Lightwave Logic, Inc. (OTCMKTS:LWLG) On A Bull Run

We made a call on Lightwave Logic, Inc. (OTCMKTS:LWLG), on May 7, 2017 when the share price was around $1.10, claiming that the amount of patents owned and the cash on hand could be interesting for a bigger competitor. We speculated with the idea of a buyout. Additionally, the fact that the CEO and institutional investors were buying shares was also very interesting. We do not know whether the market came to the same conclusions as us, but as of May 31, 2017, the share price is $1.49 and touched the level of $1.80 after we put out our article. This is a 58% return is less than a month.Several things happened in a month, and the stock became very popular on iHub. Hence, we decided that a new update was necessary. This is the price action that we will try to justify. Have a look:SourceWhy did the market become so bullish on the stock?For those who have heard about this stock for the first time, here is a little background. LWLG develops the "next generation photonic devices and nonlinear optical polymer materials systems for applications in high speed fiber-optic data communications and optical computing markets". The company has already obtained large amount of intangible assets thanks to its expenditures in research development, and believes that the products that will be produced thanks to this technology will be easily sold to data center, and telecom companies. For example, Netflix, or IBM were said to be potential users of this technology in the last annual report. Let's review now the new developments.First of all, the Q1 2017 was released on May 15, 2017, and the market pushed the stock to the highest level in months around the same time. Thus, we decided to have a close look.SourceDuring this quarter, some good news came out about the item that interests us the most; cash in hand. The December 31, 2016 figure was $1.9 million, whereas $2.18 million was reported as of March 31, 2017. That is 11% increase. Furthermore, the total assets increased to approximately $3.3 million from $3.1 million, while the total liabilities are still only $0.2 million. To sum up, as we said in the last piece, the balance sheet of the company shows that the company is quite rich, not only in intangible assets, but also in cash. Regarding the profit and loss account, the good news is that the R&D expense keeps increasing to $0.728 million from $0.603 million, which was reported in the last quarter. What does it mean? It means that the company will be able to obtain more patents in the future, and the management believes that the company's technology will be easily sold. We don't think that this positive vision about the future growth of the company is factored into the current share price.Additionally, on May 18, it was put out that the company had released a new aggressive strategy during its annual meeting of shareholders:

"the burgeoning and explosive 100Gbps market opportunity using its all-organic 25 Gps ridge waveguide modulator in a 4 channel architecture (4x25 Gbps)" Source

But, its is not only that. The company revealed initial simulation results, showing that the technology being developed could target the 400Gbps market by using 50Gbps ridge waveguide modulators. Given that the current know-how enables the company to provide 25 Gbps applications, the fact that the company may be able to sell technology with 100 Gbps, and even 400 Gbps is great news. The CEO, Dr. Michael Lebby, explained:

“The team has come a long way in the past 3 months with our 25Gbps modulator, and we are now laser-focused on moving the technology from prototype to marketplace. Our team is expanding with more world-class engineers being hired to accelerate development of 25Gbps all-organic ridge waveguide modulator, as well as hone the performance.” Source

The market reaction to this news was not quite dramatic in the beginning. It is true that the volume crossed the 1.0 million share mark, but the share price did not increase the following days, which is quite rare. In our opinion, the good news was mixed with this SEC filing, wherein it was announced that the underwriter of the company, Lincoln Park, would be trying to sell shares of the company. It is sure that some market participants, who were willing to buy shares because of the good news, thought twice due to the move by Lincoln Park.ConclusionWe still believe that LWLG is interesting takeover prospect. The amount of cash on hand and intangible assets are substantial, and we saw in the last quarter that cash is even increasing. Additionally, we appreciated that the company could be able to develop 100 Gbps technology and maybe enter the 400 Gbps market. This good news was responsible for the uptrend at the end of May. Furthermore, the company was able to announce a capital increase without causing a large collapse in the share price. Finally, we appreciate that the company decided to add more talent to the Board of Directors. To sum up, there are many things to like in this company, and it may surprise in the near future. Thus, try to stay alert on LWLG. We will be updating our subscribers as soon as we know more. For the latest updates on LWLG, sign up below!Disclosure: We have no position in any of the securities mentioned and have not been compensated for this article.