What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-20 compared with 2025-03-18 · 323 added, 324 removed, 56 unchanged (92% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management’s

4 unchanged sentences

within this Annual Report on Form 10-K and the "Forward-Looking Statements" explanation included elsewhere herein.

is a technology platform company leveraging its proprietary engineered electro-optic (EO) polymers to transmit data at higher

speeds with less power in a small form factor.

The Company’s high activity and high stability organic polymers allow it to create

next-generation photonic EO devices that convert data from electrical signals into light/optical signals for applications in telecommunications,

and for data transmission potentially used to support generative AI.

Our differentiation

at the modulator device level is in higher speed, lower power consumption, simplicity of manufacturing, small footprint (size), and reliability.

We have demonstrated the electro-optic polymers potential for higher speed and lower power consumption in packaged devices, and during

2024, we continued to make advances in techniques to translate our world class material properties to efficient, reliable modulator devices

with commercial foundries.

We are currently focused on a) working with potential and existing customers to integrate our proprietary materials

into our customers’ specific PIC and device architecture.

b) testing and demonstrating the superior performance, simplicity of manufacturability

and reliability of our devices, including in conjunction with the silicon photonics manufacturing ecosystem c) providing our potential

and existing customers with the proper Process Development Kits (PDKs) to enable the efficient and fast integration of our materials into

their own design and manufacturing plans.

In 2024 we continued to work with silicon-based foundry partners to help scale in volume our

polymer modulator devices and we received working modulator chips from these foundries.

We have advanced and matured our interactions

with our foundry partners and we continue to receive working modulator chips for prototyping.

Silicon-based foundries are semiconductor

fabrication plants developed for the electronics IC business, that are now engaging with silicon photonics to increase their wafer throughput.

Partnering with silicon-based foundries not only demonstrates that our polymer technology can be transferred into standard production

lines using standard equipment, it also allows us to efficiently utilize our capital.

The foundry partnerships will allow us to scale

our high-performance polymer optical engines quickly and efficiently.

We have now received silicon wafers that range up to 200mm in diameter,

which aligns well with foundry manufacturing.

Our extremely

strong and broad patent portfolio allows us to optimize our business model in three areas:

1) Traditional focus on polymer materials development,

2) Patent licensing and 3) Technology transfer to foundries.

We are continually looking to strengthen our patent portfolio both by internal

inventions and acquisition of intellectual property.

initially targeting applications in fiber optic data communications and telecommunications markets, in particular ultra-high bandwidth

optical connections deployed inside and between datacenters and/or AI clusters.

In addition, we are exploring other applications that

include automotive/LIDAR, sensing, displays, storage, aerospace and defense, etc., for our polymer technology platform.

Our goal is to

have our unique polymer technology platform become ubiquitous across multiple market verticals over and above the optical fiber optic

communications markets.

Intelligence (AI) has been integrating deeper within our daily activities with applications to make us more efficient and possibly smarter.

The impact on the internet is huge, and the internet is based on an optical network that utilizes data centers to route and switch traffic

or information to and from destinations.

Data centers are being upgraded today in a fashion that the industry has not seen before with

significant investments of capital.

The expected demands of increased traffic, information, and data driven by AI is changing the way

the internet is being operated.

AI is now creating new and interesting market opportunities to upgrade the internet.

Three of these opportunities

are important today:

density, speed, and low power and these are very well aligned with our high performance electro-optic polymers modulator

We are designing high performance polymer modulator optical engines to support the rise and growth of AI as it generates more

information that will travel through the internet and optical network.

While we are not directly an AI company designing electronic processors,

we do see immediate benefits of enabling higher levels of information to cross the internet using our optical polymer modulator platform.

For discussion

and analysis pertaining to 2024 overview and highlights as compared to 2023, please refer to the Company’s Annual Report on Form

10-K, filed with the Securities and Exchange Commission (“SEC”) on March 18, 2025.

Lightwave Logic, Inc.

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

In addition, our materials are intended to be compatible with complementary metal-oxide-semiconductor (“CMOS”) fabrication

processes, which may facilitate integration into established semiconductor foundry workflows.

Reduced drive voltage operation may enable

lower system-level power consumption and simplified driver electronics in specific implementations.

We do not manufacture optical

transceivers, photonic devices, or complete optical modules.

Instead, our strategy is to commercialize our technology through a combination

of material sales, intellectual property licensing, process design kit (“PDK”) enablement, and royalty or other fee-based

arrangements tied to customer production.

Our customers and prospective

customers include semiconductor foundries, silicon photonics device designers, optical module manufacturers, and system integrators serving

artificial intelligence (“AI”), cloud computing, data center, and telecommunications markets.

We pursue customer adoption

through a structured commercialization process designed to support evaluation, integration, qualification, and production readiness within

established semiconductor manufacturing ecosystems.

As of January 2026, multiple

customer programs are progressing through defined development stages under our commercialization framework.

The timing and scale of potential

production revenue depend on customer product qualification and adoption cycles, technical validation, manufacturing readiness, end-market

demand, and broader industry conditions.

