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

Good morning, and welcome. Welcome, ladies and gentlemen. My name is Michael Lebby, and I am the Chair of the Board of Lightwave Logic. It is my pleasure to welcome you to the company's 2023 Annual Meeting of Shareholders. This meeting is being -- also being webcast live, and the webcast will be posted on our website for a period of time after the meeting. Welcome to those shareholders participating by webcast. The meeting will follow an agenda, copies of which have been placed on each chair. As it indicates, there will be time for shareholder questions at the end of the meeting. Before we begin the meeting, I would like you to introduce the company's directors who are with us today. I encourage you to take a moment to meet them after the meeting. As I call your name, please stand. Jim Marcelli, who is our President, COO and Secretary; Ron Bucchi, who is our Lead Director and the Chair of our Audit Committee; Dr. Frederick Leonberger, who is the Chair of our Nominating and Corporate Governance Committee; Siraj Nour El-Ahmadi, who is the Chair of our Compensation Committee; Dr. Craig Ciesla. Also with us is Oxana Holubowsky, a representative of our auditing firm Morison Cogen LLP. Oxana will have the opportunity to make a statement if she desires to do so and she will be available to respond to any appropriate questions afterwards. Today's meeting will be in 2 phases. First, we will conduct the formal part of the business meeting to consider each of the proposals listed in the notice of Annual Meeting of Shareholders dated April 14, 2023, and to conduct such other business as may be properly come before the meeting. The second part of the meeting will be my management presentation, followed by a question-and-answer session. So in the next section, James Marcelli, our Corporate Secretary, will be reporting the minutes of this meeting. Wendy C. Shiba, the duly appointed representative of Broadridge Financial Solutions, Inc, has been appointed to serve as the inspector of election for the annual meeting. Ms. Shiba, would you please stand? Ms. Shiba has signed the oath of office, which will be filed with the minutes of the meeting. So now we come to the formal meeting. For the formal part of the meeting, I will now call on our Corporate Secretary, James Marcelli, to establish that we have met the necessary corporate requirements for this meeting.

Good morning. We have proof that notice of this meeting has been duly given and that the notice of the Annual Meeting of Shareholders, proxy statement and proxy were mailed on or about April 14, 2023, to all shareholders of record at the close of business on March 28, 2023. The affidavit, together with copies of the notice, proxy statement and proxy will be filed with the minutes of the meeting. As of March 28, 2023, the record date of the meeting, there were 114,002,707 shares outstanding. We have 50,322,835 shares present by person or proxy at this meeting, which is over 33.3% of the outstanding shares and constitutes a quorum permitting transaction of business. Each share entitles the holder to one vote on each matter that may become before the meeting. A list of the registered shareholders entitled to vote is available by examination by shareholders.

So we come to the section quarter order. Thank you, Jim. Since a quorum is present, I will now call the meeting to order. The meeting will proceed as provided for in the agenda. The items to be voted upon are: number one, to elect one director to the Board of Directors to serve until 2026 Annual Meeting of the Shareholders or until his successor has been duly elected or appointed and qualified. Number two, to ratify the appointment of Morison Cogen LLP to serve as the company's independent registered public accounting firm for the fiscal year ending December 31, 2023. Number three, to approve an amendment to increase the number of shares reserved pursuant to the company's 2016 Equity Incentive Plan from 8 million to 13 million shares of common stock and to include restricted stock units as a type of award that may be granted pursuant to the company's 2016 Equity Incentive Plan. And number four, to consider and take action upon such other business as may properly come before the annual meeting or any adjournments thereof. Jim, would you please describe the voting procedures?

We will be voting by proxy ballot on the agenda items described in the proxy statement previously sent to you. If you have already turned in a proxy card and you do not intend to change your vote, it's not necessary for you to vote again. However, for those of you who did not turn in a proxy card or if you wish to change your vote, please get a blank ballot card from Ms. Shiba, our Inspector of Election, to use the vote for voting today. If you take a ballot, please make sure you print your name and the number of shares you are voting on the ballot. If you have previously sent in a proxy card and you are changing your vote, please note this on the ballot. The ballot must be signed by the shareholder. After you complete the ballot, please give it to Ms. Shiba as soon as possible as the results will be announced at the end of the formal portion of the meeting.

Discussion of the proposal. The first item of business is the election of one Class III director to the Board of Directors to serve until the 2026 Annual Meeting of Shareholders or until his successor has been duly elected or appointed and qualified. The Board of Directors is comprised of 6 directors and is divided into 3 classes, currently comprised of two Class I directors whose terms expire at the 2024 Annual Meeting, 3 Class II directors whose terms expire at the 2025 Annual Meeting and one Class III director whose term expires at the 2023 Annual Meeting. The Board of Directors has nominated one Class III incumbent director for reelection and recommends a vote for the election of the Class III incumbent Director. Our Corporate Secretary will now place the names of the nominees in the nomination.

Thank you. The Board of Directors has nominated the following Class III director to serve for a term of 3 years or until their successor is elected and qualified. James S. Marcelli. Advanced notice must be given to the Secretary of a shareholder's intent to nominate other persons as directors of the company. No such notice has been received. Accordingly, nominations for directors are now closed. The nominee for director receiving the highest number of votes will be elected to the Board of Directors. The proxies solicited by management will be voted in favor of all director nominees.

