UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________

FORM 10-Q

(Mark One)



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

For the quarterly period ended September 30, 2008

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 Number0-52567

Lightwave Logic, Inc.

(Exact name of registrant as specified in its charter)

|                                                                                                                                                          |                                                                    
|--------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------
|Nevada
(State or other jurisdiction of
Incorporation or Organization)

2601 Annand Drive
Suite 16
Wilmington, DE
(Address of principal executive offices) | 82-049-7368
(I.R.S. Employer
Identification No.)


19808
(Zip Code)
|Registrants telephone number, including area code: (302) 998-8824                                                                                       



Indicate by check mark whether the registrant (1) has filed all reports 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 ý No  ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (check one).

Large accelerated filer  ̈ Accelerated filer  ̈ Non-accelerated filer  ̈ Smaller Reporting Company ý

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

The number of shares of the registrants Common Stock outstanding as of November 10, 2008 was 35,268,076.









---

TABLE OF CONTENTS



|                                                                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Page                                                                                                                                                                                                                                                                                                   
|PART I  FINANCIAL INFORMATION                                                                                                                                                                                                                                                                         
|Item 1.Financial Statements
1
Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations
26
Item 4.Controls and Procedures
36
PART II  OTHER INFORMATION
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
37
Item 6.Exhibits
37
SIGNATURES
38









---





PART I  FINANCIAL INFORMATION



Item 1.

Financial Statements



LIGHTWAVE LOGIC, INC.

(A Development Stage Company)



FINANCIAL STATEMENTS



SEPTEMBER 30, 2008



(UNAUDITED)





CONTENTS

|                                        
|----------------------------------------
|                                        
|PAGE                                    
|                                        
|BALANCE SHEETS
2                        
|                                        
|STATEMENTS OF OPERATIONS
3              
|                                        
|STATEMENTS OF COMPREHENSIVE LOSS
4      
|                                        
|STATEMENTS OF STOCKHOLDERS EQUITY
5 - 8
|                                        
|STATEMENTS OF CASH FLOWS
9 - 10         
|                                        
|NOTES TO FINANCIAL STATEMENTS
11 - 25   









1



---





LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

BALANCE SHEETS

|                                                        |  |                    |             |                   |   |            |  
|------------------------------------------------------- |  | ------------------ | ----------- | ----------------- | - | ---------- | -
|                                                        |  | September 30, 2008 |             | December 31, 2007 |  
|                                                        |  | (Unaudited)        |             | (Audited)         |  
|ASSETS                                                  |  |                    |             |                   |   |            |  
|CURRENT ASSETS                                          |  |                    |             |                   |   |            |  
|Cash and cash equivalents                               |  | $                  | 135,339     |                   | $ | 479,451    |  
|Deferred charges                                        |  |                    |            |                   |   | 12,395     |  
|Prepaid expenses                                        |  |                    | 12,169      |                   |   | 7,294      |  
|Note receivable                                         |  |                    |            |                   |   | 100,000    |  
|Interest receivable                                     |  |                    |            |                   |   | 1,244      |  
|                                                        |  |                    | 147,508     |                   |   | 600,384    |  
|                                                        |  |                    |             |                   |   |            |  
|AVAILABLE FOR SALE SECURITIES                           |  |                    |             |                   |   |            |  
|Related party                                           |  |                    | 38,119      |                   |   | 26,779     |  
|Other                                                   |  |                    | 2,495       |                   |   | 2,411      |  
|                                                        |  |                    | 40,614      |                   |   | 29,190     |  
|                                                        |  |                    |             |                   |   |            |  
|PROPERTY AND EQUIPMENT - NET                            |  |                    | 65,270      |                   |   | 67,276     |  
|                                                        |  |                    |             |                   |   |            |  
|OTHER ASSETS                                            |  |                    |             |                   |   |            |  
|Intangible assets                                       |  |                    | 190,844     |                   |   | 174,421    |  
|                                                        |  |                    |             |                   |   |            |  
|TOTAL ASSETS                                            |  | $                  | 444,236     |                   | $ | 871,271    |  
|                                                        |  |                    |             |                   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                    |  |                    |             |                   |   |            |  
|CURRENT LIABILITIES                                     |  |                    |             |                   |   |            |  
|Accounts payable                                        |  | $                  | 31,085      |                   | $ | 103,426    |  
|Accounts payable - related party                        |  |                    | 10,531      |                   |   |           |  
|Accrued expenses                                        |  |                    | 98,205      |                   |   | 114,665    |  
|                                                        |  |                    | 139,821     |                   |   | 218,091    |  
|                                                        |  |                    |             |                   |   |            |  
|CONTINGENCY                                             |  |                    |            |                   |   |           |  
|                                                        |  |                    |             |                   |   |            |  
|TOTAL LIABILITIES                                       |  |                    | 139,821     |                   |   | 218,091    |  
|                                                        |  |                    |             |                   |   |            |  
|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   |  |                    |             |                   |   |            |  
|35,270,076 and 33,690,075 issued and outstanding at     |  |                    |             |                   |   |            |  
|September 30, 2008 and December 31, 2007                |  |                    | 35,270      |                   |   | 33,690     |  
|Additional paid-in-capital                              |  |                    | 13,764,801  |                   |   | 10,449,763 |  
|Deferred charges                                        |  |                    | (138,331    | )                 |   | (154,667   | )
|Unrealized loss on Available for Sale Securities        |  |                    | (47,017     | )                 |   | (58,610    | )
|Accumulated deficit                                     |  |                    | (15,827     | )                 |   | (15,827    | )
|Receivable for issuance of common stock                 |  |                    | (12,500     | )                 |   |           |  
|Deficit accumulated during development stage            |  |                    | (13,281,982 | )                 |   | (9,601,169 | )
|                                                        |  |                    |             |                   |   |            |  
|TOTAL STOCKHOLDERS' EQUITY                              |  |                    | 304,414     |                   |   | 653,180    |  
|                                                        |  |                    |             |                   |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              |  | $                  | 444,236     |                   | $ | 871,271    |  



See accompanying notes to these financial statements.

2



---





LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDING

SEPTEMBER 30, 2008 AND 2007 AND FOR THE PERIOD

JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 2008

(UNAUDITED)

|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|--------------------------------------------------- |  | -------------------------- | ----------- | ---------------------------------------------- | - | ---------------------------------------------- | - | --------------------------------------------- | ---------- | --------------------------------------------- | - | ---------- | - | - | ---------- | -
|                                                    |  | Cumulative
Since
Inception |             | For the Three
Months Ending
September 30, 2008 |   | For the Three
Months Ending
September 30, 2007 |   | For the Nine
Months Ending
September 30, 2008 |            | For the Nine
Months Ending
September 30, 2007 |  
|                                                    |  |                            |             |                                                |   |                                               
|                                                    |  |                            |             |                                                |   |                                               
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|NET SALES                                           |  | $                          |            |                                                | $ |                                               |   | $                                             |           |                                               | $ |           |   | $ |           |  
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|COST AND EXPENSE                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|Research and development                            |  |                            | 6,410,123   |                                                |   | 1,032,393                                      |   |                                               | 371,075    |                                               |   | 2,847,366  |   |   | 1,651,266  |  
|General and administrative                          |  |                            | 6,933,534   |                                                |   | 163,581                                        |   |                                               | 330,421    |                                               |   | 842,351    |   |   | 987,097    |  
|                                                    |  |                            | 13,343,657  |                                                |   | 1,195,974                                      |   |                                               | 701,496    |                                               |   | 3,689,717  |   |   | 2,638,363  |  
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|LOSS FROM OPERATIONS                                |  |                            | (13,343,657 | )                                              |   | (1,195,974                                     | ) |                                               | (701,496   | )                                             |   | (3,689,717 | ) |   | (2,638,363 | )
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|OTHER INCOME (EXPENSE)                              |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|Interest income                                     |  |                            | 29,393      |                                                |   | 2,702                                          |   |                                               | 2,990      |                                               |   | 11,368     |   |   | 4,573      |  
|Dividend income                                     |  |                            | 1,527       |                                                |   |                                               |   |                                               |           |                                               |   |           |   |   |           |  
|Realized gain (loss) on investment                  |  |                            | 63,079      |                                                |   |                                               |   |                                               |           |                                               |   | (108       | ) |   |           |  
|Realized gain on disposal of assets                 |  |                            | 637         |                                                |   |                                               |   |                                               |           |                                               |   |           |   |   |           |  
|Interest expense                                    |  |                            | (32,961     | )                                              |   | (829                                           | ) |                                               | (1,271     | )                                             |   | (2,356     | ) |   | (4,619     | )
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|NET LOSS                                            |  | $                          | (13,281,982 | )                                              | $ | (1,194,101                                     | ) | $                                             | (699,777   | )                                             | $ | (3,680,813 | ) | $ | (2,638,409 | )
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|Basic and Diluted Loss per Share                    |  |                            |             |                                                | $ | (0.03                                          | ) | $                                             | (0.02      | )                                             | $ | (0.11      | ) | $ | (0.09      | )
|                                                    |  |                            |             |                                                |   |                                                |   |                                               |            |                                               |   |            |   |   |            |  
|Basic and Diluted Weighted Average Number of Shares |  |                            |             |                                                |   | 35,017,902                                     |   |                                               | 31,622,535 |                                               |   | 34,505,623 |   |   | 30,538,858 |  





See accompanying notes to these financial statements.

3



---





LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDING

SEPTEMBER 30, 2008 AND 2007 AND FOR THE PERIOD

JANUARY 1, 2004 (INCEPTION OF DEVELOPMENT STAGE) TO SEPTEMBER 30, 2008

(UNAUDITED)

|                                                        |  |                            |             |                                                  |   |                                                 |   |                                               |          |   |                                                |            |   |   |            |  
|------------------------------------------------------- |  | -------------------------- | ----------- | ------------------------------------------------ | - | ----------------------------------------------- | - | --------------------------------------------- | -------- | - | ---------------------------------------------- | ---------- | - | - | ---------- | -
|                                                        |  | Cumulative
Since
Inception |             | For the Three
 Months Ending 
September 30, 2008 |   | For the Three
 Months Ending
September 30, 2007 |   | For the Nine
Months Ending
September 30, 2008 |          |   | For the Nine
 Months Ending
September 30, 2007 |           
|                                                        |  |                            |             |                                                  |   |                                                 |  
|                                                        |  |                            |             |                                                  |   |                                                 |  
|                                                        |  |                            |             |                                                  |   |                                                 |   |                                               |          |   |                                                |            |   |   |            |  
|NET LOSS                                                |  | $                          | (13,281,982 | )                                                | $ | (1,194,101                                      | ) | $                                             | (699,777 | ) | $                                              | (3,680,813 | ) | $ | (2,638,409 | )
|                                                        |  |                            |             |                                                  |   |                                                 |   |                                               |          |   |                                                |            |   |   |            |  
|OTHER COMPREHENSIVE INCOME (LOSS)                       |  |                            |             |                                                  |   |                                                 |   |                                               |          |   |                                                |            |   |   |            |  
|Unrealized gain (loss) on Available for Sale Securities |  |                            | (47,017     | )                                                |   | 3,641                                           |   |                                               | (7,333   | ) |                                                | 11,593     |   |   | (23,761    | )
|                                                        |  |                            |             |                                                  |   |                                                 |   |                                               |          |   |                                                |            |   |   |            |  
|                                                        |  |                            |             |                                                  |   |                                                 |   |                                               |          |   |                                                |            |   |   |            |  
|COMPREHENSIVE LOSS                                      |  | $                          | (13,328,999 | )                                                | $ | (1,190,460                                      | ) | $                                             | (707,110 | ) | $                                              | (3,669,220 | ) | $ | (2,662,170 | )





See accompanying notes to these financial statements.

4



---





LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS EQUITY

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

SEPTEMBER 30, 2008

(UNAUDITED)



|                                                                                                   |  |  |                  |  |              |        |                 |   |                         |   |                  |        |                               |   |                     |   |                                              |   |       |   |         |   |   |            |   |   |            |  
|-------------------------------------------------------------------------------------------------- |  |  | ---------------- |  | ------------ | ------ | --------------- | - | ----------------------- | - | ---------------- | ------ | ----------------------------- | - | ------------------- | - | -------------------------------------------- | - | ----- | - | ------- | - | - | ---------- | - | - | ---------- | -
|                                                                                                   |  |  | Number
of Shares |  | Common
Stock |        | Paid-in
Capital |   | Subscription
Receivable |   | Deferred
Charges |        | Unrealized
Loss on
Securities |   | Accumulated
Deficit |   | Deficit
Accumulated
During
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    |  



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

SEPTEMBER 30, 2008

(UNAUDITED)



|                                                                                            |  |  |                  |  |              |        |                 |   |                         |  |                  |        |                               |   |                     |   |                                              |         |       |   |         |   |   |            |   |   |            |  
|------------------------------------------------------------------------------------------- |  |  | ---------------- |  | ------------ | ------ | --------------- | - | ----------------------- |  | ---------------- | ------ | ----------------------------- | - | ------------------- | - | -------------------------------------------- | ------- | ----- | - | ------- | - | - | ---------- | - | - | ---------- | -
|                                                                                            |  |  | Number
of Shares |  | Common
Stock |        | Paid-in
Capital |   | Subscription
Receivable |  | Deferred
Charges |        | Unrealized
Loss on
Securities |   | Accumulated
Deficit |   | Deficit
Accumulated
During
Development
Stage |         | Total |  
|                                                                                            |  |  |                  |  |              |        |                 |   |                         |  |                 
|                                                                                            |  |  |                  |  |              |        |                 |   |                         |  |                 
|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    |  
|Unrealzed 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

SEPTEMBER 30, 2008

(UNAUDITED)



|                                                                                                          |  |  |                  |   |              |        |                 |   |                         |   |                  |   |                               |   |                     |   |                                              |         |       |   |         |   |   |            |   |   |            |  
|--------------------------------------------------------------------------------------------------------- |  |  | ---------------- | - | ------------ | ------ | --------------- | - | ----------------------- | - | ---------------- | - | ----------------------------- | - | ------------------- | - | -------------------------------------------- | ------- | ----- | - | ------- | - | - | ---------- | - | - | ---------- | -
|                                                                                                          |  |  | Number
of Shares |   | Common
Stock |        | Paid-in
Capital |   | Common Stock
Receivable |   | Deferred
Charges |   | Unrealized
Loss on
Securities |   | Accumulated
Deficit |   | Deficit
Accumulated
During
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 (AUDITED)                                                                    |  |  | 33,690,075       |   |              | 33,690 |                 |   | 10,449,763              |   |                  |  |                               |   | (154,667            | ) |                                              | (58,610 | )     |   | (15,827 | ) |   | (9,601,169 | ) |   | 653,180    |  



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

SEPTEMBER 30, 2008

(UNAUDITED)



|                                                                                                        |  |  |                  |  |              |        |                 |   |                         |  |                  |         |                               |   |                     |   |                                              |         |       |   |         |   |   |             |   |   |            |  
|------------------------------------------------------------------------------------------------------- |  |  | ---------------- |  | ------------ | ------ | --------------- | - | ----------------------- |  | ---------------- | ------- | ----------------------------- | - | ------------------- | - | -------------------------------------------- | ------- | ----- | - | ------- | - | - | ----------- | - | - | ---------- | -
|                                                                                                        |  |  | Number
of Shares |  | Common
Stock |        | Paid-in
Capital |   | Common Stock
Receivable |  | Deferred
Charges |         | Unrealized
Loss on
Securities |   | Accumulated
Deficit |   | Deficit
Accumulated
During
Development
Stage |         | Total |  
|                                                                                                        |  |  |                  |  |              |        |                 |   |                         |  |                 
|                                                                                                        |  |  |                  |  |              |        |                 |   |                         |  |                 
|BALANCE AT DECEMBER 31, 2007 (AUDITED)                                                                  |  |  | 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 $0.50/share                                                                     |  |  | 270,000          |  |              | 270    |                 |   | 134,730                 |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 135,000    |  
|Warrants issued for services in September 2005, vested through September 2008, valued at $1.45/share    |  |  |                 |  |              |       |                 |   | 27,014                  |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 27,014     |  
|Warrants issued for services in March 2007, vested through September 2008, valued at $0.63/share        |  |  |                 |  |              |       |                 |   | 10,885                  |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 10,885     |  
|Warrants issued for services in April 2007, vested through September 2008, valued at $0.69/share        |  |  |                 |  |              |       |                 |   | 121,713                 |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 121,713    |  
|Warrants issued for services in April 2007, vested through September 2008, valued at $0.63/share        |  |  |                 |  |              |       |                 |   | 48,738                  |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 48,738     |  
|Warrants issued for services in May 2007, vested through September 2008, valued at $0.56/share          |  |  |                 |  |              |       |                 |   | 31,444                  |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 31,444     |  
|Warrants issued for services in December 2007, vested through September 2008, valued at $0.55/share     |  |  |                 |  |              |       |                 |   | 10,224                  |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 10,224     |  
|Options issued for services in November 2007, vested through September 2008, valued at $0.60/share      |  |  |                 |  |              |       |                 |   | 236,604                 |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 236,604    |  
|Options issued for services in January 2008, vested through September 2008, valued at $0.60/share       |  |  |                 |  |              |       |                 |   | 25,752                  |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 25,752     |  
|Options issued for services in July 2008, vested through September 2008, valued at $1.48/share          |  |  |                 |  |              |       |                 |   | 89,631                  |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 89,631     |  
|Options issued for services in August 2008, vested through September 2008, valued at $1.36/share        |  |  |                 |  |              |       |                 |   | 342,420                 |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | 342,420    |  
|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                                                                        |  |  |                 |  |              |       |                 |   |                        |  |                  |        |                               |   | 348,336             |   |                                              |        |       |   |        |   |   |            |   |   | 348,336    |  
|Receivable for the issuance of common stock                                                             |  |  |                 |  |              |       |                 |   |                        |  |                  | (12,500 | )                             |   |                    |   |                                              |        |       |   |        |   |   |            |   |   | (12,500    | )
|Unrealized gain (loss) on securities                                                                    |  |  |                 |  |              |       |                 |   |                        |  |                  |        |                               |   |                    |   |                                              | 11,593  |       |   |        |   |   |            |   |   | 11,593     |  
|Net loss for the nine months ending September 30, 2008                                                  |  |  |                 |  |              |       |                 |   |                        |  |                  |        |                               |   |                    |   |                                              |        |       |   |        |   |   | (3,680,813  | ) |   | (3,680,813 | )
|                                                                                                        |  |  |                  |  |              |        |                 |   |                         |  |                  |         |                               |   |                     |   |                                              |         |       |   |         |   |   |             |   |   |            |  
|BALANCE AT SEPTEMBER 30, 2008 (UNAUDITED)                                                               |  |  | 35,270,076       |  | $            | 35,270 |                 | $ | 13,764,801              |  | $                | (12,500 | )                             | $ | (138,331            | ) | $                                            | (47,017 | )     | $ | (15,827 | ) | $ | (13,281,982 | ) | $ | 304,414    |  





See accompanying notes to these financial statements.

8



---





LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOW FOR THE NINE MONTHS ENDING

SEPTEMBER 30, 2008 AND 2007 AND

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

SEPTEMBER 30, 2008

(UNAUDITED)



|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|------------------------------------------------------------------------- |  | -------------------------- | ----------- | ---------------------------------------------- | - | ---------------------------------------------- | - | - | ---------- | -
|                                                                          |  | Cumulative
Since
Inception |             | For the Nine
Months Ending
September 30, 
2008 |   | For the Nine
Months Ending
September 30, 
2007 |  
|                                                                          |  |                            |             |                                               
|                                                                          |  |                            |             |                                               
|CASH FLOWS FROM OPERATING ACTIVITIES                                      |  |                            |             |                                                |   |                                                |   |   |            |  
|Net loss                                                                  |  | $                          | (13,281,982 | )                                              | $ | (3,680,813                                     | ) | $ | (2,638,409 | )
|Adjustment to reconcile net loss to net cash
used in operating activities |  |                            |             |                                                |   |                                                |   |   |            |  
|Amortization of deferred charges                                          |  |                            | 4,254,125   |                                                |   | 360,731                                        |   |   | 1,246,346  |  
|Warrants issued for services                                              |  |                            | 2,060,173   |                                                |   | 1,226,211                                      |   |   | 417,037    |  
|Stock options issued for services                                         |  |                            | 1,559,794   |                                                |   | 694,407                                        |   |   | 61,346     |  
|Common stock issued for services                                          |  |                            | 965,292     |                                                |   | 435,000                                        |   |   | 5,292      |  
|Depreciation                                                              |  |                            | 57,351      |                                                |   | 12,213                                         |   |   | 12,461     |  
|Realized (gain) loss on investments                                       |  |                            | (63,079     | )                                              |   | 108                                            |   |   |           |  
|Realized gain on disposal of assets                                       |  |                            | (637        | )                                              |   |                                               |   |   |           |  
|(Increase) decrease in assets                                             |  |                            |             |                                                |   |                                                |   |   |            |  
|Receivables                                                               |  |                            | (30,461     | )                                              |   | 1,244                                          |   |   | (101,285   | )
|Prepaid expenses                                                          |  |                            | (12,169     | )                                              |   | (4,875                                         | ) |   | 4,784      |  
|Increase (decrease) in liabilities                                        |  |                            |             |                                                |   |                                                |   |   |            |  
|Accounts payable                                                          |  |                            | 119,000     |                                                |   | (72,341                                        | ) |   | 47,859     |  
|Accounts payable - related party                                          |  |                            | 10,531      |                                                |   | 10,531                                         |   |   | (65,339    | )
|Accrued expenses                                                          |  |                            | 32,690      |                                                |   | (16,460                                        | ) |   | (5,113     | )
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|Net cash used in operating activities                                     |  |                            | (4,329,372  | )                                              |   | (1,034,044                                     | ) |   | (1,015,021 | )
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                      |  |                            |             |                                                |   |                                                |   |   |            |  
|Cost of intangibles                                                       |  |                            | (190,844    | )                                              |   | (16,423                                        | ) |   | (108,647   | )
|Proceeds from sale of available for sale securities                       |  |                            | 175,449     |                                                |   | 62                                             |   |   |           |  
|Proceeds from sale of note receivable                                     |  |                            | 100,000     |                                                |   | 100,000                                        |   |   |           |  
|Purchase of available for sale securities                                 |  |                            | (200,000    | )                                              |   |                                               |   |   |           |  
|Purchase of equipment                                                     |  |                            | (85,371     | )                                              |   | (10,207                                        | ) |   | (42,536    | )
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|Net cash provided by (used in) investing activities                       |  |                            | (200,766    | )                                              |   | 73,432                                         |   |   | (151,183   | )
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                      |  |                            |             |                                                |   |                                                |   |   |            |  
|Issuance of common stock, private placement                               |  |                            | 4,140,524   |                                                |   | 414,000                                        |   |   | 1,241,000  |  
|Common stock rescinded, private placement                                 |  |                            | (200,000    | )                                              |   |                                               |   |   |           |  
|Issuance of common stock, exercise of warrants                            |  |                            | 202,500     |                                                |   | 202,500                                        |   |   |           |  
|Repayment of notes payable                                                |  |                            | (14,970     | )                                              |   |                                               |   |   | (3,695     | )
|Proceeds from subscription receivable                                     |  |                            | 6,500       |                                                |   |                                               |   |   |           |  
|Advances to stockholders                                                  |  |                            | (4,933      | )                                              |   |                                               |   |   |           |  
|Proceeds from convertible notes                                           |  |                            | 529,000     |                                                |   |                                               |   |   |           |  
|Advances from officers                                                    |  |                            | 1,498       |                                                |   |                                               |   |   |           |  
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|Net cash provided by financing activities                                 |  |                            | 4,660,119   |                                                |   | 616,500                                        |   |   | 1,237,305  |  
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                      |  |                            | 129,981     |                                                |   | (344,112                                       | ) |   | 71,101     |  
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD                           |  |                            | 5,358       |                                                |   | 479,451                                        |   |   | 528        |  
|                                                                          |  |                            |             |                                                |   |                                                |   |   |            |  
|CASH AND CASH EQUIVALENTS - END OF PERIOD                                 |  | $                          | 135,339     |                                                | $ | 135,339                                        |   | $ | 71,629     |  



See accompanying notes to these financial statements.

9



---





LIGHTWAVE LOGIC, INC.

(A Development Stage Company)

STATEMENTS OF CASH FLOW FOR THE NINE MONTHS ENDING

SEPTEMBER 30, 2008 AND 2007 AND

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

SEPTEMBER 30, 2008

(UNAUDITED)



|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|------------------------------------------------------------------------- |  | -------------------------- | --------- | ---------------------------------------------- | - | ---------------------------------------------- |  | - | ------- | -
|                                                                          |  | Cumulative
Since
Inception |           | For the Nine
Months Ending
September 30, 
2008 |   | For the Nine
Months Ending
September 30, 
2007 | 
|                                                                          |  |                            |           |                                               
|                                                                          |  |                            |           |                                               
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                         |  |                            |           |                                                |   |                                                |  |   |         |  
|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|CASH PAID DURING THE PERIOD FOR:                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|Interest                                                                  |  | $                          | 20,352    |                                                | $ | 2,356                                          |  | $ | 1,271   |  
|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES    |  |                            |           |                                                |   |                                                |  |   |         |  
|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|Common stock issued in exchange for deferred charges                      |  | $                          | 3,142,400 |                                                | $ |                                               |  | $ | 686,250 |  
|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|Warrants issued in exchange for deferred charges                          |  | $                          | 1,581,056 |                                                | $ | 332,000                                        |  | $ | 288,428 |  
|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|Common stock issued as settlement for accounts payable                    |  | $                          | 29,708    |                                                | $ |                                               |  | $ | 29,708  |  
|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|Increase/(Decrease) in fair value of investment securities                |  | $                          | 70,203    |                                                | $ | 11,593                                         |  | $ | (23,761 | )
|                                                                          |  |                            |           |                                                |   |                                                |  |   |         |  
|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                                   |  | $                          | 12,500    |                                                | $ | 12,500                                         |  | $ |        |  







See accompanying notes to these financial statements.

10



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 1- FINANCIAL STATEMENTS



The accompanying unaudited financial 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 2007 Annual Report.  Certain financial information and footnote disclosures normally indicated in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to those rules and regulations, 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-KSB for the year ended December 31, 2007, as filed with the Securities and Exchange Commission.   The interim operating results for the three and nine months ending September 30, 2008 may not be indicative of operating results expected for the full year.



Loss per Share

The company follows SFAS 128, Earnings per Share, resulting in the presentation of basic and diluted loss per share.  The basic loss per share calculations includes the change in capital structure for all periods presented.  Because the Company reported a net loss for each of the three and nine months ending September 30, 2008 and 2007, common stock equivalents consisting of options and warrants were anti-dilutive; therefore, the basic and diluted net loss per share for each of these periods was the same.



Recently Issued Accounting Pronouncements

During September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements (SFAS 157), which is effective for fiscal years beginning after November 15, 2007 with earlier adoption encouraged. SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. In February 2008, the FASB issued FASB Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which delayed the effective date of SFAS 157 for all non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis, until January 1, 2009.   The Company adopted SFAS 157 on January 1, 2008 for all financial assets and liabilities, but the implementation did not require additional disclosures or have a significant impact on the Company's financial statements.  The Company has not yet determined the impact the implementation of SFAS 157 will have on the Companys non-financial assets and liabilities which are not recognized or disclosed on a recurring basis.  However, the Company does not anticipate that the full adoption of SFAS 157 will significantly impact their consolidated financial statements.



11



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 1- FINANCIAL STATEMENTS (CONTINUED)



Recently Issued Accounting Pronouncements (Continued)

During February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an amendment of FASB Statement No. 115 (SFAS 159), which permits entities to choose to measure many financial instruments and certain other items at fair value. The objective of SFAS 159 is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company has adopted SFAS 159 on January 1, 2008 and has elected not to measure any additional financial assets, liabilities or other items at fair value.



In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS 141R). SFAS 141R establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. SFAS 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement is effective for the Company beginning January 1, 2009 and will change the accounting for business combinations on a prospective basis.



In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statementsan amendment of Accounting Research Bulletin No. 51 (SFAS 160). SFAS 160 establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the noncontrolling interest, changes in a parents ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. This statement is effective for the Company beginning January 1, 2009.   This statement is not currently applicable since it has no majority-owned subsidiaries.



In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS 161), which is effective January 1, 2009. SFAS 161 requires enhanced disclosures about derivative instruments and hedging activities to allow for a better understanding of their effects on an entitys financial position, financial performance, and cash flows. Among other things, SFAS 161 requires disclosures of the fair values of derivative instruments and associated gains and losses in a tabular formant.  SFAS 161 is not currently applicable to the Company since the Company does not have derivative investments of hedging activity.



In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162, The Hierarchyof Generally Accepted Accounting Principles(FAS 162"). This Standard identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles. FAS 162 directs thehierarchy to the entity, rather than the independent auditors, as the entity is responsible for selecting accounting principles for financial statements that are presented in conformity with generally accepted accounting principles. The Standard is effective 60 days following SEC approval of the Public Company Accounting Oversight Board amendments to remove the hierarchy of generally accepted accounting principles from the auditing standards. FAS 162 is not expected to have an impact on the financial statements.



12



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 1- FINANCIAL STATEMENTS (CONTINUED)



Recently Issued Accounting Pronouncements (Continued)

In April 2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets.This Staff Position is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. Early adoption is prohibited. Application of this FSP is not expected to have a significant impact on the financial statements.



In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities. This FSP provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The Company does not currently have any share-based awards that would qualify as participating securities. Therefore, application of this FSP is not expected to have an effect on the Company's financial reporting.



In May 2008, the FASB issued FASB Staff Position (FSP) APB 14-1, Accounting for Convertible Debt That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)("FSP 14-1"). FSP 14-1 will be effective for financial statements issued for fiscal years beginning after December 15, 2008. The FSP includes guidance that convertible debt instruments that may be settled in cash upon conversion should be separated between the liability and equity components, with each component being accounted for in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest costs are recognized in subsequent periods. This FSP is not currently applicable to the Company.



In October 2008, the FASB issued FAS Staff Position (FSP) 157-3, "Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active." This is effective upon issuance, including prior periods for which financial statements have not been issued. This FSP applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with Statement 157.This FSP clarifies the application of Statement 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP 1573 did not have an impact on the companys financial statements.



Reclassifications

Certain reclassifications have been made to the September 30, 2007 financial statements to conform to the September 30, 2008 presentation.





NOTE 2  RESTATEMENT



The accompanying September 30, 2007 financial statements have been restated to reflect the adjusted valuation of warrants issued for management services.  Originally the warrant was valued at $288,428 and amortized over the life of the contract, which is one year.  The adjusted valuation of the warrant was $348,000.  The effect of this restatement was a net increase in the net loss of $14,892 and $34,749 for the three and nine months ended September 30, 2007, for the additional amortization expense associated with the adjusted valuation.



13



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 3  GOING CONCERN



The accompanying financial statements have been prepared assuming the Company will continue as a going concern.  The Company has incurred significant losses and experienced negative cash flow during the development stage.  These conditions 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.



The Company is in the development stage at September 30, 2008.  Currently, the Company has funds to maintain its operations through November 2008. The Companys development is proceeding on schedule and management hopes to demonstrate a prototype by the end of the first quarter of 2009. Management is in the process of developing a business plan that it believes will be attractive enough to investors to raise the necessary capital. However, there can be no assurances that the Company will be able to secure the necessary financing and/or equity investment or achieve an adequate sales level. Successful completion of the Companys prototype could lead to adequate financing to fulfill its development activities and achieve a level of revenue adequate to support the Companys cost structure for the following three years.



NOTE 4  DEFERRED CHARGES



Deferred charges represent the unamortized fair value of the issuance of common stock and warrants for future services to non-employees which was accounted for in accordance with Emerging Issue Task Force No. 96-18, Accounting for Equity Instruments That Are Issued To Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, as follows:



|                                          |  |                    |           |                   |   |           | 
|----------------------------------------- |  | ------------------ | --------- | ----------------- | - | --------- | 
|                                          |  | September 30, 2008 |           | December 31, 2007 |  
|                                          |  |                    |           |                   |   |           | 
|Common stock                              |  | $                  | 2,811,400 |                   | $ | 2,811,400 | 
|Warrants                                  |  |                    | 1,581,056 |                   |   | 1,249,056 | 
|                                          |  |                    | 4,392,456 |                   |   | 4,060,456 | 
|Less: Accumulated Amortization            |  |                    | 4,254,125 |                   |   | 3,893,394 | 
|                                          |  |                    | 138,331   |                   |   | 167,062   | 
|Less: Amount reflected as a contra-equity |  |                    |           |                   |   |           | 
|account for management                    |  |                    |           |                   |   |           | 
|consulting services provided by           |  |                    |           |                   |   |           | 
|related party                             |  |                    | 138,331   |                   |   | 154,667   | 
|                                          |  |                    |           |                   |   |           | 
|                                          |  | $                  |          |                   | $ | 12,395    | 





14



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 5 – NOTE RECEIVABLE



Note Receivable consists of the following:



|                                                                                |  |                    |   |                   |   |         | 
|------------------------------------------------------------------------------- |  | ------------------ | - | ----------------- | - | ------- | 
|                                                                                |  | September 30,
2008 |   | December 31,
2007 |  
|                                                                                |  |                    |  
|                                                                                |  |                    |   |                   |   |         | 
|Note Receivable - Theater Xtreme Entertainment Group, Inc.,                     |  | $                  |  |                   | $ | 100,000 | 
|bears interest at 14% per year, matured one year from the date of issue         |  |                    |   |                   |   |         | 
|(August 15, 2008) and may be prepaid at any time without penalty.               |  |                    |   |                   |   |         | 
|Pursuant to the term of the Note, the Company received warrants to              |  |                    |   |                   |   |         | 
|purchase 50,000 shares of common stock at an exercise price of $1.00            |  |                    |   |                   |   |         | 
|per share.  The value of the warrant is $2,300 at September 30, 2008 and        |  |                    |   |                   |   |         | 
|$2,300 at December 31, 2007. using the Black-Scholes pricing formula.           |  |                    |   |                   |   |         | 
|This value is included in the investments.                                      |  |                    |   |                   |   |         | 
|This note was assigned in August 2008 for consideration of                      |  |                    |   |                   |   |         | 
|$100,000 (the face value of the promissory note) paid to the Company            |  |                    |   |                   |   |         | 
|by the assignees.  The Company assigned, transferred and conveyed               |  |                    |   |                   |   |         | 
|to the assignees all of its rights, title and interest in and to the promissory |  |                    |   |                   |   |         | 
|note.                                                                           |  |                    |   |                   |   |         | 
|                                                                                |  |                    |   |                   |   |         | 
|Total                                                                           |  | $                  |  |                   | $ | 100,000 | 



NOTE 6 – AVAILABLE FOR SALE SECURITIES



As described in Note 1, the Company partially adopted SFAS No. 157 on January 1, 2008.  SFAS No. 157, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis.  SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.  As a basis for considering such assumptions, SFAS No. 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:



Level 1

Observe inputs such as quoted prices in active markets;



Level 2

Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and



Level 3

Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.



15



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 6  AVAILABLE FOR SALE SECURITIES (CONTINUED)



Assets measured at fair value on a recurring basis are as follows:



|                                    |  |                               |        |  |                                                                |        |                                                |   |                                           |  |   |       | 
|----------------------------------- |  | ----------------------------- | ------ |  | -------------------------------------------------------------- | ------ | ---------------------------------------------- | - | ----------------------------------------- |  | - | ----- | 
|                                    |  |                               |        |  | Quoted Prices in
Active Markets for
Identical Assets
(Level 1) |        | Siginificant Other
Observable
Inputs
(Level 2) |   | Significant
Unobservable
Inputs
(Level 3)
|                                    |  |                               |        |  |                                                                |       
|                                    |  | Fair Value
September 30, 2008 |        |  |                                                               
|                                    |  |                               |        | 
|                                    |  |                               |        |  |                                                                |        |                                                |   |                                           |  |   |       | 
|Available for sale securities       |  |                               |        |  |                                                                |        |                                                |   |                                           |  |   |       | 
|Related Party                       |  | $                             | 38,119 |  | $                                                              | 38,119 |                                                | $ |                                          |  | $ | —     | 
|Other                               |  |                               | 2,495  |  |                                                                | 195    |                                                |   |                                          |  |   | 2,300 | 
|                                    |  |                               |        |  |                                                                |        |                                                |   |                                           |  |   |       | 
|Total available for sale securities |  | $                             | 40,614 |  | $                                                              | 38,314 |                                                | $ |                                          |  | $ | 2,300 | 
|                                    |  |                               |        |  |                                                                |        |                                                |   |                                           |  |   |       | 





|                                                   |  |                                                                        |       | 
|-------------------------------------------------- |  | ---------------------------------------------------------------------- | ----- | 
|                                                   |  | Fair Value Measurement Using
Significant Unobservable Inputs
(Level 3) |      
|                                                   |  |                                                                        |       | 
|Beginning Balance, January 1, 2008                 |  | $                                                                      | 2,300 | 
|                                                   |  |                                                                        |       | 
|Total gains or losses (realized/unrealized)        |  |                                                                        |       | 
|Included in earnings                               |  |                                                                        |      | 
|Included in other comprehensive income             |  |                                                                        | o     | 
|Purchases, issuance and settlements                |  |                                                                        |      | 
|                                                   |  |                                                                        |       | 
|Ending Balance, September 30, 2008                 |  | $                                                                      | 2,300 | 
|                                                   |  |                                                                        |       | 
|                                                   |  |                                                                        |       | 
|The amount of total gains or losses for the period |  |                                                                        |       | 
|included in earnings attributable to the change    |  |                                                                        |       | 
|in unrealized gains or losses relating to assets   |  |                                                                        |       | 
|still held at the reporting date.                  |  | $                                                                      |      | 





NOTE 7 – EQUIPMENT



Equipment consists of the following:



|                               |  |                    |        |                   |   |        | 
|------------------------------ |  | ------------------ | ------ | ----------------- | - | ------ | 
|                               |  | September 30, 2008 |        | December 31, 2007 |  
|                               |  |                    |        |                   |   |        | 
|Office equipment               |  | $                  | 7,727  |                   | $ | 23,752 | 
|Lab equipment                  |  |                    | 82,105 |                   |   | 75,165 | 
|                               |  |                    | 89,832 |                   |   | 98,917 | 
|Less: Accumulated depreciation |  |                    | 24,562 |                   |   | 31,641 | 
|                               |  |                    |        |                   |   |        | 
|                               |  | $                  | 65,270 |                   | $ | 67,276 | 



Depreciation expense for the nine months ending September 30, 2008 and 2007 was $12,213 and $12,461.



16



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 8  INTANGIBLE ASSETS



This represents legal fees and patent fees associated with the registration of patents.  The Company has not recorded any amortization expenses 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.





NOTE 9  INCOME TAXES



There is no income tax benefit for the losses for the nine months ended September 30, 2008 and 2007 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, 2008, 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 September 30, 2008.  The Company did not recognize any interest or penalties during 2008 related to unrecognized tax benefits.  Tax years from 2005 through 2007 remain subject to examination by major tax jurisdictions.



NOTE 10 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.



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 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 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.



17



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 10  STOCKHOLDERS EQUITY (CONTINUED)



Common Stock and Warrants (Continued)

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, 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 SFAS No. 123, the Company recognized consulting expense of $37,000 in 2005.  This warrant was cancelled during 2006.



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 $36,370, $66,500 and $24,200 for the years ended December 31, 2007, 2006 and 2005 in conjunction with this agreement.  For the nine months ending September 30, 2008, the Company recognized $27,014 in consulting expense.



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 SFAS No. 123, the Company recognized consulting expense of $15,900 during 2005.  These warrants expired in October 2006.



18



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 10  STOCKHOLDERS EQUITY (CONTINUED)



Common Stock and Warrants (Continued)

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 SFAS No. 123, 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.  As of September 30, 2008, the remaining warrants to purchase 200,000 shares of common stock were fully exercised.



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.



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 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 expire 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 $75,000.



19



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 10  STOCKHOLDERS EQUITY (CONTINUED)



Common Stock and Warrants (Continued)

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.  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 an outstanding subscription receivable of $6,500 to be uncollectible.



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.  As of September 30, 2008, 270,000 warrants were exercised at $0.50 per share for a total of $135,000 and warrants to purchase 971,000 shares of common stock are still outstanding.  A common stock receivable of $12,500 was recorded at September 30, 2008.



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 offerings, 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.  As of September 30, 2008, the warrants to purchase 883,770 shares of common stock are still outstanding.



During 2007, 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.  For the nine months ending September 30, 2008, the Company recognized $8,854 in investor relations expense.  This contract expired in February 2008.



20



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 10  STOCKHOLDERS EQUITY (CONTINUED)



Common Stock and Warrants (Continued)

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 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 of $773,333 was recognized during 2007.  For the nine months ending September 30, 2008, $154,667 was recognized as management consulting expense.  This contract expired in February 2008.



During April 2007, the Company issued 100,000 shares of common stock for legal services 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.  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 relation services pursuant to a contract entered into by the Chief Executive Officer on behalf of the Company.  The value of these shares is $135,000, fair value.  During 2007, the Company recognized $135,000 in investor relations expense.



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 2007 is $52,180.  For the nine months ending September 30, 2008 the Company recognized $10,885 of consulting expense.  The warrant is still outstanding as of September 30, 2008.



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 2007 is $433,966.  For the nine months ending September 30, 2008, the Company recognized $170,451 in consulting expense.  The warrants are still outstanding as of September 30, 2008.



21



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 10  STOCKHOLDERS EQUITY (CONTINUED)



Common Stock and Warrants (Continued)

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 2007 is $52,946.  For the nine months ending September 30, 2008, the Company recognized $31,444 in consulting expense.  The warrant is still outstanding as of September 30, 2008.



During October 2007, the Company issued a warrant to purchase 100,000 shares of common stock at an exercise 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 September 30, 2008.



During October 2007, the Company issued a warrant to purchase 67,200 shares of common stock at a exercise 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. The warrant was partially exercised to buy 20,000 shares of common stock in July, 2008. As of September 30, 2008, warrant to purchase 47,200 shares is still outstanding.



During December 2007, the Company issued a warrant to purchase 25,000 shares of common stock at an exercise 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 $1,159 in consulting expense during 2007.  For the nine months ending September 30, 2008, the Company recognized $10,224 in consulting expense.  The warrant is still outstanding as of September 30, 2008.



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 exercise price of $0.72 per share.  The options were valued at $1,045,077 using the Black-Scholes Option Pricing Formula.  During 2007, the Company recognized $41,653 in consulting expense.  For the nine months ending September 30, 2008, the Company recognized $236,604 of expense.  The value of the options is being recognized on a monthly basis over a three year period beginning on the grant date.  These options are still outstanding as of September 30, 2008.



In January 2008, under the 2007 Employee Stock Option Plan, the Company issued an option to purchase 100,000 shares of common stock at an exercise price of $0.72 per share.  The option was valued at $59,490 using the Black-Scholes Option Pricing Formula.  For the nine months ending September 30, 2008, the Company recognized $25,752 of expense.  The value of the option is being recognized on a monthly basis over a four year period beginning on the grant date.  The option is still outstanding as of September 30, 2008.



22



---

LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 10  STOCKHOLDERS EQUITY (CONTINUED)



Common Stock and Warrants (Continued)

During 2008, the Company issued 690,001 shares of common stock and warrants to purchase 345,000 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 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.  As of September 30, 2008, the warrants are still outstanding.



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.  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.  Management consulting expense of $193,669 was recognized for the nine months ending September 30, 2008.    The warrant is still outstanding as of September 30, 2008.



During March 2008, the company issued 100,000 shares of common stock for legal services valued at $75,000, fair value.  The Company recognized $75,000 of legal expense for the six months ending September 30, 2008.



During April 2008, the Company issued a warrant to purchase 600,000 shares of common stock at a exercise price of $0.73 per share for consulting services rendered.  The warrant was valued at $976,193 using the Black-Scholes Option Pricing Formula.  For the nine months ended September 30, 2008, the Company recognized $976,193 in consulting expense.  The warrant is still outstanding as of September 30, 2008.



In July 2008, the Company issued options to purchase 200,000 shares of common stock at a purchase price of $1.48 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. For the nine months ending September 30, 2008, the Company recognized $89,631 of expense. The values of the options are being recognized on a monthly basis over a three year period beginning on the grant date. The options are still outstanding as of September 30, 2008.



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 $1.36 per share to members of the board of directors and the Chief Executive Officer, respectively. The options were valued at $2,176,201 using the Black-Scholes Option Pricing Formula.  For the nine months ending September 30, 2008, the Company recognized $342,420 of expense. The values of the options are being recognized on a monthly basis over a three year period beginning on the grant date. The options are still outstanding as of September 30, 2008.



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 during the nine months ended September 30, 2008.



23



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LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007





NOTE 11  STOCK BASED COMPENSATION



The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award, with the following assumptions: no dividend yield, expected volatility between 113% and 186%, risk-free interest rate between 3.1% and 5.1% and expected option life of ten years.



During the nine months ended September 30, 2008, the Companys net income was approximately $1,920,618 lower as a result of stock-based compensation expense as a result of the adoption of SFAS 123(R).  As of September 30, 2008, there was $2,884,874 of unrecognized compensation expense related to non-vested market-based share awards that is expected to be recognized.



The following tables summarize all stock option and warrant activity of the Company since December 31, 2007:



|                                |  |                                                                      |   |                |  |                                 |  |  | 
|------------------------------- |  | -------------------------------------------------------------------- | - | -------------- |  | ------------------------------- |  |  | 
|                                |  | Non-Qualified Stock Options and Warrants Outstanding and Exercisable
|                                |  |                                                                      |   |                |  |                                 |  |  | 
|                                |  | Number of
Shares                                                     |   | Exercise
Price |  | Weighted Average
Exercise Price | 
|                                |  |                                                                      |   |               
|Outstanding, December 31, 2007  |  | 6,343,971                                                            |   | $0.25 - $2.00  |  | $0.48                           | 
|                                |  |                                                                      |   |                |  |                                 | 
|Granted                         |  | 3,245,001                                                            |   | $0.001 - $1.75 |  | $1.18                           | 
|Expired                         |  | (115,000                                                             | ) | $0.50 - $2.00  |  | $1.80                           | 
|Exercised                       |  | (590,000                                                             | ) | $0.25 - $0.50  |  | $0.33                           | 
|                                |  |                                                                      |   |                |  |                                 | 
|Outstanding, September 30, 2008 |  | 8,883,972                                                            |   | $0.001 - $1.75 |  | $0.32                           | 
|                                |  |                                                                      |   |                |  |                                 | 
|Exercisable, September 30, 2008 |  | 5,894,972                                                            |   | $0.001 - $1.75 |  | $0.58                           | 





|                                                     |  |                                                                |  |                                             |  |                                                                               |  | 
|---------------------------------------------------- |  | -------------------------------------------------------------- |  | ------------------------------------------- |  | ----------------------------------------------------------------------------- |  | 
|Non-Qualified Stock Options and Warrants Outstanding
|                                                     |  | Number Outstanding
Currently Exercisable
at September 30, 2008 |  | Weighted Average
Remaining
Contractual Life |  | Weighted Average
Exercise Price of Options and
Warrants Currently Exercisable | 
|Range of
Exercise Prices                             |  |                                                                |  |                                            
|                                                     |  |                                                                | 
|                                                     |  |                                                                |  |                                             |  |                                                                               |  | 
|$0.001 - $1.75                                       |  | 5,894,972                                                      |  | 3.225 Years                                 |  | $0.58                                                                         | 
|                                                     |  |                                                                |  |                                             |  |                                                                               |  | 





24



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LIGHTWAVE LOGIC, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008 AND 2007







NOTE 12 CONTINGENCY



2005 Private Offering

During 2005, the Company raised $1,000,000 through the sale of 4,000,000 shares of common stock in a limited offering to persons believed to be accredited investors.  The Company received a legal opinion from third party outside counsel as to the availability of an exemption from registration with the SEC with respect to the limited offering.  In December 2005, the Company was informed by the SEC that it is investigating the circumstances surrounding the $1,000,000 offering including the subsequent public resale of certain shares originally sold in the offering, along with related matters.  The Company has further been informed that the original issuance of the stock and subsequent resale may have been done, in the opinion of the SEC, in violation of the registration provisions of the Securities Act of 1933, as amended.  These matters could lead to enforcement action by the SEC.



In or around January 2007, the SEC issued an investigative subpoena to the Company directing it to produce specified documents and information.  Thereafter, an SEC subpoena seeking testimony by the Companys president was issued.  The Company and its president have complied with all of the SECs requests for documents and testimony.  The SEC has not indicated whether or not it intends to take any action against the Company or any of its officers, directors or employees.  There has been no contact with the SEC since December 2007.





NOTE 13  RELATED PARTY



The Company has available-for-sale securities of a related party (NOTE 6).  The information is summarized below and is recorded on the balance sheet as Available-for-sale securities.  The unrealized loss on this investment is included on the Statement of Other Comprehensive Income.



|              |  |           |  |      |        |  |              |        |                 |   |         |  
|------------- |  | --------- |  | ---- | ------ |  | ------------ | ------ | --------------- | - | ------- | -
|              |  | Number    |  |      |        |  | Market
Value |        | Unrealized
loss |  
|              |  | of Shares |  | Cost |        |  |             
|              |  |           |  |      |        |  |              |        |                 |   |         |  
|Related Party |  | 43,815    |  | $    | 87,630 |  | $            | 38,119 |                 | $ | (49,511 | )



Under the management agreement dated August 1, 2005, the related party was issued 200,000 shares of common stock with a fair value of $584,000 which was amortized over the term of the agreement (one year), which expired in 2006.  In February 2007, the Company entered into a contract with the related party and issued 1,000,000 shares of common stock with a fair value of $580,000.  In addition, the Company issued a warrant to purchase 500,000 shares of its common stock with a fair value of $348,000.  This contract was renewed in March 2008 and the Company issued a warrant to purchase 400,000 shares of its common stock in exchange for management services for one year, valued at $332,000, fair value.  For the nine months ending September 30, 2008 and 2007, the Company recognized $348,336 and $506,583 in management expense.  The unamortized expense is reflected as deferred charges in the equity section of the balance sheet.



At September, 2008 the Company has accrued officer salaries of $98,205.







25



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Item 2.

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



The following discussion Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. The words anticipate, believe, expect, plan, intend, estimate, project, will, could, may and similar expressions are intended to identify forward-looking statements. Such statements reflect our current views with respect to future events and financial performance and involve risks and uncertainties. Should one or more risks or uncertainties occur, or should underlying assumptions prove incorrect, actual results may vary materially and adversely from those anticipated, believed, expected, planned, intended, estimated, projected or otherwise indicated. We caution you not to place undue reliance on these forward-looking statements, which we have made as of the date of this Quarterly Report on Form 10-Q.



The following provides information that management believes is relevant to an assessment and understanding of our plans and financial condition. The following selected financial information is derived from our historical financial statements and should be read in conjunction with such financial statements and notes thereto set forth elsewhere herein and the "Forward-Looking Statements" explanation included herein.



Overview



Lightwave Logic, Inc., formerly, Third-Order Nanotechnologies, Inc., formerly, PSI-TEC Holdings, Inc., formerly Eastern Idaho Internet Service, Inc. was organized under the laws of the State of Nevada in 1997, where we engaged in the business of marketing Internet services until June 30, 1998 when our operations were discontinued. We were then inactive until we acquired PSI-TEC Corporation as our wholly owned subsidiary on July 14, 2004, at which time our name was changed to PSI-TEC Holdings, Inc. On October 20, 2006, we completed a parent-subsidiary merger with PSI-TEC Corporation whereby we were the surviving corporation of the merger, and our name was changed to Third-Order Nanotechnologies, Inc. On March 10, 2008, we changed our name to Lightwave Logic, Inc. to better suit our strategic business plan and to facilitate stockholder recognition of our Company and its business.



We are a developmental stage company that has developed and continues to develop high-activity, high-stability electro-optic polymers (plastics) that we believe could have a broad range of applications in the electro-optic device market. We engineer our proprietary electro-optic plastics at the molecular level for superior performance, stability, cost-efficiency and ease of processability. We expect our electro-optic plastics to broadly replace more expensive, lower-performance materials that are currently used in fiber-optic ground, wireless and satellite communication networks.



In order to transmit digital information at extremely high-speeds (wide bandwidth) over the Internet, it is necessary to convert the electrical signals produced by a computer into optical signals for transmission over long-distance fiber-optic cable. The actual conversion of electricity to an optical signal may be performed by a molecularly-engineered material known as an electro-optic plastic.



26



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We are currently developing electro-optic plastics that promise performance many times faster than any technology currently available and that have unprecedented thermal stability. High-performance electro-optic materials produced by our Company have demonstrated stability as high as 350 degrees Celsius. Stability above 300 degrees Celsius is necessary for vertical integration into many semi-conductor production lines. Our past results, independently confirmed by the University of Arizona, have demonstrated that the molecular performance of some of our Company's molecular designs perform 650% better than competitive electro-optic compounds.



Our revenue model relies substantially on the assumption that we will be able to successfully develop electro-optic products for applications within the industries described below. When appropriate, we intend to create specific materials for each of these applications and use our proprietary knowledge base to continue to enhance its discoveries.



·

Satellite Reconnaissance

·

Navigational Systems

·

Radar Applications

·

Telecommunications

·

Backplane Optical Interconnects

·

Entertainment

·

Medical Applications

·

Optical Computing



To be successful, we must, among other things:



·

Develop and maintain collaborative relationships with strategic partners;

·

Continue to expand our research and development efforts for our products;

·

Develop and continue to improve on our manufacturing processes and maintain stringent quality controls;

·

Produce commercial quantities of our products at commercially acceptable prices;

·

Rapidly respond to technological advancements;

·

Attract, retain and motivate qualified personnel; and

·

Obtain and retain effective intellectual property protection for our products and technology.



Plan of Operation



Since our inception, we have been engaged primarily in the research and development of our polymer materials technologies and potential products. We are devoting significant resources to engineer next-generation electro-optic plastics for future applications to be utilized by electro-optic device manufacturers, such as telecommunications component and systems manufacturers, networking and switching suppliers, semiconductor companies, aerospace companies and government agencies. We expect to continue to develop products that we intend to introduce to these rapidly changing markets and to seek to identify new markets. We expect to continue to make significant operating and capital expenditures for research and development activities.



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As we move from a development stage company to a product vendor, we expect that our financial condition and results of operations will undergo substantial change. In particular, we expect to record both revenue and expense from product sales, to incur increased costs for sales and marketing and to increase general and administrative expense. Accordingly, the financial condition and results of operations reflected in our historical financial statements are not expected to be indicative of our future financial condition and results of operations.



On August 8, 2006, we contracted with Triple Play Communications Corporation, a design and market consulting company, to deliver a comprehensive market opportunity assessment report for high speed 40G (commercial) & 100G+ (military/aerospace) modulators and system applications.



In August, 2006 we entered into a co-location agreement with InPlane Photonics, a New Jersey-based micro-optics company that allowed our scientists to establish a pre-production line in order to test and integrate our organic materials into waveguide devices and system prototypes as a first step toward product commercialization. This agreement was terminated at the end of January 2007 so that we could focus on pursuing a strategic relationship with Photon-X LLC, a Pennsylvania-based firm with extensive experience in polymer waveguide processing. We entered into a non-binding memorandum of understanding with Photon-X, LLC in December 2006 to work towards creating a "fee for services" agreement with Photon-X, LLC to design, develop, produce and market electro-optic components based upon our polymer technology. Such an agreement with Photon-X, LLC would afford our Company access to a full suite of fabrication facilities capable of producing commercial quantities of precision micro-optic devices such as high-speed (40GHz) telecom modulators, optical filters, and optical interconnects important to military and civilian global information movement and management markets.



On September 25, 2006 we obtained independent laboratory results that confirmed the thermal stability of our Perkinamine electro-optic materials. Thermal stability as high as 350 degrees Celsius was confirmed, significantly exceeding many other commercially available high performance electro-optic materials, such as CLD-1 which exhibits thermal degradation in the range of 250 degrees Celsius to 275 degrees Celsius. This high temperature stability of our materials eliminates a major obstacle to vertical integration of electro-optic polymers into standard microelectronic manufacturing processes (e.g. wave/vapor-phase soldering) where thermal stability of at least 300 degrees Celsius is required. In independent laboratory tests, ten-percent material degradation, a common evaluation of overall thermal stability, did not occur until our Perkinamine material base was exposed to temperatures as high as 350 degrees Celsius, as determined by Thermo-Gravimetric Analysis (TGA). The test results supported our Company's progress to introduce our materials into commercial applications such as optical interconnections, high-speed telecom and datacom modulators, and military/aerospace components.



In July 2007, our Company developed an innovative process to integrate our unique architecture into our anticipated commercial devices, whereby dendritic spacer systems are attached to its core chromophore. In the event we are successful in developing a commercially viable product, we believe these dendrimers will reduce the cost of manufacturing materials and reduce the cost and complexity of tailoring the material to specific customer requirements.



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In January 2008, we retained TangibleFuture, Inc., a San Francisco based technology analysis and business development consulting company, to generate an independent assessment of our business opportunities in the fiber-optic telecommunications and optical computing sectors and develop strategies to penetrate those potential markets. We recently received an assessment from TangibleFuture, Inc. whereby they consider the existing high speed, long reach, communication modulator market to approximate $140,000,000 per year.



In March 2008, we commenced production of our first prototype photonic chip, which we delivered to our partner, Photon-X, LLC who will fabricate a prototype polymer optical modulator and measure its technical properties. We hope to be able to demonstrate this prototype prior to the end of the fourth quarter. We intend to utilize the services of Dr. Robert Norwood at the University of Arizona Photonics Department to perform the necessary proof of concept tests, as we have in the past. We may incur delays in this process due to slower than expected material production within our laboratories and/or delays caused by the testing procedures at the University of Arizona. Should these tests produce a functional 10 Gb/s or greater modulator we expect to go forward with product marketing and development in the telecommunication market with partners in the telecommunication field. We cannot anticipate the details of the customer adoption cycle until we have produced a functional prototype to create a credible technology offering.



We ultimately intend to use our next-generation electro-optic plastics for future applications vital to the following industries. We expect to create specific materials for each of these applications as appropriate:



·

Satellite Reconnaissance

·

Navigational Systems

·

Radar Applications

·

Telecommunications

·

Backplane Optical Interconnects

·

Entertainment

·

Medical Applications

·

Optical Computing



In an effort to maximize our future revenue stream from our electro-optic polymer products, we are currently evaluating each of or some combination of the following approaches:



·

Licensing our technology for individual specific applications;

·

Entering into collaborative or joint venture agreements with one or a number of partners; or

·

Selling our products directly to commercial customers.



Additionally, we must create an infrastructure, including operational and financial systems, and related internal controls, and recruit qualified personnel. Failure to do so could adversely affect our ability to support our operations.



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We have incurred substantial net losses since inception. We have satisfied our capital requirements since inception primarily through the issuance and sale of our common stock. During 2004 we raised approximately $529,000 from the issuance of convertible promissory notes, of which $30,000 was converted into common stock of the company during 2004 and the remaining $499,000 converted in 2005. Also, during 2005, we raised an aggregate of $1,000,000 from the private sale of our common stock. During 2006, we raised approximately $425,000 from the private sale of our common stock, of which $200,000 was rescinded during 2007. During 2007, we raised approximately $2,301,524 from the private sale of our common stock. During 2008, we raised approximately $414,000 from the private sale of our common stock. We have also issued shares of our common stock and warrants to purchase shares of our common stock in exchange for services rendered to our company, including professional services.



Award



On September 26, 2006, we were awarded the 2006 Electro-Optic Materials Technology Innovation of the Year Award by Frost & Sullivan. Frost & Sullivan's Technology Innovation of the Year Award is bestowed upon candidates whose original research has resulted in innovations

that have, or are expected to bring, significant contributions to multiple industries in terms of adoption, change, and competitive posture. This award recognizes the quality and depth of our Company's research and development program as well as the vision and risk-taking that enabled us to undertake such an endeavor.



Results of Operations



Comparison of Three Months Ended September 30, 2008 to Three Months Ended September 30, 2007



Revenues



We had no revenues during the three months ended September 30, 2008 and 2007 since we are a development stage company that has yet to commence revenue creating operations.



Operating Expenses



Our operating expenses were $1,195,974 and $701,496 for the three months ended September 30, 2008 and 2007, respectively, for an increase of $494,478. This increase in operating expenses was due primarily to the increase in use of consultants, issuance of stock options for board of director members and a new CEO, an increase in the payroll expense, an increase in health insurance, offset by a decrease in accounts payable, decrease in chemicals and materials, decrease in investor relations fees, management fees and legal fees.



Included in our operating expenses for the three months ended September 30, 2008 was $1,032,393 for research and development expenses compared to $371,075 for the three months ended September 30, 2007, for an increase of $661,318. Research and development expenses currently consist primarily of compensation for employees and consultants engaged in internal research and product development activities; laboratory operations, outsourced development and processing work; fees and expenses related to patent applications and intellectual property protection; costs incurred in acquiring and maintaining licenses; and related operating expenses. We expect to continue to incur substantial research and development expense to develop commercial products that utilize our electro-optic plastics. These expenses could increase as a result of continued development and commercialization of our electro-optic materials technology; subcontracting work to potential development partners; expanding and equipping in-house laboratories; hiring additional technical and support personnel; pursuing other potential business opportunities; and incurring related operating expenses.



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General and administrative expense consists primarily of compensation and support costs for management and administrative staff, and for other general and administrative costs, including executive, investor relations, accounting and finance, legal, consulting and other operating expenses, including laboratory space rental costs.



General and administrative expenses decreased $166,840 to $163,581 for the three months ended September 30, 2008 compared to $330,421 for the three months ended September 30, 2007. The decrease is due primarily to our decrease in investor relations fees, management fees and legal fees, offset by a payroll expense due to the company hiring a new Chief Executive Officer in August 2008 and issuing stock options for members of the Board of Directors.



There were no fees for investor relations for the three months ended September 30, 2008 compared to $37,187 for the same three month period in 2007. This decrease was due to the suspension of the contract with an investor relations firm during April 2008. Management fees decreased $148,999 to $83,001 for the three months ended September 30, 2008 compared to $232,000 for the three months ended September 30, 2007 due to a contract expiring in February 2008 and a new contract becoming effective in February 2008.



Legal fees were $22,719 and $27,767 for the three months ended September 30, 2008 and 2007. The decrease of $5,048 was due to fees associated with the Company completing a registration statement in the third quarter of 2007.



Wages and salaries increased $831,182 from $161,521 for the three months ended September 30, 2007 to $992,703 for the three months ended September 30, 2008 due to the company hiring a new Chief Executive Officer in August 2008 that was issued a stock grant upon acceptance of this position and the issuance of stock options to members of the Board of Directors.



We expect general and administrative expense to increase in future periods as we increase the level of corporate and administrative activity, including increases associated with our operation as a public company; and significantly increase expenditures related to the future production and sales of our products.



Other Income (Expense)



Other income was $1,873 for the three months ended September 30, 2008, consisting of $2,702 of interest income on cash deposits and short term investments offset by $829 of interest expense compared to other income of $1,719 for the three months ended September 30, 2007, consisting of $2,990 of interest income on cash deposits and short term investments offset by $1,271 of interest expense.



Net Loss



Net loss was $1,195,974 and $701,496 for the three months ended September 30, 2008 and 2007, respectively, for an increase of $494,478, primarily resulting from research and development and general and administrative expenses incurred as described above.



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Comparison of Nine Months Ended September 30, 2008 to Nine Months Ended September 30, 2007



Revenues



We had no revenues during the nine months ended September 30, 2008 and 2007 since we are a development stage company that has yet to commence revenue creating operations.



Operating Expenses



Our operating expenses were $3,689,717 and $2,638,363 for the nine months ended September 30, 2008 and 2007, respectively, for an increase of $1,051,354. This increase in operating expenses was due primarily to the increase in use of consultants, issuance of stock options for board of director members and new CEO, an increase in the payroll expense, increase in health insurance, offset by a decrease in accounts payable, decrease in chemicals and materials, decrease in investor relations fees, management fees and legal fees.



Included in our operating expenses for the nine months ended September 30, 2008 was $2,847,366 for research and development expenses compared to $1,651,266 for the nine months ended September 30, 2007, for an increase of $1,196,100. Research and development expenses currently consist primarily of compensation for employees and contractors engaged in internal research and product development activities; laboratory operations, outsourced development and processing work; fees and expenses related to patent applications and intellectual property protection; costs incurred in acquiring and maintaining licenses; and related operating expenses.



We expect to continue to incur substantial research and development expense to develop commercial products that utilize our electro-optic plastics. These expenses could increase as a result of continued development and commercialization of our electro-optic materials technology; subcontracting work to potential development partners; expanding and equipping in-house laboratories; hiring additional technical and support personnel; pursuing other potential business opportunities; and incurring related operating expenses.



General and administrative expense consists primarily of compensation and support costs for management and administrative staff, and for other general and administrative costs, including executive, investor relations, accounting and finance, legal, consulting and other operating expenses, including laboratory space rental costs.



General and administrative expenses decreased $144,746 to $842,351 for the nine months ended September 30, 2008 compared to $987,097 for the nine months ended September 30, 2007. The decrease is due primarily to our decrease in investor relations fees, management fees and legal fees, offset by a payroll expense due to the company hiring a new Chief Executive Officer in August 2008 and issuing stock options for new members of the Board of Directors.



Management fees were $348,336 and $541,333 for the nine months ended September 30, 2008 and 2007. The decrease of $192,997 was due to a contract expiring in February 2008 and a new contract becoming effective in February 2008.



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Legal fees were $159,776 and $136,150 for the nine months ended September 30, 2008 and 2007. The increase of $23,626 was primarily due to the company filing its first Annual Report on Form 10-KSB for the year ended December 31, 2007 with the SEC in March 2008, as well as the filing of its Quarterly Reports on Form 10-Q for each of the first two quarterly periods of 2008.



Wages and salaries increased $1,122,843 from $393,670 for the nine months ended September 30, 2007 to $1,516,513 for the nine months ended September 30, 2008 due to the company issuing a stock grant to the new Chief Executive Officer in August 2008 and Chief Technology Officer in January 2008. This increase is also due to the Company granting stock options to members of the Board of Directors in the third quarter of 2008.



We expect general and administrative expense to increase in future periods as we increase the level of corporate and administrative activity, including increases associated with our operation as a public company; and significantly increase expenditures related to the future production and sales of our products.



Other Income (Expense)



Other income was $8,904 for the nine months ended September 30, 2008, consisting of $11,368 of interest income on cash deposits and short term investments offset by $108 in realized loss on investments and $2,356 of interest expense compared to other expense of $46 for the nine months ended September 30, 2007, consisting of $4,573 of interest income on cash deposits and short term investments offset by $4,619 of interest expense.



Net Loss



Net loss was $3,689,717 and $2,638,363 for the nine months ended September 30, 2008 and 2007, respectively, for an increase of $1,051,354, primarily resulting the hiring of additional key personnel and officers.



Critical Accounting Policies



The Company's accounting policies are more fully described in the Notes to Financial Statements. As disclosed in Note 1 of Notes to Financial Statements, the preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions about future events that affect the amounts reported in the financial statements and accompanying notes. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgment. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements. The Company believes that, of its significant accounting policies, the following may involve a higher degree of judgment, estimation, or complexity than other accounting policies.



Merger



On July 14, 2004, the Company acquired PSI-TEC Corporation. Under the terms of the merger agreement, the stockholders of PSI-TEC Corporation received 15,600,000 shares of common stock in exchange for its 2,206,280 shares. Following the merger, the Company changed its name to PSI-TEC Holdings, Inc. Under accounting principles generally accepted in the United States, the share exchange is considered to be a capital transaction in substance rather than a business combination. That is, the share exchange is equivalent to the issuance of stock by PSI-TEC Holdings, Inc. for the net monetary assets of PSI-TEC Corporation, accompanied by a recapitalization, and is accounted for as a change of capital structure. Accordingly, the accounting for the share exchange will be identical to that resulting from a reverse acquisition, except no goodwill will be recorded. Under reverse takeover accounting, the post-reverse acquisition comparative historical financial statements of the legal acquirer, PSI-TEC Holdings, Inc., are those of the legal acquiree, PSI-TEC Corporation, which is considered to be the accounting acquirer. On October 20, 2006, PSI-TEC Holdings, Inc. and PSI-TEC Corporation merged and changed its name to Third-Order Nanotechnologies, Inc.



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Stock Based Compensation



In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS 123 (revised 2004), Share-Based Payment ("SFAS 123R"). SFAS 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends SFAS No. 95, Statement of Cash Flows. Generally, the approach in SFAS 123(R) is similar to the approach described in SFAS 123. However, SFAS 123(R) requires share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values at the date of grant. Pro forma disclosure is no longer an alternative.



On January 1, 2006, the Company adopted SFAS 123(R) using the modified prospective method as permitted under SFAS 123(R). Under this transition method, compensation cost recognized in the first quarter of 2006 includes compensation cost for all share-based payments granted prior to but not yet vested as of December 30, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS 123. In accordance with the modified prospective method of adoption, the Company's results of operations and financial position for prior periods have not been restated.



The Company uses the Black-Scholes option pricing model to calculate the grant-date fair value of an award.



Liquidity and Capital Resources



During the nine months ended September 30, 2008, net cash used in operating activities was $1,034,044 and net cash provided by investing activities was $73,432, which was due primarily to the Company applying for patents, the purchase of equipment, and the repayment of notes receivable. Net cash provided by financing activities for the nine months ended September 30, 2008 was $616,500. At September 30, 2008, our cash and cash equivalents totaled $135,339, our assets totaled $444,236, our liabilities totaled $139,821, and we had stockholders' equity of $304,414.



Sources and Uses of Cash



Our future expenditures and capital requirements will depend on numerous factors, including: the progress of our research and development efforts; the rate at which we can, directly or through arrangements with original equipment manufacturers, introduce and sell products incorporating our plastic materials technology; the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; market acceptance of our products and competing technological developments; and our ability to establish cooperative development, joint venture and licensing arrangements. We expect that we will incur in excess of $1 million of expenditures over the next 12 months. Our cash requirements are expected to increase at a rate consistent with revenue growth as we expand our activities and operations with the objective of commercializing our electro-optic plastic technology during 2008.



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Our business does not presently generate the cash needed to finance our current and anticipated operations. We believe we have raised sufficient capital to finance our operations for the next three months, however, we will need to obtain additional future financing during 2008 to finance our operations until such time that we can conduct profitable revenue-generating activities. Such future sources of financing may include cash from equity offerings, exercise of warrants and stock options and proceeds from debt instruments; but we cannot assure you that such equity or borrowings will be available or, if available, will be at rates or prices acceptable to us. If adequate funds are not available to satisfy either short-term or long-term capital requirements, or if planned revenues are not generated, we may be required to substantially limit our operations. This limitation of operations may include reductions in capital expenditures and reductions in staff and discretionary costs.



We expect that our cash used in operations will increase beyond the nine months ended September 30, 2008 as a result of the following planned activities:



·

The addition of management, sales, marketing, technical and other staff to our workforce;

·

Increased spending for the expansion of our research and development efforts, including purchases of additional laboratory and production equipment;

·

Increased spending in marketing as our products are introduced into the marketplace;

·

Developing and maintaining collaborative relationships with strategic partners;

·

Developing and improving our manufacturing processes and quality controls; and

·

Increases in our general and administrative activities related to our operations as a reporting public company and related corporate compliance requirements.



Analysis of Cash Flows



For the nine months ended September 30, 2008



Net cash used in operating activities was $1,034,044 for the nine months ended September 30, 2008, consisting of payments for management, legal, professional and consulting expenses, rent and other expenditures necessary to develop our business infrastructure, $4,875 in prepaid expenses, $78,270 in accounts payable and accrued expenses, offset by $360,731 in deferred charges, $1,226,211 in warrants issued for services, $694,407 in options issued for services, $435,000 in common stock issued for services and $3,631 in receivables, and prepaid expenses.



Net cash used by investing activities was $73,432 for the nine months ended September 30, 2008, consisting of $16,423 for intangibles, as well as the purchase of equipment for $10,207, and the repayment of a note receivable for $100,000, offset by a sale of available for sale securities of $62.



Net cash provided by financing activities was $616,500 for the nine months ended September 30, 2008 and consisted of $414,000 of proceeds from the sale of our common stock and $202,500 from the exercise of warrants.



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Inflation and Seasonality



We do not believe that our operations are significantly impacted by inflation. Our business is not seasonal in nature.



Item 4

Controls and Procedures



Effectiveness of Disclosure



Our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2008 as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, (the Exchange Act). Our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2008, our Principal Executive Officer and Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective to assure that information required to be declared by us in reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the periods specified in the SEC's rules and forms and (2) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.



Changes in Internal Control over Financial Reporting



No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II  OTHER INFORMATION



Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

The following are unregistered securities our Company sold during the period covered by this report that have not been previously reported in a Current Report on Form 8-K:



During July 2008, we issued 50,000 and 20,000 shares of our common stock to three accredited persons pursuant to the exercise of warrants. The shares were valued at $0.50 and $0.25 per share pursuant to the warrant agreements for an aggregate amount of $25,000 and $5,000 respectively.



In August 2008, we issued 150,000 shares of our common stock to two accredited persons pursuant to the exercise of warrants. The shares were valued at $0.50 per share pursuant to the warrant agreements for an aggregate amount of $75,000.



We relied on Section 4(2) of the Securities Act since these transactions did not involve any public offering. No underwriters were utilized and no commissions or fees were paid with respect to any of the above transactions.



Item 6.

Exhibits

(31)

31.1

Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2

Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

(32)

32.1

Certification of the Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



32.2

Certification of the Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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SIGNATURES



In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



LIGHTWAVE LOGIC, INC.



Registrant



By: /s/James S. Marcelli

James S. Marcelli,

Chief Executive Officer



Date: November 14, 2008



By: /s/James S. Marcelli

James S. Marcelli,

Chief Executive Officer



Date: November 14, 2008



By: /s/ Andrew J. Ashton

Andrew Ashton,

Principal Financial Officer



Date: November 14, 2008



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