Lightwave Logic Q3 2026 Earnings Call Transcript

Lightwave Logic (NASDAQ:LWLG) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Lightwave Logic continues to advance its electro-optic polymer technology, with significant progress in collaboration with Foxconn, including a successful demonstration of an optical transceiver at Hon Hai Tech Day.

The company reported net sales of $38,000 for Q3 2026 and a net loss of $7.2 million, mainly due to increased operating expenses associated with technology development and commercialization efforts.

Volume production is now expected to begin in 2028, delayed from the previous target of 2027 due to extended foundry schedules and qualification cycles.

The company is actively engaging with multiple Fortune Global 500 customers at various stages of development, aiming to reach volume production readiness.

Lightwave Logic’s liquidity remains strong, with $87.8 million in cash and securities, providing flexibility to continue supporting its strategic priorities and investments into 2028.

Full Transcript

OPERATOR

Good afternoon and welcome to the Lightwave Logic third quarter 2026 financial results and business update. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. Please note this event is being recorded. I would now like to turn the conference over to Nick Teves. Please go ahead.

Nick Teves (Investor Relations)

Thank you, Operator, and good afternoon, everyone. Thanks for joining us today for Lightwave Logic’s third quarter financial results and business update call. I’m joined on today’s call by Lightwave Logic’s President and Chief Executive Officer Yves LeMaitre and Lightwave Logic’s Chief Financial Officer Fred Graffam. Please note that this call is in listen-only mode for the duration of the call and that a replay will be posted to the company’s website shortly after the call concludes. Some of the matters we’ll discuss on this call, including statements on our business outlook, are forward-looking and as such, this call speaks only as of today, November 10, 2026.

Such statements may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters discussed on this call are subject to known and unknown risks and uncertainties, and these risks and uncertainties can cause actual operating results to differ materially from those expressed in the call. A more detailed description of the risks our company faces is more fully described by the company under the caption Risk Factors included in the most recent Form 10-K and 10-Q. As always, Lightwave Logic assumes no obligation to update the information presented on this conference call. Lastly, you are cautioned that any time-sensitive information may no longer be accurate at the time of replay listening or transcript reading.

With that, I’ll turn the call over to Yves.

Yves LeMaitre (Chief Executive Officer)

Thank you, Nick, and good afternoon, everyone. Before turning to our quarterly progress, I want to put our work at Lightwave Logic in the context of a broader industry shift. One of the main themes of our previous calls has been the convergence of photonics and semiconductors, and recent developments show that convergence is accelerating. As AI systems grow, their performance increasingly depends on the ability to move data through optical connections with greater bandwidth, lower power consumption, and a smaller footprint.

This is bringing photonic materials closer to the heart of semiconductor design, enabling new architecture for scale-out and scale-up connectivity among AI accelerators, processors, and switches. Future scaling architectures will bring optical connectivity even closer to the compute, requiring tighter integration of photonic materials and advanced packaging technologies. Leading semiconductor design and manufacturing companies are incorporating optical technologies and materials into their roadmaps.

Marvell’s recently announced agreement to acquire Lumentum underscores this direction with plans to bring semiconductor and optical capabilities under one roof to address these emerging requirements. Our recently announced collaboration with Hon Hai Technology Group, otherwise known as Foxconn, incorporating our electro-optic polymers into a scale-out optical transceiver, is a concrete example of our role in this transition. Foxconn plays a critical role in the semiconductor ecosystem by integrating advanced chips into complex electronic systems and providing the manufacturing scale to bring those systems into high-volume production. We believe this industry shift creates a compelling opportunity for Lightwave Logic.

Our proprietary materials combine high-speed performance and power efficiency with compatibility with established semiconductor manufacturing processes, positioning us to help customers integrate advanced optical capabilities into silicon photonics platforms. During the third quarter, we continued to make progress advancing Lightwave Logic’s electro-optic polymer technology towards commercial qualification and ultimately volume production. Our efforts remain focused on working closely with customers and foundry partners to establish the technical performance, reliability, and manufacturing processes necessary to bring our technology into commercial products. In October, we achieved an important system-level validation milestone through the public demonstration of our technology within an optical transceiver developed by Foxconn, and I will cover this project in more detail during this call.

On the manufacturing side, we continue to invest and expand our Perkinamine production infrastructure in Denver, Colorado to ramp capacity of our back-end-of-line process. We are in advanced negotiation with a leading specialist in wafer-level optical manufacturing whose material processing and encapsulation capabilities can help scale silicon-organic hybrid solutions for AI. I’ll discuss these developments today, along with our updated expectations for the timing of volume production and the priorities guiding our efforts as we move closer to 2027.