I hereby move that James Marcelli be elected as class III director to serve for a term of [indiscernible].

I second the motion.

Proposal 2. The next item of business is the ratification of the appointment of Morison Cogen LLP as the company's independent registered public accounting firm for 2023. The vote required to ratify the appointment of Morison Cogen LLP to serve as our independent registered public accounting firm for fiscal year 2023 is the affirmative vote of the holders of a majority of the votes cast at the annual meeting entitled to vote on the matter. The Board of Directors recommends a vote for approval of this matter.

I hereby move that the appointment of Morison Cogen LLP as the company's independent registered public accounting firm for the year ending 2023 be ratified.

I second the motion.

The next item of business is the approval of an amendment to increase the number of shares reserved pursuant to the company's 2016 Equity Incentive Plan from 8 million to 13 million shares of common stock and to include restricted stock units as a type of award that may be granted pursuant to the company's 2016 Equity Incentive Plan. The vote required to approve the amendment to the 2016 Equity Incentive Plan is the affirmative vote of the holders of a majority of the votes cast at the annual meeting entitled to vote on the matter. The Board of Directors recommends a vote for approval of this matter.

I hereby move that the amendment to the 2016 Equity Incentive Plan be approved.

I second the motion.

We now come to Section 3, voting. [Voting]

There being no other items to be brought before our shareholders for a vote at this meeting, voting is now complete. All ballots must be turned in to Ms. Shiba at this time. So now I will go to the next section, the results of the election. The Inspector of Election has tabulated the votes and Ms. Shiba will now give us the report of the inspector of election.

Mr. Chairman, all of the votes have been counted. Based on the preliminary results, James S. Marcelli has been elected as a Class III director to serve for a term of 3 years or until his successor is elected and qualified. Number two, Morison Cogen LLP has been appointed as the company's independent registered public accounting firm for 2023. And number three, the amendment to the Lightwave Logic, Inc. 2016 Equity Incentive Plan is approved.

