Lightwave Logic Inc (LWLG)

[tedpeele]

MRLWLG101:Your articulate post made me re-examine my views regarding the status of the PIC and ongoing work with transceiver companies. So I went back and more closely than ever before looked at what the company has told us regarding both to see if your narrative makes more sense than mine.

You CONCLUDED:

it is highly likely that Lightwave Logic's 4x200G PIC is under a Non-Disclosure Agreement with a potential TIER1 customer

You also concluded they are "far along the development process" since going from "in qualification" to qualification only takes "several months".

So, I decided to look closely at the evidence you have provided for your views and conclusions.

Before I review the evidence you provided (3 items), I'd like to point out a couple of things that seem odd if your conclusion is correct:

1. The PR announcing Dr Lebby's resignation doesn't even mention the PIC platform. WOW.

Rather, it mentioned new areas of expansion, evolving, multiple verticles, materials and "polymer modulators". Doesn't it seem rather odd that if they were anywhere near a deal involving 4x200 PICs with transceiver companies, they would have at least said something about that?

2. The company has never said they are actively working on developing a PIC with a transceiver company.

Wouldn't common sense say that if your conclusion above is correct these 2 items are odd at the very least? I mean the narrative is that Yves is going to complete the work that Dr Lebby couldn't do with regard to licensing the PIC - and yet the PIC isn't even mentioned!


Let's look at the EVIDENCE you provide for your conclusion that it is highly likely the 4x200 is under a NDA with transciever companies:

1. Working under an NDA is common in the industry

This is true and I"m sure they have a lot of NDAs with various kinds of companies. At OFC alone they probably got 20 NDAs from those who witnessed the demo. However, this obviously isn't enough. You need to be able to provide evidence that Lightwave and a transceiver company would want to be silent about what Lightwave has accomplished with the PIC development.

That's where it appears you have skipped over a very important part here: The PIC is a PRE-TRANSCEIVER development. Yes, they may work together to customize a PIC for a potential customer - but the initial development of the PIC alone is not something Lightwave does with a transceiver company nor that requires an NDA. That's a very important point: The initial PIC development from what I can see is something Lightwave would do in their own labs and then replicate it in a Foundry on 200mm wafers. As I understand it - once the PIC is 'ready' then they work with a transceiver company to customize it and 'drop' it into their transceiver module.

So would you agree that there would be no need for and NDA with respect to the actual development of the PIC in the first place? Would you also agree that such a development would be a monumental event warranting substantial PRs and messaging to shareholders? Do you see a reason the company would not share the PIC development PRE-TRANSCEIVER customization stage?


YOUR SECOND EVIDENCE

2. The status "in qualification" shown on the ASM slide #29

Ok, I agree that is what it shows. The "in development" legend item is unnecessary but I don't think it negates what is shown. But I don't find that to be particulary compelling since Dr Lebby said "4 lanes is coming" and has never said :it is here" since that time. Also, of the Perk 6 he says "THAT ONE is in qualification". Why didn't he say the PIC and packaging are also in qualification? I think you HAVE to look at the other messaging to get a more accurate picture.

OTHER COMPANY STATEMENTS RE THE PIC:

The first mention re the PIC is in the Nov '23 PR which says "several commercial foundries are implementing our PIC designs for multi-channel polymer modulator engines, including 4 channel solutions for 800G." Then he backpedaled in the infamous Dec 4 letter: "we are planning to implement our PIC designs using commercial semiconductor foundries for multi-channel polymer modulator engines, including 4 channel solutions for 800G."

"Planning to impement" into FOUNDRIES: NOTHING was even possible by year end 2023 - yet people were expecting 'deals' immenently thanks to the pumped up language in that now infamous letter! What kind of deals can you do without a PIC? Materials and one-offs only. But I drigress...

The PIC work begins in FOUNDRIES and it is clear they had just reached the starting point with trying out their PIC designs in FOUNDRIES a year ago.

But we are told precious little about how that PIC work developed throughout 2024. We get a SINGLE lane demo at OFC, and then we get a "4 channels is coming" statement at the ASM.

But read closely what Dr Lebby says when Kevin pressed the issue - remember this is the Q&A that pissed Marcelli off to no end:

Kevin... The timing for the 4x200 PIC chip and a completed transceiver is still ambiguous. At the Optica conference last fall, you said the 4x200 PIC to be ready in 2024. Is that still on target? Have you received prototyped 4x200 PICs yet from these wafers?
Michael Lebby
All I can say is it’s in progress.

