What changed in this filing

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Item 1A. Risk Factors

2021-03-31 compared with 2020-03-16 · 119 added, 75 removed, 276 unchanged (41% of the section changed)

19 unchanged sentences

These risks include our potential inability to:

Establish product sales and marketing capabilities;

Establish and maintain markets for our potential products;

Identify, attract, retain and motivate qualified personnel;

Continue to develop and upgrade our technologies to keep pace with changes in technology and the growth of markets using polymer based materials;

Develop expanded product production facilities and outside contractor relationships;

Maintain our reputation and build trust with customers;

Scale up from small pilot or prototype quantities to large quantities of product on a consistent basis;

Establish product sales and marketing capabilities;  

Establish and maintain markets for our potential products;  

Identify, attract, retain and motivate qualified personnel;  

Continue to develop and upgrade our technologies to keep pace with changes in technology and the growth of markets using polymer based materials;  

Develop expanded product production facilities and outside contractor relationships;  

Maintain our reputation and build trust with customers;  

Scale up from small pilot or prototype quantities to large quantities of product on a consistent basis;  

Contract for or develop the internal skills needed to master large volume production of our products;

Fund the capital expenditures required to develop volume production due to the limits of our available financial resources.

and  

Fund the capital expenditures required to develop volume production due to the limits of our available financial resources.  

If we fail to effectively manage our growth, and effectively transition from our focus on research and development activities to commercially successful products, our business could suffer.

Failure to manage growth of operations could harm our business.

To date, a large number of our activities and resources have been directed at the research and development of our technologies and development of potential related products.

To date, a large number of our activities and resources have been directed at the research and development of our technologies and development of potential related products including work in association with external partners.

The transition from a focus on research and development to being a vendor of products requires effective planning and management.

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In order to effectively manage growth, we must:

Continue to develop an effective planning and management process to implement our business strategy;

Hire, train and integrate new personnel in all areas of our business;

Expand our facilities and increase capital investments.

and  

Expand our facilities and increase capital investments.  

We cannot assure you that we will be able to accomplish these tasks effectively or otherwise effectively manage our growth.

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Our business does not presently generate the cash needed to finance our current and anticipated operations.

Based on our current operating plan and budgeted cash requirements, we believe that we have sufficient funds to finance our operations through May 2020;

Based on our current operating plan and budgeted cash requirements, we believe that we have sufficient funds to finance our operations through December 2021;

however, we will need to obtain additional future financing after that time to finance our operations until such time that we can conduct profitable revenue-generating activities.

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Poor financial results, unanticipated expenses or unanticipated opportunities could require additional financing sooner than we expect.

Other than with respect to the purchase agreement for $25 million (the Purchase Agreement ) we entered into with Lincoln Park Capital Fund, LLC ( Lincoln Park ), we have no plans or arrangements with respect to the possible acquisition of additional financing, and such financing may be unavailable when we need it or may not be available on acceptable terms.

Other than with respect to the purchase agreement for $25 million (the “

Purchase Agreement ”) we entered into with Lincoln Park Capital Fund, LLC (“

Lincoln Park ”), we have no plans or arrangements with respect to the possible acquisition of additional financing, and such financing may be unavailable when we need it or may not be available on acceptable terms.

Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this annual report.

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In addition, as we enter new markets, there is a significant risk that:

The market may not accept the price and/or performance of our products;

There may be issued patents we are not aware of that could block our entry into the market or could result in excessive litigation;

The time required for us to achieve market acceptance of our products may exceed our capital resources that would require additional investment.

and  

The time required for us to achieve market acceptance of our products may exceed our capital resources that would require additional investment.  

Our plan to develop relationships with strategic partners may not be successful.

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However, qualification of a product by a customer does not assure any sales of the product to that customer.

Even after successful qualification and sales of a product to a customer, a subsequent revision to the product, changes in our customers manufacturing process or our selection of a new supplier may require a new qualification process, which may result in additional delays.

Even after successful qualification and sales of a product to a customer, a subsequent revision to the product, changes in our customer’s manufacturing process or our selection of a new supplier may require a new qualification process, which may result in additional delays.

Also, once one of our products is qualified, it could take several additional months or more before a customer commences volume production of components or devices that incorporate our products.

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The delays inherent in these lengthy sales cycles increase the risk that a customer will decide to cancel, curtail, reduce or delay its product plans, causing us to lose anticipated sales.

