Dilutive financing continues to crush the share price and will minimize future gains. I expect the share price to continue to decline until they sign a meaningful partnership or sale the company outright. The share price gains will be minimal and fleeting if they make an announcement that they have delivered prototypes to customers due to the dilutive financing approach. Why, over a revenue cycle of 27 years, they have issued too many shares. Thus, to start to dig their way out of this dilutive position, they need to find other methods of financing. Simply put, they are issuing shares faster than future income will be earned. Take POETF as an example, they recently received an order for their POET Optical Interposer and their share price has not gained a penny. Why, as of 12/17 they have 260 million shares outstanding and reported a net loss of ($13) million. POETF received a $3 million dollar order. However, POETF will need 5-10 $3 million dollar deals to break even and they will need to make $260 million to have a PE of 1. At this point, I’m not sure how POETF will manage to be a going concern in the future unless business really picks-up. LWLG is on the same path at POETF. They need to get a better financing deal today. Lebby stated in his last Open Letter to Shareholders “By being ahead, we appear to be gaining significant market leverage through technical advantage. Market leverage in this sense does not relate to financial leverage but to a specific competitive strength.” He should be able to take this competitive strength to the bank and get a $25 million loan or to a future partner and make a good financing deal.