So let me begin with customers. On October 29th we announced that Foxconn will demonstrate an optical transceiver incorporating a silicon-organic hybrid optical engine enabled by Lightwave Logic’s electro-optic polymer technology. The demonstration at Hon Hai Tech Day in Taipei marked an important milestone for Lightwave Logic and meaningful validation of our progress with Foxconn. What makes this demonstration significant is that it goes beyond the performance of individual materials or devices.

It shows our technology operating within a functional optical engine and transceiver designed to address the high-speed, low-power requirements of next-generation AI networks. It provides tangible system-level evidence of how our polymer platform can be incorporated into customer products, and I want to recognize the teams whose collaborative efforts made this milestone possible. This project illustrates the work that takes place during Stage 3 of our design win process. We began working with Foxconn in the first half of 2025 and have now demonstrated the first iteration of an optical engine capable of supporting 200 gigabits per second per lane. We also want to be clear about what this milestone means. A functioning transceiver demonstration is an important step towards product qualification.

Further chip design iterations, integration, reliability testing, manufacturing preparation, and customer-specific qualification activities are required before a program can move into volume production, or Stage 4 of our design win process. We consider Stage 4 reached when our customer’s product is fully qualified, accepted by the end user, and ready to be manufactured and shipped in volume with consistently high yields. Every Stage 3 program must progress through a rigorous development and qualification process. Let me explain that in more detail because it is a recurring question from shareholders. The sequence varies by customer and application, but typically begins with alpha devices or early optical engine prototypes integrated into test platforms or evaluation boards. The next step is to design and produce beta devices that meet the target specification for integration into the customer’s transceiver.

Once the silicon photonics chips have been fabricated and the necessary back-end processing completed, testing takes place at both the chip and assembled transceiver levels. This covers optical and electrical performance, mechanical and thermal requirements, and other application-specific criteria at the transceiver level. It also includes software functionality, wherever applicable. Comprehensive reliability testing will also be completed on both the photonic chip and the finished product.

This design and qualification process assumes that, in the background, the silicon foundries have qualified their own equipment and processes and have achieved predictable yields. This is usually announced to the external customers with a new PDK release, including the steps necessary to produce SOH modulators. In parallel, our customers’ new product introduction, or NPI, teams prepare the optical engine and transceiver manufacturing line for volume production.

Equipment must be installed and qualified, operators trained, and assembly processes and test systems validated to achieve the required throughput, consistency, and yield. A final critical step is end-user qualification. Sample products are delivered to the end user, which may be a hyperscaler or an AI infrastructure supplier, for testing within its own systems. Those customers must confirm compatibility, performance, and reliability in their intended operating environment.

Once these requirements and the manufacturing readiness criteria have been met, the product can move into commercial volume shipments. In addition to Foxconn and Marvell, which we have previously disclosed, we have three other Fortune Global 500 customers in Stage 3. Each program is progressing through its own development and qualification requirements, and our team is focused on helping these customers advance towards Stage 4. Ultimately, Stage 4 is where the necessary technical and qualification criteria have been satisfied, commercial terms have been agreed upon, and programs can move towards volume production.

Now let me turn to our silicon photonics foundry activities. On our second quarter call we reported three dedicated foundry runs underway, with two wafer sets expected in August and a third foundry expected to deliver wafers in the fourth quarter, and a dedicated run with our fourth partner progressing towards tape-out. As a reminder, our active foundry ecosystem includes GlobalFoundries, Tower Semiconductor, SilTerra, and a fourth partner that remains unnamed.

I’m pleased to report that we received wafers on two of our foundry partners during the third quarter following receipt. Our engineering teams performed the necessary back-end processing, including depositing and poling our electro-optic polymer, encapsulating the devices, preparing them for testing, and completing characterization. Chips received on an expedited schedule from one of our foundry partners showed promising results and were used in the transceiver demonstration at Hon Hai Tech Day.

We expect to receive additional wafers from that foundry by the end of 2026. Our customer currently plans to launch another run in early 2027 targeting the final product configuration. Our second foundry partner ran into process issues at one of their facilities, which translated into a limited number of usable chips. This foundry partner is expected to deliver two new sets of high-performance chips from two different manufacturing locations during the first half of 2027. We expect wafers from our third foundry partner in December 2026, while the wafer run with our fourth foundry partner is tentatively scheduled for the first half of 2027.