Unless the context otherwise

requires, all references to the “Company,” “we,” “our” or “us” and other similar terms

means Lightwave Logic, Inc.

Also, this Form 10-K Annual Report may include the names of various government agencies and the trade names

of other companies.

Unless specifically stated otherwise, the use or display by us of such other parties’ names and trade names

in this report is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, any of these other

Commencement of Commercial Operations

commenced commercial operations in May 2023.

Presently, our commercial operations consist of a material

supply license agreement to provide Perkinamine ® chromophore

We commenced commercial operations

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).

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progress for electro-optic polymers as part of our Company's business plan.

Our Company is also

in various stages of photonic proprietary device designs and materials development and evaluation with potential customers and strategic

We expect to continue to obtain a revenue stream from technology licensing agreements, and to obtain additional revenue streams

from technology transfer agreements and sale of our electro-optic proprietary device designs.

During 2025, we entered into a non-recurring engineering

joint development arrangement with a customer to develop an electro-optical polymer-based modulator chip for use in communication applications

Business Strategy

first revenue stream was obtained from our entry into a material supply license agreement to

provide Perkinamine ® chromophore

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

is also in various stages of photonic device designs and materials development and evaluation with potential customers and strategic partners.

We expect to continue to obtain a revenue stream from technology licensing agreements, and to obtain additional revenue streams from technology

transfer agreements and sale of our proprietary electro-optic devices.

Specifically,

our business strategy provides that our revenue stream will be derived from one or some combination of the following:

(i) technology licensing

for specific product application;

(ii) joint venture relationships with significant industry leaders;

and (iii) the sale of our own proprietary

electro-optic device designs.

Our objective is to be a leading provider of proprietary technology and know-how in the electro-optic materials

In order to meet this objective, we intend to continue to:

Further the development of proprietary organic electro-optic polymer material systems

Develop photonic device designs based on our

P 2 IC™ technology

Develop proprietary intellectual property

Grow our device design development

Partner with silicon-based foundries who can scale volume quickly

Grow our product reliability and quality assurance capabilities

Grow our optoelectronic packaging and testing capabilities

Grow our commercial material manufacturing capabilities

Maintain/develop strategic relationships with major telecommunications and data communications companies to further the awareness and commercialization of our technology platform

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

Create Organic Polymesr-Enabling design and production

of Electro-Optic Modulators

intend to utilize our proprietary optical polymer technology to create an initial portfolio of commercial electro-optic polymer product

devices designs with applications for various markets, including telecommunications, data communications and data centers.

These product

devices will be part of our proprietary photonics integrated circuit (PIC) technology platform .

Business Model - Material

+ IP Licensing

Our business model is centered

on the commercialization of proprietary electro-optic polymer materials and related intellectual property through material supply and

licensing arrangements.

We do not currently seek

to manufacture finished optical transceivers, discrete photonic devices, or complete optical modules.

Our strategy is to enable customers

to incorporate our materials into their own device platforms and manufacturing ecosystems, leveraging established semiconductor foundry

infrastructure.

Our revenue model may include

one or more of the following components:

Material Sales

We supply EO polymer materials

to customers for evaluation, prototyping, and potential commercial production.

Material sales may occur during development phases as

well as during volume manufacturing, subject to customer qualification and demand.

If customer programs transition

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

Intellectual Property

We may enter into licensing

agreements covering aspects of our polymer compositions, device designs, integration processes, and related intellectual property.

arrangements may include:

license fees,

• Development

or milestone-based payments, or

• Field-of-use

or application-specific licenses.

The structure and economics

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

Royalty or Production-Based

In certain arrangements,

we may receive royalties or other production-based payments tied to the manufacture or sale of devices incorporating our materials or

licensed technology.

The structure, rate, and duration of such payments depend on negotiated terms and customer product lifecycles.

There can be no assurance

that any given customer program will result in royalty-bearing production.

Revenue Timing Considerations

Customer engagements typically

progress through multi-stage development cycles.

During early stages, revenue may consist primarily of material sales, non-recurring

engineering (“NRE”) fees, prototype-related activities, or development support.

Based on the current status

of customer programs, we anticipate that revenues, if any, recognized during 2026 would primarily relate to material supply, NRE arrangements,

or prototype and development activities.

We do not currently expect significant revenue from volume commercial production of customer

products until 2027 at the earliest.

The timing and magnitude of any production-related revenue depend on successful product qualification,

yield validation, customer adoption decisions, end-market demand, and broader industry conditions.

There can be no assurance

that development-stage programs will transition to volume production, that anticipated timelines will be achieved, or that commercial

revenues will occur as expected.

Strategic Flexibility

While our current strategy

is focused on materials supply and intellectual property licensing, we may evaluate selective opportunities to participate more directly

in device-level development in limited circumstances.

Such participation, if pursued, would likely be application-specific and would

depend on market conditions, partnership opportunities, capital requirements, and strategic considerations.