This concludes the formal part of the annual meeting, and the formal portion of the annual meeting of shareholders is adjourned. I will now provide you with a brief management presentation. The management presentation will remain posted on our website for a period of time after the meeting. Okay. So now is the fun part. We'll get to the management presentation. So it gives me great pleasure to give you a management update. As most people are probably aware, we had a press release come out this morning, and I see a lot of smiling faces. And somebody said to me earlier this morning, are you smiling. Well, I'm smiling and this is a really good day for us. So let's get to the presentation. So obviously, we're a public company, so we have a safe harbor slide. And the outline of the presentation today is what we do, some market dynamics, the market opportunity, competition and partnering, commercial strategy and activity, investor and public relations and then I'll summarize. And after summary, we can open up for Q&A. So what do we do? So this is a slide that is new from my presentation. We make Perkinamine electrooptic polymers. And as you can see from this slide, the polymers get aligned through a voltage, but they start off on this slide here, these are the chromophore that we start with, with some chemical symbols. We turn those into devices and those devices have an impact and we've shown that the material has high levels of thermal and photo stability, long-term storage and operational durability. We have devices that have fast performance and lower power than existing technologies. So you can see from the takeaway at the bottom of the slide -- fast, stable, reliable, low power consumption and very small in size. These are the metrics that folks are looking for with our technology. And so another very new slide for me, so what is a polymer modulator. It is a very simple slide. Now we can see a chip here and on the chip is a purple sort of circle here, an elliptical circle. And this is a representative of our Lightwave Logic Perkinamine chromophore, but that goes on to the chip. And in this chip, you have an optical signal in an electrical signal in with data. You mix the 2 together and you get a signal out that's optical that provides the information. So it's a chip that actually provides optical information. And where these chips go essentially is in racks that look like this are going to data centers. So this gives you a sort of a very high-level view of the type of technology we're working on. And this -- one way to look at this is a high-performance engine for optical networking. And you can see from the bullet points here, a modulator combines a photonic integrated circuit. That's a chip with lots of different photonic devices. With radio frequency, RF electronics, so it works in very high speed. And obviously, it uses electrooptic polymers. So when you apply a voltage to the chip, we can change the intensity here and the intensity, as you can see, can be changed to develop the signal with the data. And you can see that there's millions of these modulators used in a single data center. So a lot of these chips are used to drive signals on the Internet. So the electrooptic polymer slot modulators. They provide faster data rates, smaller sizes and lower power, which makes the technology very exciting for us as we go forward to take our technology into the optical network and Internet environment. Now this slide here is a few bullet points, but one way to look at our technology is as we solve the problem, not just for this generation, but for a long time, and I put here for the next decade. So that's a number of years. There's other technologies out there that are good for 1 or 2 generations. But the performance of our technology can go a long way because the materials we use, they modulate light really quickly. Now you can modulate light -- a very simple way to look at this is liquid crystal displays. They modulate light also, but are very, very slow. And so we have a very fast, much faster technology and the right application for this technology is the fiber optic network or Internet. They're polymer-based, our materials are polymer based. I think we all know this. We all use polymers today with OLEDs. OLEDs stands for organic LEDs. So the TVs we look at and the mobile phones and the PDAs, they were LCDs, but now they are polymer-based. And so those polymers actually generate light, ours modulate and switch light. So it's a different chemical composition. But if you think about it for a second, I mean 10, 15 years ago, were we using OLEDs in our displays, we were not. We don't even think twice and by using polymers today. And so we see the success of OLEDs has been something we can follow with our technology. Our modulators are very small, which actually is a great benefit to put them inside boxes that go into these servers and routers in a data center, and these boxes are called pluggable transceivers. Now this next bullet point is interesting because I've used the word transformational performance headroom. And that means that the performance of the electrooptic polymer material is not just good for one generation. It's good for a number of generations. So when you're talking to the end users, and they're asking about the implementation of our brand-new technology, they don't just want to put a technology in that's good for one generation. they want to put a technology and it's going to be around for a long time, and that's really important. And then lastly here, we can integrate our devices with other devices onto silicon photonics. And that's really important because these pluggable transceiver boxes are actually quite small. And to shoehorn lots of different components in a small box means you have to integrate them. Now we did this not ourselves, but the industry in electronics did this 60 years ago with ICs, integrated circuits, we put a lot of transistors on a chip because then it's a smaller size and lower power. The same sort of effect is happening in our industry and photonics. So the takeaway, polymer technology extends speeds, reduces power consumption and not just for this generation, for a long, long time. So I think there's a few investors in here that were before my time. And so back in 2017, which is when I gave my first talk, we had unique chemistry. And this is one of the things that attracted me to the company. But at that time, few believed in polymers. I mean everybody thought a new polymer of modulators had some potential when the industry really wasn't that interested, and that was 2017. But if we fast forward to today, we do have unique chemistry and we improved the performance of our materials incredibly over the last 5 to 6 years. Many now believe in polymers. In 2017, it was a case of -- we have this great technology, are you interested. Now it's very different. Polymer modulators have huge potential for optical networking and the Internet in general. And the last point, which is -- makes me really excited is the industry is now very interested in our technology. And so we've come a long way in like the last 5 or 6 years. And this is really excited. And so let's have a look at the market dynamics and potential. And so this looks like a complicated slide. It's not really about pyramids, but it's about what are the big drivers for this type of technology. Well, at the top there, some of the -- there we go -- at the top there, we can see a modulated chip. Next-generation components will require really high-speed modulators. And then the next line down, will necessitate next-generation switches, racks and transceivers. That's at the very highest level. But what are the real drivers, the macro drivers that really go underneath that? Well, you can see here switch density. This is a big issue in data centers. Artificial intelligence compute has become a topical subject over the last 2 or 3 months and energy usage. And so if you -- the takeaways from these on the need for space, the need for speed and the need for green, the need for lower power. And the end users need to seek an optical balance to make sure these drivers will drive the next-generation system and subassemblies for using these components. And we see polymer modulator is a key component, a key enabler for the end users to achieve these types of macro criteria. And this is really exciting because what we're seeing here is that these are problems these large companies are having, and we have a technology to really address that. And so this graph on the left, let's just focus on this one. I hope you can see some of the writings at the back. This graph says, the time it took to get to 1 million users. On the top one there is Netflix and it took 3.5 years for Netflix to get to 1 million users. And one at the bottom, which I've outlined, chatGPT, it took 5 days. I mean it just got caught on like wildfire, right? And we've all heard both positive and negative things about artificial intelligence. It's not my job to comment on that. But the observation from a Lightwave standpoint is, wow, when you see something like this taking off in less than a week, it had an impact on this graph here. This is computing power in artificial intelligence systems. And so what this graph is showing is from 1960, 1970, '80, '90, 2000, they call this the first era, and then you've got a modern era. When you start getting to 2020, look at the slope of this curve and this vertical is computing power. Now it's measured in petaflops. So I'm not sure we all understand what a petaflop is, but the way I look at this is if you think about the Internet as the U.S. highway system and you've got all these freeways with a number of lanes, the computing is basically the intersections. And so what this is telling us is that the intersections need to have 3, 4, 5, 6 lanes because if you're in L.A., I mean, or in New York, it is the intersections that clog up first, because they got to get the traffic to the right destination. And so the computing power is actually doubling every 2 to 4 months. It used to be every 2 to 4 years. And so this is providing an interesting situation the traffic and computing power is driving power consumption in data centers. The next slide I've showed before, but I can put it up again because it's pertinent. This creates an incredible Achilles heel for the end users. And what do I mean by Achilles heel? Well, look, the power consumed is going through the roof. And it's on a trajectory that it doesn't make a lot of sense. You can't sustain that. The traffic which is the data that gets down the Internet used to be because we had dial-up modems and then 15 years ago, it's because we're using lots of video and video was consuming a lot of