In addition, any delay or cancellation of a customers plans could materially and adversely affect our financial results, as we may have incurred significant expense and generated no revenue.

Finally, our customers failure to successfully market and sell their products could reduce demand for our products and materially and adversely affect our business, financial condition and results of operations.

In addition, any delay or cancellation of a customer’s plans could materially and adversely affect our financial results, as we may have incurred significant expense and generated no revenue.

Finally, our customers’

failure to successfully market and sell their products could reduce demand for our products and materially and adversely affect our business, financial condition and results of operations.

If we were unable to generate revenue after incurring substantial expenses to develop any of our products, our business would suffer.

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Accordingly, our success will depend on our ability to:

Accurately predict the needs of our target customers and develop, in a timely manner, the technology required to support those needs;

Provide products that are not only technologically sophisticated but are also available at a price acceptable to customers and competitive with comparable products;

Accurately predict the needs of our target customers and develop, in a timely manner, the technology required to support those needs;  

Provide products that are not only technologically sophisticated but are also available at a price acceptable to customers and competitive with comparable products;  

Establish and effectively defend our intellectual property;

Enter into relationships with other companies that have developed complementary technology into which our products may be integrated.

and  

Enter into relationships with other companies that have developed complementary technology into which our products may be integrated.  

We cannot assure you that we will be able to achieve any of these objectives.

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One of our significant target markets is the telecommunications market, which demands high reliability optical components.

Historically, polymer modulators have not been accepted into this market even though polymer modulators have achieved Telcordia based specifications.

Historically, polymer modulators have not been accepted into this market even though polymer modulators have achieved Telcordia™

based specifications.

It is clear that the telecommunications market is demanding higher and higher data rates for its optical components, and may again decide that polymer based modulators are not suitable even if higher data rates, high reliability, and low power consumption are demonstrated.

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Our inability to successfully acquire and integrate other businesses, assets, products or technologies could harm our business and cause us to fail at achieving our anticipated growth.

We may grow our business through strategic acquisitions and investments, such as our acquisition of BrPhotonics polymer business, and we are actively evaluating acquisitions and strategic investments in businesses, products or technologies that we believe could complement or expand our product offering, create and/or expand a client base, enhance our technical capabilities or otherwise offer growth or cost-saving opportunities.

We may grow our business through strategic acquisitions and investments, such as our acquisition of BrPhotonics’

polymer business, and we are actively evaluating acquisitions and strategic investments in businesses, products or technologies that we believe could complement or expand our product offering, create and/or expand a client base, enhance our technical capabilities or otherwise offer growth or cost-saving opportunities.

From time to time, we may enter into letters of intent with companies with which we are negotiating potential acquisitions or investments or as to which we are conducting due diligence.

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Further, contemplating or completing an acquisition and integrating an acquired business, product or technology could divert management and employee time and resources from other matters, which could harm our business, financial condition and operating results.

The novel strain of coronavirus (COVID-19) could have an adverse effect on our business operations.

In December 2019, a novel strain of coronavirus (COVID-19) was reported in Wuhan, China.

The World Health Organization has declared COVID-19 to constitute a global pandemic.

Disruptions to our business operations could occur as a result of quarantines of employees and suppliers in areas affected by the outbreak , facility closures, and travel and logistics restrictions in connection with the outbreak.

Our operations and financial results could be adversely impacted by the COVID-19 pandemic, which has at times negatively impacted our stock price and could curtail our ability to raise necessary funds in the near-term on terms that are acceptable to us, and may negatively impact our business, results of operations, particularly with respect to our research and development, and financial position.

As a result of the COVID-19 global pandemic, many countries, including the United States, have declared national emergencies and have implemented preventive measures by limiting large public gatherings (social distancing) and shelter-in-place mandates.

Many employers are restricting non-essential work travel and are requiring that employees work from their homes to limit personal interaction.

Many businesses are closed or are operating in a substantially reduced fashion and many employees have been laid off.

While the extent of the impact of the COVID-19 pandemic on our business and financial results is uncertain, a continued and prolonged public health crisis such as the COVID-19 pandemic would have a negative impact on our business, results of operations, particularly with respect to our research and development, and financial condition.

The COVID-19 pandemic has resulted in significant volatility and substantial declines in the stock markets, which has negatively impacted our stock price at times which in turn has negatively impacted our ability to raise significant funds in during those times on terms that are acceptable to us.

It is unknown the potential impact in the long-term in the event of a prolonged disruption or recession.

