Shareholder meeting expenses increased by $22,726 in the three months

ended June 30, 2023, compared to the same period in 2022.

Accounting expenses increased by $21,686 in the three months ended June 30,

2023, compared to the same period in 2022.

General and administrative non-cash stock option amortization decreased by $29,862 in the three

months ended June 30, 2023, compared to the same period in 2022.

Other Income (Expense)

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Months Ending

June 30, 2023

June 30, 2022

Other Income/(Expense)

Other income (expenses) increased

for the three months ended March 31, 2023, as compared to the three months ended March 31, 2022, primarily due to an increase in commitment

fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement in the amount of $301,481.

Other income (expenses)

increased for the three months ended June 30, 2023, as compared to the three months ended June 30, 2022, primarily due to an increase

in commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement in the

amount of $173,088.

For the Three

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Months Ending

June 30, 2023

June 30, 2022

Net loss was $5,457,747 and $3,802,598

for the three months ended March 31, 2023 and 2022, respectively, for an increase of $1,920,257 due primarily to increases in non-cash

stock option amortization, commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase

agreement, legal fees, prototype device development expenses, research and development salary expenses, recruiting fees, consulting fees,

testing expenses, travel expenses, insurance expenses, laboratory and wafer fabrication materials and supplies and depreciation.

for the three months ended June 30, 2023 and 2022, respectively, for an increase of $1,655,149 due primarily to increases in research

and development salary expenses, prototype device development expenses, employee relocation expenses, non-cash stock option amortization,

commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement, chemistry

and wafer fabrication materials and supplies, recruiting fees, consulting fees, insurance expenses, legal fees, shareholder meeting expenses

and accounting expenses.

Comparison of six months ended June 30, 2023 to

six months ended June 30, 2022

revenues are recognized over time commencing with the License Agreement in May 2023.

No revenues were recognized for the six-month period

ending June 30, 2023, since the licensee did not requisition material as of June 30, 2023.

Pursuant to the License Agreement, an up-front

licensing fee in the amount of $50,000 was paid during the six-month period ending June 30, 2023 and is recorded in short term liability

deferred revenue in the Company’s balance sheet as of June 30, 2023.

Operating Expenses

Months Ending

June 30, 2023

June 30, 2022

Research and development

General and administrative

Research and development

expenses increased for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to increases

in research and development salary expenses, research and development non-cash stock option amortization, prototype device development

expenses, employee relocation expenses, recruiting fees, chemistry and wafer fabrication materials and supplies, research and development

consulting expenses, testing expenses and research and development travel expenses.

Research and development

salary expenses increased by $677,758 in the six months ended June 30, 2023, compared to the same period in 2022.

Research and development

non-cash stock option amortization expenses increased by $631,048 in the six months ended June 30, 2023, compared to the same period in

Prototype device development expenses increased by $431,457 in the six months ended June 30, 2023, compared to the same period in

Employee relocation expenses increased by $178,626 in the six months ended June 30, 2023, compared to the same period in 2022.

fees increased by $167,226 in the six months ended June 30, 2023, compared to the same period in 2022.

Chemistry and wafer fabrication

materials and supplies increased by $115,366 in the six months ended June 30, 2023, compared to the same period in 2022.

development consulting expenses increased by $111,694 in the six months ended June 30, 2023, compared to the same period in 2022.

and development testing expenses increased by $95,805 in the six months ended June 30, 2023, compared to the same period in 2022.

and development travel expenses increased by $66,510 in the six months ended June 30, 2023, compared to the same period in 2022.

We expect to continue to incur

substantial research and development expenses developing and commercializing our photonic devices, and electro-optic materials platform.

These expenses will increase as a result of accelerated development effort to support commercialization of our non-linear optical polymer

materials technology;

to build photonic device prototypes;

working with semiconductor foundries;

hiring additional technical and support

engaging senior technical advisors;

pursuing other potential business opportunities and collaborations;

customer testing and

and incurring related operating expenses.

General and administrative expenses

increased for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to increases in legal

fees, insurance, general and administrative consulting fees, general and administrative non-cash stock option amortization, accounting

expenses and general and administrative travel expenses.

Legal expenses increased by $266,121

in the six months ended June 30, 2023, compared to the same period in 2022.

