Lightwave Logic, Inc. (LWLG) Earnings Call Transcript & Summary

My name is Jim Marcelli, President and COO of Lightwave Logic. I've been with the company since August of 2008. We are a -- Lightwave Logic is a technology company, a development-stage technology company, and we're developing the next-generation photonic devices and highly active and highly stable nonlinear op -- in optical polymers systems to be used in both the high-speed fiber optic data communications systems and also in telemarket. Here's our safe harbor statement, like everyone else before me. We have to talk about the fact that we have some forward-looking statements that we'll be presenting. And it's -- I'm not going to spend a bunch of time on this slide, but everybody who makes these presentations has to put this up. Again, Lightwave Logic is a OTCQB company. Our stock has been trading in the $0.60 range -- we're in $0.61 to $0.70 range. We are a technology platform. Like I said, it helps scale up the Internet structure. We're developing very highly stable polymer technologies, electro-optic polymer technologies. We're target -- so we're targeting these telecom and Internet companies. And we have this very high -- highly stable material that fits into different polymer-type modulators and runs at much lower speeds, very high -- excuse me, high speeds, lower power -- apology, very high speeds and lower power. We've leveraged these different polymers by creating different types of modulator designs. We are -- right now, we're in the Tier 1 -- in NDAs with Tier 1 companies, and we're several different levels with them. We have total in-house control of our both materials and device fabrication. And the one thing we go outside for is packaging, we have a packaging partner. The other thing with regards to our in-house operations, I wanted to bring everybody up-to-date with this COVID-19 issue that we have -- the pandemic we've all been living through. We have everybody back in the operation, have been since May. We worked through remote prior to that. With the 3 clean rooms that we have, obviously, everybody's gowned up, so there's no issue there. And the way our operation is set up with the private offices, everybody feels quite safe coming into work. And we've had, like I said, everybody in the operation since May. Let me move on here. So again, one of the things -- and we've seen this during this pandemic, the traffic jams in the Internet infrastructure is unbelievable, the pressure that's being put on it. And I don't think that's going to change, everything from schooling from home to everybody working from home. So the pressure that's put on these data centers is unbelievable, and we're working on ways to solve those problems and increase speed and throughput and bandwidth on those -- in the Internet. So with the Internet -- again, Internet capacity is kind of falling behind the traffic growth, as I just mentioned. And I think -- and we're looking to catch up -- help them to catch up with that. We are working, like I said, with Tier 1 customers under NDA. We're not -- unfortunately, I wish we could announce their names. We aren't allowed to do that by agreement, and we're in several different stages of work with these different companies. We're working in a -- the total photonic components market forecast is looking to grow to $44 billion by 2025. And we hope to get our chunk of that, so that total TAM that markets -- total market growth. Again, starting with fiber communications, our technology can be extended to more applications other than just the telecommunications and the data centers. We were developing and building and testing ultrafast optical compute -- modulators using our polymers. And we have -- we basically customize our polymers to work at different wavelengths, which allows us to have very, very fast modulators and a velocity matching between the electronics side and the optical side. The initial prototypes are basically state-of-the-art, 50 gigabaud. And the next generation we're working on right now and in testing is 100 gigabaud for fiber optic applications. Our target speed is 100 gigabaud, which would allow us to do in the aggregate of 800 gigabits per second. Right now, we run in this 50 gigabaud, which gets us to 400 gigabits per second. We run a low voltage, so low voltage down to a volt or less. And that means we can have a driverless modulator. So that's where we are in our development on our both polymers and devices. The -- on the competitive side of things, one of the things we -- because we're running at such low voltages, we can save a tremendous amount of energy. When you go to these Internet companies -- excuse me, if you go to these data centers on these Internet companies, and I've been to a couple of them, it's amazing when you go in. I mean, they got -- the amount of power that they use, they have to have their own substations. I visited one not too long ago and they have, like I said, their own substation to run them. That's so much power they're using. With running it with 1 volt or less, we basically can say -- we think anywhere from 26% on power consumption using this -- using our device than what they're using right now. And we're able to have a much faster -- work with them with a much faster networks with using our polymer technology. And the fact that we're -- the technology is totally flexible, so we can use -- we can design a package for a customer basically using our different material sets and work with them on co-packaging or, say, design outside of our own modulator designs and for individual applications. We're targeting very large growing markets. You can see in this slide, the -- and we're selling from the bottom up to the top down, meaning we look at the Internet providers and let them know about our technology and talk to them as well as talking to the people who supply to them, whether that's the network equipment manufacturers and the