What changed in this filing

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Item 9A. Controls and Procedures

2021-03-31 compared with 2020-03-16 · 333 added, 301 removed, 662 unchanged (49% of the section changed)

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As of December 31, 2020, our Company evaluated the effectiveness and design and operation of its disclosure controls and procedures.

Our Companys disclosure controls and procedures are the controls and other procedures that we designed to ensure that our Company records, processes, summarizes, and reports in a timely manner the information that it must disclose in reports that our Company files with or submits to the Securities and Exchange Commission.

Our Company’s disclosure controls and procedures are the controls and other procedures that we designed to ensure that our Company records, processes, summarizes, and reports in a timely manner the information that it must disclose in reports that our Company files with or submits to the Securities and Exchange Commission.

Our principal executive officer and principal financial officer reviewed and participated in this evaluation.

Based on this evaluation, our Company made the determination that its disclosure controls and procedures were effective.

Management's Annual Report on 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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Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2020.

The Company's internal control over financial reporting includes policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud.

A 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.

Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures.

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There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Attestation Report of Independent Registered Public Accounting Firm

Our independent registered public accounting firm, Morison Cogen LLP, audited our internal control over financial reporting as of December 31, 2019.

Their report dated March 16, 2020 expressed an unqualified opinion on our internal control over financial reporting.

That report appears in Item 15 of Part IV of this Annual Report on Form 10-K and is incorporated by reference to this Item 9A.

This annual report does not include an attestation report of our Company’s independent registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit our Company to provide only management’s attestation in this annual report.

Changes in Internal Control Over Financial Reporting

No change in our Companys internal control over financial reporting occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

No change in our Company’s internal control over financial reporting occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Other Information

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He also previously served a member of our Operations Committee until April 30, 2017.

Lebby is in charge of the overall general management of the Company and supervision of Company policies, setting the Companys strategies, formulating and overseeing the Companys business plan, raising capital, expanding the Companys management team and the general promotion of the Company From June 2013 to 2015, Dr.

Lebby is in charge of the overall general management of the Company and supervision of Company policies, setting the Company’s strategies, formulating and overseeing the Company’s business plan, raising capital, expanding the Company’s management team and the general promotion of the Company From June 2013 to 2015, Dr.

Lebby has served as President and CEO of OneChip Photonics, Inc., a privately held company headquartered in Ottawa, Canada, that is a leading provider of low-cost, small-footprint, high-performance indium phosphide (InP)-based photonic integrated circuits (PICs) and PIC-based optical sub-assemblies (OSAs) for the Data Center markets.

Also, from 2013 to 2015 Dr.

Lebby presently served as part-time full professor, and chair of optoelectronics at Glyndwr University in Wales, UK, to bring forward advanced materials, device, and integrated photonics based technologies for the datacenter and high performance computing markets.

Lebby served as part-time full professor, and chair of optoelectronics at Glyndwr University in Wales, UK, to bring forward advanced materials, device, and integrated photonics based technologies for the datacenter and high performance computing markets.

During the period 2014 to 2016, Dr.

Lebby focused on a foundry based model for InP-based photonic integrated circuits (PICs) and optoelectronic integrated circuits (OEICs) in the datacenter segment and was been instrumental in assembling Californias proposal (via USC) to the Federal Government for an integrated photonics manufacturing institute.

Lebby holds a Doctor of Engineering, a Ph.D., a MBA and a bachelors degree, all from the University of Bradford, United Kingdom.

Lebby focused on a foundry based model for InP-based photonic integrated circuits (PICs) and optoelectronic integrated circuits (OEICs) in the datacenter segment and was instrumental in assembling California’s proposal (via USC) to the Federal Government for an integrated photonics manufacturing institute.

Lebby holds a Doctor of Engineering, a Ph.D., a MBA and a bachelor’s degree, all from the University of Bradford, United Kingdom.

Lebby has well over 200 issued utility patents with the USPTO.

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Since May 2012, Mr.

Marcelli has served as our Companys President and Chief Operating Officer, and he was named our Secretary in March 2018.

Marcelli has served as our Company’s President and Chief Operating Officer, and he was named our Secretary in March 2018.

Previously, from August 2008 to April 2012, Mr.

Marcelli served as our President and Chief Executive Officer.

Marcelli is in charge of the day-to-day operations of our Company and its movement to a fully functioning commercial corporation, and also serves as our Companys principal financial officer.

Marcelli is in charge of the day-to-day operations of our Company and its movement to a fully functioning commercial corporation, and also serves as our Company’s principal financial officer.

Since 2000, Mr.

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Commander, Carrier Group Three and Commander, Naval Space Command.

Zelibor earned his bachelors degree from the United States Naval Academy and has been a participant in the Senior Leader in Residence Program and a visiting scholar for the Zell Center for Risk Research at the Kellogg School of Management, Northwestern University.

Zelibor earned his bachelor’s degree from the United States Naval Academy and has been a participant in the Senior Leader in Residence Program and a visiting scholar for the Zell Center for Risk Research at the Kellogg School of Management, Northwestern University.

Miller has served as a director of our Company since May 10, 2011.

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El-Ahmadi was the Product Architect & Vice President of Product Management at Qtera Corporation, a successful technology start-up acquired by Nortel in 2000 for $3.25 billion.

El-Ahmadi also held a Senior Manager position at Bell Northern Research and worked as a Transmission Engineer at WilTel (WorldCom) where he evaluated and deployed the world first bidirectional EDFA and bi-directional WDM transmission.

El-Ahmadi also held a Senior Manager position at Bell Northern Research and worked as a Transmission Engineer at WilTel (WorldCom) where he evaluated and deployed the world’s first bidirectional EDFA and bi-directional WDM transmission.

El-Ahmadi holds a BS and MS in Electrical Engineering from the University of Oklahoma, is a member of Eta Kappa Nu and is the inventor of 11 patents, issued or pending, in the area of optical communications.

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Class I, Class II and Class III, with staggered terms and with each director serving for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected;

provided that the term of each director shall continue until the election and qualification of a successor and be subject to such director's earlier death, resignation or removal.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires that our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the SEC.

Executive officers, directors and greater-than-ten percent stockholders are required by SEC regulations to furnish us with all Section 16(a) forms they file.

To the best of our knowledge, based solely upon a review of Forms 3 and 4 and amendments thereto furnished to our Company during its most recent fiscal year and Forms 5 and amendments thereto furnished to our Company with respect to its most recent fiscal year, and any written representation referred to in paragraph (b)(1) of Item 405 of Regulation S-K, all of our executive officers, directors and greater-than-ten percent stockholders complied with all Section 16(a) filing requirements with the following exceptions:

each of Messrs.

Zelibor, Joseph A.

Miller, Jr., Ronald A.

Bucchi, Siraj Nour El-Ahmadi, and Frederick J.

Leonberger filed one late Form 4 to report an employee stock option grant from the Company.

provided that the term of each director shall continue until the election and qualification of a successor and be subject to such director's earlier death, resignation or removal.

Code of Ethics

Our Company has adopted a Code of Ethics and Business Conduct that applies to all of the Companys employees, including its principal executive officer and principal financial officer.

A copy of our Code of Ethics and Business Conduct is available for review on the Investors - Governance page of our Companys website lightwavelogic.com .

Our Company has adopted a Code of Ethics and Business Conduct that applies to all of the Company’s employees, including its principal executive officer and principal financial officer.

A copy of our Code of Ethics and Business Conduct is available for review on the “Investors - Corporate Governance”

page of our Company’s website lightwavelogic.com .

The Company intends to disclose any changes in or waivers from its Code of Ethics and Business Conduct by posting such information on its website.

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Instead of having such a committee, our entire Board of Directors historically has searched for and evaluated qualified individuals to become nominees for membership on our Board of Directors.

No material changes to the procedures by which our stockholders may recommend nominees to our Board of Directors has occurred since we last provided disclosure regarding these procedures in our Definitive Schedule 14A filed on April 12, 2019, as supplemented on April 17, 2019.