traffic, and it still is a lot, but in the last year, that video has been supplanted by artificial intelligence, computational power. And so now we're seeing a trend of using even more. And so this traffic in this power is a huge problem for folks who run data centers, as you can see here. This is a major challenge for those guys and the service providers. And so we see this as the Achilles heel, and we see we have a technology to address this Achilles heel. And so where we enter the market is chips like this. We call them engines, polymer modulators. And they go into these pluggable transceiver boxes, which are these guys. Now there's lots of different designs. And as you can see here, there's a number of different designs here and a number of different designs here. This is the latest one everybody is using, and it's called an OSFP, an Octal Small Form Factor Pluggable. It's not very big. It's about the size of my finger. It's about 4 inches long and less than an inch wide. And whereas these original guys just have 1 or 2 fibers going in the end. You can see, yes, these guys have 8 fibers and some have 16. And again, really complex, which means you don't have a lot of room to have a lot of components inside this little box plus if you have a lot of components in this box, it can become really hot, consume a lot of power. So that's a big problem. So the folks and the end users, the data centers are trying to figure out how to increase the speed and keep the power down, so these things don't become hot, because when they become hot, they use a lot of power. So this is where we enter the market. And if you take the market, just looking at 2 types of these transceivers is the 800G and the 1600G or some people call it a 1.6-terabit transceiver. These are the ones that the folks are looking at today to deal with a lot of the increases in artificial intelligence, because the data center guys need to have boxes, transceivers that deal with this extra traffic. Now what are these -- this is a complicated slide. So the one at the top is the 800 and the one at the bottom is the 1600. Now these are graphs that came from Arista. So this is not our data, we're just showing you what their data is. They are suggested that where the 5-nanometer DSP working at 100G, that's the sort of power consumption. They're looking at 15 picojoules per bit. And they did some testing with one of the competitive modulated technologies, that's thin film lithium niobate, which is listed here, and got it down to 12 and they've been innovated to try and get rid of the DSP chip and they're suggesting that they could get it down to 8 or 6. We know with our technology, we're on this red type of curve. That's excited. So we know we can provide value to these guys in the 800G pluggable optics market as well as the 1600G. Our goal is not only to go fast, but to reduce the power. And the 1600G, they're suggesting that the DSP is 3 nanometers and 200G. And if they get rid of that, they might be able to get to 5, we know we can beat these numbers. This is really excited. And so if you look at the words on the left-hand side, power efficiency is key. And so we expect to see a rapid adoption of this type of technology over the next 24, 36 months. And we have to be mindful of any corresponding customer power requirements. Each customer has their own power requirements, of course. But in general, the takeaway from this slide is that polymers fit this profile really nicely. So this is another Arista slide, and I've sort of modified it a little bit. And they plotted a road map of using these transceivers. So 400G, 800G. I just talked about 1.6 terabit or 1600G. And they're even thinking about the next generation, which is 3.2. And when we look at this and go, wow, this is where the competition is today, everybody is thinking about this type of box here. This is what everybody is trying to prototype right now. We have a technology that takes us all the way up to here. And this is really exciting. And so the way you work out these transceivers, this is 16 channels at 100 gigabits, so you can get 1600. This box here is 8 x 200, 16 x 200. I put question marks here because I don't know what the industry really wants. But what I do know is that technology is aligned and can fit that performance profile, and that's very exciting. So the market. I'm going to give you some market numbers. But before I do that, I just want to give some definitions. This is for our first application of our electrooptic polymers. And so in orange, -- in orange is the total addressable market, folks in the industry call it a TAM. And then in this yellow -- olive yellow color when you got the SAM which is the serviceable addressable market, how big is the market we can reach. The orange is the total size of the market. And the yellow is what in the marketing world called a serviceable obtainable market, what you can actually obtain with your available resources. And as you are -- as you build your available resources and you become better at scaling, this yellow becomes the same size as this darker yellow. So to begin with, you start with this size, but your obtainable market will increase once you get more mature in the marketplace. So for the first applications, you just look at 2 transceivers, the 800 and the 1600, the ones I just showed you before, and you look out to 2035, and these are the units, the forecast and this is LightCounting, which is probably one of the most reputable market research companies that do this work. They're predicting 40 million units of 1.6 terabit by 2035 and over 70 million units of the 800G. So a nice growing market, but just 2 transceivers and there's plenty of transceivers out there. It doesn't even include telecom. So we haven't even included telecom. We haven't even included non-fiberoptic markets. This is just 2 types of transceivers, all right? So the SAM, which is the graph on the upper right, you can see by 2030. So this is even 5 years closer. 5 years closer, if you total the 800G and the 1.6G market, this is about 10 million units. And the assumptions we made when we put this together for the 800G, that's about 15% of the TAM. So that's -- you've taken quite a bit of haircut, so is much smaller than the total available market. And in the 1600, we've actually assumed 25% because our technology is more suitable for the higher speeds because we know our competition can't compete. So we expect a slightly bigger share as you go to the faster speeds. And so when you fold that down into your obtainable market, 20% of that SAM is about 1.6 million units for the 1.6 terabit and 1.4 million units for the 800g. So you total it up, 2030, there's 3 million units. That is a huge opportunity just on 2 types of transceivers. And I haven't even talked about other markets. And so when you put all this together in a table and you look at the market potential, you can start seeing here, you can see the TAM, which is the total available market. And so the numbers come down to about 3 million units as I just indicated. And so even without the other markets that we've included in this calculation, this is a substantial business opportunity. And this is a reflection of the combined effect of positive demand for higher traffic and lower power consumption drivers. And this is really exciting. So competition. Everybody knows we're not the only technology that makes high-speed modulators on the marketplace. So I've updated this table and you can see it's quite a complex table. There's a lot of data here. So I'm sure some of you will look at this afterwards and ask me questions. But I've really just highlighted a couple of things here. One is there are other technologies. There's [indiscernible]. Some people call it BTO. There's thin film lithium niobate. Lithium niobate was the original incumbent that Fred here really innovated within 25 years ago, there's indium phosphide and there's silicon. So we've all heard of these different technologies. But one of the things that's really exciting about our technology, not only has it got high performance, it's actually really small and really small counts for a lot. And so when I go to the next, you can see here in this rate in here, the relative size footprint. One is best. And so whether you're putting polymers into plasmonic devices or you're putting polymers into the slots, it's a really tiny device, and that's what a lot of folks are looking for, for their integrated PIC chip or the photonic integrated circuit chip. So if I go to the next slide, I mean, there's some other really nice advantages here, but I'm not going to be labor this slide. You can see from the ticks on the right-hand side, we have a very nice position vis-a-vis competition. Tiny. This is just one word on this slide. This was a prototype 800G module that was made with -- for Arista and there was a use of a thin-film lithium niobate modulated chip. And I think I've shown this slide before. So some of you have seen this slide before. So the size of this chip, with just 8 modulators is 9 millimeters x 15 millimeters. That's a huge space in a transceiver box. And there's been other thin-film modulator chips, I've seen a lot bigger than this. But when you look at what we can do on this slide here, let's see if I get that in. And so this is 8 of our modulators in 1 millimeters x 9 millimeters. And so that means there's a lot of real estate left for other things for other electronics. So you're not really taxing the designer of the transceiver with the space issue. And so it's over 10x more capacity than competition. And so this is just the 1 x 9. You can't really see a lot of detail there. But this is the first time we've shown a 1 x 4 PIC chip. So this is 4 modulators on 1 chip, right? So you can see here, the signals come in here. Here's the 4 modulators, and this is the output. And you can see a lot of the tracks and things. But the interesting thing is this is 1 millimeter x 3 millimeters. This is really tiny. So we've shown you right picture. This is a 4-channel polymer PIC layout. We've got [indiscernible] on this. We've got [indiscernible] on east and west with edge couplers. And this is designed for very high frequency operation electronically as well. And so this gives everybody an idea, it's not just single modulated chips now, we're designing PIC chips for tying integrated circuit chips. So partnering. This is a new slide I put together for this meeting and competitive polymer positioning vis-a-vis on the vertical axis is silicon foundry compatibility. And the horizontal axis is a figure of merit. And so the figure of merit is what the end users are really looking for is low voltage, low power consumption, high bandwidth, high speed and really small size. So if