We have not committed to

entering device manufacturing as a core component of our business model, and any such activity would be evaluated in the context of our

overall capital allocation priorities and commercialization strategy.

Operating Leverage

Our model is designed to

leverage existing semiconductor fabrication infrastructure rather than require capital-intensive wafer fabrication facilities.

By integrating

into established foundry process flows, we seek to enable scalable production through customer and foundry manufacturing capacity.

If customer programs advance

to high-volume production, incremental material demand and royalty streams may provide operating leverage due to the intellectual property-driven

nature of our model.

However, realization of such leverage depends on successful qualification, customer adoption, competitive dynamics,

and end-market demand.

Commercialization Process

(Design Win Cycle)

We pursue customer adoption

through a structured, multi-stage engagement framework that we refer to as our Design Win Cycle.

This process is designed to guide customer

programs from initial technology evaluation through potential production ramp within established semiconductor manufacturing ecosystems.

While program timelines vary

based on customer requirements, foundry schedules, application complexity, and market conditions, the Design Win Cycle typically spans

approximately 18 to 24 months.

Capital Requirements

commenced commercial operations in May 2023, and we do not generate sufficient revenues to pay for our operating expenses.

We have incurred

substantial net losses since inception.

We have satisfied our capital requirements since inception primarily through the issuance and

sale of our common stock.

We have satisfied our capital

requirements since inception primarily through the issuance and sale of our common stock.

Results of Operations

Comparison of year ended December

31, 2024 to year ended December 31, 2023

Comparison of the year ended December 31, 2025 to the year

ended December 31, 2024

During the year ended December

31, 2024, we recognized $81,855 of licensing and royalty revenue and $13,750 of revenue for the device processing work on the device supplied

by a customer.

During the year ended December 31, 2023, we recognized $40,502 of licensing and royalty revenue.

31, 2025, we recognized $106,855 of licensing and royalty revenue and $130,000 of non-recurring engineering revenue.

During the year

ended December 31, 2024, we recognized $81,855 of licensing and royalty revenue and $13,750 of revenue for the device processing work

on the device supplied by a customer.

Cost of Sales

During the year ended December 31, 2024,

we recognized $7,395 in cost of sales.

During the year ended December 31, 2023, we recognized $2,513 in cost of sales.

During the year

ended December 31, 2025, we recognized $6,823 in cost of sales.

During the year ended December 31, 2024, we recognized $7,395 in cost

Operating expenses

December 31, 2025

Ended December

December 31, 2024

Research and development

$ (5,316,861 )

General and administrative

Research and development

expenses increased for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to increases in

research and development salary and benefits expenses, research and development equipment depreciation expense, prototype device development

and wafer fabrication expenses, research and development travel expenses, rent expenses, property tax expenses, research and development

consulting expenses, software expenses, and laboratory and wafer fabrication materials and supplies expenses, offset by decreases in research

and development non-cash stock option amortization expenses, research and development recruiting fees, and research and development employee

relocation expenses in the year ended December 31, 2024, compared to the same period in 2023.

· Research and development salary

and benefits expenses increased by $1,472,979 in the year ended December 31, 2024, compared to the same period in 2023.

· Depreciation expense increased

by $424,232 in the year ended December 31, 2024, compared to the same period in 2023.

· Prototype device development

and wafer fabrication expenses increased by $341,555 in the year ended December 31, 2024, compared to the same period in 2023.

· Research and development travel

expenses increased by $107,351 in the year ended December 31, 2024, compared to the same period in 2023.

· Research and development rent

expenses increased by $99,898 in the year ended December 31, 2024, compared to the same period in 2023.

· Property tax expenses increased

by $98,181 in the year ended December 31, 2024, compared to the same period in 2023.

· Research and development consulting

expenses increased by $65,261 in the year ended December 31, 2024, compared to the same period in 2023.

· Research and development software

expenses increased by $64,318 in the year ended December 31, 2024, compared to the same period in 2023.

· Laboratory and wafer fabrication

materials and supplies expenses increased by $59,090 in the year ended December 31, 2024, compared to the same period in 2023.

· These increases were offset

by a $1,571,632 decrease in research and development non-cash stock option amortization expenses, a $216,115 decrease in research and

development recruiting fees, and a $108,305 decrease in research and development employee relocation expenses in the year ended December

31, 2024, compared to the same period in 2023.

$ (2,185,897 )

Research and development expenses

decreased for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to decreases in research

and development non-cash stock option and restricted stock awards and units amortization expenses, prototype device development and wafer

fabrication expenses, research and development salary and employee benefits expenses, and research and development travel expenses.

We expect to continue to incur

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These expenses will

increase as a result of accelerated development effort to support commercialization of our non-linear optical polymer materials technology

increase because of accelerated development efforts to support commercialization of our non-linear optical polymer materials technology

and create next-generation photonic EO device designs;

5 unchanged sentences

and incurring related operating expenses.

General and administrative expenses

increased for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to increases in general

and administrative salary and benefits expenses, consulting fees, depreciation expense, investor relations expenses, and sales and marketing

expenses, offset by decreases general and administrative non-cash stock option amortization expenses, and accounting expenses.

