PINX:LWLG Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

(Mark One)


ý  

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2012

OR

¨  

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____________to _____________


Commission File Number 0-52567


Lightwave Logic, Inc.

(Exact name of registrant as specified in its charter)


Nevada

(State or other jurisdiction of
Incorporation or Organization)

82-049-7368

 (I.R.S. Employer Identification No.)


111 Ruthar Drive
Newark, DE
(Address of principal executive offices)

__19711____
(Zip Code)

(302) 356-2717

(Registrant’s telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                      Yes  x  No ¨


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).            Yes  x No  ¨


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act (Check one):





Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.)                    Yes ¨   No x


The number of shares of the registrants Common Stock outstanding as of August 10, 2012 was 49,506,837.








TABLE OF CONTENTS

PART I FINANCIAL INFORMATION


 

 

Page

 

 

 

Part I

Financial Information

2

 

 

 

 

 

Item 1

Financial Statements

2

 

 

 

 

 

Item 2

Management’s Discussion and Analysis of Financial
Condition and Results of Operations

34

 

 

 

 

 

Item 4

Controls and Procedures

50

 

 

 

 

Part II

Other Information

52

 

 

 

 

 

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

52

 

 

 

 

 

Item 6

Exhibits

53

 

 

 

 

 

 

Signatures

54






-1-







PART I – FINANCIAL INFORMATION


Item 1

Financial Information



















LIGHTWAVE LOGIC, INC.

(A Development Stage Company)


FINANCIAL STATEMENTS


JUNE 30, 2012


(UNAUDITED)























-2-



LIGHTWAVE LOGIC, INC.

(A Development Stage Company)







CONTENTS



 

PAGE

 

 

BALANCE SHEETS

4

 

 

STATEMENTS OF OPERATIONS

5

 

 

STATEMENT OF STOCKHOLDERS’ EQUITY

6 – 10

 

 

STATEMENTS OF CASH FLOWS

11 - 12

 

 

NOTES TO FINANCIAL STATEMENTS

13 - 33






-3-



LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

BALANCE SHEETS





 

 

June 30, 2012

 

December 31, 2011

 

 

(Unaudited)

 

(Audited)

ASSETS

 

 

 

 

 CURRENT ASSETS

 

 

 

 

 Cash and cash equivalents

 

$

3,623,022

 

$

359,824

 Prepaid expenses and other current assets

 

123,424

 

41,756

 

 

3,746,446

 

401,580

 

 

 

 

 

 PROPERTY AND EQUIPMENT - NET

 

200,501

 

88,751

 

 

 

 

 

 OTHER ASSETS

 

 

 

 

 Intangible assets

 

488,846

 

431,104

 

 

 

 

 

 TOTAL ASSETS

 

$

4,435,793

 

$

921,435

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 CURRENT LIABILITIES

 

 

 

 

 Accounts payable

 

$

92,118

 

$

139,833

 Accounts payable - related party

 

29,178

 

22,628

 Accrued expenses

 

86,608

 

75,965

 

 

 

 

 

 TOTAL LIABILITIES

 

207,904

 

238,426

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

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

 

 

 

 

 No shares issued or outstanding

 

 

 Common stock $0.001 par value, 100,000,000 authorized

 

 

 

 

  49,506,837 and 45,337,092 issued and outstanding at

 

 

 

 

  June 30, 2012 and December 31, 2011

 

49,507 

 

45,337 

 Additional paid-in-capital

 

29,952,660 

 

24,513,000 

 Accumulated deficit

 

(15,827)

 

(15,827)

 Deficit accumulated during development stage

 

(25,758,451)

 

(23,859,501)

 

 

 

 

 

 TOTAL STOCKHOLDERS' EQUITY

 

4,227,889 

 

683,009 

 

 

 

 

 

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

4,435,793 

 

$

921,435 



See accompanying notes to these financial statements.


-4-



LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND SIX MONTHS ENDING JUNE 30, 2012 AND 2011 AND FOR THE PERIOD

JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012

(UNAUDITED)






 

 

 Cumulative

 

 For the Three

 

 For the Three

 

 For the Six

 

 For the Six

 

 

 Since

 

 Months Ending

 

 Months Ending

 

 Months Ending

 

 Months Ending

 

 

Inception

 

June 30, 2012

 

June 30, 2011

 

June 30, 2012

 

June 30, 2011

 

 

 

 

 

 

 

 

 

 

 

NET SALES

 

$

3,200 

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

COST AND EXPENSE

 

 

 

 

 

 

 

 

 

 

Research and development

 

11,592,103 

 

455,253 

 

498,041 

 

927,662 

 

964,904 

General and administrative

 

13,836,200 

 

553,860 

 

389,535 

 

851,050 

 

848,780 

 

 

25,428,303 

 

1,009,113 

 

887,576 

 

1,778,712 

 

1,813,684 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(25,425,103)

 

(1,009,113)

 

(887,576)

 

(1,778,712)

 

(1,813,684)

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

Interest income

 

30,820 

 

124 

 

149 

 

322 

 

327 

Dividend income

 

1,551 

 

 

 

 

Realized gain on investment

 

3,911 

 

 

 

 

Realized gain on disposal of assets

 

637 

 

 

 

 

Litigation settlement

 

(47,500)

 

 

 

 

 

 

 

 

Interest expense and commitment fee

 

(322,767)

 

(18,615)

 

(166,475)

 

(120,560)

 

(166,540)

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(25,758,451)

 

$

(1,027,604)

 

$

(1,053,902)

 

$

(1,898,950)

 

$

(1,979,897)

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Share

 

 

 

$

(0.02)

 

$

(0.02)

 

$

(0.04)

 

$

(0.04)

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Weighted Average Number of Shares

 

49,055,806

 

44,090,488

 

47,893,907

 

44,028,664



See accompanying notes to these financial statements.


-5-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012

(UNAUDITED)







 

 

 

 

 

 

 

 

 Subscription

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Receivable/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

 

 

 

 

 

 

Deficit Accumulated

 

 

 

 

Number of

 

Common

 

Paid-in

 

for Issuance

 

Deferred

 

Unrealized Loss

 

Accumulated

 

During

 

 

 

 

Shares

 

Stock

 

Capital

 

 of Common Stock

 

Charges

 

on Securities

 

Deficit

 

Development Stage

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ENDING BALANCE AT DECEMBER 31, 2003

 

100

$

1

$

$

$

$

$

(15,827)

$

$

(15,826)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retroactive recapitalization upon reverse acquisition

 

706,973

 

706

 

(706)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT JANUARY 1, 2004

 

707,073

 

707

 

(706)

 

 

 

 

(15,827)

 

 

(15,826)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued to founders

 

13,292,927

 

13,293

 

(13,293)

 

 

 

 

 

 

Common stock issued for future services in July 2004 at $0.16/share

 

1,600,000

 

1,600

 

254,400 

 

 

 

 

 

 

256,000 

Common stock issued at merger

 

2,000,000

 

2,000

 

(2,000)

 

 

 

 

 

 

Common stock issued for future services in August 2004 at $0.12/share

 

637,500

 

638

 

74,362 

 

 

 

 

 

 

75,000 

Conversion of note payable in December 2004 at $0.16/share

 

187,500

 

187

 

29,813 

 

 

 

 

 

 

30,000 

Net loss for the year ended December 31, 2004

 

-

 

-

 

 

 

 

 

 

(722,146)

 

(722,146)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2004

 

18,425,000

 

18,425

 

342,576 

 

 

 

 

(15,827)

 

(722,146)

 

(376,972)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in private placement in April 2005 at $0.25/share

 

4,000,000

 

4,000

 

996,000 

 

 

 

 

 

 

1,000,000 

Conversion of notes payable in May 2005 at $0.16/share

 

3,118,750

 

3,119

 

495,881 

 

 

 

 

 

 

499,000 

Subscription receivable

 

-

 

-

 

 

(6,500)

 

 

 

 

 

(6,500)

Common stock issued for future services in August 2005, valued at $2.79/share

 

210,000

 

210

 

585,290 

 

 

 

 

 

 

585,500 

Common stock issued for future services in August 2005, valued at $2.92/share

 

200,000

 

200

 

583,800 

 

 

 

 

 

 

584,000 

Warrants issued for services in May 2005, vested during 2005, valued at $1.13/share

 

-

 

-

 

37,000 

 

 

 

 

 

 

37,000 

Warrants issued for services in September 2005, vested during 2005, valued at $1.45/share

 

-

 

-

 

24,200 

 

 

 

 

 

 

24,200 

Warrants issued for services in October 2005, vested during 2005, valued at $0.53/share

 

-

 

-

 

15,900 

 

 

 

 

 

 

15,900 

Warrants issued for future services in December 2005, vested during 2005,  valued at $1.45/share

 

-

 

-

 

435,060 

 

 

 

 

 

 

435,060 

Deferred charges for common stock issued for future services in August 2005, valued at $2.92/share

 

-

 

-

 

 

 

(584,000)

 

 

 

 

(584,000)

Amortization of deferred charges

 

-

 

-

 

 

 

265,455 

 

 

 

 

265,455 

Exercise of warrants in December 2005 at $0.25/share

 

300,000

 

300

 

74,700 

 

 

 

 

 

 

75,000 

Net loss for the year ended December 31, 2005

 

-

 

-

 

 

 

 

 

 

(1,721,765)

 

(1,721,765)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2005

 

26,253,750

 

26,254

 

3,590,407 

 

(6,500)

 

(318,545)

 

 

(15,827)

 

(2,443,911)

 

831,878 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in private placement during 2006 at $0.50/share

 

850,000

 

850

 

424,150 

 

 

 

 

 

 

425,000 

Common stock issued for future services in February 2006, valued at $0.90/share

 

300,000

 

300

 

269,700 

 

 

 

 

 

 

270,000 

Common stock issued for future services in May 2006, valued at $1.55/share

 

400,000

 

400

 

619,600 

 

 

 

 

 

 

620,000 

Common stock issued for future services in June 2006, valued at $1.45/share

 

25,000

 

25

 

36,225 

 

 

 

 

 

 

36,250 

Common stock issued for future services in November 2006, valued at $0.49/share

 

60,000

 

60

 

29,340 

 

 

 

 

 

 

29,400 

Warrants issued for services in September 2005, vested during 2006, valued at $1.45/share

-

 

-

 

66,500 

 

 

 

 

 

 

66,500 

Warrants issued for future services in June 2006, vested during 2006, valued at $1.55/share

-

 

-

 

465,996 

 

 

 

 

 

 

465,996 

Options issued for services in February 2006, vested during 2006, valued at $1.01/share

-

 

-

 

428,888 

 

 

 

 

 

 

428,888 

Contributed capital related to accrued interest

 

-

 

-

 

35,624 

 

 

 

 

 

 

35,624 

Subscription receivable

 

-

 

-

 

 

6,500 

 

 

 

 

 

6,500 

Amortization of deferred charges

 

-

 

-

 

 

 

318,545 

 

 

 

 

318,545 

Unrealized gain (loss) on securities

 

-

 

-

 

 

 

 

(26,000)

 

 

 

(26,000)

Net loss for the year ending December 31, 2006

 

-

 

-

 

 

 

 

 

 

 

(2,933,809)

 

(2,933,809)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2006

 

27,888,750

$

27,889

$

5,966,430 

$

$

$

(26,000)

$

(15,827)

$

(5,377,720)

$

574,772 




See accompanying notes to these financial statements.


-6-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012 (CONTINUED)

(UNAUDITED)







 

 

 

 

 

 

 

 

 Subscription

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Receivable/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

 

 

 

 

 

 

Deficit Accumulated

 

 

 

 

Number of

 

 Common

 

 Paid-in

 

for Issuance

 

 Deferred

 

Unrealized Loss

 

Accumulated

 

During

 

 

 

 

Shares

 

 Stock

 

 Capital

 

 of Common Stock

 

 Charges

 

 on Securities

 

 Deficit

 

 Development Stage

 

 Total

BALANCE AT DECEMBER 31, 2006

 

27,888,750 

$

27,889 

$

5,966,430 

$

$

$

(26,000)

$

(15,827)

$

(5,377,720)

$

574,772 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in private placement during 2007 at $0.50/share

 

2,482,000 

 

2,482 

 

1,238,518 

 

 

 

 

 

 

1,241,000 

Common stock issued in private placement during 2007 at $0.60/share

 

1,767,540 

 

1,768 

 

1,058,756 

 

 

 

 

 

 

1,060,524 

Common stock subscription rescinded during 2007 at $0.50/share

 

(400,000)

 

(400)

 

(199,600)

 

 

 

 

 

 

(200,000)

Common stock issued for future services in February 2007, valued at $0.70/share

 

151,785 

 

152 

 

106,098 

 

 

 

 

 

 

106,250 

Common stock issued for future services in March 2007, valued at $0.58/share

 

1,000,000 

 

1,000 

 

579,000 

 

 

 

 

 

 

580,000 

Common stock issued for services and settlement for accounts payable in April 2007, valued at $0.35/share

100,000 

 

100 

 

34,900 

 

 

 

 

 

 

35,000 

Common stock issued for services in October 2007, valued at $0.68/share

 

150,000 

 

150 

 

101,850 

 

 

 

 

 

 

102,000 

Common stock issued for services in October 2007, valued at $0.90/share

 

150,000 

 

150 

 

134,850 

 

 

 

 

 

 

135,000 

Common stock issued for services in November 2007, valued at $0.72/share

 

400,000 

 

400 

 

287,600 

 

 

 

 

 

 

288,000 

Warrants issued for services in September 2005, vested during 2007, valued at $1.45/share

 

 

 

36,370 

 

 

 

 

 

 

36,370 

Warrants issued for services in March 2007, vested during 2007, valued at $0.63/share

 

 

 

52,180 

 

 

 

 

 

 

52,180 

Warrants issued for services in April 2007, vested during 2007, valued at $0.69/share

 

 

 

293,476 

 

 

 

 

 

 

293,476 

Warrants issued for services in April 2007, vested during 2007, valued at $0.63/share

 

 

 

140,490 

 

 

 

 

 

 

140,490 

Warrants issued for services in May 2007, vested during 2007, valued at $0.56/share

 

 

 

52,946 

 

 

 

 

 

 

52,946 

Warrants issued for services in October 2007, vested during 2007, valued at $0.61/share

 

 

 

61,449 

 

 

 

 

 

 

61,449 

Warrants issued for services in October 2007, vested during 2007, valued at $0.78/share

 

 

 

52,292 

 

 

 

 

 

 

52,292 

Warrants issued for services in December 2007, vested during 2007, valued at $0.55/share

 

 

 

1,159 

 

 

 

 

 

 

1,159 

Options issued for services in February 2006, vested during 2007, valued at $1.01/share

 

 

 

17,589 

 

 

 

 

 

 

17,589 

Options issued for services in February 2006, vested during 2007, valued at $1.09/share

 

 

 

43,757 

 

 

 

 

 

 

43,757 

Options issued for services in November 2007, vested during 2007, valued at $0.60/share

 

 

 

41,653 

 

 

 

 

 

 

41,653 

Warrants issued for future services in April 2007, vested during 2007, valued at $0.70/share

 

 

 

348,000 

 

 

 

 

 

 

348,000 

Deferred charges for common stock issued for future services in March 2007,  valued at $0.58/share

 

 

 

 

 

(928,000)

 

 

 

 

(928,000)

Amortization of deferred charges

 

 

 

 

 

773,333 

 

 

 

 

773,333 

Unrealized gain (loss) on securities

 

 

 

 

 

 

(32,610)

 

 

 

(32,610)

Net loss for the year ending December 31, 2007

 

 

 

 

 

 

 

 

(4,223,449)

 

(4,223,449)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2007

 

33,690,075 

 

33,690 

 

10,449,763 

 

 

(154,667)

$

(58,610)

 

(15,827)

 

(9,601,169)

 

653,180 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in private placement during 2008 at $0.60/share

 

690,001 

 

690 

 

413,310 

 

 

 

 

 

 

414,000 

Common stock issued for services in March 2008, valued at $0.75/share

 

100,000

 

100 

 

74,900 

 

 

 

 

 

 

75,000 

Common stock issued for services in August 2008, valued at $1.80/share

 

200,000

 

200 

 

359,800 

 

 

 

 

 

 

360,000 

Exercise of warrants at $0.25/share

 

320,000

 

320 

 

79,680 

 

 

 

 

 

 

80,000 

Exercise of warrants at $0.25/share, pursuant to November 2008 adjusted stock offering

 

641,080

 

641 

 

159,629 

 

 

 

 

 

 

 

 

 

 

 

160,270 

Exercise of warrants at $0.50/share

 

270,000

 

270 

 

134,730 

 

 

 

 

 

 

135,000 

Warrants issued for services in September 2005, vested during 2008, valued at $1.45/share

 

-

 

 

27,014 

 

 

 

 

 

 

27,014 

Warrants issued for services in March 2007, vested during 2008, valued at $0.63/share

 

-

 

 

10,885 

 

 

 

 

 

 

10,885 

Warrants issued for services in April 2007, vested during 2008, valued at $0.69/share

 

-

 

 

121,713 

 

 

 

 

 

 

121,713 

Warrants issued for services in April 2007, vested during 2008, valued at $0.63/share

 

-

 

 

48,738 

 

 

 

 

 

 

48,738 

Warrants issued for services in May 2007, vested during 2008, valued at $0.56/share

 

-

 

 

31,444 

 

 

 

 

 

 

31,444 

Warrants issued for services in December 2007, vested during 2008, valued at $0.55/share

 

-

 

 

12,487 

 

 

 

 

 

 

12,487 

Options issued for services in November 2007, vested during 2008, valued at $0.60/share

 

-

 

 

286,803 

 

 

 

 

 

 

286,803 

Options issued for services in January 2008, vested during 2008, valued at $0.60/share

 

-

 

 

30,750 

 

 

 

 

 

 

30,750 

Options issued for services in July 2008, vested during 2008, valued at $1.48/share

 

-

 

 

114,519 

 

 

 

 

 

 

114,519 

Options issued for services in August 2008, vested during 2008, valued at $1.36/share

 

-

 

 

525,263 

 

 

 

 

 

 

525,263 

Options issued for services in November 2008, vested during 2008, valued at $0.50/share

 

-

 

 

6,439 

 

 

 

 

 

 

6,439 

Warrants issued for future services in March 2008, vested through September 2008,  valued at $0.83/share

 

-

 

 

332,000 

 

 

(332,000)

 

 

 

 

Warrants issued for services in May 2008, vested through September 2008, valued at $1.63/share

 

-

 

 

976,193 

 

 

 

 

 

 

976,193 

Amortization of deferred charges

 

-

 

 

 

 

431,337 

 

 

 

 

431,337 

Receivable for the issuance of common stock

 

-

 

 

 

(12,500)

 

 

 

 

 

(12,500)

Realized loss reclassification

 

-

 

 

 

 

 

58,610 

 

 

 

58,610 

Net loss for the year ending December 31, 2008

 

-

 

 

 

 

 

 

 

(4,340,607)

 

(4,340,607)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2008

 

35,911,156

$

35,911 

$

14,196,060 

$

(12,500)

$

(55,330)

$

$

(15,827)

$

(13,941,776)

$

206,538 

.



See accompanying notes to these financial statements.


-7-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012 (CONTINUED)

(UNAUDITED)







 

 

 

 

 

 

 

 

Subscription

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

 

 

 

 

 

 

Deficit Accumulated

 

 

 

 

Number of

 

Common

 

Paid-in

 

for Issuance

 

Deferred

 

Unrealized Loss

 

Accumulated

 

During

 

 

3

 

Shares

 

Stock

 

Capital

 

of Common Stock

 

Charges

 

on Securities

 

Deficit

 

Development Stage

 

Total

BALANCE AT DECEMBER 31, 2008

 

 35,911,156

 

 $ 35,911

 

 $ 14,196,060

 

 $ (12,500)

 

 $ (55,330)

 

 $ -

 

 $ (15,827)

 

$

(13,941,776)

 

 $ 206,538 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rights to purchase shares issued in January 2009, vested during 2009, valued at $0.33/share

 

 -

 

  -

 

  132,058

 

  - 

 

  - 

 

 -

 

  - 

 

 

  132,058 

Common stock issued for services in January 2009, valued at $0.58/share

 

 100,000

 

  100

 

  57,900

 

  - 

 

  - 

 

 -

 

  - 

 

 

  58,000 

Common stock issued for services & settlement for accounts payable January 2009 valued at $0.25/share

 

 100,000

 

  100

 

  24,900

 

  - 

 

  - 

 

 -

 

  - 

 

 

  25,000 

Exercise of purchase right agreement in January 2009 at $0.25/share

 

 180,550

 

  181

 

  44,957

 

  - 

 

  - 

 

 -

 

  - 

 

 

  45,138 

Exercise of warrants at $0.25/share, pursuant to November 2008 adjusted stock offering

 

 1,279,336

 

  1,279

 

  318,555

 

 

 

 

 

 -

 

 

 

 

 

  319,834 

Exercise of warrants at $0.001/share

 

 400,000

 

  400

 

  -

 

  - 

 

  - 

 

 -

 

  - 

 

 

  400 

Exercise of warrants at $1.00/share

 

 355,000

 

  355

 

  354,645

 

 

 

 

 

 -

 

 

 

 

 

  355,000 

Options issued for services in November 2007, vested during 2009, valued at $0.60/share

 

 -

 

  -

 

  199,234

 

  - 

 

  - 

 

 -

 

  - 

 

 

  199,234 

Options issued for services in January 2008, vested during 2009, valued at $0.60/share

 

 -

 

  -

 

  13,583

 

  - 

 

  - 

 

 -

 

  - 

 

 

  13,583 

Options issued for services in July 2008, vested during 2009, valued at $1.48/share

 

 -

 

  -

 

  67,838

 

  - 

 

  - 

 

 -

 

  - 

 

 

  67,838 

Options issued for services in August 2008, vested during 2009, valued at $1.36/share

 

 -

 

  -

 

  623,246

 

  - 

 

  - 

 

 -

 

  - 

 

 

  623,246 

Options issued for services in November 2008, vested during 2009, valued at $0.50/share

 

 -

 

  -

 

  61,346

 

  - 

 

  - 

 

 -

 

  - 

 

 

  61,346 

Options issued for services in January 2009, vested during 2009, valued at $0.53/share

 

 -

 

  -

 

  13,136

 

  - 

 

  - 

 

 -

 

  - 

 

 

  13,136 

Options issued for services in February 2009, vested during 2009, valued at $0.38/share

 

 -

 

  -

 

  9,583

 

  - 

 

  - 

 

 -

 

  - 

 

 

  9,583 

Options issued for services in June 2009, vested during 2009, valued at $0.85/share

 

 -

 

  -

 

  21,085

 

  - 

 

  - 

 

 -

 

  - 

 

 

  21,085 

Warrants issued for services in June 2009, vested during 2009, valued at $0.85/share

 

 -

 

  -

 

  177,881

 

  - 

 

  - 

 

 -

 

  - 

 

 

  177,881 

Contribution of accrued payroll in February 2009

 

 -

 

  -

 

  52,129

 

  - 

 

  - 

 

 -

 

  - 

 

 

  52,129 

Amortization of deferred charges

 

 -

 

  -

 

  -

 

  - 

 

  55,330 

 

 -

 

  - 

 

 

  55,330 

Payment for the issuance of common stock

 

 -

 

  -

 

  -

 

  12,500 

 

  - 

 

 -

 

  - 

 

 

  12,500 

Common stock issued for services in June 2009, valued at $0.34/share

 

 116,000

 

  116

 

  39,884

 

  - 

 

  - 

 

 -

 

  - 

 

 

  40,000 

Common stock issued for services & settlement for accounts payable June 2009 valued at $0.34/share

 

 145,000

 

  145

 

  49,855

 

  - 

 

  - 

 

 -

 

  - 

 

 

  50,000 

Common stock issued in private placement during June 2009 at $0.34/share

 

 2,479,500

 

  2,480

 

  852,520

 

  - 

 

  - 

 

 -

 

  - 

 

 

  855,000 

Common stock issued for services in July 2009, valued at $0.75/share

 

 100,000

 

  100

 

  74,900

 

  - 

 

  - 

 

 -

 

  - 

 

 

  75,000 

Net loss for the year ending December 31, 2009

 

 -

 

  -

 

  -

 

  - 

 

  - 

 

 -

 

  - 

 

(2,721,871)

 

  (2,721,871)

 

 

 

 

 

 

 

 

 

 

 

 

                   

 

 

 

 

 

 

BALANCE AT December 31, 2009

 

 41,166,542

 

  41,167

 

  17,385,295

 

  - 

 

  - 

 

  -

 

  (15,827)

 

(16,663,647)

 

  746,988 

 

 

 

 

 

 

 

 

 

 

 

 

  -

 

 

 

 

 

 

Options issued for services in November 2007, vested during 2010, valued at $0.60/share

 

 -

 

  -

 

  174,866

 

  - 

 

  - 

 

 

 

  - 

 

 

  174,866 

Options issued for services in January 2008, vested during 2010, valued at $0.60/share

 

 -

 

  -

 

  14,873

 

  - 

 

  - 

 

  -

 

  - 

 

 

  14,873 

Options issued for services in July 2008, vested during 2010, valued at $1.48/share

 

 -

 

  -

 

  74,061

 

  - 

 

  - 

 

  -

 

  - 

 

 

  74,061 

Options issued for services in August 2008, vested during 2010, valued at $1.36/share

 

 -

 

  -

 

  643,812

 

  - 

 

  - 

 

  -

 

  - 

 

 

  643,812 

Options issued for services in November 2008, vested during 2010, valued at $0.50/share

 

 -

 

  -

 

  31,478

 

  - 

 

  - 

 

  -

 

  - 

 

 

  31,478 

Warrants issued for services in June 2009, vested during 2010, valued at $0.85/share

 

 -

 

  -

 

  213,459

 

  - 

 

  - 

 

  -

 

  - 

 

 

  213,459 

Warrants issued for services in January 2010, vested during 2010, valued at $1.83/share

 

 

 

 

 

  580,167

 

 

 

 

 

  -

 

 

 

 

 

  580,167 

Warrants issued for services in March 2010, vested during 2010, valued at $1.86/share

 

 -

 

  -

 

  214,063

 

  - 

 

  - 

 

  -

 

  - 

 

 

  214,063 

Options issued for services in August 2010, vested during 2010, valued at $1.31/share

 

 -

 

  -

 

  27,434

 

  - 

 

  - 

 

 -

 

  - 

 

 

  27,434 

Options issued for services in December 2010, vested during 2010, valued at $1.14/share

 

 -

 

  -

 

  286,002

 

  - 

 

  - 

 

 -

 

  - 

 

 

  286,002 

Exercise of warrants at $0.25/share

 

 947,200

 

  947

 

  235,853

 

  - 

 

  - 

 

 -

 

  - 

 

 

  236,800 

Exercise of options at $0.25/share

 

 15,000

 

  15

 

  3,735

 

  - 

 

  - 

 

 -

 

  - 

 

 

  3,750 

Exercise of warrants at $0.345/share

 

 10,000

 

  10

 

  3,440

 

  - 

 

  - 

 

 -

 

  - 

 

 

  3,450 

Exercise of warrants at $0.50/share

 

 25,000

 

  25

 

  12,475

 

  - 

 

  - 

 

 -

 

  - 

 

 

  12,500 

Exercise of warrants at $1.00/share

 

 282,500

 

  283

 

  282,218

 

  - 

 

  - 

 

 -

 

  - 

 

 

  282,500 

Common stock issued in private placement during 2010 at $1.00/share

 

 1,500,000

 

  1,500

 

  1,498,500

 

  - 

 

  - 

 

 -

 

  - 

 

 

  1,500,000 

Common stock issued for services in August 2010, valued at $1.25/share

 

 4,800

 

  4

 

  5,996

 

  - 

 

  - 

 

 -

 

  - 

 

 

  6,000 

Common stock issued for services in November 2010, valued at $0.93/share

 

 5,000

 

  5

 

  4,645

 

  - 

 

  - 

 

 -

 

  - 

 

 

  4,650 

Common stock issued for services in December 2010, valued at $01.20/share

 

 10,000

 

  10

 

  11,990

 

  - 

 

  - 

 

 -

 

  - 

 

 

  12,000 

Net loss for the year ending December 31, 2010

 

 -

 

  -

 

  -

 

  - 

 

  - 

 

 -

 

  - 

 

(3,713,232)

 

  (3,713,232)

 

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2010

 

 43,966,042

 

 $ 43,966

 

 $ 21,704,361

 

 $ - 

 

 $ - 

 

 $ -

 

 $ (15,827)

 

$

(20,376,879)

 

 $ 1,355,621 



See accompanying notes to these financial statements.


-8-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012 (CONTINUED)

(UNAUDITED)





 

 

 

 

 

 

 

 

Subscription

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

 

 

 

 

 

 

Deficit Accumulated

 

 

 

 

Number of

 

Common

 

Paid-in

 

for Issuance

 

Deferred

 

Unrealized Loss

 

Accumulated

 

During

 

 

 

 

Shares

 

Stock

 

Capital

 

of Common Stock

 

Charges

 

on Securities

 

Deficit

 

Development Stage

 

Total

BALANCE AT DECEMBER 31, 2010

 

 43,966,042

 

 $ 43,966

 

 $ 21,704,361

 

 $ -

 

 $ -

 

 $ -

 

 $ (15,827)

 

 $ (20,376,879)

 

$ 1,355,621 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued for services in March 2011, valued at $1.45/share

 

 10,000

 

  10

 

  14,490

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 14,500 

Options issued for services in January 2008, vested during 2011, valued at $0.60/share

 

 -

 

  -

 

  285

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 285 

Options issued for services in July 2008, vested during 2011, valued at $1.48/share

 

 -

 

  -

 

  39,829

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 39,829 

Options issued for services in August 2008, vested during 2011, valued at $1.36/share

 

 -

 

  -

 

  383,881

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 383,881 

Options issued for services in November 2008, vested during 2011, valued at $0.50/share

 

 -

 

  -

 

  26,648

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 26,648 

Warrants issued for services in January 2010, vested during 2011, valued at $1.83/share

 

 -

 

  -

 

  306,765

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 306,765 

Warrants issued for services in March 2010, vested during 2011, valued at $1.86/share

 

 -

 

  -

 

  64,983

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 64,983 

Options issued for services in August 2010, vested during 2011, valued at $1.31/share

 

 -

 

  -

 

  65,447

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 65,447 

Options issued for services in December 2010, vested during 2011, valued at $1.14/share

 

 -

 

  -

 

  212,136

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 212,136 

Warrants issued for services in January 2011, vested during 2011, valued at $1.05/share

 

 -

 

  -

 

  36,585

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 36,585 

Warrants issued for services in April 2011, vested during 2011, valued at $0.98/share

 

 -

 

  -

 

  109,820

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 109,820 

Options issued for services in May 2011, vested during 2011, valued at $0.97/share

 

 -

 

  -

 

  79,702

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 79,702 

Options issued for services in August 2011, vested during 2011, valued at $0.82/share

 

 -

 

  -

 

  17,204

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 17,204 

Options issued for services in November 2011, vested during 2011, valued at $0.53/share

 

 -

 

  -

 

  4,384

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 4,384 

Options issued for services in December 2011, vested during 2011, valued at $0.82/share

 

 -

 

  -

 

  53,124

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 53,124 

Warrants issued for services in December 2011, vested during 2011, valued at $1.05/share

 

 -

 

  -

 

  1,288

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 1,288 

Common stock issued for commitment shares, valued at $1.08/share

 

 150,830

 

  151

 

  162,746

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 162,896 

Common stock issued to institutional investor, valued at $1.08/share

 

 185,185

 

  185

 

  199,815

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 200,000 

Common stock issued for additional commitment shares, valued at $1.15/share

 

 3,017

 

  3

 

  3,467

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 3,470 

Common stock issued for services in June 2011, valued at $1.04/share

 

 10,000

 

  10

 

  10,390

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 10,400 

Common stock issued in private placement during 2011 at $1.00/share

 

 1,000,000

 

  1,000

 

  999,000

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 1,000,000 

Common stock issued for services in September 2011, valued at $1.45/share

 

 10,000

 

  10

 

  14,490

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 14,500 

Common stock issued for services in May 2011 through August 2011, valued at $0.90/share to $1.25/share

 

 2,018

 

  2

 

  2,161

 

  -

 

  -

 

  -

 

  -

 

  - 

 

 2,163 

Net loss for the nine months ending December 31, 2011

 

 -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  - 

 

  (3,482,622)

 

 (3,482,622)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT DECEMBER 31, 2011

 

 45,337,092

 

 $ 45,337

 

 $ 24,513,000

 

 $ -

 

 $ -

 

 $ -

 

 $ (15,827)

 

 $ (23,859,501)

 

$ 683,009 



See accompanying notes to these financial statements.


-9-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE PERIOD JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012 (CONTINUED)

(UNAUDITED)






 

 

 

 

 

 

 

 

 Subscription

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Receivable/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivable

 

 

 

 

 

 

 

Deficit Accumulated

 

 

 

 

Number of

 

 Common

 

 Paid-in

 

for Issuance

 

 Deferred

 

Unrealized Loss

 

Accumulated

 

During

 

 

 

 

Shares

 

 Stock

 

 Capital

 

 of Common Stock

 

 Charges

 

 on Securities

 

 Deficit

 

 Development Stage

 

 Total

BALANCE AT DECEMBER 31, 2011

 

 45,337,092

 

 $ 45,337

 

 $ 24,513,000

 

 $ -

 

 $ -

 

 $ -

 

 $ (15,827)

 

 $ (23,859,501)

 

 $ 683,009

Common stock issued to institutional investor, valued at $1.013/share

 

 197,433

 

  198

 

  199,802

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Common stock issued for additional commitment shares, valued at $1.64/share

 

 3,017

 

  3

 

  4,945

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  4,948

Common stock issued to institutional investor, valued at $1.197/share

 

 167,084

 

  167

 

  199,832

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  199,999

Common stock issued for additional commitment shares, valued at $1.67/share

 

 3,017

 

  3

 

  5,035

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  5,038

Common stock issued to institutional investor, valued at $1.58/share

 

 316,455

 

  317

 

  499,682

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  499,999

Common stock issued for additional commitment shares, valued at $2.87/share

 

 7,542

 

  7

 

  21,638

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  21,645

Common stock issued to institutional investor, valued at $1.66/share

 

 120,482

 

  120

 

  199,880

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Common stock issued for additional commitment shares, valued at $1.97/share

 

 3,017

 

  3

 

  5,940

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  5,943

Common stock issued to institutional investor, valued at $1.897/share

 

 158,144

 

  158

 

  299,841

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  299,999

Common stock issued for additional commitment shares, valued at $2.60/share

 

 4,525

 

  5

 

  11,760

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  11,765

Common stock issued to institutional investor, valued at $2.073/share

 

 96,479

 

  97

 

  199,904

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,001

Common stock issued for additional commitment shares, valued at $2.64/share

 

 3,017

 

  3

 

  7,962

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  7,965

Common stock issued to institutional investor, valued at $2.19/share

 

 91,324

 

  92

 

  199,908

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Common stock issued for additional commitment shares, valued at $2.23/share

 

 3,017

 

  3

 

  6,725

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  6,728

Common stock issued to institutional investor, valued at $1.68/share

 

 119,048

 

  119

 

  199,882

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,001

Common stock issued for additional commitment shares, valued at $1.80/share

 

 3,017

 

  3

 

  5,428

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  5,431

Common stock issued to institutional investor, valued at $1.81/share

 

 220,994

 

  221

 

  399,778

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  399,999

Common stock issued for additional commitment shares, valued at $1.88/share

 

 3,017

 

  3

 

  5,669

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  5,672

Common stock issued for additional commitment shares, valued at $1.92/share

 

 3,017

 

  3

 

  5,790

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  5,793

Common stock issued to institutional investor, valued at $1.53/share

 

 130,719

 

  131

 

  199,870

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,001

Common stock issued for additional commitment shares, valued at $1.60/share

 

 3,017

 

  3

 

  4,824

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  4,827

Common stock issued to institutional investor, valued at $1.667/share

 

 119,976

 

  120

 

  199,880

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Common stock issued for additional commitment shares, valued at $1.93/share

 

 3,017

 

  3

 

  5,820

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  5,823

Common stock issued to institutional investor, valued at $1.51/share

 

 132,450

 

  132

 

  199,867

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  199,999

Common stock issued for additional commitment shares, valued at $1.70/share

 

 6,034

 

  6

 

  10,252

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  10,258

Common stock issued to institutional investor, valued at $1.677/share

 

 119,261

 

  119

 

  199,882

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,001

Common stock issued for additional commitment shares, valued at $1.35/share

 

 3,017

 

  3

 

  4,070

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  4,073

Common stock issued to institutional investor, valued at $1.13/share

 

 176,991

 

  177

 

  199,823

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Common stock issued for additional commitment shares, valued at $1.28/share

 

 3,017

 

  3

 

  3,859

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  3,862

Common stock issued to institutional investor, valued at $1.1267/share

 

 177,510

 

  178

 

  199,823

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,001

Common stock issued for additional commitment shares, valued at $1.28/share

 

 3,017

 

  3

 

  3,859

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  3,862

Common stock issued to institutional investor, valued at $1.107/share

 

 180,668

 

  180

 

  199,820

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Common stock issued for additional commitment shares, valued at $1.18/share

 

 3,017

 

  3

 

  3,557

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  3,560

Common stock issued to institutional investor, valued at $1.10/share

 

 181,818

 

  182

 

  199,818

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Common stock issued for additional commitment shares, valued at $1.08/share

 

 3,017

 

  3

 

  3,255

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  3,258

Common stock issued to institutional investor, valued at $1.063/share

 

 188,147

 

  188

 

  199,812

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  200,000

Exercise of options at $0.65/share

 

 250,000

 

  250

 

  162,250

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  162,500

Exercise of warrants at $1.25/share

 

 40,000

 

  40

 

  49,960

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  50,000

Exercise of warrants at $0.34/share

 

 20,000

 

  20

 

  6,880

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  6,900

Exercise of warrants at $0.25/share

 

 900,000

 

  900

 

  224,100

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  225,000

Common stock issued for services in October 2011 through January 2012, valued at $0.65/share to $2.70/share

 1,406

 

  1

 

  1,606

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  1,607

Options issued for services in August 2010, vested during 2012, valued at $1.31/share

 

 -

 

  -

 

  32,634

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  32,634

Options issued for services in December 2010, vested during 2012, valued at $1.14/share

 

 -

 

  -

 

  42,414

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  42,414

Warrants issued for services in April 2011, vested during 2012, valued at $0.98/share

 

 -

 

  -

 

  36,605

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  36,605

Options issued for services in May 2011, vested during 2012, valued at $0.97/share

 

 -

 

  -

 

  24,122

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  24,122

Options issued for services in August 2011, vested during 2012, valued at $0.82/share

 

 -

 

  -

 

  20,466

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  20,466

Options issued for services in November 2011, vested during 2012, valued at $0.53/share

 

 -

 

  -

 

  13,080

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  13,080

Options issued for services in December 2011, vested during 2012, valued at $0.82/share

 

 -

 

  -

 

  25,556

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  25,556

Warrants issued for services in December 2011, vested during 2012, valued at $1.05/share

 

 -

 

  -

 

  78,134

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  78,134

Options issued for services in March 2012, vested during 2012, valued at $1.37/share

 

 -

 

  -

 

  75,893

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  75,893

Options issued for services in March 2012, vested during 2012, valued at $1.37/share

 

 -

 

  -

 

  32,184

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  32,184

Warrants issued for services in March 2012, vested during 2012, valued at $1.37/share

 

 -

 

  -

 

  13,709

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  13,709 

Options issued for services in May 2012, vested during 2012, valued at $1.23/share

 

 -

 

  -

 

  230,387

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  230,387 

Warrants issued for services in May 2012, vested during 2012, valued at $0.97/share

 

 -

 

  -

 

  13,912

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  13,912 

Options issued for services in June 2012, vested during 2012, valued at $0.73/share

 

 -

 

  -

 

  38,276

 

  -

 

  -

 

  -

 

  - 

 

  - 

 

  38,276 

Net loss for the six months ending June 30, 2012

 

 -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  - 

 

  (1,898,950)

 

  (1,898,950)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BALANCE AT JUNE 30, 2012 (UNAUDITED)

 

 49,506,837

 

 $ 49,507

 

 $ 29,952,660

 

 $ -

 

 $ -

 

 $ -

 

 $ (15,827)

 

 $ (25,758,451)

 

 $ 4,227,889 




See accompanying notes to these financial statements.


-10-



LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOW

FOR THE SIX MONTHS ENDING JUNE 30, 2012 AND 2011 AND

FOR THE PERIOD JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012

(UNAUDITED)






 

 Cumulative

 

 For the Six

 

 For the Six

 

 Since

 

 Months Ending

 

 Months Ending

 

Inception

 

June 30, 2012

 

June 30, 2011

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

Net loss

$

(25,758,451)

 

$

(1,898,950)

 

$

(1,979,897)

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

 

 

 

 

 

Amortization of deferred charges

4,392,456 

 

 

Amortization of prepaid expenses

75,000 

 

 

Warrants issued for services

3,909,807 

 

142,360 

 

303,758 

Stock options issued for services

5,508,390 

 

535,012 

 

628,911 

Common stock issued for services and fees

1,445,929 

 

122,058 

 

191,266 

Purchase right agreement amortization

132,058 

 

 

Depreciation and amortization of patents

165,537 

 

22,110 

 

16,576 

Realized gain on investments

(3,911)

 

 

Realized gain on disposal of assets

(637)

 

 

(Increase) decrease in assets

 

 

 

 

 

Receivables

(30,461)

 

 

Prepaid expenses and other current assets

(123,424)

 

(81,668)

 

15,637 

Increase (decrease) in liabilities

 

 

 

 

 

Accounts payable

225,033 

 

(47,715)

 

40,829 

Accounts payable - related party

29,178 

 

6,550 

 

11,951 

Accrued expenses

73,222 

 

10,643 

 

44,108 

     Net cash used in operating activities

(9,960,274)

 

(1,189,600)

 

(726,861)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

Cost of intangibles

(503,153)

 

(63,366)

 

(45,230)

   Proceeds from sale of available for sale securities

203,911 

 

 

   Proceeds from receipt of note receivable

100,000 

 

 

 

   Purchase of available for sale securities

(200,000)

 

 

   Purchase of equipment, furniture and leasehold improvements

(314,481)

 

(128,236)

 

(7,281)

     Net cash used in investing activities

(713,723)

 

(191,602)

 

(52,511)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

        Issuance of common stock, private placement

7,495,524 

 

-

 

-

Common stock rescinded, private placement

(200,000)

 

-

 

-

Issuance of common stock, exercise of options and warrants

2,021,404 

 

444,400

 

-

Issuance of common stock, exercise of purchase right agreement

45,138 

 

-

 

-

Issuance of common stock, institutional investor

4,400,000 

 

4,200,000

 

200,000

Repayment of notes payable

(14,970)

 

-

 

-

Proceeds from subscription receivable

19,000 

 

-

 

-

Advances to stockholders

(4,933)

 

-

 

-

Proceeds from convertible notes

529,000 

 

-

 

-

Advances from officers

1,498

 

-

 

-

     Net cash provided by financing activities

14,291,661

 

4,644,400

 

200,000

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

3,617,664

 

3,263,198

 

(579,372)

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

5,358

 

359,824

 

953,867 

 

 

 

 

 

 

CASH AND CASH EQUIVALENTS - END OF PERIOD

$

3,623,022

 

$

3,623,022

 

$

374,495 



See accompanying notes to these financial statements.


-11-



LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOW

FOR THE SIX MONTHS ENDING JUNE 30, 2012 AND 2011 AND

FOR THE PERIOD JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO JUNE 30, 2012

(UNAUDITED)






 

 

 Cumulative

 

 For the Six

 

 For the Six

 

 

 Since

 

 Months Ending

 

 Months Ending

 

 

Inception

 

June 30, 2012

 

June 30, 2011

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

 

 

 

 

 

 

CASH PAID DURING THE PERIOD FOR:

 

 

 

 

 

 

   Interest

 

$

23,341

 

$

109

 

$

174

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING

 

 

 

 

 

 

AND FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock issued in exchange for deferred charges

 

$

3,142,400

 

$

-

 

$

-

 

 

`

 

 

 

 

Warrants issued in exchange for deferred charges

 

$

1,581,056

 

$

-

 

$

-

 

 

 

 

 

 

 

Common stock issued as settlement for accounts payable

 

$

74,708

 

$

-

 

$

-

 

 

 

 

 

 

 

Increase/(Decrease) in fair value of investment securities

 

$

-

 

$

-

 

$

-

 

 

 

 

 

 

 

Accrued interest contributed as capital

 

$

35,624

 

$

-

 

$

-

 

 

 

 

 

 

 

Common stock issued in the conversion of notes payable

 

$

529,000

 

$

-

 

$

-

 

 

 

 

 

 

 

Acquisition of automobile through loan payable

 

$

24,643

 

$

-

 

$

-

 

 

 

 

 

 

 

Common stock issued upon exercise of a warrant
            in exchange for receivable

 

$

75,000

 

$

-

 

$

-

 

 

 

 

 

 

 

Insurance company pay off of note payable

 

$

9,673

 

$

-

 

$

-

 

 

 

 

 

 

 

Receivable for issuance of common stock

 

$

210,001

 

$

-

 

$

-

 

 

 

 

 

 

 

Contribution of officer accrued payroll

 

$

52,129

 

$

-

 

$

-

 

 

 

 

 

 

 

Common stock issued for prepaid expense

 

$

75,000

 

$

-

 

$

-



See accompanying notes to these financial statements.


-12-



LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 1- FINANCIAL STATEMENTS


The accompanying unaudited financials statements have been prepared by Lightwave Logic, Inc. (the Company).  These statements include all adjustments (consisting only of its normal recurring adjustments) which management believes necessary for a fair presentation of the statements and have been prepared on a consistent basis using the accounting polices described in the Summary of Accounting Policies included in the 2011 Annual Report.  Certain financial information and footnote disclosures normally included in financial statements prepared in accordance with accounting principals generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although the Company firmly believes that the accompanying disclosures are adequate to make the information presented not misleading.  The financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Securities and Exchange Commission.   The interim operating results for the three and six months ending June 30, 2012 may not be indicative of operating results expected for the full year.  


Loss per Share

The Company follows Financial Accounting Standards Board Accounting Standards Codification (“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 2012 and 2011, 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.


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


Recently Issued Accounting Pronouncements Not Yet Adopted


As of June 30, 2012, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.


Recently Adopted Accounting Pronouncements


As of June 30, 2012 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.


NOTE 2 – GOING CONCERN


The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  As a development stage company, substantial net losses have been incurred since inception.  The Company has satisfied capital requirements since inception primarily through the issuance and sale of its common stock.  In May 2011, the Company signed an agreement with an institutional investor to sell up to $20 million of common stock.  Under




-13-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)



NOTE 2 – GOING CONCERN (CONTINUED)


the agreement subject to certain conditions and at the Company's sole discretion, the institutional investor has committed to invest up to $20 million in the Company's common stock over a 30-month period with the remaining available amount of $15,600,002. The Company filed a registration statement with the U.S. Securities and Exchange Commission covering the resale of the shares that may be issued to the institutional investor.  The institutional investor is obligated to make purchases as the Company directs in accordance with the agreement, 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 the Company's common stock.  Management believes the Company has raised sufficient capital to finance its operations through August 2013. With the additional capital raised, the Company expects to achieve a level of revenues attractive enough to fulfill its development activities and achieve a level of revenue adequate to support the Company’s business model. However, there can be no assurances that the Company will achieve an adequate sales level or meet all the conditions to obligate the institutional investor to make purchases.  The Company continues to develop and test its next generation Electro-Optic and third-order material platform to support and cultivate potential customers, strategic partners and develop photonic devices. Currently, the Company’s Electro-Optic materials are in evaluation with potential customers. The Company’s first revenue stream has been in engineering revenues.  Management believes the Company’s next revenue stream will be in prototype devices, application and non-recurring engineering charges, and material charges for specialty non-linear application prior to moving into full production.  However, the Company has incurred significant losses and experienced negative cash flow during the development stage.  If these conditions continue beyond the next fourteen months and if the Company is unable to raise capital, it will raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


NOTE 3 – EQUIPMENT


Equipment consists of the following:


 

 

 

June 30, 2012

 

December 31, 2011

 

 

 

 

 

 

Office equipment

 

$

15,980

 

$

12,816

Lab equipment

 

279,941

 

169,028

Furniture

 

 

4,061

 

3,494

Leasehold Improvements

18,960

 

5,368

 

 

 

318,942

 

190,706

Less: Accumulated depreciation

118,441

 

101,955

 

 

 

 

 

 

 

 

 

$

200,501

 

$

88,751


Depreciation expense for the six months ending June 30, 2012 and 2011 was $16,486 and $14,107.  Depreciation expense for the three months ending June 30, 2012 and 2011 was $9,750 and $6,638.





-14-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)



NOTE 4 – INTANGIBLE ASSETS


This represents legal fees and patent fees associated with the registration of patents.  The Company has recorded amortization expenses on the Spacer and Chromophore patent applications accepted by the United States Patent and Trademark Office in February 2011 and April 2011, which are amortized over its legal life of 20 years.  No amortization expense has been recorded on the remaining patents since the patents have yet to be declared effective.  Once issued, the cost of the patents will be amortized over their legal lives, which is generally 20 years.


Patents consists of the following:


 

 

 

June 30, 2012

 

December 31, 2011

 

 

 

 

 

 

Patents

 

 

$

503,153

 

$

439,787

Less: Accumulated amortization

14,307

 

8,683

 

 

 

 

 

 

 

 

 

$

488,846

 

$

431,104


Amortization expense for the six months ending June 30, 2012 and 2011 was $5,624 and $2,469.  Amortization expense for the three months ending June 30, 2012 and 2011 was $2,812 and $2,224.


NOTE 5 – INCOME TAXES


There is no income tax benefit for the losses for the three and six months ended June 30, 2012 and 2011 since management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such benefits.


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, 2012, the Company had no unrecognized tax benefits, or any tax related interest of penalties.  There were no changes in the Company’s unrecognized tax benefits during the period ended June 30, 2012.  The Company did not recognize any interest or penalties during 2012 related to unrecognized tax benefits.  With few exceptions, the U.S. and state income tax returns filed for the tax years ending on December 31, 2008 and thereafter are subject to examination by the relevant taxing authorities.



NOTE 6 – STOCKHOLDERS’ EQUITY


Preferred Stock

Pursuant to our Company’s Articles of Incorporation, our 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 our 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 our business or a takeover from a third party.




-15-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants

The stockholders’ deficit at January 1, 2004 has been retroactively restated for the equivalent number of shares received in the reverse acquisition at July 14, 2004 after giving effect to the difference in par value with the offset to additional paid-in-capital.


In July 2004, the Company issued to related parties 1,600,000 shares of its common stock for professional services valued at $256,000, fair value.


In August 2004, the Company issued 637,500 shares of its common stock for professional services to related parties valued at $75,000, fair value.


In December 2004, the Company converted a note payable of $30,000 into 187,500 shares of common stock at a conversion price of $0.16 per share.


In April 2005, the Company issued 4,000,000 shares of its common stock in a private placement for proceeds of $1,000,000.


On May 4, 2005, the Company converted the notes payable of $499,000 into 3,118,750 shares of common stock at a conversion price of $0.16 per share.  An unpaid note payable in the amount of $6,500 has been reflected as a subscription receivable.  During 2006, the Company deemed this $6,500 outstanding subscription receivable to be uncollectible.


During August 2005, the Company issued 210,000 shares of common stock for professional services rendered valued at $585,500, fair value.  Consulting expense of $375,500 was recognized during 2005, and at December 31, 2005, the remaining balance of $210,000 is reflected as a deferred charge on the balance sheet.  During 2006, consulting expense of $210,000 was recognized.  This agreement ended in May 2006.


In August 2005, in conjunction with a management services contract with a related party, the Company issued 200,000 shares of common stock valued at $584,000.  Management expense of $265,455 was recognized during 2005, and at December 31, 2005, the remaining balance of $318,545 is reflected as a deferred charge in a contra-equity account.  During 2006, management expense of $318,545 was recognized.  This agreement ended in June 2006.


During May 2005, the Company issued Stock Purchase Warrants to purchase 100,000 shares of common stock at an exercise price of $2.10 in exchange for consulting services. The warrants are exercisable until May 2008 and vest as follows: 50,000 shares during the first year of the agreement, 25,000 shares during the second year of the agreement, and 25,000 shares during the third year. In accordance with the fair value method, the Company used the Black-Scholes model to calculate the grant-date fair value, with the following assumptions: no dividend yield, expected volatility of 60%, risk-free interest rate of 3.8% and expected life of option of three years.  The fair market value of the warrants was $113,250.  In accordance with the fair value method as described in accounting requirements of FASB ASC 718 Stock Compensation, the Company recognized consulting expense of $37,000 in 2005.  This warrant was cancelled during 2006.  




-16-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

During September 2005, the Company issued Stock Purchase Warrants to purchase 100,000 shares of common stock at an exercise price of $2.00 in exchange for consulting services. The warrants expire in September 2008 and vest as follows: 50,000 shares during the first year of the agreement, 25,000 shares during the second year of the agreement, and 25,000 shares during the third year of the agreement. In accordance with the fair value method, the Company used the Black-Scholes model to calculate the grant-date fair value, with the following assumptions: no dividend yield, expected volatility of 60%, risk-free interest rate of 3.8% and expected life of option of three years.  The fair market value of the warrants was $145,100.  The Company recognized consulting expense of $27,014, $36,370, $66,500 and $24,200 for the years ended December 31, 2008, 2007, 2006 and 2005 in conjunction with this agreement.  These warrants expired in September 2008.


On October 15, 2005, the Company issued Stock Purchase Warrants to purchase 30,000 shares of common stock at an exercise price of $1.40 in exchange for consulting services. The warrants expire in October 2006 and are exercisable immediately.  In accordance with the fair value method, the Company used the Black-Scholes model to calculate the grant-date fair value, with the following assumptions: no dividend yield, expected volatility of 60%, risk-free interest rate of 4.15% and expected life of option of one year.  The fair market value of the warrants was $15,900.   In accordance with the fair value method as described in accounting requirements of FASB ASC 718 Stock Compensation, the Company recognized consulting expense of $15,900 during 2005.  These warrants expired in October 2006.


In December 2005, in conjunction with a consulting contract, the Company issued Stock Purchase Warrants to purchase 300,000 shares of common stock at an exercise price of $0.25 per share valued at $435,060, fair value.  The warrants expire in December 2007 and were exercisable immediately. In accordance with the fair value method, the Company used the Black-Scholes model to calculate the grant-date fair value, with the following assumptions: no dividend yield, expected volatility of 60%, risk-free interest rate of 4.41% and expected life of option of two years.  In accordance with the fair value method as described in accounting requirements of FASB ASC 718 Stock Compensation, the Company recognized consulting expense of $199,435, and at December 31, 2005, the remaining balance in deferred charges amounted to $235,625.  The 300,000 warrants were fully exercised on December 31, 2005 for $75,000.  The Company recognized $18,128 and $217,497 in consulting expense in conjunction with this agreement for the years ended December 31, 2007 and 2006, which was cancelled during 2007.


During 2006, the Company issued 850,000 shares of common stock and warrants to purchase 425,000 shares of common stock for proceeds of $425,000 in accordance to a private placement memorandum amended December 18, 2006.  Pursuant to the terms of the amended offering, up to 20 units were offered at the offering price of $50,000 per unit, with each unit comprise of 100,000 shares and a warrant to purchase 50,000 shares of common stock at $0.50 per share. In November 2007, 400,000 shares of common stock and warrants to purchase 200,000 shares of common stock were rescinded.  As of December 31, 2008, warrants to purchase 210,000 shares of common stock were fully exercised for proceeds of $105,000, and warrants to purchase 15,000 shares expired.


During February 2006, the Company issued 300,000 shares of common stock for professional services rendered valued at $270,000, fair value.  The Company recognized consulting expense of $16,875 and $118,125 and legal expense of $16,875 and $118,125 during 2007 and 2006.  The contracts expired during 2007. The legal services were provided by a related party.  




-17-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

During May 2006, the Company issued 400,000 shares of common stock for professional services rendered valued at $620,000, fair value.  The Company recognized consulting expense of $258,333 and $361,667 during 2007 and 2006, and at December 31, 2006.  The contracts expired during 2007.


During June 2006, the Company issued 25,000 shares of common stock to a related party for professional services rendered valued at $36,250, fair value. The Company recognized legal expense of $16,615 and $19,635 during 2007 and 2006, and at December 31, 2006.  The contracts expired during 2007.


During November 2006, the Company issued 60,000 shares of common stock for professional services valued at $29,400, fair value. The Company recognized investor relations expense of $25,480 and $3,920 during 2007 and 2006.  The contract expired during 2007.


In June 2006, in conjunction with an addendum to an existing consulting contract effective December 2005, the Company issued Stock Purchase Warrants to purchase 300,000 shares of common stock at an exercise price of $0.25 per share.  The warrants expired in June 2008 and were exercisable immediately. In accordance with the fair value method, the Company used the Black-Scholes model to calculate the grant-date fair value, with the following assumptions: no dividend yield, expected volatility of 186%, risk-free interest rate of 4.41% and expected life of option of two years.  The fair market value of the warrants was $465,996.  During 2007 and 2006, the Company recognized consulting expense of $330,948 and $135,048 in conjunction with this agreement.  The contract was cancelled during 2007.  The 300,000 warrants were fully exercised on March 12, 2008 for proceeds of $75,000.


During 2006, the Company cancelled a warrant issued during May 2005 to purchase 100,000 shares of the Company’s common stock at an exercise price of $2.10, and issued an option to purchase 500,000 shares of the Company’s common stock at an exercise price of $1 per share and the same option’s expiration and vesting terms were modified during November 2006.  This option expired in June 2007.  The incremental cost of the modified option was $394,030 and will be expensed over the vesting terms.  The Company recognized $17,589 and $406,215 as a consulting expense in 2007 and 2006, which includes $337,290 of the incremental cost of the modified option.


During February 2006, the Company awarded an employee with an option to purchase 200,000 shares of common stock at an exercise price of $1.00 per share under the 2005 Employee Stock Option Plan.  These options were valued at $217,628 using the Black-Scholes Option Pricing Formula.  The employee compensation expense recognized during 2007 and 2006 is $43,757 and $22,673.  In June 2007, the employee was terminated and the vesting ceased.  After September 2007, the vested options expired.


During 2006, the Company recognized contributed capital of $35,624 related to the conversion of accrued interest payable.


During 2006, the Company deemed a May 2005 outstanding subscription receivable of $6,500 to be uncollectible.




-18-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)



NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

During 2007, the Company issued 2,482,000 shares of common stock and warrants to purchase 1,241,000 shares of common stock for proceeds of $1,241,000 in accordance to a private placement memorandum amended December 18, 2006.  Pursuant to the terms of the amended offering, up to 20 units were offered at the offering price of $50,000 per unit, with each unit comprised of 100,000 shares and a warrant to purchase 50,000 shares of common stock at $0.50 per share.  For the six month ending June 30, 2009, the remaining 600,000 outstanding warrants expired.


During 2007, the Company issued 1,767,540 shares of common stock and warrants to purchase 883,770 shares of common stock for proceeds of $1,060,524 in accordance to a private placement memorandum issued on October 3, 2007.  Pursuant to the terms of the offering, up to 20 units were offered at the purchase price of $60,000 per unit, with each unit comprised of 100,000 shares and a warrant to purchase 50,000 shares of common stock at $1.00 per share. During 2009 and 2008, 416,000 and 82,770 warrants were exercised, respectively.  For the year ending December 31, 2009, the remaining 385,000 outstanding warrants expired.


During 2007, as previously described, a shareholder that was issued 400,000 shares of the Company’s common stock and a warrant to purchase 200,000 shares of common stock at $0.50 per share rescinded his shares and warrant.  


During February 2007, the Company issued 151,785 shares of common stock for investor relations services valued at $106,250, fair value, which was recorded as a deferred charge and amortized over one year, the term of the services contract.  During 2007, the Company recognized $97,396 in investor relations expense.  During 2008, the Company recognized $8,854 in investor relations expense.  This contract expired in February 2008.


During February 2007, the Company terminated its then CEO.  The option to purchase 56,000 shares of common stock that was recorded as deferred charges of $42,730 were not vested and were forfeited.  The option to purchase 444,000 shares of common stock that were vested expired during 2007.


During March 2007, the Company issued 1,000,000 shares of common stock to a related party for management consulting services valued at $580,000, fair value.  During April 2007, the Company issued 500,000 warrants as an addendum to the original contract for management consulting services valued at $348,000, fair value.  This contract was recorded as a contra-equity deferred charges account and is amortized over one year, the term of the contract.  Management consulting expense recognized during 2008 and 2007 is $154,667 and $773,333.  This contract was renewed in March, 2008. In December 2010, the warrant was partially exercised to purchase 100,000 shares of common stock for proceeds of $25,000. In April 2012, the warrant was exercised to purchase the remaining 400,000 shares of common stock for proceeds of $100,000.  


During April 2007, the Company issued 100,000 shares of common stock for legal services to a related party valued at $35,000, fair value, to settle $29,708 of accounts payable and as payment for $5,292 of legal services incurred in April 2007.


During October 2007, the Company issued 150,000 shares of common stock for investor relations services valued at $102,000, fair value to a related party.  During 2007 the Company recognized $102,000 in investor relation expense.


During October 2007, the Company issued 150,000 shares of common stock for investor relations services valued at $135,000, fair value.  During 2007, the Company recognized $135,000 in investor relations expense.



-19-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)



NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

During November 2007, the Company issued 400,000 shares of common stock under the 2007 Stock Option Plan to the acting Chief Executive Officer for services rendered valued at $288,000, fair value.  The Company recognized $288,000 in consulting expense during 2007.


During March 2007, the Company issued a warrant to purchase 100,000 shares of common stock for consulting services at an exercise price of $0.25 per share.  The warrant was valued at $63,065 using the Black-Scholes Option Pricing Formula and expensed over the life of the contract associated with the consulting services, which is one year.  The consulting expense recognized during 2008 and 2007 is $10,885 and $52,180.  In April 2010, the warrant was exercised to purchase 100,000 shares of common stock for proceeds of $25,000.


During April 2007, the Company issued warrants to purchase 900,000 shares of common stock for consulting services at an exercise price of $0.25 per share. The warrants were valued at $604,416 using the Black-Scholes Option Pricing Formula and expensed over the life of the contracts associated with the consulting services, which is one year.  The consulting expense recognized during 2008 and 2007 is $170,451 and $433,966. In July 2008, the warrant was partially exercised to purchase 20,000 shares of common stock for proceeds of $5,000. In April 2010, the warrant was partially exercised to purchase 380,000 shares of common stock for proceeds of $95,000.   In April 2012, the warrant was exercised to purchase the remaining 500,000 shares of common stock for proceeds of $125,000.


During May 2007, the Company issued a warrant to purchase 150,000 shares of common stock for consulting services at an exercise price of $0.25 per share.  The warrant was valued at $84,390 using the Black-Scholes Option Pricing Formula and expensed over the life of the contract associated with the consulting services, which is one year. The consulting expense recognized during 2008 and 2007 is $31,444 and $52,946. In April 2010, the warrant was exercised to purchase 150,000 shares of common stock for proceeds of $37,500.


During October 2007, the Company issued a warrant to purchase 100,000 shares of common stock at a purchase price of $0.25 per share for accounting services rendered.  The warrant was valued at $61,449 using the Black-Scholes Option Pricing Formula. The Company recognized $61,449 in accounting expense during 2007. The warrant is still outstanding as of June 30, 2012.


During October 2007, the Company issued a warrant to purchase 67,200 shares of common stock at a purchase price of $0.25 per share for consulting services rendered. The warrant was valued at $52,292 using the Black-Scholes Option Pricing Formula. During 2007, the Company recognized $52,292 in consulting expense. In October 2010, the warrant was exercised to purchase 67,200 shares of common stock for proceeds of $16,800.  


During December 2007, the Company issued a warrant to purchase 25,000 shares of common stock at a purchase price of $0.50 per share for accounting services rendered.  The warrant was valued at $13,646 using the Black-Scholes Option Pricing Formula and expensed over the life of the contract, which is one year. The Company recognized $12,487 and $1,159 in consulting expense during 2008 and 2007. In June 2010, the warrant was exercised to purchase 25,000 shares of common stock for proceeds of $12,500.





-20-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

During November 2007, under the 2007 Employee Stock Option Plan, the Company issued options to purchase 1,752,000 shares of common stock at a purchase price of $0.72 per share.  The options were valued at $1,045,077 using the Black-Scholes Option Pricing Formula.  During 2008, an option to purchase 750,000 shares of common stock, of which 125,000 shares were vested, forfeited. The expense recognized during 2010, 2009, 2008 and 2007 is $174,866, $199,233, $286,803 and $41,653.  The options are still outstanding as of June 30, 2012.


In January 2008, under the 2007 Employee Stock Option Plan, the Company issued an option to purchase 100,000 shares of common stock at a purchase price of $0.72 per share.  The option was valued at $59,490, fair value, using the Black-Scholes Option Pricing Formula and is being recognized based on vesting terms over a three year period.  The expense recognized during 2011, 2010, 2009 and 2008 is $285, $14,873, $13,582, and $30,750.  The options are still outstanding as of June 30, 2012.


During 2008, the Company issued 690,001 shares of common stock and warrants to purchase 345,001 shares of common stock for proceeds of $414,000 in accordance to a private placement memorandum issued on October 3, 2007.  Pursuant to the terms of the offerings, up to 25 units were offered at the purchase price of $60,000 per unit, with each unit comprised of 100,000 shares and a warrant to purchase 50,000 shares of common stock at $1.00 per share.  During 2009 and 2008, the warrant was partially exercised to purchase 25,834 and 20,000 shares of common stock for proceeds of $25,834 and $20,000.  In April 2010, the warrant was partially exercised to purchase 282,500 shares of common stock for proceeds of $282,500.  During the six month ending June 30, 2010, the remaining warrants to purchase 16,667 shares of common stock expired.


During March 2008, the Company issued a warrant to purchase 400,000 shares of common stock as an addendum to the original contract for management consulting services provided by a related party, valued at $332,000, fair value using Black-Scholes Option Pricing Formula, vesting immediately.  This contract was recorded as a contra-equity deferred charges account and is amortized over one year beginning February 28, 2008, the term of the contract. For the year ending December 31, 2009 and 2008, the Company recognized $55,330 and $276,670 of management consulting expense. In January 2009, the warrant was fully exercised to purchase 400,000 shares of common stock for proceeds of $400.


During March 2008, the Company issued 100,000 shares of common stock for legal services to a related party valued at $75,000, fair value.  The Company recognized $75,000 of legal expense for the year ending December 31, 2008.


During April 2008, the Company issued a warrant to purchase 600,000 shares of common stock at a purchase price of $0.73 per share for consulting services rendered.  The warrant was valued at $976,193, fair value, using the Black-Scholes Option Pricing Formula, vesting immediately.  For the year ended December 31, 2008, the Company recognized $976,193 in consulting expense. The warrant is still outstanding as of June 30, 2012.





-21-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

In July 2008, the Company issued options to purchase 200,000 shares of common stock at a purchase price of $1.75 per share to members of the board of directors, under the 2007 Employee Stock Option Plan. Using the Black-Scholes Option Pricing Formula, the options were valued at $296,247, fair value, vesting 50,000 immediately and the remaining in annual equal installments of 50,000 over the next three years. The expense is being recognized based on vesting terms over a three year period. The expense recognized during 2011, 2010, 2009 and 2008 is $39,829, $74,061, $67,840 and $114,519.  The options are still outstanding as of June 30, 2012.


In August 2008, under the 2007 Employee Stock Option Plan, the Company issued options to purchase 550,000 and 1,050,000 shares of common stock at a purchase price of $1.42 and $1.75 per share to members of the board of directors and the Chief Executive Officer, vesting 212,500 immediately and the remaining in annual equal installments of 112,500 over the next three years and vesting in quarterly equal installments of 87,500 commencing November 1, 2008, respectively. The options were valued at $2,176,201, fair value, using the Black-Scholes Option Pricing Formula and are being recognized based on vesting terms over a three year period.  The expense recognized during 2011, 2010, 2009 and 2008 is $383,881, $643,812, $623,246 and $525,263.  The options are still outstanding as of June 30, 2012.


In August 2008, the Company issued 200,000 shares of common stock under the 2007 Stock Option Plan to its new Chief Executive Officer as part of the employment agreement valued at $360,000, fair value.  The Company recognized $360,000 in consulting expense for the year ending December 31, 2008.


In 2008, January through August warrant holders exercised warrants to purchase 270,000 shares at $0.50 per share for proceeds of $135,000.


On October 28, 2008, the Company’s board of directors authorized the Company to raise up to $600,000 of capital through an ‘Adjusted Common Stock Offering’ to certain warrant holders. This offering provided eligible warrant holders with the opportunity to purchase four (4) shares of common stock for each dollar invested pursuant to their existing warrant agreement. As of December 31, 2008, warrants to purchase 641,080 shares of common stock were exercised with proceeds of $160,270.  For the three month period ending March 31, 2009, warrants to purchase 1,279,336 shares of common stock were exercised with proceeds of $319,834.  In January 2009, the term of the 2008 Adjusted Common Stock offering was extended until January 31, 2009.


In November 2008, the Company issued an option to purchase 250,000 shares of common stock under the 2007 Stock Option Plan at a purchase price of $.65 per share to a new member of its board of directors. Using the Black-Scholes Option Pricing Formula, the options were valued at $125,911, fair value, vesting 62,500 immediately and the remaining in annual equal installments of 62,500 over the next three years. The expense is being recognized based on vesting terms over a three year period.  The expense recognized during 2011, 2010, 2009 and 2008 is $26,648, $31,478, $61,346 and $6,439.  In January 2012, the option was exercised to purchase 250,000 shares of common stock for proceeds of $162,500.  

    




-22-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)





NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

In January 2009, an employee was granted with an option to purchase up to 25,000 shares of common stock at a purchase price of $.25 per share.  Using the Black-Scholes Option Pricing Formula, the options were valued at valued at $13,136, fair value. These options expire in 5 years and vest immediately. The expense recognized during 2009 is $13,136.  In May 2010, the option was partially exercised to purchase 15,000 shares of common stock for proceeds of $3,750.  As of June 30, 2012, options to purchase 10,000 shares of common stock are still outstanding.

    

During January 2009, the Company issued 100,000 shares of common stock to an officer, under the 2007 Stock Option Plan, for services rendered valued at $58,000, fair value.


During January 2009, the Company issued 100,000 shares of common stock for legal services to a related party valued at $25,000, to settle accounts payable for $10,000 and $15,000 for legal services.


During January 2009, the officers, directors, and employees of the Company were each given the right to purchase from the Company’s 2007 Employee Stock Plan up to 40,000 shares of common stock at a purchase price of $.25 per share, 400,000 shares in the aggregate, all of which were valued at $132,058, fair value using the Black-Scholes Option Pricing Formula. The rights to purchase vested immediately.  A total of 180,550 shares were purchased pursuant to the rights to purchase with total proceeds of $35,138 and a common stock receivable of $10,000 which was paid in May, 2009. The rights to purchase the remaining 219,450 shares expired on January 31, 2009.


At December 31, 2008 the Company had accrued officer salaries and payroll taxes of $98,205.  On February 19, 2009, two officers, who are also shareholders, agreed to waive their rights to unpaid wages and salary amounting to $52,129.  Accordingly in the first quarter 2009, the accrued expense was adjusted from $98,205 to $42,088 with the $52,129 treated as contributed capital and $3,988 reversed from payroll taxes.


In February 2009, an employee was granted with an option to purchase up to 25,000 shares of common stock at a purchase price of $.45 per share.  Using the Black-Scholes Option Pricing Formula, the options were valued at valued at $9,583, fair value. These options expire in 5 years and vest immediately. The expense recognized during 2009 is $9,583. The options are still outstanding as of June 30, 2012.


During June 2009, in accordance to private placement memorandum, the Company issued 2,479,500 shares of common stock for proceeds of $855,000 dated June 10, 2009. Pursuant to the terms of the offering, up to 18 units were offered at the offering price of $50,000 per unit, with each unit comprised of 145,000 shares to purchase at $0.34 per share.





-23-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

During June 2009, the Company issued a warrant to purchase 464,000 shares of common stock at a purchase price of $0.34 per share for accounting services rendered.  The warrant was valued at $391,342 using the Black-Scholes Option Pricing Formula, vesting 46,400 immediately and the remaining on equal monthly installments of 23,200 over the next eighteen months.  The warrant expires in 5 years.  The expense is being recognized based on service terms of the agreement over a twenty two month period.  The expense recognized during 2010 and 2009 is $213,459 and $177,883.  In April 2010, the warrant was partially exercised to purchase 10,000 shares of common stock for proceeds of $3,450. In February 2012, the warrant was partially exercised to purchase 20,000 shares of common stock for proceeds of $6,900.  As of June 30, 2012, warrants to purchase 434,000 shares of common stock are still outstanding.


In June 2009, an employee was granted with an option to purchase up to 25,000 shares of common stock at a purchase price of $.34 per share.  Using the Black-Scholes Option Pricing Formula, the options were valued at valued at $21,085, fair value. These options expire in 5 years and vest immediately. The expense recognized during 2009 is $21,085. The option is still outstanding as of June 30, 2012.


During June 2009, the Company issued 145,000 shares of common stock for legal services to a related party valued at $50,000, to settle accounts payable for $35,000 and $15,000 for legal services.


During June 2009, the Company issued 116,000 shares of common stock for accounting services valued at $40,000, fair value.  The Company recognized $40,000 of accounting expense for the year ending December 31, 2009.


During July 2009, the Company issued 100,000 shares of common stock for investor relation services valued at $75,000, fair value vesting 25,000 shares each quarter commencing July 1, 2009.  The investor relation expense recognized during 2010 and 2009 is $37,500 and $37,500.


In January 2010, the Company issued a warrant to purchase 650,000 shares of common stock at a purchase price of $1.51 per share to a new member of its board of directors serving as the Company’s full-time non-executive chair of the board of directors. Using the Black-Scholes Option Pricing Formula, the warrants were valued at $1,188,000, fair value, vesting 162,500 immediately and the remaining in annual equal installments of 162,500 over the next three years.  The warrant expires in 5 years.  During 2011, the warrant to purchase 650,000 shares of common stock, of which 487,500 shares were vested, forfeited. The expense recognized during 2011 and 2010 is $306,765 and $580,167.  The warrant to purchase 487,500 shares of common stock is still outstanding as of June 30, 2012.





-24-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

In March 2010, the Company issued a warrant to purchase 150,000 shares of common stock for consulting services at an exercise price of $0.25 per share. Using the Black-Scholes Option Pricing Formula, the warrants were valued at $279,045, fair value, vesting immediately.  The warrant expires in 3 years.  The consulting expense recognized during 2011 and 2010 is $64,983 and $214,063.  In June and July 2010, the warrant was fully exercised to purchase 150,000 shares of common stock for proceeds of $37,500.


In June 2010, an employee was granted with an option to purchase up to 100,000 shares of common stock at a purchase price of $1.50 per share.  Using the Black-Scholes Option Pricing Formula, the options were valued at valued at $131,075, fair value. These options expire in 5 years and vest in equal installments of 12,500 over the next two years commencing  August 1, 2010.  The expense recognized during 2011 and 2010 is $65,447 and $27,434.  For the three month ending June 30, 2012 and 2011 the Company recognized $16,317 and $16,317 of expense.  For the six month ending June 30, 2012 and 2011, the Company recognized $32,634 and $32,455 of expense. The options are still outstanding as of June 30, 2012.


During 2010, the Company issued 1,500,000 shares of common stock and warrants to purchase 375,000 shares of common stock with 156,250 warrants expiring September 2011 and 218,750 warrants expiring December 2011 for proceeds of $1,500,000 in accordance to a private placement memorandum as amended on September 14, 2010.  Pursuant to the terms of the offerings, up to 30 units were offered at the purchase price of $50,000 per unit, with each unit comprised of 50,000 shares and a warrant to purchase 12,500 shares of common stock at $1.25 per share. During September 2011, all warrants were extended one year expiring September 2012 and December 2012.   In January 2012, the warrant was partially exercised to purchase 40,000 shares of common stock for proceeds of $50,000. The remaining warrants to purchase 335,000 shares of common stock at $1.25 per share are still outstanding as of June 30, 2012.


Effective July 8, 2010, the number of shares of the Company’s common stock available for issuance under the 2007 Employee Stock plan was increased from 3,500,000 to 6,500,000 shares.


During August 2010, the Company issued 4,800 shares of common stock for investor relations services valued at $6,000, fair value.  The Company recognized $6,000 of investor relations expense for the year ending December 31, 2010.


In November 2010, the board of directors approved a grant to employees of options to purchase up to 250,000 shares of common stock at a purchase price of $1.00 per share.  These options were granted on December 13, 2010.  Using the Black-Scholes Option Pricing Formula, the options were valued at $283,787, fair value. These options expire in 5 years with 125,000 vesting on December 13, 2010 and 125,000 vesting on June 13, 2011. The expense recognized during 2011 and 2010 is $127,080 and $156,707.  The options are still outstanding as of June 30, 2012.




-25-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

In November 2010, the board of directors approved a grant to employees of options to purchase up to 35,000 shares of common stock at a purchase price of $1.00 per share.  These options were granted on December 13, 2010.  Using  the Black-Scholes Option Pricing Formula, the options were valued at $39,730, fair value. These options expire in 5 years and vest on December 13, 2010. The expense recognized during 2010 is $39,730. The options are still outstanding as of June 30, 2012.


In November 2010, the board of directors approved a grant to three outside directors of options to purchase up to 300,000 shares of common stock at a purchase price of $1.00 per share.  These options were granted on December 13, 2010.  Using  the Black-Scholes Option Pricing Formula, the options were valued at valued at $340,545, fair value. These options expire in 5 years and vest 75,000 on December 13, 2010 and the remaining in equal annual installments of 75,000 over the next three years commencing November 4, 2011.  The expense recognized during 2011 and 2010 is $85,056 and $89,565.  For the three month ending June 30, 2012 and 2011 the Company recognized $21,207 and $21,207 of expense.  For the six month ending June 30, 2012 and 2011, the Company recognized $42,414 and $42,180 of expense. The options are still outstanding as of June 30, 2012.


In November 2010, 5,000 shares of common stock were issued for investor relation services valued at $4,650, fair value.  The Company recognized $4,650 of investor relations expense for the year ending December 31, 2010.


During December 2010, the Company issued 10,000 shares of common stock for investor relations services valued at $12,000, fair value.  The Company recognized $12,000 of investor relations expense for the year ending December 31, 2010.  


In January 2011, the Company issued a warrant to a related party to purchase 10,000 shares of common stock for legal services at an exercise price of $1.25 per share. Using the Black-Scholes Option Pricing Formula, the warrants were valued at $10,453, fair value.  These warrants expire in 3 years and vest immediately.  The expense recognized during 2011 is $10,453. The warrants are still outstanding as of June 30, 2012.


In January 2011, the Company issued a warrant to purchase 25,000 shares of common stock for research and development at an exercise price of $1.25 per share. Using the Black-Scholes Option Pricing Formula, the warrants were valued at $26,132, fair value.  These warrants expire in 3 years and vest immediately.  The expense recognized during 2011 is $26,132.  During April 2012 the warrant was voided.


During March 2011, the Company issued 10,000 shares of common stock for investor relations expense valued at $14,500, fair value.  The Company recognized $14,500 of investor relations expense for the year ending December 31, 2011.  





-26-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

During April 2011, the Company issued warrants to purchase 150,000 shares of common stock at a purchase price of $1.18 per share for accounting services rendered commencing January 1, 2011.  The warrant was valued at $146,425 using the Black-Scholes Option Pricing Formula, vesting 37,500 immediately and the remaining on equal monthly installments of 9,375 over the next twelve months expiring in 5 years.  The expense is being recognized based on service terms of the agreement over a sixteen month period. The accounting expense recognized during 2011 is $109,820.  For the three month ending June 30, 2012 and 2011 the Company recognized $9,150 and $27,455 of expense.  For the six month ending June 30, 2012 and 2011, the Company recognized $36,605 and $54,910 of expense. The warrants are still outstanding as of June 30, 2012.


In May 2011, the board of directors approved a grant to a new outside director of an option to purchase up to 200,000 shares of common stock at a purchase price of $1.12 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $193,686, fair value. The option expires in 5 years and vests 50,000 immediately and the remaining in annual equal installments of 50,000 over the next three years. The option is expensed over the vesting terms.  The expense recognized during 2011 is $79,702. For the three month ending June 30, 2012 and 2011 the Company recognized $12,061 and $55,314 of expense.  For the six month ending June 30, 2012 and 2011, the Company recognized $24,122 and $55,314 of expense.  As of June 30, 2012, options to purchase 200,000 shares of common stock are still outstanding.


In May 2011, the Company has signed an agreement with an institutional investor to sell up to $20 million of common stock. Under the agreement subject to certain conditions and at the Company's sole discretion, the institutional investor has committed to invest up to $20 million in the Company's common stock over a 30-month period. The Company filed a registration statement with the U.S. Securities and Exchange Commission covering the resale of the shares that may be issued to the institutional investor.  The institutional investor is obligated to make purchases as the Company directs in accordance with the agreement, 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 the Company's common stock immediately preceding the sales to the institutional investor.  The Company has issued 150,830 shares of common stock to the institutional investor as an initial commitment fee valued at $162,896, fair value and 301,659 shares of common stock are reserved for additional commitment fees to the institutional investor in accordance with the terms of the agreement.  During June, 2011 through June, 2012, the institutional investor purchased 3,080,168 shares of common stock for proceeds of $4,400,000.  The Company issued 66,373 shares of common stock as additional commitment fee, valued at $123,921, fair value, leaving 235,286 in reserve for additional commitment fees.  For the three month ending June 30, 2012, the institutional investor purchased 905,134 shares of common stock for proceeds of $1,000,001 and the Company issued 15,085 shares of common stock as additional commitment fee, valued at $18,615, fair value.  For the six month ending June 30, 2012, the institutional investor purchased 2,894,983 shares of common stock for proceeds of $4,200,000 and the Company issued 63,356 shares of common stock as additional commitment fee, valued at $120,451, fair value.      


During June 2011, the Company issued 10,000 shares of common stock for investor relations expense valued at $10,400, fair value.  The Company recognized $10,400 of investor relations expense for the year ending December 31, 2011.  




-27-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

In August 2011, the board of directors approved a grant to a new employee of an option to purchase up to 150,000 shares of common stock at a purchase price of $1.01 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $123,241, fair value. The option expires in 5 years and vests in equal quarterly installments of 12,500 over the next three years beginning November 1, 2011. The expense recognized during 2011 is $17,204.  For the three month ending June 30, 2012 the Company recognized $10,233 of expense.  For the six month ending June 30, 2012, the Company recognized $20,466 of expense.  As of June 30, 2012, options to purchase 150,000 shares of common stock are still outstanding.


During September 2011, the Company issued 10,000 shares of common stock for investor relations expense valued at $14,500, fair value.  The Company recognized $14,500 of investor relations expense for the year ending December 31, 2011.  


During 2011, the Company issued 2,018 shares of common stock to a director serving as a member of the Company’s Operations Committee valued at $2,163, fair value.  The Company recognized $2,163 of expense for the year ending December 31, 2011.


During 2011, the Company issued 1,000,000 shares of common stock and warrants to purchase 1,000,000 shares of common stock expiring September 2013 for proceeds of $1,000,000 in accordance to a private placement memorandum dated August 26, 2011.  Pursuant to the terms of the offerings, up to 4 units were offered at the purchase price of $250,000 per unit, with each unit comprised of 250,000 shares and a warrant to purchase 125,000 shares of common stock at $1.00 per share and a warrant to purchase 125,000 shares of common stock at $1.25 per share. The warrants to purchase 500,000 shares of common stock at $1.00 and the warrants to purchase 500,000 shares of common stock at $1.25 per share are still outstanding as of June 30, 2012.


In November 2011, the board of directors approved a grant to a new employee of an option to purchase up to 150,000 shares of common stock at a purchase price of $0.63 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $78,764, fair value. The option expires in 5 years and vests in equal quarterly installments of 12,500 over the next three years beginning February 1, 2012.  The expense recognized during 2011 is $4,384.  For the three month ending June 30, 2012, the Company recognized $6,540 of expense.  For the six month ending June 30, 2012, the Company recognized $13,080 of expense.  As of June 30, 2012, options to purchase 150,000 shares of common stock are still outstanding.


In December 2011, the board of directors approved a grant to the member of its board of directors serving as the Company’s non-executive chair of the board of directors of an option to purchase up to 250,000 shares of common stock at a purchase price of $1.01 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $205,197, fair value.  The option expires in 5 years and vests 62,500 immediately and the remaining in annual equal installments of 62,500 over the next three years.  The expense recognized during 2011 is $53,124. For the three month ending June 30, 2012, the Company recognized $12,778 of expense.  For the six month ending June 30, 2012, the Company recognized $25,556 of expense.   As of June 30, 2012, options to purchase 250,000 shares of common stock are still outstanding.





-28-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

In December 2011, the board of directors approved a grant to a senior advisor of a warrant to purchase up to 150,000 shares of common stock at a purchase price of $1.30 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $158,415, fair value. The warrant expires in 5 years and vests 37,500 immediately and the remaining in annual equal monthly installments of 9,375 over the next year.  The expense recognized during 2011 is $1,288. For the three month ending June 30, 2012, the Company recognized $39,067 of expense.  For the six month ending June 30, 2012, the Company recognized $78,134 of expense.  As of June 30, 2012, warrants to purchase 150,000 shares of common stock are still outstanding.


During February 2012, the Company issued 1,406 shares of common stock to a director serving as a member of the Company’s Operations Committee valued at $1,607, fair value.  For the three month and six month ending June 30, 2012, the Company recognized $0 and $1,607 of expense.  


In March 2012, the board of directors approved a grant to an employee of an option to purchase up to 100,000 shares of common stock at a purchase price of $1.69 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $168,909, fair value. The option expires in 10 years and vests 25,000 immediately and the remaining vest 25,000 in six months, nine months and twelve months from date of grant.  The option is expensed over the vesting terms.  For the three month ending June 30, 2012, the Company recognized $31,584 of expense.  For the six month ending June 30, 2012, the Company recognized $75,893 of expense.  As of June 30, 2012, options to purchase 100,000 shares of common stock are still outstanding.


In March 2012, the board of directors approved a grant to an employee of an option to purchase up to 25,000 shares of common stock at a purchase price of $1.69 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $42,227, fair value. The option expires in 10 years with 12,500 vesting immediately and 12,500 vesting in six months from date of grant.  The option is expensed over the vesting terms.  For the three month ending June 30, 2012, the Company recognized $10,386 of expense.  For the six month ending June 30, 2012, the Company recognized $32,184 of expense.  As of June 30, 2012, options to purchase 25,000 shares of common stock are still outstanding.


In March 2012, the Company issued a warrant to purchase up to 10,000 shares of common stock for legal services at an exercise price of $1.69 per share.  Using the Black-Scholes Option Pricing Formula, the warrants were valued at $13,709, fair value.  These warrants expire in 5 years and vest immediately and are being expensed over the service period.  For the three month ending June 30, 2012, the Company recognized $6,854 of expense.  For the six month ending June 30, 2012, the Company recognized $13,709.   As of June 30, 2012, warrants to purchase 10,000 shares of common stock are still outstanding.




-29-




LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011

(UNAUDITED)




NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)


Common Stock and Warrants (Continued)

In May 2012, the board of directors appointed its current Non-Executive Chairman of the board of directors as its new Chief Executive Officer and Executive Chairman of the board of directors and approved a grant of an option to purchase up to 500,000 shares of common stock at a purchase price of $1.30 per share. Using the Black-Scholes Option Pricing Formula, the option was valued at $613,805, fair value.  The option expires in 10 years and vests quarterly over one year in equal installments of 125,000 shares per quarter commencing on date of grant.  The option is expensed over the vesting terms.  For the three and six month ending June 30, 2012, the Company recognized $230,387 of expense.  &nb