you multiply all these things together, and I guess you have a figure of merit. Now the interesting thing is silicon foundry compatibility. Well, we know silicon modulators have really nice compatibility with foundries because they're silicon. And so that's easy, right? So we know silicon photonics and even the ring resonators have really high foundry compatibility. But when we start talking about lithium niobate and barium titanate, it's really difficult to have these technologies in the silicon foundry. There are folks working on it today, but this is not obvious. This is difficult to implement into big silicon foundries. And then you've got indium phosphide, which actually uses his own foundry, right, because they have the indium phosphide foundries. Some people are trying to get indium phosphide into silicon foundries, but it's difficult. And so from our standpoint, it's sort of mid-range, but in the low part of this. If you look where we are positioned electrooptic polymers, we have great silicon foundry compatibility. And the figure of merit when you look at these metrics here allows us to perform really well, even though some of these technologies have great performances in certain areas. And so we've seen really high bandwidth and some indium phosphide. But you've got to be able to couple that with very low voltage, low power consumption. We've seen folks of barium titanate, that's a material that people say have really high [indiscernible], okay? So it's a pockels effect. But that's not the only thing the end users are looking for. They're looking for the -- all of these metrics, so that the modulators work really well in the system. And so when you multiply these together and you look at the figure of merit, that positions our technology very nicely for scaling and ramping. And so these are new pictures. You can see here different types of SCMs from foundries. I'm not going to get into a lot of details of the foundries. But I think the message here today is we're receiving devices back from foundries with great performance. And so these are new SCMs for a lot of you. And I think I've got another one here that is really sort of exciting from our standpoint. If you looked at our press releases late last year, we did an acquisition of a company called Chromosol. And the core skills with a technology called atomic layer deposition really improved with that acquisition. And we also got some IP and some patents. And what I'm showing here is an SCM of what ALD is. It's atomic layer deposition of a dielectric-based encapsulation. And you can use this for chip scale packaging. And so what it does is it seals the polymer in. It's like it puts a container like a package over the material and protects the material from the elements of the atmosphere. And a lot of people use ALD techniques. In fact, if you look at the OLED industry, the organic LEDs, they do exactly this to protect the polymers on the displays you look at every day. And so we've taken this technology. We worked it in terms of low-temperature performance. This is an FIB analysis of what it looks like. And you can see here the 130-nanometer is very clean. It's a lovely barrier, and we're doing some really nice work here. And it's a clean, high-quality interface. So this is some of the work we've done since we did the Chromosol acquisition, and this is really exciting. Polymer stability, and this is not meant to be a technical [indiscernible]. I don't expect everybody to be super technical PhDs in the audience. But one of the things the end users ask us is what is the reliability and the stability of this material. And we've hired [indiscernible] here as Director of Reliability and he's putting together our first-class reliability team to make sure we not only have 2 of these graphs, but a lot more of these graphs because this is what the end users want to see. Now the top one just shows you thermal stability. There's 400 hours, but you can see here the change in [indiscernible] is minimal. This is a stress at 85 degrees. This is a thermal stability test. And you can see the results are looking really nice. Obviously, we're going to keep these in the oven and keep this going. In terms of product stability, I just wanted to show there was a whole bunch of questions as we've more than 5,000 hours. This is running about 9,000 hours. And so with pretty good optical intensity of 1,550. And so we're getting some really nice performance here over the long term. And this is going to increase this year and it's going to increase next year, and everybody wants to see this type of data because this is exactly what happened in the OLED business about 10 years ago. They asked for data like this, look for data like this and then everything ramped up. So reliability data set is being built for end-user valuation. Okay. Let's talk about commercial strategy and activity. So this is our business model. It hasn't changed since the last slide I gave you. It's this 3-pronged approach where you've got product sales, patent licensing and tech transfer. So that hasn't changed. The technology that falls into this is the Chromophore and polymer matrix IP, Perkinamine series materials, devices and PIC architecture IP, fabrication and processing, high-speed package and assembly design IP. And what that will bring is obviously the output, what everybody here wants to see, which is license and royalty fees, device and PIC, optical subassembly sales, technology transfer license, royalty fees and tech transfers, too. And so the goal here with this business model is to become a leader in the engineering and manufacturing of electrooptic partners. And so with this, I think most folks have seen this slide before. These are the representative interactions for all levels of the value chain from optical component suppliers to high-speed optics manufacturers to optical networking equipment companies, to the Internet service providers, which really influence all these levels. And so there's many verticals here. But these companies are all sort of part of the optical network and they make the infrastructure for the Internet. And so these are the type of companies that we use our technology. So you can't do licensing without a strong patent portfolio. And so the patent portfolio is really based on materials, that's the Perkinamine series; the device, PIC, fab and design, the optical subassembly package concept just like the atomic layer deposition that I showed you. And obviously, new patents that we want to acquire and file continuously. But what it really boils down to is we're developing a polymer-based technologies for licensing that really will engage with the Internet and optical networking and data centers. We're creating a strong moat and know how to carve leadership in the high-speed modulated game. And we have a unique chemistry to create unique polymers that we can design and create and strengthen this patent portfolio. But this portfolio enables this license and tech transfer for long-term revenue generation. And so you have to put this in place. It takes a long time to get patents and know-how. And so we have to be very aggressive in this. But it drives the licensing opportunities. Now a lot of folks have heard that we've been expanding. I think you've seen it in some of our documents. And so before I go through the words, let's have a look at the pictures. Now the last picture I showed of our facility had the parking lot essentially empty. That's because when I took the photograph, I was in at 6:00 a.m. in the morning, and nobody had arrived. So I went at lunch time, and you can see the parking lot is full. I know there's some people go up to companies and they count the number of cars in the parking lot. And our parking lot is full, right? This is the front of the facility. And this corner here, if you go off in that direction, and that's the front end and you see the side. And you can see the front actually joins the back. The back is the place that we're actually moving into, expanding into. So actually it joins. We're actually going to knock a hole in the wall and just walk through. So it's all part of the end of one building and this is the back. So if you go to the end there, and here and you look down, we go basically about halfway down here. You can see some of the pods here. The folks in there are actually moving out at the end of May. So they're already getting ready to do that. It's going to take us about a couple of months to refit it a little bit, but it's pretty much set up. And so probably round about July, August, we'll be moving in. And some of the things that we're going to be doing. Now remember, this is about 10,000 square feet and this is a joining. So we're going to be a single unit, which is really exciting. It's about a 72% increase in the current space. But this is what is going to be useful. Production device test and evaluation, production reliability, laser characterization, SCM analysis and a big area of expansion of our chemical synthesis production line. So that's really super exciting. And obviously, there's going to be some offices and meeting space for the new stuff. But look what's happened in the last 6, 7 months, maybe it's 8 months. I mean we have had 11 recent hires. And this is exciting times for us. So we're really building the team to create a world-class team to service our technology to the end users. And so we see that we have the team and the production facilities to make this technology and I'll use this word like I did last year, ubiquitous. That's really one of the key reasons why we're really excited here. So a growth funnel. A lot of these companies that get into business usually show some type of funnel. This is our type of funnel, how we look at the marketplace. So we have value proposition prospects. So what's the value proposition, expand awareness and value proposition of our modulator technology. Well, I've been doing this since 2017. So we have a lot of talks, both technical talks as well as the banking type talks. Prospecting, talking to potential customers and technology. We've done a lot of this in the early days of the technical conferences. And then screening some of the friendlies, some of these technology partners and customers to form a lead list and then selecting your friendly ones, the ones you really want to work with to work with the technology. The customers who see our technology is enabling their business to be more competitive. And then lastly, that turns into full-blown customers with technology licensing and optimizing for scaling. And so we are undertaking multilevel and cross-functional engagements with the goal of establishing revenue-generating clients. I mean this is what the funnel is all about. A