These programs are progressing against a backdrop of strong demand and significant pressure on the optical supply chain. Shortages of indium phosphide lasers, particularly electro-absorption modulated lasers, or EMLs, are accelerating interest in silicon photonics architectures that use continuous-wave, or CW, lasers. CW lasers are simpler devices than EMLs, easier to produce, and these architectures typically use fewer lasers. We believe this shift towards silicon photonics further validates the opportunity for electro-optic polymers, which can be integrated into silicon photonics to provide higher-performance modulation.

At the same time, this demand creates near-term challenges for silicon photonics foundries. Our foundry partners are prioritizing the immediate need for additional silicon photonics production capacity, which can affect the resources and schedules available to qualify new materials and processes. They are also managing the need for additional capacity investment and expansion. These pressures have extended our development timelines and continue to affect our schedule.

We remain closely engaged with each partner to advance our programs and appreciate their support under these demanding conditions. The value of this work extends beyond individual foundry runs. Each completed run provides information that helps us refine device performance, improve manufacturing yield, and achieve greater consistency in subsequent runs. We also incorporate these findings into our process design kit, or PDK, to support future customer designs and foundry integrations. Although our foundry programs are at different stages of maturity, progress across this ecosystem continues to strengthen the manufacturing foundation needed to scale our technology.

I also want to address what these timelines mean for expectations for volume production. On our second quarter call, we discussed the goal of beginning volume production in the second half of 2027. We now expect volume production to begin in 2028, reflecting longer foundry wafer production schedules and process qualification cycles alongside the remaining customer development and product qualification work. Throughout 2027, our focus will be on completing these activities and helping our customers advance towards the…

We will continue to report meaningful technical, manufacturing, and commercial milestones as they are achieved. With that, I will turn the call over to Fred to review our third quarter financial results and financial priorities.

Fred Graffam (Chief Financial Officer)

Thank you, Yves, and good afternoon, everyone. Since joining Lightwave Logic, my focus has been on supporting disciplined execution as the company advances its customer programs, foundry work, and manufacturing readiness. During the third quarter, our investment priorities remained centered on advancing our technology and preparing the organization to support commercialization and production at scale. We continue to evaluate these investments against the technical and commercial milestones they are intended to support, with a focus on maintaining appropriate liquidity and aligning our spending with the progression of customer programs.

Turning to the financial results for the quarter ended September 30, 2026, net sales were approximately $38,000 compared with approximately $29,000 in the prior year period. Revenue remains limited at this stage and will be driven principally by the achievement of technical and commercial milestones in existing development contracts. As of September 30, 2026, the company had approximately $100,000 of deferred revenue, which is expected to be recognized upon the achievement of these milestones.

Net loss was approximately $7.2 million, or $0.05 per share, compared with approximately $5.1 million, or $0.04 per share, in the prior year period. The increase in net loss is principally due to year-over-year increase in operating expenses, reflecting continued investments in electro-optic polymer development and production, device performance and reliability, foundry integration, and prototype development and testing. We also continue to invest in intellectual property and customer engagement as well as the people, systems, and infrastructure required to support commercialization.

During the quarter, we made targeted hires across key engineering, manufacturing, and commercial functions along with continued improvement in our IT infrastructure, financial and operational systems, reporting, and cost controls. Our objective is to build the capabilities needed to support multiple customer programs and future production requirements while maintaining a disciplined approach to capital allocation. For the quarter, research and development expense was approximately $4.3 million compared with approximately $2.9 million in the prior year period.

General and administrative expense for the quarter was approximately $3.7 million, compared with approximately $2.3 million in the prior year period. Turning to our balance sheet, as of September 30, 2026, we held approximately $87.8 million in cash, cash equivalents, and marketable securities, compared with approximately $95.9 million at June 30, 2026. Our balance sheet continues to provide significant financial flexibility to execute our strategic priorities, and we believe we have sufficient liquidity to fund our operating plan into 2028. Cash used in operating activities was approximately $15 million for the first nine months of 2026, compared with approximately $10.4 million in the first nine months of 2025, including approximately $5.2 million during the third quarter of 2026.

Purchases of property and equipment were approximately $2.9 million for the first nine months of 2026, compared with approximately $1 million in the prior year period. These investments support our continued technology development and production readiness, including laboratory and manufacturing equipment, clean room and quality control capabilities, and the infrastructure necessary to support customer programs as they advance. We continue to manage liquidity closely against our progress towards commercialization, including the results of our technical work, customer qualification, manufacturing readiness, and advancement of commercial arrangements. As these programs progress, our approach is to build the necessary manufacturing supply chain and operating capabilities in step with verified customer requirements. In summary, we remain focused on aligning our investments with the company’s commercialization priorities and long-term value creation strategy.