In addition, the COVID-19 pandemic could impact the conduct of our research and development due to the slowdown or stoppage of modulator and materials development at our laboratory facility.

Given the dynamic nature of these circumstances, the duration of any business disruption or potential impact of the COVID-19 pandemic to our business is difficult to predict.

The extent to which the COVID-19 pandemic will adversely impact our business, financial condition and results of operations is highly uncertain and cannot be predicted.

The COVID-19 pandemic has created significant worldwide uncertainty, volatility and economic disruption.

The extent to which COVID-19 will adversely impact our business, financial condition and results of operations is dependent upon numerous factors, many of which are highly uncertain, rapidly changing and uncontrollable.

These factors include, but are not limited to:

(i) the duration and scope of the pandemic;

(ii) governmental, business and individual actions that have been and continue to be taken in response to the pandemic, including travel restrictions, quarantines, social distancing, work-from-home and shelter-in-place orders and shut-downs;

(iii) the impact on U.S.

and global economies and the timing and rate of economic recovery;

(iv) potential adverse effects on the financial markets and access to capital;

(v) potential goodwill or other impairment charges;

(vi) increased cybersecurity risks as a result of pervasive remote working conditions;

(vii) our ability to effectively carry out our operations due to any adverse impacts on the health and safety of our employees and their families;

and (viii) the ability of our collaborative partners to timely satisfy their collaborative obligations to us.

The exercise of options and warrants and other issuances of shares of common stock or securities convertible into common stock will dilute your interest.

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Our quarterly operating results may vary significantly based on many factors, including:

Fluctuating demand for our potential products and technologies;

Announcements or implementation by our competitors of technological innovations or new products;

Amount and timing of our costs related to our marketing efforts or other initiatives;

The status of particular development programs and the timing of performance under specific development agreements;

Timing and amounts relating to the expansion of our operations;

Product shortages requiring suppliers to allocate minimum quantities;

Fluctuating demand for our potential products and technologies;  

Announcements or implementation by our competitors of technological innovations or new products;

The status of particular development programs and the timing of performance under specific development agreements;

Our ability to enter into, renegotiate or renew key agreements;

Timing and amounts relating to the expansion of our operations;

The extent of the impact of the novel strain of coronavirus known as COVID-19 on global commerce;

Amount and timing of our costs related to our marketing efforts or other initiatives;  

The status of particular development programs and the timing of performance under specific development agreements;  

Timing and amounts relating to the expansion of our operations;  

Product shortages requiring suppliers to allocate minimum quantities;  

Announcements or implementation by our competitors of technological innovations or new products;  

The status of particular development programs and the timing of performance under specific development agreements;  

Our ability to enter into, renegotiate or renew key agreements;  

Timing and amounts relating to the expansion of our operations;  

The extent of the impact of the novel strain of coronavirus known as COVID-19 on global commerce;  

Costs related to possible future acquisitions of technologies or businesses;

Economic conditions specific to our industry, as well as general economic conditions.

Our current and future expense estimates are based, in large part, on estimates of future revenue, which is difficult to predict.

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As a result, these competitors may:

Succeed in developing products that are equal to or superior to our potential products or that will achieve greater market acceptance than our potential products;

Devote greater resources to developing, marketing or selling their products;

Respond more quickly to new or emerging technologies or scientific advances and changes in customer requirements, which could render our technologies or potential products obsolete;

Introduce products that make the continued development of our potential products uneconomical;

Obtain patents that block or otherwise inhibit our ability to develop and commercialize our potential products;

Withstand price competition more successfully than we can;

Establish cooperative relationships among themselves or with third parties that enhance their ability to address the needs of our prospective customers.

Succeed in developing products that are equal to or superior to our potential products or that will achieve greater market acceptance than our potential products;  

Devote greater resources to developing, marketing or selling their products;  

Respond more quickly to new or emerging technologies or scientific advances and changes in customer requirements, which could render our technologies or potential products obsolete;  

Introduce products that make the continued development of our potential products uneconomical;  

Obtain patents that block or otherwise inhibit our ability to develop and commercialize our potential products;  

Withstand price competition more successfully than we can;  

Establish cooperative relationships among themselves or with third parties that enhance their ability to address the needs of our prospective customers.  

The failure to compete successfully against these existing or future competitors could harm our business.

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Any patent infringement claims brought against us may cause us to incur significant expenses, divert the attention of our management and key personnel from other business concerns and, if successfully asserted against us, require us to pay substantial damages.

