Lightwave Logic, Inc. Leases Disclosure

NOTE 8 – LEASES

 

On October 30, 2017, the Company entered into a lease agreement (the “Lease”) to lease approximately 13,420 square feet of office, chemistry, clean room and research and development space located in Colorado for the Company’s principal executive offices and research and development facility. The term of the lease was sixty-one (61) months, beginning on November 1, 2017 and ending on November 30, 2022. In January 2022, the term was extended for an additional twenty-four (24) months.

 

On November 22, 2022, the Company entered into an amendment to the Lease (“the Amended Lease”) to lease an additional approximately 9,684 square feet of adjacent office and warehouse space.  The term of the Amended Lease is one hundred twenty-eight (128) months, with an effective date of June 1, 2023. Base rent through January 31, 2024 of the Amended Lease term was approximately $30,517 per month. The base rent for the next full year of the Amended Lease term is approximately $377,288, with an increase in annual base rent of approximately 3% in each subsequent year of the lease term.  Commencing on June 1, 2023, monthly installments of base rent and one-twelfth of landlord’s estimate of tenant’s proportionate share of annual operating expenses shall be due on the first day of each calendar month. The Amended Lease also provides an allowance of up to $43,216 to be used solely for the cost of renovations to the additional lease premises. As of December 31, 2025, the operating lease right-of-use asset and operating lease liability amounted to $2,440,369 and $2,598,681, respectively. As of December 31, 2024, the operating lease right-of-use asset and operating lease liability amounted to $2,645,723 and $2,766,971, respectively.

 

For purposes of calculating operating lease liability, lease term includes the initial non-cancelable term plus any term under renewal options that are reasonably assured. Any rent escalations, along with rent abatements, are included in the computation of rent expense calculated on a straight-line basis over the lease term. The interest rate implicit in lease contracts is typically not readily determinable and as such the Company uses the appropriate incremental borrowing rate based on information available at the lease commencement date in determining the present value of the lease payments.

 

Undiscounted future minimum lease payments under the Amended Lease as of December 31, 2025, by year and in aggregate, including the extended term, are as follows:

Schedule of future lease payments of operating leases
YEARS ENDING
DECEMBER 31,				AMOUNT
	2026			$	399,199
	2027				411,174
	2028				423,612
	2029				436,300
	2030				449,431
	Thereafter				1,471,840
					3,591,556
	Less discounted interest				(992,875	)
	TOTAL			$	2,598,681

 

The Company has elected not to recognize right-of-use assets and lease liabilities arising from short-term leases. There are no other material operating leases.

 

The following table presents weighted average assumptions used to compute the Company’s right-of-use assets and lease liabilities: 

Schedule of operating lease right-of-use assets
	December 31, 2025
Weighted average remaining lease term (in years)	8.08
Weighted average discount rate	8.25%

 

As of December 31, 2025, current operating leases had remaining terms between 12 months and 8.08 years, with some leases having options to extend the lease terms.

 

Current lease agreements do not contain any residual value guarantees or material restrictive covenants. As of December 31, 2025, the Company did not have any finance leases.

 

Operating and short-term lease costs totaling $372,282 and $107,140 are included in research and development and general and administrative expenses for the year ended December 31, 2025. Operating and short-term lease costs totaling $513,428 and $102,077 are included in research and development and general and administrative expenses for the year ended December 31, 2024.