· General and administrative salary

and benefits expenses increased by $866,829 in the year ended December 31, 2024, compared to the same period in 2023.

· General and administrative consulting

fees increased by $215,707 in the year ended December 31, 2024, compared to the same period in 2023.

· Depreciation expense increased

by $103,624 in the year ended December 31, 2024, compared to the same period in 2023.

· Investor relations expenses

increased by $54,259 in the year ended December 31, 2024, compared to the same period in 2023.

· Sales and marketing expenses

increased by $52,623 in the year ended December 31, 2024, compared to the same period in 2023.

· These increases were offset

by a $263,822 decrease in general and administrative non-cash stock option amortization expense and a $183,722 decrease in accounting

fees in the year ended December 31, 2024, compared to the same period in 2023.

General and administrative

expenses increased for the year ended December 31, 2025, as compared to the year ended December 31, 2024, primarily due to increases

in general and administrative salary and employee benefits expenses and general and administrative non-cash stock option and restricted

stock awards and units amortization expenses, offset by a decrease in consulting expenses.

December 31, 2025

December 31, 2024

Other income increased

for the year ended December 31, 2024, as compared to year ended December 31, 2023, primarily due to a $519,368 decrease in commitment

fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement, a $280,433 increase

in interest income on money market account, and a recognition of a $210,274 loss on retirement of certain expired patent applications

Other income increased

for the year ended December 31, 2023, as compared to the year ended December 31, 2022, primarily due to an increase in interest income

earned on money market account of $568,137 and a gain on disposal of fixed assets of $215,509, offset by 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 $463,869.

Other income decreased for

the year ended December 31, 2025, as compared to year ended December 31, 2024, 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 and a decrease in interest income

on money market account, offset by a decrease in loss due to retirement of certain expired patent applications and patents.

December 31, 2025

2 unchanged sentences

Net loss was $20,313,797 and

for the year ended December 31, 2024 and 2023, respectively, for an increase of $1,497,009 due primarily to increases in salary and benefits

expenses, depreciation expense, prototype device development and wafer fabrication expenses, and consulting fees, recognition of loss

on retirement of certain expired patent applications and patents, travel expenses, rent expense, property tax expenses, software expenses,

laboratory and wafer fabrication materials and supplies expenses, investor relations expenses, and sales and marketing expenses.

increases were offset by decreases in non-cash stock option amortization expense, commitment fee associated with the purchase of shares

by an institutional investor for sale under a stock purchase agreement, recruiting fees, accounting fees, and employee relocation expenses,

and an increase in interest income on money market account.

Significant Accounting Policies

$22,535,041 for the year ended December 31, 2025 and 2024, respectively, for a decrease of $2,221,244 due primarily to decreases prototype

device development and wafer fabrication expenses, and research and development travel expenses, offset by net increases in salaries

and employee benefits expenses and an increase in commitment fee associated with the purchase of shares by an institutional investor

for sale under a stock purchase agreement.

Critical Accounting Policies and Estimates

Our Company’s accounting

3 unchanged sentences

to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures.

these estimates are based on our management’s best knowledge of current events and actions our Company may undertake in the future,

actual results could differ from the estimates.

An accounting policy is considered

to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time

the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimate that are

reasonably likely to occur, could materially impact the consolidated financial statements.

We consider the estimates related

to the fair value of option and warrant awards on the date of grant using the Black Scholes model, recognition of the compensation expense

for performance stock units over the service period based on the likelihood that the applicable performance goals will be achieved, valuation

of internally developed patents and externally acquired intangible assets, test for impairment of long-lived and finite-lived intangible

assets, and estimation of the deferred tax assets valuation allowance to be the most critical in the preparation of our consolidated

financial statements as they are important to the portrayal of our financial condition and require significant or complex judgment and

estimates on the part of management.

Further details on each item are discussed in Notes 1, 7, 9 and 11 to our Financial Statements included

in this Annual Report on Form 10-K.

Although these estimates are

based on our management’s best knowledge of current events and actions our Company may undertake in the future, actual results

could differ from the estimates.

Liquidity and Capital Resources

Our primary source of operating cash

inflows was (i) proceeds from the sale of common stock to Lincoln Park (institutional investor) pursuant to purchase agreements with Lincoln

Park and proceeds from sale of common stock by Roth Capital (investment banking company) pursuant to the at the market sale agreement

with Roth Capital as described in Note 10 to the Financial Statements and (ii) proceeds received pursuant to the exercise of options and

On July 2, 2021, our Company

filed a $100 million universal shelf registration statement which became effective on July 9, 2021, and expired on July 8, 2024.

26, 2024, the Company filed a new $100 million universal shelf registration statement which became effective on August 5, 2024.

4, 2021, our Company entered into the 2021 purchase agreement with Lincoln Park to sell up to $33 million of registered common stock over

a 36-month period.