Audit Committee

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Our audit committee is governed by an audit committee charter.

A copy of our Audit Committee Charter is available for review on the Investors - Governance page of our Companys website lightwavelogic.com .

A copy of our Audit Committee Charter is available for review on the “Investors - Governance”

page of our Company’s website lightwavelogic.com .

Our audit committee is comprised of Ronald A.

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Compensation Discussion and Analysis

The Companys entire Board of Directors currently participates in the review and determination of the compensation packages of our executive officers because our Board of Directors currently has no standing compensation committee or committee performing similar functions.

The Company’s entire Board of Directors currently participates in the review and determination of the compensation packages of our executive officers because our Board of Directors currently has no standing compensation committee or committee performing similar functions.

A discussion of the policies and decisions that shape our executive compensation program, including the specific objectives and elements, is set forth below.

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To this end, our compensation programs for executive officers are designed to achieve the following objectives:

attract talented and experienced executives to join the Company;

motivate, reward and retain executives whose knowledge, skills and performance are critical to our success;

be “ market-based ” and reflect the competitive environment for personnel;

focus executive behavior on achievement of our corporate mission and long-term corporate objectives and strategy;

be affordable, within the context of our operating expense model;

be fairly and equitably administered;

attract talented and experienced executives to join the Company;  

motivate, reward and retain executives whose knowledge, skills and performance are critical to our success;  

be “market-based”

and reflect the competitive environment for personnel;  

focus executive behavior on achievement of our corporate mission and long-term corporate objectives and strategy;  

be affordable, within the context of our operating expense model;  

be fairly and equitably administered;  

reflect our values;

align the interests of management and shareholders by providing management with longer-term incentives through equity ownership.

and  

align the interests of management and shareholders by providing management with longer-term incentives through equity ownership.  

The Board of Directors reviews the allocation of compensation components regularly to help ensure alignment with strategic and operating goals, competitive market practices and our changing business needs.

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Certain compensation components, such as base salaries, benefits and perquisites, are intended primarily to attract and retain qualified executives.

Other compensation elements, such as long-term incentive opportunities, are designed to motivate and reward our long-term performance and to strongly align named executive officers' interests with those of shareholders.

Other compensation elements, such as long-term incentive opportunities, are designed to motivate and reward our long-term performance and to strongly align named executive officers'

interests with those of shareholders.

Elements of Executive Officer Compensation

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(i) annual base salary;

and (ii) long-term equity incentive compensation in the form of stock option grants, with the objective of aligning the executive officers' long-term interests with those of the shareholders.

In establishing overall executive compensation levels and making specific compensation decisions for the executives in 2019, the Board of Directors considered a number of criteria, including the executive's position, any applicable employment agreement, prior compensation levels, scope of responsibilities, prior and current period performance, attainment of individual and overall company performance objectives and retention concerns.

and (ii) long-term equity incentive compensation in the form of stock option grants, with the objective of aligning the executive officers'

long-term interests with those of the shareholders.

In establishing overall executive compensation levels and making specific compensation decisions for the executives in 2020, the Board of Directors considered a number of criteria, including the executive's position, any applicable employment agreement, prior compensation levels, scope of responsibilities, prior and current period performance, attainment of individual and overall company performance objectives and retention concerns.

In addition, the Board of Directors considered the results of the advisory vote by shareholders on the "say-on-pay"

proposal presented to shareholders at the Companys 2018 Annual Meeting of Shareholders where approximately 96% of the votes cast on the say-on-pay proposal was voted for approval of the 2017 executive compensation.

proposal presented to shareholders at the Company’s 2018 Annual Meeting of Shareholders where approximately 96% of the votes cast on the “say-on-pay”

proposal was voted for approval of the 2017 executive compensation.

In determining our 2020 executive compensation program, the Board of Directors reviewed the results of the say-on-pay vote and concluded that changes to the program were not desired by our shareholders for 2020.

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In considering compensation of executives, one of the factors the Board of Directors takes into account is the anticipated tax treatment of various components of compensation.

Our Boards strategy is to be cost and tax efficient and the Board intends to preserve corporate tax deductions where possible, while maintaining the flexibility in the future to approve arrangements that it deems to be in our best interests and the best interests of our shareholders, even if such arrangements do not always qualify for full tax deductibility.

Our Board’s strategy is to be cost and tax efficient and the Board intends to preserve corporate tax deductions where possible, while maintaining the flexibility in the future to approve arrangements that it deems to be in our best interests and the best interests of our shareholders, even if such arrangements do not always qualify for full tax deductibility.

We do not believe Section 162(m) of the Internal Revenue Code, which generally disallows a tax deduction for certain compensation in excess of $1 million to our named executive officers, will have a material effect on us due to the current compensation levels of named executive officers.

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We also believe that attractive base salaries can motivate and reward executives for their overall performance.

Base salaries are established in part based on the individual experience, skills and expected contributions of our executives and our executives' performance during the prior year, in addition to affordability within the context of our operating expense model.

Base salaries are established in part based on the individual experience, skills and expected contributions of our executives and our executives'

performance during the prior year, in addition to affordability within the context of our operating expense model.

Annual Non-Equity Incentive Compensation

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Long-term incentive compensation allows the executive officers to share in any appreciation in the value of our common stock.

The Board of Directors believes that stock option participation aligns executive officers' interests with those of the shareholders.

The Board of Directors believes that stock option participation aligns executive officers'

interests with those of the shareholders.

The amounts of the awards are designed to reward past performance, create incentives to meet long-term objectives and ensure that we retain executive talent over a longer period of time.

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Name and Principal Position

Option Awards

All Other Compensation

Sec., Director

The named executive officers compensation includes the amount for services rendered to the Company in his capacity as both an officer and a director.

The named executive officer’s compensation includes the amount for services rendered to the Company in his capacity as both an officer and a director.

The aggregate fair value of awards and options in columns (e) and (f) are computed in accordance with FASB ASC 718.

A ll assumptions made in the valuation are more fully described in Note 10 - Stock Based Compensation of Notes to Financial Statements.

All assumptions made in the valuation are more fully described in Note 10 - Stock Based Compensation of Notes to Financial Statements.

The amounts shown in columns (f) do not reflect dollar amounts actually received by our named executive officers.

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The aggregate fair value of awards and options are computed in accordance with FASB ASC 718 and are reported in the Summary Compensation Table above in the columns (e) and (f).

No plan-based awards were granted to our named executive officers:

No plan-based awards were granted to our named executive officers during the last completed fiscal year.

The table below summarizes all of the outstanding equity awards for our named executive officers as of December 31, 2020, our latest fiscal year end.

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Option Awards

options(#) exercisable

underlying unexercised

options(#) unexercisable

Number of securities underlying unexercised options(#) exercisable

Number of securities underlying unexercised options(#) unexercisable

Equity incentive plan awards:

number of securities underlying unexercised unearned options

Option exercise price

Option expiration date

CEO, Director (1)(3)

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(iv) 100,000 shares of Common Stock, of which 12,500 shares vested on May 1, 2019 and the remaining shares vested quarterly in equal installments of 12,500 options per quarter commencing on August 1, 2019.

In the event of a change in control of our Company, such persons options will become fully vested and/or exercisable, as the case may be, immediately prior to such change in control, and shall remain exercisable as set forth in their stock option agreement.

In the event of a change in control of our Company, such person’s options will become fully vested and/or exercisable, as the case may be, immediately prior to such change in control, and shall remain exercisable as set forth in their stock option agreement.

Option Exercises and Stock Vested

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On March 20, 2017, we entered into an employment agreement with Dr.

Lebby (the Lebby Employment Agreement ).

Lebby (the “

Lebby Employment Agreement ”).

The term of the Lebby Employment Agreement commenced on May 1, 2017 for a period of 24 months, following which time the Lebby Employment Agreement will be renewed for successive 12-month periods at the end of each term upon the written agreement of the parties that shall be delivered by each party to the other not less than 60 days prior to the expiration of the existing term.

