What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-03-01 compared with 2022-03-01 · 389 added, 253 removed, 681 unchanged (49% of the section changed)

86 unchanged sentences

Description of Registrant’s Securities

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

Filed herewith

Employee Agreement – Michael Lebby

7 unchanged sentences

Employee Agreement Amendment - James Marcelli

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on January 21, 2022

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on April 20, 2021

Employee Agreement Amendment - James Marcelli

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Form of Restricted Stock Award Agreement -Non Employee Directors

Filed herewith

Lease Agreement – Englewood, CO.

Incorporated by reference to the Company’s Annual Report on Form

10-K as filed with the SEC on March 1, 2022

Lease Agreement dated October 26, 2017

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

First Amendment to the October 26, 2017 Lease Agreement dated November 22, 2022

Filed herewith

Purchase Agreement, dated October 4, 2021, by and between the Company and Lincoln Park

2 unchanged sentences

Incorporated by reference to the Company’s Current Report on Form 8-K as filed with the SEC on October 5, 2021

Purchase Agreement, dated February 28, 2023, by and between the Company and Lincoln Park

Filed herewith

Registration Rights Agreement, dated February 28, 2023, by and between the Company and Lincoln Park

Filed herewith

Code of Ethics and Business Conduct

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Executive Officer of the Company.

Furnished herewith

Filed herewith

Certification pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by the Principal Financial Officer of the Company.

Furnished herewith

Filed herewith

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

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/s/ Michael Lebby

Chief Executive Officer, Principal Executive Officer, Director

Chief Executive Officer, Principal Executive Officer, Chair of the Board of Directors

March 1, 2023

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March 1, 2023

/s/ Thomas E.

Chair of the Board of Directors

March 1, 2022

/s/ Ronald A.

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(the Company) as of December 31, 2022 and 2021, and the related statements of comprehensive loss, stockholders’

equity, and cash flows for each of the two years in the period ended December 31, 2021, and the related notes (collectively referred to

as the financial statements).

equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred

to as the financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31,

based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations

of the Treadway Commission (COSO).

2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring

Organizations of the Treadway Commission (COSO).

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, 2022 and 2021, and the results

of its operations and its cash flows for each of the two years in the period ended December 31, 2021, 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, 2021, based on criteria established in Internal Control – Integrated

Framework (2013) issued by COSO.

of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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, 2022, based on criteria established in Internal Control –

Integrated Framework (2013) issued by COSO.

Basis for Opinion

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BALANCE SHEETS

December 31, 2021

December 31, 2020

CURRENT ASSETS

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Prepaid expenses and other current assets

Loan receivable

Total Current Assets

7 unchanged sentences

Accrued bonuses and accrued expenses

Current portion of equipment purchase

Accounts payable and accrued expenses - related parties

Deferred lease liability

Paycheck Protection Program advance

Operating lease liability

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Additional paid-in-capital

Deferred compensation

Accumulated deficit

6 unchanged sentences

STATEMENTS OF COMPREHENSIVE LOSS

FOR THE YEARS ENDING DECEMBER 31, 2021 AND 2020

December 31, 2021

December 31, 2020

FOR THE YEARS ENDING DECEMBER 31, 2022, 2021

COST AND EXPENSE

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( 16,996,443 )

( 6,599,974 )

OTHER INCOME (EXPENSE)

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$ ( 18,631,381 )

Basic and Diluted Loss per Share

Basic and Diluted Weighted Average Number of Shares

$ ( 6,715,564 )

LOSS PER SHARE

WEIGHTED AVERAGE NUMBER OF SHARES

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

1 unchanged sentence

STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDING DECEMBER 31, 2021 AND 2020

FOR THE YEARS ENDING DECEMBER 31, 2022, 2021

BALANCE AT DECEMBER 31, 2021

$ 114,696,597

$ ( 89,602,881 )

Common stock issued to institutional investor

Common stock issued for commitment shares

Exercise of options

Cashless exercise of 4,375 options

Exercise of warrants

Options issued for services

Warrants issued for services

Restricted stock awards issued for future services

Forfeiture restricted stock awards issued for future services

Deferred compensation

Net loss for the year ending December 31, 2022

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$ 134,406,825

$ ( 133,324 )

$ ( 106,833,361 )

BALANCE AT DECEMBER 31, 2020

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$ ( 89,602,881 )

BALANCE AT DECEMBER 31, 2019

$ ( 64,255,936 )

Common stock issued to institutional investor

Common stock issued for commitment shares

Exercise of warrants

Options issued for services

Warrants issued for services

Net loss for the year ending December 31, 2020

( 6,715,564 )

BALANCE AT DECEMBER 31, 2020

$ ( 70,971,500 )

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

2 unchanged sentences

FOR THE YEARS ENDING DECEMBER 31, 2022, 2021 AND 2020

December 31, 2022

December 31, 2021

December 31, 2020

CASH FLOWS FROM OPERATING ACTIVITIES

1 unchanged sentence

$ ( 18,631,381 )

$ ( 6,715,564 )

Adjustments to reconcile net loss to net cash used in operating activities

1 unchanged sentence

Stock options issued for services

Amortization of deferred compensation

Cashless option exercise

13 unchanged sentences

( 10,038,626 )

( 4,873,863 )

CASH FLOWS FROM INVESTING ACTIVITIES

2 unchanged sentences

( 1,307,187 )

( 1,097,530 )

Issuance of loan

Net cash used in investing activities

( 2,209,722 )

( 1,116,179 )

CASH FLOWS FROM FINANCING ACTIVITIES

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Lightwave Logic, Inc.

is a technology company focused on the development

of next generation photonic devices and non-linear optical polymer materials systems for applications in high speed fiber-optic data communications

and optical computing markets.

Currently the Company is in various stages of photonic device and materials development and evaluation

with potential customers and strategic partners.

The Company expects to obtain a revenue stream from technology licensing agreements,

technology transfer agreements and the production and direct sale of its own electro-optic device components.

a technology company focused on the development of next generation photonic devices and non-linear optical polymer materials systems for

applications in high speed fiber-optic data communications and optical computing markets.

Currently the Company is in various stages of

photonic device and materials development and evaluation with potential customers and strategic partners.

The Company expects to obtain

a revenue stream from technology licensing agreements, technology transfer agreements and the production and direct sale of its own electro-optic

device components.

The Company’s current

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the Company’s technology now under development.

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.

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.

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in accordance with accounting principles generally accepted in the United States of America.

For the statements of comprehensive loss, stockholders’ equity and cash flows for the year ended December 31, 2019 refer to the

Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

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 management’s

best knowledge of current events and actions the Company may undertake in the future, actual results could differ from the estimates.

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 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

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did have deposits with a financial institution that exceed the Federal Depository Insurance coverage.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

Property and Equipment

4 unchanged sentences

resulting gain or loss is included in operations.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING

POLICIES (CONTINUED)

Intangible Assets

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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 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.

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.

For license agreements, each contract will be reviewed

to determine the portion of the revenue recognition at the point in time that the license is transferred to the customer and the portion

of the revenue recognition to be recognized over time.

The Company follows Financial Accounting Standards

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Stock-based Payments

The Company accounts for stock-based compensation

under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 718, "Compensation -

Stock Compensation", which requires the measurement and recognition of compensation expense for all stock-based awards made

to employees and directors based on estimated fair values on the grant date.

The Company estimates the fair value of stock-based awards

on the date of grant using the Black-Scholes model.

The value of the portion of the award that is

ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

In June 2018,

the FASB issued ASU No.

2018-07, Compensation – Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based

Payment Accounting (the “2018 Update).

The amendments in the 2018 Update expand the

scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees.

Prior to the 2018 Update,

Topic 718 applied only to share-based transactions to employees.

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.

The Company has elected to account for forfeiture of stock-based awards

as they occur.

accounts for stock-based compensation under the provisions of Financial Accounting Standards Board (FASB) Accounting Standards

Codification (ASC) 718, "Compensation - Stock Compensation", which requires the measurement

and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the

The fair value of restricted stock awards is estimated by the market price of the Company’s common stock at the date

Restricted stock awards are being amortized to expense over the vesting period.

The Company estimates the fair value of option

and warrant awards on the date of grant using the Black-Scholes model.

The value of the portion of the award that is ultimately expected

to vest is recognized as expense over the requisite service periods using the straight-line method.

In June 2018, the FASB issued

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

(the “2018 Update).

The amendments in the 2018 Update expand the scope of Topic 718

to include share-based payment transactions for acquiring goods and services from nonemployees.

Prior to the 2018 Update, Topic 718 applied

only to share- based transactions to employees.

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.

The Company has

elected to account for forfeiture of stock-based awards as they occur.

Loss 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 2021

and 2020, common stock equivalents, including stock options and warrants were anti-dilutive;

therefore, the amounts reported for basic

and dilutive loss per share were the same.

Recoverability of Long-Lived Assets

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 2022, 2021 and 2020, common stock equivalents, including stock options and warrants were anti-dilutive;

the amounts reported for basic and dilutive loss per share were the same.

Recoverability

of Long-Lived Assets

The Company follows FASB ASC 360, “Property,

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based on the excess of the asset’s carrying amount.

Comprehensive Income (Loss)

Comprehensive

Income (Loss)

follows FASB ASC 220.10, “Reporting Comprehensive Income (Loss).” Comprehensive income (loss) is a more inclusive financial

9 unchanged sentences

accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

Reclassifications

Certain reclassifications

have been made to the 2020 financial statement in order to conform to the 2021 financial statement presentation.

LIGHTWAVE LOGIC, INC.

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NOTE 2 – MANAGEMENT’S PLANS

Our future expenditures

and capital requirements will depend on numerous factors, including:

the progress of our research and development efforts;

which we can, directly or through arrangements with original equipment manufacturers, introduce and sell products incorporating our polymer

materials technology;

the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

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

the progress of our research and development

the rate at which we can, directly or through arrangements with original equipment manufacturers, introduce and sell

products incorporating our polymer materials technology;

the costs of filing, prosecuting, defending and enforcing any patent claims

and other intellectual property rights;

market acceptance of our products and competing technological developments;

our ability to establish cooperative development, joint venture

and licensing arrangements;

and the impact of the COVID-19 pandemic.

We expect that we will incur approximately $ 1,015,000 of

and our ability

to establish cooperative development, joint venture and licensing arrangements.

We expect that we will incur

approximately $ 1,604,000 of

expenditures per month over the next 12 months.

Our current cash position enables us to finance our operations through December 2023.

July 2, 2021, the Company filed a $100,000,000 universal shelf registration statement with the U.S.

Securities and Exchange Commission

which became effective on July 9, 2021.

On October 4, 2021, the Company entered into a purchase agreement with the institutional investor

to sell up to $ 33,000,000 of common stock over a 36-month period (described in Note 10).

Pursuant to the purchase agreement, the Company

received $ 3,173,743 in January and February and a remaining available amount of $ 13,448,832 is available to the Company per the agreement.

Our cash requirements are expected to increase at a rate consistent with the Company’s path to revenue 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 April

On July 2, 2021, the Company filed a $100,000,000 universal shelf registration statement with the U.S.

Securities and

Exchange Commission which became effective on July 9, 2021.

On October 4, 2021, the Company entered into a purchase agreement with

the institutional investor to sell up to $ 33,000,000

of common stock over a 36-month period (described in Note 10).

Pursuant to the purchase agreement, the Company received $ 1,720,750

in January and February 2023 and a remaining available amount of $ 2,126,557

is available to the Company per the agreement.

On December 9, 2022, the Company entered into a sales agreement with an investment

banking company whereby the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ 35,000,000

from time to time through or to the investment banking company, as sales agent or principal (described in Note 10).

requirements are expected to increase at a rate consistent with the Company’s path to revenue as we expand our activities and

operations with the objective of commercializing our electro-optic polymer technology.

We currently have no debt to service.

NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT ASSETS

NOTE 3 – PREPAID EXPENSES AND OTHER CURRENT

Prepaid expenses and other current assets consist of the following:

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Prototype devices

Research & Development Credit

Investor relations

Loan interest receivable

Prepaid expenses and other current assets

NOTE 4 – LOAN RECEIVABLE

On September 7, 2022, the Company entered into a convertible loan agreement

(the “Loan”) with an entity and issued a loan on September 12, 2022 in the amount of EUR 600,000 bearing interest at 7 % per

annum with a maturity date of March 31, 2023 .

The Company recorded $ 13,375 of interest income for the year ended December 31, 2022.

exchange rates used for the conversion of the EUR denominated loan are the December 31, 2022 reporting period end date exchange rate for

the loan principal resulting in a balance of $ 642,120 and interest receivable resulting in a balance of $ 13,669 and

the average exchange rate for the period ending December 31, 2022 for interest income.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

NOTE 5 – PROPERTY AND EQUIPMENT

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31, 2022, 2021 and 2020 was $ 966,995 , $ 792,004 and $ 701,015 .

During the years ended December 31, 2021 and 2020, the Company did not sell or retire property

and equipment.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

During the year ending December 31, 2022, the Company retired $ 70,963 of

leasehold improvements.

During the years ended December 31, 2021 and 2020, the Company did no t sell or retire property and equipment.

NOTE 6 – INTANGIBLE ASSETS

This represents legal fees and patent fees

associated with the prosecution of patent applications.

The Company has recorded amortization expense on patents granted,

which are amortized over the remaining legal life.

Maintenance patent fees are paid to a government patent authority to

maintain a granted patent in force.

This represents legal fees and patent fees associated

with the prosecution of patent applications.

The Company has recorded amortization expense on patents granted, which are amortized over

the remaining legal life.

Maintenance patent fees are paid to a government patent authority to maintain a granted patent in

Some countries require the payment of maintenance fees for pending patent

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

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

on these applications have yet to be granted.

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 on these applications

have yet to be granted.

Intangible assets consist of the following:

Schedule of Patents

Schedule of Intangible assets

Accumulated amortization

1 unchanged sentence

Amortization expense for the years ending December

31, 2021 and 2020 was $ 86,516 and $ 83,404 .

There were no patent costs written off for the years ended December 31, 2021 and 2020.

31, 2022, 2021 and 2020 was $ 78,213 , $ 86,516

and $ 83,404 .

no patent costs

written off for the years ended December 31, 2022, 2021 and 2020.

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

NOTE 7 – COMMITMENTS

On October 30, 2017, the Company entered into a

lease agreement to lease approximately 13,420 square feet of office, laboratory and research and development space located in

Colorado for the Company’s principal executive offices and research and development facility.

The term of the lease is sixty-

months, beginning on November

1, 2017 and ending on November

On October 30, 2017, the Company entered into a lease

agreement (the “Lease”) to lease approximately 13,420 square feet of office, laboratory and research and development space

located in Colorado for the Company’s 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

During January 2022, the term was extended for an additional twenty-four ( 24 )

This extension did not require a lease modification as the additional option period was included in the original computation

as of January 1, 2019.

Base rent for the first year of the lease term is approximately $ 168,824 ,

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in each subsequent year of the lease term.

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 ;

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 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 Lessee’s lease agreement with landlord.

The consideration of $ 260,000 was received on November

Due to the adoption of the new lease standard, the

Company has capitalized the present value of the minimum lease payments commencing November 1, 2019, including the additional option period

using an estimated incremental borrowing rate of 6.5 %.

The minimum lease payments do not include common area annual expenses which are

considered to be nonlease components.

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.

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.

to the adoption of the new lease standard, the Company has capitalized the present value of the minimum lease payments commencing November

1, 2019, including the additional option period using an estimated incremental borrowing rate of 6.5 %.

The minimum lease payments do not

include common area annual expenses which are considered to be nonlease components.

As of January 1, 2019 the operating lease right-of-use

asset and operating lease liability amounted to $ 885,094 with no cumulative-effect adjustment to the opening balance of retained earnings/accumulated

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

On November 22, 2022, the Company entered into an

amendment to the Lease (“the Amended Lease”) to lease an additional approximately 9,684 square feet of adjacent office and

warehouse space.

The Amended Lease is contingent upon the landlord entering into a written agreement with the existing tenant occupying

the expanded premise (“the Existing Tenant Lease Termination”) to terminate its lease prior to the expiration date thereof,

and to surrender the expansion premises to the landlord.

The term of the Amended Lease is one hundred twenty ( 120 ) months, with an effective

date estimated to be August 1, 2023 or earlier if the existing tenant terminates its lease prior to that date.

Base rent through October

31, 2023 of the Amended Lease term is approximately $ 30,517 per month.

The base rent for the next full year of the Amended Lease term

is approximately $ 377,288 , with an increase in annual base rent of approximately 3 % in each subsequent year of the lease term.

on the effective date, 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 Amended Lease also provides an allowance

of up to $ 38,736 to be used solely for the cost of renovations to the additional lease premises.

As of December, 31, 2022, the landlord

did not enter into the Existing Tenant Lease Termination.

As a result, the Company did not capitalize the present value of the minimum

lease payments under the Amended Lease.

The Company has elected not to recognize right-of-use

assets and lease liabilities arising from short-term leases.

There are no other material operating leases.

LIGHTWAVE LOGIC, INC.

12 unchanged sentences

and $ 44,747 is included in research and development and general and administrative expenses for the year ended December 31, 2021.

NOTE 7 – PAYCHECK

PROTECTION PROGRAM ADVANCE

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.

PAYCHECK PROTECTION PROGRAM ADVANCE

On April 24, 2020, the Company received $ 410,700 in

15 unchanged sentences

( 3,692,000 )

( 1,972,000 )

Change in valuation allowance

10 unchanged sentences

$ ( 3,913,000 )

$ ( 1,544,000 )

State tax benefit, net of federal tax effect

2 unchanged sentences

Non-deductible share-based compensation

Exercised share based compensation

( 2,981,000 )

Change in valuation allowance

7 unchanged sentences

( 21,208,000 )

( 17,516,000 )

The valuation allowance for deferred tax assets as

of December 31, 2022, 2021 and 2020 was $ 26,279,000 , $ 21,208,000 and $ 17,516,000 , respectively.

The change in the total valuation for the year ended December

31, 2021 was an increase of $ 3,692,000 and for the year ended December 31, 2020 was an increase of $ 1,972,000 .

In assessing the realization

of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will

not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the

periods in which the net operating losses and temporary differences become deductible.

Management considered projected future taxable

income and tax planning strategies in making this assessment.

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, 2021,

the Company had net operating loss carry forwards of approximately $ 73,950,000 , expiring through the year ending December 31, 2038 .

operating losses recorded in tax years beginning January 1, 2018 and after of approximately $ 35,670,000 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.

The change in the total valuation for

the year ended December 31, 2022 was an increase of $ 5,071,000 , for the year ended December 31, 2021 was an increase of $ 3,692,000 and

for the year ended December 31, 2020 was an increase of $ 1,972,000 .

In assessing the realization of deferred tax assets, management considers

whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization

of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the net operating losses

and temporary differences become deductible.

Management considered projected future taxable income and tax planning strategies in making

this assessment.

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, 2022, the Company had net operating

loss carry forwards of approximately $ 97,297,000

and is comprised of net operating losses in the amount of approximately $ 38,275,000

recorded in tax years beginning prior to Janua ry 1, 2018 expiring through

the year ending December 31,

2038 and net operating losses recorded in tax years beginning January 1, 2018 and after in the amount of approximately $ 59,022,000

which are allowed for an indefinite carryforward period but may be subject to limitations.

This amount can be used to offset future

taxable income of the Company.

The timing and manner in which the Company can utilize

37 unchanged sentences

In January 2019, the Company signed a purchase agreement

with the institutional investor to sell up to $ 25,000,000 of common stock.

The Company registered 9,500,000 shares pursuant to a registration

statement filed on January 30, 2019 which became effective February 13, 2019.

The Company issued 350,000 shares of common stock to the

institutional investor as an initial commitment fee valued at $ 258,125 , fair value, and 812,500 shares of common stock are reserved for

additional commitment fees to the institutional investor in accordance with the terms of the purchase agreement.

with the institutional investor to sell up to $ 25,000,000

of common stock.

The Company registered 9,500,000

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 30, 2021, the institutional investor purchased 22,337,500 shares of

common stock for proceeds of $ 23,773,924 and the Company issued 772,666 shares of common stock as additional commitment fee, valued at

$ 1,575,509 , fair value, leaving 39,834 in reserve for additional commitment fees.

During the year ending December 30, 2021, the institutional

investor purchased 8,062,500 shares of common stock for proceeds of $ 13,973,249 and the Company issued 454,138 shares of common stock

as additional commitment fee, valued at $ 1,333,628 , fair value.

All of the registered shares under the purchase agreement have been issued

as of December 31, 2021.

shares pursuant to a registration statement filed on January 30, 2019 which became effective February 13, 2019.

The Company issued

shares of common stock to the institutional investor as an initial commitment fee valued at $ 258,125 ,

fair value, and 812,500

shares of common stock are reserved for additional commitment fees to the institutional investor in accordance with the terms

of the purchase agreement.

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.

the period January 2019 through December 30, 2022, the institutional investor purchased 22,337,500

shares of common stock for proceeds of $ 23,773,924

and the Company issued 772,666

shares of common stock as additional commitment fee, valued at $ 1,575,509 ,

fair value, leaving 39,834

in reserve for additional commitment fees.

During the year ending December 30, 2022, the institutional investor did no t

purchase any shares of common stock.

All the registered shares under the purchase agreement have been issued as of December 31, 2022.

LIGHTWAVE LOGIC, INC.

6 unchanged sentences

Securities and Exchange Commission which became effective on July 9, 2021.

4, 2021, the Company entered into a purchase agreement with the institutional investor to sell up to $ 33,000,000 of common stock over

a 36-month period.

Concurrently with entering into the purchase agreement, the Company also entered into a registration rights agreement

which provides the institutional investor with certain registration rights related to the shares issued under the purchase agreement.

Pursuant to the purchase agreement, the Company issued 30,312 shares of common stock to the institutional investor as an initial commitment

fee valued at $ 279,174 , fair value, and 60,623 shares of common stock are reserved for additional commitment fees to the institutional

investor in accordance with the terms of the purchase agreement.

During the year ending December 31, 2021, pursuant to the purchase agreement,

the institutional investor purchased 1,227,511 shares of common stock for proceeds of $ 16,377,425

and the Company issued 30,086 shares of common stock as additional commitment fee, valued at $ 446,663 ,

fair value, leaving 30,537 in reserve for additional commitment fees.

During January and February 2022, pursuant

to the purchase agreement, the institutional investor purchased 400,000 shares of common stock for proceeds of $ 3,173,743 and the Company

issued 5,831 shares of common stock as additional commitment fee, valued at $ 53,123 , fair value, leaving 24,706 in reserve for additional

commitment fees.

4, 2021, the Company entered into a purchase agreement with the institutional investor to sell up to $ 33,000,000

of common stock over a 36-month period.

Concurrently with entering into the purchase agreement, the Company also entered into

a registration rights agreement which provides the institutional investor with certain registration rights related to the shares issued

under the purchase agreement.

Pursuant to the purchase agreement, the Company issued 30,312

shares of common stock to the institutional investor as an initial commitment fee valued at $ 279,174 ,

fair value, and 60,623

shares of common stock are reserved for additional commitment fees to the institutional investor in accordance with the terms

of the purchase agreement.

During the period October 4, 2021 through December 31, 2022, the institutional investor purchased 2,852,511

shares of common stock for proceeds of $ 29,152,692

and the Company issued 53,554

shares of common stock as additional commitment fee, valued at $ 656,372 ,

fair value, leaving 7,069

in reserve for additional commitment fees.

During the year ending December 31, 2022, pursuant to the purchase agreement, the institutional

investor purchased 1,625,000

shares of common stock for proceeds of $ 12,775,268

and the Company issued 23,468

shares of common stock as additional commitment fee, valued at $ 209,709 ,

During January and February 2023, pursuant to the purchase agreement, the institutional

investor purchased 300,000 shares of common stock for proceeds of $ 1,720,750 and the Company issued 3,161 shares of common stock

as additional commitment fee, valued at $ 19,377 , fair value, leaving 3,908

in reserve for additional commitment fees.

On December 9, 2022, the Company entered into a

sales agreement with an investment banking company.

In accordance with the terms of this sales agreement, the Company may offer and

sell shares of its common stock having an aggregate offering price of up to $ 35,000,000

from time to time through or to the investment banking company, as sales agent or principal.

Sales of shares of the Company’s common

stock, if any, may be made by any method deemed to be an “at the market offering”.

The sales agent will be entitled to

compensation under the terms of the sales agreement at a commission rate equal to 3 %

of the gross proceeds of the sales price of common stock that they sell.

NOTE 11 – STOCK BASED COMPENSATION

11 unchanged sentences

purchase 2,895,000 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.

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 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, 2021, options to purchase 3,663,248 shares of common stock have been issued and are outstanding and 3,210,250 shares

of common stock remain available for grants under the 2016 Plan.

Both plans are administered by the Board of Directors

or its compensation committee which determines the persons to whom awards will be granted, the number of awards to be granted, and the

specific terms of each grant.

Subject to the provisions regarding Ten Percent Shareholders, the exercise price per share of each option

cannot be less than 100% of the fair market value of a share of common stock on the date of grant.

Options granted under the

2016 Plan are generally exercisable for a period of 10 years from the date of grant and may vest on the grant date, another specified

date or over a period of time.

LIGHTWAVE LOGIC, INC.

2 unchanged sentences

NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)

During 2016, the Board of Directors of the Company

adopted the 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 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, 2022, options to

purchase 4,390,173 shares of common stock have been issued and are outstanding and 28,500 restricted shares of common stock have been

granted, 5,180 have been forfeited and 13,816 are non-vested.

As of December 31, 2022, 2,317,680 shares of common stock remain available

for grants under the 2016 Plan.

Both plans are administered by the Company’s

Board of Directors or its compensation committee which determines the persons to whom awards will be granted, the number of awards to

be granted, and the specific terms of each grant.

Subject to the provisions regarding Ten Percent Shareholders, (as defined in the 2016

Plan), the exercise price per share of each option cannot be less than 100% of the fair market value of a share of common stock

on the date of grant.

Options granted under the 2016 Plan are generally exercisable for a period of 10 years from the date of grant

and may vest on the grant date, another specified date or over a period of time.

The Company uses the Black-Scholes option pricing

7 unchanged sentences

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 2020:

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

The Black-Scholes option pricing model assumptions for 2021 are as follows:

no dividend yield in all years, expected volatility, based on the Company’s historical volatility, 70.4 % to 77.1 %, risk-free interest

rate between 1.15 % to 1.73 % and expected option life of 10 years.

The Black-Scholes option pricing model assumptions for 2020 are as follows:

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.

As of December 31, 2022, there was $ 1,623,565 of unrecognized

compensation expense related to non-vested market-based share awards that is expected to be recognized through September 30, 2023.

compensation expense related to non-vested market-based share awards that is expected to be recognized through December 2024.