All of the registered shares under the October 4, 2021 purchase agreement with Lincoln Park have been issued as of

December 31, 2023.

On February 28, 2023, our Company entered into the 2023 Purchase Agreement with Lincoln Park to sell up to $30 million

of registered common stock over a 36-month period.

As of the date of this filing, $0 remains on the 2023 Purchase Agreement.

17, 2025, our Company entered into the 2025 Purchase Agreement with Lincoln Park to sell up to $30 million of registered common stock

over a 36-month period, subject to the conditions set forth therein.

As of the date of this filing, $30 million remains on the 2025 Purchase

On December 9, 2022, our Company entered into the at the market sale agreement with Roth Capital, as sales agent, whereby pursuant

to the at the market sale agreement, our Company may offer and sell up to $35 million in shares of our registered common stock, from time

to time through Roth Capital.

As of the date of this filing, $31.5 million remains available to our Company pursuant to the at the market

sale agreement.

During the year ended December

31, 2024, the Company received $12,366,965 in proceeds pursuant to the 2023 Purchase Agreement with Lincoln Park, $1,779,976 in proceeds

pursuant to the at the market sale agreement with Roth Capital, $337,350 in proceeds pursuant to the exercise of options and warrants

and $63,884 in cash collections from customer contracts, of which $50,000 related to the proceeds received under a material supply and

license agreement and $13,884 – to the proceeds received for a contact for processing work on the devices supplied by a customer.

During the year ended December 31, 2023, the Company received $19,993,359 in proceeds pursuant to the 2021 purchase agreement and 2023

Purchase Agreement with Lincoln Park, $1,515,878 in proceeds pursuant to the at the market sale agreement with Roth Capital, $1,013,924

in proceeds pursuant to the exercise of options and warrants and $50,000 in a proceed received under a material supply and license agreement

of which $39,875 is recorded as a contract liability as of December 31, 2023.

the year ended December 31, 2024, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to

vendors including prototypes development and foundries expenses, laboratory and wafer fabrication materials and supplies expenses, and

third-party service providers.

During the year ended December 31, 2023, our primary sources of cash outflows from operations included

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

31, 2025, our primary source of operating cash inflows was (i) proceeds from the sale of common stock to Titan Partners Group LLC (investment

banker) (“Titan”), proceeds from the sale of common stock to Lincoln Park Capital Fund, LLC (institutional investor) (“Lincoln

Park”) pursuant to purchase agreements with Lincoln Park and proceeds from sale of common stock by Roth Capital Partners, LLC (investment

banking company) (“Roth Capital”) pursuant to the at-the-market sales agreement with Roth Capital as described in Note 10

to the Financial Statements and (ii) proceeds received pursuant to the exercise of options and warrants.

On December 15, 2025, we

entered into an underwriting agreement (the “Underwriting Agreement”) with Titan Partners Group LLC, a division of American

Capital Partners, LLC, as the underwriter (the “Underwriter”), relating to an underwritten public offering of 11,666,667

shares of the Company’s common stock, par value $0.001 per share, at a price to the public of $3.00 per share (the “Offering”).

Pursuant to the Underwriting Agreement, we granted to the Underwriter an option, exercisable not later than thirty (30) days after the

date of the closing of the Offering, to purchase from us up to 1,750,000 additional shares of common stock for the purpose of covering

over-allotments, if any.

The Offering closed on December 17, 2025.

The net proceeds us from the Offering were approximately $32.8 million

during the year ended December 31, 2025, and approximately $4.9 million in January 2026, after deducting underwriting discounts and commissions

and other estimated offering expenses payable by us.

We intend to use the net proceeds from the Offering for working capital and other

general corporate purposes and may use a portion of the net proceeds to accelerate our commercialization timeline, accelerate and expand

production capacity to support customer partnerships and design-ins, to pursue strategic mergers and acquisitions or to invest

in complementary technologies or businesses.

Pursuant to the Underwriting Agreement, we agreed to issue to the Underwriter warrants to

purchase up to 350,000 shares of Common Stock, or three percent (3%) of the total number of shares of Common Stock sold in the Offering,

as well as additional underwriter warrants to purchase up to an aggregate of 52,500 shares of common stock, which were issued upon the

exercise by the Underwriter of its option.

The underwriter warrants will be immediately exercisable at an exercise price of $3.45 per

share during the five-year period following the date of the Underwriting Agreement.

On February 28, 2023, we

entered into a purchase agreement with Lincoln Park (the “2023 Purchase Agreement”) to sell up to $30 million of registered

common stock over a 36-month period.

On March 17, 2025, we entered into a new purchase agreement with Lincoln Park (the “2025 Purchase

Agreement”) to sell up to $30 million of registered common stock over a 36-month period.

On December 12, 2025, the 2025 Purchase

Agreement was terminated in conjunction with the Titan Offering.

On December 9, 2022, we entered into the at-the-market sales agreement

with Roth Capital, as sales agent, (the “Roth Sales Agreement”) pursuant to which we may offer and sell up to $35 million

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

As of the date of this filing, $12,235,261 remains

available pursuant to the Roth Sales Agreement.