high-speed transceiver and subsystem people. So they're all aware of what we're doing, and we're working with some of these companies on, like I said, under NDA. Our business model to commercialize our products and the commercialization road map is threefold. We can sell individual components and modulators and -- while I've said we can do everything in-house except the packaging, and we have a packaging partner. One of our business models is selling components. The second one is licensing technology. We have 51 patents, which I'll show you later in this presentation. Some of these patents cover what we're doing today and some cover other market segments that we're really not focused on now, which would allow us to license some of those patents to the people that are focusing on those different areas. And the other thing is technology transfer. What I mean by that is getting -- in which we're working on with people right now is basically a co-package where we're using our technology -- our enabling technology to help them package their next device -- next-generation device. And we can work with all polymer. We can also work with -- we can marry up with indium phosphide or silicon photonics. We basically are an additive. We're not -- it's not really a competition. It's really additive on a design that would use both our materials and some of those other substructures. We're -- right now, with regards to our engagement is we have customer -- under NDA with several prospective customers. We're doing prototype and specification and testing optimization. We're doing some sampling with people, and they test them and they come back and give us what input they need to make any adjustments and tweaks. And we're working on, like I said, initial design in to commercialize our products. As I said earlier, we have -- right now, we've been issued 51 patents and they cover everything from the polymers themselves, electro-optic polymers, all the way to device design and methods. We are also prosecuting another 13 patents right now as we speak. So we have quite a portfolio, intellectual property portfolio. We haven't gone out and valued -- had a valuation done on at this point, but we believe it's quite valuable. And we're trying to picket fence our protection both on the materials and device design and methods as well -- so again, we have 51 patents currently, and we're prosecuting another 13 at the moment. And we continually look at filing additional patents as we move through the development process. I think we have a very experienced management and Board. Dr. Michael Lebby is our CEO. He was a Board member before he became the CEO, and he's also on our ops committee. I said, I'm the President of the company. Rear Admiral Tom Zelibor, who's been with the company almost as long as me, I think he came on 2 weeks before I did, is our Chairman. Dr. Joseph Miller, who's independent Director, was Executive Vice President and CTO of Corning Corporation. And before that, DuPont Corporation. And Dr. Fred Leonberger is an independent Director, and he's basically a father of the modulator. He developed lithium niobate modulators in the beginning. And then on the financial side, we have Ron Bucchi and then we also have Siraj El-Ahmadi as independent Director. So we have a very strong and experienced management team and Board. And we also have added the world-class Advisory Board team, and -- as you can see on this slide. And they help us and help guide us through both OEM -- non-OEM market segments we ought to be focused on, but basically, the solutions we should be focused on -- we're focusing on. And they're very, very active. And again, I think the key takeaways here -- sorry, is we're able to make custom proprietary polymers, electro-optic polymers to be able to scale up these different -- be able to scale those up, put them into different optical devices and be able to help scale up the existing Internet structure and get them to run much faster and wider bandwidth than they're running today. And again, I think as a second bullet point, as you know, basically, transmit at much higher speeds and less power. And I said we think we can save power at least 26% of the power they're using today. The -- we have, again, all in-house control of our material supply. We have -- in this operation here, we have synthetic labs and so we produce our polymers here. And then we have 3 clean rooms for processing the wafers. And then as I'd said the only thing we go outside for is packaging, and we have a partner for doing the packaging. Again, the total photonics component market is forecast to grow to $44 billion by 2025, and we like our chunk of that. And our technology is being -- is under evaluation today with Tier 1 partners under NDA, and we're very pleased with the progress that we're making there. So then -- anyway, so in closing, what I wanted -- the materials, the electro-optic polymers, they're so flexible, we can make all polymer modulators. We can also make devices or modulators that will interface with everything from silicon photonics to [ other modulators ] and other indium phosphide-type devices, and we're working on all those types of designs. The other thing we want to say, while we published a road map of the company and our technology, we've given no guidance with regards to revenue time line at this point. The other thing I want to talk about briefly is the -- on our working capital side. We have an agreement with Lincoln Park Capital, an equity line with them. We've been working with them for almost 10 years. They -- this is, I think, our third agreement with them. We did a $25 million equity line with them in January 2019. And we still have just under $17 million available to us. So based on our current burn rate and our budget going into next year, we believe we have enough working capital right now to take us through May of 2022. And thank you for listening to my presentation.