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In the event of a change in control of our Company, Dr.

Lebbys options shall remain exercisable as set forth in Dr.

Lebbys stock option agreement.

Lebby’s options shall remain exercisable as set forth in Dr.

Lebby’s stock option agreement.

On April 8, 2019, we entered into an amended employee agreement with Dr.

Lebby to (i) increase his base salary to $278,250 per year effective May 1, 2019, (ii) provide him with eligibility to receive bonus compensation to be determined by the Board of Directors from time to time in its sole discretion, and (iii) extend his employee agreements expiration date to April 30, 2021.

Additionally, Dr.

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The options vest quarterly over two years in equal installments of 12,500 shares per quarter beginning on May 1, 2019.

Lebbys employment terminates upon the expiration of the term of the Lebby Employment Agreement, and the Company elects for any reason not to renew the Lebby Employment Agreement for an additional 12-month term, then our Company will continue to pay to Dr.

Lebby’s employment terminates upon the expiration of the term of the Lebby Employment Agreement, and the Company elects for any reason not to renew the Lebby Employment Agreement for an additional 12-month term, then our Company will continue to pay to Dr.

Lebby the compensation described in the Lebby Employment Agreement for a period of 9 months the after the termination.

Lebbys employment is terminated by the Company without cause during the term of the Lebby Employment Agreement, the Company will pay to Dr.

Lebbys the compensation described in the Lebby Employment Agreement for the remainder of the term of Lebby Employment Agreement or 12 months, whichever is longer.

Lebby’s employment is terminated by the Company without cause during the term of the Lebby Employment Agreement, the Company will pay to Dr.

Lebby’s the compensation described in the Lebby Employment Agreement for the remainder of the term of Lebby Employment Agreement or 12 months, whichever is longer.

Marcelli Employee Agreement- President;

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On August 10, 2015, we entered into a new employment agreement with Mr.

Marcelli, which was amended during 2015 and 2017 (collectively, the Marcelli Employment Agreement ), which replaced his previous employment agreement, as amended.

Marcelli, which was amended during 2015 and 2017 (collectively, the “

Marcelli Employment Agreement ”), which replaced his previous employment agreement, as amended.

The term of the Marcelli Employment Agreement commenced on January 1, 2014 and expires December 31, 2019, following which time the Marcelli Employment Agreement will be renewed for successive 12-month periods at the end of each term upon the written agreement of the parties that shall be delivered by each party to the other not less than 60 days prior to the expiration of the existing term.

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In the event of a change in control of our Company, Mr.

Marcellis options shall remain exercisable as set forth in Mr.

Marcellis stock option agreement.

Marcelli’s options shall remain exercisable as set forth in Mr.

Marcelli’s stock option agreement.

On April 8, 2019, we entered into an amended employee agreement with Mr.

Marcelli, to (i) increase his base salary to $262,500 per year effective May 1, 2019, (ii) provide him with eligibility to receive bonus compensation to be determined by the Board of Directors from time to time in its sole discretion, and (iii) extend his employee agreements expiration date to December 31, 2021.

Additionally, Mr.

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The options vest quarterly over two years in equal installments of 12,500 shares per quarter beginning on May 1, 2019.

Marcellis employment terminates upon his death and key man life insurance is in place for Mr.

Marcelli’s employment terminates upon his death and key man life insurance is in place for Mr.

Marcelli, our Company will continue to pay the compensation described in the Marcelli Employment Agreement to his estate through the remainder of the term of the Marcelli Employment Agreement, or 12 months, whichever is longer.

Marcellis employment terminates upon the expiration of the term of the Marcelli Employment Agreement, and the Company elects for any reason not to renew the Marcelli Employment Agreement for an additional 12-month term, then our Company will continue to pay to Mr.

Marcelli’s employment terminates upon the expiration of the term of the Marcelli Employment Agreement, and the Company elects for any reason not to renew the Marcelli Employment Agreement for an additional 12-month term, then our Company will continue to pay to Mr.

Marcelli the compensation described in the Marcelli Employment Agreement for a period of 9 months the after the termination.

Marcellis employment is terminated by the Company without cause during the term of the Marcelli Employment Agreement, the Company will pay to Mr.

Marcelli’s employment is terminated by the Company without cause during the term of the Marcelli Employment Agreement, the Company will pay to Mr.

Marcelli the compensation described in the Marcelli Employment Agreement for the remainder of the term of Marcelli Employment Agreement or 12 months, whichever is longer.

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Option Awards

Non-Equity Incentive

Plan Compensation

Non-Equity Incentive Plan Compensation

Non-Qualified Deferred Compensation Earnings

Other Compensation

All Other Compensation

Siraj Nour El-Ahmadi

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With respect to Dr.

Leonberger only, it also reflects cash compensation received of $11,500 per month for serving on our Operations Committee.

The option awards in this column reflect options issued on January 14, 2019 to purchase shares of our Companys common stock at an exercise price of $.84 that vest pursuant to the following schedule:

Leonberger, it also reflects cash compensation received of $11,500 per month for serving on our Operations Committee.

With respect to Siraj Nour El-Ahmadi, it also reflects cash compensation received of $4,600 per month commencing September 2020 for serving on our Operations Committee.

The option awards in this column reflect options issued on January 14, 2020 to purchase shares of our Company’s common stock at an exercise price of $.80 that vest pursuant to the following schedule:

25% of the options vest immediately, and the remaining options vest in three equal quarterly installments of 25% of the options granted commencing on April 1, 2020.

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Reflects an option to purchase up to 60,000 shares of common stock for board service and up to 20,000 shares of common stock for serving as Audit Committee Chair.

In the event of a change in control of our Company, all of the above persons options become fully vested and/or exercisable, as the case may be, immediately prior to such change in control, and shall remain exercisable as set forth in their stock option agreement.

In the event of a change in control of our Company, all of the above person’s options become fully vested and/or exercisable, as the case may be, immediately prior to such change in control, and shall remain exercisable as set forth in their stock option agreement.

Compensation Policies and Practices as They Relate to Our Risk Management

No risks arise from our Companys compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on our Company.

No risks arise from our Company’s compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on our Company.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table sets forth, as of March 16, 2020, the names, addresses, amount and nature of beneficial ownership and percent of such ownership of each person or group known to our Company to be the beneficial owner of more than five percent (5%) of our common stock:

Security Ownership of Certain Beneficial Owners

Name and Address (1)

Amount and Nature

of Beneficial Ownership (2)

% Owned (3)(4)

Number of Options and Warrants Included in Amount and Nature of Beneficial Ownership (5)

In care of our Company at 369 Inverness Parkway, Suite 350, Englewood, CO 80112.

To our best knowledge, as of the date hereof, such holders had the sole voting and investment power with respect to the voting securities beneficially owned by them, unless otherwise indicated herein.

Includes the person's right to obtain additional shares of common stock within 60 days from March 16, 2020.

Based on 89,070,604 shares of common stock outstanding on March 16, 2020.

Does not include shares underlying:

(i) options to purchase shares of our common stock under our 2007 Employee Stock Plan and our 2016 Equity Incentive Plan;

or (ii) outstanding warrants to purchase shares of our common stock.

If a person listed on this table has the right to obtain additional shares of common stock within 60 days from March 16, 2020, the additional shares are deemed to be outstanding for the purpose of computing the percentage of class owned by such person but are not deemed to be outstanding for the purpose of computing the percentage of any other person.

Represents options and warrants exercisable within 60 days from March 16, 2020.