Insurance expenses increased by $94,388 in the six months

ended June 30, 2023, compared to the same period in 2022.

General and administrative consulting fees increased by $66,500 in the six months

ended June 30, 2023, compared to the same period in 2022.

General and administrative non-cash stock option amortization increased by $50,838

in the six months ended June 30, 2023, compared to the same period in 2022.

Accounting expenses increased by $40,234 in the six months

ended June 30, 2023, compared to the same period in 2022.

General and administrative travel expenses increased by $36,375 in the six months

ended June 30, 2023, compared to the same period in 2022.

Other Income (Expense)

Months Ending

June 30, 2023

June 30, 2022

Other Income/(Expense)

Other income (expenses)

increased for the six months ended June 30, 2023, as compared to the six months ended June 30, 2022, primarily due to an increase in commitment

fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement in the amount of $474,569.

Months Ending

June 30, 2023

June 30, 2022

$ 7,358,359 $

Net loss was $10,933,765 and $7,358,359

for the six months ended June 30, 2023 and 2022, respectively, for an increase of $3,575,406 due primarily to increases in research and

development salary expenses, non-cash stock option amortization, commitment fee associated with the purchase of shares by an institutional

investor for sale under a stock purchase agreement, prototype device development expenses, employee relocation expenses, consulting fees,

recruiting fees, chemistry and wafer fabrication materials and supplies, travel expenses, testing expenses, legal fees, insurance expenses

and accounting expenses.

Liquidity and Capital Resources

source of operating cash inflows was proceeds from the sale of common stock to Lincoln Park pursuant to purchase agreements with an institutional

investor as described in Note 9 to the financial statements herein and proceeds received pursuant to the exercise of options and warrants.

All of the registered shares under

the January 21, 2019 purchase agreement with Lincoln Park have been issued as of June 30, 2021.

On July 2, 2021, the Company filed

a $100 million universal shelf registration statement which became effective on July 9, 2021.

On October 4, 2021, our Company entered

into a purchase agreement (the “ 2021 Purchase Agreement ”) to sell up to $33 million of common stock over a 36-month

period, and all of the registered shares under the 2021 Purchase Agreement with Lincoln Park have been issued as of the date of this filing.

On February 28, 2023, our Company entered into the 2023 Purchase Agreement to sell up to $30 million of common stock over a 36-month period,

with $26,999,998 remaining on the 2023 Purchase Agreement as of the date of this filing.

On December 9, 2022, our Company entered into

the Roth Sales Agreement with Roth Capital , as sales agent, whereby pursuant to the Roth

Sales Agreement, our Company may offer and sell up to $35,000,000 in shares of our common stock, from time to time through Roth Capital.

As of the date of this filing $35 million remains available to our Company pursuant to the Roth Sales Agreement.

the three months ended March 31, 2023, the Company received $5,499,377 in proceeds pursuant to the 2021 Purchase agreement with the institutional

investor and $25,750 in proceeds pursuant to the exercise of options and warrants.

During the year ended December 31, 2022, the Company

received $12,775,268 in proceeds pursuant to the 2021 Purchase agreement with the institutional investor and $653,895 in proceeds pursuant

to the exercise of options and warrants.

the three months ended March 31, 2023, our primary sources of cash outflows from operations included payroll, rent, utilities, payments

to vendors including prototypes development and foundries expenses, third-party service providers and payroll taxes related to cashless

option exercise.

During the year ended December 31, 2022, our primary sources of cash outflows from operations included payroll, rent,

utilities, payments to vendors including prototypes development and foundries expenses, third-party service providers and payroll taxes

related to cashless option exercise.

source of operating cash inflows was proceeds from the sale of common stock to Lincoln Park pursuant to purchase agreements with the institutional

investor and proceeds from sale of common stock pursuant to an at the market sale agreement with Roth Capital investment banking company

(all as described in Note 10 to the Financial Statements), proceeds received pursuant to the exercise of options and warrants and a proceed

received under the License Agreement which the Company recorded as deferred revenue as of June 30, 2023.

On July 2, 2021, the

Company filed with the U.S.

Securities and Exchange Commission a $100 million universal shelf registration statement that became effective

on July 9, 2021.

This shelf registration statement registered shares under the October 4, 2021 purchase agreement with Lincoln Park (the

“ 2021 Purchase Agreement ”), the 2023 Purchase Agreement (defined below) and the Roth Sales Agreement (defined below).