Share-based compensation was recognized as follows:

2 unchanged sentences

2016 Equity Incentive Plan

2016 Equity Incentive Plan restricted stock awards

Total share-based compensation

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)

The following tables summarize all stock option and

1 unchanged sentence

Schedule of Non-Qualified Stock Options and Warrants Outstanding and Exercisable

Non-Qualified Stock Options and Warrants Outstanding and Exercisable

Weighted Average

13 unchanged sentences

$ 0.51 - $ 16.81

$ 5.81 - $ 10.86

$ 1.46 - $ 7.53

$ 0.64 - $ 5.81

Outstanding, December 31, 2022

$ 0.51 - $ 16.81

Exercisable, December 31, 2022

$ 0.51 - $ 16.81

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2021 AND 2020

NOTE 10 – STOCK BASED COMPENSATION (CONTINUED)

The aggregate intrinsic value of options and warrants

4 unchanged sentences

During the year ending December 31, 2022, 302,950 options were exercised for proceeds of

During the year

ending December 31, 2021, 677,000 warrants were exercised for proceeds of $ 428,350 and 445,252 options were exercised via cashless method.

$ 257,895 and 4,375 options were exercised via cashless method.

During the year ending December 31, 2022, 350,000 warrants were exercised

for proceeds of $ 396,000 .

During the year ending December 31, 2021, 2,046,250 options were exercised for proceeds of $ 1,950,875 .

the year ending December 31, 2021, 677,000 warrants were exercised for proceeds of $ 428,350 and 445,252 options were exercised via cashless

No options were exercised during 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, 2020, 2,073,052 warrants were exercised for proceeds

of $ 1,658,442 .

Schedule of Non-Qualified Stock Options and Warrants Outstanding, by Exercise Price Range

1 unchanged sentence

Stock Options and Warrants Outstanding

Number Outstanding

Weighted Average

Currently Exercisable

Exercise Price of Options

Price of Options and

December 31, 2022

1 unchanged sentence

$ 0.51 - $ 16.81

The fair value of restricted stock awards is estimated

by the market price of the Company’s common stock at the date of grant.

Restricted stock activity during the year ending December

31, 2022, 2021 and 2020 are as follows:

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2022, 2021 AND 2020

NOTE 11 – STOCK BASED COMPENSATION (CONTINUED)

Schedule of Nonvested Restricted Stock Units Activity

Weighted Average

Non-vested, beginning of period

Cancelled and forfeited

Non-vested, end of period

NOTE 12 – RELATED PARTY

At December 31, 2021 the Company had office expense

accruals of officers in the amount of $ 24,000 , a legal accrual to related party of $ 6,130 and accounting service fee accrual and expense

reimbursements to related parties of $ 2,059 .

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, 2022 the Company had a legal accrual

to a related party of $ 60,577 , fees and consulting expense accruals of advisory board members in the amount of $ 18,000 , fees to directors

in the amount of $ 13,500 , travel and office expense accruals of officers in the amount of $ 4,859 and accounting service fee accrual and

expense reimbursement to related parties of $ 3,233 .

At December 31, 2021 the Company had office expense accruals of officers in the amount

of $ 24,000 , a legal accrual to related party of $ 6,130 and accounting service fee accrual and expense reimbursements to related parties

NOTE 13 – RETIREMENT PLAN

5 unchanged sentences

December 31, 2021 to all eligible non-executive participants.

A contribution of $ 53,832 was charged to expense and accrued for the year

ending December 31, 2020 to all eligible non-executive participants.

NOTE 14 – SUBSEQUENT EVENTS

On February 28, 2023,

the Company entered into a purchase agreement with an institutional investor to sell up to $ 30,000,000

of common stock over a 36-month period.

Concurrently with entering into the purchase agreement, the Company also entered into

a registration rights agreement which provides the institutional investor with certain registration rights related to the shares issued

under the purchase agreement.

Pursuant to the purchase agreement, the institutional investor has agreed to purchase $ 3,000,000

of shares upon commencement.

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