The following table sets forth, as of March 16, 2020, the names, addresses, amount and nature of beneficial ownership and percent of such ownership of our common stock of each of our officers and directors, and officers and directors as a group:

Security Ownership of Management

The following table sets forth, as of March 31, 2021, the names, addresses, amount and nature of beneficial ownership and percent of such ownership of our common stock of each of our officers and directors, our officers and directors as a group and each person or group known to our Company to be the beneficial owner of more than five percent (5%) of our common stock:

Name and Address (1)

Amount and Nature

of Beneficial Ownership (2)

Amount and Nature of Beneficial Ownership (2)

% Owned (3)(4)

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Directors and Officers as a Group (7 Persons):

———————

* Less than 1%.

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Includes the person's right to obtain additional shares of common stock within 60 days from March 16, 2020.

Includes the person's right to obtain additional shares of common stock within 60 days from March 31, 2021.

Based on 101,758,709 shares of common stock outstanding on March 31, 2021.

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Securities Authorized for Issuance under Equity Compensation Plans

Information regarding our compensation plans under which our equity securities are authorized for issuance can be found in Part II Item 5 of this report.

Information regarding our compensation plans under which our equity securities are authorized for issuance can be found in Part II –Item 5 of this report.

Certain Relationships and Related Transactions, and Director Independence.

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Director Independence

OTCQB Standards consist of certain regulations adopted by OTC Markets Group to prescribe the rights, privileges and obligations of companies with securities traded on the OTCQB market.

The OTCQB Standards define an Independent Director as a person other than an executive officer or employee of the Company or any other person having a relationship which, in the opinion of the Company's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Although we are currently traded on the OTCQX Market, our Board of Directors has reviewed each of the Directors’

relationships with the Company in conjunction with NASDAQ Listing Rule 5605(a)(2) that provides that an “independent director”

is ‘one who is not an executive officer or an employee of the company and who does not have a relationship that, in the opinion of the board of directors, would interfere with exercising independent judgment in carrying out a director’s responsibilities.’

Our Board of Directors has affirmatively determined that the following directors, Joseph A.

Miller, Jr., Ronald A.

Bucchi, and Siraj Nour El-Ahmadi are independent directors in that they are independent of management and free of any relationship that would interfere with their independent judgment as members of our Board of Directors.

Bucchi, Siraj Nour El-Ahmadi, Thomas E.

Zelibor and Frederick J.

Leonberger are independent directors in that they are independent of management and free of any relationship that would interfere with their independent judgment as members of our Board of Directors.

In making such determination, our Board of Directors considered the relationships that each such non-employee director has with our Company and all other facts and circumstances that our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

The following members of our Board of Directors, Thomas E.

Michael Lebby, James S.

Marcelli and Frederick J.

Leonberger are not independent directors pursuant to the standards described above.

The following members of our Board of Directors, Dr.

Michael Lebby and James S.

Marcelli are not independent directors pursuant to the standards described above.

Our Company does not have a separately designated nominating or compensation committee or committee performing similar functions;

therefore, o ur full Board of Directors currently serves in these capacities.

therefore, our full Board of Directors currently serves in these capacities.

Principal Accounting Fees and Services.

The aggregate fees billed for the years ended December 31, 2019 and December 31, 2018 for professional services rendered by Morison Cogen, LLP for the audit of the Companys annual financial statements and review of financial statements included in the Companys Form 10-Q or services that are normally provided by Morison Cogen, LLP in connection with statutory and regulatory filings or engagements were $56,000 for the year ended December 31, 2019 and $81,000 for the year ended December 31, 2018.

The aggregate fees billed for the years ended December 31, 2020 and December 31, 2019 for professional services rendered by Morison Cogen, LLP for the audit of the Company’s annual financial statements and review of financial statements included in the Company’s Form 10-Q or services that are normally provided by Morison Cogen, LLP in connection with statutory and regulatory filings or engagements were $84,460 for the year ended December 31, 2020 and were $56,000 for the year ended December 31, 2019.

Audit-Related Fees.

Fees billed for the years ended December 31, 2019 and December 31, 2018 for assurance and related services rendered by Morison Cogen, LLP that are reasonably related to the performance of the audit or review of the Companys financial statements and are not reported under the category Audit Fees described above were $0 for the year ended December 31, 2019 and $0 for the year ended December 31, 2018.

Fees billed for the years ended December 31, 2020 and December 31, 2019 for assurance and related services rendered by Morison Cogen, LLP that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under the category Audit Fees described above were $0 for the year ended December 31, 2020 and $0 for the year ended December 31, 2019.

Fees billed for the years ended December 31, 2020 and December 31, 2019 for tax compliance services rendered by Morison Cogen, LLP were $6,000 for the year ended December 31, 2020 and $6,000 for the year ended December 31, 2019.

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Audit Committee Pre-Approval Policies.

The Companys audit committee currently does not have any pre-approval policies or procedures concerning services performed by Morison Cogen, LLP.

All the services performed by Morison Cogen, LLP that are described above were pre-approved by the Companys audit committee.

None of the hours expended on Morison Cogen, LLP s engagement to audit the Companys financial statements for the years ended December 31, 2019 and December 31, 2018 were attributed to work performed by persons other than Morison Cogen, LLPs full-time, permanent employees.

The Company’s audit committee currently does not have any pre-approval policies or procedures concerning services performed by Morison Cogen, LLP.

All the services performed by Morison Cogen, LLP that are described above were pre-approved by the Company’s audit committee.

None of the hours expended on Morison Cogen, LLP ‘s engagement to audit the Company’s financial statements for the years ended December 31, 2020 and December 31, 2019 were attributed to work performed by persons other than Morison Cogen, LLP’s full-time, permanent employees.

Exhibits, Financial Statement Schedules

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Balance Sheets

Statements of Operations

Statement of Stockholders Equity

Statements of Comprehensive Loss

Statement of Stockholders’

Statements of Cash Flows

3 unchanged sentences

Articles of Incorporation

Incorporated by reference to Companys Form 10-SB as filed with the SEC on April 13, 2007

Incorporated by reference to Company’s Form 10-SB as filed with the SEC on April 13, 2007

Certificate of Amendment to Articles of Incorporation

Incorporated by reference to Companys Definitive Schedule 14C Information Statement as filed with the SEC on February 19, 2008

Incorporated by reference to Company’s Definitive Schedule 14C Information Statement as filed with the SEC on February 19, 2008

Certificate of Amendment to Articles of Incorporation

Incorporated by reference to Companys Form S-1 Registration Statement as filed with the SEC on August 3, 2015

Incorporated by reference to Company’s Form S-1 Registration Statement as filed with the SEC on August 3, 2015

Restated Bylaws

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Description of Registrant's Securities

Filed herewith

Employee Agreement Michael Lebby

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on March 22, 2017

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Description of Registrant's Securities

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2020

Employee Agreement –

Michael Lebby

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on March 22, 2017

Employee Agreement Amendment - Michael Lebby

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on April 10, 2019

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on April 10, 2019

Employee Agreement - James Marcelli

Incorporated by reference to Companys Form 10-Q as filed with the SEC on August 12, 2015

Incorporated by reference to Company’s Form 10-Q as filed with the SEC on August 12, 2015

Employee Agreement Amendment - James Marcelli

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on March 22, 2017

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on March 22, 2017

Employee Agreement Amendment - James Marcelli

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on April 10, 2019

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on April 10, 2019

Form of Executive Paid Time Off Waiver Agreement

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Form of Director Agreement

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Form of Director Indemnification Agreement

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Form of Directors Non-Disclosure Agreement

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Form of Director’s Non-Disclosure Agreement

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Operations Committee Charter

Incorporated by reference to the Company's Form 10-Q as filed with the SEC on August 15, 2016

Statement of Operations Committee Work - Frederick J.