All of the registered shares under the 2021 Purchase Agreement have been issued as of June 30, 2023.

On February 28, 2023, our Company

entered into a purchase Agreement (the “ 2023 Purchase Agreement ”) to sell up to $30 million of common stock over a

36-month period, with $18 million remaining on the 2023 Purchase Agreement as of the date of this filing.

On December 9, 2022, our Company

entered into an at the market sale agreement with Roth Capital , as sales agent (the “ Roth

Sales Agreement ”), whereby pursuant to the Roth Sales Agreement, our Company may offer and sell up to $35,000,000 in shares

of our common stock, from time to time through Roth Capital.

As of the date of this filing $33 million remains available to our Company

pursuant to the Roth Sales Agreement.

During the six months

ended June 30, 2023, our Company received $14,950,409 in proceeds pursuant to the 2021 Purchase Agreement and 2023 Purchase Agreement,

$643,529 in proceeds pursuant to the Roth Sales Agreement, $456,801 in proceeds pursuant to the exercise of options and warrants and $50,000

in a proceed received under the License Agreement which the Company recorded as deferred revenue as of June 30, 2023.

During the year

ended December 31, 2022, our Company received $12,775,268 in proceeds pursuant to the 2021 Purchase Agreement and $653,895 in proceeds

pursuant to the exercise of options and warrants.

the six months ended June 30, 2023, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to

vendors including prototypes development and foundries expenses, third-party service providers and payroll taxes related to cashless option

During the year ended December 31, 2022, our primary sources of cash outflows from operations included payroll, rent, utilities,

payments to vendors including prototypes development and foundries expenses, third-party service providers and payroll taxes related to

cashless option exercise.

expenditures and capital requirements will depend on numerous factors, including:

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We expect that we will incur approximately $1,640,000 of expenditures per month over the next

the 2023 Purchase Agreement and the Roth Sales Agreement (all as more fully described below) to provide us with sufficient funds

to maintain our operations over that period of time.

Our current cash position enables us to finance our operations through July 2024

before we will be required to replenish our cash reserves pursuant to the 2023 Purchase Agreement or the Roth Sales Agreement.

cash requirements are expected to increase at a rate consistent with our Company’s path to revenue growth as we expand our activities

and operations with the objective of commercializing our electro-optic polymer technology.

the 2023 Purchase Agreement and the Roth Sales Agreement, which we detail below, to provide us with sufficient funds to maintain

our operations over that period of time.

Our current cash position enables us to finance our operations through February 2025 before we

will be required to replenish our cash reserves pursuant to the 2023 Purchase Agreement or the Roth Sales Agreement.

Our cash requirements

are expected to increase at a rate consistent with our Company’s path to revenue growth as we expand our activities and operations

with the objective of commercializing our electro-optic polymer technology.

We currently have no debt to service.

7 unchanged sentences

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

2021 and 2023 Purchase Agreements

- Lincoln Park

2021 and 2023 Purchase

Agreements - Lincoln Park

4, 2021 , our Company entered into the 2021 Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase

5 unchanged sentences

of our common stock (subject to certain limitations) from time to time over a 36-month period.

Pursuant the 2023 Purchase Agreement, Lincoln

Park is obligated to make purchases as the Company directs in accordance with the 2023 Purchase Agreement , which may be terminated by

the Company at any time, without cost or penalty.

Pursuant to the 2023 Purchase Agreement,

Lincoln Park is obligated to make purchases as the Company directs in accordance with the 2023 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

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Analysis of Cash Flows

For the three months ended March 31, 2023

Net cash used in operating activities

was $3,748,656 for the three months ended March 31, 2023, primarily attributable to the net loss of $5,476,018 adjusted by $1,795,842

For the six months ended June 30, 2023

Net cash used in operating

activities was $7,004,008 for the six months ended June 30, 2023, primarily attributable to the net loss of $10,933,765 adjusted by $3,389,804

in options issued for services, $133,854 amortization of deferred compensation, $582,426 in common stock issued for services, $531,046

in depreciation expenses and patent amortization expenses, $46,381 amortization of right of use asset, ($91,853) in prepaid expenses and

($733,476) in accounts payable, accrued bonuses and accrued expenses.