lot of companies show this type of graphic. And this for us is commercial planning. And then this slide here, I've sort of expanded the top to show you the type of representative actives that you need to talk to for the value proposition. And then you've got your prospects. There's a little bit of information here. I'm sure most people in the audience won't be happy until I go into more detail. But for right now, this is the guidance we've given. But this just shows you this funnel is working. It's in action. And this is part of our commercial activity that we see developing well in 2023. And so one of the things that I didn't really call out. I mean, there's key poor drivers from the hyperscalers. These are the data center guys, artificial intelligence, quantum computing is now becoming quite topical too, but it's still in its early stages. And then there's the key push drivers, the folks who are doing the silicon photonics platform providers, the fabs and the foundries. And so this pull and push is something that we're really taking a very close look at as we build our commercial business. So this slide here is a slide we're proud about because this is really part of the press release this morning, a license agreement template for our first commercial license. And so we're excited to talk about this today. Thank you. I don't think I'll be able to answer all the questions you have on this, but I'll do my best. But what we have done is given what this is -- what does this consist of? And why is this important to us? I mean this is our first commercial market acceptance. That's really what it means. I know you may have a lot of questions about what's the royalty and what's the revenue coming in. I'm sure you're going to get these questions. But really, what this means is the market has accepted our technology. And for us, it's huge. It's really huge, right? So we're supplying the material. There's a license initiation fee, there are royalties per unit. There's some minimums as you go up in years and there's some minimum sales volumes. So I haven't gone into any of the details, but certainly, we've been talking to a number of folks and one across the finish line, and that's what the PR was this morning. So in doing some of this activity, you've got to put a data sheet together. So this is just one representative data sheet of the Perkinamine Series 2 material. There's other data sheets, but I just wanted to put one up for representation. Now I don't expect anybody to read the words at the back of the room or even at the front of the room. But the reason I put this up is that this is a commercial data sheet. This is what you send out to customers and when you want to talk to them about the materials. So there's high activity, high stability [indiscernible] now in what we call limited availability. And some of the specs are shown in this table. And I'm not going to go through the details, but I'm sure you will a little bit later. And so going to the next one is, what's the commercial plan that's behind this data sheet. And so you can see here, Perkinamine is the 2 series, the 3 Series, the 5 series, and then our team is working on the 6 series and that's not ready yet, it's still in development. But in terms of licensing, these are the materials we expect to see licensing both this year and next year. So for us, this is really exciting. And we want to increase the commercial acceptance of our technology. That's really -- I mean, when you think about what happened to the OLED business and the focus that the OLED displays, they also wanted commercial acceptance. When I worked on the technologies in the '90s, I mean, blue and green and they last a couple of hours. And I gave up on it and I went off into semiconductors, but the folks in that area worked really hard and they sorted all the problems out. And now we're using, we don't even think about it. So that's our material road map. And so third-party verification is always really important when you go talk to the end users because they ask you as a company what the performance is, but they also want to see if other people can use our materials and also get good performance. And so this is a bit of a word show. I don't expect anybody to read any of this stuff because it's super technical. But the point is, I mean, there's the references at the bottom if you want to go look up the papers. But these are a bunch of companies, there's Calorex, there is Polariton, there's Kit. There's a couple of others here, the ETH Zurich, which is a university but they've combined and used our material and produced world-class results, had world record results. And that's something we should be proud of. And so our polymer used in different device designs in silicon slots, in plasmonic slots, in plasmonic ring resonators. All have produced world-class results that have been shown at industry conferences, the OFC, the ECOC conference. This is pretty exciting. This is really good third-party review. And so some of the market reactions we hear at some of these conferences as well as talking into some of the end users. I don't know if I want to go through every one of these. But certainly, we fill the industry gap. We reduce the power consumption. These folks here, we want to go on the list for a prototype. We want to run live traffic. Folks just come up to me and ask these things now. This is not pushing our technology like I was trying to do in 2017. These are folks who are realizing we have something that's really exciting. And what do I got here. Our investment, we look at this one here. At our foundry, we are worried about the investment into thin-film lithium niobate. That's one of our competitors. It may only be for one generation. With polymers, our investment will be worthwhile and better ROI. This is one foundry feedback. And so they see our technology growing further in terms of generations towards the end of the decade. And that's really exciting for these types of folks. They like the fact that you can put on our polymers quite easily. Hybrid PICs is a term that we've coined to show you can put polymers with silicon photonics to get the best performance. Using foundries is making really good business sense. We hear that a lot. We do see the request for more reliability. And we're not going to be secret about this. I call it a reliability data set, and that's what we're working on right now. Folks want to see more reliability results and we're doing that. And then there's other opportunities like LiDAR and sensing too. But the feedback has been strong and constructive and that's exciting. So in terms of investor relations, we work with the MZ Group. And so this is the data for the last 12 months. So we can see that last 12 months, since I had the last year's Annual Shareholder Meeting. And so we've had 10 investor conferences, both in person and virtual, 26 press releases. I don't think it includes the one this morning, plus 146% 30-day average volume. I know the volume today has been really nice. It's probably over $3 million now. 81 buy-side and sell-side meetings. So we've been engaged a lot with the financial community. We look at this point, I mean, plus a 154% increase in institutional ownership. That's really good. That's really exciting. That's just showing you we'll be coming on the radar, not just of the tech companies, but of the financial industry. And I think most people know we've been added to the Russell 2000. So there's been an extremely active cadence of meetings with institutional investors, research analysts, et cetera. And so that's been pretty exciting. And then in terms of public relations for the last 12 months, this is the data that MZ Group have put together. 60 unique media opportunities. They believe we've reached an audience of over 80 million. That can expand to a much higher number, depending on how you want to look at it. But that means we're reaching a lot of people. And then some of the things that we've done in terms of exposing ourselves, Bloomberg, Radio, trade talks, laser focused world or some of you folks reminded me yesterday, that my children call me Dr. Doctor and I checked with my son yesterday and he said, "Yes, that's not going to change." So that article came out last week, and I put the company in really good light. And so these things are happening on a regular basis. And I think there's going to be a few more coming up soon after the announcement this morning, and so that's great for us. So we're getting some really good presence both in the industry and the financial side of things for a small cap company. To summarize. So this slide shows you a bunch of boxes. But what do the boxes really represent. We have great material science. We have great technology. We're using that for designing state-of-the-art polymer photonic integrated circuit designs. We've got high-speed design and packaging. We've got a powerful patent portfolio. We're entering some really exciting markets, selling components, licensing materials, partnering with foundries and other players like transceiver companies. We're now developing material and device data sheets. And we have a world-class Board, technical advisory Board as well as a team we're working with very closely, the MZ Group that we feel has done a really nice job on the IR and the PR side of things. And so one of the takeaways from the presentation, our technology is competitively superior and unique. We continue to increase our commercial progress and I guess today is the first public viewing of that. With our partners, we are positioned to scale polymers for optical networking. And we believe now we have the team, resources and plans in place to really make polymers ubiquitous. And I'll finish with one slide, and this is the one slide that's probably going to generate a lot of Q&A. It's the press release that came out this morning. And unfortunately, we didn't have time to get it ready for everybody to come in this morning. But I just want to focus on one thing. I mean, okay, the title is Lightwave Logic begins commercialization of geopolymer materials. But this thing here, this comment I made here, this material supply license agreement for our Perkinamine chromophore recognizes market acceptance and competitive advantage of our technology and validates the first prong of our business model. It is that validation, the acceptance in the marketplace that really is making myself and the team, which I think has done an incredible job to bring us to this point. It's not all my work. The team has done a great job of bringing the technology to a commercial data point, and that's all summed up in this press release as of this morning. And I think that's it. Thank you. And officially, do you want to...