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on April 3, 2017

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on April 3, 2017

Statement of Operations Committee Work - Siraj Nour El-Ahmadi

Filed herewith

2007 Employee Stock Plan

Incorporated by reference to Companys Definitive Schedule 14C Information Statement as filed with the SEC on February 19, 2008

Incorporated by reference to Company’s Definitive Schedule 14C Information Statement as filed with the SEC on February 19, 2008

2007 Employee Stock Plan Amendment

Incorporated by reference to Companys Definitive Schedule 14A Proxy Statement as filed with the SEC on July 22, 2014

Incorporated by reference to Company’s Definitive Schedule 14A Proxy Statement as filed with the SEC on July 22, 2014

2016 Equity Incentive Plan

Incorporated by reference to Appendix A to the Company's Definitive Schedule 14A filed with the SEC on April 20, 2016

2016 Equity Incentive Plan Amendment Plan

Incorporated by reference to Appendix A to the Companys Definitive Schedule 14A filed with the SEC on April 12, 2019

Incorporated by reference to Appendix A to the Company’s Definitive Schedule 14A filed with the SEC on April 12, 2019

Form of Non-qualified Stock Option Award Agreement - Employees

Incorporated by reference to the Companys Annual Report on Form 10-K as filed with the SEC on March 17, 2017

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on March 17, 2017

Form of Non-qualified Stock Option Award Agreement - Executive Officers

Incorporated by reference to the Companys Annual Report on Form 10-K as filed with the SEC on March 17, 2017

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on March 17, 2017

Form of Non-qualified Stock Option Award Agreement - Non Employee Directors

Incorporated by reference to the Companys Annual Report on Form 10-K as filed with the SEC on March 17, 2017

Lease Agreement Englewood, CO.

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on November 2, 2017

Incorporated by reference to the Company’s Annual Report on Form 10-K as filed with the SEC on March 17, 2017

Lease Agreement –

Englewood, CO.

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on November 2, 2017

Purchase Agreement dated as of January 21, 2019, by and between the Company and Lincoln Park Capital Fund, LLC

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on January 22, 2019

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on January 22, 2019

Registration Rights Agreement, dated as of January 21, 2019, by and between the Company and Lincoln Park Capital Fund, LLC

Incorporated by reference to the Companys Current Report on Form 8-K as filed with the SEC on January 22, 2019

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on January 22, 2019

Promissory Note made to Community Banks of Colorado dated April 23, 2020

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on April 28, 2020

Code of Ethics and Business Conduct

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Consent of Independen t Registered Public Accounting Firm - Morison Cogen LLP

Incorporated by reference to the Company's Form 10-K as filed with the SEC on March 16, 2018

Filed herewith

Consent of Independent Registered Public Accounting Firm - Morison Cogen LLP

Filed herewith

Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, executed by the Principal Executive Officer of the Company.

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BALANCE SHEETS

STATEMENTS OF OPERATIONS

STATEMENT OF STOCKHOLDERS' EQUITY

STATEMENTS OF COMPREHENSIVE LOSS

STATEMENT OF STOCKHOLDERS'

STATEMENTS OF CASH FLOWS

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We have audited the accompanying balance sheets of Lightwave Logic, Inc.

(the Company) as of December 31, 2019 and 2018, and the related statements of operations, stockholders equity, and cash flows for each of the two years in the period ended December 31, 2019, and the related notes (collectively referred to as the financial statements).

We also have audited the Companys internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

(the Company) as of December 31, 2020 and 2019, and the related statements of comprehensive loss, stockholders’

equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2019, based on criteria established in Internal Control Integrated Framework (2013) issued by COSO.

Basis for Opinion

The Companys management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Companys financial statements and an opinion on the Companys internal control over financial reporting based on our audits.

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

To the Board of Directors and

Stockholders of Lightwave Logic, Inc.

Definition and Limitations of Internal Control over Financial Reporting

A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

We determined that there are no critical audit matters.

/s/ Morison Cogen LLP

We have served as the Companys auditor since 2005.

We have served as the Company’s auditor since 2005.

Blue Bell, Pennsylvania

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Operating Lease - Right of Use - Building

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS'

CURRENT LIABILITIES

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Deferred lease liability

Paycheck Protection Program advance

Operating lease liability

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TOTAL LIABILITIES

STOCKHOLDERS' EQUITY

STOCKHOLDERS'

Preferred stock, $ 0.001 par value, 1,000,000 authorized,

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Accumulated deficit

TOTAL STOCKHOLDERS' EQUITY

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

TOTAL STOCKHOLDERS'

TOTAL LIABILITIES AND STOCKHOLDERS'

The accompanying notes are an integral part of these financial statements.

LIGHTWAVE LOGIC, INC.

STATEMENTS OF OPERATIONS

STATEMENTS OF COMPREHENSIVE LOSS

FOR THE YEARS ENDING DECEMBER 31, 2020 AND 2019

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LIGHTWAVE LOGIC, INC.

STATEMENT OF STOCKHOLDERS' EQUITY

STATEMENT OF STOCKHOLDERS'

FOR THE YEARS ENDING DECEMBER 31, 2020 AND 2019

BALANCE AT DECEMBER 31, 2017 (AUDITED)

BALANCE AT DECEMBER 31, 2018

Common stock issued to institutional investor

Common stock issued for commitment shares

Exercise of options

Exercise of warrants

Options issued for services

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Net loss for the year ending December 31, 2019

BALANCE AT DECEMBER 31, 2018 (AUDITED)

BALANCE AT DECEMBER 31, 2019

Common stock issued to institutional investor

Common stock issued for commitment shares

Exercise of warrants

Options issued for services

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Net loss for the year ending December 31, 2020

BALANCE AT DECEMBER 31, 2019 (AUDITED)

BALANCE AT DECEMBER 31, 2020

The accompanying notes are an integral part of these financial statements.

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Common stock issued for services and fees

Depreciation and amortization and noncash patent expenses

Loss on disposal of property and equipment

Decrease in assets

Depreciation and amortization of patents

Decrease (increase) in assets

Prepaid expenses and other current assets

(Decrease) increase in liabilities

Increase (decrease) in liabilities

Accounts payable

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Deferred lease liability

Paycheck Protection Program advance

Accrued expenses

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Purchase of property and equipment

Sale of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Exercise of options and warrants

Exercise of warrants

Issuance of common stock, institutional investor

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Net cash provided by financing activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

NET INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR

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DECEMBER 31, 2020 AND 2019

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 –

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

History and Nature of Business

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The Company expects to obtain a revenue stream from datacom and telecom devices, sales of non-linear optical polymers, and product development agreements prior to moving into full-scale production.

The Companys current development activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Companys technology now under development.

Lightwave Logic, Inc., (the Company) was organized under the laws of the State of Nevada in 1997 as Eastern Idaho Internet Service, Inc.

The Company was engaged in an unrelated business until June 30, 1998, at which time the principal assets of that business were sold and operations were discontinued.

The Company was inactive until the acquisition of PSI-TEC Corporation (PSI-TEC) on July 14, 2004, which is when the Company commenced with its current business and changed its name to PSI-TEC Holdings, Inc.

On July 14, 2004, the Company acquired PSI-TEC in a share exchange, which was considered to be a capital transaction in substance rather than a business combination, and was accounted for as a change of capital structure under accounting principles generally accepted in the United States.

On October 20, 2006, the Company and PSI-TEC merged and the Company changed its name to Third-Order Nanotechnologies, Inc.

On March 10, 2008, the Company changed its name to Lightwave Logic, Inc.

The Company’s current development activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company’s technology now under development.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States.

In mid March 2020 the Governor of Colorado declared a health emergency and issued an order to close all nonessential businesses.

The Company temporarily curtailed most of its business operations from mid March 2020 through May 1, 2020.

The Company is currently operating under the guidelines of the State of Colorado Department of Public Health and Environment and the Governor of Colorado’s Executive Order, Safer-at Home, as amended.

Lightwave Logic, Inc.

(the “Company”) was organized under the laws of the State of Nevada in 1997, and the Company commenced with its current business plan in 2004.

Basis of Presentation

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The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures.

Although these estimates are based on managements best knowledge of current events and actions the Company may undertake in the future, actual results could differ from the estimates.

Although these estimates are based on management’s best knowledge of current events and actions the Company may undertake in the future, actual results could differ from the estimates.

Cash Equivalents

For the purposes of the statement of cash flows, the Company considers all highly liquid instruments with maturities of three months or less at the time of purchase to be cash equivalents.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 1 –

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Concentration of Credit Risk

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When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in operations.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Intangible Assets

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The patents generally have a term of up to 20 years from the date of filing of the earliest related patent application.

When certain patent applications are abandoned by the Company for claims that are covered by patents already granted to the Company, the cost of patent applications are removed from the accounts and the resulting expense is reflected in the statement of operations.

Fair Value of Financial Instruments

The carrying value of the Companys short-term financial instruments such as cash, accounts payable and accrued expenses approximate their fair values because of their short maturities.

The carrying value of the Company’s short-term financial instruments such as cash, accounts payable and accrued expenses approximate their fair values because of their short maturities.

Revenue Recognition

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Recognize revenue as (or when) the performance obligations are satisfied.

For product sales, revenue will be recognized at a point in time when the product is shipped or is delivered to the customers location.

For product sales, revenue will be recognized at a point in time when the product is shipped or is delivered to the customer’s location.

For services performed, revenue will be recognized at a point in time when the service is performed.

However, for certain contracts, revenue will be recognized over time as the customer simultaneously receives and consumes the benefits of performance as the Company performs the service.

The Company follows Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes.

The Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, “Income Taxes,”

which requires an asset and liability approach to financial accounting and reporting for income taxes.

Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.

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Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 1 –

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-based Payments

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In June 2018, the FASB issued ASU No.

2018-07, Compensation Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting.

2018-07, Compensation –

Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting.

The amendments in this Update expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

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Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 are measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the good has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Loss Per Share

The Company follows FASB ASC 260, Earnings per Share, resulting in the presentation of basic and diluted earnings per share.

The Company follows FASB ASC 260, “Earnings per Share”, resulting in the presentation of basic and diluted earnings per share.

Because the Company reported a net loss in 2020 and 2019, common stock equivalents, including stock options and warrants were anti-dilutive;

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Recoverability of Long-Lived Assets

The Company follows FASB ASC 360, Property, Plant, and Equipment.

The Company follows FASB ASC 360, “Property, Plant, and Equipment”.

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.

When required, impairment losses on assets to be held and used are recognized based on the excess of the assets carrying amount.

Comprehensive Income

The Company follows FASB ASC 220.10, Reporting Comprehensive Income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss).

Since the Company has no items of other comprehensive income, comprehensive income (loss) is equal to net income (loss).

When required, impairment losses on assets to be held and used are recognized based on the excess of the asset’s carrying amount.

Comprehensive Income (Loss)

The Company follows FASB ASC 220.10, “Reporting Comprehensive Income (Loss).”

Comprehensive income (loss) is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income (loss).

Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

Recently Adopted Accounting Pronouncements

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Recently Issued Accounting Pronouncements Not Yet Adopted

As of December 31, 2019, there are no recently issued accounting standards not yet adopted which would have a material effect on the Companys financial statements.

Reclassifications

Certain reclassifications have been made to the 2018 financial statement in order to conform to the 2019 financial statement presentation.

NOTE 2 MANAGEMENTS PLANS

As of December 31, 2020, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 2 –

MANAGEMENT’S PLANS

Our future expenditures and capital requirements will depend on numerous factors, including:

the impact of the COVID-19 pandemic;

the progress of our research and development efforts;

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and our ability to establish cooperative development, joint venture and licensing arrangements.

From late March through May 1, 2020, the Company curtailed most operations due to the COVID-19 pandemic.

On April 24, 2020, the Company received $ 410,700 in loan funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Paycheck Protection Program, administered by the U.S.

Small Business Administration.

The loan was eligible for forgiveness as part of the CARES Act if certain requirements were met.

The loan was forgiven in its entirely on January 22, 2021 (See Note 8).

We expect that we will incur approximately $ 700,000 of expenditures per month over the next 12 months.

We expect our Lincoln Park financing (described in Note 9) to provide us with sufficient funds to maintain our operations over that period of time and until May 2022.

Our current cash position enables us to finance our operations through May 2020 before we will be required to replenish our cash reserves pursuant to the Lincoln Park financing.

Our cash requirements are expected to increase at a rate consistent with the Companys path to revenue growth as we expand our activities and operations with the objective of commercializing our electro-optic polymer technology.

Our current cash position enables us to finance our operations through December 2021 before we will be required to replenish our cash reserves pursuant to the Lincoln Park financing.

Subject to any additional impact of the COVID-19 pandemic, we expect our Lincoln Park financing (described in Note 10) to provide us with sufficient funds to maintain our operations over that period of time and until May 2022.

Our cash requirements are expected to increase at a rate consistent with the Company’s path to revenue growth as we expand our activities and operations with the objective of commercializing our electro-optic polymer technology.

We currently have no debt to service.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 3 PREPAID EXPENSES AND OTHER CURRENT ASSETS

NOTE 3 –

PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

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December 31, 2019

Research & Development Credit

Deposit for equipment

Prototype Devices

Research & Development Credit

Prepaid Material

NOTE 4 PROPERTY AND EQUIPMENT

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 4 –

PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

December 31, 2019

December 31, 2018

Office equipment

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Depreciation expense for the years ending December 31, 2020 and 2019 was $ 701,015 and $ 617,741 .

During the year ended December 31, 2019, the Company did not sell or retire property and equipment.

During the year ending December 31, 2018, the Company sold equipment for proceeds of $2,500 and a gain of $2,500.

During the year ending December 31, 2018, the Company retired property and equipment and recorded a loss on the retirement of $12,584.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 5 INTANGIBLE ASSETS

During the years ended December 31, 2020 and 2019, the Company did not sell or retire property and equipment.

NOTE 5 –

INTANGIBLE ASSETS

This represents legal fees and patent fees associated with the prosecution of patent applications.

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Some countries require the payment of maintenance fees for pending patent applications.

Maintenance fees paid after a patent is granted are expensed, as these are considered ongoing costs to maintain a patent.

Maintenance fees paid prior to a patent grant date are capitalized to patent costs, as these are considered patent application costs.

Maintenance fees paid after a patent is granted are expensed, as these are considered ongoing costs to “maintain a patent”.

Maintenance fees paid prior to a patent grant date are capitalized to patent costs, as these are considered “patent application costs”.

No amortization expense has been recorded on the remaining patent applications since patents have yet to be granted.

On June 11, 2018, the Company purchased patents for $315,000.

Intangible assets consist of the following:

December 31, 2019

December 31, 2018

Accumulated amortization

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There were no patent costs written off for the years ended December 31, 2020 and December 31, 2019.

NOTE 6 LONG TERM EQUIPMENT PURCHASE PAYABLE

Outstanding long term equipment purchase payable is comprised of the following:

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 6 –

EQUIPMENT PURCHASE PAYABLE

Outstanding equipment purchase payable is comprised of the following:

Classification

NOTE 7 COMMITMENTS

On October 30, 2017, the Company entered into a new lease to lease approximately 13,420 square feet of office, laboratory and research and development space located in Colorado for the Companys new principal executive offices and research and development facility.

NOTE 7 –

On October 30, 2017, the Company entered into a new lease to lease approximately 13,420 square feet of office, laboratory and research and development space located in Colorado for the Company’s new principal executive offices and research and development facility.

The term of the lease is sixty- one ( 61 ) months, beginning on November 1, 2017 and ending on November 30, 2022 .

2 unchanged sentences

As specified in the lease, the Company paid the landlord (i) all base rent for the period November 1, 2017 and ending on October 31, 2019, in the sum of $ 347,045 ;

and (ii) the estimated amount of tenants proportionate share of operating expenses for the same period in the sum of $186,293.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 7 COMMITMENTS (CONTINUED

Commencing on November 1, 2019, monthly installments of base rent and one-twelfth of landlords estimate of tenants proportionate share of annual operating expenses shall be due on the first day of each calendar month.

The lease also provides that (i) on November 1, 2019 landlord shall pay the Company for the cost of the cosmetic improvements in the amount of $3.00 per rentable square foot of the premises, and (ii) on or prior to November 1, 2019, the Company shall deposit with Landlord the sum of $36,524 as a security deposit which shall be held by landlord to secure the Companys obligations under the lease.

and (ii) the estimated amount of tenant’s proportionate share of operating expenses for the same period in the sum of $ 186,293 .

Commencing on November 1, 2019, monthly installments of base rent and one-twelfth of landlord’s estimate of tenant’s proportionate share of annual operating expenses shall be due on the first day of each calendar month.

The lease also provides that (i) on November 1, 2019 landlord shall pay the Company for the cost of the cosmetic improvements in the amount of $3.00 per rentable square foot of the premises, and (ii) on or prior to November 1, 2019, the Company shall deposit with Landlord the sum of $ 36,524 as a security deposit which shall be held by landlord to secure the Company’s obligations under the lease.

The lease contains an option to extend the term to October 31, 2024.

On October 30, 2017, the Company entered into an agreement with the tenant leasing the premise from the landlord (Original Lessee) whereby the Original Lessee agreed to pay the Company the sum of $260,000 in consideration of the Company entering into the lease and landlord agreeing to the early termination of the Original Lessees lease agreement with landlord.

On October 30, 2017, the Company entered into an agreement with the tenant leasing the premise from the landlord (“Original Lessee”) whereby the Original Lessee agreed to pay the Company the sum of $260,000 in consideration of the Company entering into the lease and landlord agreeing to the early termination of the Original Lessee’s lease agreement with landlord.

The consideration of $ 260,000 was received on November 1, 2017.

3 unchanged sentences

The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases.

The Company is obligated under an operating lease for office and laboratory space.

The aggregate minimum future lease payments under the operating leases, including the extended term are as follows:

Less discounted interest

In June 2018, the lease for the facility located in Longmont Colorado was terminated.

Rent expense approximating $114,559 and $38,220 is included in research and development and general and administrative expenses for the year ended December 31, 2019.

Rent expense amounting to $149,131 and $51,791 is included in research and development and general and administrative expenses for the year ended December 31, 2018.

LIGHTWAVE LOGIC, INC.

1 unchanged sentence

DECEMBER 31, 2020 AND 2019

NOTE 8 INCOME TAXES

NOTE 7 –

COMMITMENTS (CONTINUED)

The Company is obligated under an operating lease for office and laboratory space.

The aggregate minimum future lease payments under the operating leases, including the extended term are as follows:

Less discounted interest

Rent expense totaling $ 129,806 and $ 43,269 is included in research and development and general and administrative expenses for the year ended December 31, 2020.

Rent expense totaling $ 114,559 and $ 38,220 is included in research and development and general and administrative expenses for the year ended December 31, 2019.

NOTE 8 –

PAYCHECK PROTECTION PROGRAM ADVANCE

On April 24, 2020, the Company received $ 410,700 in loan funding from the Paycheck Protection Program, established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act and administered by the U.S.

Small Business Administration.

The unsecured loan is evidenced by a promissory note of the Company dated April 23, 2020 in the principal amount of $ 410,700 , to Community Banks of Colorado, a division of NBH Bank, the lender.

The loan proceeds have been used to cover payroll costs, rent and utility costs.

The loan was eligible for forgiveness as part of the CARES Act if certain requirements were met.

The loan was forgiven in its entirety on January 22, 2021.

NOTE 9 –

As discussed in Note 1, the Company utilizes the asset and liability method of accounting for income taxes in accordance with FASB ASC 740.

1 unchanged sentence

Change in valuation allowance

The reconciliation of the statutory federal rate to the Companys effective income tax rate is as follows:

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 9 –

INCOME TAXES (CONTINUED)

The reconciliation of the statutory federal rate to the Company’s effective income tax rate is as follows:

Income tax benefit at U.S.

13 unchanged sentences

The value of the deferred tax assets was offset by a valuation allowance, due to the current uncertainty of the future realization of the deferred tax assets.

As of December 31, 2019, the Company had net operating loss carry forwards of approximately $50,090,000, expiring through the year ending December 31, 2039.

As of December 31, 2020, the Company had net operating loss carry forwards of approximately $ 56,805,000 , expiring through the year ending December 31, 2037 for net operating losses originating in tax years beginning before January 1, 2018.

Net operating losses recorded in tax years beginning January 1, 2018 and after are allowed for an indefinite carryforward period but limited to 80% of each subsequent year’s net income.

This amount can be used to offset future taxable income of the Company.

4 unchanged sentences

DECEMBER 31, 2020 AND 2019

NOTE 8 INCOME TAXES (CONTINUED)

The Company follows FASB ASC 740.10, which provides guidance for the recognition and measurement of certain tax positions in an enterprises financial statements.

NOTE 9 –

INCOME TAXES (CONTINUED)

The Company follows FASB ASC 740.10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements.

Recognition involves a determination of whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information.

The adoption of FASB ASC 740.10 did not require an adjustment to the Companys financial statements.

The Companys policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations.

The adoption of FASB ASC 740.10 did not require an adjustment to the Company’s financial statements.

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the statement of operations.

As of January 1, 2020, the Company had no unrecognized tax benefits and no charge during 2020, and accordingly, the Company did not recognize any interest or penalties during 2020 related to unrecognized tax benefits.

4 unchanged sentences

and state income tax returns filed for the tax years ending on December 31, 2017 and thereafter are subject to examination by the relevant taxing authorities.

NOTE 9 STOCKHOLDERS EQUITY

NOTE 10 –

STOCKHOLDERS’

Preferred Stock

Pursuant to the Companys Articles of Incorporation, the Companys board of directors is empowered, without stockholder approval, to issue series of preferred stock with any designations, rights and preferences as they may from time to time determine.

The rights and preferences of this preferred stock may be superior to the rights and preferences of the Companys common stock;

Pursuant to the Company’s Articles of Incorporation, the Company’s board of directors is empowered, without stockholder approval, to issue series of preferred stock with any designations, rights and preferences as they may from time to time determine.

The rights and preferences of this preferred stock may be superior to the rights and preferences of the Company’s common stock;

consequently, preferred stock, if issued could have dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the common stock.

Additionally, preferred stock, if issued, could be utilized, under special circumstances, as a method of discouraging, delaying or preventing a change in control of the Companys business or a takeover from a third party.

Common Stock Options and Warrants

2 unchanged sentences

The Company also entered into a registration rights agreement with the institutional investor whereby the Company agreed to file a registration statement related to the transaction with the U.S.

Securities and Exchange Commission registering 5,000,000 shares of the Companys common stock.

Securities and Exchange Commission registering 5,000,000 shares of the Company’s common stock.

The registration statement was filed on March 25, 2016.

2 unchanged sentences

The Company registered an additional 5,000,000 shares pursuant to a registration statement filed on May 2, 2018 which became effective May 11, 2018.

Under the Purchase Agreement and at Company's sole discretion, the institutional investor has committed to invest up to $20,000,000 in common stock over a 36-month period.

Under the Purchase Agreement and at Company's sole discretion, the institutional investor has committed to invest up to $20,000,000 in common stock over a 36 -month period.

The Company issued 350,000 shares of restricted common stock to the institutional investor as an initial commitment fee valued at $ 237,965 , fair value, and 650,000 shares of common stock are reserved for additional commitment fees to the institutional investor in accordance with the terms of the Purchase Agreement.

5 unchanged sentences

DECEMBER 31, 2020 AND 2019

NOTE 9 STOCKHOLDERS EQUITY (CONTINUED)

NOTE 10 –

STOCKHOLDERS’

EQUITY (CONTINUED)

Common Stock Options and Warrants (Continued)

2019 Purchase Agreement

3 unchanged sentences

The Company registered an additional 6,000,000 shares pursuant to a registration statement filed on January 24, 2020 which became effective February 4, 2020.