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 by investing activities

was $289,592 for the three months ended March 31, 2023, consisting of $106,475 in cost for intangibles, $246,053 in asset additions for

the Colorado headquarter facility and labs offset by $642,120 in a loan repayment.

Net cash provided by financing activities

was $5,525,127 for the three months ended March 31, 2023 and consisted of $25,750 in proceeds from exercise of options and warrants and

$5,499,377 in proceeds from resale of common stock to an institutional investor.

31, 2023, our cash and cash equivalents totaled $26,168,214, our assets totaled $30,810,139, our liabilities totaled $976,973 and we had

stockholders’ equity of $29,833,166.

For the three months ended March 31, 2022

in depreciation expenses and patent amortization expenses, $92,812 amortization of right of use asset, $581 loss on disposal of property

and equipment, ($162,748) in prepaid expenses and ($638,019) in accounts payable, 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 by investing

activities was $513,095 for the six months ended June 30, 2023, consisting of $177,245 in cost for intangibles, $978,560 in asset additions

for the Colorado headquarter facility and labs offset by $642,120 in a loan repayment and $590 in proceeds on sale of property and equipment.

Net cash provided by financing

activities was $16,050,739 for the six months ended June 30, 2023 and consisted of $456,801 in proceeds from exercise of options and warrants,

$14,950,409 in proceeds from resale of common stock to an institutional investor and $643,529 in proceeds from at the market sale of common

stock by an investment banking company.

30, 2023, our cash and cash equivalents totaled $32,635,787, our assets totaled $40,552,039, our liabilities totaled $3,775,958 and we

had stockholders’ equity of $36,776,081.

For the six months ended

June 30, 2022

used in operating activities was $5,245,275 for the six months ended June 30, 2022, primarily attributable to the net loss of $7,358,359

adjusted by $2,798,550 in options issued for services, $43,221 amortization of deferred compensation, $107,857 in common stock issued

for services, $496,549 in depreciation expenses and patent amortization expenses, ($550,988) in prepaid expenses, ($888,764) in accounts

payable, accrued bonuses and accrued expenses and $106,659 in cashless option exercise expense.

Net cash used in operating activities

was $2,545,689 for the three months ended March 31, 2022, primarily attributable to the net loss of $3,555,761 adjusted by $1,338,932

in options issued for services, $22,930 amortization of deferred charges, $60,213 in common stock issued for services, $244,168 in depreciation

expenses and patent amortization expenses, $18,090 in prepaid expenses, ($750,376) in accounts payable, accrued bonuses and accrued expenses

and $76,115 in cashless option exercise expense.

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 by investing activities

was $221,991 for the three months ended March 31, 2022, consisting of $39,706 in cost for intangibles and $182,285 in asset additions

for the Colorado headquarter facility and labs.

Net cash provided by financing activities

was $3,672,570 for the three months ended March 31, 2022 and consisted of $26,850 in proceeds from exercise of options, $3,686,817 in

proceeds from resale of common stock to an institutional investor offset by $41,097 in cashless option exercise tax payments.

consisted of payments for research and development, legal, professional and consulting expenses, rent and other expenditures necessary

to develop our business infrastructure.

used by investing activities was $414,565 for the six months ended June 30, 2022, consisting of $41,905 in cost for intangibles and $372,660

in asset additions for the Colorado headquarter facility and labs.

provided by financing activities was $7,056,977 for the six months ended June 30, 2022, and consisted of $422,925 in proceeds from exercise

of options and warrants, $6,705,693 in proceeds from resale of common stock to an institutional investor offset by $71,641 in cashless

option exercise tax payments.

30, 2022, our cash and cash equivalents totaled $24,829,749, our assets totaled $29,007,064, our liabilities totaled $1,047,887 and we

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Contractual Obligations

been no material changes outside the ordinary course of business in our contractual commitments during the three months ended March 31,

See Note 7 to the financial statements herein for a discussion of our contractual commitments.

22, 2022, our Company entered into an amendment to its operating lease to lease an additional 9,684 square feet of adjacent office and

warehouse space that became effective June 1, 2023.

See Note 8 to the financial statements herein for a discussion of the lease

amendment and our other our contractual commitments.

There have been no other material changes outside the ordinary course of business

in our contractual commitments during the six months ended June 30, 2023.

Significant Accounting Policies

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis