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Equity sale boosts Lightwave Logic cash reserves

10 Apr 2012

Developer of electro-optic devices based on organic molecules says it now has enough cash for the next 18 months of operations.

Lightwave Logic, the Newark, Delaware company that is working to commercialize novel types of electro-optic devices based on organic molecules, has raised enough cash to fund its operations through September 2013.

Under the terms of a deal with the Lincoln Park Capital Fund, originally signed in May 2011, Lightwave can sell up to $20 million worth of shares in its common stock over a 30-month period to the investment and asset management group – provided that Lightwave’s stock price remains above $1.

In the opening quarter of this year, Lightwave issued 2.3 million shares in its common stock, in exchange for just over $3.4 million in cash – meaning that auditors no longer have to include a “going concern” notice in their report warning potential investors that the company may be unable to continue operating.

Most of that cash raised now appears on Lightwave’s balance sheet, and CEO Jim Marcelli said: “The absence of a going concern opinion for the first time in the history of our company is a significant achievement for us as a pre-revenue, development-stage entity. With $3,194,810 in cash on April 2, 2012, we believe we currently have sufficient cash on hand to fund our operations through September 2013.”

Since being founded more than 20 years ago by researcher Frederick Goetz (originally as “PSI-TEC”, then as “Third-Order Nanotechnologies”, before becoming Lightwave Logic in March 2008) Lightwave has made virtually zero revenues, and the company’s cumulative losses now total nearly $24 million.

In 2011, Lightwave made an operating loss of $3.3 million and ended the year with cash holdings of only $360,000, indicating the urgent need for access to cash.

Commercial partners
The company is mostly involved with academic partners, but in a letter to shareholders earlier this year, CEO Marcelli said that the development of a new electro-optic material that it calls “Perkinamine Indigo” held out great hopes for the future in a more commercial arena:

“We believe the properties of Perkinamine Indigo exceed the technical specification requirements set by the major microelectronics company we have been working with for the past two years, and we are now hoping to enter into an agreement with them sometime during 2012,” he wrote.

Admitting that Lightwave had not been able to generate revenues on the timescale previously expected, Marcelli added that design proposals for potential blue-chip customers Lockheed Martin and Celestech should also be accepted, and that other large companies were placing enquiries.

With new chief technology officer Louis Glasgow in place since November 2011, the company has also begun developing a spatial light modulator and “multi-channel telecom modulator”, as well as an all-optical waveguide and transistor.

Another recent addition to Lightwave’s advisory team comes in the form of industry veteran Fred Leonberger – previously CTO at JDSU and, prior to that, co-founder of high-speed optical modulator specialist United Technologies Photonics.

“Leonberger is one of the foremost optical device experts in the country,” wrote Marcelli in the same shareholder letter. “With his industry expertise and experience, he will be invaluable to us as we begin developing new devices to address the telecom market.”

Lightwave Logic is one of only a handful of commercial entities developing polymer-based electro-optical devices that could one day challenge standard inorganic devices based on gallium arsenide semiconductors and sold for applications in high-speed communications networks by the likes of JDSU, Oclaro and Fujitsu.

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