Nothing in this answer suggests that a prototype PIC existed by that time, much less a transceiver company was involved.
Later Kevin asks another question about the PICs and what would be included and notice how Dr Lebby's answer never says they ARE DOING it NOW - He doesn't say "Our platform does this" But he only answer in terms of the future.

While the graph indeed shows "in qualification" all of the other pieces of evidence show that to be hyperbole at best. If he could say "in qualification" he could also say "4 lanes is now working" "we have a working 4x200 PIC" "the PIC is 100% ready for evaluation by a transceiver company" and so on. But he doesn't, MRLWLG101. How do you explain that?

My interpretation of all of the above is that the PIC is not ready for a transceiver company to run it through the tests, that they have not successfully gotten a 4x200 PIC completed because there is no reason for them to not have shouted that at the top of their lungs if they had completed that step. "In qualification" was either a mistake or highly misleading

For grins let's say I'm wrong and they have a working PIC. You say it may take "several months" to become qualified. Here we are 5 months later and Dr Lebby most recently stressed the need for more testing - so where are you getting "several months" from? We are talking about something that has never been done before: 4x200gpbs. It could take a few more months, or it could take a few more years, or it may not be possible to do. So, even if somehow "in qualification" is technically correct, I don't think it is very meaningful. So again, where are you getting this "far along in development" from?


THIRD PIECE OF EVIDENCE:

1." the many interviews and quarterly reports (SEC), which reference collaborations with the (largest) TIER1 partners ".

You provided no detail to support this. How substantive are those "collaborations"? How much work were they doing and what kind of work was it? And how many? I think I know why you didn't provide any detail: The detail we have isn't very supportive

First the 10Qs are notably silent about any such collaborations. The best we have is in the most recent one, which I'll quote below.

Since you shared nothing to support your view, I went through the quarterly commentaries starting back in early 2023 to see what was really said.

When you read closely you see that quarter after quarter the message is quite vague. It starts with the transceiver companies "expressing an interest" and ends with "we are currently having multiple ongoing engagements discussing". I was going to post those here but it will just clutter this further. I encourage you to look at them all - you'll see what I'm saying.

The latest we have sounds good but read it closely:

Nov 13 update: " We are targeting a wide spectrum of Tier-1 companies and multinational corporations - currently having multiple ongoing engagements discussing materials supply, technology transfer and licensing agreements as well as chiplet device designs. While we understand it is our goal to sign an agreement with a tier-1 company in 2024, ongoing discussions are in progress, and have progressed well with companies based in USA,Europe, and the Far East, and our revised goal is now 2025"

Discussions. Not active partnerships where products are BEING designed.. Discussions. Where is the evidence that they are actively working together on customized PIC designs, and creating demos? This appears to be pure conjecture that only exists in your imagination. At least they do mention discussing chiplet - PIC - device designs. But who knows how preliminary those might be.: "Hey our foundry is running a PIC design that we think might meet the needs you said your customer had last quarter. Those results will be coming out in a few months." "Ok let us know". See I can do it too.

There just is no evidence to support the idea that transceiver companies are on board and getting their hands dirty to make transceivers. Remember the 7900 goal? Remember how it just disappeared this year?


So, since none of your 3 pieces of evidence to support your conclusion above hold up very well under scrutiny, I can't agree with your conclusion: I think they have made very little progress with transceiver companies because I think the PIC just isn't anywhere close to working right. Otherwise the company would have clearly announced it and would be more straightforward when talking about where things stand with transceiver companies. There is no reason in the world that I can come up with that makes sense that would keep Lightwave from saying a 4 lane PIC is working and that a Tier 1 has agreed to produce a prototype transceiver product with their PIC in it. What's the competition going to do - make their own polymer PIC that's better?

ALL of the above suggests only that some transceiver companies - including some Tier1s - are curious - maybe a lot even - but there is no reason to conclude they are "highly likely" to be doing any deep collaborative work with Lightwave on their PICs. It really seems like wishful thinking when you read closely what the company has been telling us. And the most recent PR pretty much shoots down the "highly likely" conclusion you have come to. There has been a progression of interest in the last year - progressing from talks, to visits, to evaluations, and even discussions about PIC designs and even deals. But not collaborative work to make a PIC, and optical engine, or a final transceiver demo product.


THE NARRATIVE AS TO WHY DR LEBBY LEFT - A DIFFERENCE OF VISION:

The narrative regarding Dr Lebby's departure is totally made up isn't it? What evidence do you have that the board members had a different strategy for commercialization in mind? I haven't seen a word on that. The only evidence I see of a different strategy is a pivot away from the PIC to new "verticles".

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