The Company registered an additional 8,000,000 shares pursuant to a registration statement filed on November 20, 2020 which became effective November 20, 2020.

During the period January 2019 through December 31, 2020, the institutional investor purchased 14,275,000 shares of common stock for proceeds of $ 9,800,675 and the Company issued 318,528 shares of common stock as additional commitment fee, valued at $ 241,871 , fair value, leaving 493,972 in reserve for additional commitment fees.

During the year ending December 31, 2020, the institutional investor purchased 8,125,000 shares of common stock for proceeds of $ 5,173,300 and the Company issued 168,137 shares of common stock as additional commitment fee, valued at $ 116,366 , fair value.

During January through March 31, 2021, the institutional investor purchased 3,791,911 shares of common stock for proceeds of $ 4,953,972 and the Company issued 161,009 shares of common stock as additional commitment fee, valued at $ 250,280 , fair value, leaving 332,963 in reserve for additional commitment fees.

NOTE 10 STOCK BASED COMPENSATION

During 2007, the Board of Directors of the Company adopted the 2007 Employee Stock Plan (2007 Plan) that was approved by the shareholders.

NOTE 11 –

STOCK BASED COMPENSATION

During 2007, the Board of Directors of the Company adopted the 2007 Employee Stock Plan (“2007 Plan”) that was approved by the shareholders.

Under the Plan, the Company is authorized to grant options to purchase up to 10,000,000 shares of common stock to directors, officers, employees and consultants who provide services to the Company.

The Plan is intended to permit stock options granted to employees under the 2007 Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (Incentive Stock Options).

All options granted under the 2007 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options (Non-Statutory Stock Options).

All options granted under the 2007 Plan, which are not intended to qualify as Incentive Stock Options are deemed to be non-qualified options (“Non-Statutory Stock Options”).

Effective June 24, 2016, the 2007 Plan was terminated.

As of December 31, 2020, options to purchase 4,450,000 shares of common stock have been issued and are outstanding.

During 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan (2016 Plan) that was approved by the shareholders at the 2016 annual meeting of shareholders on May 20, 2016.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 11 –

STOCK BASED COMPENSATION (CONTINUED)

During 2016, the Board of Directors of the Company adopted the 2016 Equity Incentive Plan (“2016 Plan”) that was approved by the shareholders at the 2016 annual meeting of shareholders on May 20, 2016.

Under the 2016 Plan, the Company is authorized to grant awards of incentive and non-qualified stock options and restricted stock to purchase up to 3,000,000 shares of common stock to employees, directors and consultants.

Effective May 16, 2019, the number of shares of the Companys common stock available for issuance under the 2016 Plan was increased from 3,000,000 to 8,000,000 shares.

Effective May 16, 2019, the number of shares of the Company’s common stock available for issuance under the 2016 Plan was increased from 3,000,000 to 8,000,000 shares.

As of December 31, 2020, options to purchase 3,757,500 shares of common stock have been issued and are outstanding and 4,242,500 shares of common stock remain available for grants under the 2016 Plan.

3 unchanged sentences

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions for 2020:

no dividend yield in all years, expected volatility, based on the Companys historical volatility, 60% to 80.5%, risk-free interest rate between 1.47% to 2.71% and expected option life of 5.0 to 10 years.

Prior to May 2018, the expected life is based on the estimated average of the life of options using the simplified method, as prescribed in FASB ASC 718, due to insufficient historical exercise activity during recent years.

no dividend yield in all years, expected volatility, based on the Company's historical volatility, 64 % to 78 %, risk-free interest rate between 0.30 % to 1.82 % and expected option life of 4.6 to 10 years.

Prior to May 2018, the expected life is based on the estimated average of the life of options using the “simplified”

method, as prescribed in FASB ASC 718, due to insufficient historical exercise activity during recent years.

Starting in May 2018, the expected life is based on the legal contractual life of options.

The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions for 2019:

no dividend yield in all years, expected volatility, based on the Companys historical volatility, 60% to 90%, risk-free interest rate between 1.89% to 3.06% and expected option life of 5.0 to 10 years.

no dividend yield in all years, expected volatility, based on the Company's historical volatility, 60 % to 80.5 %, risk-free interest rate between 1.47 % to 2.71 % and expected option life of 5 .0 to 10 years.

As of December 31, 2020, there was $ 161,831 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized through September 30, 2022.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2019 AND 2018

NOTE 10 STOCK BASED COMPENSATION (CONTINUED)

Share-based compensation was recognized as follows:

2 unchanged sentences

Total share-based compensation

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2020 AND 2019

NOTE 11 –

STOCK BASED COMPENSATION (CONTINUED)

The following tables summarize all stock option and warrant activity of the Company during the years ended December 31, 2020 and 2019:

Non-Qualified Stock Options and Warrants

Outstanding and Exercisable

Non-Qualified Stock Options and Warrants Outstanding and Exercisable

Exercise Price

1 unchanged sentence

0.57 - $ 1.69

0.64 - $ 1.05

0.95 - $ 1.25

0.77 - $ 1.50

Outstanding, December 31, 2019

0.51 - $ 0.86

0.80 - $ 1.02

Outstanding, December 31, 2020

0.51 - $ 1.69

Exercisable, December 31, 2020

0.51 - $ 1.69

The aggregate intrinsic value of options and warrants outstanding and exercisable as of December 31, 2020 was $ 1,593,794 .

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and warrants and the closing stock price of $0.70 for the Companys common stock on December 31, 2019.

No options or warrants were exercised during 2019.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and warrants and the closing stock price of $ 0.93 for the Company’s common stock on December 31, 2020.

During the year ending December 31, 2020, 2,073,052 warrants were exercised for proceeds of $ 1,658,442 .

During the year ending December 31, 2018, 100,000 options were exercised for proceeds of $100,000.

No options were exercised during 2020.

No options or warrants were exercised during 2019.

Non-Qualified Stock Options and Warrants Outstanding

Exercise Prices

Number Outstanding

Weighted Average

Currently Exercisable

Exercise Price of Options and

Exercise Prices

at December 31, 2020

Weighted Average

Contractual Life

Weighted Average

Exercise Price of Options and

Warrants Currently Exercisable

3 unchanged sentences

DECEMBER 31, 2020 AND 2019

NOTE 11 RELATED PARTY

NOTE 12 –

RELATED PARTY

At December 31, 2020 the Company had a legal accrual to related party of $ 30,100 , director fees accrued in the amount of $ 10,000 , travel and office expense accruals of officers in the amount of $ 7,177 and accounting service fee accrual to a related party of $ 2,520 .

At December 31, 2019 the Company had a legal accrual to related party of $ 10,152 and travel and office expense accruals of officers in the amount of $ 4,653 .

At December 31, 2018 the Company had a legal and accounting service accrual to related party of $10,999 and travel and office expense accruals of officers in the amount of $2,825.

During July 2018, the Company issued a warrant to purchase 100,000 shares of common stock at a purchase price of $ 1.15 per share for professional services to be rendered over a twelve month period commencing July 1, 2018.

1 unchanged sentence

The expense is being recognized based on service terms of the agreement over a twelve month period.

For the years ending December 31, 2019 and 2018, the Company recognized $31,319 and $31,318 of expense.

During July 2017, the Company issued a warrant to purchase 150,000 shares of common stock at a purchase price of $1.48 per share for professional services to be rendered over a twelve month period commencing July 1, 2017.

The warrant was valued at $124,788, fair value upon issuance, using the Black-Scholes Option Pricing Formula.

The expense is being recognized based on service terms of the agreement over a twelve month period.

For the year ending December 31, 2019, the Company recognized $ 31,319 of expense.

NOTE 12 RETIREMENT PLAN

NOTE 13 –

RETIREMENT PLAN

The Company established a 401(k) retirement plan covering all eligible employees beginning November 15, 2013.

2 unchanged sentences

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 9A. Controls and Procedures