Yes, we can now begin our question-and-answer session. So I would ask everyone to limit the question to one per person, so we can make sure we get everyone. But yes, let's get started. So any questions?

So Dr. Doctor. The slide talking about serviceable, obtainable market share. It said by 2030 and then 2035 is where mass commercialization would most likely be taking place? Is that the proper way to interpret that slide from a timing perspective?

No. That is a market slide that we did not produce. So it's not a slide. I mean that data is produced by LightCounting. And it's what LightCounting sees. So basically, what this slide says, this is -- this company LightCounting, they do the market analysis of this market. And they talk to all the usual suspects, the data center companies, the transceiver companies. And what they're forecasting is by 2030, the serviceable available market is going to be about 10 million units of these transceivers. What they're really saying is that when they cater it all up, it's going to be about 110 million units. That's a huge number of transceivers. Now this is 2035, right? So that's a big one. But I really didn't want to focus on 2035 because that's a long way out. And when these market research companies look out 10 years, there's probably a little bit of an error bar here. But the point is their forecast for 2030, which is about here, is probably much more reasonable, and much more accurate. And so when I look at this graph, the 10 million units is probably a pretty good forecast of what the market needs in terms of the transceivers. This is the market we know we can get into with our polymers.

Can you go one more slide over, more to my question, 2030. [indiscernible] that one we really forecast is going to be 7 years before the numbers?