During the year ended December

31, 2025, the Company received $1,486,983 in proceeds pursuant to the 2023 Purchase Agreement, $3,646,655 in proceeds pursuant to the

2025 Purchase Agreement, $18,785,657 in proceeds pursuant to the Roth Sales Agreement, $32,825,700 in proceeds from the Titan Offering,

$355,583 in proceeds pursuant to the exercise of options and warrants, and $75,000 in cash collections from the material supply and license

During the year ended December

31, 2025, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to vendors including laboratory

and wafer fabrication materials and supplies expenses, and third-party service providers.

Sources and Uses of Cash

Our future expenditures

and capital requirements will depend on numerous factors, including:

Our future expenditures and

capital requirements will depend on numerous factors, including:

the progress of our research and development efforts;

which we can, directly or through arrangements with original equipment manufacturers, introduce and sell products incorporating our polymer

materials technology;

the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

market acceptance of our products and competing technological developments;

and our ability to establish cooperative development, joint

venture and licensing arrangements.

We expect that we will incur approximately $1,727,000 of expenditures per month over the next 12

expect the proceeds received pursuant to the 2023 and the 2025 Lincoln Park purchase agreements and, the at the market sale agreement

with Roth Capital, the exercise of options and warrants, and commercial operations to provide us with sufficient funds to maintain our

operations over the next 12 months.

Our current cash position enables us to finance our operations through April 2026

before we will be required to replenish our cash reserves.

Our cash requirements are expected to increase at a rate consistent with our

Company’s revenue growth as we expand our activities and operations with the objective of increasing our revenue stream from the

commercialization of our electro-optic polymer technology.

the rate at which

we can, directly or through arrangements with original equipment manufacturers, introduce and sell our products;

the costs of filing,

prosecuting, defending and enforcing any patent claims and other intellectual property rights;

market acceptance of our products and

competing technological developments;

and our ability to establish cooperative development, joint venture and licensing arrangements.

We expect that we will incur approximately $2,400,000 of expenditures per month over the next 12 months.

On December 31, 2025, our cash

and cash equivalents totaled $69,017,354.

We expect the proceeds

received pursuant to the Titan Offering and the Roth Sales Agreement, the exercise of options and warrants, and commercial operations

to provide us with sufficient funds to maintain our operations over the next 12 months.

Our current cash position enables us to finance

our operations at least through December 2027 before we will be required to replenish our cash reserves.

Our cash requirements are expected

to increase at a rate consistent with our Company’s revenue growth as we expand our activities and operations with the objective

of increasing our revenue stream from the commercialization of our electro-optic polymer technology.

We currently have no debt to service.

We expect that our cash used in operations

will continue to increase during 2025 and beyond because of the following planned activities:

· The addition of management, sales, marketing, technical and other staff

to our workforce;

· Increased spending for the expansion of our research and development efforts,

including purchases of additional laboratory and production equipment;

· Increased spending in marketing as our products are introduced into the

· Partnering with commercial foundries to implement our electro-optic polymers

into accepted PDKs by the foundries;

· Developing and maintaining collaborative relationships with strategic partners;

· Developing and improving our manufacturing processes and quality controls;

· Increases in our general and administrative activities related to our operations

as a reporting public company and related corporate compliance requirements.

and 2025 Purchase Agreements with Lincoln Park

On February 28, 2023, our

Company entered into the 2023 Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $30

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

On March 17, 2025, our Company entered

into the 2025 Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $30 million of our

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

Pursuant to the 2025 Purchase Agreement, subject

to the conditions set forth therein, Lincoln Park is obligated to make purchases as the Company directs in accordance with the 2025 Purchase

Agreement, which may be terminated by the Company at any time, without cost or penalty.

Sales of shares will be made in specified amounts

and at prices that are based upon a look back formula for market prices of our common stock immediately preceding the sales to Lincoln

are no trading volume requirements or restrictions on the 2025 Purchase Agreement, and we will control the timing and amount of any sales

of our common stock to Lincoln Park.

Lincoln Park has no right to require any sales by us, but is obligated to make purchases from us

as we direct in accordance with the 2025 Purchase Agreement.

We can also accelerate the amount of common stock to be purchased under

certain circumstances.

There are no limitations on the use of proceeds, financial or business covenants, restrictions on future financings

(other than restrictions on the Company’s ability to enter into a similar type of agreement or equity line of credit during the

term, excluding an at-the-market transaction with a registered broker-dealer), rights of first refusal, participation rights, penalties

or liquidated damages in the 2025 Purchase Agreement.

the Market Sale Agreement – Roth Capital

9, 2022, we entered into the at the market sale agreement with Roth Capital, as sales agent.

Pursuant to the at the market sale agreement,

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

Upon delivery

of a placement notice based on our Company’s instructions and subject to the terms and conditions of the at the market sale agreement,

Roth Capital may sell the shares by methods deemed to be an "at the market offering” as defined in Rule 415(a)(4) promulgated

under the Securities Act, including sales made directly on or through The Nasdaq Capital Market, on any other existing trading market

for the Company’s common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related

to such prevailing market prices, or by any other method permitted by law, including negotiated transactions, subject to the prior written

consent of our Company.