We believe our financial position and operational investments provide a solid foundation to execute our current organic commercialization plan, support continued research and development, and prepare the organization for future growth and production at scale. With that, I will turn the call back to Nick for Q&A.

Nick Teves (Investor Relations)

Thank you, Fred. We received a number of questions from investors in advance of today’s call. We’ve consolidated those submissions around the topics raised most frequently and will now address several of those questions. Our first question is: On the second quarter call, management discussed beginning volume production in the second half of 2027. What specifically has changed in your assessment of the commercialization timeline, and what key technical, manufacturing, and customer qualification milestones should investors expect during 2027 as you work toward volume production in 2028?

Yves LeMaitre (Chief Executive Officer)

The main challenge we have been facing in 2026 is a slower pace of silicon photonics foundries both in terms of production cycles and PDK process qualification. So today this is our main hurdle: speed up the introduction of silicon-organic hybrid modulators incorporating our Perkinamine materials. Obviously, together with our customers we also have to execute flawlessly all of the design and qualification activities I described earlier. At this time, our engineering team is 100% focused on accelerating the enablement of our silicon foundry partners both for front end and back end, as well as supporting the transition to commercial revenue of our five lead customers. Regarding the production of our Perkinamine in our Denver facility, I’m pleased with the progress we have made over the last few quarters.

Nick Teves (Investor Relations)

With the pressure on AI infrastructure stocks and questions on CapEx funding, is your revised timing for production volume tied to a slowdown in R&D investment for next-gen 400G solutions?

Yves LeMaitre (Chief Executive Officer)

No, not at all. All of our programs continue with the same intensity, and our customers continue to invest into a path towards 400G per lane in all types of applications from scale across to scale up and potentially scaling in the future. We are also seeing an increase in activities beyond 400G per lane, especially in the field of POH, or plasmonic organic hybrid, solutions.

Nick Teves (Investor Relations)

What were the principal findings from recent foundry wafer testing and characterization, particularly regarding device performance, repeatability, and manufacturing yield? Beyond the foundry runs themselves, what additional progress is needed to scale the back-end processing and manufacturing capabilities required for commercial production?

Yves LeMaitre (Chief Executive Officer)

That is a good question. On the back end of line for polymer processing onto the silicon photonics chips, this is a big area of focus with our customers on reaching wafer-scale back end of line with a path towards both high volume and larger 300 millimeter wafers. As you know, this activity currently resides in Denver, but our plan is to outsource it to a partner specializing in wafer testing and material processing. As I mentioned earlier, we are actively negotiating an agreement with that company and kicked off the technical project a few months ago.

Nick Teves (Investor Relations)

What is the status of the second material supply and licensing agreement previously discussed by management? And are there specific technical qualification or commercial milestones that must be achieved before an agreement can be finalized?

Yves LeMaitre (Chief Executive Officer)

Yeah, thanks for the question. On the second material supply and licensing agreement, all I can say at this time is that it’s an ongoing and active negotiation. This is obviously a sensitive and confidential matter protected by non-disclosure agreements, and unfortunately I’m not in a position to share more at this time.

Nick Teves (Investor Relations)

With volume production now expected to commence in 2028, how does the revised timeline affect the company’s anticipated investment requirements and capital allocation priorities? And how does the current liquidity position support the commercialization plan?

Fred Graffam (Chief Financial Officer)

As I noted previously, our liquidity position provides significant financial flexibility with sufficient cash to execute our business plan into 2028. Importantly, the revised timing for volume production does not fundamentally change how we think about capital allocation. We will continue to actively manage our liquidity to ensure that we have the resources necessary to support our customers and execute our commercialization plan, while remaining disciplined about the timing of our investments.

In particular, we will ensure that the timing and level of our investments will be aligned with the expected business requirements and the benefits we expect those investments to generate.

Nick Teves (Investor Relations)

Are both 200G per lane and 400G per lane solutions active development priorities, and what additional work is required to commercialize 400G per lane?

Yves LeMaitre (Chief Executive Officer)

Yes, both are active development priorities. We view 200G per lane as a stepping stone for 400G per lane, with most of the technical activities overlapping. Obviously, 400G per lane requires more demanding performance specification, particularly in terms of bandwidth, but the programs are very similar. What is different is what happens beyond 400G per lane. This is where new solutions might be required beyond SOH and where plasmonics might play an important role.

Our CTO and Advanced Technology Group is leading these activities.

Nick Teves (Investor Relations)

Thank you, Yves and Fred, and thank you to everyone who submitted questions. We appreciate your continued interest and engagement. A replay of today’s call will be available in the Events and Presentations section of the company’s investor relations website. Operator, this concludes today’s conference call.

OPERATOR

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.