Now that just shows you the size of the market in 2030. I mean this year, it just shows you how they see this market building. So they see in 2025, there's going to be about, was it about 80,000. That's going to be about 80,000, right? And here it's going to be about 3 million. And so if we can get all of the 80,000, then we've attained our obtainable market. We may get more than 80,000 and then we'll be going into this market. That just give you -- this is our view of what we think is obtainable given our resources. That could change. As we scale up and we get more confident in volume scaling, it's going to move more towards this job. Yes, there's another question?

In relation to the same data slide that you're talking to, so in terms of like 2025 with 80,000 units, if we got them all, that would be great. But are we talking Lightweight Logic devices inside of those units. So how many modulators would be -- I mean, you're saying you have 120 modulators in one transceiver potentially. I mean, obviously, that's not for the first ones. But I'm saying so, can you give us some indication...

This will be the PIC chip. It will be a chip. The chip may have a number of modulators on it.

So can we get some kind of estimation as to when, say, for example, in volume terms, we could reach a breakeven and not need outside financing?

So we haven't given any guidance on breakeven at this point. But certainly, we're -- Jim and I are looking at internally. So yes, we haven't got to the point of being public about those types of metrics. I think the focus right now is to make sure we get market acceptance for our technology. But that's something we have a handle on internally.

Thank you, and a great job, Lightwave. So talking about that 80,000, and I know you got to be careful with this one. How much revenue -- if somebody had 80,000, what is the revenue on that? What is the value that Lightwave logically get out of that? I don't have a sense of -- is this a $25,000 chip, 80,000 represents $25,000 and I know our margins are really fantastic. But is there a -- can you give us a sense of that?