We are not obligated to make any sales of shares under this agreement.

The Company or Roth Capital may suspend

or terminate the offering of shares upon notice to the other party, subject to certain conditions.

Roth Capital will act as sales agent

on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law,

rules and regulations and the rules of Nasdaq.

We have agreed to pay Roth Capital commissions for its services of acting as agent of 3.0%

of the gross proceeds from the sale of the shares pursuant to the at the market sale agreement.

of proceeds we receive from the at the market sale agreement, if any, will depend upon the number of shares of our common stock sold and

the market price at which they are sold.

There can be no assurance that we will be able to sell any shares under or fully utilize this

Roth Capital is not required to sell any specific number of shares of our common stock under the agreement.

We intend to use

net proceeds from the at the market sale agreement for general corporate purposes, including, without limitation, sales and marketing

activities, product development, making acquisitions of assets, businesses, companies or securities, capital expenditures, and for working

capital needs.

assure you that we will meet the conditions of the 2025 Purchase Agreement with Lincoln Park in order to obligate Lincoln Park to purchase

our shares of common stock, and we cannot assure you that we will be able to sell any shares under or fully utilize the at the market

sale agreement with Roth Capital.

In the event we fail to do so, and other adequate funds are not available to satisfy long-term capital

requirements, or if planned revenues are not generated, we may be required to substantially limit our operations, which could result

in our Company reducing some capital expenditures or reducing staff and discretionary costs.

We expect that our cash used in operations will continue to increase during 2026 and beyond because of the following planned activities:

The addition of management, sales, marketing, technical, production

and other staff to our workforce;

Increased spending for the expansion of our

research and development efforts, including purchases of additional laboratory and production equipment;

Increased spending in marketing as our products are introduced into

the marketplace;

Partnering with commercial foundries to implement our electro-optic

polymers into accepted PDKs by the foundries;

Developing and maintaining collaborative relationships with strategic

Developing and improving our manufacturing processes and quality

Increases in our general and administrative

activities related to our operations as a reporting public company and related corporate compliance requirements.

At the Market Sales Agreement – Roth

On December 9, 2022, we entered

into the Roth Sales Agreement with Roth Capital, as sales agent.

Pursuant to the Roth Sales Agreement, our Company may offer and sell

up to $35 million in shares of our common stock, from time to time through Roth Capital.

Upon delivery of a placement notice based on

our Company’s instructions and subject to the terms and conditions of the Roth Sales Agreement, Roth Capital may sell the shares

by methods deemed to be an “at-the-market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including

sales made directly on or through The Nasdaq Capital Market, on any other existing trading market for the Company’s common stock,

in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or

by any other method permitted by law, including negotiated transactions, subject to the prior written consent of our Company.

not obligated to make any sales of shares under this agreement.

The Company or Roth Capital may suspend or terminate the offering of

shares upon notice to the other party, subject to certain conditions.

Roth Capital will act as sales agent on a commercially reasonable

efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and

the rules of Nasdaq.

We have agreed to pay Roth Capital commissions for its services of acting as agent of 3.0% of the gross proceeds

from the sale of the shares pursuant to the Roth Sales Agreement.

The amount of proceeds we

receive from the Roth Sales Agreement, if any, will depend upon the number of shares of our common stock sold and the market price at

which they are sold.

There can be no assurance that we will be able to sell any shares under or fully utilize this agreement.

is not required to sell any specific number of shares of our common stock under the agreement.

We cannot assure you that

we will be able to sell any shares under or fully utilize the Roth Sales Agreement with Roth Capital.

In the event we fail to do so,

and other adequate funds are not available to satisfy long-term capital requirements, or if planned revenues are not generated, we may

be required to substantially limit our operations, which could result in our Company reducing some capital expenditures or reducing staff

and discretionary costs.

Analysis of Cash Flows

2 unchanged sentences

activities was $13,749,186 for the year ended December 31, 2025, primarily attributable to the net loss of $20,313,797 adjusted by $2,051,204

in options issued for services, $446,628 amortization of deferred compensation, $154,210 in common stock issued for services, $1,682,760

in depreciation expenses and patent amortization expenses, $192,487 amortization of right of use asset, $213,440 loss on disposal of property

and equipment and retirement of certain expired patent applications and patents, $(15,189) in accounts receivable, $835,880 in prepaid

expenses and other current assets, and ($965,693) in accounts payable, accrued bonuses, accrued expenses, contract liability and other

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.

in options issued for services, $551,466 amortization of deferred compensation, $801,595 amortization of performance stock units, $1,278,403

amortization of restricted stock units, $370,311 in common stock issued as commitment shares under the 2023 and 2025 Purchase Agreements,

$1,903,368 in depreciation expenses and patent amortization expenses, $205,354 amortization of right of use asset, $20,018 gain on disposal

of property and equipment, $45,170 loss due to retirement of certain expired patent applications, ($145,188) in accounts receivable,

($199,360) in prepaid expenses and other current assets, and ($277,694) in accounts payable, accrued bonuses, accrued expenses, contract

liability and other liabilities.

