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STOCKHOLDERS' EQUITY
 9 Months Ended
Sep. 30, 2016
Equity [Abstract]  
STOCKHOLDERS EQUITY

NOTE 6 – STOCKHOLDERS' EQUITY

 

Preferred Stock

 

Pursuant to the Company’s Articles of Incorporation, the Company’s board of directors is empowered, without stockholder approval, to issue series of preferred stock with any designations, rights and preferences as they may from time to time determine. The rights and preferences of this preferred stock may be superior to the rights and preferences of the Company’s common stock; consequently, preferred stock, if issued could have dividend, liquidation, conversion, voting or other rights that could adversely affect the voting power or other rights of the common stock. Additionally, preferred stock, if issued, could be utilized, under special circumstances, as a method of discouraging, delaying or preventing a change in control of the Company’s business or a takeover from a third party.

 

Common Stock Options and Warrants

 

In October 2013, under the 2007 Employee Stock Option Plan, the Company issued an option to a new director to purchase 200,000 shares of common stock at a purchase price of $0.93 per share for a directorship commencing November 1, 2013. The option was valued at $174,106 using the Black-Scholes option pricing model. The option expires in 10 years with 50,000 vesting in annual installments commencing November 1, 2013. The option is expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $32,675 of expense. For the three months ending September 30, 2016, the Company recognized $10,971 of expense. As of September 30, 2016, the option to purchase 200,000 shares of common stock is still outstanding.

 

In March 2014, under the 2007 Employee Stock Option Plan, the Company issued options to a new employee to purchase 30,000 shares of common stock at a purchase price of $0.92 per share. The options were valued at $23,304, fair value, using the Black-Scholes Option Pricing Formula. The options expire in 10 years vesting in quarterly equal installments of 3,750 from date of employment. The options are expensed over the vesting terms. For the three and nine months ending September 30, 2016, the Company recognized $0 and $1,552 of expense. As of September 30, 2016, the options to purchase 30,000 shares of common stock are still outstanding.

 

In March 2014, under the 2007 Employee Stock Option Plan, the Company issued options to a new employee to purchase 75,000 shares of common stock at a purchase price of $0.92 per share. The options were valued at $58,384, fair value, using the Black-Scholes Option Pricing Formula. The options expire in 10 years vesting in quarterly equal installments of 9,375 from date of employment. The options are expensed over the vesting terms. For the three and nine months ending September 30, 2016, the Company recognized $0 and $4,363 of expense. As of September 30, 2016, the options to purchase 75,000 shares of common stock are still outstanding.

 

In March 2014, under the 2007 Employee Stock Option Plan, the Company issued options to a new employee to purchase 50,000 shares of common stock at a purchase price of $0.92 per share. The options were valued at $38,922, fair value, using the Black-Scholes Option Pricing Formula. The options expire in 10 years vesting in quarterly equal installments of 6,250 from date of employment. The options are expensed over the vesting terms. For the three and nine month ending September 30, 2016, the Company recognized $0 and $3,331 of expense. As of September 30, 2016, the options to purchase 50,000 shares of common stock are still outstanding.

 

9 
 

 

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2016 AND 2015

 

NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)

 

Common Stock Options and Warrants (Continued)

 

In May 2014, under the 2007 Employee Stock Option Plan, the Company issued options to a new director to purchase 200,000 shares of common stock at a purchase price of $0.763 per share. The options were valued at $122,515 using the Black-Scholes Option Pricing Formula. The options expire in 10 years with 50,000 vesting immediately and the remainder vesting in annual equal installments of 50,000 commencing on the one year anniversary of the date of grant. The options are expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $22,992 of expense. For the three months ending September 30, 2016, the Company recognized $7,720 of expense. As of September 30, 2016, the options to purchase 200,000 shares of common stock are still outstanding.

 

During July 2015, the Company issued a warrant to purchase 125,000 shares of common stock at a purchase price of $0.70 per share for accounting services to be rendered over a twelve month period commencing July 1, 2015. The warrant was valued at $46,897, fair value at December 31, 2015, using the Black-Scholes Option Pricing Formula, vesting over the next twelve months with 10,416 vesting immediately, 10,416 vesting per month on the first day of the next ten months and 10,424 vesting on the first day of the twelfth month of the corresponding service agreement. The warrant expires in five years. The expense is being recognized based on service terms of the agreement over a twelve month period. For the nine months ending September 30, 2016, the Company recognized $23,452 of expense. For the three months ending September 30, 2016, the Company recognized $0 of expense. As of September 30, 2016, the warrants to purchase 125,000 shares of common stock are still outstanding.

 

During August 2015, under the 2007 Employee Stock Option Plan, the Company issued an option to an employee to purchase 50,000 shares of common stock at a purchase price of $0.67 per share. The option was valued at $19,930, fair value, using the Black-Scholes Option Pricing Formula. The option expires in 10 years and vests 12,500 immediately and the remaining in equal quarterly installments of 12,500 over the next three quarters. The option is expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $7,203 of expense. For the three months ending September 30, 2016, the Company recognized $0 of expense. As of September 30, 2016, the options to purchase 50,000 shares of common stock are still outstanding.

 

During August 2015, under the 2007 Employee Stock Option Plan, the Company issued options to three employees to purchase an aggregate of 75,000 shares of common stock at a purchase price of $0.69 per share. The options were valued at $32,734, fair value, using the Black-Scholes Option Pricing Formula. The options expire in 10 years and vest 15,000 immediately and the remaining in equal quarterly installments of 15,000 over the next four quarters. The options are expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $17,142 of expense. For the three months ending September 30, 2016, the Company recognized $4,053 of expense. As of September 30, 2016, the options to purchase 75,000 shares of common stock are still outstanding.

 

10 
 

 

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2016 AND 2015

 

NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)

 

Common Stock Options and Warrants (Continued)

 

During August 2015, under the 2007 Employee Stock Option Plan, the Company issued an option to a new director to purchase 200,000 shares of common stock at a purchase price of $0.69 per share. The option was valued at $90,615, fair value, using the Black-Scholes Option Pricing Formula. The option expires in 10 years and vests 50,000 immediately and the remaining in equal annual installments of 50,000 over the next three years. The option is expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $16,944 of expense. For the three months ending September 30, 2016, the Company recognized $5,648 of expense. As of September 30, 2016, the options to purchase 200,000 shares of common stock are still outstanding.

 

During October 2015, under the 2007 Employee Stock Option Plan, the Company issued options to a new employee to purchase 35,000 shares of common stock at a purchase price of $0.74 per share. The option was valued at $16,393, fair value, using the Black-Scholes Option Pricing Formula. The options expire October 12, 2025 with 4,375 shares vesting on the anniversary date of the third month of employment and the remaining vesting in seven equal installments of 4,375 at the end of every three month period thereafter. The option is expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $6,147 of expense. For the three month ending September 30, 2016, the Company recognized $2,052 of expense. As of September 30, 2016, the options to purchase 35,000 shares of common stock are still outstanding.

 

During November 2015, under the 2007 Employee Stock Option Plan, the Company granted options effective January 1, 2016 to the Chief Executive Officer to purchase 100,000 shares of common stock at a purchase price of $0.86 per share. The options expire November 9, 2025 with 12,500 shares vesting on January 1, 2016 and the remaining vesting quarterly in equal installments of 12,500 options commencing April 1, 2016. The options were valued at $33,108, fair value, using the Black-Scholes Option Pricing Formula. The option is expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $16,510 of expense. For the three month ending September 30, 2016, the Company recognized $4,139 of expense. As of September 30, 2016, the options to purchase 100,000 shares of common stock are still outstanding.

 

In December 2015, the board of directors approved a grant to a senior advisor effective January 1, 2016 of a warrant to purchase up to 125,000 shares of common stock at a purchase price of $0.60 per share. Using the Black-Scholes Option Pricing Formula, the warrant was valued at $44,868, fair value. The warrant expires in 5 years and vests 31,250 immediately and the remaining in equal monthly installments of 9,375 over the next 10 months. The warrant is expensed over the vesting terms. For the nine months ending September 30, 2016, the Company recognized $35,584 of expense. For the three months ending September 30, 2016, the Company recognized $12,298 of expense. As of September 30, 2016, the warrant to purchase 125,000 shares of common stock is still outstanding.

 

 

 

11 
 

 

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2016 AND 2015

 

NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)

 

Common Stock Options and Warrants (Continued)

 

In January 2016, the Company signed a Purchase Agreement with an institutional investor to sell up to $20,000,000 of common stock. The Company also entered into a Registration Rights Agreement with the institutional investor whereby the Company agreed to file a registration statement related to the transaction with the U.S. Securities and Exchange Commission registering 5,000,000 shares of the Company’s common stock. The registration statement was filed on March 25, 2016. The registration became effective April 7, 2016. Under the Purchase Agreement and at Company's sole discretion, the institutional investor has committed to invest up to $20,000,000 in common stock over a 36-month period. The Company issued 350,000 shares of restricted common stock to the institutional investor as an initial commitment fee valued at $237,965, fair value and 650,000 shares of common stock are reserved for additional commitment fees to the institutional investor in accordance with the terms of the agreement. During three and nine month period ending September 30 2016, the institutional investor purchased 1,400,000 shares of common stock for proceeds of $964,200 and the Company issued 31,338 shares of common stock as additional commitment fee, valued at $22,177, fair value, leaving 618,662 in reserve for additional commitment fees. During October and November 2016, the institutional investor purchased 500,000 shares of common stock for proceeds of 246,320 and the Company issued 9,897 shares of common stock as additional commitment fee, valued at $6,241, fair value, leaving 608,765 in reserve for additional commitment fees.

 

In February 2016, under the 2007 Employee Stock Option Plan, the Company issued options to the Company’s six independent directors to each purchase 50,000 shares of common stock at a purchase price of $0.68 per share. The options were each valued at $21,475, fair value, using the Black-Scholes Option Pricing Formula. The options expire in 10 years with an aggregate of 20,000 vesting immediately and the remaining vest in quarterly equal installments of 10,000 commencing April 1, 2016. The options are expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $128,562 of expense. For the three months ending September 30, 2016, the Company recognized $25,770 of expense. As of September 30, 2016, the options to purchase 300,000 shares of common stock are still outstanding.

 

For the three months ending September 30, 2016 the Company issued 8,517 shares, with a fair value of $6,000, to a director serving as a member of the Company’s Operations Committee commencing August 2015. For the three months ending September 30, 2016, the Company recognized $6,000 of expense. For the nine months ending September 30, 2016 the Company issued 28,744 shares, with a fair value of $18,000. For the nine months ending September 30, 2016, the Company recognized $18,000 of expense. During October 2016, the Company issued 3,182 additional shares of common stock valued at $2,000.

 

In May 2016, under the 2007 Employee Stock Option Plan, the Company issued an option to a director to purchase 200,000 shares of common stock at a purchase price of $0.60 per share. The option was valued at $67,376, fair value, using the Black-Scholes Option Pricing Formula. The option expires in 10 years and vests immediately. The option is expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $67,376 of expense. For the three months ending September 30, 2016, the Company recognized $0 of expense. As of September 30, 2016, the option to purchase 200,000 shares of common stock is still outstanding.

 

12 
 

 

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2016 AND 2015

 

NOTE 6 – STOCKHOLDERS’ EQUITY (CONTINUED)

 

Common Stock Options and Warrants (Continued)

 

In May 2016, under the 2007 Employee Stock Option Plan, the Company issued an option to an employee to purchase 5,000 shares of common stock at a purchase price of $0.60 per share. The option was valued at $1,738, fair value, using the Black-Scholes Option Pricing Formula. The option expires in 10 years and vesting in quarterly equal installments of 625 commencing August 4, 2016. The option is expensed over the vesting terms. For the nine month ending September 30, 2016, the Company recognized $354 of expense. For the three months ending September 30, 2016, the Company recognized $223 of expense. As of September 30, 2016, the option to purchase 5,000 shares of common stock is still outstanding.

 

During the three month period ending June 30, 2016, an option issued in May 2011 to purchase 200,000 shares of common stock at an exercise price of $1.12 expired and warrants issued in April 2011 to purchase 150,000 shares of common stock at an exercise price of $1.18 expired.

 

In July 2016, under the 2016 Equity Incentive Plan, the board of directors approved a grant to a new employee of an option to purchase up to 15,000 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 $6,216, fair value. The option expires in 10 years and vests 1,875 on September 27, 2016 and the remaining in equal quarterly installments of 1,875 over the next 21 months. The option is expensed over the vesting terms. For the three month and nine months ending September 30, 2016, the Company recognized $803 of expense. As of September 30, 2016, the option to purchase 15,000 shares of common stock is still outstanding.

 

During July 2016, the Company issued a warrant to purchase 150,000 shares of common stock at a purchase price of $0.63 per share for accounting services to be rendered over a twelve month period commencing July 1, 2016. The warrant was valued at $60,272, fair value, using the Black-Scholes Option Pricing Formula, vesting over the next twelve months with 12,500 vesting immediately, 12,500 vesting per month on the first day of the next ten months and 12,500 vesting on the first day of the twelfth month of the corresponding service agreement. The warrant expires in five years. The expense is being recognized based on service terms of the agreement over a twelve month period. For the three and nine months ending September 30, 2016, the Company recognized $14,768 of expense. As of September 30, 2016, the warrants to purchase 150,000 shares of common stock are still outstanding.

 

Effective June 24, 2016, the 2007 Employee Stock Plan was terminated. The Board of Directors approved a new 2016 Equity Incentive Plan in the amount of 3,000,000 shares on April 15, 2016, which the Company’s shareholders approved on May 20, 2016.

 

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LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2016 AND 2015