Lightwave Logic, Inc. 10-K

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following management’s discussion and analysis of financial condition and results of operations provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following selected financial information is derived from our historical financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere within this Annual Report on Form 10-K and the "Forward-Looking Statements" explanation included elsewhere herein. Overview Lightwave Logic, Inc. is a development stage company moving toward commercialization of next generation electro-optic photonic devices made on its P 2 IC™ technology platform which we have detailed as: 1) Polymer Stack™, 2) Polymer Plus™, and 3) Polymer Slot™. Our unique polymer technology platform uses in-house proprietary high-activity and high-stability organic polymers. Electro-optical devices called modulators convert data from electric signals into optical signals for multiple applications. Our differentiation at the modulator device level is in higher speed, lower power consumption, simplicity of manufacturing, small footprint (size), and reliability. We have demonstrated higher speed and lower power consumption in packaged devices, and during 2022, we continued to make advances in techniques to translate material properties to efficient, reliable modulator devices with commercial foundries. We are currently focused on testing and demonstrating the simplicity of manufacturability and reliability of our devices, including in conjunction with the silicon photonics manufacturing ecosystem. In 2022 we discussed the addition of several silicon-based foundry partners to help scale in volume our polymer modulator devices. Silicon-based foundries are large semiconductor fabrication plants developed for the electronics IC business, that are now engaging with silicon photonics to increase their wafer throughput. Partnering with silicon-based foundries not only demonstrates that our polymer technology can be transferred into standard production lines using standard equipment, it also allows us to efficiently utilize our capital. The foundry partnerships will allow us to scale our high-performance polymer optical engines quickly and efficiently. Our extremely strong and broad patent portfolio allows us to optimize our business model in three areas: 1) Traditional focus on product development, 2) Patent licensing and 3) Technology transfer to foundries. We are continually looking to strengthen our patent portfolio both by internal inventions and acquisition of intellectual property. We are initially targeting applications in fiber optic data communications and telecommunications markets and are exploring other applications that include automotive/LIDAR, sensing, displays etc., for our polymer technology platform. Our goal is to have our unique polymer technology platform become ubiquitous. Our business strategy anticipates that our revenue stream will be derived from one or some combination of the following: (i) technology licensing for specific product application; (ii) joint venture relationships with significant industry leaders; and (iii) the production and direct sale of our own electro-optic device components. Our objective is to be a leading provider of proprietary technology and know-how in the electro-optic device market. In order to meet this objective, we intend to continue to: · Further the development of proprietary organic electro-optic polymer material systems   · Develop photonic devices based on our P 2 IC™ technology   · Develop proprietary intellectual property   · Grow our commercial device development capabilities  45 · Partner with silicon-based foundries who can scale volume quickly  · Grow our product reliability and quality assurance capabilities   · Grow our optoelectronic packaging and testing capabilities   · Grow our commercial material manufacturing capabilities   · Maintain/develop strategic relationships with major telecommunications and data communications companies to further the awareness and commercialization of our technology platform   · Add high-level personnel with industrial and manufacturing experience in key areas of our materials and device development programs.   Create Organic Polymer-Enabled Electro-Optic Modulators We intend to utilize our proprietary optical polymer technology to create an initial portfolio of commercial electro-optic polymer product devices with applications for various markets, including telecommunications, data communications and data centers. These product devices will be part of our proprietary photonics integrated circuit (PIC) technology platform . We expect our initial modulator products will operate at symbol rates at least 112 Gigabaud which is roughly 200Gbps when utilized with PAM4 encoding schemes. Our devices are highly linear, and can also enable the performance required to take advantage of more advance complex encoding schemes if required. Capital Requirements As a development stage company, we do not generate revenues. We have incurred substantial net losses since inception. We have satisfied our capital requirements since inception primarily through the issuance and sale of our common stock. 46 Results of Operations Comparison of year ended December 31, 2022 to year ended December 31, 2021 and year ended December 31, 2021 to year ended December 31, 2020 Revenues As a development stage company, we had no revenues during the years ended December 31, 2022, December 31, 2021 and December 31, 2020. 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. Operating Expenses For the For the Percent Year Ending Year Ending Change from Change from December 31, 2022 December 31, 2021 Prior Year Prior Year Research and development $ 12,805,374 $ 12,476,040 $ 329,334 3 % General and administrative 4,334,290 4,520,403 (186,113 ) -4 % $ 17,139,664 $ 16,996,443 $ 143,221 1 % For the For the Percent Year Ending Year Ending Change from Change from December 31, 2021 December 31, 2020 Prior Year Prior Year Research and development $ 12,476,040 $ 4,590,545 $ 7,885,495 172 % General and administrative 4,520,403 2,009,429 2,510,974 125 % $ 16,996,443 $ 6,599,974 $ 10,396,469 158 % Research and development expenses increased for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to increases in research and development non-cash stock option amortization, prototype device development expenses, research and development salary expenses, laboratory and wafer fabrication materials and supplies, research and development consulting expenses, depreciation and research and development travel expenses offset by a decrease in expense for cashless option exercises and research and development bonus expenses. Research and development non-cash stock option amortization expenses increased by $3,732,646 in the year ended December 31, 2022, compared to the same period in 2021. Prototype device development expenses increased by $1,460,419 in the year ended December 31, 2022, compared to the same period in 2021. Research and development salary expenses increased by $617,627 in the year ended December 31, 2022, compared to the same period in 2021. Laboratory and wafer fabrication materials and supplies increased by $242,737 in the year ended December 31, 2022, compared to the same period in 2021. Research and development consulting expenses increased by $224,435 in the year ended December 31, 2022, compared to the same period in 2021. Depreciation expenses increased by $173,206 in the year ended December 31, 2022, compared to the same period in 2021. Research and development travel expenses increased by $147,136 in the year ended December 31, 2022, compared to the same period in 2021. The expense for research and development cashless option exercises decreased by $3,382,582 in the year ended December 31, 2022, compared to the same period in 2021. Research and development bonus expenses decreased by $3,003,169 in the year ended December 31, 2022, compared to the same period in 2021. Research and development expenses increased for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily due to the research and development expense for cashless option exercises and increases in research and development bonus and salary expenses, prototype device development expenses, non-cash stock option and warrant amortization, laboratory and wafer fabrication materials and supplies, operations committee fees, depreciation and research and development travel expenses. 47 The research and development expense for cashless option exercises for the year ended December 31, 2021 were $3,490,324. There was no expense for cashless option exercises for the year ended December 31, 2020. Research and development bonus and salary expenses increased by $3,300,257 in the year ended December 31, 2021, compared to the same period in 2020 primarily for bonus expenses. Prototype device development expenses increased by $368,483 in the year ended December 31, 2021, compared to the same period in 2020. Non-cash stock option and warrant amortization expenses increased by $349,059 in the year ended December 31, 2021, compared to the same period in 2020. Laboratory and wafer fabrication materials and supplies increased by $128,481 in the year ended December 31, 2021, compared to the same period in 2020. Depreciation expenses increased by $92,404 in the year ended December 31, 2021, compared to the same period in 2020. Research and development travel expenses increased by $41,741 in the year ended December 31, 2021, compared to the same period in 2020. We expect to continue to incur substantial research and development expense developing and commercializing our photonic devices, and electro-optic materials platform. These expenses will increase as a result of accelerated development effort to support commercialization of our non-linear optical polymer materials technology; to build photonic device prototypes; working with semiconductor foundries; hiring additional technical and support personnel; engaging senior technical advisors; pursuing other potential business opportunities and collaborations; customer testing and evaluation; and incurring related operating expenses. General and administrative expenses decreased for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to decreases in general and administrative bonus and salary expenses and general and administrative expense for cashless option exercises offset by increases general and administrative non-cash stock option amortization, legal expenses, director fees, insurance and general and administrative travel expenses. General and administrative bonus and salary expenses decreased by $2,054,916 in the year ended December 31, 2022, compared to the same period in 2021 primarily for bonus expenses in the year ended December 31, 2021. The expense for general and administrative cashless option exercises decreased by $170,137 in the year ended December 31, 2022, compared to the same period in 2021. General and administrative non-cash stock option amortization increased by $1,138,708 in the year ended December 31, 2022, compared to the same period in 2021. Legal expenses increased by $417,624 in the year ended December 31, 2022, compared to the same period in 2021. Director fees increased by $149,750 in the year ended December 31, 2022, compared to the same period in 2021. Insurance expenses increased by $136,771 in the year ended December 31, 2022, compared to the same period in 2021. General and administrative travel expenses increased by $75,652 in the year ended December 31, 2022, compared to the same period in 2021. General and administrative expenses increased for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily due to general and administrative bonus expenses, general and administrative expense for cashless option exercises and increases in investor expenses, general and administrative consulting fees, non-cash stock option amortization, legal fees, general and administrative travel expenses and director and officer insurance. General and administrative bonus and salary expenses increased by $2,015,959 in the year ended December 31, 2021, compared to the same period in 2020 primarily for bonus expenses. The general and administrative expense for cashless option exercises for the year ended December 31, 2021 were $182,501. There was no expense for cashless option exercises for the year ended December 31, 2020. Investor expenses increased by $108,341 in the year ended December 31, 2021, compared to the same period in 2020 primarily for the expenses to uplist the Company to the Nasdaq Capital Market. Compensation consulting expenses increased by $53,500 in the year ended December 31, 2021, compared to the same period in 2020. Non-cash stock option amortization expenses increased by $49,739 in the year ended December 31, 2021, compared to the same period in 2020. Legal expenses increased by $44,718 in the year ended December 31, 2021, compared to the same period in 2020 primarily for the expenses to uplist the Company to the Nasdaq Capital Market. General and administrative travel expenses increased by $33,260 in the year ended December 31, 2021, compared to the same period in 2020. Director and officer insurance increased by $32,390 in the year ended December 31, 2021, compared to the same period in 2020. 48 Other Income (Expense) For the For the Percent Year Ending Year Ending Change from Change from December 31, 2022 December 31, 2021 Prior Year Prior Year Other Income/(Expense) $ (90,816 ) $ (1,634,938 ) $ 1,544,122 -94 % For the For the Percent Year Ending Year Ending Change from Change from December 31, 2021 December 31, 2020 Prior Year Prior Year Other Income/(Expense) $ (1,634,938 ) $ (115,590 ) $ (1,519,348 ) 1314 % Other income (expenses) decreased for the year ended December 31, 2022, as compared to the year ended December 31, 2021, primarily due to a decrease in commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement in the amount of $1,849,755 offset by the forgiveness by the Small Business Administration during 2021 of a loan funding from the Paycheck Protection Program n the amount of $410,700. Other income (expenses) increased for the year ended December 31, 2021, as compared to the year ended December 31, 2020, primarily due to an increase in commitment fee in the amount of $1,943,098 associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement offset by the Paycheck Protection Program loan forgiveness January 22, 2021 in the amount of $410,700. Net Loss For the For the Percent Year Ending Year Ending Change from Change from December 31, 2022 December 31, 2021 Prior Year Prior Year Net Loss $ 17,230,480 $ 18,631,381 $ (1,400,901 ) -8 % For the For the Percent Year Ending Year Ending Change from Change from December 31, 2021 December 31, 2020 Prior Year Prior Year Net Loss $ 18,631,381 $ 6,715,564 $ 11,915,817 177 % Net loss was $17,230,480 and $18,631,381 for the year ended December 31, 2022 and 2021, respectively, for a decrease of $1,400,901 due primarily to decreases in expense for cashless option exercises, bonus expenses and commitment fee associated with the purchase of shares by an institutional investor for sale under a stock purchase agreement offset by increases in non-cash stock option amortization, prototype device development expenses, research and development salary expenses, legal expenses, the forgiveness by the Small Business Administration during 2021 of a loan funding from the Paycheck Protection Program, laboratory and wafer fabrication materials and supplies, research and development consulting fees, travel expenses, depreciation, director fees and insurance expenses. Net loss was $18,631,381 and $6,715,564 for the year ended December 31, 2021 and 2020, respectively, for an increase of $11,915,817, due primarily to bonus and salary expenses, the expense for cashless option exercises and increases in commitment fee, non-cash stock option and warrant amortization, prototype device development expenses, laboratory and wafer fabrication materials and supplies, investor expenses, operations committee fees, depreciation, compensation consulting fees, travel expenses, legal expenses and director and officer insurance. 49 Significant Accounting Policies Our Company’s accounting policies are more fully described in Note 1 of Notes to Financial Statements. As disclosed in Note 1 of Notes to Financial Statements, 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 our management’s best knowledge of current events and actions our Company may undertake in the future, actual results could differ from the estimates. Liquidity and Capital Resources Our primary source of operating cash inflows was proceeds from the sale of common stock to Lincoln Park, an institutional investor, pursuant to purchase agreements with Lincoln Park (the institutional investor) as described in Note 10 to the Financial Statements and proceeds received pursuant to the exercise of options and warrants. All of the registered shares under the January 21, 2019 purchase agreement with Lincoln Park have been issued as of June 30, 2021. On July 2, 2021, the Company filed a $100 million universal shelf registration statement which became effective on July 9, 2021. On October 4, 2021, our Company entered into the 2021 Purchase Agreement to sell up to $33 million of common stock over a 36-month period, with $2,126,557 remaining on the 2021 Purchase Agreement as of the date of this filing. On February 28, 2023, our Company entered into the 2023 Purchase Agreement to sell up to $30 million of common stock over a 36-month period, with $30 remaining on the 2023 Purchase Agreement as of the date of this filing, and on December 9, 2022, our Company entered into the Roth Sales Agreement with Roth Capital , as sales agent, whereby pursuant to the Roth Sales Agreement, our Company may offer and sell up to $35,000,000 in shares of our common stock, from time to time through Roth Capital. As of the date of this filing $35 million remains available to our Company pursuant to the Roth Sales Agreement. During the year ended December 31, 2022, the Company received $12,775,268 in proceeds pursuant to the 2021 purchase agreement with the institutional investor and $653,895 in proceeds pursuant to the exercise of options and warrants. During the year ended December 31, 2021, the Company received $30,350,674 in proceeds pursuant to the purchase agreements with the institutional investor and $2,379,225 in proceeds pursuant to the exercise of options and warrants. During the year ended December 31, 2020, we received $5,173,300 in proceeds pursuant to the January 2019 purchase agreement with the institutional investor and $1,658,442 in proceeds from exercise of warrants. Additionally, on April 24, 2020, we received $410,700 in loan funding from the Paycheck Protection Program, as described in Note 8 to the Financial Statements. The loan was forgiven by the Small Business Administration in its entirety on January 22, 2021. During the year ended December 31, 2022, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to vendors including prototypes development and foundries expenses, third-party service providers and payroll taxes related to cashless option exercise. During the year ended December 31, 2021, our primary sources of cash outflows from operations included payroll and bonus, payroll taxes related to cashless option exercise, rent, utilities, payments to vendors including prototypes development and foundries expenses and third-party service providers. During the year ended December 31, 2020, our primary sources of cash outflows from operations included payroll, rent, utilities, payments to vendors and third-party service providers. Sources and Uses of Cash Our future expenditures and capital requirements will depend on numerous factors, including: the progress of our research and development efforts; 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; 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. We expect the 2021 Purchase Agreement, the 2023 Purchase Agreement and the Roth Sales Agreement (all as more fully described below) to provide us with sufficient funds to maintain our operations over that period of time. Our current cash position enables us to finance our operations through April 2024 before we will be required to replenish our cash reserves pursuant to our 2021 Purchase Agreement, the 2022 Purchase Agreement or the Roth Sales Agreement. Our cash requirements are expected to increase at a rate consistent with our 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. 50 We expect that our cash used in operations will continue to increase during 2023 and beyond as a result of the following planned activities: · The addition of management, sales, marketing, technical and other staff to our workforce;   · Increased spending for the expansion of our research and development efforts, including purchases of additional laboratory and production equipment;   · Increased spending in marketing as our products are introduced into the marketplace;   · Partnering with commercial foundries to implement our electro-optic polymers into accepted PDKs by the foundries;   · Developing and maintaining collaborative relationships with strategic partners;   · Developing and improving our manufacturing processes and quality controls; and   · Increases in our general and administrative activities related to our operations as a reporting public company and related corporate compliance requirements.   2021 and 2023 Purchase Agreements - Lincoln Park On October 4, 2021 , our Company entered into the 2021 Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $33 million of our common stock (subject to certain limitations) from time to time over a 36-month period. On February 28, 2023, our Company entered into the 2023 Purchase Agreement with Lincoln Park, pursuant to which Lincoln Park agreed to purchase from us up to $30 million of our common stock (subject to certain limitations) from time to time over a 36-month period. Pursuant to each of the 2021 Purchase Agreement, and the 2023 Purchase Agreement, Lincoln Park is obligated to make purchases as the Company directs in accordance with each of the applicable purchase agreements, which may be terminated by the Company at any time, without cost or penalty. Sales of shares will be made in specified amounts and at prices that are based upon the market prices of our common stock immediately preceding the sales to Lincoln Park. We expect this financing to provide us with sufficient funds to maintain our operations for the foreseeable future. With the additional capital, we expect to achieve a level of revenues attractive enough to fulfill our development activities and adequate enough to support our business model for the foreseeable future. There are no trading volume requirements or restrictions under either of the 2021 Purchase Agreement or the 2023 Purchase Agreement, and we will control the timing and amount of any sales of our common stock to Lincoln Park. Lincoln Park has no right to require any sales by us, but is obligated to make purchases from us as we direct in accordance with each of the applicable purchase agreements. We can also accelerate the amount of common stock to be purchased under certain circumstances. There are no limitations on the use of proceeds, financial or business covenants, restrictions on future financings (other than restrictions on the Company’s ability to enter into a similar type of agreement or equity line of credit during the term, excluding an at-the-market transaction with a registered broker-dealer), rights of first refusal, participation rights, penalties or liquidated damages in either of the purchase agreements. Roth Sales Agreement – Roth Capital On December 9, 2022, we entered into the Roth Sales Agreement with Roth Capital, as sales agent. Pursuant to the Roth Sales Agreement, our Company may offer and sell up to $35,000,000 in shares of our common stock, from time to time through Roth Capital. Upon delivery of a placement notice based on our Company’s instructions and subject to the terms and conditions of the Roth Sales Agreement, Roth Capital may sell the shares by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act, including sales made directly on or through The Nasdaq Capital Market, on any other existing trading market for the Company’s common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, or by any other method permitted by law, including negotiated transactions, subject to the prior written consent of our Company. We are not obligated to make any sales of shares under the Roth Sales Agreement. The Company or Roth Capital may suspend or terminate the offering of shares upon notice to the other party, subject to certain conditions. Roth Capital will act as sales agent on a commercially reasonable efforts basis consistent with its normal trading and sales practices and applicable state and federal law, rules and regulations and the rules of Nasdaq. We have agreed to pay Roth Capital commissions for its services of acting as agent of 3.0% of the gross proceeds from the sale of the shares pursuant to the Roth Sales Agreement. The amount of proceeds we receive from the Roth Sales Agreement, if any, will depend upon the number of shares of our common stock sold and the market price at which they are sold. There can be no assurance that we will be able to sell any shares under or fully utilize the Roth Sales Agreement. Roth Capital is not required to sell any specific number of shares of our common stock under the Roth Sales Agreement. We intend to use net proceeds from the Roth Sales Agreement for general corporate purposes, including, without limitation, sales and marketing activities, product development, making acquisitions of assets, businesses, companies or securities, capital expenditures, and for working capital needs. 51 We cannot assure you that we will meet the conditions of either of the purchase agreements with Lincoln Park in order to obligate Lincoln Park to purchase our shares of common stock, and we cannot assure you that we will be able to sell any shares under or fully utilize the Roth Sales Agreement. In the event we fail to do so, and other adequate funds are not available to satisfy long-term capital requirements, or if planned revenues are not generated, we may be required to substantially limit our operations. This limitation of operations may include reductions in capital expenditures and reductions in staff and discretionary costs. Analysis of Cash Flows For the year ended December 31, 2022 Net cash used in operating activities was $10,465,880 for the year ended December 31, 2022, primarily attributable to the net loss of $17,230,480 adjusted by $5,813,628 in options issued for services, $91,713 amortization of deferred compensation, $209,709 in common stock issued for services, $1,045,208 in depreciation expenses and patent amortization expenses, ($379,037) in prepaid expenses, ($135,661) in accounts payable, accrued bonuses and accrued expenses and $119,040 in cashless option exercise expense. Net cash used in operating activities consisted of payments for research and development, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business infrastructure. Net cash used by investing activities was $2,209,722 for the year ended December 31, 2022, consisting of $260,415 in cost for intangibles, $1,307,187 in asset additions for the Colorado headquarter facility and labs and $642,120 in a loan issuance. Net cash provided by financing activities was $13,345,141 for the year ended December 31, 2022 and consisted of $653,895 in proceeds from exercise of options and warrants, $12,775,268 in proceeds from resale of common stock to an institutional investor offset by $84,022 in cashless option exercise tax payments. On December 31, 2022, our cash and cash equivalents totaled $24,102,151, our assets totaled $29,263,472, our liabilities totaled $1,710,449 and we had stockholders’ equity of $27,553,023. For the year ended December 31, 2021 Net cash used in operating activities was $10,038,626 for the year ended December 31, 2021, primarily attributable to the net loss of $18,631,381 adjusted by $11,001 in warrants issued for services, $1,022,985 in options issued for services, $2,059,464 in common stock issued for services, $878,520 in depreciation expenses and patent amortization expenses, ($410,700) in Paycheck Protection Program loan forgiveness, $334,877 in prepaid expenses, $1,023,785 in accounts payable, accrued bonuses and accrued expenses and $3,672,823 in cashless option exercise expense. Net cash used in operating activities consisted of payments for research and development, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business infrastructure. Net cash used by investing activities was $1,116,179 for the year ended December 31, 2021, consisting of $18,649 in cost for intangibles and $1,097,530 in asset additions primarily for the Colorado headquarter facility and labs. Net cash provided by financing activities was $31,280,827 for the year ended December 31, 2021 and consisted of $2,379,225 in proceeds from exercise of options and warrants, $30, 350,674 in proceeds from resale of common stock to an institutional investor offset by $1,435,965 in cashless option exercise tax payments and $13,107 repayment of equipment purchased. On December 31, 2021, our cash and cash equivalents totaled $23,432,612, our assets totaled $27,228,575, our liabilities totaled $2,024,303 and we had stockholders’ equity of $25,204,272. 52 For the year ended December 31, 2020 Net cash used in operating activities was $4,873,863 for the year ended December 31, 2020, primarily attributable to the net loss of $6,715,564 adjusted by $95,774 in warrants issued for services, $539,414 in options issued for services, $116,366 in common stock issued for services, $784,419 in depreciation expenses and patent amortization expenses, ($194,636) in prepaid expenses, $89,664 in accounts payable and accrued expenses and $410,700 in proceeds from Paycheck Protection Plan refundable advance. Net cash used in operating activities consisted of payments for research and development, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business infrastructure. Net cash used by investing activities was $217,984 for the year ended December 31, 2020, consisting of $59,923 in cost for intangibles and $158,061 in asset additions primarily for the new Colorado headquarter facility and labs. Net cash provided by financing activities was $6,162,093 for the year ended December 31, 2020 and consisted of $1,658,442 in proceeds from exercise of warrants, $5,173,300 in proceeds from resale of common stock to an institutional investor offset by $669,649 repayment of equipment purchased. On December 31, 2020, our cash and cash equivalents totaled $3,306,590, our assets totaled $7,366,778, our liabilities totaled $1,591,332 and we had stockholders’ equity of $5,775,446. Contractual Obligations See "Note 7–Commitments" of the notes to the financial statements contained elsewhere within this Annual Report on Form 10-K for a discussion of our operating lease for office and laboratory space.