Net cash used in operating activities consisted of payments for research and development, legal, professional

and consulting expenses, salaries, rent and other expenditures necessary to develop our business infrastructure.

Net cash used by investing

1 unchanged sentence

additions for the Colorado headquarter facility and labs.

Net cash provided by

financing activities was $14,484,291 for the year ended December 31, 2024, and consisted of $337,350 in proceeds from exercise of options

and warrants, $12,366,965 in proceeds from resale of common stock to an institutional investor and $1,779,976 in proceeds from at the

market sale of common stock by an investment banking company.

31, 2024, our cash and cash equivalents totaled $27,667,964, our assets totaled $37,807,983, our liabilities totaled $4,384,078 and we

had stockholders’ equity of $33,423,905.

Net cash provided by financing

activities was $56,915,778 for the year ended December 31, 2025, and consisted of $355,583 in proceeds from exercise of options and warrants,

($171,925) cashless option exercise tax payments, ($12,875) tax payment on net settlement of vested restricted stock awards, $5,133,638

in proceeds from the sale of common stock pursuant to the 2023 and 2025 Purchase Agreements, $32,825,700 in proceeds from the Titan Offering

and $18,785,657 in proceeds from the sale of common stock pursuant to the Roth Sales Agreement.

On December 31, 2025, our

cash and cash equivalents totaled $69,017,354, our assets totaled $79,185,249, our liabilities totaled $4,539,419 and we had stockholders’

equity of $74,645,830.

For the year ended December

Net cash used in operating activities

was $12,236,024 for the year ended December 31, 2023, primarily attributable to the net loss of $21,038,032 adjusted by $6,459,387 in

options issued for services, $262,697 amortization of deferred compensation, $673,578 in common stock issued for services, $1,119,141

in depreciation expenses and patent amortization expenses, $184,835 amortization of right of use asset, $215,509 gain on disposal of property

and equipment, ($587,540) in prepaid expenses, $935,795 in accounts receivable, accounts payable, accrued bonuses, accrued expenses, deferred

revenue and other liabilities.

Net cash used in operating activities consisted of payments for research and development, legal, professional

and consulting expenses, rent and other expenditures necessary to develop our business infrastructure.

Net cash used in operating

activities was $15,550,515 for the year ended December 31, 2024, primarily attributable to the net loss of $22,535,041 adjusted by

$4,440,003 in options issued for services, $446,628 amortization of deferred compensation, $154,210 in common stock issued for

commitment shares, $1,682,760 in depreciation expenses and patent amortization expenses, $192,487 amortization of right of use asset,

$213,440 loss on disposal of property and equipment and retirement of certain expired patent applications and patents, $(15,189) in

accounts receivable, $835,880 in prepaid expenses and other current assets, and ($965,693) in accounts payable, accrued bonuses,

accrued expenses, contract liability and other liabilities.

Net cash used in operating activities consisted of payments for research

and development, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business

infrastructure.

Net cash used by investing activities

was $2,957,201 for the year ended December 31, 2023, consisting of $307,687 in cost for intangibles, $3,292,224 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.

was $2,697,899 for the year ended December 31, 2024, consisting of $430,501 in cost for intangibles and $2,267,398 in asset additions

for the Colorado headquarter facility and labs.

Net cash provided by financing

activities was $22,523,161 for the year ended December 31, 2023, and consisted of $1,013,924 in proceeds from exercise of options and

warrants, $19,993,359 in proceeds from resale of common stock to an institutional investor and $1,515,878 in proceeds from at the market

sale of common stock by an investment banking company.

31, 2023, our cash and cash equivalents totaled $31,432,087, our assets totaled $41,783,585, our liabilities totaled $5,349,771 and we

had stockholders’ equity of $36,433,814.

activities was $14,484,291 for the year ended December 31, 2024, and consisted of $337,350 in proceeds from exercise of options and warrants,

$12,366,965 in proceeds from resale of common stock to an institutional investor and $1,779,976 in proceeds from at the market sale of

common stock by an investment banking company.

On December 31, 2024, our cash

and cash equivalents totaled $27,667,964, our assets totaled $37,807,983, our liabilities totaled $4,384,078 and we had stockholders’

equity of $33,423,905.

Contractual Obligations

8–Leases” of the notes to the financial statements contained elsewhere within this Annual Report on Form 10-K for a discussion

of our operating lease for office and laboratory space.

See “Note 8–Leases”

of the notes to the financial statements contained elsewhere within this Annual Report on Form 10-K for a discussion of our operating

lease for office and laboratory space.

Quantitative and Qualitative Disclosures

About Market Risk

Not required for smaller

reporting companies.

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-K

Item 7. Management’s Discussion and Analysis