In addition, as a result of a patent infringement suit, we may be forced to stop or delay developing, manufacturing or selling potential products that are claimed to infringe a patent covering a third party's intellectual property unless that party grants us rights to use its intellectual property.

We may be unable to obtain these rights on terms acceptable to us, if at all.

Even if we are able to obtain rights to a third party's patented intellectual property, these rights may be non-exclusive, and therefore our competitors may obtain access to the same intellectual property.

Ultimately, we may be unable to commercialize our potential products or may have to cease some of our business operations as a result of patent infringement claims, which could severely harm our business.

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Since techniques used to obtain unauthorized access or to sabotage information systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventive measures in advance of such an attack on our systems.

In addition, we use third party vendors to store our proprietary information who use cyber or Cloud storage of information as part of their service or product offerings, and despite our attempts to validate the security of such services, our proprietary information may be misappropriated by other parties.

In addition, we use third party vendors to store our proprietary information who use cyber or “Cloud”

storage of information as part of their service or product offerings, and despite our attempts to validate the security of such services, our proprietary information may be misappropriated by other parties.

In the event of an actual or perceived breach of our security, or the security of one of our vendors, the market perception of the effectiveness of our security measures could be harmed and we could suffer damage to our reputation or our business.

Additionally, misappropriation of our proprietary business information could prove competitively harmful to our business.

As a smaller reporting company, we are subject to scaled disclosure requirements that may make it more challenging for investors to analyze our results of operations and financial prospects.

As a “smaller reporting company,”

we (i) are able to provide simplified executive compensation disclosures in our filings, (ii) are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting and (iii) have certain other decreased disclosure obligations in our filings with the SEC, including being required to provide only two years of audited financial statements in annual reports.

Consequently, it may be more challenging for investors to analyze our results of operations and financial prospects.

We will remain a smaller reporting company until the beginning of a fiscal year in which we had a public float of $250 million held by non-affiliates as of the last business day of the second quarter of the prior fiscal year, assuming our common stock is registered under Section 12 of the Exchange Act on the applicable evaluation date.

Even if we remain a smaller reporting company, if our public float exceeds $250 million and our annual revenues are greater than $100 million, we will become subject to the provisions of Section 404(b) of the Sarbanes-Oxley Act.

If we are unable to maintain effective internal controls, our business, financial position and results of operations could be adversely affected.

We are subject to the reporting and other obligations under the Securities Exchange Act of 1934 ( Exchange Act ), including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which require annual management assessments of the effectiveness of our internal control over financial reporting.

We are subject to the reporting and other obligations under the Securities Exchange Act of 1934 (“

Exchange Act ”), including the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which require annual management assessments of the effectiveness of our internal control over financial reporting.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f).

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Any failure to achieve and maintain effective internal controls could have an adverse effect on our business, financial position and results of operations.

In addition, our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting annually.

If our independent registered public accounting firm is unable to attest to the effectiveness of our internal control over financial reporting, investor confidence in our reported results will be harmed and the price of our securities may fall.

These reporting and other obligations place significant demands on our management and administrative and operational resources, including accounting resources.

For as long as we are a non-accelerated filer, as defined in Rule 12b-2 under the Exchange Act, our auditors will not be required to attest as to our internal control over financial reporting.

If we identify material weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section 404 in a timely manner, are unable to assert that our internal control over financial reporting is effective or, once required, our independent registered public accounting firm is unable to attest that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decrease.

We could also become subject to stockholder or other third-party litigation as well as investigations by the SEC or other regulatory authorities, which could require additional financial and management resources and could result in fines, trading suspensions or other remedies.

Any control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detected.

Shares eligible for future sale may adversely affect the market.

From time to time, certain of the Companys shareholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act of 1933, as amended (the Securities Act), subject to certain limitations.

From time to time, certain of the Company’s shareholders may be eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144, promulgated under the Securities Act of 1933, as amended (the “Securities Act”), subject to certain limitations.

In general, a non-affiliate stockholder who has satisfied a six-month holding period may, under certain circumstances, sell its shares, without limitation.

Any substantial sale of the Companys common stock pursuant to Rule 144 or pursuant to any resale prospectus may have a material adverse effect on the market price of our common stock.

Any substantial sale of the Company’s common stock pursuant to Rule 144 or pursuant to any resale prospectus may have a material adverse effect on the market price of our common stock.

There is a limited market for our common stock, which may make it more difficult for you to sell your stock.

Our Companys common stock is quoted on the OTCMarkets (OTCQB) under the symbol "LWLG."

Our Company’s common stock is quoted on the OTCMarkets (OTCQX) under the symbol "LWLG."

The trading market for our common stock is limited, accordingly, there can be no assurance as to the liquidity of any markets that may develop for our common stock, your ability to sell our common stock, or the prices at which you may be able to sell our common stock.

Our Companys stock price may be volatile.

The market price of our Companys common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:

Technological innovations or new products and services by our Company or our competitors;

Additions or departures of key personnel;

Sales of our Companys common stock;

Our Companys ability to integrate operations, technology, products and services;

Our Companys ability to execute our business plan;

Operating results below expectations;

Loss of any strategic relationship;

Industry developments;

The extent of the impact of the novel strain of coronavirus known as COVID-19 on global commerce;

Our Company’s stock price may be volatile.

The market price of our Company’s common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:

Technological innovations or new products and services by our Company or our competitors;  

Additions or departures of key personnel;  

Sales of our Company’s common stock;  

Our Company’s ability to integrate operations, technology, products and services;  

Our Company’s ability to execute our business plan;  

Operating results below expectations;  

Loss of any strategic relationship;  

Industry developments;  

The extent of the impact of the novel strain of coronavirus known as COVID-19 on global commerce;  

Economic and other external factors;

Period-to-period fluctuations in our Companys financial results.

and   

Period-to-period fluctuations in our Company’s financial results.  

You may consider any one of these factors to be material, and our stock price may fluctuate widely as a result of any of the above listed factors.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies.

These market fluctuations may also materially and adversely affect the market price of our Companys common stock.

These market fluctuations may also materially and adversely affect the market price of our Company’s common stock.

Our board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to existing common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.

Our amended articles of incorporation allow us to issue shares of preferred stock without any vote or further action by our stockholders.

Our articles of incorporation, as amended, allow us to issue shares of preferred stock without any vote or further action by our stockholders.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock.

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Our articles of incorporation and bylaws, and certain provisions of Nevada corporate law, as well as certain of our contracts, contain provisions that could delay or prevent a change in control even if the change in control would be beneficial to our stockholders.

Nevada law, as well as our amended articles of incorporation and bylaws, contain anti-takeover provisions that could delay or prevent a change in control of our Company, even if the change in control would be beneficial to our stockholders.

Nevada law, as well as our articles of incorporation, as amended, and bylaws, contain anti-takeover provisions that could delay or prevent a change in control of our Company, even if the change in control would be beneficial to our stockholders.

These provisions could lower the price that future investors might be willing to pay for shares of our common stock.

These anti-takeover provisions:

authorize our board of directors to create and issue, without stockholder approval, preferred stock, thereby increasing the number of outstanding shares, which can deter or prevent a takeover attempt;

prohibit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;

empower our board of directors to fill any vacancy on our board of directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;

provide that our board of directors be divided into three classes, with approximately one-third of the directors to be elected each year;

empower our board of directors to fill any vacancy on our board of directors, whether such vacancy occurs as a result of an increase in the number of directors or otherwise;  

provide that our board of directors be divided into three classes, with approximately one-third of the directors to be elected each year;  

provide that our board of directors is expressly authorized to adopt, amend or repeal our bylaws;

provide that our directors will be elected by a plurality of the votes cast in the election of directors.

and  

provide that our directors will be elected by a plurality of the votes cast in the election of directors.  

Nevada Revised Statutes, the terms of our employee stock option agreements and other contractual provisions may also discourage, delay or prevent a change in control of our Company.

Nevada Revised Statutes sections 78.378 to 78.3793 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply.

Our articles of incorporation and bylaws do not state that these provisions do not apply.

Our articles of incorporation, as amende, and bylaws do not state that these provisions do not apply.

The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things.

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Our board of directors also has the power to adopt a stockholder rights plan that could delay or prevent a change in control of our Company even if the change in control is generally beneficial to our stockholders.

These plans, sometimes called poison pills, are oftentimes criticized by institutional investors or their advisors and could affect our rating by such investors or advisors.

These plans, sometimes called “poison pills,”

are oftentimes criticized by institutional investors or their advisors and could affect our rating by such investors or advisors.

If our board of directors adopts such a plan, it might have the effect of reducing the price that new investors are willing to pay for shares of our common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors