10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2012

OR

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

For the transition period from _________ to _________

Commission File Number 0-31927

LASERLOCK TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	23-3023677
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

837 Lindy Lane

 Bala Cynwyd, PA 19004 

 (Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (610) 668-1952

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

     Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o or No þ

      Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o or No þ

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

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

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

Large accelerated filer o Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company þ

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

     The aggregate market value of the common stock held by non-affiliates of the registrant was $2,656,351 as of June 30, 2012 based on the price in which the common stock of the registrant was last sold as reported by the OTC Bulletin Board.  Shares of common stock held by each current executive officer and director and by each person who is known by the registrant to own 5% or more of the outstanding common stock have been excluded from this computation in that such persons may be deemed to be affiliates of the registrant. This determination of affiliate status is not a conclusive determination for other purposes.

     The registrant had 230,594,219 shares of common stock outstanding as of the close of business on March 11, 2013.

DOCUMENTS INCORPORATED BY REFERENCE

NONE

LASERLOCK TECHNOLOGIES, INC.

FORM 10-K ANNUAL REPORT

Years Ended December 31, 2012 and 2011

		Page
PART I
Item 1.	Business	1
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	9
Item 2.	Properties	9
Item 3.	Legal Proceedings	9
Item 4.	Mine Safety Disclosures	9
PART II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	10
Item 6.	Selected Financial Data	12
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 8.	Financial Statements and Supplementary Data	18
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	18
Item 9A.	Controls and Procedures	19
Item 9B.	Other Information	19
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	20
Item 11.	Executive Compensation	25
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	26
Item 13.	Certain Relationships and Related Transactions, and Director Independence	28
Item 14.	Principal Accountant Fees and Services	28
PART IV
Item 15.	Exhibits and Financial Statement Schedules	30

PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this annual report on Form 10-K, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objective of management for future operations, are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” or “believes” or the negative thereof or any variation thereon or similar terminology or expressions.  We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from our expectations include, but are not limited to:  our ability to raise additional capital, our limited revenues generated to date, our ability to attract and retain qualified personnel, our ability to successfully develop licensing programs and generate business, rapid technological change in relevant markets, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments, intense competition with larger companies, general economic conditions, and other factors set forth described in “Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.

All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we assume no duty to update or revise our forward-looking statements.

ITEM 1.   BUSINESS.

General Development

LaserLock Technologies, Inc. (the "Company," "we," "us" or "our") was incorporated in Nevada on November 10, 1999.  Our principal offices are located at 837 Lindy Lane, Bala Cynwyd, Pennsylvania 19004, and our telephone number is (610) 668-1952.

We are a development stage company.

Following initial development and commercialization, the Company invested in developing new proprietary color shifting inks that it believed would allow it to penetrate broader markets and result in increased revenues. During the past eight years, the Company has refined its technologies and their applications and now has what it believes to be one of the most cost effective and efficient authentication technologies available. Its most recent technology takes advantage of the new ubiquitous energy efficient fluorescent lighting to change the color of ink, resulting in numerous potential new applications ranging from credit cards to drivers licenses, passports, stock certificates, clothing labels, currency, ID cards, and tax stamps. The technologies can also be used to protect DVDs, apparel, pharmaceuticals, and virtually any other physical product.

The identical compact fluorescent lighting is used in most color photocopiers and color scanners so that any document which incorporates the Company’s technology cannot be copied and/or reproduced on a color copier or color scanner.

We are a security technology company that delivers product and document authentication. We plan to develop and market technologies in a variety of applications in the security fields.

We believe that the technologies we own will have applications in various aspects of corporate security - from counterfeit identification to employee or customer monitoring. Potential applications of our technologies are available in different types of products and industries including gaming, apparel, tobacco, perfume, compact disks, pharmaceuticals, event and transportation tickets, driver’s licenses, insurance cards, passports, computer software, DVDs, and credit cards. We intend to generate sales through licenses of our technology or through direct sales of our technology to end-users.

1

Overview

We have filed a total of five patent applications relating to our technology, which have all been issued. These patents seek to accomplish non-intrusive document and product authentication in order to reduce losses caused by unpermitted document reproduction or by product counterfeiting. The technologies involve the utilization of invisible or color shifting/changing inks, which are compatible with today’s printing machines. The inks may be used with certain printing systems such as offset, flexographic, silkscreen, gravure, and laser. Based upon the Company’s experience, we believe that the ink technologies may be incorporated into existing manufacturing processes.

Anti-Counterfeiting Technologies and Products

Recent developments in copying and printing technologies have made it easier to counterfeit a wide variety of documents and products. Currency, lottery tickets, gift certificates, credit cards, event and transportation tickets, casino slot tickets, and travelers’ checks are all susceptible to counterfeiting. We believe that losses from such counterfeiting have increased substantially with improvements in counterfeiting technology. Counterfeiting has long caused losses to manufacturers of brand name products, and we believe that these losses have increased as the counterfeiting of labeling and packaging has become easier.

We believe that our document authentication technologies may be useful to businesses desiring to authenticate a wide variety of printed materials and products. Our technologies include (1) a technology utilizing invisible ink that can be revealed by use of laser light for authentication purposes, (2) an inkjet ink technology, which allows invisible codes to be printed, and (3) a color shifting technology that is activated by certain types of lights. All of those technologies are intended to be substantially different than pen systems that are currently in the marketplace. Pen systems also rely on invisible ink that is activated by a special marker. If the item is an original and not an invisible print, then the ink will be activated and show a visible mark as a different color than on an illegitimate copy. We believe that our technologies are superior to the pen system technology because our laser and color shifting technologies will not result in a permanent mark on the merchandise. Permanent marks generally lead to the disposal of the merchandise or its sale as a “second” rather than best-quality product. In the case of rubbed ink technology, no special tools are required to distinguish the counterfeit from the genuine. Other possible variations of our laser-based technology involve multiple color responses from a common laser, visible marks of one color that turn another color with a second laser, or visible and invisible marks that turn into a multicolored image. These technologies provide users with the ability to authenticate products and detect counterfeit documents. Applications include the authentication of documents having intrinsic value, such as currency, checks, travelers’ checks, gift certificates and event tickets, and the authentication of product labeling and packaging. When applied to product labeling and packaging, our technologies can be used to detect counterfeit products with labels and/or in packaging that do not contain the authenticating marks invisibly printed on the packaging or labels of legitimate products, as well as to combat product diversion (i.e., the sale of legitimate products through unauthorized distribution channels or in unauthorized markets). We believe that our technologies also could be used in a manner that permits manufacturers and distributors to track the movement of products from production to ultimate consumption when coupled with proprietary software.

We have focused on the widespread problem of counterfeiting in the gaming industry. We have incorporated our technology into traditional gaming accessories such as playing cards, casino chips, and dice as well as gaming-based machinery such as slot machines with cashless gaming systems. This is accomplished during the regular manufacturing and printing processes. Our products use ink that is incorporated into dice and casino chips that can be viewed with a laser to reveal the authenticity of the item. These covert authenticating technologies are also intended to be marketed to manufacturers of compact discs (“CDs”) to identify CDs produced by those manufacturers. We believe that this technology can provide CD manufacturers and publishers with a tool to combat the significant losses sustained as a result of illegal pirating and counterfeiting of data, music and videodiscs.

Other possible variations of our technologies involve multiple color responses from a common laser, visible marks of one color that turn another color with a laser or other generally available light sources or visible and invisible marks that turn into a multicolored image. These technologies provide users with the ability to authenticate documents and detect counterfeit products.

2

Industry Background

The U.S. is projected to remain the largest single consumer of security services and products in the world. One of the most important new areas of expansion is in the area of authentication, that is the act of confirming that some object--be it currency, passports, casino chips, credit cards, stock certificates, pharmaceuticals, stamps, identification cards or lottery tickets, to name just a few examples--is real and not a forgery.

With the advent of the digital age, including the color copier and other new technologies and templates available on the web, thieves and forgers have been able to make nearly identical copies of almost any printed item which has resulted in major financial losses to business and, importantly, has compromised security at critical installations.

One particular problem is that criminal and civil penalties for forgery, fraud, and counterfeiting are relatively light and many of those engaging in such activities are overseas and far from the reach of U.S. law enforcement. Therefore, the affected industries have little choice other than to make their products more formidable, often with multiple layers of defense, adopting what is known as multifactor authentication strategies.

While some currency and credit cards have introduced holograms, seals, and embedded strips in order to add a level of protection, most such methodologies are expensive and, in some cases, time-consuming in the production process. In other instances, such as when printing cigarette tax stamps or hundreds of millions of pieces used in a popular restaurant chain’s contest game pieces, the authentication process must be extremely inexpensive and easy to use or it will be rejected. There is no commercially viable way, for example, that a hologram, costing around five cents a copy, can be introduced to verify tax stamps. More than half the national currencies in the world, moreover, lack even one layer of protection and can easily be counterfeited.

Authentication Industry Overview

Currency, passports, ID cards and other high-value documents have historically been subject to counterfeiting and forgery and continue to be today. In the last 15 years, the counterfeiting of goods has increased significantly on a global basis and has become a major threat to brand owners in most industries. Major brands, whether national or multinational, are being systematically attacked by sophisticated criminals and terrorists. Furthermore, counterfeiting and forgery have filtered down to the level of lone criminals due to the availability of digital scanning and copying technologies.

In 2010, losses by companies and governments globally from counterfeiting and diversion ranged from $500 billion to as high as $1 trillion annually. The International Anti-Counterfeiting Coalition (IACC) estimates losses of over $600 billion in 2010, up from $150 billion in 2008.

According to the 2012 Special 301 report prepared and released by United States Trade Representative Ambassador Mark Kirk, “Another notable trend involves shipping counterfeit products separately from labels and packaging to evade enforcement efforts. For example, infringers in Russia reportedly import unbranded products, package these products with unauthorized packaging materials bearing the right holder’s trademarks, and subsequently export the products to various countries.”

The industry is segmented into four general categories:

1. Optical technologies - use of light, i.e. holograms;

2. Electronic - magnetic strips and smart cards;

3. Biotechnologies - uses characteristics of biological proteins such as antibodies, enzymes and DNA; and

4. Chemical technologies - include photochromic (light-reactive) and thermochromic (heat-reactive) inks.

We operate in the chemical technologies and security ink sectors of the industry. Products in this industry, when exposed to either heat or light, change color, and when exposed again the color reverts to the original. Generally, the effect is reversible as often as required. Inks have also been developed that are invisible to the human eye but which can be read by bar-code scanners. These have been used in the fragrance and pharmaceutical industries to authenticate products. Other reactive inks change color when brought into contact with specific substances, for example, ink from a felt-tipped pen.

3

In April 2010, the United States Government Accounting Office (the “GAO”) issued a report to Congress entitled, “INTELLECTUAL PROPERTY Observations on Efforts to Quantify the Economic Effects of Counterfeit and Pirated Goods.” In that report the GAO estimated that the total economic value of intellectual property seizures by Customs and Border Protection during 2004 to 2009 was $1.12 billion. This was based only on imported goods and not goods produced in the United States.

The Organization for Economic Cooperation and Development estimates that the value of counterfeiting losses to its members is approximately $250 billion per year.  They also concluded that millions of consumers are risking their lives unknowingly by using unsafe and ineffective counterfeit products.

The mislabeling of foodstuffs caused thousands of Chinese babies to become sick in 2008 after drinking milk formula contaminated with melamine, which is normally used in plastics and banned from use in food.  The chemical is used as an additive to watered-down milk in order to appear higher in protein when tested.  This was reported by the United Nations Office on Drugs and Crime.

The Opportunity

As counterfeiting continues to increase and losses to manufacturers and owners having their intellectual property rights compromised continue to escalate, we believe that such compromised entities will seek better technologies to minimize their exposure. These technologies, however, must also be cost effective.

Our Solution

In the area of document and product authentication and serialization, we offer the following products:

1. RainbowSecure™

2. LaserXpose™

3. InkJetSecure™

4. SecurDox™™™

5. SecureLight™ and SecureLight+™

RainbowSecure™ Technology. This was the Company’s first technology to be patented. It combines an invisible ink with a proprietary tuned laser to enable counterfeit products to be exposed. It has been widely accepted in the gaming industry where the technology is used by casinos to protect their chips, dice, and playing cards from fraud. The technology also features a unique double layer of security which remains entirely covert at all times and provides licensees with additional protection. RainbowSecure™ is particularly well-suited to closed and controlled environments, such as casinos that want to verify transactions within a specific area, and are not interested in outside public verification. The technology is also appropriate for anti-counterfeit protection of tags and labels in the apparel industry, where it can be applied to a variety of different materials.

LaserXpose™ Technology. This is an innovative patented technology which combines overt and covert anti-counterfeiting technology in one printing ink. It offers customers the ability to have two layers of security within a product while not having to disclose the covert feature if desired. It also is easily applied on most commercial printing presses.

InkJetSecure™ Technology. This technology involves an innovative method for coating pigments so that they can be used in high-speed continuous inkjet printers without clogging the submicron nozzles of the printers. The application for InkJetSecure™ is to invisibly mark and track individual products through the distribution chain where products are often illegally diverted. The technology is utilized in combination with proprietary tracking software.

4

SecurDox. The market for “Security on Demand” printing of documents with SecurDox on a standard desktop inkjet printer is large and growing. The Company’s patent for aqueous ink, which was issued in 2004, enables the printing of selective information invisibly on a desktop bubblejet printer, using a water-based secure inkjet cartridge. The information can then be activated on-demand.

SecureLight™ Technology. Following development and commercialization the Company invested in developing new proprietary color shifting inks that could penetrate broader markets and result in far greater revenues. During the past eight years, the Company has refined its technologies and their applications, and now has what is believed to be the easiest, most cost effective and efficient authentication technologies available in the world today. Its most recent technology, known as SecureLight™, takes advantage of the now ubiquitous energy efficient fluorescent lighting to change the color of ink, resulting in hundreds of new applications ranging from credit cards to drivers licenses, passports, stock certificates, clothing labels, currency, ID cards, and tax stamps. The technologies can also be used to protect DVDs, apparel, pharmaceuticals, and virtually any other physical product.

The identical compact fluorescent lighting is used in most color photocopiers and color scanners so that any document which incorporates SecureLight™ ink cannot be copied and/or reproduced on a color copier or color scanner.  In 2013, the Company filed for patent protection for an enhanced version of SecureLight technology, called SecureLight+™.

Our Technology

We have attempted to achieve sufficient flexibility in our products and technologies so as to provide cost-effective solutions to a wide variety of counterfeiting problems. We intend to generate revenues primarily by collecting license fees from manufacturers who incorporate our technologies into their manufacturing processes and their products as well as through the sale of inks.

Our Intellectual Property

Intellectual property is important to our business.  Our current patent portfolio consists of five granted patents (one granted in 2002, two granted in 2004, one granted in 2005 and one granted in 2011). We believe that some of the patents that have been granted may have commercial application in the future but will require additional capital and/or a strategic partner in order to reach the potential markets. All of the patents related to the five inventions are described above.

We continue to develop new anti-counterfeiting technologies and to apply for patent protection for these technologies wherever possible.  Since January 2013, the Company has filed provisional applications for three new patents. When a new product or process is developed, we may seek to preserve the economic benefit of the product or process by applying for a patent in each jurisdiction in which the product or process is likely to be exploited. Generally, for a patent to be granted, the product or process must be new and be inventively different from what has been previously patented or otherwise known anywhere in the world. Patents generally have a life span of 20 years from the date of application depending on the relevant jurisdiction, after which time any person is free to exploit the product or process covered by a patent. A person who is the owner of a patent has, within the jurisdiction in which the patent is granted, the exclusive right to exclude others from practicing the subject matter defined in the patent claims.

We intend to extend our patent filings to other countries where doing so is economically reasonable, considering the expense of foreign patent applications and the increasing level of our activity. Currently, we believe that we will be filing for patent protection in Europe, Australia and one or more countries in the Far East and South America. The granting of a patent does not prevent a third party from seeking a judicial determination that the patent is invalid. Such challenges to the validity of a patent are not uncommon and are occasionally successful. There can be no assurance that a challenge will not be filed to one or more of our patents, if granted, and that, if filed, such a challenge will not be successful. The granting of a U.S. patent does not ensure that patents will be granted in other countries where protection is sought. Standards for granting patents vary and there is a possibility that prior art not yet discovered could arise and could prevent the grant of a foreign patent and cast into question the validity of a U.S. patent.

5

In October 2010, the Company filed suit in the Western District of Pennsylvania, alleging that a company had infringed on one of the Company’s patents in the manufacture of game pieces. On June 4, 2012 both companies filed a stipulation to dismiss the action, without prejudice, and enter into settlement negotiations.  Settlement negotiations are ongoing.

Research and Development

We have been involved in research and development, or R&D, since our inception and intend to continue our R&D activities, funds permitting. We hope to expand our technology into new areas of implementation and to develop unique customer applications.

For the period from inception at November 10, 1999 to December 31, 2012, we incurred costs of $867,792 on R&D. For the years ended December 31, 2012 and 2011, we incurred costs of $5,420 and $9,081.

Our Revenue Model

We believe that a primary reason for our lack of revenue is our lack of funds to create a marketing program that effectively reaches potential customers in the security industry. In developing our most recent marketing approach, we have attempted to achieve sufficient flexibility in our products and technologies so as to provide cost-effective solutions to a wide variety of counterfeiting problems. We intend to generate revenues primarily by collecting license fees from manufacturers who incorporate our technologies into their manufacturing processes and their products as well as through the sale of inks.

In January 2010, the Bureau of Engraving and Printing (the “Bureau”) believed the color pigment market was estimated to be worth $2.6 billion per year, of which the color-shifting segment is valued between $55 million and $235 million annually, based on a relatively limited number of products and applications. A more realistic estimate suggests that the color-shifting pigment market will be worth several billion dollars a year within ten years, predicated on anticipated new security applications and demand for greater low-cost counterfeiting protection.

As the number of pharmaceutical drugs continues to increase, the pharmaceutical market has the potential to be worth millions in revenue for LaserLock Technologies, Inc. as the Company provides what is believed to be the most cost-effective anti-counterfeiting solution in the industry.

A hologram, by contrast, costs approximately 5 cents, or more than 17 times as much. Similarly, security threads, seals, and other methodologies for protecting currency are all more expensive than color shifting inks. In the U.S. there are more than 650 million credit cards as well as 488 million debit cards, many of which currently have holograms embedded in them. Should Visa and MasterCard use the Company’s product instead of a 5 cent hologram, and a one-cent royalty were obtained instead of $.003, the cost to Visa and MasterCard would be approximately $11.4 million annually.

6

Sales and Marketing Strategy

We plan to direct our sales and marketing strategy at multiple target groups as follows:

1. Documents of Value

a. Currency,

b. Stock certificates and bonds,

c. Event tickets, and

d. Lottery tickets.

2. Homeland Security

a. Container seals,

b. Pallet security,

c. Passports,

d. ID cards,

e. Driver licenses, and

f. Visas.

3. Consumer Product Security

a. Tax stamps,

b. CDs/DVDs,

c. Apparel tags and labels,

d. Pharmaceuticals,

e. Tobacco,

f. Alcohol,

g. Auto parts,

h. Aviation parts, and

i. Any other packaging requirements.

4. Gaming

a. Chips,

b. Dice,

c. Playing cards,

d. E-proms/critical memory devices, and

e. Slot tickets.

5. Product Diversion Tracking

a. Fragrances,

b. Apparel/licensed merchandise,

c. Cosmetics,

d. Pharmaceuticals, and

e. Watches and jewelry.

6. Financial Services and Products

a. Credit cards,

b. Bank checks, and

c. Financial documents/promissory notes.

As part of our sales and marketing strategy, our technology will be tailored to our clients, and we will form partnerships with authorities and merchants whose products or audiences can be complimentary to our own.

7

Competition

The market for protection from counterfeiting, diversion, theft and forgery is a mature 25-year-old industry dominated by a number of large, well-established companies, particularly in the area of traditional overt security technologies. This is due to the fact that security printing for currency production, for example, began in Europe over a century ago and has resulted in the establishment of old-line security printers who have branched out into brand and product protection as well. In North America, brand protection products, such as tamper-resistant packaging, security labels, and anti-theft devices, are readily available and utilized on a widespread basis. In recent years, however, demand has increased for more sophisticated, overt and covert, security technologies. Competitors can be segregated into the groupings below:

1. Security Ink Manufacturers. These are generally well-established companies such as SICPA and Sun Chemical, whose core business is printing inks;

2. System Integrators. These companies have often evolved from other sectors in the printing industry, mainly security printing manufacturers, technology providers, or packaging and label manufacturers. These companies offer a range of security solutions, enabling them to provide a complete suite of solutions tailored to the customer’s specific needs and requirements. The companies in this space include 3M, DuPont, Honeywell, and Avery Dennison;

3. System Consultancy Groups. These companies offer a range of technologies from several different providers and tailor specific solutions to end-users;

4. Traditional Authentication Technology Providers. These purveyors include American Banknote Holographics, and Digimarc, which provide holograms and digital watermarking, respectively;

5. Product Diversion Tracking Providers. Next-Generation Technology Providers LLC falls into this group, along with several companies such as Authentix, DNA Technologies, and Identif, which provide on-product and in-product tagging technologies; and

6. Traditional Security Printers. Traditional security printers such as Thomas de la Rue and Portals whose core products are printing the world’s currencies.

To compete effectively, we expect that we will need to expend significant resources in technology and marketing. Each of our competitors has substantially greater financial, human and other resources than we have. As a result, we may not have sufficient resources to develop and market our services to the market effectively, if at all.

Manufacturing

We do not have manufacturing facilities. We acquire components from various suppliers, which are manufactured to our specifications and reprocess these components. We intend to subcontract the manufacturing of our ink technology to third-party manufacturers. Applications of our technology are expected to be affected mainly through printing and coating of products with both visible and invisible ink. These inks will be custom manufactured for us by a third party. Because some of the processes that we intend to use in our applications are based on relatively common manufacturing techniques, there is no technical or economic reason for us to invest our own capital in manufacturing facilities at this stage.

We have established a quality-control program that includes laboratory analysis of developed technologies. We intend to include as part of this quality control program a specially trained technician on site at third-party production facilities to monitor the manufacturing process when warranted.

Government Regulation

We are not currently aware of any regulations affecting our products; however, our technology is dependent upon an ink-based product. Therefore, it is possible that our products will be subject to environmental regulations in the future.

8

Employees

As of December 31, 2012, we had two full-time employees, and as of March 15, 2013, we have seven full-time employees. We are using three part-time consultants to assist us with our marketing and sales strategy, R & D, technical assistance and distribution services. None of our employees is represented by a union or covered by a collective bargaining agreement. We believe that our relations with our employees and consultants are good.

ITEM 1A.  RISK FACTORS.

Not required.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2.  PROPERTIES.

Our principal offices are currently located in approximately 1000 square feet of space owned by the Company’s Chief Executive Officer at 837 Lindy Lane, Bala Cynwyd, Pennsylvania, 19004.

ITEM 3.  LEGAL PROCEEDINGS.

In October 2010, the Company filed suit in the Western District of Pennsylvania against WS Packaging Group, Inc. (“WS”) alleging that WS infringed on one of the Company’s patents in the manufacture of MONOPOLY game pieces on behalf of McDonald’s Corp. On June 4, 2012, both WS and the Company filed a stipulation to dismiss the action, without prejudice, and enter into settlement negotiations.Settlement negotiations are ongoing.

ITEM 4.  MINE SAFETY DISCLOSURES.

None.

9

PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Our common stock is quoted on Pink OTC Markets, Inc. under the trading symbol “LLTI.PK”.  The following table sets forth the range of high and low bid prices of our common stock for the periods indicated as reported by Pink OTC Markets, Inc.  Until recently, there was only sporadic and intermittent trading activity of our common stock.  The quoted prices represent only prices between dealers on each trading day as submitted from time to time by certain of the securities dealers wishing to trade in our common stock, do not reflect retail mark-ups, mark-downs or commissions, and may differ substantially from prices in actual transactions.

Fiscal Year Ended December 31, 2012	High	Low
Quarter ended March 31, 2012	$0.07	$0.01
Quarter ended June 30, 2012	$0.07	$0.05
Quarter ended September 30, 2012	$0.06	$0.02
Quarter ended December 31, 2012	$0.05	$0.02

Fiscal Year Ended December 31, 2011	High	Low
Quarter ended March 31, 2011	$0.01	$0.005
Quarter ended June 30, 2011	$0.05	$0.0075
Quarter ended September 30, 2011	$0.07	$0.025
Quarter ended December 31, 2011	$0.16	$.0299

Common Stockholders

As of February 28, 2013, our shares of Common Stock were held by 91 stockholders of record.

Dividend Policy

We have never declared or paid a cash dividend. At this time, we do not anticipate paying dividends in the foreseeable future. The declaration and payment of dividends is subject to the discretion of our board of directors (the “Board”) and will depend upon our earnings (if any), our financial condition, and our capital requirements.

10

Securities Authorized for Issuance Under Equity Compensation Plans

The following table provides certain information with respect to all of our equity compensation plans in effect as of the date of this filing.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted- average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	2,435,000	$	.00	1,074,004
Equity compensation plans not approved by security holders	12,900,000	$	.05	-
Total:	15,335,000	$	.05	1,074,004

2003 Stock Option Plan

We adopted our 2003 Stock Option Plan as of December 17, 2003 (the “Plan”). Awards may be made under the Plan for up to 18,000,000 shares of our common stock in the form of stock options or deferred stock awards.  Awards may be made to our employees, officers or directors as well as our consultants or advisors.  The Plan is administered by our Board, which has full and final authority to interpret the Plan, select the persons to whom awards may be granted, and determine the amount, vesting and all other terms of any awards. 

All stock options granted under the Plan are exercisable for a period of up to ten years from the date of grant, are subject to vesting as determined by the Board upon grant, and have an exercise price equal to not less than the fair market value of our common stock on the date of grant (except for incentive stock options granted to 10% stockholders, which are required to have an exercise price of not less than 110% of the fair market value of the common stock on the date the option is granted).  Unless otherwise determined by the Board, awards may not be transferred except by will or the laws of descent and distribution.  The Board has discretion to determine the effect on any award granted under the Plan of the death, disability, retirement, resignation, termination  or other change in employment or other status of any participant in the Plan.

Upon the occurrence of a “Change in Control”, as defined in the Plan, the Board may take any number of actions.  These actions include, providing for all options outstanding under the Plan to be assumed by the acquiring corporation or to become immediately vested and exercisable in full.  As of the date of this report, we have issued options under the Plan to purchase 16,925,996 shares of common stock.

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ITEM 6. SELECTED FINANCIAL DATA.

Not required.

ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Management’s Discussion and Analysis of Financial Condition And Results Of Operation and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties.  All forward-looking statements included in this Annual Report on Form 10-K are based on information available to us on the date hereof, and except as required by law, we assume no obligation to update any such forward-looking statements.  Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various of factors. The following should be read in conjunction with our annual financial statements contained elsewhere in this report.

Overview

We were incorporated in Nevada in November 1999. We are a technology development company that delivers product and document authentication and security. We plan to develop and market technologies in a variety of applications in the security fields.

We believe that the technologies we own will enable businesses to reconstruct their overall approaches to corporate security - from counterfeit identification to employee or customer monitoring. Potential applications of our technologies are available in different types of products and industries including gaming, apparel, tobacco, perfume, compact disks, pharmaceuticals, event and transportation tickets, driver’s licenses, insurance cards, passports, computer software, DVDs, and credit cards. We intend to generate sales through licenses of our technology or through direct sales of our technology to end-users.

We have filed a total of five patent applications relating to our technology, which have all been issued. These patents seek to accomplish non-intrusive document and product authentication in order to reduce losses caused by unpermitted document reproduction or by product counterfeiting. The technologies involve the utilization of invisible or color shifting/changing inks, which are compatible with today’s printing machines. The inks may be used with certain printing systems such as offset, flexographic, silkscreen, gravure, and laser. Based upon the Company’s experience, we believe that the ink technologies may be incorporated into existing manufacturing processes.

Strategic Outlook

We believe that the security and authentication industries will continue to grow over time, especially as counterfeiting becomes easier with advances in technology. Within the market, we intend to provide our products to government bodies, and merchants in the consumer products, gaming and financial services industries.

Sustained spending on technology, our ability to raise additional financing, and the continued growth of the security and authentication markets are all external conditions that may affect our ability to execute our business plan. In addition, certain potential customers may view our small size and limited financial resources as a negative even if they prefer our products to those of our competitors.

Our primary strategic objective over the next 12-24 months is to successfully market our products and generate revenue that is sufficient to cover our operating expenses and support additional growth over the next several years. We plan to achieve this objective through a targeted marketing program. As we grow, we intend to hire professionals to develop new products and market our products.

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We believe that our near-term success will depend particularly on our ability to develop customer awareness and confidence in our products. Since we have limited capital resources, we will need to closely manage our expenses and conserve our cash by continually monitoring any increase in expenses and reducing or eliminating unnecessary expenditures. Our prospects must be considered in light of the risks, expenses and difficulties encountered by companies in the development stage, particularly given that we operate in rapidly evolving markets, that we have limited financial resources, and face an uncertain economic environment. We may not be successful in addressing such risks and difficulties.

Results of Operations

Comparison of the Years Ended December 31, 2012 and 2011

The following discussion analyzes our results of operations for the years ended December 31, 2012 and 2011. The following information should be considered together with our financial statements for such periods and the accompanying notes thereto.

Revenue/Net Loss

We are a development stage company and have not generated significant revenue since our inception.  For the years ended December 31, 2012 and 2011, we generated revenues of $17,029 and $8,884.  Our net loss increased $533,944 to $1,199,057 for the year ended December 31, 2012 compared to $665,113 for the year ended December 31, 2011, as a result of changes in expenses as further described below.

General and Administrative Expenses

General and administrative expenses were $129,329 for the year ended December 31, 2012 compared to $114,376 for the year ended December 31, 2011, an increase of $14,953.  The increase is primarily attributable to increases in occupancy costs of $29,741 and filing fees of $8,592, which were offset by decreases in office expenses of $20,116 and decreases in other expenses of $3,264.

Legal and Accounting

Legal and accounting fees increased $204,927 to $276,774 for the year ended December 31, 2012 from $71,847 for the year ended December 31, 2011.  The professional fees were for legal, accounting and other professional services, primarily related to preparation of filings with the Securities and Exchange Commission (the “SEC”) for the years 2008 through 2011 as well as the preparation and review of the investment, registration rights, technology and service, patent and technology license and asset purchase agreements entered  into with one investor on December 31, 2012.

Payroll Expenses

Payroll expenses increased to $612,721 for the year ended December 31, 2012 from $227,658 for the year ended December 31, 2011, an increase of $385,063.  The increase relates to the hiring of the President and Chief Operating Officer of the Company.  Additionally, included in the increase was the expense of the fair market value of options issued to the Board, the Vice Chairman and Chief Executive Officer, and the President and Chief Operating Officer.

Research and Development

Research and development expenses decreased $3,661 to $5,420 for the year ended December 31, 2012 from $9,081 for the year ended December 31, 2011.  The decrease was due to the cash conservation efforts of the Company.

Sales and Marketing

Sales and marketing expenses for the year ended December 31, 2012 were $66,499 as compared to $113,377 for the year ended December 31, 2011, a decrease of $46,878.   This decrease related to cost conservation measures.

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Interest Expense

During the year ended December 31, 2012, we incurred interest expense of $277,371, as compared to $321,586 for the year ended December 31, 2011, a decrease of $44,215.  The decrease in interest expense relates to the conversion of notes payable into common stock in 2012 and the negotiation of a lower interest rate on certain debt in June 2011.

Gain on Debt Forgiveness

During the year ended December 31, 2012, we received a benefit of $156,110 in debt forgiveness, as compared to $184,242 for the year ended December 31, 2011, a decrease of $28,132. This was the result of management’s negotiation with vendors to forgive amounts due to those vendors.

Liquidity and Capital Resources

As of March 21, 2013 we had cash resources of approximately $3.6 million.  

Net cash used in operating activities increased $53,175 to $(367,060) for the year ended December 31, 2012 as compared to $(313,885) for the year ended December 31, 2011.  The increase related primarily to the increase in net loss from operations, gain on debt forgiveness and prepaid expenses, which were offset by increases in the fair value of options issued in exchange for services and accounts payable and accrued expenses.  The increase in net loss was related to increased payroll expenses and legal and accounting expenses offset by the gain on debt forgiveness, which were discussed above.  The increase in prepaid expenses and accounts payable and accrued expenses relate primarily to the agreements with one investor that were entered into on December 31, 2012, discussed below.

Net cash used in investing activities was $(9,025) for the year ended December 31, 2012 as compared to $(3,577) for the year ended December 31, 2011 an increase of $5,488.  The increase in cash used is attributable to patent costs associated with the five patents and computer equipment purchases.

Net cash provided by financing activities increased $3,023,157 to $3,316,862 for the year ended December 31, 2012 from $293,705 for the year ended December 31, 2011.  The cash provided for the year ended December 31, 2012 consisted primarily of proceeds from the issuance of equity securities and proceeds from the exercise of options and warrants.  The issuance of equity securities was attributable to the agreements with one investor that were entered into on December 31, 2012, discussed below.

The following agreements were executed on December 31, 2012 and provided the Company with $2 million in funding.

Investment Agreement

The Company entered into an Investment Agreement with VerifyMe, Inc. (“VerifyMe”) on December 31, 2012 (the “Investment Agreement”). Under the terms of the Investment Agreement, VerifyMe  purchased 22,222,222 shares of the Company's common stock as well as a warrant to purchase 22,222,222 shares of the Company’s common stock for $1 million.  In addition, a Subscription Agreement (discussed below) was to be entered into on or before January 31, 2013.

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Registration Rights Agreement

In connection with the Investment Agreement, the Company entered into a Registration Rights Agreement with VerifyMe (the “Registration Rights Agreement”), pursuant to which VerifyMe can demand at any time on or after four months after December 31, 2012, that the Company file a registration statement relative to shares owned by VerifyMe.  If the Company has not filed the demand registration statement by the later of (i) two (2) months after the date of the request of demand registration and (ii) six (6) months after the date of the Registration Rights Agreement (such date, the “Filing Date”), then, (i) the Company shall not issue any (A) capital stock, (B) evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for capital stock (“Convertible Securities”), or (C) rights, options or warrants to subscribe for, purchase or otherwise acquire capital stock or Convertible Securities to anyone other than the stockholder until it files the demand registration statement, (ii) beginning on the day following the Filing Date, the applicable exercise price shall be reduced by $0.01, (iii) until the Company has filed the registration statement with the SEC, on each subsequent one (1) month anniversary of the filing date, the applicable exercise price shall be reduced by $0.01, and (iv) all common stock held by the stockholder and all common stock held by the Company to be granted by the Company in respect of the exercise of the warrants, shall automatically convert into a class of preferred stock of the Company, established by the Company on terms acceptable to the stockholder, which such class of preferred stock shall have voting rights representing 51% of the aggregate voting power of the Company.

Technology and Service Agreement

In connection with the Investment Agreement, the Company entered into a Technology and Service Agreement with VerifyMe (the “Technology and Service Agreement ”), pursuant to which VerifyMe purchased warrants of the Company to purchase 22,222,222 shares of the Company’s common stock for $1 million.  Additionally, the Company executed a services agreement with Zaah Technologies, Inc. (“Zaah”) concurrently with this agreement (the “Zaah Technology and Service Agreement”).  The Company is to use up to $550,000 of the proceeds from the Technology and Service Agreement for the purpose of the Company’s hiring (i) a full-time Chief Technology Officer or Chief Information Officer and (ii) two full-time business developers.

Technology and Service Agreement with Zaah

Under the Zaah Technology and Service Agreement, Zaah will provide the Company (a) twelve (12) months of technical support, (b) up to twelve (12) days of meetings annually between the respective management teams of the Company and Zaah, (c) updates to technology as agreed in writing between the Company and Zaah, and (d) twelve (12) months of technical hosting.

The Company is required to pay Zaah the following:

(a) $450,000 on the date of the agreement (December 31, 2012), consisting of $250,000 in cash and warrants to purchase 4,444,444 shares of common stock under a cashless exercise initially at an exercise price of $0.045 on the terms set forth under the warrants issued by the Company to Zaah, dated as of December 31, 2012,

(b) $100,000, accrued in full as of the date of the agreement, but payable in twelve (12) months from the date hereof to a designee of Zaah’s selection, with a right to convert (at Zaah’s sole discretion, from time to time at any time) to shares of common stock at the prevailing market price per share of common stock (which, as long as the common stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the common stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.)), and

(c) a commission of 10% of the revenue generated by any Company transaction originated through the efforts of Zaah, as substantiated by a written agreement between the Company and Zaah, specifically referencing the transaction in which Zaah is entitled to such commission, payable by the Company to Zaah in cash. Such payment shall be made on the earlier of (i) the date of the signing of such transaction, (ii) the date of the closing of such transaction, or (iii) any date on which any funds are paid to the Company in respect to such transaction.

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Patent and Technology License Agreement

In connection with the Investment Agreement, the Company entered into a Patent and Technology License Agreement with VerifyMe, pursuant to which VerifyMe granted the Company exclusive and non-exclusive licenses relative to a specific list of patents in return for the following:

(a) Payment 1, payable upon execution of the agreement on December 31, 2012: The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of common stock, of the Company equal to (x) $100,000 divided by (y) $0.045 (2,222,222 shares) and (ii) cashless exercise warrants to purchase an equal number of shares exercisable at a price of Ten Cents ($0.10) per share with a term of five (5) years.

(b) Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of shares exercisable at a price of Ten Cents ($0.10) per share with a term of five (5) years.

(c) Payment 3, payable on January 1, 2015: The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of shares exercisable at a price of Ten Cents ($0.10) per share with a term of five (5) years.

(d) Future Payments Contingent: The Company’s payment of Payment 2 and Payment 3 is contingent. To the extent that VerifyMe does not develop and license to the Company at a time subsequent to Payment 1, further technology and/or a further patent right related to the local, mobile and cloud based biometric security systems, then any payments not already paid, will not longer be due to VerifyMe, this nonperformance being a likelihood, more likely than not.

Asset Purchase Agreement

In connection with the Investment Agreement, the Company entered into an Asset Purchase Agreement with VerifyMe, pursuant to which the Company purchased trademark rights, software and a domain name at a purchase price of $100,000 to be paid by issuing shares equal to $100,000/0.045 (2,222,222 shares) and cashless exercise warrants to purchase an equal number of shares at an exercise price of ten cents per share with a term of five years.

The following agreement was executed on January 31, 2013 and provided the Company with $1 million in funding:

Subscription Agreement

VerifyMe subscribed to purchase 33,333,333 shares of the Company’s preferred stock and a warrant to purchase 33,333,333 shares of the Company’s common stock for $1 million at an exercise price of $0.12.  This agreement was executed on January 31, 2013.

The Company is in the development stage. During the years ended December 31, 2012 and 2011, the Company’s operational resources were used primarily to fund general and administrative expenses to continue operations and a significantly reduced sales and marketing program.

As we have not realized significant revenues since our inception, we have financed our operations through public and private offerings of debt and equity securities.  We do not currently maintain a line of credit or term loan with any commercial bank or other financial institution.  The following sets forth our primary sources of capital during the previous two years.

On April 28, 2011, the Company purchased 17,795,903 shares of the Company’s outstanding common stock for $17,796 and placed them in the treasury.

On May 25, 2011, the Company sold 15.5 million shares of the Company’s stock to an investor pursuant to a private placement for $400,000.

On June 24, 2011, an investor exercised a warrant to purchase 1 million shares of the Company’s common stock, which raised $10,000 for the Company.

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During the second quarter of 2012, the Company received $200,000 for a 10% unsecured note payable, due April 27, 2013.  In December 2012, this note payable and accrued interest of $9,167 was converted into 4,703,711 shares of the Company’s common stock.

In October 2012, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share.  The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $0.045 and $0.05 per unit.  As of December 31, 2012, the Company sold 21,888,889 units that raised $1,060,000 for the Company.

On November 13, 2012, an employee and a consultant exercised options to purchase in the aggregate 10,490,996 shares of the Company’s common stock at an exercise price of $.00125 per share that raised $13,114 for the Company.

On December 20, 2012, an investor exercised warrants to purchase 333,333 shares of the Company’s common stock at $0.15 per share, that raised $50,000 for the Company.

Since our inception, we have focused on developing and implementing our business plan.  Our business plan is dependent on our ability to raise capital through private placements of our common stock and/or preferred stock, through the possible exercise of outstanding options and warrants, through debt financing and/or through a future public offering of our securities. There is no assurance that we will raise sufficient capital in order to meet our goals of implementing a sales and marketing effort to introduce our products.  We believe that our existing cash resources will be sufficient to sustain our operations during the next twelve months, however, we may need to raise additional funds in the future. We intend to raise such financing through private placements and/or the sale of debt and equity securities.  The issuance of additional equity would result in dilution to our existing shareholders.  If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms favorable to us, we may be unable to execute our business plan or pay our costs and expenses as they are incurred, which could have a material, adverse effect on our business, financial condition and results of operations.

Even if we are successful in raising sufficient capital, our ability to continue in business as a viable going concern can only be achieved when our revenues reach a level that sustains our business operations. While it is impossible to predict the amount of revenues, if any, that we may receive from our products, we presently believe, based solely on our internal projections, that we will generate revenues sufficient to fund our planned business operations if the products are marketed effectively in accordance with our plans.  There can be no assurance that we will raise sufficient proceeds, or any proceeds, for us to implement fully our proposed business plan.  Moreover, there can be no assurance that even if our products are marketed effectively, that we will generate revenues sufficient to fund our operations.  In either situation, we may not be able to continue our operations and our business might fail.

Off-Balance Sheet Arrangements

As of December 31, 2012 we did not have any relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.  As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in note 1 of the notes to our financial statements included elsewhere herein. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

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Stock-based Compensation

We account for stock-based compensation under the provisions of FASB ASC Topic 718,  Compensation—Stock Compensation   (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes model.  The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

We account for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 505-50, Equity-Based Payments to Non-Employees   (“ASC 505-50”). Under ASC 505-50, we determine the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional paid-in capital in stockholders’ equity over the applicable service based on the fair value of the options at the end of each period.

Revenue Recognition

In accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 104, Revenue Recognition (Codified in FASB ASC 605), we recognize revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectibility of the sales revenues is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer.  Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements are discussed in Note 1 of the Notes to Financial Statements contained elsewhere in this report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements required to be filed pursuant to this Item 8 are appended to this report beginning on page F-1 located immediately after the signature page.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

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ITEM 9A.  CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

Our management has evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15(d)-15(e) under the Exchange Act) as of the end of the period covered by this report pursuant to Rule 13a-15(b) under the Exchange Act. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2012, our disclosure controls and procedures were effective to ensure (i) that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, in order to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934 as amended. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an evaluation of the effectiveness of our internal controls over financial reporting as of December 31, 2012 using criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management has concluded that our internal control over financial reporting was effective as of December 31, 2012.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to attestation by our registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permits us to provide only management’s report in this annual report.

Changes in Internal Control Over Financial Reporting

There have been changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during the fiscal quarter ended December 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The Company has strengthened its internal controls over financial reporting.  We have engaged a Chief Financial Officer.  We have established a separation of duties between our Chief Executive Officer and our President.  We have implemented multi-layer controls over check-signing authority and implemented new procedures as it relates to internal disbursements and check processing.  Management believes that these changes have strengthened our internal controls.

ITEM 9B. OTHER INFORMATION.

Departure of Director; Election of Director

On March 30, 2013, Claudio R. Ballard, 54, was elected to fill the vacancy on the Board left from the resignation of Walter Hauk III. Mr. Ballard was nominated to the Board at the suggestion of VerifyMe pursuant to nomination rights held by VerifyMe under provisions of the Investment Agreement.  Mr. Ballard is currently the president of VerifyMe. Mr. Ballard is the Chairman, Founder and one of the two Managing Members of VEEDIMS.  In 2010, Mr. Ballard was named “Inventor of the Year” by the United States Business and Industry Council, in recognition of his founding of Iconic Motors and VEEDIMS as well as the creation of the DataTreasury Global Repository Platform, a patent-protected electronic transaction system licensed by banks to process digital checks.

Mr. Ballard has over 37 years of experience in computer technology, software and business development. In 1979, he founded FORTEX Corporation, that in 1981 became the world’s first ORACLE Value-Added Reseller and Systems Integrator by delivering the earliest known commercially viable production mission critical application software and supporting development tools that initially ran on ORACLE and eventually ran on other database platforms. By the late 1980s, Mr. Ballard’s team had built sophisticated, mission critical systems for more than 30 Fortune 500 companies, including Kidder Peabody, General Electric (14 Divisions), Standard & Poor’s, CitiBank, Philip Morris, Boeing, McDonnell Douglas and AT&T Bell Labs, Pfizer, Novartis (formally Ciba-Geigy) as well as government agencies that included the U.S. Army, U.S. Air Force, U.S. Navy, the Food and Drug Administration (7 departments at the FDA) and the Central Intelligence Agency.

In 1994, Mr. Ballard invented the DataTreasury System, the sophisticated repository and on-line biometrics system that enables banks to quickly verify identity and process a myriad number of financial transactions. In 1998, Mr. Ballard founded DataTreasury Corporation and launched the core technology that led to the development of the check-imaging platform. Today, over 50 banks throughout the U.S. representing approximately 70% of U.S. check processing volume use this technology through a licensing arrangement.

As a result of these and other professional experiences, Mr. Ballard possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience.

On March 29, 2013, Walter Hauk III resigned his position as a member of the Board, such resignation to be effective immediately. Mr. Hauk did not indicate any reason for his resignation or note any disagreement with the Company on any matter relating to the Company’s operations, policies or practices. Mr. Hauk was elected to the Board on January 11, 2013.

Mr. Hauk, 53, was most recently the Chief Information Officer and Senior Vice President of Technology for Dun & Bradstreet (“D&B”).  Under Mr. Hauk’s leadership, D&B initiated a $100M corporate transformation effort including consolidation and re-design of their product suite and development of a real-time data supply chain.  He was instrumental in building strategic partnerships, consolidating over sixty vendors into two, with $10M of in-year savings.

Prior to D&B, Walt spent 13 years at Pfizer, Inc. where he most recently served as Vice President, Global Technology.  In this role, he worked extensively in the automation of new drug submissions and led the creation of a paperless clinical trials process.  Mr. Hauk was an R&D team member for several new drug approval teams, including Viagra, Lipitor, Geodon, and Celebrex.  He began his professional career in underwater acoustics as an engineer at the Naval Underwater Systems Center, focused on ocean acoustics and signal processing.

Mr. Hauk also serves as a Regent at the University of Hartford, where he is a member of the Executive, Audit and Strategic Planning committees.  He holds a bachelor's degree in Engineering from University of Hartford, Connecticut and a master's degree in Acoustics from Pennsylvania State University.

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Appointment of Chief Financial Officer

On December 14, 2012, Scott A. McPherson, 51, was appointed as Chief Financial Officer of the Company. Prior to that, Mr. McPherson served as the Chief Financial Officer of Virtual Piggy, Inc., from August 2012 through November 2012. Virtual Piggy, Inc. is a public company that has increased market interest towards the security aspects of online gaming and social networking and has focused its efforts towards delivering a platform technology designed to manage the under 18 age group’s online experience in a secure manner. Mr. McPherson formed McPherson, CPA, PLLC in January 2005, which he continues to manage today. The firm performs accounting and tax services for numerous clients in various industries. The firm also performs litigation support services, primarily involving class action lawsuits and other lawsuits involving accounting malpractice or manipulation. The firm has successfully assisted small public companies by developing procedures for them to implement in order to initially comply and maintain compliance with the Sarbanes-Oxley Act. All of these services are conducted under the direction of Mr. McPherson. Prior to the formation of McPherson, CPA, PLLC, Mr. McPherson was a partner in the SEC, Merger and Acquisition and Co-Chairman of the Litigation Support departments of a regional certified public accounting firm.

PART III

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The current members of our Board and executive officers of the Company are as follows:

Name	Age	Position with Company
Michael R. Sonnenreich	74	Chairman of the Board of Directors
Norman A. Gardner	70	Vice Chairman of the Board of Directors and Chief Executive Officer
Neil Alpert	35	Director, President and Chief Operating Officer
Constance Harriman	64	Director
General Peter Pace	67	Director
Paul Wolfowitz	68	Director
Jonathan Weinberger	36	Director
Claudio R. Ballard	54	Director
Scott A. McPherson	51	Chief Financial Officer

Board of Directors

We believe that our Board should be composed of individuals with sophistication and experience in many substantive areas that impact our business.  We believe that experience, qualifications, or skills in the following areas are most important: security industry experience; accounting and finance; strategic planning; human resources and development practices; and board practices of other corporations.  These areas are in addition to the personal qualifications described in this section.  We believe that all of our current Board members possess the professional and personal qualifications necessary for board service and have highlighted particularly noteworthy attributes for each Board member in the individual biographies below.  The principal occupation and business experience, for at least the past five years, of each current director is as follows:

MICHAEL R. SONNENREICH

Michael R. Sonnenreich has vast experience in the global pharmaceutical industry. He is a graduate of the University of Wisconsin, the University of Madrid, Spain, and Harvard University Law School. He is currently Chairman of The Board of Kikaku America International and Vice Chairman of PharMa International Corporation of Tokyo, Japan.  He is also Chairman and CEO of Williams Creek Explorations, Vancouver, British Columbia, Canada. He is a Director of Wi2Wi, Palo Alto, California, Tyhee Development Corp. Ltd., Vancouver, British Columbia, Canada, and Amorfix Life Sciences Ltd., Toronto, Canada.  Mr. Sonnenreich has in the past been a Board member and Trustee of numerous important companies and universities, such as Les Aliments SoYummi, Inc., Montreal, Canada, the ABD American Capital Market Funds, the Integra Fund, Continental Steel Inc., Scientific American, Medical Tribune International, and has long-term involvements with many nonprofit institutions such as the Washington National Opera (President 1996-98; 2002-2006), D.C. Jazz Festival (Chairman, 2010-present), Sackler/Freer Galleries of Art (Smithsonian Institution), D.C. Commission on the Arts and Humanities (Mayoral Appointment as Commissioner, 2008-2011), the Johns Hopkins University School of Advanced International Studies, the New England Conservatory of Music, the North Carolina Museum of Art Foundation, the University of Virginia Art Museum, Clark University, the Maret School,  the Richard Tucker Music Foundation, and served as President of the National Coordinating Council on Drug Education.  In 2008, he was named Distinguished Washingtonian by the University Club of Washington, D.C.

Mr. Sonnenreich previously served in government in the Department of Justice and was appointed Executive Director of the National Commission on Marijuana and Drug Abuse.

As a result of these and other professional experiences, Mr. Sonnenreich possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience. Mr. Sonnenreich was elected to the Board on November 21, 2012.

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NORMAN A. GARDNER

Norman A. Gardner served as our president since inception on November 11, 1999 through October 8, 2012, when he became the Vice Chairman of the Company and has served as our Chief Excecutive Officer since inception. From 1974 to 1985 Mr. Gardner served as president of Polymark Management, Ltd., a Canadian public relations firm. In 1982, Mr. Gardner founded NoCopi Technologies, Inc. of West Conshohocken, Pennsylvania, a publicly traded company. He served as president and chief executive officer of NoCopi Technologies, Inc. from 1985 until 1997 and as chairman of its board until March 1998. Mr. Gardner received his B.A. in English from McGill University in 1963.

As a result of these and other professional experiences, Mr. Gardner possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience.

NEIL ALPERT

Neil Alpert became the President and Chief Operating Officer of the Company on October 8, 2012.  In his capacity as President, Mr. Alpert is responsible for overseeing the day-to-day operations of the Company as well as its vision for the future.  His background spans over a decade of management experience in the political, non-profit and business sectors.

From 2011 to 2012, Mr. Alpert served as President of The Kiawah Group, a boutique government relations and development firm specializing in fundraising, advocacy, non-profit consulting and global representation.

Prior to 2011, Mr. Alpert served as Special Assistant to the Chairman of the Republican National Committee.  In his role as Special Assistant, Mr. Alpert orchestrated a nationwide political outreach campaign targeting over 100 congressional districts. In addition, the campaign helped inspire the largest Congressional seat change since 1948 and the largest for any midterm election since the 1938 midterm elections.

Prior to joining the Republican National Committee, Mr. Alpert served in a number of capacities in the non-profit world ranging from National Campaign Director at the American Israel Public Affairs Committee (AIPAC) to working with Plácido Domingo and the Washington National Opera. He also worked with health-focused organizations such as the Red Cross and the American Cancer Society.

Mr. Alpert’s management experience ranges from managing small teams of just four employees to teams as large as 100+.  In each situation, Mr. Alpert’s leadership and vision has led to significant increases in productivity and output.

Mr. Alpert is involved with a number of charities and most recently served on the Board of Directors for the Armed Forces Foundation, a non-profit organization dedicated to providing comfort and solace to members of the military.  He also sits on the Board of Advisors for the Institute of World Politics, a graduate school focused on supplying professional education in statecraft, national security and international affairs.

As a result of these and other professional experiences, Mr. Alpert possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience. Mr. Alpert was elected to the Board on November 21, 2012.

CONSTANCE HARRIMAN

Constance B. Harriman has helped formulate U.S. trade, natural resource and legal policy in executive positions at three U.S. government agencies: the U.S. Export-Import Bank and the U.S. Department of Justice and Interior.  During her over twenty-five years of legal, public policy, and management experience, Ms. Harriman has worked extensively with Congress, federal agencies, the media, and special interest groups.  She has given speeches throughout the United States and abroad on issues related to finance, natural resources, and environmental technology.

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During the Bush and Clinton administrations, she was one of five full-time members of the Board of Directors of the Export-Import Bank.  She served on the board’s Audit Committee and chaired the bank’s taskforce on environmental guidelines.  Previously, Ms. Harriman was Assistant Secretary for Fish and Wildlife and Parks at the U.S. Department of the Interior.  She had policy, budget and administration responsibility for the National Park Service and the Fish and Wildlife Service: 25,000 employees, 170 million acres of land, and a budget of $2 billion.  Ms. Harriman played a key role in several inter-agency and international organizations.  She served as U.S. Commissioner to the Great Lakes Fishery Commission and as a member of the President’s Advisory Council on Historic Preservation.

Ms. Harriman’s other government experience includes high-level legal positions at the U.S. Department of Justice and the U.S. Department of the Interior.  She also worked with the California law firm of Sheppard, Mullin, Richter & Hampton, where she practiced corporate and securities law and commercial and anti-trust litigation.

Ms. Harriman is a member of numerous organizations, and her work in the public and private sectors has earned her admission in the Marquis “Who’s Who in America.”

A Phi Beta Kappa graduate of Stanford University, she holds Bachelor and Master’s degrees from Stanford, a Master’s degree in international Law from Georgetown University, and a Juris Doctor degree from the University of California at Los Angeles.

As a result of these and other professional experiences, Ms. Harriman possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience. Ms. Harriman was elected to the Board on November 21, 2012.

GENERAL PETER PACE

General Peter Pace served as the sixteenth Chairman of the Joint Chiefs of Staff from 2005-2007. Prior to becoming Chairman, he served as Vice Chairman of the Joint Chiefs of Staff. General Pace holds the distinction of being the first Marine to have served in either of these positions.  General Pace retired in 2007 after more than 40 years of active service in the United States Marine Corps.

Born in Brooklyn and raised in Teaneck, NJ, General Pace was commissioned in June 1967, following graduation from the United States Naval Academy. He holds a Master’s Degree in Business Administration from George Washington University, attended the Harvard University Senior Executives in National and International Security program, and graduated from the National War College.

During his distinguished career, General Pace held command at virtually every level, beginning as a Rifle Platoon Leader in Vietnam.  He also served in Europe, Japan, Thailand, South Korea, and Somalia.

In June 2008, General Pace was awarded the Presidential Medal of Freedom, the highest civilian honor a President can bestow.

He is currently serving on the Board of Directors of several corporate entities involved in management consulting, private equity, and IT security.  He served on the President’s Intelligence Advisory Board, and on the Secretary of Defense’s Defense Policy Board.  General Pace served as leader-in-residence and the Poling Chair of Business and Government, for the Kelley School of Business, Indiana University.  He is a Distinguished Visiting Research Scholar for Fordham University, and an Adjunct Faculty member of Georgetown University.

General Pace is associated with a number of charities focused on supporting the troops and their families.  He is Chairman of the Wall Street Warfighters Foundation and a long-standing member of the Board of Directors for the Marine Corps Law Enforcement Foundation.  He is a member of the USO World Board of Governor and serves on the Advisory Board for Snowball Express.  He and his wife Lynne are on the advisory board for Our Military Kids, an organization that supports children of deployed Guard and Reserve personnel with tutoring and enrichment activities.

As a result of these and other professional experiences, General Pace possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience. General Pace was elected to the Board on November 21, 2012.

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PAUL WOLFOWITZ

Paul Wolfowitz spent more than three decades in public service and higher education, including 24 years in U.S. government service under seven U.S. presidents.

After receiving a Ph.D. in political science from the University of Chicago and teaching at Yale University, Dr. Wolfowitz served in the Arms Control and Disarmament Agency, the Department of Defense, and the Department of State from 1973 to 1993, including as Director of Policy Planning, Assistant Secretary of State for East Asia and the Pacific, Ambassador to Indonesia and Undersecretary of Defense for Policy. From 1994 to 2001, Dr. Wolfowitz was Dean of the School of Advanced International Studies at Johns Hopkins University. Most recently, he served as Deputy Secretary of Defense from 2001 to 2005 and as President of the World Bank from 2005 to 2007. Dr. Wolfowitz currently focuses on development and national security issues as a scholar at the American Enterprise Institute.

In addition to his work at the American Enterprise Institute, he is Chairman of the U.S. Taiwan Business Council and has served as a Director of Hasbro Corporation and on the advisory boards of the Clinton Global Initiative, ING Americas, and the AMAR Foundation, as well as two organizations that assist veterans from Afghanistan and Iraq, the Aleethia Foundation and American Corporate Partners.  He also advises international businesses in Indonesia, Japan, Hong Kong and Switzerland.

His many awards for public service include The Presidential Citizen’s Medal, The Department of Defense’s Distinguished Public Service Medal, The Department of State’s Distinguished Honor Award, The Department of Defense’s Distinguished Civilian Service Medal, and The Arms Control and Disarmament Agency’s Distinguished Honor Award.

As a result of these and other professional experiences, Mr. Wolfowitz possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience. Mr. Wolfowitz was elected to the board on November 21, 2012.

JONATHAN WEINBERGER

Jonathan R. Weinberger is an experienced, accomplished, and well respected member of the Washington D.C. legal, government, and business communities.  Mr. Weinberger currently serves as Executive Vice President of a revolutionary technology company called Veedims, LLC based in Fort Lauderdale, Florida.  He also serves as a senior advisor to the owners of the private holding company that owns Veedims, LLC.

Mr. Weinberger has served directly under six cabinet members in various positions.  At the Department of State he was on the staffs of both Secretary Albright and Secretary Powell.  At the U.S. Treasury, he served as the youngest Executive Secretary of the Treasury in history.  He also served as the Executive Secretary and Deputy Chief of Staff at the Office of the United States Trade Representative at the White House.  Mr. Weinberger also served as Associate General Counsel where he was in charge of issues with respect to foreign investment in the United States and led the litigation team on various high-level trade disputes with China. Through his service in the government he has developed a superb skill for executive management at the largest scale, an eye for efficient operation, and a rare entrepreneurial mindset that allowed for the streamlining of multitudes of bureaucratic structures and processes.

Originally from Scranton, Pennsylvania, Mr. Weinberger received his Bachelors Degree in International Affairs and Italian from The Johns Hopkins University. He also earned a Masters Degree in U.S. Foreign Policy from the Elliott School of International Affairs at George Washington University, a Juris Doctor degree from the Washington College of Law at American University, and a Masters of Law (LL.M) in international finance and national security law, with distinction, from Georgetown University Law Center.

As a result of these and other professional experiences, Mr. Weinberger possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience. Mr. Weinberger was elected to the board on November 21, 2012.

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CLAUDIO R. BALLARD

Claudio R. Ballard, 54, is the Chairman, Founder and one of the two Managing Members of VEEDIMS. Mr. Ballard is currently the President of VerifyMe. In 2010, Mr. Ballard was named “Inventor of the Year” by the United States Business and Industry Council, in recognition of his founding of Iconic Motors and VEEDIMS as well as the creation of the DataTreasury Global Repository Platform, a patent-protected electronic transaction system licensed by banks to process digital checks.

Mr. Ballard has over 37 years of experience in computer technology, software and business development. In 1979, he founded FORTEX Corporation, that in 1981 became the world’s first ORACLE Value-Added Reseller and Systems Integrator by delivering the earliest known commercially viable production mission critical application software and supporting development tools that initially ran on ORACLE and eventually ran on other database platforms. By the late 1980s, Mr. Ballard’s team had built sophisticated, mission critical systems for more than 30 Fortune 500 companies, including Kidder Peabody, General Electric (14 Divisions), Standard & Poor’s, CitiBank, Philip Morris, Boeing, McDonnell Douglas and AT&T Bell Labs, Pfizer, Novartis (formally Ciba-Geigy) as well as government agencies that included the U.S. Army, U.S. Air Force, U.S. Navy, the Food and Drug Administration (7 departments at the FDA) and the Central Intelligence Agency.

In 1994, Mr. Ballard invented the DataTreasury System, the sophisticated repository and on-line biometrics system that enables banks to quickly verify identity and process a myriad number of financial transactions. In 1998, Mr. Ballard founded DataTreasury Corporation and launched the core technology that led to the development of the check-imaging platform. Today, over 50 banks throughout the U.S. representing approximately 70% of U.S. check processing volume use this technology through a licensing arrangement.

As a result of these and other professional experiences, Mr. Ballard possesses particular knowledge and experience in information technology that strengthen the Board’s collective qualifications, skills and experience. Mr. Ballard was elected to the Board on March 30, 2013.

SCOTT A. MCPHERSON

Mr. McPherson was appointed as the Chief Financial Officer of the Company in December 2012.  Prior to that Mr. McPherson served as the Chief Financial Officer of Virtual Piggy, Inc., from August 2010 through November 2012.  Virtual Piggy, Inc. is a public company that has  increased market interest towards the security aspects of online gaming and social networking and has focused its efforts towards delivering a platform technology designed to manage the under 18 age group’s online experience in a secure manner.  Mr. McPherson formed McPherson, CPA, PLLC in January 2005, which he continues to manage today.  The firm performs accounting and tax services for numerous clients in various industries.  The firm also performs litigation support services, primarily involving class action lawsuits and other lawsuits involving accounting malpractice or manipulation.  The firm has successfully assisted small public companies by developing procedures for them to implement in order to initially comply and maintain compliance with the Sarbanes-Oxley Act. All of these services are conducted under the direction of Mr. McPherson.  Prior to the formation of McPherson, CPA, PLLC, Mr. McPherson was a partner in the SEC, Merger and Acquisition and Co-Chairman of the Litigation Support departments of a regional certified public accounting firm.

Committees

Our board of directors has created a separately-designated audit committee, governance committee, compensation committee, and investment committee.  The audit committee is comprised of Mr. Sonnenreich and committee chairperson Ms. Harriman.  As of the date of this annual report, we have seven employees and have not generated significant revenue to date.  In light of the foregoing, our Board concluded that the benefits of retaining an individual who qualifies as an “audit committee financial expert,” as that term is defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act, would be outweighed by the costs of retaining such a person.  As a result, no member of our Board is an “audit committee financial expert.”

Code of Ethics

We have adopted a code of ethics applicable to our executives, as defined by applicable rules of the SEC.  

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that our officers and directors and persons who beneficially own more than 10% of our common stock file initial reports of ownership and reports of changes in beneficial ownership of our common stock with the SEC.  They are also required to furnish us with copies of all Section 16(a) forms that they file with the SEC.  Based solely on our review of the copies of such forms received by us, or written representations from such persons that no reports were required for those persons, we believe that all Section 16(a) filing requirements were satisfied in a timely fashion during our fiscal year ended December 31, 2012.

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ITEM 11.  EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table sets forth the compensation earned by the Company’s board of directors, principal executive officer, and principal financial officer during the years ended December 31, 2012 and 2011.

Name and Principal Position	Year	Salary ($)	Option Awards(1) ($)	All Other Compensation (3)(4)($)	Total ($)
Norman A. Gardner (2) Vice Chairman & CEO	2012 2011	50,000 180,000	44,769 40,946	56,414 35,880	151,183 256,826
Neil Alpert President & COO	2012 2011	50,000 -	44,769 -	- -	94,769 -
Scott A. McPherson CFO	2012 2011	- -	11,638 -	16,325 19,500	27,963 19,500

(1)	Represents the grant date fair value of the option award, calculated in accordance with FASB Accounting Standard Codification 718, “Compensation – Stock Compensation,” or ASC 718.   The assumptions used in calculating the grant date fair value of the option awards are set forth in Note 9 of our Consolidated Financial Statements.
(2)	Mr. Gardner was appointed as our President and Chief Executive Officer on November 10, 1999.  The $180,000 of salary in 2011 was forgiven in 2012 by Mr. Gardner.
(3)	Company car, insurance, occupancy costs and expenses.
(4)	Mr. McPherson was appointed as Chief Financial Officer in December 2012 and the amounts received were paid to the accounting firm owned by Mr. McPherson.

Outstanding Equity Awards At December 31, 2012

The following table sets forth, for each named executive officer, information regarding unexercised options, stock that had not vested, and equity incentive plan awards as of the end of our fiscal year ended December 31, 2012.

Name	Number of securities underlying unexercised options  (#) exercisable	Number of securities underlying unexercised options (#) unexercisable	Option exercise price ($)	Option expiration Date
Norman A. Gardner	1,000,000	-	$0.05	11/20/2022
Neil Alpert	1,000,000	-	$0.05	11/20/2022
Scott A. McPherson	200,000	-	$0.05	7/16/2022

Narrative Disclosure to Summary Compensation Table and Outstanding Equity Awards Table

Employment Agreements

We currently have a three-year employment agreement dated October 8, 2012 with our Vice Chairman and Chief Executive Officer of the Company with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company has agreed to issue options to the Vice Chairman and Chief Executive Officer to purchase 5% of the fully-diluted shares of the Company’s common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 millon.

We currently have a three-year employment agreement dated October 16, 2012 with our President and Chief Operating Officer of the Company with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company has agreed to issue options to the President and Chief Operating Officer to purchase 5% of the fully-diluted shares of the Company’s common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 millon.

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Option Issuance

On November 21, 2012, the Company issued the Vice Chairman and Chief Executive Officer of the Company an option to purchase 1 million shares of the Company’s common stock at an exercise price of $0.05, with a term of ten years.

On November 21, 2012, the Company issued the President and Chief Operating Officer of the Company an option to purchase 1 million shares of the Company’s common stock at an exercise price of $0.05, with a term of ten years.

Director Compensation

Name		Fees earned or paid in cash ($)	Option awards ($)(1)	Total ($)
Michael Sonnenreich	2012 2011	- -	89,568          -	89,568          -
Neil Alpert	2012 2011	- -	-          -	-          -
Constance Harriman	2012 2011	- -	89,568          -	89,568          -
General Peter Pace	2012 2011	- -	89,568          -	89,568          -
Paul Wolfowitz	2012 2011	- -	89,568          -	89,568          -
Jonathan Weinberger (2)	2012 2011	- -	89,568          -	89,568          -

(1)	Represents the grant date fair value of the option award, calculated in accordance with FASB Accounting Standard Codification 718, “Compensation – Stock Compensation,“ or ASC 718.   The assumptions used in calculating the grant date fair value of the option awards are set forth in Note 9 of our Consolidated Financial Statements.
(2)	VerifyMe, Inc. controls these options.

 Narrative Disclosure to Directors Compensation Table

We did not pay an annual fee to any of our directors during 2012.  Each member of our Board receives reimbursement of expenses incurred in connection with his or her services as a member of our Board or Board committees.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND DIRECTORS.

The following table sets forth, as of February 28, 2013, information with respect to the securities holdings of all persons that we have reason to believe, pursuant to filings with the SEC, may be deemed the beneficial owner of more than 5% of our outstanding common stock.  The following table also sets forth, as of such date, the beneficial ownership of our common stock by all executive officers and directors, individually and as a group.

The beneficial owners and amount of securities beneficially owned have been determined in accordance with Rule 13d-3 under the Exchange Act and, in accordance therewith, includes all shares of our common stock that may be acquired by such beneficial owners within 60 days of February 28, 2013 upon the exercise or conversion of any options, warrants or other convertible securities.  Unless otherwise indicated, each person or entity named below has sole voting and investment power with respect to all common stock beneficially owned by that person or entity, subject to the matters set forth in the footnotes to the table below, and has an address of c/o LaserLock Technologies, Inc., 837 Lindy Lane, Bala Cynwyd, Pennsylvania 19004.

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Name and Address of Beneficial Owner	Amount and Nature Of Beneficial Ownership(1)	Percentage of Class
5% Beneficial Owners
Robert L. Bast 110 Spruce Lane Ambler, PA 19002	28,423,622(2)	7.25%
California Securities SA 60 West Randolph Street, Suite 200 Chicago, IL 60601	16,986,595(3)	4.33%
Clydesdale Partners II LLC 201 Spear Street, Suite 1150 San Francisco, CA 94105	45,875,000(4)	11.70%
Nob Hill Capital Partners L.P. 1 Ferry Building, Suite 225 San Francisco, CA  19411	32,250,000(5)	8.22%
VerifyMe, Inc. 205 Linda Drive Daingerfield, TX  75638	155,333,332(6)	39.60%
Executive Officers and Directors
Michael R. Sonnenreich	5,000,000(7)	1.27%
Norman A. Gardner	17,421,339(8)	4.44%
Neil Alpert	1,000,000(9)	*
Constance Harriman	3,000,000(10)	*
General Peter Pace	1,000,000(11)	*
Paul Wolfowitz	1,000,000(12)	*
Jonathan Weinberger	1,000,000(13)	*
Claudio R. Ballard	1,000,000(14)	*
Scott A. McPherson	200,000(15)	*
All officers and directors as a group (9 people)	30,621,339	7.81%

*Less than 1 percent

(1)  This table has been prepared based on 230,594,219 shares of our common stock outstanding on March 11, 2013.

(2) Consists of 28,423,622 shares of common stock.

(3) Consists of 13,543,095 shares of common stock.

(4) Consists of 43,875,000 shares of common stock and 2,000,000 shares of PFK Acquisition Group II LLC, which is under common control.

(5) Consists of 26,250,000 shares underlying convertible notes payable at an exercise price of $0.00533 and 6,000,000 shares underlying warrants at an exercise price of $0.01.

(6) Consists of 32,222,222 shares of common stock, 33,333,333 shares underlying convertible preferred stock convertible at $0.03 per share, 87,777,777 shares underlying warrants exercisable at 0.10 per share, 1,000,000 shares underlying options held by Jonathan Weinberger exercisable at $0.05 per share (see (13) below) and 1,000,000 shares underlying options held by Claudio Ballard exercisable at $0.05 per share (see (14) below).

(7) Consists of 2,000,000 shares of common stock, 1,000,000 shares underlying options exercisable at $0.05 per share and 2,000,000 shares underlying warrants exercisable at $0.15.

(8) Consists of 16,421,339 shares of common stock, and 1,000,000 shares underlying options exercisable at $0.05 per share.

(9) Consists of 1,000,000 shares underlying options exercisable at $0.05 per share.

(10) Consists of 1,333,333 shares of common stock, 1,000,000 shares underlying options exercisable at $0.05 per share and 666,667 shares underlying warrants exercisable at $0.15 per share.

(11) Consists of 1,000,000 shares underlying options exercisable at $0.05 per share.

(12) Consists of 1,000,000 shares underlying options exercisable at $0.05 per share.

(13) Consists of 1,000,000 shares underlying options exercisable at $0.05 per share, that are controlled by VerifyMe, Inc. (see (6) above).

(14) Consists of 1,000,000 shares underlying options exercisable at $0.05 per share, that are controlled by VerifyMe, Inc. (See (6) above). 

(15) Consists of 200,000 shares underlying options exercisable at $0.05 per share.

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Transfer Agent

Our Transfer Agent is Interwest Transfer Company, Inc., and their address and phone number are 1981 Murray Holladay Road, #100, Salt Lake City, Utah 84117; (801) 272-9294.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Related Party Transactions

Under applicable SEC rules and regulations, the following individuals may be considered “promoters” of the Company as they were instrumental in forming and organizing the Company: (i) Norman A. Gardner, the Vice Chairman of our Board of Directors and Chief Executive Officer.

At December 31, 2012 and 2011, six and five shareholders of the Company held $732,249 and $577,500 of the senior secured convertible notes payable.

One shareholder held $140,000 of convertible notes payable as of December 31, 2012 and 2011.

At December 31, 2012 and 2011, three shareholders of the Company held $711,000 of unsecured notes payable.

The Company maintains its office at the home of its Chief Executive Officer. No formal lease agreement exists and no direct rent expense has been incurred. However, related occupancy costs of $32,414 and $13,220 were incurred during the years ended December 31, 2012 and 2011.

At December 31, 2011, accrued and unpaid salary for the Chief Executive Officer was $208,514.  As of December 31, 2012, the Chief Executive Officer has forgiven $349,000 of accrued salary, which was treated as additional paid in capital.

On December 31, 2012, the Company liquidated its wholly owned subsidiary, LL Security Products, Inc.

We have entered an employment agreement with Mr. Gardner and Mr. Alpert.  We have issued options to both, which awards are described in more detail under “Item 11.  Executive Compensation” of this report.

Policies and Procedures for Reviewing Related Party Transactions

We have not adopted any written policies or procedures governing the review, approval or ratification of related party transactions. However, our Board reviews, approves or ratifies, when necessary, all transactions with related parties.

Director Independence

Pursuant to Item 407(a)(1)(ii) of Regulation S-K promulgated under the Securities Act, we have adopted the definition of “independent director” as set forth in Rules 5000(a)(19) and 5605(a)(2) of the rules of the Nasdaq Stock Market.  We believe that Michael Sonnenreich, Constance Harriman, General Peter Pace, and Paul Wolfowitz qualify as an “independent director” pursuant to such rules.  Our Board has created separately-designated standing committees.  Officers are elected annually by our Board  and serve at the discretion of our Board.

ITEM 14.   PRINCIPAL ACCOUNTING FEES AND DISCLOSURES.

Audit Fees

The fees billed for professional services rendered by our principal accountant for the audit of our annual financial statements for the years ended December 31, 2012 and 2011 and the review of the financial statements included in each of our quarterly reports during the years ended December 31, 2012 and 2011, were $36,500 and $55,000, respectively.

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Audit-Related Fees

There were no fees billed by our independent accountants for audit-related services during the fiscal year ended December 31, 2012 and 2011.   

Tax Fees

During the fiscal years ended December 31, 2012 and 2011, there were no fees billed for tax compliance, tax advice and/or tax planning by our principal accountants.

All Other Fees

During the fiscal years ended December 31, 2012 and 2011, there were no additional fees billed for products and services provided by the principal accountant other than those set forth above.

Audit Committee Approval

Our audit committee approves the engagement of our independent auditors and meets with our independent auditors to approve the annual scope of accounting services to be performed and the related fee estimates.  It also meets with our independent auditors prior to the completion of our annual audit and reviews the results of their audit and review of our annual and interim consolidated financial statements, respectively.  During the course of the year, our chairperson has the authority to pre-approve requests for services that were not approved in the annual pre-approval process.  The chairperson reports any interim pre-approvals at the following quarterly meeting.  At each of the meetings, management and our independent auditors update our Board regarding material changes to any service.

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PART IV

ITEM 15.   EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

The following exhibits are filed as part of this report.

3.1	Amended and Restated Articles of Incorporation of the Company dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).
3.2**	Certificate of Amendment to Amended and Restated Articles of Incorporation of LaserLock Technologies, Inc., dated as of November 29, 2012 (filed herewith).
3.3	Amended Certificate of Designation of Series A Preferred Stock, dated as of January 31, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2013 and incorporated herein by reference).
3.4	Amended and Restated Bylaws of the Company dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).

10.1 Employment Agreement by and between the Company and Norman Gardner dated November 5, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).

10.2 Stock Loan Agreement by and among Norman Gardner, Californian Securities, SA and Pacific Continental Securities (UK) Nominees Limited and the Company (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2003 and incorporated herein by reference).

10.3 Regulation S Stock Purchase Agreement, dated May 2, 2003, by and between the Company and Californian Securities, S.A. (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on August 14, 2003 and incorporated herein by reference).

10.4 Amendment to Regulation S Stock Purchase Agreement by and between the Company and Californian Securities, S.A., dated October 15, 2003 (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2003 and incorporated herein by reference).

10.5 Regulations S Stock Purchase Agreement, dated March 10, 2004, by and between the Company and California Securities, S.A. (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on May 17, 2004 and incorporated herein by reference).

10.6 Senior Secured Convertible Note and Warrant Purchase Agreement, dated February 13, 2006, among the Company and Nob Hill Capital Partners, L.P. (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

10.7 Schedule of Purchasers who have entered into the Senior Secured Convertible Note and Warrant Purchase Agreement (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

10.8 Senior Secured Convertible Promissory Note, dated February 17, 2006, by the Company in favor of Nob Hill Capital Partners, L.P. in the amount of $100,000 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

10.9 Schedule of Payees who have entered into a senior secured convertible promissory note substantially identical to the Senior Secured Convertible Promissory Note (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

10.10 Warrant, issued by the Company in favor of Nob Hill Capital Partners, L.P., dated February 13, 2006 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

10.11 Schedule of Holders to whom the Company has issued a warrant substantially identical to the Warrant (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

10.12 Security Agreement, dated February 13, 2006, by and between the Company and Nob Hill Capital Partners, L.P. (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

10.13 Schedule of Secured Parties who have entered into a security agreement substantially identical to the Security Agreement (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference).

30

10.14 Grant of 3,000,000 shares of the Company to Norman A. Gardner on January 3, 2006 in consideration for services provided to the Company (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2006 and incorporated herein by reference).

10.15 LaserLock Technologies, Inc. 2003 Stock Option Plan adopted on December 19, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).

10.16 Option Agreement, dated as of March 23, 2012, between the Company and Gaming Partners International Corporation (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 13, 2012 and incorporated herein by reference).

10.17**	Investment Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed herewith).
10.18**	Registration Rights Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed herewith).
10.19**	Technology and Services Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed herewith).
10.20**	Patent and Technology License Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed herewith).
10.21**	Asset Purchase Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed herewith).
10.22**	Technology and Services Agreement (Zaah), dated as of December 31, 2012, between LaserLock Technologies, Inc. and Zaah Technologies, Inc. (filed herewith).
10.23**	Employment Agreement between LaserLock Technologies, Inc. and Norman Gardner, dated as of October 8, 2012 (filed herewith).
10.24**	Employment Agreement between LaserLock Technologies, Inc. and Neil Alpert, dated as of October 8, 2012 (filed herewith).
10.25**	Employment Agreement between LaserLock Technologies, Inc. and Scott McPherson, dated as of December 14, 2012 (filed herewith).
10.26**	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Norman Gardner, dated as of November 21, 2012 (filed herewith).
10.27	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Neil Alpert, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.26).
10.28**	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Michael Sonnenreich, dated as of November 21, 2012 (filed herewith).
10.29	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Constance Harriman, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28).
10.30	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Peter Pace, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28).
10.31	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Jonathan Weinberger, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28).
10.32	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Paul Wolfowitz, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28).
10.33	Subscription Agreement between LaserLock Technologies, Inc. and VerifyMe, Inc., dated as of January 31, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2013 and incorporated herein by reference).
14.1**	Code of Ethics (filed herewith).

23.1** Consent of Morison Cogen LLP (filed herewith).

31.1**	Certification of the principal executive officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)
31.2**	Certification of the principal financial officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a)
32.1**	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the chief executive officer of the Company
32.2**	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, signed by the chief financial officer of the Company
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document

**filed herewith

31

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 1st day of April 2013.

LaserLock Technologies, Inc.
By:	/s/ Norman A. Gardner
	Norman A. Gardner, Vice Chairman of the Board and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report on Form 10-K has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

Signature	Title	Date
/s/ Michael R. Sonnenreich	Chairman of the Board	April 1, 2013
Michael R. Sonnenreich

Signature	Title	Date
/s/ Norman A. Gardner	Vice Chairman of the Board and Chief Executive Officer	April 1, 2013
Norman A. Gardner

Signature	Title	Date
/s/ Neil Alpert	President, Chief Operating Officer and Director	April 1, 2013
Neil Alpert

Signature	Title	Date
/s/ Constance Harriman	Director	April 1, 2013
Constance Harriman

Signature	Title	Date
/s/ General Peter Pace	Director	April 1, 2013
General Peter Pace

Signature	Title	Date
/s/ Paul Wolfowitz	Director	April 1, 2013
Paul Wolfowitz

Signature	Title	Date
/s/ Jonathan Weinberger	Director	April 1, 2013
Jonathan Weinberger

Signature	Title	Date
/s/ Claudio R. Ballard	Director	April 1, 2013
Claudio R. Ballard

Signature	Title	Date
/s/ Scott A. McPherson	Chief Financial Officer	April 1, 2013
Scott A. McPherson

32

LaserLock Technologies, Inc. and Subsidiary

 (A Development Stage Enterprise)

CONTENTS

	PAGE
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	1 - 2
CONSOLIDATED BALANCE SHEETS	3
CONSOLIDATED STATEMENTS OF OPERATIONS	4
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT	5
CONSOLIDATED STATEMENTS OF CASH FLOWS	10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	11 - 27

Report of Independent Registered Public Accounting Firm

To the Board of Directors

LaserLock Technologies, Inc. and Subsidiary

We have audited the accompanying consolidated balance sheet of LaserLock Technologies, Inc. and its Subsidiary (a development stage enterprise) as of December 31, 2012 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the year then ended and for the period from November 10, 1999 (date of inception) to December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the consolidated financial statements of LaserLock Technologies, Inc. and its Subsidiary as of December 31, 2011, 2010, 2009 and 2008 and for each of the years in the four-year period ended December 31, 2011. Such statements are included in the cumulative inception to December 31, 2012 totals of the consolidated statements of operations and cash flows. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to amounts for each of the years in the four-year period ended December 31, 2011, included in the cumulative totals, is based solely on the report of the other auditors.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the report of the other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audit and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LaserLock Technologies, Inc. and its Subsidiary  as of December 31, 2012, and the results of their operations and their cash flows for the year then ended and for the period November 10, 1999 (date of inception) to December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

/s/ MORISON COGEN LLP 

Bala Cynwyd, Pennsylvania

April 1, 2013

-1-

Report of Independent Registered Public Accounting Firm

To the Board of Directors

LaserLock Technologies, Inc. and its Subsidiary

We have audited the accompanying consolidated balance sheet of LaserLock Technologies, Inc. and its Subsidiary (a development stage company) (the Company) as of December 31, 2011 and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the year ended December 31, 2011 and for the period from November 10, 1999 (date of inception) to December 31, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We did not audit the consolidated financial statements of LaserLock Technologies, Inc. and its Subsidiary for the period from November 10, 1999 (date of inception) to December 31, 2007. Such statements are included in the cumulative inception to December 31, 2011 totals of the consolidated statements of operations and cash flows. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to amounts for the period from November 10, 1999 (date of inception) to December 31, 2007, included in the cumulative totals, is based solely on the reports of the other auditors.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, based on our audit and the reports of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LaserLock Technologies, Inc. and its Subsidiary (a development stage company) as of December 31, 2011, and the results of its operations and its cash flows for the year ended December 31, 2011 and for the period November 10, 1999 (date of inception) to December 31, 2011, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As described in Note 2 to the 2011 consolidated financial statements, the Company’s recurring operating losses from development stage activities raise substantial doubt about its ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 2 to the 2011 consolidated financial statements. The 2011 consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

/s/ ASHER & COMPANY, Ltd.

Philadelphia, Pennsylvania

July 13, 2012

-2-

LaserLock Technologies, Inc. and Subsidiary

(A Development Stage Enterprise)

Consolidated Balance Sheets

December 31, 2012 and December 31, 2011

	December 31, 2012			December 31, 2011
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,994,350		$	53,573
Accounts receivable, net of allowance of $0 at December 31, 2012 and December 31, 2011		3,473			-
Inventory		19,980			35,137
Deferred finance charges		-			13,625
Prepaid expenses		750,000			117,760
TOTAL CURRENT ASSETS		3,767,803			220,095
PROPERTY AND EQUIPMENT
Capital equipment		34,964			32,604
Less accumulated depreciation		32,624			32,604
		2,340			-
Patents and Trademark, net of accumulated amortization of $92,302 and $78,851 as of December 31, 2012 and December 31, 2011		311,832			118,618
TOTAL ASSETS	$	4,081,975		$	338,713
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses		660,493		$	634,632
Accrued interest		97,563			8,667
Notes payable		200,000			50,000
TOTAL CURRENT LIABILITIES		958,056			693,299
LONG-TERM LIABILITIES
Accrued interest		975,559			940,554
Senior secured convertible notes payable		775,249			781,500
Convertible notes payable		140,000			140,000
Notes payable, net of discount of $13,632 and $18,589 as of December 31, 2012 and December 31, 2011		697,368			1,092,411
TOTAL LONG-TERM LIABILITIES		2,588,176			2,954,465
CONTINGENCIES
STOCKHOLDERS’ DEFICIT
Preferred Stock, $ .001 par value; 75,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $ .001 par value; 675,000,000 shares authorized; 248,244,012 shares issued and 218,448,109 outstanding at December 31, 2012 and 174,940,506 shares issued and 145,144,603 outstanding at December 31, 2011		248,244			174,940
Additional paid in capital		13,787,929			8,817,382
Treasury stock, at cost (29,795,903 shares at December 31, 2012 and December 31, 2011)		(113,389	)		(113,389	)
Deficit accumulated during the development stage		(13,387,041	)		(12,187,984	)
STOCKHOLDERS’ DEFICIT		535,743			(3,309,051	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	4,081,975		$	338,713

The accompanying notes are an integral part of these consolidated financial statements.

-3-

LaserLock Technologies, Inc. and Subsidiary

(A Development Stage Enterprise)

Consolidated Statements of Operations

For the Years Ended December 31, 2012 and 2011

And for the Period November 10, 1999 (Date of Inception) to December 31, 2012

				Year Ended			Year Ended
	Cumulative			Ended			Ended
	Since			December 31,			December 31,
	Inception			2012			2011
NET REVENUES
Sales	$	461,155		$	7,029		$	900
Royalties		645,180			10,000			7,984
TOTAL NET REVENUE		1,106,335			17,029			8,884
COST OF SALES		429,031			4,083			373
GROSS PROFIT		677,304			12,946			8,511
OPERATING EXPENSES
General and administrative		1,543,359			129,329			114,376
Legal and Accounting		1,538,786			276,774			71,847
Patent costs		65,000			-			-
Payroll Expenses		3,412,982			612,721			227,658
Research and development		867,792			5,420			9,081
Sales and Marketing		5,019,732			66,499			113,377
Total operating expenses		12,447,651			1,090,743			536,339
LOSS BEFORE OTHER INCOME		(11,770,347	)		(1,077,797	)		(527,828	)
OTHER INCOME (EXPENSE)
Interest income		63,664			1			59
Interest expense		(2,190,432	)		(277,371	)		(321,586	)
Gain on debt forgiveness		340,352			156,110			184,242
Gain on disposition of assets		4,722			-			-
		(1,781,694	)		(121,260	)		(137,285	)
LOSS BEFORE INCOME TAX BENEFIT		(13,552,041	)		(1,199,057	)		(665,113	)
INCOME TAX BENEFIT		(165,000	)		-			-
NET LOSS	$	(13,387,041	)	$	(1,199,057	)	$	(665,113	)
BASIC AND DILUTED NET LOSS PER COMMON SHARE				$	(0.01	)	$	(0.00	)
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING					150,559,287			146,076,571

The accompanying notes are an integral part of these consolidated financial statements.

-4-

LaserLock Technologies, Inc. and Subsidiary

 (A Development Stage Enterprise)

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

For the Period November 10, 1999 (Date of Inception) to December 31, 2012

													Deficit
	Common												Accumulated
	Stock				Deferred			Additional					During the
	Number of				Consulting			Paid-In			Treasury		Development
	Shares		Amount		Fees			Capital			Stock		Stage			Total
Issuance of initial 4,278,000 shares on November 10, 1999		4,278,000	$	4,278	$	-		$	16,595		$	-	$	-		$	20,873
Issuance of shares of common stock in exchange for services		1,232,000		1,232		-			35,728			-		-			36,960
Issuance of shares of common stock		2,090,000		2,090		-			60,610			-		-			62,700
Stock issuance costs		-		-		-			(13,690	)		-		-			(13,690	)
Net loss		-		-		-			-			-		(54,113	)		(54,113	)
Balance, December 31, 1999		7,600,000		7,600		-			99,243			-		(54,113	)		52,730
Issuance of shares of common stock		5,449,999		5,450		-			921,050			-		-			926,500
Issuance of shares of common stock in exchange for services		240,000		240		(40,800	)		40,560			-		-			-
Stock issuance costs		-		-		-			(16,335	)		-		-			(16,335	)
Fair value of non-employee stock options grants		-		-		-			50,350			-		-			50,350
Amortization of deferred consulting fees		-		-		20,117			-			-		-			20,117
Net loss		-		-		-			-			-		(367,829	)		(367,829	)
Balance, December 31, 2000		13,289,999		13,290		(20,683	)		1,094,868			-		(421,942	)		665,533
Issuance of shares of common stock		217,500		218		-			77,723			-		-			77,941
Issuance of shares of common stock and stock options for acquisition of subsidiary		2,000,000		2,000		-			736,000			-		-			738,000
Issuance of stock options		-		-		-			15,000			-		-			15,000
Exercise of options		1,450,368		1,450		-			230,609			-		-			232,059
Fair value of non-employee stock options		-		-		-			323,250			-		-			323,250
Amortization of deferred consulting fees		-		-		20,683			-			-		-			20,683
Net loss		-		-		-			-			-		(1,052,299	)		(1,052,299	)
Balance, December 31, 2001		16,957,867		16,958		-			2,477,450			-		(1,474,241	)		1,020,167

The accompanying notes are an integral part of these consolidated financial statements.

-5-

LaserLock Technologies, Inc. and Subsidiary

 (A Development Stage Enterprise)

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Continued)

For the Period November 10, 1999 (Date of Inception) to December 31, 2012

														Deficit
	Common													Accumulated
	Stock						Deferred		Additional					During the
	Number of						Consulting		Paid-In			Treasury		Development
	Shares			Amount			Fees		Capital			Stock		Stage			Total
Issuance of shares of common stock		3,376,875			3,377			-		687,223			-		-			690,600
Fair value of non-employee stock options		-			-			-		94,000			-		-			94,000
Salary due to shareholder contributed capital		-			-			-		15,000			-		-			15,000
Return of shares of common stock related to purchase price adjustment		(1,000,000	)		(1,000	)		-		(353,000	)		-		-			(354,000	)
Net loss		-			-			-		-			-		(1,195,753	)		(1,195,753	)
Balance, December 31, 2002		19,334,742			19,335			-		2,920,673			-		(2,669,994	)		270,014
Issuance of shares of common stock		22,512,764			22,512			-		1,387,109			-		-			1,409,621
Fair value of non-employee stock options		-			-			-		213,300			-		-			213,300
Issuance of shares of common stock in exchange for services		143,000			143			-		23,857			-		-			24,000
Stock issuance costs		-			-			-		(49,735	)		-		-			(49,735	)
Net loss		-			-			-		-			-		(1,107,120	)		(1,107,120	)
Balance, December 31, 2003		41,990,506			41,990			-		4,495,204			-		(3,777,114	)		760,080
Stock issuance costs		-			-			-		(25,000	)		-		-			(25,000	)
Fair value of non-employee stock options		-			-			-		493,600			-		-			493,600
Issuance of shares of common stock		18,600,000			18,600			-		939,881			-		-			958,481
Net loss		-			-			-		-			-		(1,406,506	)		(1,406,506	)
Balance, December 31, 2004		60,590,506			60,590			-		5,903,685			-		(5,183,620	)		780,655

The accompanying notes are an integral part of these consolidated financial statements.

-6-

LaserLock Technologies, Inc. and Subsidiary

 (A Development Stage Enterprise)

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Continued)

For the Period November 10, 1999 (Date of Inception) to December 31, 2012

														Deficit
	Common													Accumulated
	Stock						Deferred		Additional					During the
	Number of						Consulting		Paid-In			Treasury		Development
	Shares			Amount			Fees		Capital			Stock		Stage			Total
Fair value of non-employee stock options		-			-			-		286,762			-		-			286,762
Issuance of shares of common stock		3,000,000			3,000			-		102,000			-		-			105,000
Net loss for the year ended December 31, 2005		-			-			-		-			-		(1,266,811	)		(1,266,811	)
Balance at December 31, 2005		63,590,506			63,590			-		6,292,447			-		(6,450,431	)		(94,394	)
Fair value of non-employee stock options		-			-			-		215,463			-		-			215,463
Fair value of employee stock options		-			-			-		135,098			-		-			135,098
Fair value of warrants issued for deferred finance charges		-			-			-		392,376			-		-			392,376
Exercise of warrants		5,550,000			5,550			-		49,950			-		-			55,500
Exercise of options		4,300,000			4,300			-		(3,870	)		-		-			430
Shares retired upon cancellation of consulting agreements		(1,200,000	)		(1,200	)		-		1,080			-		-			(120	)
Issuance of shares for services		1,200,000			1,200			-		53,800			-		-			55,000
Net loss for the year ended December 31, 2006		-			-			-		-			-		(1,607,017	)		(1,607,017	)
Balance at December 31, 2006		73,440,506			73,440			-		7,136,344			-		(8,057,448	)		(847,664	)
Fair value of non-employee stock options		-			-			-		47,692			-		-			47,692
Fair value of employee stock options		-			-			-		67,651			-		-			67,651
Recognition of beneficial conversion feature		-			-			-		375,000			-		-			375,000
Net loss for the year ended December 31, 2007		-			-			-		-			-		(1,117,334	)		(1,117,334	)
Balance at December 31, 2007		73,440,506			73,440			-		7,626,687			-		(9,174,782	)		(1,474,655	)

The accompanying notes are an integral part of these consolidated financial statements.

-7-

LaserLock Technologies, Inc. and Subsidiary

 (A Development Stage Enterprise)

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Continued)

For the Period November 10, 1999 (Date of Inception) to December 31, 2012

											Deficit
	Common										Accumulated
	Stock				Deferred		Additional				During the
	Number of				Consulting		Paid-In		Treasury		Development
	Shares		Amount		Fees		Capital		Stock		Stage			Total
Fair value of non-employee stock options		-		-		-		28,752		-		-			28,752
Fair value of employee stock options		-		-		-		19,720		-		-			19,720
Fair value of warrants issued in conjunction with debt financing		-		-		-		25,000		-		-			25,000
Net loss for the year ended December  31, 2008		-		-		-		-		-		(931,338	)		(931,338	)
Balance at December 31, 2008		73,440,506		73,440		-		7,700,159		-		(10,106,120	)		(2,332,521	)
Fair value of non-employee stock options		-		-		-		1,524		-		-			1,524
Fair value of warrants issued in conjunction with debt financing		-		-		-		15,450		-		-			15,450
Issuance of shares for services		7,200,000		7,200		-		40,500		-		-			47,700
Shares issued for conversion of notes payable		48,750,000		48,750		-		263,291		-		-			312,041
Net loss for the year ended December  31, 2009		-		-		-		-		-		(694,910	)		(694,910	)
Balance at December 31, 2009		129,390,506		129,390		-		8,020,924		-		(10,801,030	)		(2,650,716	)
Fair value of non-employee stock options		-		-		-		364		-		-			364
Fair value of warrants issued in conjunction with debt financing		-		-		-		20,143		-		-			20,143
Issuance of shares for services		25,950,000		25,950		-		182,650		-		-			208,600
Net loss for the year ended December 31, 2010		-		-		-		-		-		(721,841	)		(721,841	)
Balance at December 31, 2010		155,340,506		155,340		-		8,224,081		-		(11,522,871	)		(3,143,450	)

The accompanying notes are an integral part of these consolidated financial statements.

-8-

LaserLock Technologies, Inc. and Subsidiary

 (A Development Stage Enterprise)

Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Continued)

For the Period November 10, 1999 (Date of Inception) to December 31, 2012

														Deficit
	Common													Accumulated
	Stock					Deferred		Additional						During the
	Number of					Consulting		Paid-In			Treasury			Development
	Shares			Amount		Fees		Capital			Stock			Stage			Total
Issuance of shares for services		1,000,000			1,000		-		29,000			-			-			30,000
Contribution of common stock from related parties		(12,000,000	)		-		-		95,594			(95,594	)		-			-
Purchase of common stock for treasury		(17,795,903	)		-		-		-			(17,795	)		-			(17,795	)
Sale of common stock		15,500,000			15,500		-		384,500			-			-			400,000
Issuance of shares for stock issuance costs		2,100,000			2,100		-		(2,100	)		-			-			-
Stock issuance costs		-			-		-		(40,000	)		-			-			(40,000	)
Exercise of options		1,000,000			1,000		-		9,000			-			-			10,000
Fair value of warrants issued in conjunction with debt financing		-			-		-		21,275			-			-			21,275
Fair value of employee stock options		-			-		-		47,658			-			-			47,658
Fair value of non-employee stock options		-			-		-		48,374			-			-			48,374
Net loss for the year ended December 31, 2011		-			-		-		-			-			(665,113	)		(665,113	)
Balance at December 31, 2011		145,144,603			174,940		-		8,817,382			(113,389	)		(12,187,984	)		(3,309,051	)
Issuance of shares for services		1,000,000			1,000		-		45,500			-			-			46,500
Issuance of shares of common stock		44,111,111			44,111		-		2,015,889			-			-			2,060,000
Issuance of stock for licensing		2,222,222			2,222		-		97,778			-			-			100,000
Issuance of warrants for licensing		-			-		-		100,000			-			-			100,000
Issuance of stock for trademarks, etc.		2,222,222			2,222		-		97,778			-			-			100,000
Issuance of warrants for trademarks, etc.		-			-		-		100,000			-			-			100,000
Shares issued for conversion of notes payable and accrued interest		12,923,622			12,925		-		568,639			-			-			581,564
Issuance of warrants for technology services agreement		-			-		-		1,200,000			-			-			1,200,000
Exercise of options		10,490,996			10,491		-		2,622			-			-			13,113
Exercise of warrants		333,333			333		-		49,667			-			-			50,000
Fair value of employee stock options		-			-		-		332,036			-			-			332,036
Fair value of non-employee stock options		-			-		-		11,638			-			-			11,638
Forgiveness of debt-related party		-			-		-		349,000			-			-			349,000
Net loss for the year ended December 31, 2012		-			-		-		-			-			(1,199,057	)		(1,199,057	)
Balance at December 31, 2012		218,448,109		$	248,244	$	-	$	13,787,929		$	(113,389	)	$	(13,387,041	)	$	535,743

The accompanying notes are an integral part of these consolidated financial statements.

-9-

LaserLock Technologies, Inc. and Subsidiary

 (A Development Stage Enterprise)

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2012 and 2011

And for the Period November 10, 1999 (Date of Inception) to December 31, 2012

				Year			Year
	Cumulative			Ended			Ended
	Since			December 31,			December 31,
	Inception			2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(13,387,041	)		(1,199,057	)		(665,113	)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of options issued in exchange for services		2,417,232			343,674			96,032
Accretion of interest on deferred finance charges		453,625			13,625			27,149
Accretion of discount on notes payable		443,236			4,957			17,416
Salary due to stockholder contributed to capital		15,000			-			-
Amortization and depreciation		530,055			13,471			10,904
Gain on disposition of assets		(4,722	)		-			-
Gain on debt forgiveness		(340,352	)		(156,110	)		(184,242	)
Stock issued in exchange for services		553,760			46,500			30,000
Financing expenses paid directly from stock proceeds		5,270			-			-
Amortization of deferred consulting fees		40,800			-			-
(Increase) decrease in assets
Accounts receivable		(3,473	)		(3,473	)		10,193
Inventory		19,980			15,157			(11,451	)
Prepaid expenses		(350,000	)		(232,240	)		21,936
Increase in liabilities
Accounts payable and accrued expenses		2,567,362			786,436			333,291
Net cash used in operating activities	$	(7,039,268	)	$	(367,060	)	$	(313,885	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(38,109	)		(2,360	)		-
Purchase of intangibles		(224,134	)		(6,665	)		(3,577	)
Proceeds from sale of assets		6,738			-			-
Net cash used in investing activities		(255,505	)		(9,025	)		(3,577	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock		6,551,447			2,060,000			400,000
Proceeds from exercise of stock options		255,482			13,113			10,000
Proceeds issuance of stock options		15,000			-			-
Proceeds from exercise of warrants		105,500			50,000			-
Proceeds from issuance of warrants		1,000,000			1,000,000			-
Proceeds from issuance of notes payable		2,789,000			200,000			-
Repayments of notes payable		(202,751	)		(6,251	)		(58,500	)
Payment for treasury stock		(17,795	)		-			(17,795	)
Debt issuance costs		(62,000	)		-			-
Stock issuance costs		(144,760	)		-			(40,000	)
Net cash provided by financing activities		10,289,123			3,316,862			293,705
NET DECREASE IN CASH AND CASH EQUIVALENTS		2,994,350			2,940,777			(23,757	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		-			53,573			77,330
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	2,994,350		$	2,994,350		$	53,573
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid during the year for:
Interest	$	39,440		$	-		$	6,557
Income taxes	$	-		$	-		$	-
Return of shares of common stock related to purchase price adjustment
Common stock		(1,000	)		-			-
Additional paid-in capital		(353,000	)		-			-
Intangible assets	$	(354,000	)	$	-		$	-
Issuance of common stock and stock options for acquisition of subsidiary	$	738,000		$	-		$	-
Proceeds from common stock sales applied directly to debt and financing expenses repayment	$	55,270		$	-		$	-
Fair value of warrants issued for deferred finance charges	$	392,376		$	-		$	-
Fair value of stock issued for conversion of notes payable and accrued interest	$	893,605		$	581,564		$	-
Fair value of stock issued for purchase of assets	$	100,000		$	100,000		$	-
Fair value of warrants issued for purchase of assets	$	100,000		$	100,000		$	-
Fair value of stock issued for licensing costs	$	100,000		$	100,000		$	-
Fair value of warrants issued for licensing costs	$	300,000		$	300,000		$	-
Fair value of beneficial conversion option	$	400,000		$	-		$	-
Fair value of warrants issued as debt discount	$	78,043		$	-		$	21,275
Issuance of common stock for stock issuance costs	$	2,100		$	-		$	2,100
Issuance of options as stock cost for treasury stock	$	5,594		$	-		$	5,594
Forgiveness of debt-related party treated as additional paid in capital	$	349,000		$	349,000		$	-

The accompanying notes are an integral part of these consolidated financial statements.

-10-

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies, Inc. and Subsidiary (“the Company”) is a development stage enterprise incorporated in the state of Nevada on November 10, 1999. The Company was established to address counterfeiting issues, initially with respect to the gaming industry. Since inception, substantially all of the efforts of the company have been developing technologies for the prevention of product and document counterfeiting. The Company is in the development stage of raising capital, financial planning, and establishing sources of supply. The Company anticipates establishing markets for its technologies in North America, Europe and Asia. The Company has more recently developed proprietary technologies that could penetrate broader markets in a cost effective manner.

Principle of Consolidation

The accompanying consolidated financial statements include the accounts of LaserLock Technologies, Inc. and its wholly-owned subsidiary, LL Security Products, Inc. All inter-company transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.

Comprehensive Income

The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220 in reporting comprehensive income.  Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.  Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts receivable, accounts payable and accrued expenses and notes payable.  The carrying value of cash, accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable and convertible debt approximates its fair value based on rates and other terms currently available to the Company for similar debt instruments.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents.

Concentration of Credit Risk Involving Cash and Cash Equivalents

The Company’s cash and cash equivalents are held at two financial institutions. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits.  The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits.

Inventory

Inventory principally consists of penlights and pigments and is stated at the lower of cost (determined by the first-in, first-out method) or market.

-11-

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. Depreciation of property and equipment was $20 and $0 for the years ended December 31, 2012 and 2011.

Patents and Trademark

The Company has five issued patents for anti-counterfeiting technology and purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be 17 years.

Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360 “Property, Plant, and Equipment.” The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets.

Deferred Financing Costs

Costs incurred in securing long-term debt are deferred and amortized, as a charge to interest expense, over the term of the related debt. In the case of long-term debt modifications, the Company follows the guidance provided by ASC 470-50 “Debt – Modification and Extinguishments.”

Convertible Notes Payable

Convertible notes payable, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature (BCF) as a debt discount, which is then accreted to interest expense over the life of the related debt using the straight-line method which approximates the effective interest method.

Revenue Recognition

In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition (Codified in FASB ASC 605), the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process.

-12-

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company follows FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes.  Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.  Tax years from 2009 through 2012 remain subject to examination by major tax jurisdictions.

Stock-based Payments

The Company accounts for stock-based compensation under the provisions of ASC 718,  Compensation—Stock Compensation   (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model.  The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional paid-in capital in stockholders’ equity over the applicable service periods.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were approximately $0 and $2,686 for the years ended December 31, 2012 and 2011, and are included in sales and marketing expenses.

Research and  Development Costs

In accordance with FASB ASC 730, research and development costs are expensed when incurred.

Loss Per Share

The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share.  Because the Company reported a net loss for the years ended December 31, 2012 and 2011, common stock equivalents, including convertible notes payable, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same.

Segment Information

The Company is organized and operates as one operating segment wherein the Company’s patented technologies are utilized to address counterfeiting issues. In accordance with ASC 280, Segment Reporting, the chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.  Since the Company operates in one segment and provides one group of similar products, all financial segment and product line information required by ASC 280 can be found in the consolidated financial statements.

-13-

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recently Adopted Accounting Pronouncements

In January 2010, FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This update provides amendments to ASC Topic 820 that provide disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company adopted the disclosure requirements effective January 1, 2011. The adoption of this standard did not have a material impact on the Company’s consolidated statements of financial position or results of operations.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about the fair value measurements. The amendments include the following:

1. Those that clarify the Board’s intent about the application of existing fair value measurement and disclosure requirements.

2. Those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.

The amendments in this update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.

The Company adopted the amendments effective January 1, 2012 and their adoption did not have any impact on the Company’s financial position or results of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of December 31, 2012, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company's financial statements.

Reclassifications

Certain reclassifications were made to current and long term accrued interest and payroll expense as a separate line item in the 2011 financial statement in order to conform to the 2012 financial statement presentation.

NOTE 2 – PATENTS AND TRADEMARK

The Company has five issued patents for anti-counterfeiting technology. Accordingly, costs associated with the registration of these patents and legal defense have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents (17 years). During the years ended December 31, 2012 and 2011, the Company capitalized patent costs of $6,665 and $3,577. Amortization expense for patents was $13,451 and $10,904 for the years ended December 31, 2012 and 2011. Future estimated annual amortization over the next five years is approximately $11,000 per year for the years ended December 31, 2013 through 2017.  On December 31, 2012, the Company entered into an asset purchase agreement describe in Note 7 to these financial statements.

NOTE 3 – INCOME TAXES

The Company follows FASB ASC 740-10-10 whereby an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have been previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not anticipated.

-14-

NOTE 3 – INCOME TAXES (Continued)

At December 31, 2012 the Company has a net operating loss (“NOL”) that approximates $8.3 million. Consequently, the Company may have NOL carryforwards available for federal income tax purposes, which would begin to expire in 2019. Due to changes in ownership, a portion of the NOL carryforward may be subject to certain annual limitations imposed under Section 382 of the Internal Revenue Code. Deferred tax assets would arise from the recognition of anticipated utilization of these net operating losses to offset future taxable income.

The income tax benefit (provision) consists of the following:

	Year Ended December 31, 2012			Year Ended December 31, 2011
Current	$	490,000		$	142,000
Deferred		263,000			97,000
Change in valuation allowance		(753,000	)		(239,000	)
	$	-		$	-

The following is a reconciliation of the tax derived by applying the U.S. Federal Statutory Rate of 35% to the earnings before income taxes and comparing that to the recorded tax provisions:

	2012						2011
	Amount			%			Amount			%
U.S federal income tax benefit at Federal statutory rate	$	(298,000	)		(35	)	$	(226,000	)		(34	)
State tax, net of federal tax effect		(50,000	)		(6	)		(38,000	)		(6	)
Non deductible accrued expenses		(238,000	)		(28	)		-			-
Non deductible share based compensation		(167,000	)		(20	)		25,000			4
Change in valuation allowance		753,000			89			239,000			36
	$	-			-		$	-			-

The primary components of the Company’s December 31, 2012 and 2011 deferred tax assets, liabilities and related valuation allowances are as follows:

	December 31, 2012			December 31, 2011
Deferred tax asset for NOL carryforwards	$	3,308,000		$	2,354,000
Deferred tax liability for intangibles		(165,000	)		(165,000	)
Non taxable income		162,000			47,000
(Deductible) non deductible accrued expenses		386,000			702,000
Valuation allowance		(3,691,000	)		(2,938,000	)
	$	-		$	-

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.

-15-

NOTE 3 – INCOME TAXES (Continued)

The Company follows FASB ASC 740-10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information.

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the consolidated statement of operations. As of December 31, 2012 and 2011, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2012 and 2011. The Company did not recognize any interest or penalties during 2012 and 2011 related to unrecognized tax benefits.

NOTE 4 - SENIOR SECURED CONVERTIBLE NOTES PAYABLE

In February 2006, the Company commenced a private placement of up to $800,000 principal amount of 10% senior secured convertible promissory notes due twelve months from the date of issue to certain Company shareholders and other accredited investors. As of December 31, 2006, the Company completed this private placement by selling all notes payable totaling $800,000. The notes are secured by a first priority lien on all of the tangible and intangible personal property of the Company. In May 2007, the due date of these notes was extended to August 2008 and the interest rate increased to 12% per annum during the extension period.  In June 2011, the interest rate on all of the notes was reset to 10% and $596,500 of the notes and accrued interest was extended until September 15, 2015.  During the fourth quarter of 2012 the remaining $178,749 of unextended notes and the associated accrued interest were extended to September 30, 2015.  As of December 31, 2012 and 2011, the outstanding principal balance on these notes was $775,249 and $781,500. Accrued interest at December 31, 2012 and 2011 amounted to $600,091 and $521,665.

Purchasers of the notes were issued 8,000,000 10-year warrants exercisable into the Company’s shares at an exercise price of $0.01 per share. The warrants were valued at $392,376 and recorded as a debt discount on the notes payable. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 169% and 284%, risk-free interest rate between 3.6% and 4.5% and expected warrant life of ten years. The deferred finance charges were amortized over one year, which was the original term of the notes. As of December 31, 2012, the Company has received $70,000 for the exercise of 7,000,000 of the warrants.  The exercise of these options occurred prior to December 31, 2011.

In addition, if an equity financing with total proceeds of more than $5,000,000 occurs while any notes are outstanding, holders of notes will have the right, at their option, to convert the outstanding principal and interest of the notes into shares at a discount of 30% of the price per share in the qualified financing. Since the embedded conversion feature is contingent upon the occurrence of the qualified financing, the value of the contingent conversion feature, if beneficial, will be recognized when the triggering event occurs and the contingency is resolved.

NOTE 5 - CONVERTIBLE NOTES PAYABLE

During 2007, the Company commenced a private placement of up to $400,000 principal amount of 10% Convertible Promissory Notes originally due in August 2008 (the “Notes”). The Company raised $375,000 under this private placement in 2007 and the remaining $25,000 was raised in 2008. Previously $260,000 of the Notes were converted into shares of the Company’s common stock.  Holders of Notes will have the right, at their option, to convert the outstanding principal and interest of the Notes into shares of the Company’s Series A Preferred Stock at any time and from time to time at the option of the holder at the initial conversion price of $0.005333 per share. It is the intention, however, that the option holder will convert the Notes into shares of the Company’s common stock.  The Notes are unsecured.

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NOTE 5 - CONVERTIBLE NOTES PAYABLE (Continued)

In accordance with ASC 470, a beneficial conversion feature of $375,000 and $25,000 was required to be recorded in 2007 and 2008, respectively, since the fair value of the Company’s common stock at the date of issuance ($0.016 per share) was greater than the conversion price of $0.005333 per share. The value of the beneficial conversion feature was recorded to additional paid-in capital with the offset to discount on notes payable. The debt discount was accreted to interest expense over the one-year original term of the notes. 

In August 2009, noteholders exercised their option to convert $260,000 of the notes payable plus accrued interest into 48,750,000 shares of common stock. The noteholder of the remaining $140,000 under this convertible note issue agreed to extend the maturity date of these notes to September 30, 2015 at an interest rate of 10% per annum. Additionally, the noteholder agreed in writing to suspend its right to convert its note until such as the Company’s authorized shares have been increased. Remaining shares to be potentially issued under this convertible note issue is 26,250,000.

As of December 31, 2012 and 2011, the remaining principal balance on the notes is $140,000.  Accrued interest at December 31, 2012 and 2011 amounted to $78,750 and $64,750.

NOTE 6 - NOTES PAYABLE

Notes payable consists of the following as of December 31:

	December 31, 2012			December 31, 2011
Unsecured notes payable; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	561,000		$	561,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015		150,000			150,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)		50,000			50,000
Notes payable, interest at 25% per annum; principal and interest due September 2013		150,000			400,000
Less: Debt discount		(13,632	)		(18,589	)
		897,368			1,142,411
Less: Current portion		200,000			50,000
Long-term portion	$	697,368		$	1,092,411

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NOTE 6 - NOTES PAYABLE (Continued)

At December 31, 2012 and 2011 accrued interest on notes payable was $394,281 and $362,806.

Unsecured Notes Payable

During the second quarter of 2012, the Company received $200,000 for a 10% unsecured note payable, due April 27, 2013.  In December 2012, this note payable and accrued interest of $9,167 was converted into 4,703,711 shares of the Company’s common stock.

Private Placement of 8% Series A Notes Payable

In August 2009, the Company commenced a private placement of up to $300,000 consisting of up to 6 units. Each unit consists of a $50,000, 8% Series A Note Payable, due September 30, 2011, and a non-detachable warrant to purchase 2 million shares of the Company’s common stock. During 2009, the Company sold 4 units, issued $200,000 of 8% Series A Notes Payable, issued 8 million warrants, and raised $180,000, net of commission of $20,000. In January 2010, the Company sold .5 units, issued $25,000 of 8% Series A Notes Payable, issued 1 million warrants, and raised $17,500 net of commissions of $7,500. The commissions were treated as deferred finance charges and are expensed over the term of notes payable. For the years ended December 31, 2012 and 2011, amortization of deferred finance charges was $0 and $10,650.

The 8 million warrants in 2009 were valued at $15,450, fair value, using the Black-Scholes option pricing model to calculate the fair-value of the warrants, with the following assumptions: no dividend yield, expected volatility of between 30.9% and 34.5%, risk free interest rate between .95% and 1.06% and warrant life of approximately 2 years. The 1 million warrants in 2010 were valued at $20,143, fair value, using the Black-Scholes option pricing model to calculate the fair-value of the warrants, with the following assumptions: no dividend yield, expected volatility of 28.6 %, risk free interest rate of .84% and warrant life of approximately 2 years.

In June 2011, the maturity date on the $150,000 of the 8% Series A Notes Payable and the term on the associated 6 million warrants were extended to September 30, 2015. As a result, the warrants were revalued using the Black-Scholes option pricing model to calculate the incremental fair-value of the warrants of $21,275, with the following assumptions: no dividend yield, expected volatility of 60%, risk free interest rate of 1.52% and warrant life of approximately 1.25 years. As part of the debt extension, the lender holding the 6 million warrants agreed in writing to suspend its right to exercise these warrants until such time that the Company’s authorized shares have been increased.  The authorized shares of the Company’s common stock were increased on November 12, 2012 from 175,000,000 to 425,000,000.

The relative fair value of the warrants issued in conjunction with the 8% Series A Notes Payable have been treated as a debt discount with an offsetting credit to additional paid-in capital. The debt discount related to the warrant issuances is being accreted to interest expense over the term of the notes. When the warrants were revalued the incremental amount of $21,275 was also treated as additional debt discount and is being accreted over the new term of the 8% Series A Notes Payable.  As of December 31, 2012 and 2011, the unaccreted debt discount related to warrants issued in conjunction with the 8% Series A Notes payable was $13,632 and $18,589. As of the year ended December 31, 2012 and 2011, accreted interest expense from the accretion of the debt discount was $4,957 and $17,415. 

During the third quarter of 2011, $25,000 plus accrued interest of the 8% Series A Notes Payable were repaid and 3 million of the associated warrants expired unexercised.

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NOTE 6 - NOTES PAYABLE (Continued)

Private Placement of 25% Notes Payable

In 2010, the Company issued $400,000 in notes payable in order to finance a patent infringement lawsuit (see Note 11 - Contingencies to these condensed consolidated financial statements). The notes payable accrue interest at 25% per annum and mature upon the earlier of September 1, 2013 or the date on which the Company receives net proceeds from the patent infringement claim. In addition to the base interest of 25% per annum, the lenders are entitled to bonus interest equal to the following:

a. First monies realized by the Company from its share of the net proceeds of the lawsuit shall be allocated and paid to the lender until the principal and base interest accruing has been fully paid.

b. The next monies from the net proceeds of the litigation settlement will be paid to the Company to reimburse for out-of-pocket legal costs related to the lawsuit.

c. The next $825,000 of proceeds will be split 50%/50% between the Company and the lenders.

d. The next $1 million realized by the Company shall be allocated 90% to the Company and 10% to the lenders.

e. The next $1 million realized by Company shall be allocated 85% to Company and 15% to lenders.

f. All remaining proceeds realized by Company shall be allocated 80% to Company and 20% to lenders.

The lenders have a security interest in the Company’s patent infringement claim in which the lender has the right to the net proceeds of this lawsuit to satisfy outstanding principal and interest under the notes.

As part of the private placement of the 25% notes payable, the Company incurred debt placement fees of $34,500 in 2010. These debt placement fees have been treated as deferred finance charges and are being amortized to interest expense over two years.  For the years ended December 31, 2012 and 2011 amortization of deferred finance charges was $13,625 and $17,250.

In December 2012, $250,000 of these notes payable and accrued interest of $122,397 were converted into 8,219,911 shares of the Company’s common stock.

Aggregate Maturities of Long-term Debt

Aggregate maturities of the senior secured convertible notes, convertible notes and notes payable over the next five years are as follows:

2013                 $    200,000

2014                                  -

2015                    1,626,249

2016                                  -

2017                                  -

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NOTE 7 – MAJOR AGREEMENTS

Investment Agreement

The Company entered into an Investment Agreement with VerifyMe, Inc, (“VerifyMe”) on December 31, 2012 (the “Investment Agreement”). Under the terms of the Investment Agreement, VerifyMe purchased 22,222,222 shares of the Company’s common stock as well as a warrant to purchase 22,222,222 shares of the Company’s common stock for $1 million.  In addition a Subscription Agreement (discussed below) was to be entered into on or before January 31,2013.

Registration Rights Agreement

In connection with the Investment Agreement, the Company entered into a Registration Rights Agreement with VerifyMe (the “Registration Rights Agreement”), pursuant to which VerifyMe can demand at any time on or after four months after December 31, 2012, that the Company file a registration statement relative to shares owned by VerifyMe.  If the Company has not filed the demand registration statement by the later of (i) two (2) months after the date of the request of demand registration and (ii) six (6) months after the date of the Registration Rights Agreement (such date, the “Filing Date”), then, (i) the Company shall not issue any (A) capital stock, (B) evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for capital stock (“Convertible Securities”), or (C) rights, options or warrants to subscribe for, purchase or otherwise acquire capital stock or Convertible Securities to anyone other than the stockholder until it files the demand registration statement, (ii) beginning on the day following the Filing Date, the applicable exercise price shall be reduced by $0.01, (iii) until the Company has filed the registration statement with the SEC, on each subsequent one (1) month anniversary of the filing date, the applicable exercise price shall be reduced by $0.01, and (iv) all common stock held by the stockholder and all common stock held by the Company to be granted by the Company in respect of the exercise of the warrants, shall automatically convert into a class of preferred stock of the Company, established by the Company on terms acceptable to the stockholder, which such class of preferred stock shall have voting rights representing 51% of the aggregate voting power of the Company.

Technology and Service Agreement

In connection with the Investment Agreement, the Company entered into a Technology and Service Agreement with VerifyMe (the “Technology and Service Agreement ”), pursuant to which VerifyMe purchased warrants of the Company to purchase 22,222,222 shares of the Company’s common stock for $1 million.  Additionally, the Company executed a services agreement with Zaah Technologies, Inc. (“Zaah”) concurrently with this agreement (the “Zaah Technology and Service Agreement”).  The Company is to use up to $550,000 of the proceeds from the Technology and Service Agreement for the purpose of the Company’s hiring (i) a full-time Chief Technology Officer or Chief Information Officer and (ii) two full-time business developers.

Technology and Service Agreement with Zaah

Under the Zaah Technology and Service Agreement, Zaah will provide the Company (a) twelve (12) months of technical support, (b) up to twelve (12) days of meetings annually between the respective management teams of the Company and Zaah, (c) updates to technology as agreed in writing between the Company and Zaah, and (d) twelve (12) months of technical hosting.

The Company is required to pay Zaah the following:

(a) $450,000 on the date of the agreement (December 31, 2012), consisting of $250,000 in cash and warrants to purchase 4,444,444 shares of Common Stock under a cashless exercise initially at an exercise price of $0.045 on the terms set forth under the warrants issued by the Company to Zaah under the warrant, dated as of December 31, 2012. The $450,000 is reflected as prepaid expenses on the December 31, 2012 balance sheet.

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NOTE 7 – MAJOR AGREEMENTS (Continued)

(b) $100,000, accrued in full as of the date of this Agreement, and reflected as prepaid expenses on the December 31, 2012 balance sheet, but payable in twelve (12) months from the date hereof to a designee of Zaah’s selection, with a right to convert (at Zaah’s sole discretion, from time to time at any time) to shares of common stock at the prevailing market price per share of common stock (which, as long as the common stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the common stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.)); and

(c) a commission of 10% of the revenue generated by any Company transaction originated through the efforts of Zaah, as substantiated by a written agreement between the Company and Zaah, specifically referencing the transaction in which Zaah is entitled to such commission, payable by the Company to Zaah in cash. Such payment shall be made on the earlier of (i) the date of the signing of such transaction, (ii) the date of the closing of the transaction, or (iii) any date on which any funds are paid to the Company in respect of such transaction.

Patent and Technology License Agreement

In connection with the Investment Agreement, the Company entered into a Patent and Technology License Agreement with VerifyMe, pursuant to which VerifyMe granted the Company exclusive and non-exclusive licenses relative to a specific list of patents in return for the following:

(a) Payment 1, payable upon execution of the Agreement on December 31, 2012: The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of the Company equal to (x) $100,000 divided by (y) $0.045 (2,222,222 shares) and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years. The fair value of the shares of common stock ($100,000) and the fair value of the cashless exercise warrants ($100,000) are reflected as prepaid expenses on the December 31, 2012 balance sheet.

(b) Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of Shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

(c) Payment 3, payable on January 1, 2015: The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of Shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

(d) Future Payments Contingent: the Company’s payment of Payment 2 and Payment 3 is contingent. To the extent that VerifyMe does not develop and license to the Company, at a time subsequent to Payment 1, further technology and/or a further patent right related to the local, mobile and cloud based biometric security systems, then any payments not already paid, will not longer by due to VerifyMe, this nonperformance being a likelihood, more likely than not.

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NOTE 7 – MAJOR AGREEMENTS (Continued)

Asset Purchase Agreement

In connection with the Investment Agreement, the Company entered into an Asset Purchase Agreement with VerifyMe, pursuant to which the Company purchased trademark rights, software and a domain name at a purchase price of $100,000 to be paid by issuing shares equal to $100,000/0.045 (2,222,222 shares) and cashless exercise warrants to purchase an equal number of shares at an exercise price of ten cents per share with a term of five years.

Subscription Agreement

VerifyMe subscribed to purchase 33,333,333 shares of the Company’s preferred stock and a warrant to purchase 33,333,333 shares of the Company’s common stock for $1 million at an exercise price of $0.12.  This agreement was executed on January 31, 2013.

NOTE 8 – STOCKHOLDERS’ EQUITY

On February 17, 2011, the Company issued 1 million shares of the Company’s common stock, valued at $30,000 to a consultant.

On April 7, 2011, a board member returned 2 million shares of the Company’s common stock, valued at $15,000 to the treasury.

On April 7, 2011, the President of the Company returned 10 million shares of the Company’s common stock, valued at $75,000 to the treasury.

On April 28, 2011, the Company purchased 17,795,903 shares of the Company’s outstanding common stock for $17,796 and placed them in the treasury.

On May 25, 2011, the Company sold 15.5 million shares of the Company’s stock to an investor for $400,000.

On May 25, 2011, the Company issued 2.1 million shares of the Company’s common stock, valued at $2,100 to a consultant for raising the $400,000 associated with the sale of the 15.5 million shares.

On June 24, 2011, an investor exercised a warrant to purchase 1 million shares of the Company’s common stock, that raised $10,000 for the Company.

In October, 2012, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share.  The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.045 per unit.  As of December 31, 2012, the Company sold 6,888,889 units that raised $310,000 for the Company.

In October, 2012, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share.  The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.05 per unit.  As of December 31, 2012, the Company sold 15 million units that raised $750,000 for the Company.

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NOTE 8 – STOCKHOLDERS’ EQUITY (Continued)

On November 13, 2012, an employee and consultant exercised options to purchase in the aggregate 10,490,996 shares of the Company’s common stock at an exercise price of $.00125 per share that raised $13,114 for the Company.

On November 21, 2012, the Company issued 1 million shares of the Company’s common stock, valued at $46,500 to a board member for services to the Company.

On December 5, 2012, the Company issued 12,923,622 shares of the Company’s common stock, valued at $581,564 for the retirement of two notes payable totaling $450,000 and accrued interest of $131,564.

On December 20, 2012, an investor exercised warrants to purchase 333,333 shares of the Company’s common stock at $0.15 per share, that raised $50,000 for the Company.

NOTE 9 – STOCK OPTIONS AND WARRANTS

During 1999, the Board of Directors (“Board”) of the Company adopted, with the approval of the stockholders, a Stock Option Plan. In 2000, the Board superseded that plan and created a new Stock Option Plan, pursuant to which it is authorized to grant options to purchase up to 1.5 million shares of common stock. On December 17, 2003, the Board, with approval of the stockholders, superseded this plan and created the 2003 Stock Option Plan (the “Plan”). Under the Plan the Company is authorized to grant options to purchase up to 18,000,000 shares of common stock to the Company’s employees, officers, directors, consultants, and other agents and advisors. The Plan is intended to permit stock options granted to employees under the Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the Plan, which are not intended to qualify as Incentive Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock Options”). As of December 31, 2012, there are 13,590,996 options that have been issued and exercised, 3,335,000 options that have been issued and are unexercised, and 1,074,004 options that are available to be issued under the Plan.

The Plan is administered by a committee of the Board of Directors (“Stock Option Committee”) which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock for which an employee may exercise Incentive Stock Options under all plans of the company shall not exceed $1,000,000 per calendar year. If any employee shall have the right to exercise any options in excess of$100,000 during any calendar year, the options in excess of $100,000 shall be deemed to be Non-Statutory Stock Options, including prices, duration, transferability and limitations on exercise.

The Company issued non-statutory stock options pursuant to contractual agreements to non-employees. Options granted under the agreements are expensed when the related service or product is provided.

On May 9, 2011, an option holder agreed to return an option to purchase 3,056,662 shares of the Company’s common stock at an exercise price of $.03 and an option to purchase 2.8 million shares of the Company’s common stock at an exercise price of $.01, to the Company. On the same day, the Company agreed to issue to the option holder an option to purchase 5,000,996 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years. The fair value of the option issued was $37,186 and was expensed immediately.

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NOTE 9 – STOCK OPTIONS AND WARRANTS (Continued)

On May 9, 2011, a board member agreed to return an option to purchase 250,000 shares of the Company’s common stock at an exercise price of $.03 and an option to purchase 750,000 shares of the Company’s common stock at an exercise price of $.01, to the Company. On the same day, the Company agreed to issue to the board member an option to purchase 900,000 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years. The fair value of option issued was $6,712 and was expensed immediately.

On May 9, 2011, the President of the Company agreed to return an option to purchase 2.5 million shares of the Company’s common stock at exercise prices of $.03 and an option to purchase 3.6 million shares of the Company’s common stock at an exercise price of $.01, to the Company. On the same day, the Company agreed to issue to the President of the Company an option to purchase 5,490,000 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years. The fair value of the option issued was $40,946 and was expensed immediately.

On May 9, 2011, the Company issued an option to purchase 750,000 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years, to a consultant in conjunction with his efforts to acquire the 17,795,903 treasury shares. The fair value of the option issued was $5,594 and was expensed immediately.

All of the options issued on May 9, 2011 were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 150%, risk-free interest rate of 3.7% and expected option life of ten years.

On July 16, 2012, the Company issued an option to purchase 200,000 shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to a consultant. The fair value of options issued was $11,638. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 133%, risk-free interest rate of 1.5% and expected option life of ten years. These options granted were fully vested as of the date of the agreement. As a result, the Company recorded $11,638 of consulting expense for the year ended December 31, 2012.

On November 21, 2012, the Company issued options to purchase an aggregate of 2 million shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to the Chief Executive Officer and the Chief Operating Officer. The fair value of options issued was $89,538 and was expensed immediately.

On November 21, 2012, the Company issued options to purchase an aggregate of 10 million shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to the five members of the Board of Directors. The fair value of options issued was $447,689 of which $223,844 was expensed immediately and the remainder will be expensed over one year with one month expense of $18,564 being expensed in 2012.

All of the options issued on November 21, 2012 were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 131%, risk-free interest rate of 1.7% and expected option life of ten years.

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NOTE 9 – STOCK OPTIONS AND WARRANTS (Continued)

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2010:

	Option/Warrant Shares			Exercise Price			Weighted Average Exercise Price
Outstanding, December 31, 2010		19,856,662			$0.01 to $0.20		$	0.02
Granted		7,235,996			0.00125			-
Exercised		(1,000,000	)		0.01			-
Expired/Returned		(10,506,662	)	0.01 to 0.03				(0.01	)
Outstanding, December 31, 2011		15,585,996			$0.00125 to $0.20		$	0.01
Granted		72,422,221		0.05 to 0.10				0.08
Transferred to employee options		(200,000	)		(0.05	)		-
Exercised		(5,000,996	)		0.00125			-
Expired		-			-			-
Outstanding, December 31, 2012		82,807,221			$.00125 to $.20		$	0.09
Exercisable, December 31, 2012		82,807,221			$.00125 to $.20		$	0.09
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years)		6.4

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NOTE 9 – STOCK OPTIONS AND WARRANTS (Continued)

A summary of incentive stock option transactions for employees since December 31, 2010 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2010		7,100,000			$.01 to $.28	$	0.07
Granted		6,390,000			$0.00125	$	0.00125
Exercised		-			-		-
Expired/Returned		(7,100,000	)		$.01 - $.03		(0.07	)
Outstanding, December 31, 2011		6,390,000			$0.00125	$	0.00125
Granted		15,000,000			0.05 - 0.15		0.06
Transferred from non-employee options		200,000			0.05		-
Exercised		(5,823,333	)		0.00125 - 0.15		-
Expired/Returned		-			-		-
Outstanding, December 31, 2012		15,766,667			$0.00125 to $0.10	$	0.06
Exercisable, December 31, 2012		10,766,667			$0.00125 to $0.10	$	0.07
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years)		9.8

NOTE 10 – RELATED PARTY TRANSACTIONS

At December 31, 2012 and 2011, six and five shareholders of the Company held $732,249 and $577,500 of the senior secured convertible notes payable.

One shareholder held $140,000 of convertible notes payable as of December 31, 2012 and 2011.

At December 31, 2012 and 2011 three shareholders of the Company held $711,000 of unsecured notes payable.

The Company maintains its office at the home of its Chief Executive Officer. No formal lease agreement exists and no direct rent expense has been incurred. However, related occupancy costs of $32,414 and $13,220 were incurred during the years ended December 31, 2012 and 2011.

At December 31, 2011, accrued and unpaid salary for the Chief Executive Officer was $208,514.  As of December 31, 2012, the Chief Executive Officer has forgiven $349,000 of unpaid accrued salary, which was treated as additional paid in capital.

On December 31, 2012, the Company liquidated its wholly owned subsidiary, LL Security Products, Inc.

NOTE 11 – MAJOR CUSTOMERS

During the years ended 2012 and 2011, the Company earned a substantial portion of its revenue from two customers. During the years ended December 31, 2012 and 2011, revenue from those customers aggregated $15,289 and $7,984. At December 31, 2012 and 2011, amounts due from those customers included in trade accounts receivable were $3,473 and $0.

NOTE 12 – CONTINGENCIES

In October 2010, the Company filed suit in the Western District of Pennsylvania against WS Packaging Group, Inc. (“WS”) alleging that WS infringed on one of the Company’s patents in the manufacture of MONOPOLY game pieces on behalf of McDonald’s Corp. On June 4, 2012, both WS and the Company filed a stipulation to dismiss the action without prejudice and enter into settlement negotiations. Settlement negotiations are ongoing.

-26-

NOTE 13 – SUBSEQUENT EVENTS

The Company received $185,000 from the sales of 3,700,000 units from private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share.  The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.05 per unit.  

In January 2012, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.12 per share.  The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.045 per unit.  The company sold 1,111,111 units and raised $50,000 as of the date of this report.

On January 31, 2013, the Company sold 33,333,333 shares of the Company’s preferred A stock and issued a warrant to purchase 33,333,333 shares of the Company’s common stock at an exercise price of $0.12 per share and having a term of 5 years, beginning July 31, 2013, pursuant to a Subscription Agreement.  The Subscription Agreement raised $1 million (Note 7).

Effective October 8, 2012, the Company entered into a three year agreement with the Vice Chairman of the Board and Chief Executive Officer of the Company, with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company has agreed to issue options to the Vice Chairman to purchase 5% of the shares of the Company’s common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million.  The Company has raised the $2.5 million in funding, but has not issued the options as of the date of this report.

Effective October 16, 2012, the Company entered into a three year agreement with the President and Chief Operating Officer of the Company with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company has agreed to issue options to the President to purchase 5% of the shares of the Company’s common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million.  The Company has raised the $2.5 million in funding, but has not issued the options as of the date of this report.

During February and March 2013, three option holders and one warrant holder exercised options to purchase 2,435,000 shares of the Company’s common stock and a warrant to purchase 1 million shares of the Company’s common stock.  These exercises raised $26.794.

In February 2013, a former board member exercised an option to purchase 900,000 shares of the Company’s common stock.  This exercise raised $1,125.

In March 2013, the Company agreed to convert the Notes payable bearing interest at 25% per annum and due September 2013, plus the accrued interest thereon of $83,896 into 3 million shares of the Company’s common stock and a cash payment of $13,896.

In March 2013, the Board of Directors authorized an additional 250 million shares of common stock, with a par value of $.001, which is retroactively reflected on the Balance Sheet.

In March 2013, the Company issued options to purchase 2 million shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to a new member of the Board of Directors.

-27-

EX-3.2

Exhibit 3.2

		*090201*
	ROSS MILLER
	Secretary of State
	204 North Carson Street, Suite 1
	Carson City, Nevada 89701-4520	Filed in the office of	Document Number
	(775) 684-5708	/s/ Ross Miller	20120803181-76
	Website: www.nvsos.gov		Filing Date and Time
		Ross Miller	11/29/2012 8:45 AM
		Secretary of State	Entity Number
Certificate of Amendment		State of Nevada	C28190-1999
(PURSUANT TO NRS 78.385 AND 78.390)

USE BLACK INK ONLY - DO NOT HIGHLIGHT ABOVE SPACE IS FOR OFFICE USE ONLY

Certificate of Amendment to Articles of Incorporation

For Nevada Profit Corporations

(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)

1. Name of corporation:

 Laserlock Technologies, Inc.

2. The articles have been amended as follows: (provide article numbers, if available)

Article III, Section 1 and Article IV of the corporation’s Amended and Restated Articles of Incorporation have been amended and restated to read as set forth on Exhibit A attached hereto.

3. The vote by  which  the   stockholders   holding   shares   in  the corporation  entitling  them  to exercise a least a majority of the voting  power, or  such   greater  proportion of  the voting power  as  may  be  required  in  the  case of  a  vote by classes  or  series,  or   as   may  be   required  by
the provisions  of  the  articles  of  incorporation*   have   voted  in  favor   of   the amendment Is:	See Exhibit A attached hereto

4. Effective date of filing: (optional)
	(must not be later than 90 days after the certificate is filed)

5. Signature (required)
/s/ Norman A. Gardner
Signature of Officer Norman A. Gardner, CEO
*If any proposed amendment would alter or change any preference or any relative or other right given to any class or series of outstanding shares, then the amendment must be approved by the vote, in addition to the affirmative vote otherwise required, of  the holders of shares representing a majority of the voting power of each class or series affected by the amendment regardless to limitations or restrictions on the voting power thereof.
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees.	Nevada Secretary of State Amend Profit After Revised 3-6-09

[ILLEGIBLE]

Exhibit A

to

Certificate of Amendment to

Amended and Restated Articles of Incorporation

of Laserlock Technologies, Inc.

(Pursuant to NRS 78.385 and 78,390)

2.          The text of Article III, Section 1 of the Amended and Restated Articles of Incorporation is amended and restated to read in its entirety as follows:

“Section 1. Authorized Shares. The aggregate number of shares which the Corporation shall have authority to issue is Five Hundred Million (500,000,000), consisting of two classes to be designated, respectively, “Common Stock” and “Preferred Stock”, with all of such shares having a par value of $0.001 per share. The total number of shares of Common Stock that the Corporation shall have authority to issue is Four Hundred Twenty-Five Million (425,000,000). The total number of shares of Preferred Stock that the Corporation shall have authority to issue is Seventy Five Million (75,000,000). The Preferred Stock may be issued in one or more series, each series to be appropriately designated by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers, designations, preferences, limitations, restrictions, and relative, participating, optional and other rights, and the qualifications, limitations, or restrictions thereof, of the Preferred Stock shall hereinafter be prescribed by resolution of the board of directors of the Corporation pursuant to Section 3 of this Article III.”

The text of Article IV of the Amended and Restated Articles of Incorporation is amended and restated to read in its entirety as follows:

“[INTENTIONALLY OMITTED]”

3.          The amendment to Article III, Section 1 of the Amended and Restated Articles of Incorporation was approved by a vote of 95,967,749 votes for and 2,295,439 votes against.

             The amendment to Article IV of the Amended and Restated Articles of Incorporation was approved by a vote of 84,195,460 votes for and 1,970,266 votes against.

1

EX-10.17

Exhibit 10.17

INVESTMENT AGREEMENT

By and Between

LASERLOCK TECHNOLOGIES, INC.

AND

VERIFYME, INC.

Dated as of December 31, 2012

Table of Contents

ARTICLE 1 DEFINITIONS		1
SECTION 1.01.	Definitions	1
SECTION 1.02.	Interpretation and Rules of Construction	7
ARTICLE II	PURCHASE AND SALE OF INTERESTS	7
SECTION 2.01.	Transactions	7
SECTION 2.02.	Closing	8
SECTION 2.03.	Closing Deliveries by the Company	8
SECTION 2.04.	Closing Deliveries by the Purchaser	8
SECTION 2.05.	Subscription Agreement	8
ARTICLE III	REPRESENTATIONS AND WARRANTIES OF THE COMPANY	9
SECTION 3.01.	Organization, Authority and Qualification of the Company	10
SECTION 3.02.	Company Subsidiary	10
SECTION 3.03.	Capitalization	10
SECTION 3.04.	No Conflict	11
SECTION 3.05.	Governmental Consents and Approvals	11
SECTION 3.06.	Compliance with Laws	11
SECTION 3.07.	Financial Information; Books and Records	12
SECTION 3.08.	Litigation	12
SECTION 3.09.	SEC Reports	12
SECTION 3.10.	Valid Issuance of the Shares, Warrants and Warrant Shares	12
SECTION 3.11.	Absence of Certain Changes or Events; Absence of Undisclosed Liabilities	13
SECTION 3.12.	Material Contracts	13
SECTION 3.13.	Intellectual Property	13
SECTION 3.14.	Taxes	15
SECTION 3.15.	Environmental Matters	15
SECTION 3.16.	Investment Company	15
SECTION 3.17.	Board Approval	15
SECTION 3.18.	Brokers	15
SECTION 3.19.	Solvency	15
SECTION 3.20.	Pro Forma Capitalization Table and Balance Sheet	15
ARTICLE IV	REPRESENTATIONS AND WARRANTIES OF THE PURCHASER	16
SECTION 4.01.	Organization and Authority of the Purchaser	16
SECTION 4.02.	No Conflict	16
SECTION 4.03.	Restricted Securities	16
SECTION 4.04.	Purchase Entirely For Own Account	16
SECTION 4.05.	Suitable Investor	17

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Table of Contents

ARTICLE V	RISK FACTORS	17
SECTION 5.01.	Development Stage of Company; Uncertainty of Future Revenues	17
SECTION 5.02.	Technology	17
SECTION 5.03.	General Industry Risks	18
SECTION 5.04.	Competition in the Company’s Industry	18
SECTION 5.05.	Governmental Regulation of the Company’s Business	18
SECTION 5.06.	Rapidly Changing Market	18
SECTION 5.07.	Lack of Diversification	19
SECTION 5.08.	Lack of Liquidity	19
SECTION 5.09.	Need for Additional Funds; Future Dilution	19
SECTION 5.10.	Dependence on Management and Limited Staff	19
SECTION 5.11.	Dividends	19
SECTION 5.12.	Projections	19
SECTION 5.13.	Controlling Stockholders	20
SECTION 5.14.	Determination of Purchase Price	20
ARTICLE VI	ADDITIONAL AGREEMENTS	20
SECTION 6.01.	Further Action	20
SECTION 6.02.	Corporate Actions	21
SECTION 6.03.	Covenants	21
SECTION 6.04.	Ancillary Agreements	23
SECTION 6.05.	Use of Proceeds	23
SECTION 6.06.	Director; Observer	23
SECTION 6.07.	Additional Investment Options	24
SECTION 6.08.	Pre-Emptive Right	24
ARTICLE VII	INDEMNIFICATION	25
SECTION 7.01.	Survival of Representations and Warranties	25
SECTION 7.02.	Indemnification by the Company	25
ARTICLE VIII	MISCELLANEOUS	26
SECTION 8.01.	Amendment; Waiver	26
SECTION 8.02.	Confidentiality	27
SECTION 8.03.	Expenses	27
SECTION 8.04.	Notices	27
SECTION 8.05.	Severability	28
SECTION 8.06.	Assignment	28
SECTION 8.07.	Third Party Beneficiaries and Transfers	28
SECTION 8.08.	Governing Law; Consent to Jurisdiction	28
SECTION 8.09.	Waiver of Jury Trial	29
SECTION 8.10.	Entire Agreement	29
SECTION 8.11.	Counterparts	29
SECTION 8.12.	Public Announcements	29

ii

Table of Contents

SECTION 8.13.	No Termination	29
SECTION 8.14.	Restrictive Legends	29

iii

INVESTMENT AGREEMENT, dated as of December 31, 2012 (this “Agreement”), by and between LaserLock Technologies, Inc. (the “Company”), a Nevada corporation, and VerifyMe, Inc. (the “Purchaser”), a Texas corporation.

WHEREAS, the Purchaser desires to purchase the Shares and the Warrants from the Company and the Company desires to issue and sell the Shares and the Warrants to the Purchaser; and

WHEREAS, concurrently with the purchase of the Shares and the Warrants by the Purchaser and the sale of the Shares and the Warrants by the Company, the Purchaser and the Company shall enter into the Ancillary Agreements.

NOW, THEREFORE, in consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Company and the Purchaser hereby agree as follows:

ARTICLE 1

DEFINITIONS

SECTION 1.01     Definitions.  As used in this Agreement, the following terms shall have the following meanings:

“Action” means any claim, action, suit, arbitration, inquiry, proceeding or investigation by or before any Governmental Authority.

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

“Agreement” shall have the meaning set forth in the Preamble.

“Ancillary Agreements” means the Registration Rights Agreement and the Warrants.

“Asset Purchase Agreement” means the Asset Purchase Agreement, dated as of the date hereof, between the Purchaser and the Company.

“Business Day” means any day that is not a Saturday, a Sunday or other day on which commercial banks are required or authorized by Law to be closed in the State of New York.

“Claims” means any and all administrative, regulatory or judicial actions, suits, petitions, appeals, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations, proceedings, consent orders or consent agreements.

“Closing” shall have the meaning set forth in Section 2.02.

“Closing Date” shall have the meaning set forth in Section 2.02.

“Common Stock” means the common stock, $0.001 par value per share, of the Company.

“Common Stock Equivalents” means any issuance of any warrants, options or subscription or purchase rights with respect to shares of Common Stock and the issuance of any securities convertible into, or exchangeable for, shares of Common Stock and the issuance of any warrants, options or subscription or purchase rights with respect to such convertible or exchangeable securities.

“Company” shall have the meaning set forth in the Preamble.

“Company Intellectual Property” means the Owned Intellectual Property and the Licensed Intellectual Property.

“Company IP Agreements” means all (a) (i) licenses of Intellectual Property by the Company or the Company Subsidiary to any Person, (ii) licenses of Intellectual Property by any Person to the Company or the Company Subsidiary relating to the transfer, development, maintenance or use of Intellectual Property, and (b) consents, settlements, decrees, orders, injunctions, judgments or rulings governing the use, validity or enforceability of Intellectual Property to or under which the Company or the Company Subsidiary is a party or beneficiary, or by which the Company or the Company Subsidiary, or any of its or their properties or assets, may be bound.

“Company Subsidiary” means LL Security Products, Inc., a Pennsylvania corporation.

“Encumbrance” means any security interest, pledge, hypothecation, mortgage, lien including Tax liens (other (a) liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (b) purchase money liens and liens securing rental payments under capital lease arrangements, and (c) other liens arising in the ordinary course of business and not incurred in the borrowing of money), charge, or encumbrance.

“Environmental Law” means any Law relating to (a) releases or threatened releases of Hazardous Substances or materials containing Hazardous Substances; (b) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; (c) exposure to Hazardous Substances; or (d) pollution or protection of the environment, health, safety or natural resources, including natural resource damages.

“Equity Financing” shall have the meaning set forth in Section 6.08(a).

“Escrow Agreement” means the Escrow Agreement, dated as of the date hereof, among the Purchaser, the Company, and Shearman & Sterling LLP, as escrow agent.

“Escrow Amount” means $1,000,000.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, and all rules and regulations promulgated thereunder.

“Financial Statements” means the audited consolidated balance sheet of each of the Company and its consolidated Subsidiary for each of the last three fiscal years ended December 31, 2011, 2010 and 2009 and the related audited consolidated statements of operations, changes in stockholders’ equity (deficit) and cash flows, together with the related notes and schedules thereto, accompanied by the reports of accountants.

“Founder” has the meaning set forth in Section 5.10.

“GAAP” means the generally accepted accounting principles applied in the United States.

“Governmental Authority” means any United States or non-United States federal, national, supranational, state, provincial, local, or similar government, governmental, regulatory or administrative authority, agency or commission or any court, tribunal, or judicial or arbitral body, including the SEC or the appropriate state public utilities commissions.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority.

“Hazardous Substances” means (a) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “extremely hazardous substances,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” or words of similar import, under any applicable Environmental Law; and (b) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority.

“Indebtedness” of any Person means (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of such Person to pay the deferred purchase price of property or services (other than trade payables and accrued liabilities arising in the ordinary course of business), (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all capitalized lease obligations of such Person, (f) all obligations, contingent or otherwise, of such Person under acceptance, letter of credit or similar facilities securing Indebtedness, (g) all unconditional obligations of such Person to purchase, redeem, retire, defease or otherwise acquire for value any capital stock of such Person or any warrants, rights or options to acquire such capital stock, (h) all Indebtedness of any other Person of the type referred to in clauses (a) through (g) guaranteed by such Person or for which such Person shall otherwise (including pursuant to any keepwell, makewell or similar arrangement) become directly or indirectly liable (other than indirectly as a result of a performance guarantee not entered into with respect to Indebtedness), and (i) all third party Indebtedness of the type referred to in clauses (a) through (h) above secured by any lien or security interest on property (including accounts and contract rights) owned by the Person whose Indebtedness is being measured, even though such Person has not assumed or become liable for the payment of such third party Indebtedness.

3

“Intellectual Property” means, collectively, (a) patents, utility models, inventions and discoveries, statutory invention registrations, mask works, invention disclosures, and industrial designs, community designs and other designs; (b) trademarks, service marks, domain names, uniform resource locators, trade dress, trade names, geographical indications and other identifiers of source or goodwill, including the goodwill symbolized thereby or associated therewith; (c) works of authorship (including all (i) computer programs, applications, systems and code, including software implementations of algorithms, models and methodologies, program interfaces, and source code and object code, (ii) Internet and intranet websites, databases and compilations, including data and collections of data, whether machine-readable or otherwise, (iii) development and design tools, library functions and compilers, and (iv) technology supporting websites, and the contents and audiovisual displays of websites) and copyrights, and moral rights, design rights and database rights therein and thereto; (d) trade secrets, know-how and invention rights; and (e) registrations, applications, continuations, renewals and extensions for any of the foregoing in clauses (a)-(d).

“Interim Financial Statements” means the unaudited consolidated balance sheet of the Company and its consolidated Subsidiary as of June 30, 2012 and September 30, 2012 and related consolidated statements of income, retained earnings, stockholders’ equity and changes in financial position together with the related notes and schedules thereto.

“Investment Company Act” means the Investment Company Act of 1940, as amended, and all rules and regulations promulgated thereunder.

“Law” means any United States or non-United States federal, national, supranational, state, provincial, local or similar statute, law, ordinance, regulation, rule, code, order, requirement or rule of law (including common law).

“Liabilities” means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, including those arising under any Law, Action or Governmental Order and those arising under any contract, agreement, arrangement, commitment or undertaking.

“Licensed Intellectual Property” means all Intellectual Property that the Company or the Company Subsidiary is licensed or otherwise permitted to use pursuant to the Company IP Agreements.

“Loss” shall have the meaning set forth in Section 7.02(a).

“Lower Price” shall have the meaning set forth in Section 6.03(b).

4

“Material Adverse Effect” means any event, circumstance, change or effect on the Company and the Company Subsidiary, or their business that, individually or in the aggregate with all other events, circumstances, changes and effects on the Company and the Company Subsidiary or their business, (a) is or is reasonably likely to be materially adverse to the business, condition (financial or otherwise), assets, liabilities or results of operations of the Company and the Company Subsidiary taken as a whole or (b) would prevent or materially delay consummation of the transactions contemplated herein by the Company or otherwise prevent or materially delay the Company from performing its obligations under this Agreement; provided, however, that the following shall not be taken into account in determining whether a Material Adverse Effect has occurred:  (i) changes in applicable Law or GAAP or in any interpretation thereof that do not disproportionately affect the Company and the Company Subsidiary taken as a whole (relative to other participants in the industries in which the Company and the Company Subsidiary operate); (ii) changes in the industries in which the Company and the Company Subsidiary conduct their respective businesses that do not disproportionately affect the Company and the Company Subsidiary taken as a whole (relative to other participants in the industries in which the Company and the Company Subsidiary operate); (iii) any event, circumstance, change or effect arising directly or indirectly from the public announcement of this Agreement or pendency of the transactions contemplated herein; (iv) any change in the market price or trading volume of the Shares (but not the underlying cause of such change); (v) any event, circumstance, change or effect arising directly or indirectly from any act of terrorism, war or any other similar event that does not disproportionately affect the Company and the Company Subsidiary taken as a whole (relative to other participants in the industries in which the Company and the Company Subsidiary operate); and (vi) any adverse effect arising directly from or otherwise directly relating to any action taken by the Company or its Subsidiary at the written direction of the Purchaser or the failure of the Company or its Subsidiary to take any action that the Company or its Subsidiary are specifically prohibited from taking pursuant to this Agreement and were not consented to by the Purchaser.

“Material Contract” shall have the meaning set forth in Section 3.12.

“New Securities” shall have the meaning set forth in Section 6.08(a).

“Offer Notice” shall have the meaning set forth in Section 6.08(b).

“Owned Intellectual Property” means all Intellectual Property owned by, purported to be owned by or under obligation of assignment to, the Company or the Company Subsidiary.

“Patent and Technology License Agreement” means the Patent and Technology License Agreement, dated as of the date hereof, between the Purchaser and the Company.

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Exchange Act.

5

“Pre-Emptive Right” shall have the meaning set forth in Section 6.08(a).

“Preferred Stock” means the senior convertible preferred stock, $0.001 par value per share, of the Company.

“Purchase Price” means $1,000,000.

“Purchaser” shall have the meaning set forth in the Preamble.

“Purchaser’s Pro-Rata Portion” shall have the meaning set forth in Section 6.08(a).

“Purchaser Indemnified Party” shall have the meaning set forth in Section 7.02(a).

“Registration Rights Agreement” means the Registration Rights Agreement in the form attached hereto as Exhibit A.

“SEC” means the Securities and Exchange Commission.

“SEC Reports” shall have the meaning set forth in Section 3.09.

“Securities” shall have the meaning set forth in Article V.

“Securities Act” means the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder.

“Shares” means the shares of Common Stock issued to the Purchaser as set forth in Section 2.01(a).

“Subscription Agreement” means the Subscription Agreement in substantially the form attached hereto as Exhibit B.

“Subsidiaries” means, with respect to any Person, any and all corporations, partnerships, limited liability companies, joint ventures, associations and other entities controlled by such Person directly or indirectly through one or more intermediaries.

“Tax” or “Taxes” means any and all taxes, fees, levies, duties, tariffs, imposts, and other charges of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any government or taxing authority, including taxes or other charges on or with respect to income, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, social security, workers’ compensation, unemployment compensation, or net worth; taxes or other charges in the nature of excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes; license, registration and documentation fees; and customs’ duties, tariffs, and similar charges.

“Tax Returns” shall have the meaning set forth in Section 3.14.

6

“Technology and Services Agreement” means the Technology and Services Agreement, dated as of the date hereof, between the Purchaser and the Company.

“Third Party Claims” shall have the meaning set forth in Section 7.02(c).

“Warrants” means the warrants to purchase shares of Common Stock in the form attached hereto as Exhibit C.

SECTION 1.02.  Interpretation and Rules of Construction. In this Agreement, except to the extent otherwise provided or that the context otherwise requires:

(a)           when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement;

(b)           the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement;

(c)           whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”;

(d)           the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement;

(e)           all terms defined in this Agreement have the defined meanings when used in any certificate or other document delivered or made available pursuant hereto, unless otherwise defined therein;

(f)           the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms;

(g)           references to a Person are also to its successors and permitted assigns; and

(h)           references to sums of money are expressed in lawful currency of the United States of America, and “$” refers to U.S. dollars.

ARTICLE II

PURCHASE AND SALE OF INTERESTS

SECTION 2.01.     Transactions.  Subject to the terms and conditions of this Agreement:

(a)           The Company hereby agrees to sell and issue to the Purchaser, and the Purchaser hereby agrees to purchase from the Company, 22,222,222 shares of Common Stock and a warrant to purchase 22,222,222 shares of Common Stock, and in exchange therefor, the Purchaser agrees to pay cash in the amount of the Purchase Price to the Company.

7

(b)           Within 30 days after Closing, Purchaser shall propose the allocation of the Purchase Price between the Shares and the Warrants in form and substance reasonably acceptable to both parties, and the parties hereto shall use their best reasonable efforts to agree to such allocation.

SECTION 2.02.     Closing.  Subject to the terms and conditions of this Agreement, the issuance, sale and purchase of the Shares and the Warrants and the other transactions contemplated by this Agreement shall take place at a closing (the “Closing”) to be held at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York, New York at 10:00 a.m. New York time on the date hereof or at such other place or at such other time or such other date as the Purchaser and the Company shall mutually agree upon in writing (the date on which the Closing takes place being the “Closing Date”).

SECTION 2.03.     Closing Deliveries by the Company.  At the Closing, the Company shall deliver, or cause to be delivered, to the Purchaser:

(a)           Executed counterparts of the Ancillary Agreements.

(b)           Stock certificates representing the Shares, in the name of the Purchaser.

(c)           Certificates evidencing the Warrants, in the name of the Purchaser.

(d)           A letter to the Purchaser from the Company, signed by an officer of the Company, acknowledging that, in accordance with the terms of Section 6.06, the Company shall appoint Purchaser’s two (2) designees as non-voting observers to the Company’s board of directors and the Company shall appoint Purchaser’s two (2) designees as advisors to each of the Company’s advisory committees.

SECTION 2.04.     Closing Deliveries by the Purchaser.  At the Closing, the Purchaser shall deliver, or cause to be delivered, to the Company:

(a)           Executed counterparts of the Ancillary Agreements.

(b)           The Purchase Price, by wire transfer of immediately available funds to the bank account designated by the Company to the Purchaser.

SECTION 2.05.     Subscription Agreement.

(a)            On or before January 31, 2013, the parties hereto shall execute and deliver the Subscription Agreement, pursuant to which the Company shall sell and issue to the Purchaser, and the Purchaser shall purchase from the Company, $1 million in stated amount of cumulative Preferred Stock and a warrant to purchase 33,333,333 shares of Common Stock, which warrants may be exercised on a cashless exercise basis, initially at twelve cents ($0.12) per share, and in exchange therefor, the Purchaser shall release from escrow the Escrow Amount, to be paid out of such escrow to the Company by wire transfer of immediately available funds to a bank account designated by the Company.

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(b)           Prior to the execution of the Subscription Agreement, the Company shall establish the terms, preferences, and other special rights of the Preferred Stock under a certificate of designation made effective in the State of Nevada, on terms no less favorable to the Purchaser than those set forth on Schedule 2.05(b) and otherwise agreed by the Purchaser.

(c)           In respect of the agreement set forth in Section 2.05(a), at the Closing, the Purchaser shall deliver the Escrow Amount into escrow at Shearman & Sterling LLP, subject to the terms set forth in the Escrow Agreement, by wire transfer of immediately available funds to a bank account designated by Shearman & Sterling LLP to the Purchaser.

(d)           If, for any reason, the parties hereto do not, on or before January 31, 2013, execute and deliver the Subscription Agreement and consummate the transactions contemplated in the Subscription Agreement (including the issuance by the Company to the Purchaser of Preferred Stock and warrants to purchase Common Stock in the amounts and on the terms set forth therein), then the Purchaser may, at its sole discretion, (i) return to the Company all or any part of the shares of Common Stock and warrants exercisable for shares of Common Stock held by the Purchaser and (ii) rescind the Technology and Services Agreement, the Patent and Technology License Agreement, the Asset Purchase Agreement, and any transaction made pursuant to such agreements, and in exchange therefor, the Company shall promptly, but in no event less than three (3) Business Days later, refund to the Purchaser in cash the price originally paid by the Purchaser for such shares of Common Stock and warrants exercisable for shares of Common Stock by wire transfer of immediately available funds to a bank account designated by the Purchaser.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE COMPANY

As an inducement to the Purchaser to enter into this Agreement, the Company hereby represents and warrants to the Purchaser, except as set forth in the SEC Reports (as defined below) of the Company filed with the SEC on or after January 1, 2012 and prior to the date of this Agreement and disclosed on Exhibit E hereto, other than disclosures referred to in the “Risk Factors” section of any such SEC Report of the Company, as follows:

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SECTION 3.01.     Organization, Authority and Qualification of the Company.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all necessary corporate power and authority to enter into this Agreement and the Ancillary Agreements, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The Company is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the failure to do so would have a Material Adverse Effect.  The execution and delivery of this Agreement and the Ancillary Agreements by the Company, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Company and its stockholders, as the case may be.  This Agreement and the Ancillary Agreements have been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the Purchaser of this Agreement and the Ancillary Agreements) shall constitute, legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, fraudulent conveyances, moratorium or other similar Laws affecting the validity or enforcement of creditors rights generally and the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law).

SECTION 3.02.     Company Subsidiary.  (a)  The Company Subsidiary does not conduct any business and holds only de minimis assets.  Neither the Company nor the Company Subsidiary is a member of (nor is any material part of their business conducted through) any partnership nor is the Company or the Company Subsidiary a participant in any joint venture or similar arrangement that is material to the Company.

(b)           (i) The Company Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, (ii) has all necessary power and authority to own, operate or lease the properties and assets owned, operated or leased by the Company Subsidiary and to carry on its business as it has been and is currently conducted by the Company Subsidiary and (iii) is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the failure to be so would have a Material Adverse Effect.

SECTION 3.03.     Capitalization.  (a)  The authorized capital stock of the Company consists of 425,000,000 shares of Common Stock and 75,000,000 shares of preferred stock.  As of the date hereof, (i) 208,368,225 shares of Common Stock were issued and outstanding, (ii) no shares of preferred stock were issued and outstanding and (iii) 14,325,996 shares of Common Stock were reserved for issuance pursuant to (w) outstanding options to acquire Common Stock to employees and directors of the Company, (x) outstanding warrants to acquire Common Stock and (y) outstanding debt instruments convertible into 26,250,000 shares of Common Stock.

(b)           Other than as set forth in Section 3.03(a), there are no outstanding options, warrants, subscriptions, calls, convertible securities, phantom equity, equity appreciation or similar rights, or other rights, agreements, arrangements or commitments (contingent or otherwise) (including any right of conversion or exchange under any outstanding security, instrument or other agreement or any preemptive right) obligating the Company to deliver or sell, or cause to be issued, delivered or sold, any shares of its capital stock or other securities, instruments or rights which are, directly or indirectly, convertible into or exercisable or exchangeable for any shares of its capital stock.  There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of its capital stock or to provide funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any other Person.  There are no voting trusts, stockholder agreements, proxies or other agreements or understandings in effect with respect to the voting or transfer of any of the shares of Common Stock to which the Company is a party.  As of the date hereof, the Company has not granted or agreed to grant any holders of shares of Common Stock or securities convertible into Common Stock registration rights with respect to such shares under the Securities Act.

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(c)           The outstanding shares of Common Stock are all duly and validly authorized and issued, fully paid and nonassessable, and were issued in accordance with the registration or qualification provisions of the Securities Act, and any relevant state securities Laws, or pursuant to valid exemptions therefrom.  None of the issued and outstanding shares of Common Stock was issued in violation of any preemptive rights.

SECTION 3.04.     No Conflict.  The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Company do not and will not (a) violate, conflict with or result in the breach of any provision of the Amended and Restated Certificate of Incorporation of the Company, dated December 17, 2003, as amended, or the Amended and Restated Bylaws of the Company, dated December 17, 2003, as amended, (b) conflict with or violate any Law or Governmental Order applicable to the Company or any of its assets, properties or businesses, or (c) conflict with, result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, or result in the creation of any Encumbrance on any of the shares of Common Stock or any of the assets of the Company pursuant to, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Company is a party or by which any of the shares of Common Stock or any of the assets of the Company is bound or affected, other than such conflicts or violations described in clause (c) above as would not reasonably be expected to have a Material Adverse Effect.  The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Company will not result in any acceleration of, or requirement to repay, convert or exchange any of the Indebtedness of the Company.

SECTION 3.05.     Governmental Consents and Approvals.  The execution, delivery and performance of this Agreement and the Ancillary Agreements by the Company do not and will not require any material consent, approval, authorization or other order of, action by, filing with or notification to, any Governmental Authority, other than the filing of a Form D with the SEC.

SECTION 3.06.     Compliance with Laws.  (a)  The Company has conducted and continues to conduct its business, in all material respects, in accordance with all Laws and Governmental Orders applicable to the Company or its properties or business, and the Company is not in violation in any material respect of any Law or Governmental Order.

(b)           No Governmental Order has affected or, to the knowledge of the Company, could affect, the legality, validity or enforceability of this Agreement, any Ancillary Agreement or the consummation of the transactions contemplated hereby or thereby.

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SECTION 3.07.     Financial Information; Books and Records.  The Financial Statements and the Interim Financial Statements (a) were prepared in accordance with the books of account and other financial records of the Company and its consolidated Subsidiary, (b) present fairly in all material respects the consolidated financial condition and results of operations of the Company and its consolidated Subsidiary as of the dates thereof or for the periods covered thereby, and (c) have been prepared in accordance with GAAP applied on a basis consistent with past practice (except as may be described in the notes thereto or, in the case of the Interim Financial Statements as permitted by the Quarterly Reports on Form 10-Q under the Exchange Act) and (d) in the case of the Financial Statements, include all adjustments that are necessary for a fair presentation of consolidated financial condition and results of the operations as of the dates thereof or for the periods covered thereby.

SECTION 3.08.     Litigation.  There are no material Actions by or against the Company and relating to the Company or affecting any of the assets of the Company pending before any Governmental Authority (or, to the knowledge of the Company, threatened to be brought by or before any Governmental Authority) and neither the Company nor any of its assets or properties is subject to any material Governmental Order (nor, to the knowledge of the Company, are there any such material Governmental Orders threatened to be imposed by any Governmental Authority).

SECTION 3.09.     SEC Reports.  The filings required to be made by the Company under the Securities Act and the Exchange Act (the “SEC Reports”) have been filed with the SEC, including all forms, statements, reports, written agreements and all documents, exhibits, amendments and supplements appertaining thereto, and the Company has complied in all material respects with all applicable requirements of the appropriate act and the rules and regulations thereunder.  As of their respective dates, the SEC Reports did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.  The Company has filed all certifications and statements required by (a) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (b) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) with respect to the SEC Reports filed after July 30, 2002.  The Company maintains disclosure controls and procedures required under the Exchange Act, and such controls and procedures are designed to provide reasonable assurance that all material information concerning the Company is made known on a timely basis to the individuals responsible for the preparation of the Company’s SEC filings and other public disclosure documents.  The Company maintains complete copies of all policies, manuals and other documents promulgating such disclosure controls and procedures (and all written descriptions thereof) in compliance with applicable Law.  As used in this Section 3.09, the term “file” shall be broadly construed to include any document or information “filed” or “furnished” to the SEC.

SECTION 3.10.     Valid Issuance of the Shares, Warrants and Warrant Shares.  The Shares and the Warrants are duly authorized by the Company.  The shares of Common Stock issuable upon exercise of the Warrants have been duly authorized and validly reserved for issuance and, upon issuance in accordance with the terms of the Warrants for the consideration expressed therein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer that result from applicable state and federal securities Laws.

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SECTION 3.11.     Absence of Certain Changes or Events; Absence of Undisclosed Liabilities.  (a)  Except as disclosed on Schedule 3.11, since September 30, 2012, the Company has conducted its business in all material respects only in the ordinary course of business consistent with past practice and there has not been, and no fact or condition exists which would have, a Material Adverse Effect.

(b)           Other than as disclosed in the Financial Statements, the Company has no Liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than (i) Liabilities or obligations related to the transactions contemplated by this Agreement, (ii) Liabilities, obligations or contingencies that are accrued or reserved against in the Financial Statements or disclosed in the notes thereto, (iii) Liabilities which were incurred after September 30, 2012 in the ordinary course of business and would not be reasonably expected to have a Material Adverse Effect or (iv) Liabilities that would not be required by GAAP to be reflected in a consolidated corporate balance sheet.

SECTION 3.12.     Material Contracts.  (a)  Each material contract to which the Company is a party (a “Material Contract”) (i) is valid and binding on the Company and, to the knowledge of the Company, each of the other parties thereto, except as such enforceability may be limited by any applicable bankruptcy, insolvency, fraudulent conveyances, moratorium or other similar Laws affecting the validity or enforcement of creditors’ rights generally and the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law), and is in full force and effect and (ii) upon consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, shall continue in full force and effect without penalty or other adverse consequence.  The Company is not in breach of, or default under, any Material Contract.

(b)           The Company has not received any notice of termination, cancellation, breach or default under any Material Contract, and, to the knowledge of the Company, no other party to any Material Contract is in breach thereof or default thereunder.

SECTION 3.13.     Intellectual Property.  (a)  The Company Intellectual Property includes, and the Company and the Company Subsidiary have sufficient rights to use, all Intellectual Property used or held for use in connection with the operation of the Company’s and its Subsidiary’s businesses, and there are no other items of Intellectual Property that are material to or necessary for the operation of the Company’s and its Subsidiary’s businesses as conducted in the year preceding the date hereof, and for the continued operation of the Company’s and the Company’s Subsidiary businesses immediately after the Closing in substantially the same manner as operated prior to the Closing.  The Company or the Company Subsidiary is the exclusive owner of all right, title and interest in and to each item of the Owned Intellectual Property, free and clear of all exclusive licenses, non-exclusive licenses not granted in the ordinary course of business consistent with past practice, and Encumbrances, or any obligation to grant any of the foregoing.  The Company or the Company Subsidiary has a valid license to use the Licensed Intellectual Property in connection with the operation of their business, subject only to the terms of the applicable Company IP Agreements.

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(b)           The Company Intellectual Property is (i) valid, subsisting and enforceable, and (ii) not subject to any outstanding Governmental Order affecting any of the use by the Company or the Company Subsidiary thereof or rights thereto, or that would, to the knowledge of the Company, impair the validity or enforceability thereof.  The registered Owned Intellectual Property is currently in compliance with any and all formal legal requirements necessary to record and perfect the Company’s or the Company Subsidiary’s interest therein and the chain of title thereof.  There is no Action pending, asserted, or, to the knowledge of the Company, threatened in writing (A) against the Company or the Company Subsidiary concerning the ownership, validity, registerability, enforceability or use of, or licensed right to use, any of the Company Intellectual Property, or (B) contesting or challenging the ownership, validity, registerability or enforceability of, or the Company’s or the Company Subsidiary’s right to use, any Company Intellectual Property.  The Company and the Company Subsidiary are not in violation of any agreement or arrangement with, or any obligation to, any Governmental Authority that does, or to the knowledge of the Company would, with the passage of time, (A) impair the validity or enforceability of any Owned Intellectual Property, (B) affect any of the Company’s or the Company Subsidiary’s use thereof or rights thereto, including all rights to license, transfer, commercialize or otherwise exploit such Owned Intellectual Property, or (C) result in the grant of any license under, or any lien on, any Owned Intellectual Property.

(c)           The operation of the businesses of the Company and the Company Subsidiary and the use of the Company Intellectual Property in connection therewith does not, and has not, infringed, misappropriated or otherwise violated or conflicted with the Intellectual Property rights of any other Person.  There is no Action pending, asserted, or, to the knowledge of the Company, threatened in writing against any of the Company or the Company Subsidiary concerning any of the foregoing, nor has any of the Company or the Company Subsidiary received any written notification that a license under any other Person’s Intellectual Property is or may be required.  To the Company’s knowledge, no Person is engaging, or has engaged, in any activity that infringes, misappropriates or otherwise violates or conflicts with any of the Company’s Intellectual Property.

(d)           The Company and the Company Subsidiary have taken commercially reasonable measures to maintain the confidentiality of all confidential information, including trade secrets, used or held for use in connection with the operation of its business.  No confidential information, trade secrets or other confidential Intellectual Property of the Company has been disclosed by the Company or the Company Subsidiary to any Person except pursuant to valid and enforceable non-disclosure or license agreements that the Company or the Company Subsidiary, and to the knowledge of the Company, any such Person, have not breached.

(e)           To the extent that any Intellectual Property has been conceived, developed or created for the Company or the Company Subsidiary by any other Person, the Company or the Company Subsidiary, as applicable, have executed valid and enforceable written agreements with such Person with respect thereto transferring to the Company or the Company Subsidiary the entire and unencumbered right, title and interest therein and thereto by operation of law or by valid written assignment.

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SECTION 3.14.     Taxes.  (a) All material returns and reports in respect of Taxes (“Tax Returns”) required to be filed by the Company or the Company Subsidiary (including any consolidated, combined or unitary Tax Returns) have been timely filed (unless covered by valid extensions of the filing dates therefor); (b) except where being contested in good faith, all Taxes required to be shown on such Tax Returns or otherwise due have been timely paid; (c) all such Tax Returns are true, correct and complete in all material respects; (d) except for adjustments, actions or proceedings in respect of which adequate reserves have been established in accordance with GAAP applied on a basis consistent with past practice, (i) no adjustment relating to such Tax Returns has been proposed formally or informally by any Tax authority and, to the knowledge of the Company, no basis exists for any such adjustment and (ii) there are no pending or, to the knowledge of the Company, threatened actions or proceedings for the assessment or collection of Taxes against the Company or any corporation that was included in the filing of a Tax Return with the Company on a consolidated or combined basis; and (e) there are no Tax liens filed against any assets of the Company.

SECTION 3.15.     Environmental Matters.  To the Company’s knowledge, there are no facts or circumstances relating to the business of the Company that would give rise to any material violation or liability under any Environmental Law.

SECTION 3.16.     Investment Company.  The Company is not, and immediately after receipt of payment for the Shares and Warrants will not be, an “investment company” or an entity “controlled” by an “investment company” within the meaning of the Investment Company Act and shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

SECTION 3.17.     Board Approval.  The Company’s board of directors, by resolutions duly adopted by unanimous vote of those voting at a meeting duly called and held and not subsequently rescinded or modified in any way, has duly (a) determined that this Agreement is fair to and in the best interests of the Company and its stockholders, (b) approved this Agreement and the Ancillary Agreements and declared their advisability and (c) approved the issuance of the Shares, the Warrants and the shares of Common Stock issuable upon the exercise of the Warrants contemplated by this Agreement and the Ancillary Agreements.

SECTION 3.18.     Brokers.  No placement agent, broker, finder or investment banker is entitled to any placement, brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement and the Ancillary Agreements based upon arrangements made by or on behalf of the Company.

SECTION 3.19.     Solvency.  The Company is not entering into this Agreement or the transactions contemplated hereby with the actual intent to hinder, delay or defraud either present or future creditors.  After giving effect to the transactions contemplated by this Agreement, at and immediately after the Closing, each of the Company and the Company Subsidiary will be solvent (in that both the fair value of such entity’s assets will not be less than the sum of such entity’s debts and that the present fair saleable value of such entity’s assets will not be less than the amount required to pay such entity’s probable liability on such entity’s recourse debts as they mature or become due).

SECTION 3.20.     Pro Forma Capitalization Table and Balance Sheet.  Exhibit D hereto sets forth a pro forma capitalization table and balance sheet of the Company as of December 31, 2012, giving effect to the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements.

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

As an inducement to the Company to enter into this Agreement, the Purchaser hereby represents and warrants to the Company as follows:

SECTION 4.01.     Organization and Authority of the Purchaser.  The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all necessary power and authority to enter into this Agreement and the Ancillary Agreements to which it is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated by this Agreement.  The execution and delivery by the Purchaser of this Agreement and the Ancillary Agreements to which the Purchaser is a party, the performance by the Purchaser of its obligations hereunder and thereunder and the consummation by the Purchaser of the transactions contemplated hereby and thereby have been duly authorized by all requisite action on the part of the Purchaser.  This Agreement and the Ancillary Agreements to which the Purchaser is a party have been duly executed and delivered by the Purchaser, and (assuming due authorization, execution and delivery by the Company of this Agreement and the Ancillary Agreements to which the Company is a party) this Agreement and the Ancillary Agreements to which the Purchaser is a party shall constitute legal, valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their terms.

SECTION 4.02.     No Conflict.  The execution, delivery and performance by the Purchaser of this Agreement and the Ancillary Agreements to which the Purchaser is a party do not and will not (a) violate, conflict with or result in the breach of any provision of the organizational documents of the Purchaser, (b) conflict with or violate any Law or Governmental Order applicable to the Purchaser or (c) conflict with, or result in any breach of, constitute a default (or event which with the giving of notice or lapse of time, or both, would become a default) under, require any consent under, or give to others any rights of termination, amendment, acceleration, suspension, revocation or cancellation of, any note, bond, mortgage or indenture, contract, agreement, lease, sublease, license, permit, franchise or other instrument or arrangement to which the Purchaser is a party, which would adversely affect the ability of the Purchaser to carry out its obligations under, and to consummate the transactions contemplated by, this Agreement or by the Ancillary Agreements, except in the case of any of the foregoing that would not be reasonably expected to have a material adverse effect.

SECTION 4.03.     Restricted Securities.  Neither the offer nor the sale of the Shares and the Warrants purchased hereunder will be registered under the Securities Act or any other securities Laws.  The Purchaser understands that the offering and sale of the Shares and the Warrants is intended to be exempt from registration under the Securities Act.

SECTION 4.04.     Purchase Entirely For Own Account.  The Purchaser is acquiring the Shares and the Warrants to be acquired hereunder for its own account, and (except as contemplated by the Registration Rights Agreement) not with a view to the public resale, in violation of any securities Law.  The Purchaser does not have, and as of the date hereof, has not engaged in any negotiations, discussions or other communications with respect to, any contract, agreement, understanding or arrangement with any Person to sell any portion of the Shares or the Warrants.

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SECTION 4.05.  Suitable Investor.  The Purchaser represents and warrants that it is suited to make the investment contemplated by this Agreement.

ARTICLE V

RISK FACTORS

AN INVESTMENT IN THE SHARES AND THE WARRANTS AS WELL AS THE SHARES OF COMMON STOCK ISSUABLE UPON ANY EXERCISE OF THE WARRANTS (COLLECTIVELY REFERRED TO HEREIN AS THE “SECURITIES”) INVOLVES A HIGH DEGREE OF RISK; THE COMPANY IS A DEVELOPMENT STAGE COMPANY WITH LIMITED ASSETS, REVENUES OR OPERATIONS; THERE ARE OR MAY BE COMPETITIVE PRODUCTS AND SERVICES IN THE MARKETPLACE FOR THE COMPANY’S PRODUCTS AND SERVICES; THE MARKETPLACE MAY NOT ACCEPT THE COMPANY’S PROPOSED PRODUCTS AND SERVICES; THE COMPANY MAY NEED ADDITIONAL CAPITAL IN THE FUTURE TO REACH ITS GROWTH OBJECTIVES AND/OR MEET ITS EXPENSES AND THE SECURITIES MAY NEVER HAVE ANY VALUE.  AMONG OTHER RISKS, THE PURCHASER SHOULD CONSIDER THE FOLLOWING:

SECTION 5.01.     Development Stage of Company; Uncertainty of Future Revenues.  The Company’s operations are subject to all of the risks inherent in a new business enterprise.  The Company currently has limited revenue, limited operating history and limited salable product.  The Company is subject to the same types of risks that many new businesses face including but not limited to shortages of cash, under-capitalization and expenses in connection with new product development.  The Company does not currently anticipate positive cash flow on a monthly basis and cannot give assurances that it will be operating at break-even levels at any time in the future.  Various problems, expenses, complications and delays may be encountered in connection with the Company’s development, both in terms of its products and its business.  Future growth beyond present capacity will require significant expenditures for expansion, marketing, research and development.  These expenses must be paid either out of the proceeds of this or future offerings of the Company’s securities or out of its generated revenues and profits, if any.  The availability of funds from either of these sources cannot be ensured.

SECTION 5.02.     Technology.  The Company’s focus is directed towards light sensitive ink technology which will require substantial further investment for the Company to reach its revenue and profitability goals.  The Company cannot assure the Purchaser that the Company’s technologies will enable the Company to develop any additional commercial products such that the Purchaser will receive a return on his investment. In addition, the value of the Company’s technology and any products derived from its technology could be substantially reduced as new or modified techniques for combating document and product counterfeiting and product diversion are developed and become widely accepted.  The Company cannot guarantee that future technological developments will not result in the obsolescence of its technologies.

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SECTION 5.03.     General Industry Risks.  The industry in which the Company intends to compete is subject to the traditional risks faced by any industry including but not limited to adverse changes in general economic conditions, the availability and expense of liability insurance and adverse changes in local markets.  However, the Company will also be subject to industry specific risks such as counterfeiters learning how to circumvent new and existing technologies, evolving consumer preference, federal, state and local chemical processing controls, consumer product liability claims and risks of product tampering.

SECTION 5.04.     Competition in the Company’s Industry.  In the area of document security and product authentication and serialization, the Company is aware of other companies and other similar technologies, including both covert and overt surface marking techniques, which require decoding elements or analytical methods to reveal the relevant information.  These technologies are offered by other companies for the same anti-counterfeiting and anti-diversion purposes for which the Company plans to market its technologies.  Other competitors are marketing products utilizing the hologram and copy void technologies.  The hologram, which has been incorporated into credit cards to foil counterfeiting, is considerably more costly than the Company’s technology.  Copy void is a security device which has been developed to indicate whether a document has been photocopied.  It is anticipated that a significant number of companies of varying sizes, which may ultimately include divisions or subsidiaries of larger companies, will be vying for the same market segment as the Company is.  A number of these competitors may have substantially greater financial and other resources available to them.  There can be no assurance that the Company can compete successfully with such other companies.  Competitive pressures or other factors could cause the Company to lose market share or could result in significant price erosion, either of which would have a material adverse effect on the results of the Company’s operations.

SECTION 5.05.     Governmental Regulation of the Company’s Business.  The Company’s operations may be subject to varying degrees to federal, state or local laws and regulations.  Operations such as those the Company intends to conduct may be subject to federal, state and local laws and regulations controlling the development of technologies related to privacy protection, the protection of the environment from materials that the Company may use in its inks and advanced algorithm formulations or encryption tactics that the Company may develop.  Any of these regulations may have a materially adverse effect upon the Company’s operations.

SECTION 5.06.     Rapidly Changing Market.  The Company believes that the market for its products is rapidly changing with evolving industry standards.  The Company’s future success will depend in part upon its ability to introduce new products and features to meet changing customer requirements and emerging industry standards.  There can be no assurance that the Company will successfully complete the development of future products or that the Company’s current or future products will achieve market acceptance.  Any delay or failure of these products to achieve market acceptance would adversely affect the Company’s business.  In addition, there can be no assurance that products or technologies developed by others will not render the Company’s products or technologies non-competitive or obsolete.

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SECTION 5.07.     Lack of Diversification.  The Company’s proposed operations, even if successful, will in all likelihood result in the Company’s engaging in a business which is concentrated in only one industry.  Consequently, the Company’s activities will be limited to the anti-counterfeiting industry.  The Company’s inability to diversify its activities into a number of areas may subject the Company to economic fluctuations within a particular business or industry and, therefore, increase the risks associated with the Company’s operations.

SECTION 5.08.     Lack of Liquidity.  A purchase of the Securities should be considered a long-term investment.  There is no public market for the Securities, nor is one expected to develop as a result of this offering.  The Purchaser must be prepared to hold the Securities indefinitely and should not expect to be able to liquidate this investment even in an emergency or for any other reason.

SECTION 5.09.     Need for Additional Funds; Future Dilution.  The Company will require significant additional funds in order bring the Company’s products and services to market.  To the extent that the funds generated by this offering together with existing resources and any future earnings or credit facilities are insufficient to fund the Company’s activities, the Company may adversely affect the current stockholders by diluting the stockholders’ interests in the Company.  It is difficult to estimate the exact funds necessary to develop a finished product.  No assurance can be given that additional financing will be available or that, if available, it will be obtained on terms favorable to the Company.  If adequate funds are not available, the Company may have to reduce developing, manufacturing and marketing activities and services, which could have a material adverse effect on the Company’s business, or discontinue operations entirely.

SECTION 5.10.     Dependence on Management and Limited Staff.  The Company’s ability to achieve its objectives is largely dependent upon the services of Norman Gardner (the “Founder”).  The loss of services of the Founder could have a material adverse impact on the Company.  The death or disability of the Founder or the occurrence of any other uninsured event would likely have a material adverse impact on the Company.  The Company’s future success also depends on its continuing ability to attract and retain highly qualified technical, sales and marketing, customer support, financial and accounting and managerial personnel.  Competition for such personnel is intense, and there can be no assurance that the Company will be able to attract, assimilate or retain highly qualified personnel in the future.

SECTION 5.11.     Dividends.  The Company does not intend to pay dividends to the holders of any of the Company’s outstanding capital stock for the foreseeable future.  Therefore, potential purchasers who anticipate the need for immediate or future income by way of dividends from their investment should refrain from the purchase of the Securities.

SECTION 5.12.     Projections.  Any financial projections of the Company and projections relating to the future market for the Company’s potential products are based upon current assumptions as to future events and conditions which the Company believes to be reasonable as of the date thereof, but which are inherently uncertain and unpredictable.  Any such projections have been prepared by officers of the Company and no independent expert rendered an opinion as to the reasonableness of the projections or the assumptions on which they are based.  The assumptions may prove to be incomplete or incorrect, and unanticipated events and circumstances may occur.  Because of such uncertainties, and the other risks outlined herein, the actual results of the Company’s future operations can be expected to be different from those projected, and such difference may be material and adverse.  The Purchaser should consider the projections in light of the underlying assumptions, reach their own conclusions as to the reasonableness of those assumptions and evaluate the projections on the basis of that analysis.

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SECTION 5.13.     Controlling Stockholders.  Upon the closing of the transaction contemplated by this Agreement, control of the majority of the outstanding shares of capital stock of the Company will remain concentrated amongst very few individuals.  As a result of the beneficial ownership of a majority of the outstanding capital stock with a majority of the voting rights, these individuals will be in a position to control the outcome of all matters requiring a vote of the Company’s stockholders, including the election of directors.

SECTION 5.14.     Determination of Purchase Price.  There have been no formal professional opinions concerning the value of the stock of the Company, the value of the assets of the Company, the net worth of the Company or the projected financial results of the Company.  The Purchase Price for the Shares has been determined by the Company based in part on public information.  The Purchase Price for the Shares is not necessarily indicative of their value since there are many unknowns at this time.  It is possible that the Shares, if transferable, could not be resold for the Purchase Price, or for any other amount.

ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.01.     Further Action.  (a)  Each party hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable Law, and execute and deliver such documents and other papers as may be reasonably required to carry out the provisions of this Agreement and the Ancillary Agreements and consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b)           Each party hereto shall cooperate and use its reasonable best efforts to (i) promptly prepare and file with the appropriate Governmental Authorities all necessary reports, applications, petitions, forms, notices or other applicable documents required or advisable with respect to the transactions contemplated by this Agreement and the Ancillary Agreements, (ii) comply, at the earliest practicable date following the date of receipt by the Purchaser or the Company, with any request for information or documents from a Governmental Authority related to, and appropriate in the light of, matters within the jurisdiction of such Governmental Authority, provided that (x) the parties shall use their reasonable best efforts to keep any such information confidential to the extent required by the party providing the information and (y) each party may take, in its reasonable discretion, appropriate legal action not to provide information relating to trade or business secrets, privileged information or other information which reasonably should be treated as confidential, (iii) take all actions necessary or advisable to promptly obtain all necessary permits, consents, approvals and authorizations of all Governmental Authorities necessary or advisable to consummate the transactions contemplated by this Agreement and the Ancillary Agreements and (iv) oppose vigorously any litigation that would impede or delay the consummation of the transactions contemplated by this Agreement and the Ancillary Agreements, including promptly appealing any adverse court order.

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SECTION 6.02.     Corporate Actions.  (a)  Until the date that is 3 years after the Closing Date, the Company shall timely file with the SEC all SEC Reports required to be made by the Company, and the Company shall comply in all material respects with all applicable requirements of the appropriate act and the rules and regulations thereunder.  As of their respective dates, the SEC Reports shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(b)           As long as any Warrants are outstanding, the Company shall at all times have authorized and reserved for issuance a sufficient number of shares of Common Stock to permit the full exercise of the Warrants issued in connection with this Agreement.

SECTION 6.03.     Covenants.  Until the date that is 24 months after the Closing Date, the Company shall not, without the Purchaser’s consent:

(a)Issue or sell in any manner whatsoever (other than to the Purchaser) any preferred stock or any other equity securities having a preference on liquidity senior to the Common Stock; provided,that if the Company does issue or sell any such preferred stock or any other equitysecurities having rights more favorable than the Common Stock, then:

 (i)           notwithstandingany contrary rights otherwise applicable to the Common Stock, the Company shall berequired to treat all shares of Common Stock issued in connection with the transactions contemplated in this Agreement and the shares of Common Stock issuable upon exercise ofany warrants exercisable for shares of Common Stock issued in connection with the transactions contemplated in this Agreement as though they are entitled to the same more favorable rights, and the Company shall be required to take any action requested by Purchaser to give effect to such intent, including by way of exchanging any shares of Common Stock and warrants exercisable for shares of Common Stock for corresponding shares of preferred stock, warrants exercisable for preferred stock, or any other equity securities issued with the Purchaser’s consent in accordance with this Section 6.03(a); and

 (ii)           if the Company receives a bona fide binding offer from a third-party under which such third-party would purchase from the Company, and the Company would issue or sell to such third party, any preferred stock or any other equity securities having a preference on liquidity senior to the Common Stock, that the Company intends to consummate if the Purchaser granted its consent under this Section 6.03(a), then the Company shall notify the Purchaser of such offer prior to requesting consent to the transaction from the Purchaser and the Purchaser shall have a right of first refusal with respect to such offer during a period beginning on the date on which the Purchaser receives a written notice from the Company, specifying the terms of the offer in detail, and ending five (5) Business Days later. Any time before the expiration of such five (5) Business Day period, the Purchaser may elect, by written notice delivered to the Company, to purchase such securities on the same terms contained in the binding offer in lieu of such third party and the Company shall consummate such transaction with the Purchaser within five (5) Business Days thereafter.

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(b)           If the Company issues or sells any Common Stock or Common Stock Equivalents at a price per share lower than the lesser of (i) the prevailing market price per share of Common Stock or Common Stock Equivalents at the time of issuance or sale (which, as long as the Common Stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the Common Stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.)) or (ii) $0.045 per share of Common Stock or Common Stock Equivalents (such price, a “Lower Price”), then,

 (i)           on the date of such issuance or sale, the Company shall issue to the Purchaser a number of shares of Common Stock (if greater than zero) equal to (x) the number of Shares multiplied by (1) $0.045 divided by (2) the Lower Price minus (y) the number of Shares minus (z) all shares of Common Stock previously issued to the Purchaser under this Section 6.03(b).  All shares of Common Stock issued to the Purchaser under this Section 6.03(b) shall be entitled to the same rights given to the Shares under this Agreement and the Ancillary Agreements; and

 (ii)           if the Company receives a bona fide binding offer from a third-party under which such third-party would purchase from the Company, and the Company would issue or sell, any Common Stock or Common Stock Equivalents at a Lower Price to such third party, that the Company intends to consummate if the Purchaser granted its consent under this Section 6.03(b), then the Company shall notify the Purchaser of such offer prior to requesting consent to the transaction from the Purchaser and the Purchaser shall have a right of first refusal with respect to such offer during a period beginning on the date on which the Purchaser receives a written notice from the Company, specifying the terms of the offer in detail, and ending five (5) Business Days later. Any time before the expiration of such five (5) Business Day period, the Purchaser may elect, by written notice delivered to the Company, to purchase such securities on the same terms contained in the binding offer in lieu of such third party and the Company shall consummate such transaction with the Purchaser within five (5) Business Days thereafter.

(c)           Acquire or divest (including by merger, consolidation or acquisition or divestiture of stock or assets or any other business combination) any corporation, limited liability company, partnership, other business organization or any division thereof or any material amount of assets.

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(d)           Incur any Indebtedness or issue any debt securities or assume, guarantee or endorse, or otherwise become responsible for, the obligations of any Person, or make any loans or advances or capital contribution to, or investment in, any Person.

(e)           Enter into any new line of business, make any change to the current Company business plan or adopt a new Company business plan.

(f)            Enter into any transaction with any of its Affiliates.

(g)           Amend or restate the Amended and Restated Certificate of Incorporation of the Company, dated December 17, 2003, as amended.

SECTION 6.04.     Ancillary Agreements.  Each party hereto shall use its best efforts to promptly execute and deliver each of the Ancillary Agreements in substantially the forms attached as Exhibits hereto.

SECTION 6.05.     Use of Proceeds.  The Company shall use the proceeds from the sale and issuance of the Shares and Warrants in accordance with, and in the order set forth in, Schedule 6.05 hereto; provided, that, proceeds may be used for ordinary course payments of compensation to the management of the Company substantially consistent with current levels of compensation.

SECTION 6.06.     Director; Observer.  Until the date that is four (4) years after the date of effectiveness of the Company’s registration statement to be filed pursuant to the Registration Rights Agreement:

(a)           The Purchaser shall be entitled to nominate, and the Company shall arrange to fill, two seats on the Company’s board of directors with two Persons reasonably acceptable to the Company, such acceptance not to be unreasonably withheld.  To the extent those positions become vacant for any reason, the Company agrees that the Purchaser shall be permitted to fill the vacancy. To the extent he is at any time serving on the Company’s board of directors, Jonathan Weinberger shall be deemed to be one of the two Persons selected by Purchaser to fill one of the two seats on the Company’s board of directors.

(b)           The Company shall appoint Purchaser’s designee as a non-voting observer to the Company’s board of directors, to the extent such Person is reasonably acceptable to the Company, such acceptance to be not unreasonably withheld, such designee replaceable at the Purchaser’s discretion from time to time at any time.

(c)           The Company shall appoint Purchaser’s designee as an advisor to each of the Company’s advisory committees, such designee replaceable at the Purchaser’s discretion from time to time at any time.

(d)           The Company agrees that there shall not be more than nine (9) directors serving together on the Company’s board of directors at any time.

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SECTION 6.07.     Additional Investment Options.

(a)           If, during the period between the date hereof and the date that is 18 months from the date hereof, in addition to the funds received pursuant to the Subscription Agreement, the Company reasonably determines that it requires an additional $900,000 to fund its working capital, then, at any time following such determination, at the Purchaser’s election in its sole discretion, within five (5) Business Days after the date of the Purchaser’s written notification to the Company of such election (or on any other date agreed by the Purchaser and the Company), the Company shall sell and issue to the Purchaser, and the Purchaser shall have the first right to purchase from the Company (i) 30,000,000 shares of Preferred Stock, and (ii) a warrant to purchase 30,000,000 shares of Common Stock with an initial exercise price of twelve cents ($0.12) and otherwise on terms consistent with those provided in the Warrants (or such lesser amount of shares of Preferred Stock and warrants exercisable for shares of Common Stock as determined in the sole discretion of the Purchaser), and in exchange therefor, the Purchaser shall pay cash in the amount per share of Preferred Stock (together with a corresponding warrant exercisable for one share of Common Stock to the Company) that is the lower of (A) three cents ($0.03) or (B) 90% of the prevailing market price per share of Common Stock or Common Stock Equivalents at the time of such issuance or sale (which, as long as the Common Stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the Common Stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.) by wire transfer of immediately available funds to a bank account designated in writing by the Company to the Purchaser.

SECTION 6.08.     Pre-Emptive Right.

(a)           Grant of Pre-Emptive Right.  Until the date that is 24 months after the Closing Date, the Company hereby grants the Purchaser the right to receive equity securities or other securities convertible into equity securities of the Company (“New Securities”, and any such transaction, an “Equity Financing”) proposed to be sold by the Company, of an amount of such New Securities as is required for the Purchaser to maintain its fully-diluted ownership percentage in the Company calculated as of the time immediately prior to the issuance of such New Securities (the “Pre-Emptive Right” and such amount, the “Purchaser’s Pro-Rata Portion”).  The Purchaser’s Pre-Emptive Right with respect to New Securities shall not be applicable to, and the Purchaser shall have no right to purchase any New Securities issued in connection with any bona fide business acquisition of or by the Company, whether by merger, consolidation, sale of assets, sale or exchange of stock or otherwise.

(b)           Notice of Equity Financing.  In the event the Company desires to consummate an Equity Financing, the Company shall give notice (the “Offer Notice”) to the Purchaser, stating (i) its bona fide intention to offer and sell New Securities in an Equity Financing, (ii) the number of such New Securities to be offered and (iii) the price and terms, if any, upon which it proposes to offer such New Securities.

(c)           Exercise of Pre-Emptive Right.  The Company shall ensure that the Purchaser shall automatically receive in such Equity Financing the Purchaser’s Pro-Rata Portion of such New Securities simultaneously with the consummation of such Equity Financing.

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ARTICLE VII

INDEMNIFICATION

SECTION 7.01.     Survival of Representations and Warranties.  (a)  The representations and warranties of the Company contained in this Agreement shall survive the Closing until the first anniversary of the Closing Date, other than the representations and warranties set forth in Sections 3.01, 3.03 and 3.10, which shall survive indefinitely.  Notwithstanding anything herein to the contrary, the representations and warranties contained in Section 3.14 shall terminate at the close of business 30 days after the expiration of the applicable statute of limitations with respect to the Tax liabilities in question (giving effect to any waiver, mitigation or extension thereof).

(b)           The representations and warranties of the Purchaser contained in this Agreement shall survive the Closing until the first anniversary of the Closing Date, other than the representations and warranties set forth in Section 4.01, which shall survive indefinitely.

SECTION 7.02.     Indemnification by the Company.  (a)  To the greatest extent permitted by applicable Law, the Company shall indemnify and hold harmless the Purchaser and its Affiliates, officers, directors, employees, agents, successors and assigns (each a “Purchaser Indemnified Party”) from and against any and all Liabilities, losses, diminution in value, damages, claims, costs and expenses, interest, awards, judgments and penalties (including attorneys’ and consultants’ fees and expenses) suffered or incurred by them (including any Action brought or otherwise initiated by any of them) (hereinafter a “Loss”), arising out of or resulting from:  (i) the breach of any representation or warranty of the Company contained herein, or in any agreement, certificate or instrument delivered pursuant hereto set forth therein and (ii) the breach of any agreement or covenant of the Company contained herein.

(b)           Notwithstanding the provisions of Section 7.02(a), the maximum liability of the Company under this Section 7.02 shall not exceed $2,000,000, provided, however, that the limitations in Section 7.02(b) shall not apply to breaches by the Company of its representations and warranties contained in Sections 3.01, 3.03 and 3.10 or a breach of the covenants in Section 6.03.

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(c)           A Purchaser Indemnified Party shall give the Company prompt written notice of any matter that a Purchaser Indemnified Party has determined has given or could give rise to a right of indemnification under this Agreement, no later than within 30 days of such determination, stating the amount of the Loss, if known, and method of computation thereof, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises.  The obligations and Liabilities of the Company under this Article VII with respect to Losses arising from claims of any third party that are subject to the indemnification provided for in this Article VII (“Third Party Claims”) shall be governed by and be contingent upon the following additional terms and conditions:  if a Purchaser Indemnified Party shall receive notice of any Third Party Claim, the Purchaser Indemnified Party shall give the Company notice of such Third Party Claim within 30 days after the receipt by the Purchaser Indemnified Party of such notice; provided, however, that the failure to provide such notice shall not release the Company from any of its obligations under this Article VII except to the extent that the Company is materially prejudiced by such failure and shall not relieve the Company from any other obligation or Liability that it may have to any Purchaser Indemnified Party otherwise than under this Article VII.  If the Company acknowledges in writing its obligation to indemnify the Purchaser Indemnified Party hereunder against any Losses that may result from such Third Party Claim, then the Company shall be entitled to assume and control the defense of such Third Party Claim at its expense and through counsel of its choice if it gives notice of its intention to do so to the Purchaser Indemnified Party within five days of the receipt of such notice from the Purchaser Indemnified Party; provided, however, that if there exists or is reasonably likely to exist a conflict of interest that would make it inappropriate in the judgment of the Purchaser Indemnified Party in its sole and absolute discretion for the same counsel to represent both the Purchaser Indemnified Party, on the one hand, and the Company, on the other hand, then the Purchaser Indemnified Party shall be entitled to retain its own counsel in addition to any requisite local counsel for which the Purchaser Indemnified Party reasonably determines counsel is required at the expense of the Company.  In the event that the Company exercises the right to undertake any such defense against any such Third Party Claim as provided above, the Purchaser Indemnified Party shall cooperate with the Company in such defense and make available to the Company, at the expense of the Company, all witnesses, pertinent records, materials and information in the Purchaser Indemnified Party’s possession or under the Purchaser Indemnified Party’s control relating thereto as is reasonably required by the Company.  Similarly, in the event the Purchaser Indemnified Party is, directly or indirectly, conducting the defense against any such Third Party Claim, the Company shall cooperate with the Purchaser Indemnified Party in such defense and make available to the Purchaser Indemnified Party, at the expense of the Company, all such witnesses, records, materials and information in the Company’s possession or under the Company’s control relating thereto as is reasonably required by the Purchaser Indemnified Party.  No such Third Party Claim may be settled by the Company without the prior written consent of the Purchaser Indemnified Party, except if such settlement constitutes a full and unconditional release of the Purchaser Indemnified Party.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.01.     Amendment; Waiver.  This Agreement may not be amended, supplemented, modified or restated except by an instrument in writing signed by, or on behalf of, the parties hereto or by a waiver in accordance with this Section 8.01.  Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements of any other party or conditions to such party’s obligations contained herein.  Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby.  Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement.  The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

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SECTION 8.02.     Confidentiality.  The Purchaser and the Company covenant and agree that they will not, and they will cause their principals, Affiliates, officers and other personnel and authorized representatives not to, use information concerning another party’s business, properties and personnel received in the course of negotiating this Agreement and investigation in connection with this transaction and will hold such information (and will cause the aforesaid persons to hold such information) in confidence until such information otherwise becomes publicly available or as may be required by applicable Law.

SECTION 8.03.     Expenses.  Except as otherwise specified in this Agreement, each party hereto shall bear its own costs and expenses incurred in connection with this Agreement, including the fees and expenses of their respective accountants and legal counsel.

SECTION 8.04.     Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by telecopy, facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 8.04):

(a)           if to the Company:

LaserLock Technologies, Inc.

837 Lindy Lane

Bala Cynwyd, PA 19004

Facsimile:  (610) 668-2771

Attention:  Norman Gardner

Attention:  Neil Alpert

with a copy to:

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Facsimile:  (215) 963-5001

Attention:  Justin W. Chairman, Esq.

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(b)           if to the Purchaser:

VerifyMe, Inc.

205 Linda Drive

Daingerfield, TX  75638

Facsimile:  (212) 661-2146

Attention:  Shephard Lane

with a copy to:

Lane & Seidman LLP

2 Park Avenue, 14th Floor

New York, NY 10016

Facsimile:  (212) 249-6960

Attention:  Vanessa Seidman, Esq.

SECTION 8.05.     Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.

SECTION 8.06.     Assignment.  This Agreement may not be assigned by the Company, by operation of law or otherwise, without the express written consent of the Purchaser (which consent may be granted or withheld in the sole discretion of the Purchaser).  The Purchaser may assign this Agreement or any of its rights and obligations hereunder to one or more Affiliates without the consent of the Company or to a third party with the consent of the Company, which consent shall not be unreasonably withheld.

SECTION 8.07.     Third Party Beneficiaries and Transfers.  Except for the provisions of Article VII relating to indemnified parties, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

SECTION 8.08.     Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.  The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal court sitting in the Borough of Manhattan of The City of New York for the purpose of any action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above-named courts.

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SECTION 8.09.     Waiver of Jury Trial.  Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Ancillary Agreements.  Each of the parties hereto (a) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 8.09.

SECTION 8.10.     Entire Agreement.  This Agreement and the Ancillary Agreements constitute the entire agreement of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, between the Company and the Purchaser with respect to the subject matter hereof and thereof.

SECTION 8.11.     Counterparts.  This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

SECTION 8.12.     Public Announcements.  Subject to its obligations under Law (including requirements of stock exchanges and other similar regulatory bodies and the requirements of the Exchange Act), no party hereto shall make any announcement regarding the entering into of this Agreement or the Closing to the financial community, governmental entities, employees, customers or the general public without the prior consent of the other party, which shall not be unreasonably withheld; provided, that if a party hereto is required by any such obligations under Law to make any such announcement as contemplated by this Section 8.12, the parties hereto shall cooperate with each other regarding the contents and timing of any such announcement, and the non-announcing party shall have the opportunity to review and comment upon the language of the proposed announcement in advance of public disclosure.  Any such comments shall be considered in good faith by the announcing party.

SECTION 8.13.     No Termination.  This Agreement may not be terminated or rescinded for any reason.

SECTION 8.14.     Restrictive Legends.  In order to reflect the restrictions on disposition of the Shares and the Warrants, certificates representing the Shares and the Warrants will be endorsed with restrictive legends, including a legend substantially in the following form:

“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.”

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or other representatives thereunto duly authorized, as of the date first above written.

LASERLOCK TECHNOLOGIES, INC.
By:	/s/Norman A. Gardner
	Name:  Norman A. Gardner
	Title:  Chief Executive Officer

[Signature Page to Investment Agreement]

VERIFYME, INC.
By:	/s/ Claudio Ballard
	Name: Claudio Ballard
	Title:   President

[Signature Page to Investment Agreement]

SCHEDULE 2.05(b)

TERMS OF PREFERRED STOCK

1. The Preferred Stock shall be senior convertible preferred stock, which shall be senior to all existing or future preferred stock.

2. Stated Amount and Preference: $1,000,000.00.

3. Conversion: Convertible into common stock by dividing stated amount per share by Conversion Price.

4. Conversion Price: Initial conversion price equals $0.03, subject to adjustment.

5. Adjustment and Anti-Dilution: Conversion price subject to “full ratchet” adjustment in the event of issuance of Common Stock at a price below the then applicable conversion price.

6. Approval Rights: For two (2) years beginning on the date of the first issuance of Preferred Stock to the Purchaser, approval of holders of a majority of stated amount of Preferred Stock shall be required for all significant corporate actions including, but not limited to: issuance of any securities with a senior preference on liquidation; incurrence of debt; approval of annual business plans; sale or acquisitions of assets or businesses; sale, license or other actions relating to any material intellectual property rights; merger, reorganization, combination or similar transaction; bankruptcy filing or similar actions.

7. Preference on Liquidation: On any liquidation or deemed liquidation, holders of Preferred Stock will have the right to receive the stated amount per share of the Preferred Stock prior to any distribution to holders of Common Stock.

SCHEDULE 3.11

ABSENCE OF CERTAIN CHANGES OR EVENTS; ABSENCE OF UNDISCLOSED LIABILITIES

1.           None.

SCHEDULE 6.05

USE OF PROCEEDS

The proceeds received by the Company in connection with this Agreement will be used to pay expenses incurred in the normal course of business consistent with the Company’s business plan provided to the Purchaser at the earliest stages of discussion and include expenses such as compensation, insurance, sales and marketing, research & development, professional fees and working capital.

EXHIBIT A

REGISTRATION RIGHTS AGREEMENT

See attached.

EXHIBIT B

FORM OF SUBSCRIPTION AGREEMENT

See attached.

EXHIBIT C

WARRANTS

See attached.

EXHIBIT D

PRO FORMA CAPITALIZATION TABLE AND BALANCE SHEET

See attached.

EXHIBIT E

DISCLOSURES

None.

EX-10.18

Exhibit 10.18

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of the 31st day of December, 2012 by and among LaserLock Technologies, Inc., a Nevada corporation (the “Company”), and VerifyMe, Inc., a Texas corporation (the “Stockholder,” and, with the Company, the “Parties”).

Recitals

WHEREAS, the Parties have entered into that certain Investment Agreement, dated December 31, 2012 (the “Investment Agreement”) pursuant to which the Company has issued to the Stockholder shares of Common Stock and warrants to purchase shares of Common Stock;

WHEREAS, the Parties shall enter into that certain Subscription Agreement (the “Subscription Agreement”), pursuant to which the Company shall issue to the Stockholder shares of Preferred Stock and warrants to purchase shares of Common Stock;

WHEREAS, the Parties have entered into that certain Technology and Services Agreement, dated December 31, 2012 (the “Services Agreement”) pursuant to which the Company has issued to the Stockholder warrants to purchase shares of Common Stock and, as contemplated therein, the Company and Zaah Technologies, Inc. (“Zaah”) have entered into that certain Technology and Services Agreement, dated December 31, 2012 (the “Zaah Agreement”), pursuant to which the Company has issued to Zaah warrants to purchase shares of Common Stock;

WHEREAS, the Parties have entered into that certain Patent and Technology License Agreement, dated December 31, 2012 (the “License Agreement”) pursuant to which the Company has issued to the Stockholder shares of Common Stock and warrants to purchase shares of Common Stock;

WHEREAS, the Parties have entered into that certain Asset Purchase Agreement, dated December 31, 2012 (the “Asset Purchase Agreement”) pursuant to which the Company has issued to the Stockholder shares of Common Stock and warrants to purchase shares of Common Stock; and

WHEREAS, the Company has agreed to provide the registration rights provided for in this Agreement to the Stockholder with respect to all of the Registrable Securities obtained or to be obtained by the Stockholder pursuant to the Investment Agreement, the Subscription Agreement, the Services Agreement, the Zaah Agreement, the License Agreement, and the Asset Purchase Agreement, together with the shares of Common Stock and warrants to purchase shares of Common Stock previously purchased by the Stockholder.

Terms and Conditions

NOW, THEREFORE, the Parties hereto, each intending to be legally bound, do hereby agree as follows:

1.             Definitions.

(a) “1933 Act” is defined in Section 2(a).

(b) “1934 Act” means the Securities Exchange Act of 1934, as amended.

(c) “Agreement” is defined in the Preamble.

(d) “Asset Purchase Agreement” is defined in the Recitals.

(e) “Common Stock” means the Common Stock, par value $0.001 per share, of the Company.

(f)  “Company” is defined in the Preamble.

(g) “Demand Registration” is defined in Section 2(a).

(h) “Demand Registration Statement” is defined in Section 2(a).

(i)  “Investment Agreement” is defined in the Recitals.

(j)  “License Agreement” is defined in the Recitals.

(k) “Losses” is defined in Section 5(a).

(l)  “Parties” is defined in the Preamble.

(m)“Person” means any natural person, business trust, corporation, partnership, limited liability company, joint stock company, proprietorship, association, trust, joint venture, unincorporated association or any other legal entity of whatever nature.

(n)            “Preferred Stock” means the Preferred Stock, par value $0.001 per share, of the Company.

(o)            “Registrable Securities” means (i) the Shares and the Warrants, (ii) the capital stock issuable upon exercise of the Warrants, (iii) any securities issued or to be issued to the Stockholder with respect to the Shares or the Warrants by way of a stock dividend or stock split in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, and (iv) the 5,555,556 shares of Common Stock and the warrants to purchase 5,555,556 shares of Common Stock owned by the Stockholder prior to the date hereof.

(p)            “Registration Expenses” means all expenses incident to the Company’s performance of or compliance with this Agreement, including with respect to all registration and filing fees, fees relating to registration statements including any statutory underwriter registration statements, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, expenses and fees for listing the securities to be registered on exchanges on which similar securities issued by the Company are then listed, fees and disbursements of counsel for the Company and of all independent registered public accountants, underwriters (other than Underwriting Commissions) and other Persons retained by the Company.

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(q)           “SEC” means the Securities and Exchange Commission, or such other comparable agency or commission.

(r)           “Services Agreement” is defined in the Recitals.

(s)           “Shares” means all shares of Common Stock issued or to be issued to the Stockholder in respect of the transactions under the Investment Agreement and the Subscription Agreement (including, for the avoidance of doubt, under Sections 6.03(b), 6.07, or 6.08 of the Investment Agreement and all shares of Common Stock underlying all outstanding shares of Preferred Stock issued or to be issued to the Stockholder), the Asset Purchase Agreement, and the License Agreement, any other shares of Common Stock issued or to be issued to the Stockholder or to Zaah in respect thereof by the Company, and any shares of Common Stock issued or to be issued to Zaah under the Zaah Agreement.

(t)           “Stockholder” is defined in the Preamble.

(u)           “Subscription Agreement” is defined in the Recitals.

(v)           “Underwriting Commissions” means all underwriting discounts or commission relating to the sale of securities of the Company, but excludes any expenses reimburse to underwriters.

(w)           “Warrants” means all warrants to purchase shares of Common Stock issued or to be issued to the Stockholder in respect of the transactions under Investment Agreement and the Subscription Agreement (including, for the avoidance of doubt, under Sections 6.03(b), 6.07, or 6.08 of the Investment Agreement), the Services Agreement, the Asset Purchase Agreement, and the Patent License Agreement, and any other warrants to purchase shares of Common Stock issued or to be issued to the Stockholder or to Zaah in respect thereof by the Company, and any warrants to purchase shares of Common Stock issued or to be issued to Zaah under the Zaah Agreement.

2.             Demand Registration.

(a)           Request for Registration.  At any time on or after the date that is four months after the date of this Agreement, the Stockholder may demand (the “Demand Registration”) that the Company file a registration statement on Form S-1 or such other form as may then be applicable (the “Demand Registration Statement”) to register under the Securities Act of 1933, as amended (the “1933 Act”), the resale or other distribution of all of the Registrable Securities owned by the Stockholder to the shareholders of the Stockholder on a pro rata basis in such transaction structure (and/or otherwise as the Stockholder may determine in its reasonable discretion) as the Stockholder may determine in its reasonable discretion, subject to applicable legal and regulatory requirements.  The Stockholder shall send written notice of the demand to the Company and, consistent with Section 4(a) below, the Company must file the Demand Registration within two months after receipt of notice of such demand; provided, for the avoidance of doubt, the Company is under no obligation to file the Demand Registration any earlier than six months after the date hereof.  Once the SEC declares the Demand Registration effective, and the distribution of the Shares or other Registrable Securities by the Stockholder to its shareholders is completed in accordance with the plan of distribution contained therein, the Company shall cause the Shares or other Registrable Securities to be transferred into the names of the shareholders of the Stockholder.

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(b)           Expenses.  In connection with the Demand Registration, the Company shall pay the Registration Expenses, but any Underwriting Commissions shall be shared among the Company and the Stockholder in proportion to any securities included on their behalf.

(c)           Selection of Underwritten Offerings.  If an underwritten offering is contemplated in connection with the Demand Registration, the Company and the Stockholder by mutual agreement shall select the investment banker(s) and manager(s) to be retained in connection with such offering and make any other decisions regarding the underwriting arrangements for the offering.

(d)           Notwithstanding the registration obligations set forth in Section 2(a), if the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415 or otherwise, be registered for resale as a secondary offering on a single registration statement, then the Company agrees to promptly inform the Stockholder thereof and file amendments to the Demand Registration Statement as required by the SEC to cover the maximum number of Registrable Securities permitted to be registered by the SEC, on Form S-1 or such other form available to register the Registrable Securities, including the addition of a statutory underwriter registration statement.  Notwithstanding any other provision of this Agreement, if the SEC or any SEC guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Demand Registration Statement (and notwithstanding that the Company advocated with the SEC for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by the Stockholder, the number of Registrable Securities to be registered on such Demand Registration Statement will be reduced.  If the Company amends the Demand Registration Statement in accordance with the foregoing, or if for any other reason the Stockholder has been issued Registrable Securities that were not covered under the Demand Registration Statement, then, unless otherwise directed in writing by the Stockholder, the Company will file with the SEC, as promptly as allowed by the SEC or under SEC guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-1 or such other form available to register the remaining Registrable Securities that were not registered on the Demand Registration Statement, as amended and the registration statements necessary to distribute the Registrable Securities to each Stockholder.  In addition to the foregoing, if any Registrable Securities are issued by the Company to the Stockholder pursuant to Sections 6.03(b), 6.07, or 6.08 of the Investment Agreement, the Company will have six months from the date of issuance of such Registrable Securities to file another Demand Registration Statement for such Registrable Securities, unless the Stockholder elects, in its sole discretion, to require that the Company cover such Registrable Securities under a previous Demand Registration Statement in accordance with Section 2(d) to the extent permitted by the SEC, which Registrable Securities the Company shall then cover in such previous Demand Registration Statement in accordance with Section 2(d).

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3.             Registration Procedures.

Whenever the Stockholder has requested that the Registrable Securities be registered pursuant to Section 2 of this Agreement, the Company shall, as expeditiously as possible:

(a)           prepare and file with the SEC the Demand Registration Statement with respect to such Registrable Securities and use reasonable best efforts to cause the Demand Registration Statement to become effective as promptly as practicable (provided that, before filing the Demand Registration Statement or prospectus or any amendments or supplements thereto, the Company shall furnish the Stockholder with copies of all such documents proposed to be filed);

(b)           prepare and file with the SEC such amendments and supplements to the Demand Registration Statement and the prospectus used in connection therewith as may be necessary to keep the Demand Registration Statement effective for a period of not less than 30 days, or for such longer period of time as may be necessary to complete the distribution contemplated by the Demand Registration Statement;

(c)           furnish to the Stockholder such number of copies of the Demand Registration Statement, each amendment and supplement thereto and the prospectus (including each preliminary prospectus) prepared in conformity with the 1933 Act, and such other documents as the Stockholder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by the Stockholder;

(d)           use commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as the managing underwriter(s) or the Stockholder may reasonably request;

(e)           at any time when a prospectus relating to the Demand Registration Statement is required to be delivered under the 1933 Act and during the period that the Company is required to keep the Demand Registration Statement effective, notify the Stockholder of the happening of any event as a result of which the prospectus included in the Demand Registration Statement contains an untrue statement of a material fact or omits any fact necessary to make the statement therein not misleading in light of the circumstances then existing, and, at the request of the Stockholder, the Company shall prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statement therein not misleading in light of the circumstances then existing;

(f)           enter into such customary agreements (including an underwriting agreement in customary form, if appropriate) and take such other customary actions as may be reasonably necessary to expedite or facilitate the disposition of such Registrable Securities;

(g)           make available for inspection by the Stockholder, any underwriter participating in any disposition pursuant to the Demand Registration Statement, and any attorney, accountant or other agent retained by the Stockholder or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors and employees to supply all information reasonably requested by the Stockholder, underwriter, attorney, accountant or agent in connection with the Demand Registration Statement including, without limitation, when conducting due diligence of the Company for the purpose of establishing the benefit of Section 11 of the 1933 Act;

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(h)           in the event that any Registrable Securities are sold in a firm commitment underwritten public offering, furnish to the Stockholder and any underwriter, a signed counterpart, addressed to the Stockholder or such underwriter, of (i) an opinion or opinions of counsel to the Company and updates thereof and customary negative assurance letters and (ii) a comfort letter or comfort letters from the Company’s accountants, each in customary form and covering such matters of the type customarily covered by opinions and negative assurance letters or comfort letters, as the case may be, as the Stockholder or underwriter may request; and

(i)            keep the Stockholder notified of any material events that have occurred in connection with the Demand Registration, including the receipt of SEC or other commentary.  The Stockholder, including a designee selected by the Stockholder reasonably acceptable to the Company, shall be permitted to assist in and oversee the Demand Registration on a reasonable basis.

4.             Failure of the Demand Registration to be Filed.  If the Stockholder has requested a Demand Registration pursuant to the terms herein, then the following adjustments to the applicable Exercise Price (as defined under the terms of the Warrants) shall apply:

(a)          If the Company has not filed the Demand Registration Statement by the later of (i) two (2) months after the date of the request of Demand Registration and (ii) six (6) months after the date hereof (such date, the “Filing Date”), then, (i) the Company shall not issue any (A) capital stock, (B) evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for capital stock (“Convertible Securities”), or (C) rights, options or warrants to subscribe for, purchase or otherwise acquire capital stock or Convertible Securities to anyone other than the Stockholder until it files the Demand Registration Statement, (ii) beginning on the day following the Filing Date, the applicable Exercise Price shall be reduced by $0.01, (iii) until the Company has filed the registration statement with the SEC, on each subsequent one (1) month anniversary of the Filing Date, the applicable Exercise Price shall be reduced by $0.01, and (iv) all Common Stock held by the Stockholder and all Common Stock held by the Company to be granted by the Company in respect of the exercise of the Warrants, shall automatically convert into a class of preferred stock of the Company, established by the Company on terms acceptable to the Stockholder, which such class of preferred stock shall have voting rights representing 51% of the aggregate voting power of the Company.

(b)          Notwithstanding anything to the contrary in this Section 4, the applicable Exercise Price may not be reduced below the par value of the shares of capital stock underlying any such Warrants.

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5.             Indemnification.

(a)           The Company shall indemnify, to the extent permitted by law, the Stockholder, its officers, directors and managers and each Person who controls the Stockholder (within the meaning of the 1933 Act or the 1934 Act), against all losses, claims, damages, liabilities (joint or several) and expenses (including reasonable attorneys’ and other professionals’ fees) (collectively, “Losses”) arising out of or resulting from (i) any untrue or alleged untrue statement of material fact contained in any registration statement, prospectus or preliminary prospectus or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in the case of any prospective or preliminary prospectus, in light of the circumstances then existing, except insofar as the same are caused by or contained in any information furnished in writing to the Company by the Stockholder expressly for use therein or by the Stockholder’s failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished the Stockholder with a sufficient number of copies of the same or (ii) the Stockholder being deemed a statutory underwriter in connection with the transactions set forth herein.  In connection with any underwritten offering, the Company shall indemnify the underwriters, their officers and directors, and each Person who controls such underwriters (within the meaning of the 1933 Act or the 1934 Act) to the same extent as provided above with respect to the indemnification of the Stockholder.

(b)           In connection with the Demand Registration, the Stockholder shall furnish to the Company in writing such information as is reasonably requested by the Company for use in such registration statement or prospectus and shall indemnify, to the extent permitted by law, the Company, its officers, directors and managers and each Person who controls the Company (within the meaning of the 1933 Act or the 1934 Act), against any Losses resulting from any untrue or alleged untrue statement of material fact or any omission or alleged omission of a material fact required to be stated in the registration statement or prospectus or any amendment thereof or supplement thereto or necessary to make the statements therein not misleading, in the case of any prospectus or preliminary prospectus, in light of the circumstances then existing, but only to the extent that such untrue statement or omission is contained in information so furnished in writing by the Stockholder specifically for use in preparing the registration statement.

(c)           Any Person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying Party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified Party’s reasonable judgment a conflict of interest between such indemnified and indemnifying Parties may exist with respect to such claim, permit such indemnifying Party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified Party.  If such defense is assumed, the indemnifying Party shall not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld).  An indemnifying Party who is not entitled, or elects not, to assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all Parties indemnified by such indemnifying Party with respect to such claim, unless in the reasonable judgment of any indemnified Party a conflict of interest may exist between such indemnified Party and any other of such indemnified Parties with respect to such claim.

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(d)           If the indemnification provided for in Section 5(a) or 5(b) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any Losses, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations.  The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. The parties hereto agree that it would not be just or equitable if the contribution pursuant to this Section 5(d) were to be determined solely by pro rata allocation or by any other method of allocation that does not take into account such equitable considerations.  In no event shall the liability of an indemnifying party under this Section 5(d) be greater in amount than such Person would have been obligated to pay by way of indemnification if the indemnification provided for under Section 5(a) or 5(b) hereof, as applicable, had been available under the circumstances. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of fraudulent misrepresentation.

6.             Underwriters or Controlling Persons.  If the Demand Registration refers to the Stockholder by name or otherwise as the holder of any securities of the Company and if in the Stockholder’s reasonable judgment the Stockholder is or might be deemed to be an underwriter or a controlling person of the Company, the Stockholder shall have the right to require (i) the insertion therein of language, in form and substance satisfactory to the Stockholder and presented to the Company in writing, to the effect that the holding by the Stockholder of such securities is not to be construed as a recommendation by the Stockholder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that the Stockholder shall assist in meeting any future financial requirements of the Company or (ii) in the event that such reference to the Stockholder by name or otherwise is not required by the 1933 Act or any other similar federal statute then in force, the deletion of the reference to the Stockholder.

7.             Preservation of Rights.  The Company shall not, without the prior consent of the Stockholder, (a) grant any registration rights to third parties which are more favorable than or inconsistent with the rights granted hereunder or (b) enter into any agreement, take any action or permit any change to occur, with respect to its securities, that violates or subordinates the rights expressly granted to the Stockholder under this Agreement.

8.             Miscellaneous.

(a)           Notices.  All notices that are required or permitted hereunder shall be in writing and shall be sufficient if personally delivered or sent by facsimile, registered or certified mail or Federal Express or other nationally recognized overnight delivery service.  Any notices shall be deemed given upon the earliest of the date when received at, the day when delivered via facsimile, the third day after the date when sent by registered or certified mail or the day after the date when sent by Federal Express to, the address of the respective party as set forth herein, unless such address has been changed by notice to the other Parties hereto.

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(b)           Restrictive Legend.  Each certificate representing Registrable Securities shall (unless otherwise permitted by the provisions of this Agreement) be stamped or otherwise imprinted with a legend substantially similar to the following (in addition to any legend required under applicable state securities laws or any other applicable agreements):

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH, A REGISTRATION RIGHTS AGREEMENT AMONG THE COMPANY AND THE HOLDER OF THESE SECURITIES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE RECORD HOLDER OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE COMPANY.

(c)           Amendments and Waivers.  The provisions of this Agreement may be amended or terminated, and the Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if approved in writing by the Stockholder.

(d)           Binding Effect.  This Agreement will bind and inure to the benefit of the respective successors (including any successor resulting from a merger or similar reorganization), assigns, heirs, and personal representatives of the Parties hereto.  In addition, without limiting the generality of the foregoing, if the Stockholder liquidates or reorganizes such that its assets are transferred to its own equity owners or partners or to another entity, such equity owners, partners or entity shall succeed to all of the rights of the Stockholder hereunder.

(e)           Governing Law.  This Agreement shall be construed and interpreted in accordance with the internal laws of the State of Nevada without regard to any choice of law or conflict of law, choice of forum or provision, rule or principle (whether of the State of Nevada or any other jurisdiction) that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.  The parties hereby irrevocably (i) submit themselves to the non-exclusive jurisdiction of the state and federal courts sitting in the State of Nevada and (ii) waive the right and shall not assert by way of motion, as a defense or otherwise in any action, suit or other legal proceeding brought in any such court, any claim that it, he or she is not subject to the jurisdiction of such court, that such action, suit or proceeding is brought in an inconvenient forum or that the venue of such action, suit or proceeding is improper.  Each party also irrevocably and unconditionally consents to the service of any process, pleadings, notices or other papers in a manner permitted by the notice provisions of Section 9(a).  EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF SUCH PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

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(f)            Counterparts.  This Agreement may be executed in two or more counterparts (delivery of which may occur via facsimile), each of which shall be binding as of the date first written above, and, when delivered, all of which shall constitute one and the same instrument.  This Agreement and any other certificate, instrument, agreement or document required to be delivered pursuant to the terms of this Agreement, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or as an attachment to an electronic mail message in “pdf” or similar format, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine or electronic mail attachment in “pdf” or similar format to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine or as an attachment to an electronic mail message as a defense to the formation of a contract and each such party forever waives any such defense.  A facsimile signature or electronically scanned copy of a signature shall constitute and shall be deemed to be sufficient evidence of a party’s execution of this Agreement, without necessity of further proof.  Each such copy shall be deemed an original, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart.

(g)           Interpretation.  Unless the context of this Agreement clearly requires otherwise, (i) references to the plural include the singular, the singular the plural, the part the whole, (ii) references to any gender include all genders, (iii) “including” has the inclusive meaning frequently identified with the phrase “but not limited to,” and (iv) references to “hereunder” or “herein” relate to this Agreement.  The section and other headings contained in this Agreement are for reference purposes only and shall not control or affect the construction of this Agreement or the interpretation thereof in any respect.  Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified.  Each accounting term used herein that is not specifically defined herein shall have the meaning given to it under GAAP.  Any reference to a Party’s being satisfied with any particular item or to a Party’s determination of a particular item presumes that such standard will not be achieved unless such Party shall be satisfied or shall have made such determination in its sole or complete discretion.

[THE BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]

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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
 

IN WITNESS WHEREOF, the Parties hereto have executed and delivered this Registration Rights Agreement as of the date first written above.

COMPANY:
LaserLock Technologies, Inc.
By:	/s/ Norman A. Gardner
Name:  Norman A. Gardner
Title: Chief Executive Officer
Address:		837 Lindy Lane
		Bala Cynwyd, PA 19004
Fax:		(610) 668-2771
STOCKHOLDER:
VerifyMe, Inc.
By:	/s/ Claudio Ballard
Name: Claudio Ballard
Title:   President
Address:		205 Linda Drive
		Daingerfield, TX 75638
Fax:		(212) 661-2146

EX-10.19

Exhibit 10.19

TECHNOLOGY AND SERVICES AGREEMENT

TECHNOLOGY AND SERVICES AGREEMENT, dated as of December 31, 2012 (this “Agreement”), by and between LaserLock Technologies, Inc. (the “Company”), a Nevada corporation, and VerifyMe, Inc. (the “Licensor”), a Texas corporation.  In consideration of the premises and the mutual agreements and covenants hereinafter set forth, the Company and the Licensor hereby agree as follows:

ARTICLE 1

DEFINITIONS

SECTION 1.01  Definitions.  As used in this Agreement, the following terms shall have the following meanings:

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

“Common Stock” means the common stock, $0.001 par value per share, of the Company.

“Licensor Payment” means $1,000,000.

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

“Services” means those services to be performed by the Company pursuant to this Agreement.

“Technology” means the technology to be supported by the Company pursuant to this Agreement and the software to be further developed by the Company pursuant to this Agreement.

“Warrants” means the warrants to purchase shares of Common Stock as set forth in Section 2.01.

ARTICLE 2

TRANSACTIONS

SECTION 2.01  Consideration.  In consideration for the Services to be performed by the Company as set forth herein, in consideration for the support and further development of the Technology by the Company as set forth herein, and as consideration for the Company’s issuance to the Licensor of warrants to purchase 22,222,222 shares of Common Stock on terms consistent with the terms of the Warrant issued by the Company to the Licensor on the date hereof, the Licensor has paid the Licensor Payment to the Company on the terms set forth herein, the receipt of which is hereby acknowledged by the Company.

SECTION 2.02  Services.  The Licensor and the Company hereby agree as follows:

(a)           The Company shall support, both internally and externally, the Technology covered by the patents licensed by the Licensor to the Company under the Patent License Agreement, between the Licensor and the Company, dated as of the date hereof, and further develop the software heretofore developed by the Licensor and sold to the Company in the Asset Purchase Agreement, between the Licensor and the Company, dated as of the date hereof, such that the Company will take all commercially reasonable actions, which Company shall exercise in its sole discretion, to develop, support, sell, and market the technology and products created thereunder in the fields and markets for the Technology.

(b)           Concurrently with the execution of this Agreement, the Company shall execute a services agreement with Zaah Technologies, Inc. (“Zaah”) in substantially the form attached as Exhibit A.

(c)           The Company shall use up to $550,000 of the proceeds from the Licensor Payment for the purpose of the Company’s hiring, paying, and retaining (i) a full-time Chief Technology Officer or Chief Information Officer and (ii) two (2) full-time business developers who will have development, marketing and selling responsibilities; provided, that such proceeds shall not be used by the Company for the payment of any employment benefits, which benefits the Company shall be required to pay.  The Company shall employ persons in such roles as soon as practicable after the date hereof and for a period of at least twelve (12) months.  Such persons shall fulfill job responsibilities for the Company consistent with the responsibilities customarily associated with such job titles.  Licensor may make recommendations concerning the Company’s hires, provided, however, that (iii) the final hiring decision shall be in the sole discretion of the Company, and (iv) the Company may terminate the employment of anyone hired pursuant to this Section in its sole discretion, subject to compliance with all applicable laws, rules and regulations and this Agreement.

(d)           The Licensor shall use its commercially reasonable efforts to assist the Company in the development of its business and marketing of the products and technology to the extent directly relating to the Licensor’s commercial experience as of the date hereof, including referring relevant business opportunities to the Company of which the Licensor becomes aware, introducing the Company to relevant business contacts, and providing subject matter expertise to the Company.

SECTION 2.03  Company Representations.  The Company hereby represents and warrants to the Licensor as follows:

(a)           The Company has all necessary corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.  This Agreement has been duly executed and delivered by the Company, and (assuming due authorization, execution and delivery by the Licensor of this Agreement) shall constitute a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.

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(b)           The execution, delivery and performance of this Agreement by the Company will not result in any acceleration of, or requirement to repay, convert or exchange any of the indebtedness of the Company.

(c)           The Warrants are duly authorized by the Company.  The shares of Common Stock issuable upon exercise of the Warrants have been duly authorized and validly reserved for issuance and, upon issuance in accordance with the terms of the Warrants for the consideration expressed therein, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer that result from applicable state and federal securities laws.

SECTION 2.04  Further Action.  Each party hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable law, and execute and deliver such documents and other papers as may be reasonably required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement.

ARTICLE 3

MISCELLANEOUS

SECTION 3.01  Amendment; Waiver.  This Agreement may not be amended, supplemented, modified or restated except by an instrument in writing signed by, or on behalf of, the parties hereto or by a waiver in accordance with this Section 3.01.  Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of any other party, (b) waive any inaccuracies in the representations and warranties of any other party contained herein or in any document delivered by any other party pursuant hereto or (c) waive compliance with any of the agreements of any other party or conditions to such party’s obligations contained herein.  Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby.  Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement.  The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

SECTION 3.02  Confidentiality.  The Licensor and the Company covenant and agree that they will not, and they will cause their principals, Affiliates, officers and other personnel and authorized representatives not to, use information concerning another party’s business, properties and personnel received in the course of negotiating this Agreement and investigation in connection with this transaction and will hold such information (and will cause the aforesaid persons to hold such information) in confidence until such information otherwise becomes publicly available or as may be required by applicable Law.

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SECTION 3.03  Expenses.  Except as otherwise specified in this Agreement, each party hereto shall bear its own costs and expenses incurred in connection with this Agreement, including the fees and expenses of their respective accountants and legal counsel.

SECTION 3.04  Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by telecopy, facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 3.04):

(a)           if to the Company:

LaserLock Technologies, Inc.

837 Lindy Lane

Bala Cynwyd, PA 19004

Facsimile:  (610) 668-2771

Attention:  Norman Gardner

Attention:  Neil Alpert

with a copy to:

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Facsimile:  (215) 963-5001

Attention:  Justin W. Chairman, Esq.

(b)           if to the Licensor:

VerifyMe, Inc.

205 Linda Drive

Daingerfield, TX  75638

Facsimile:  (212) 661-2146

Attention:  Shephard Lane

with a copy to:

Lane & Seidman LLP

2 Park Avenue, 14th Floor

New York, NY 10016

Facsimile:  (212) 249-6960

Attention:  Vanessa Seidman, Esq.

SECTION 3.05  Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.

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SECTION 3.06  Assignment.  This Agreement may not be assigned by the Company, by operation of law or otherwise, without the express written consent of the Licensor (which consent may be granted or withheld in the sole discretion of the Licensor).  The Licensor may assign this Agreement or any of its rights and obligations hereunder to one or more Affiliates without the consent of the Company or to a third party with the consent of the Company, which consent shall not be unreasonably withheld.

SECTION 3.07  Third Party Beneficiaries and Transfers.  This Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

SECTION 3.08  Governing Law; Consent to Jurisdiction.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida.  The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal court sitting in Broward County, Florida for the purpose of any action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above named courts.

SECTION 3.09  Waiver of Jury Trial.  Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Ancillary Agreements.  Each of the parties hereto (a) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 3.09.

SECTION 3.10  Entire Agreement.  This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between the Company and the Licensor with respect to the subject matter hereof.

SECTION 3.11  Counterparts.  This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

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SECTION 3.12  Public Announcements.  Subject to its obligations under Law (including requirements of stock exchanges and other similar regulatory bodies and the requirements of the Exchange Act), no party hereto shall make any announcement regarding the entering into of this Agreement or the Closing to the financial community, governmental entities, employees, customers or the general public without the prior consent of the other party, which shall not be unreasonably withheld; provided, that if a party hereto is required by any such obligations under Law to make any such announcement as contemplated by this Section 3.12, the parties hereto shall cooperate with each other regarding the contents and timing of any such announcement, and the non-announcing party shall have the opportunity to review and comment upon the language of the proposed announcement in advance of public disclosure.  Any such comments shall be considered in good faith by the announcing party.

SECTION 3.13  Termination.  This Agreement shall terminate five (5) years from the date hereof.

SECTION 3.14  Rules of Interpretation.  In this Agreement, except to the extent otherwise provided or that the context otherwise requires: (a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement; (b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement; (c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”; (d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) all terms defined in this Agreement have the defined meanings when used in any certificate or other document delivered or made available pursuant hereto, unless otherwise defined therein; (f) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (g) references to a Person are also to its successors and permitted assigns; and (h) references to sums of money are expressed in lawful currency of the United States of America, and “$” refers to U.S. dollars.

[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or other representatives thereunto duly authorized, as of the date first above written.

LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Norman A. Gardner
	Name:  Norman A. Gardner
	Title:  Chief Executive Officer
VERIFYME, INC.
By:	/s/ Claudio Ballard
	Name: Claudio Ballard
	Title:   President

[Signature Page to Services Agreement]

EX-10.20

Exhibit 10.20

PATENT AND TECHNOLOGY LICENSE AGREEMENT

THIS AGREEMENT is made as of this 31st day of December, 2012 (the “Effective Date”), by and between VERIFYME, INC., a Texas corporation (“LICENSOR”) and LASERLOCK TECHNOLOGIES, INC., a Nevada corporation (“LICENSEE”) (collectively the “Parties”).

W I T N E S S E T H:

WHEREAS, LICENSOR is the sole and exclusive owner of certain technology relating to local, mobile and cloud-based biometric security systems and methods of providing same identified more fully in the attached Schedule A (collectively, the “Technology”) and has the right to license certain United States Letters Patents and applications therefor identified more fully in the attached Schedule A (collectively, the “Patents”); and

WHEREAS, LICENSEE desires to acquire an exclusive license under the Technology and under the Patents, for at least an initial period, and thereafter a non-exclusive license thereunder, for use in the development and sale of the types of products listed in the attached Schedule A (the “Licensed Products”);

WHEREAS, LICENSOR has the power and authority to grant to LICENSEE such license(s).

NOW, THEREFORE,in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows:

1.           LICENSE

A1.  Exclusive License: LICENSOR hereby grants to LICENSEE, upon and subject to all the terms and conditions of this Agreement, an exclusive license under the Technology and under the Patents to make, use, and sell the systems and methods embodying the Technology and the invention(s) described in the Patents, during the Exclusive Period, in the Licensed Territory, as set forth in the attached Schedule A, with the sole exception of U.S. Patent No. 7,519,558, under which LICENSOR instead hereby grants to LICENSEE a non-exclusive license to make, use, and sell the systems and methods embodying the invention(s) described in U.S. Patent No. 7,519,558, during the Exclusive Period, in the Licensed Territory.  For the avoidance of doubt, the exclusivity granted hereunder shall also apply to LICENSOR without reservation and LICENSOR shall not, during the Exclusive Period, make, use, and sell the systems and methods embodying the Technology and the invention(s) of the Patents, including U.S. Patent No. 7,519,558, nor shall LICENSOR license U.S. Patent No. 7,519,558 to any third parties.  The Exclusive Period shall begin on the Effective Date and shall expire as set forth below:

1.  If the Royalties actually paid by LICENSEE to LICENSOR under this Agreement between the Effective Date through January 1, 2015, total at least Two Million Dollars ($2,000,000), then the Exclusive Period shall expire on January 1, 2016, and thereafter be automatically renewed at expiration for a successive one (1) year period each time the Royalties actually paid by LICENSEE to LICENSOR under this Agreement during the year prior to said expiration total at least One Million Dollars ($1,000,000).  If the Exclusive Period is not renewed upon any expiration, it shall not be later reinstated, regardless of the amount of Royalties later paid.

2.  If the Royalties actually paid by LICENSEE to LICENSOR under this Agreement between the Effective Date through January 1, 2015, total less than Two Million Dollars ($2,000,000), then the Exclusive Period shall expire on January 1, 2015.

3.  For purposes of Sections 1.A1.1 and 1.A1.2, the “Royalties actually paid by LICENSEE to LICENSOR” during a given period shall include (i) amounts paid by LICENSEE to LICENSOR, during the given period, attributable to sales of Licensed Products in accordance with Section 3B plus (ii) any amounts (“Make-Up Amounts”) paid by LICENSEE to LICENSOR, during the given period, expressly designated “Make-Up Amounts” by LICENSEE, where such Make-Up Amounts are not attributable to Payments due under Section 3.A of this Agreement or any other obligations under this Agreement.  For the avoidance of doubt, the payment of any Make-Up Amounts is at LICENSEE’s option for the purpose of extending the Exclusive Period.

4.  Make-Up Amounts are payable, at LICENSEE’s option, in:

(a) cash; or

(b) by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of LaserLock Technologies, Inc., equal to (x) the Make Up Amount (in dollars) divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years

A2.  Non-Exclusive License: LICENSOR hereby grants to LICENSEE, upon and subject to all the terms and conditions of this Agreement, a nonexclusive license under the Technology and under the Patents to make, use, and sell the systems and methods embodying the Technology and the invention(s) described in the Patents, beginning immediately at expiration of the Exclusive Period and until the end of the Term, in the Licensed Territory, as set forth in the attached Schedule A.

B.  As used in the Agreement, the Patents shall mean and include the United States Letters Patents identified more fully in the attached Schedule A, along with any patents on improvements thereof.  In addition, the Patents shall mean and include the following:

1.  Any divisional, continuation, reexamination, reissue or substitute U.S. patent application that shall be based on any of the Patents; and

2.  Any patents that shall issue on any of the above-described patent applications or on any improvements thereof, and any reexaminations and reissues and extensions thereof.

C.  LICENSEE may grant sublicenses under this Agreement to the extent required to sell, license, market or otherwise commercially exploit any Licensed Products, including but not limited to sublicenses required for distribution or manufacturing channels and to any end users of the Licensed Products, subject to the written consent of LICENSOR.

D. Sale of Patents or Technology.  In the event LICENSOR sells the Technology or any of the Patents to a third party during the Exclusive Period, LICENSOR shall pay to LICENSEE the greater of (i) ten percent (10%) of the value of the net proceeds derived from such sale or (ii) an amount equal to the sum of the Payments actually paid prior to the time of such sale by LICENSEE to LICENSOR under Subsection 3.A.  For the avoidance of doubt, the sum of the Payments referred to in Subsection (ii) of this Section 1.D. excludes any Royalties paid by LICENSEE to LICENSOR.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 2 of 12

2.  TERM

A.  This Agreement shall be effective as of the Effective Date and shall continue through a Primary Term and a Secondary Term, unless sooner terminated by the Parties pursuant to the terms of this Agreement (collectively, the Primary Term combined with the Secondary Term being the “Term”).

B.  The Primary Term shall begin on the Effective Date and expire simultaneously with the expiration of the longest-lived patent or the rejection or abandonment beyond further appeal of the last-remaining patent application comprised within the Patents, whichever occurs later.

C.  A Secondary Term shall begin immediately at expiration of the Initial Term and continue for a period of one (1) year thereafter, the Secondary Term renewing automatically for a successive one (1) year period unless terminated in writing by one of the Parties pursuant to the terms of this Agreement.

3.  COMPENSATION

A.  Payments: In consideration for the licenses granted hereunder, LICENSEE agrees to pay to LICENSOR cash and securities (collectively “Payments”) as follows:

1.  Payment 1, payable upon execution of the Agreement: The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of LaserLock Technologies, Inc., equal to (x) $100,000 divided by (y) $0.045 and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

2.  Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of Shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

3.  Payment 3, payable on January 1, 2015:  The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of Shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

4.  Future Payments Contingent:  LICENSEE’s payment of Payment 2 and Payment 3 of this Subsection 3.A. is contingent.  To the extent that LICENSOR does not develop and license to LICENSEE, at a time subsequent to Payment 1, further technology and/or a further patent right related to the local, mobile and cloud based biometric security systems, then any payments not already paid, will not longer by due to LICENSOR hereunder, this nonperformance being a likelihood, more likely than not.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 3 of 12

5.  The Payments set forth in this Subsection 3.A. are in addition to any Royalties payable pursuant to Subsection 3.B. and Schedule A, and do not apply towards the Royalties paid requirement necessary to extend and/or renew the Exclusive Period pursuant to Subsection 1.A1.

B.  Royalty:  In further consideration for the licenses granted hereunder, LICENSEE agrees to pay to LICENSOR during the Term of the Agreement, on an installment basis, the royalty recited in Schedule A (Royalty), namely, (i) an amount (the “Net Royalty”) equal to (w) LICENSEE’s Net Sales of Licensed Products during the relevant period multiplied by (x) the Net Royalty Rate recited in Schedule A, or (ii) an amount (the “Gross Royalty”) equal to (y) LICENSEE’s Gross Sales of Licensed products during the relevant period multiplied by (z) the Gross Royalty Rate recited in Schedule A, whichever (of the Net Royalty or Gross Royalty) is greater.

1.  Only one Royalty shall be paid hereunder as to Licensed Product whether or not it is covered by the Technology, a single patent or multiple patents of the Patents.

2.  The Royalty owed LICENSOR shall be calculated on a semiannual calendar basis (Royalty Period) and shall be payable no later than 30 days after the termination of the preceding full semiannual period, i.e., commencing on January 1 and June 15, except that the first and last calendar periods may be “short,” depending on the effective date of this Agreement.

3.  Notwithstanding the provisions of Subsection 3.B.2., payment of all Royalties accruing from the Effective Date until December 31, 2013, shall be deferred until January 1, 2014.  Such accrued Royalties shall become payable immediately on January 1, 2014.

C.  For each Royalty Period, LICENSEE shall provide LICENSOR with a written Royalty statement in a form acceptable to LICENSOR.  Such Royalty statement shall be certified as accurate by a duly authorized officer of LICENSEE reciting, on a country-by-country basis, the stock number, item, units sold, description, quantity shipped, gross invoice, amount billed customers less discounts, allowances, returns, and reportable sales for each Licensed Product.  Such statements shall be furnished to LICENSOR regardless of whether any Licensed Products were sold during the Royalty Period or whether any actual Royalty was owed.

D.  “Net Sales” shall mean LICENSEE’s gross sales (the gross invoice amount billed customers) of Licensed Products, less excise taxes, discounts, and allowances actually shown on the invoice (except cash discounts that are not deductible in the calculation of Royalty) and, further, less any bona fide returns (net of all returns actually made or allowed as supported by credit memoranda actually issued to the customers) up to the amount of the actual sales of the Licensed Products during the Royalty Period.  No other costs incurred in the manufacturing, selling, advertising, and distribution of the Licensed Products shall be deducted nor shall any deduction be allowed for any uncollectible accounts or allowances.

E.  A Royalty obligation shall accrue upon the sale of the Licensed Products regardless of the time of collection by LICENSEE.  A Licensed Product shall be considered “sold” when such Licensed Product is billed, invoiced, shipped, or paid for, whichever occurs first.

F.  If LICENSEE sells any Licensed Products to any affiliated or related party at a price less than the regular price charged to other parties, the Royalty shall be computed at the regular price.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 4 of 12

G.  The receipt or acceptance by LICENSOR of any Royalty statement or payment shall not prevent LICENSOR from subsequently challenging the validity or accuracy of such statement or payment.

H.  Upon expiration or termination of this Agreement, all Royalty obligations, including the Guaranteed Minimum Royalty, shall be accelerated and shall immediately become due and payable.

I.  All payments due LICENSOR shall be made in United States currency by check drawn on a U.S. bank, unless otherwise specified by LICENSOR.

J.  In the event that currency regulations of a country in which sales are made prohibit the deposit or payment of Royalties to LICENSOR or its nominee, no Royalty payment shall accrue or be due and payable by LICENSEE with respect to such sales for so long as such restrictions prevail.

K.  Late payments shall incur interest at One Percent (1.0%) per month from the date such payments were originally due, or at the maximum rate of interest allowable by the State of Texas, whichever is lower, provided that any payments in excess of the maximum rate allowable by the State of Texas will be automatically considered as advance payments against future Royalties.

4.  RECORD INSPECTION AND AUDIT

A.  LICENSOR shall have the right, upon reasonable notice, to inspect LICENSEE’s books and records and all other documents and material in LICENSEE’s possession or control with respect to the subject matter of this Agreement.  LICENSOR shall have free and full access thereto for such purposes and may make copies thereof.  In no event shall LICENSOR have the right to examine information with respect to LICENSEE’s costs, pricing formulas, or percentages of markup.  LICENSEE shall impose similar obligations on its sublicensees for the benefit of itself and of LICENSOR.

B.  In the event that such inspection reveals an underpayment by LICENSEE of the actual Royalty owed LICENSOR, LICENSEE shall pay the difference, plus interest calculated at the rate of One Percent (1.0 %) per month, or at the maximum rate of interest allowable by the State of Texas, whichever is lower, provided that any payments in excess of the maximum rate allowable by the State of Texas will be automatically considered as advance payments against future underpayments.  If such underpayment is in excess of Five Thousand Dollars ($5,000) for any Royalty Period, LICENSEE shall also reimburse LICENSOR for the cost of such inspection.

C.  All books and records relative to LICENSEE’s obligations hereunder shall be maintained and made accessible to LICENSOR for inspection at a location in the United States for at least five years after termination of this Agreement.

5.  INTELLECTUAL PROPERTY PROTECTION

All patent applications comprised within the Patents shall be prosecuted to issuance or final rejection by LICENSOR at LICENSOR’s reasonable cost and expense.  Any taxes, annuities, working fees, maintenance fees, and/or renewal and extension charges with respect to each patent application and patent subject to this Agreement shall be paid by LICENSOR.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 5 of 12

6. WARRANTIES AND OBLIGATIONS

A.  LICENSOR represents and warrants that, to the best of its knowledge and belief, it has the right and power to grant the licenses granted herein; that there are no other agreements with any other party in conflict with such grant; and that it knows of no prior art that would invalidate the Patents.

B.  LICENSOR further represents and warrants that, to the best of its knowledge and belief, LICENSEE’s contemplated use of the Patents as represented to LICENSOR does not infringe any valid rights of any third party, and that there are no actions for infringement against LICENSOR with respect to the Patents.

C.  LICENSOR EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE PATENTS AND THE TECHNOLOGY, INCLUDING ANY WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR ANY PARTICULAR PURPOSE, AND WARRANTIES OF PERFORMANCE, AND ANY WARRANTY THAT MIGHT OTHERWISE ARISE FROM COURSE OF DEALING OR USAGE OF TRADE. NO WARRANTY IS EITHER EXPRESS OR IMPLIED WITH RESPECT TO THE USE OF THE PATENTS AND THE TECHNOLOGY. Under no circumstances shall LICENSOR be liable for incidental, special, indirect, direct or consequential damages or loss of profits, interruption of business, or related expenses which may arise from use of the Patents or the Technology, including but not limited to those resulting from defects in the Patents or the Technology of any kind

D.  LICENSEE acknowledges and agrees that the Patents and Technology are licensed “AS IS”.

E.  LICENSEE acknowledges and agrees to use its reasonable best efforts to use the Patent and Technology licensed herein in accordance with applicable laws, customary good business practices, and in a manner consistent with the use of the patents and technology owned by LICENCEE.

F.  LICENSEE shall be solely responsible for the manufacture, production, sale, and distribution of the Licensed Products and will bear all costs associated therewith.

G.  In the event that LICENSOR shall develop any improvement to the apparatus claimed in the Patents, and later incorporate it into an improved or modified product by LICENSEE, such improved product shall be subject to the payment of a Royalty. All improvement made by the LICENSEE shall be promptly disclosed to LICENSOR and shall hereinafter become the property of LICENSOR. LICENSEE hereby agrees to execute any and all documents necessary to perfect LICENSOR’s rights in such improvements.

7.  MARKING AND SAMPLES

A.  LICENSEE shall, and agrees to require its sublicensees to, fully comply with the patent marking provisions of the intellectual property laws of the applicable countries in the Licensed Territory.

B.  At least once during each calendar year, LICENSEE shall submit to LICENSOR two samples of each of the Licensed Products.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 6 of 12

8.  TERMINATION

The following termination rights are in addition to the termination rights that may be provided elsewhere in the Agreement:

A.  Immediate Right of Termination.  LICENSOR shall have the right to immediately terminate this Agreement by giving written notice to LICENSEE in the event that LICENSEE does any of the following:

1. Fails to obtain or maintain product liability insurance in the amount and of the type provided for herein;

2. Files a petition in bankruptcy or is adjudicated a bankrupt or insolvent, or makes an assignment for the benefit of creditors or an arrangement pursuant to any bankruptcy law, or if the LICENSEE discontinues or dissolves its business or if a receiver is appointed for LICENSEE or for LICENSEE’s business and such receiver is not discharged within thirty (30) days;

3. Fails to commence the shipment of Licensed Products within eighteen (18) months from the Effective Date of this Agreement; or

4. Upon the commencement of sale of Licensed Products, fails to sell any Licensed Products for three (3) or more consecutive Royalty Periods.

B.  Right to Terminate Upon Notice.  Either party may terminate this Agreement upon thirty (30) days’ written notice to the other party in the event of a breach of any provision of this Agreement by the other party, provided that, during the thirty-day period, the breaching party fails to cure such breach.

C.  LICENSEE Right to Terminate.  LICENSEE shall have the right to terminate this Agreement at any time upon sixty (60) days’ written notice to LICENSOR, such termination to become effective at the conclusion of such sixty-day period.

9.  POST TERMINATION RIGHTS

Upon expiration or termination of this Agreement, LICENSEE shall thereafter immediately, except for reason of termination because of expiration or a declaration of patent invalidity, cease all further use of the Patents and all rights granted to LICENSEE or its sublicensees under this Agreement shall forthwith terminate and immediately revert to LICENSOR.

10.  INFRINGEMENTS

A.  LICENSOR shall have the sole and exclusive right, in its discretion, to institute and prosecute lawsuits against third persons for infringement of the rights licensed in this Agreement.  All sums recovered in any such lawsuits, whether by judgment, settlement or otherwise, in excess of the amount of reasonable attorneys’ fees and other out of pocket expenses of such suit, shall be retained solely by LICENSOR.

B.  LICENSEE agrees to fully cooperate with LICENSOR in the prosecution of any such suit against a third party and shall execute all papers, testify on all matters, and otherwise cooperate in every way necessary and desirable for the prosecution of any such lawsuit.  The LICENSOR shall reimburse the LICENSEE for any expenses incurred as a result of such cooperation.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 7 of 12

11.  CONFIDENTIALITY

A.  “Confidential Information” shall mean any confidential technical data, trade secret, know-how or other confidential information disclosed by any party hereunder in writing, orally, or by drawing or other form and which shall be marked by the disclosing party as “Confidential” or “Proprietary.” If such information is disclosed orally, or through demonstration, in order to be deemed Confidential Information, it must be specifically designated as being of a confidential nature at the time of disclosure and reduced in writing and delivered to the receiving party within thirty (30) days of such disclosure.

B.  Notwithstanding the foregoing, Confidential Information shall not include information which: (i) is known to the receiving party at the time of disclosure or becomes known to the receiving party without breach of this Agreement; (ii) is or becomes publicly known through no wrongful act of the receiving party or any subsidiary of the receiving party; (iii) is rightfully received from a third party without restriction on disclosure; (iv) is independently developed by the receiving party or any of its subsidiary; (v) is furnished to any third party by the disclosing party without restriction on its disclosure; (vi) is approved for release upon a prior written consent of the disclosing party; (vii) is disclosed pursuant to judicial order, requirement of a governmental agency or by operation of law.

C.  The receiving party agrees that it will not disclose any Confidential Information to any third party and will not use Confidential Information of the disclosing party for any purpose other than for the performance of the rights and obligations hereunder during the term of this Agreement and for a period of five (5) years thereafter, without the prior written consent of the disclosing party. The receiving party further agrees that Confidential Information shall remain the sole property of the disclosing party and that it will take all reasonable precautions to prevent any unauthorized disclosure of Confidential Information by its employees. No license shall be granted by the disclosing party to the receiving party with respect to Confidential Information disclosed hereunder unless otherwise expressly provided herein.

D.  Upon the request of the disclosing party, the receiving party will promptly return all Confidential Information furnished hereunder and all copies thereof.

E.  The Parties agree that all publicity and public announcements concerning the formation and existence of this Agreement shall be jointly planned and coordinated by and among the Parties. Neither party shall disclose any of the specific terms of this Agreement to any third party without the prior written consent of the other party, which consent shall not be withheld unreasonably. Notwithstanding the foregoing, any party may disclose information concerning this Agreement as required by the rules, orders, regulations, subpoenas or directives of a court, government or governmental agency, after giving prior notice to the other party.

F.  If a party breaches any of its obligations with respect to confidentiality and unauthorized use of Confidential Information hereunder, the non-breaching party shall be entitled to equitable relief to protect its interest therein, including but not limited to injunctive relief, as well as money damages notwithstanding anything to the contrary contained herein.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 8 of 12

G.  Except as otherwise set forth in this Agreement, neither party will make any public statement, press release or other announcement relating to the terms of or existence of this Agreement without the prior written approval of the other.

12.  INDEMNITY

A.  LICENSEE agrees to defend, indemnify and hold LICENSOR and its officers, directors, agents, and employees, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against LICENSOR based on the manufacture or sale of the Licensed Products including, but not limited to, actions founded on product liability.

B.  LICENSOR agrees to defend, indemnify and hold LICENSEE and its officers, directors, agents, sublicensees, employees, and customers, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against LICENSEE based on a breach by LICENSOR of any representation and warranty made in this Agreement, provided, however, any provision herein to the contrary notwithstanding, the maximum liability of LICENSOR to any person, firm or corporation whatsoever arising out of or in the connection with any sale, license, use or other employment of the Patents and the Technology licensed to LICENSEE hereunder, whether such liability arises from any claim based on breach or repudiation of contract, warranty, tort or otherwise, shall in no case exceed the actual amounts paid to LICENSOR by LICENSEE under this Agreement. The essential purpose of this provision is to limit the potential liability of LICENSOR arising out of this Agreement. The parties acknowledge that the limitations set forth in this Section are integral to the amount of consideration levied in connection with the license of the Patents and the Technology and any services rendered hereunder and that, were LICENSOR to assume any further liability other than as set forth herein, such consideration would of necessity be set substantially higher.

C.  The provisions of Subsection 12.B. notwithstanding, unless LICENSEE uses the Patents and Technology licensed hereunder in accordance with this Agreement, and until such time as LICENSEE has commenced the sale of Licensed Products pursuant to this Agreement, LICENSOR shall have no obligation to defend, indemnify or hold harmless LICENSEE and its officers, directors, agents, sublicensees, employees, and customers, against any costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against LICENSEE arising out of or in the connection with this Agreement or with any sale, license, use or other employment of the Patents and the Technology licensed to LICENSEE hereunder.

13. INSURANCE

LICENSEE shall, throughout the Term of the Agreement, obtain and maintain at its own cost and expense from a qualified insurance company licensed to do business in Texas and having a Moody’s rating of B+ or better, standard Product Liability Insurance naming LICENSOR, and its officers, directors, employees, agents, and shareholders, as an additional insured.  Such policy shall provide protection against all claims, demands, and causes of action arising out of any defects or failure to perform, alleged or otherwise, of the Licensed Products or any material used in connection therewith or any use thereof.  The amount of coverage shall be as specified in Schedule A attached hereto.  The policy shall provide for thirty (30) days’ notice to LICENSOR from the insurer by registered or certified mail, return receipt requested, in the event of any modification, cancellation, or termination thereof.  LICENSEE agrees to furnish LICENSOR a certificate of insurance evidencing same within thirty (30) days after execution of this Agreement and, in no event, shall LICENSEE manufacture, distribute, or sell the Licensed Products prior to receipt by LICENSOR of such evidence of insurance.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 9 of 12

 

14.  NOTICE AND PAYMENT

A.  Any notice required to be given under this Agreement shall be in writing and delivered personally to the other designated party at the above-stated address or mailed by certified, registered or Express mail, return receipt requested or by Federal Express.

B. Either party may change the address to which notice or payment is to be sent by written notice to the other under any provision of this paragraph.

15.  JURISDICTION/DISPUTES

This Agreement shall be governed in accordance with the laws of the State of Texas.  All disputes under this Agreement shall be resolved by litigation in the courts in Morris County in the State of Texas including the federal courts therein and the Parties all consent to the jurisdiction of such courts, agree to accept service of process by mail, and hereby waive any jurisdictional or venue defenses otherwise available to it.  With respect to litigation in the federal courts where multiple districts within the State of Texas have jurisdiction, the Parties agree to jurisdiction in the Eastern District of Texas.

16. AGREEMENT BINDING ON SUCCESSORS

The provisions of the Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, their heirs, administrators, successors and assigns.

17.  ASSIGNABILITY

Neither party may assign this Agreement or the rights and obligations thereunder to any third party without the prior express written approval of the other party which shall not be unreasonably withheld.

18.  WAIVER

No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default of the same or other provisions of this Agreement.

19.  SEVERABILITY

If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from the Agreement.

20.  INTEGRATION

This Agreement constitutes the entire understanding of the Parties, and revokes and supersedes all prior agreements between the Parties and is intended as a final expression of their Agreement.  It shall not be modified or amended except in writing signed by the Parties hereto and specifically referring to this Agreement.  This Agreement shall take precedence over any other documents which may conflict with this Agreement.

PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 10 of 12

21.  COUNTERPARTS AND FACSIMILE SIGNATURES

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. Facsimile execution and delivery of this Agreement by any of the Parties shall be legal, valid and binding execution and delivery of such document for all purposes.

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PATENT AND TECHNOLOGY LICENSE AGREEMENT  Page 11 of 12

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have each caused to be affixed hereto its or his/her hand and seal the day indicated.

VERIFYME, INC.			LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Claudio Ballard			By:	/s/ Norman A. Gardner
Title:		President		Title:		Chief Executive Officer
Date:		December 31, 2012		Date:		December 31, 2012

PATENT AND TECHNOLOGY LICENSE AGREEMENT Page 12 of 12

EX-10.21

Exhibit 10.21

ASSET PURCHASE AGREEMENT

THIS AGREEMENT is made as of this 31st day of December, 2012 (the “Effective Date”), by and between VERIFYME, INC., a Texas corporation (“SELLER”), and LASERLOCK TECHNOLOGIES, INC., a Nevada corporation (“PURCHASER”) (collectively the “Parties”).

W I T N E S S E T H:

WHEREAS, SELLER is in the business of developing and selling local, mobile and cloud-based biometric security systems and methods of providing same and currently owns certain intellectual property assets including software, trademarks and goodwill associated therewith and domain names relating thereto and identified more fully in the attached Schedule A (collectively, the “Assets”);

WHEREAS, PURCHASER desires to purchase from SELLER, and SELLER wishes to sell to PURCHASER, the Assets; and

WHEREAS, SELLER and PURCHASER have agreed to enter into a Patent and Technology License Agreement in the form set forth as Schedule B to this Agreement (the “Patent and Technology License Agreement”) pursuant to which SELLER will license to PURCHASER certain technology and U.S. patents relating to local, mobile and cloud-based biometric security systems and methods of providing same.

NOW, THEREFORE,in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows:

1.           PURCHASE OF THE ASSETS

A.  Upon the terms and subject to the conditions of this Agreement, at Closing (as defined herein), SELLER shall sell, transfer and assign to PURCHASER, and PURCHASER shall purchase and acquire from SELLER, all right, title and interest owned by SELLER, throughout the world in and to all of the Assets.  The Assets comprise the following properties:

1.  The Trademark Rights identified more fully in the attached Schedule A.

2.  The Software identified more fully in the attached Schedule A.

3.  The Domain Name identified more fully in the attached Schedule A.

2.  TERM

A.  This Agreement shall be effective as of the Effective Date and shall extend until Closing and transfer of the Assets to PURCHASER (the “Term”).  For the avoidance of doubt, the sale, transfer and assignment of the Assets from SELLER to PURCHSASER is permanent.

3. PURCHASE PRICE AND CLOSING

A.  Purchase Price.  Subject to the other provisions of this Agreement, at the Closing, PURCHASER shall pay to SELLER, for the transfer of the Assets, One Hundred Thousand Dollars ($100,000) (the “Purchase Price”), to be paid by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of LaserLock Technologies, Inc., equal to (x) $100,000 divided by (y) $0.045 and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

B.  Time and Place of the Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at such location as the Parties may designate in writing.

C.  Deliveries by SELLER at the Closing.  At the Closing, SELLER shall deliver to PURCHASER the following:

1.  The Patent and Technology License Agreement, duly executed by SELLER.

2.  Assignment of the Trademark Rights, substantially in the form attached as Schedule C, in recordable form and duly executed by SELLER;

3.  Assignment of the Software, substantially in the form attached as Schedule D and duly executed by SELLER;

4.  Assignment of the Domain Name, substantially in the form attached as Schedule E and duly executed by SELLER;

5.  Such other documents and instruments as PURCHASER may reasonably request and SELLER can reasonably and lawfully provide as shall be necessary in connection with transactions contemplated hereby.

D.  Deliveries by PURCHASER at the Closing.  At the Closing, PURCHASER shall deliver to SELLER the following:

1.  The Purchase Price.

2.  The Patent and Technology License Agreement, duly executed by PURCHASER.

3.  Such other documents and instruments as SELLER may reasonably request and PURCHASER can reasonably and lawfully provide as shall be necessary in connection with transactions contemplated hereby.

4. REPRESENTATIONS AND WARRANTIES

A.  SELLER represents and warrants that, to the best of its knowledge and belief, it is the owner of the entire right, title, and interest in and to the Assets; that it has the right and power to sell, transfer and assign the Assets to PURCHASER; and that there are no other agreements with any other party in conflict with such sale, transfer and assignment of the Assets to PURCHASER.

 

ASSET PURCHASE AGREEMENT Page 2 of 7

B.  PURCHASER acknowledges and agrees that the Assets are sold “AS IS”.

C.  SELLER EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE ASSETS, INCLUDING THE SOFTWARE AND DOCUMENTATION, INCLUDING ANY WARRANTIES OF MERCHANTABILITY AND/OR FITNESS FOR ANY PARTICULAR PURPOSE, AND WARRANTIES OF PERFORMANCE, AND ANY WARRANTY THAT MIGHT OTHERWISE ARISE FROM COURSE OF DEALING OR USAGE OF TRADE. NO WARRANTY IS EITHER EXPRESS OR IMPLIED WITH RESPECT TO THE USE OF THE ASSETS, INCLUDING THE SOFTWARE AND DOCUMENTATION. Under no circumstances shall SELLER be liable for incidental, special, indirect, direct or consequential damages or loss of profits, interruption of business, or related expenses which may arise from use of Assets, including the Software or documentation, including but not limited to those resulting from defects in software and/or documentation, or loss or inaccuracy of data of any kind.

D.  PURCHASER ACKNOWLEDGES AND AGREES THAT THE CONSIDERATION WHICH SELLER IS CHARGING HEREUNDER DOES NOT INCLUDE ANY CONSIDERATION FOR ASSUMPTION BY SELLER OF THE RISK OF PURCHASER’S CONSEQUENTIAL OR INCIDENTAL DAMAGES WHICH MAY ARISE IN CONNECTION WITH PURCHASER’S USE OF THE ASSETS, INCLUDING THE SOFTWARE, DERIVATIVE PRODUCTS AND DOCUMENTATION. ACCORDINGLY, PURCHASER AGREES THAT SELLER SHALL NOT BE RESPONSIBLE TO PURCHASER FOR ANY LOSS-OF-PROFIT, INDIRECT, INCIDENTAL, SPECIAL, OR CONSE-QUENTIAL DAMAGES ARISING OUT OF THE SALE, LICENSING OR USE OF THE ASSETS, INCLUDING THE SOFTWARE, DERIVATIVE PRODUCTS OR DOCUMENTATION. Any provision herein to the contrary notwithstanding, the maximum liability of SELLER to any person, firm or corporation whatsoever arising out of or in the connection with any sale, license, use or other employment of any Assets, including Software delivered to PURCHASER hereunder, whether such liability arises from any claim based on breach or repudiation of contract, warranty, tort or otherwise, shall in no case exceed the lesser of the Purchase Price or the actual price paid to SELLER by PURCHASER for the Assets, including the Software, whose license, use, or other employment gives rise to the liability. The essential purpose of this provision is to limit the potential liability of SELLER arising out of this Agreement. The parties acknowledge that the limitations set forth in this Section are integral to the amount of consideration levied in connection with the sale of the Assets, including the Software and any services rendered hereunder and that, were SELLER to assume any further liability other than as set forth herein, such consideration would of necessity be set substantially higher.

5.  TERMINATION

A.  Termination.  Either party may terminate this Agreement prior to Closing upon written notice to the other party.

ASSET PURCHASE AGREEMENT Page 3 of 7

B.  Effect of Termination.  In the event of termination of this Agreement pursuant to Section 5.A., all obligations under this Agreement (other than those provisions set forth in Section 6) shall terminate and shall be of no further force or effect.

6.  CONFIDENTIALITY

A.  “Confidential Information” shall mean any confidential technical data, trade secret, know-how or other confidential information disclosed by any party hereunder in writing, orally, or by drawing or other form and which shall be marked by the disclosing party as “Confidential” or “Proprietary.” If such information is disclosed orally, or through demonstration, in order to be deemed Confidential Information, it must be specifically designated as being of a confidential nature at the time of disclosure and reduced in writing and delivered to the receiving party within thirty (30) days of such disclosure.

B.  Notwithstanding the foregoing, Confidential Information shall not include information which: (i) is known to the receiving party at the time of disclosure or becomes known to the receiving party without breach of this Agreement; (ii) is or becomes publicly known through no wrongful act of the receiving party or any subsidiary of the receiving party; (iii) is rightfully received from a third party without restriction on disclosure; (iv) is independently developed by the receiving party or any of its subsidiary; (v) is furnished to any third party by the disclosing party without restriction on its disclosure; (vi) is approved for release upon a prior written consent of the disclosing party; (vii) is disclosed pursuant to judicial order, requirement of a governmental agency or by operation of law.

C.  The receiving party agrees that it will not disclose any Confidential Information to any third party and will not use Confidential Information of the disclosing party for any purpose other than for the performance of the rights and obligations hereunder during the term of this Agreement and for a period of five (5) years thereafter, without the prior written consent of the disclosing party. The receiving party further agrees that Confidential Information shall remain the sole property of the disclosing party and that it will take all reasonable precautions to prevent any unauthorized disclosure of Confidential Information by its employees. No license shall be granted by the disclosing party to the receiving party with respect to Confidential Information disclosed hereunder unless otherwise expressly provided herein.

D.  Upon the request of the disclosing party, the receiving party will promptly return all Confidential Information furnished hereunder and all copies thereof.

E.  The Parties agree that all publicity and public announcements concerning the formation and existence of this Agreement shall be jointly planned and coordinated by and among the Parties. Neither party shall disclose any of the specific terms of this Agreement to any third party without the prior written consent of the other party, which consent shall not be withheld unreasonably. Notwithstanding the foregoing, any party may disclose information concerning this Agreement as required by the rules, orders, regulations, subpoenas or directives of a court, government or governmental agency, after giving prior notice to the other party.

ASSET PURCHASE AGREEMENT Page 4 of 7

F.  If a party breaches any of its obligations with respect to confidentiality and unauthorized use of Confidential Information hereunder, the non-breaching party shall be entitled to equitable relief to protect its interest therein, including but not limited to injunctive relief, as well as money damages notwithstanding anything to the contrary contained herein.

G.  Except as otherwise set forth in this Agreement, neither party will make any public statement, press release or other announcement relating to the terms of or existence of this Agreement without the prior written approval of the other.

7.  INDEMNITY

A.  PURCHASER agrees to defend, indemnify and hold SELLER and its officers, directors, agents, and employees, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against SELLER based on the manufacture, sale, use or license by PURCHASER of products and services embodying the Assets, including the Software, including, but not limited to, actions founded on product liability.

B.  SELLER agrees to defend, indemnify and hold PURCHASER and its officers, directors, agents, sublicensees, employees, and customers, harmless against all costs, expenses, and losses (including reasonable attorney fees and costs) incurred through claims of third parties against PURCHASER based on a breach by SELLER of any representation and warranty made in this Agreement, including but not limited to claims by a third party of infringement based on the manufacture, use, or sale of products and services embodying or employing the Assets, including the Software, or actions founded on product liability based on the sale of products and services embodying the Assets, including the Software, provided, however, any provision herein to the contrary notwithstanding, the maximum liability of SELLER to any person, firm or corporation whatsoever arising out of or in the connection with any sale, license, use or other employment of any Assets, including Software delivered to PURCHASER hereunder, whether such liability arises from any claim based on breach or repudiation of contract, warranty, tort or otherwise, shall in no case exceed the actual price paid to SELLER by PURCHASER for the Assets, including the Software, whose sale, license, use, or other employment gives rise to the liability. The essential purpose of this provision is to limit the potential liability of SELLER arising out of this Agreement. The parties acknowledge that the limitations set forth in this Section are integral to the amount of consideration levied in connection with the sale of the Assets, including the Software and any services rendered hereunder and that, were SELLER to assume any further liability other than as set forth herein, such consideration would of necessity be set substantially higher.

8.  NOTICE AND PAYMENT

A.  Any notice required to be given under this Agreement shall be in writing and delivered personally to the other designated party at the above-stated address or mailed by certified, registered or Express mail, return receipt requested or by Federal Express.

B. Either party may change the address to which notice or payment is to be sent by written notice to the other under any provision of this paragraph.

ASSET PURCHASE AGREEMENT Page 5 of 7

9.  JURISDICTION/DISPUTES

This Agreement shall be governed in accordance with the laws of the State of Texas.  All disputes under this Agreement shall be resolved by litigation in the courts  in Morris County in the State of Texas including the federal courts therein and the Parties all consent to the jurisdiction of such courts, agree to accept service of process by mail, and hereby waive any jurisdictional or venue defenses otherwise available to it.  With respect to litigation in the federal courts where multiple districts within the State of Texas have jurisdiction, the Parties agree to jurisdiction in the Eastern District of Texas.

10.  AGREEMENT BINDING ON SUCCESSORS

The provisions of the Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, their heirs, administrators, successors and assigns.

11.  ASSIGNABILITY

Neither party may assign this Agreement or the rights and obligations thereunder to any third party without the prior express written approval of the other party which shall not be unreasonably withheld.

12.  WAIVER

No waiver by either party of any default shall be deemed as a waiver of prior or subsequent default of the same or other provisions of this Agreement.

13.  SEVERABILITY

If any term, clause or provision hereof is held invalid or unenforceable by a court of competent jurisdiction, such invalidity shall not affect the validity or operation of any other term, clause or provision and such invalid term, clause or provision shall be deemed to be severed from the Agreement.

14.  INTEGRATION

This Agreement constitutes the entire understanding of the Parties, and revokes and supersedes all prior agreements between the Parties and is intended as a final expression of their Agreement.  It shall not be modified or amended except in writing signed by the Parties hereto and specifically referring to this Agreement.  This Agreement shall take precedence over any other documents which may conflict with this Agreement.

15.  COUNTERPARTS AND FACSIMILE SIGNATURES

This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. Facsimile execution and delivery of this Agreement by any of the Parties shall be legal, valid and binding execution and delivery of such document for all purposes.

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ASSET PURCHASE AGREEMENT Page 6 of 7

IN WITNESS WHEREOF, the Parties hereto, intending to be legally bound hereby, have each caused to be affixed hereto its or his/her hand and seal the day indicated.

VERIFYME, INC.			LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Claudio Ballard			By:	/s/ Norman A. Gardner
Title:		President		Title:		Chief Executive Officer
Date:		December 31, 2012		Date:		December 31, 2012

ASSET PURCHASE AGREEMENT Page 7 of 7

EX-10.22

Exhibit 10.22

TECHNOLOGY AND SERVICES AGREEMENT (ZAAH)

TECHNOLOGY AND SERVICES AGREEMENT (ZAAH), dated as of December 31, 2012 (this “Agreement”), by and between LaserLock Technologies, Inc. (“LaserLock”), a Nevada corporation, and Zaah Technologies, Inc. (“Zaah”).  In consideration of the premises and the mutual agreements and covenants hereinafter set forth, LaserLock and Zaah hereby agree as follows:

ARTICLE 1

DEFINITIONS

SECTION 1.01.  Definitions. As used in this Agreement, the following terms shall have the following meanings:

“Affiliate” means, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person.

“Common Stock” means the common stock, $0.001 par value per share, of LaserLock.

“Person” means any individual, partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity, as well as any syndicate or group that would be deemed to be a person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

“Warrants” means the warrants to purchase shares of Common Stock as set forth in Section 2.01.

ARTICLE 2

TRANSACTIONS

SECTION 2.01.  Consideration. In consideration of the transactions contemplated hereby, the parties hereto hereby agree that LaserLock shall pay to Zaah:

(a)           $450,000 on the date of this Agreement, consisting of $250,000 in cash and warrants to purchase 4,444,444 shares of Common Stock under a cashless exercise initially at an exercise price of $0.045 on the terms set forth under the warrants issued by LaserLock to Zaah under the Warrant, dated as of December 31, 2012.

(b)           $100,000, accrued in full as of the date of this Agreement, but payable in twelve (12) months from the date hereof to a designee of Zaah’s selection, with a right to convert (at Zaah’s sole discretion, from time to time at any time) to shares of Common Stock at the prevailing market price per share of Common Stock (which, as long as the Common Stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the Common Stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.)); and

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(c)           a commission of 10% of the revenue generated by any LaserLock transaction originated through the efforts of Zaah, as substantiated by a written agreement between LaserLock and Zaah, specifically referencing the transaction in which Zaah is entitled to such commission, payable by LaserLock to Zaah in cash.  Such payment shall be made on the earlier of (i) the date of the signing of such transaction, (ii) the date of the closing of the transaction, or (iii) any date on which any funds are paid to LaserLock in respect of such transaction.

SECTION 2.02.  Services. Zaah and LaserLock hereby agree that Zaah shall provide to LaserLock (a) twelve (12) months of technical support, (b) up to twelve (12) days of meetings annually between the respective management teams of LaserLock and Zaah, (c) updates to technology as agreed in writing between LaserLock and Zaah, and (d) twelve (12) months of technical hosting.

SECTION 2.03.  LaserLock Representations. LaserLock hereby represents and warrants to Zaah as follows:

(a)           LaserLock has all necessary corporate power and authority to enter into this Agreement, to carry out its obligations hereunder and to consummate the transactions contemplated hereby.  This Agreement has been duly executed and delivered by LaserLock, and (assuming due authorization, execution and delivery by Zaah of this Agreement) shall constitute a legal, valid and binding obligation of LaserLock, enforceable against LaserLock in accordance with its terms.

(b)           The execution, delivery and performance of this Agreement by LaserLock will not result in any acceleration of, or requirement to repay, convert or exchange any of the indebtedness of LaserLock.

(c)           The Warrants are duly authorized by LaserLock.  The shares of Common Stock issuable upon exercise of the Warrants or otherwise issuable to Zaah in connection with the transactions contemplated hereby have been duly authorized and validly reserved for issuance and, upon issuance, will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on transfer other than restrictions on transfer that result from applicable state and federal securities laws.

SECTION 2.04.  Further Action. Each party hereto shall use its reasonable best efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things necessary, proper or advisable under applicable law, and execute and deliver such documents and other papers as may be reasonably required to carry out the provisions of this Agreement and consummate and make effective the transactions contemplated by this Agreement.

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ARTICLE 3

MISCELLANEOUS

SECTION 3.01.  Amendment; Waiver. This Agreement may not be amended, supplemented, modified or restated except by an instrument in writing signed by, or on behalf of, the parties hereto or by a waiver in accordance with this Section 3.01.  Any extension or waiver to any obligations in this Agreement shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby.  Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement.  The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

SECTION 3.02.  Confidentiality. The parties hereto covenant and agree that they will not, and they will cause their principals, Affiliates, officers and other personnel and authorized representatives not to, use information concerning another party’s business, properties and personnel received in the course of negotiating this Agreement and investigation in connection with this transaction and will hold such information (and will cause the aforesaid persons to hold such information) in confidence until such information otherwise becomes publicly available or as may be required by applicable Law.

SECTION 3.03.  Expenses. Except as otherwise specified in this Agreement, each party hereto shall bear its own costs and expenses incurred in connection with this Agreement, including the fees and expenses of their respective accountants and legal counsel.

SECTION 3.04.  Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given or made (and shall be deemed to have been duly given or made upon receipt) by delivery in person, by an internationally recognized overnight courier service, by telecopy, facsimile or registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 3.04):

(a)           if to LaserLock:

LaserLock Technologies, Inc.

837 Lindy Lane

Bala Cynwyd, PA 19004

Facsimile:  (610) 668-2771

Attention:  Norman Gardner

Attention:  Neil Alpert

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with a copy to:

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103-2921

Facsimile:  (215) 963-5001

Attention:  Justin W. Chairman, Esq.

(b)           if to Zaah:

Zaah Technologies, Inc.

171 Milbar Blvd.

Farmingdale, NY 11735

Facsimile:  (631) 873-2050

SECTION 3.05.  Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible.

SECTION 3.06.  Assignment. This Agreement may not be assigned by the parties hereto by operation of law or otherwise.

SECTION 3.07.  Third Party Beneficiaries and Transfers. Except in respect of VerifyMe, Inc., a Texas corporation, which the parties hereto acknowledge as an intended third-party beneficiary of this Agreement, this Agreement shall be binding upon and inure solely to the benefit of the parties hereto and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

SECTION 3.08.  Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida.  The parties hereto hereby (a) submit to the exclusive jurisdiction of any state or federal court sitting in Broward County, Florida for the purpose of any action arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the above named courts, that its property is exempt or immune from attachment or execution, that the action is brought in an inconvenient forum, that the venue of the action is improper, or that this Agreement or the transactions contemplated by this Agreement may not be enforced in or by any of the above named courts.

SECTION 3.09.  Waiver of Jury Trial. Each of the parties hereto hereby irrevocably waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the Ancillary Agreements.  Each of the parties hereto (a) certifies that no representative of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the Ancillary Agreements, as applicable, by, among other things, the mutual waivers and certifications in this Section 3.09.

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SECTION 3.10.  Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and undertakings, both written and oral, between LaserLock and Zaah with respect to the subject matter hereof.

SECTION 3.11.  Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.

SECTION 3.12.  Public Announcements. Subject to its obligations under Law (including requirements of stock exchanges and other similar regulatory bodies and the requirements of the Exchange Act), no party hereto shall make any announcement regarding the entering into of this Agreement or the Closing to the financial community, governmental entities, employees, customers or the general public without the prior consent of the other party, which shall not be unreasonably withheld; provided, that if a party hereto is required by any such obligations under Law to make any such announcement as contemplated by this Section 3.12, the parties hereto shall cooperate with each other regarding the contents and timing of any such announcement, and the non-announcing party shall have the opportunity to review and comment upon the language of the proposed announcement in advance of public disclosure.  Any such comments shall be considered in good faith by the announcing party.

SECTION 3.13.  Termination. This Agreement shall terminate five (5) years from the date hereof.

SECTION 3.14.  Rules of Interpretation. In this Agreement, except to the extent otherwise provided or that the context otherwise requires: (a) when a reference is made in this Agreement to an Article, Section, Exhibit or Schedule, such reference is to an Article or Section of, or an Exhibit or Schedule to, this Agreement; (b) the table of contents and headings for this Agreement are for reference purposes only and do not affect in any way the meaning or interpretation of this Agreement; (c) whenever the words “include,” “includes” or “including” are used in this Agreement, they are deemed to be followed by the words “without limitation”; (d) the words “hereof,” “herein” and “hereunder” and words of similar import, when used in this Agreement, refer to this Agreement as a whole and not to any particular provision of this Agreement; (e) all terms defined in this Agreement have the defined meanings when used in any certificate or other document delivered or made available pursuant hereto, unless otherwise defined therein; (f) the definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (g) references to a Person are also to its successors and permitted assigns; and (h) references to sums of money are expressed in lawful currency of the United States of America, and “$” refers to U.S. dollars.

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers or other representatives thereunto duly authorized, as of the date first above written.

LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Norman A. Gardner
	Name: Norman A. Gardner
	Title:  Chief Executive Officer

ZAAH TECHNOLOGIES, INC.
By:	/s/  Sandy Fliderman
	Name:  Sandy Fliderman
	Title:  CTO

[Signature Page to Services Agreement (Zaah)]

EX-10.23

Exhibit 10.23

Employment Agreement

This Employment Agreement (this Agreement) is made and entered into as of October 8, 2012 (the Effective Date) by and between NORMAN GARDNER, a resident of Bala Cynwyd, PA (Executive), and LASERLOCK TECHNOLOGIES, INC., a Nevada corporation (the Company).

Recitals

A.           The Company desires to employ as Vice Chairman of the Board and Chief Executive Officer of the Company to serve as an executive reporting directly to its Board of Directors.

B.           Executive has valuable leadership, management, and other skills necessary to serve as Chief Executive Officer of the Company.

C.           The Company desires to employ Executive, and Executive desires to be employed by the Company, as its Chief Executive Officer on the terms and conditions set forth herein.

Agreement

Therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE ONE
Employment; Term

1.1     Employment. The Company hereby employs Executive, and Executive hereby agrees to be employed by the Company, as Chief Executive Officer of the Company. Executive’s duties shall be the duties of a chief executive officer of a company of similar size and he shall be responsible for the overall strategic direction of the Company.

1.2     Term. Executive’s employment shall commence on the Effective Date and continue for three years thereafter (the Employment Period), subject to renewal for subsequent, consecutive one-year periods upon the mutual agreement of the parties.

ARTICLE TWO
Duties

2.1     Time and Efforts. Subject to Article Seven, Executive agrees to devote his full time and efforts during the Employment Period to the business of the Company and its affiliates, if any, and to serve as a Director and Vice Chairman of the Board of the Company, if elected as such.

2.2     Nature of Duties. Executive shall perform his duties faithfully, diligently, and to the best of his abilities during the Employment Period, both in his capacity as Chief Executive Officer of the Company and, if elected, as a Director of the Board of the Company.

ARTICLE THREE

Compensation

  3.1        Salary. The Company shall pay to Executive an annual salary during the Employment Period (the Salary) as follows:

   3.1.1     A annual sum of Two Hundred Thousand Dollars ($200,000) payable in weekly or semi-monthly installments;

   3.1.2     For the second year of the Employment Period, the minimum sum of Two Hundred Thousand Dollars ($200,000) payable in weekly or semi-monthly installments. The compensation committee of the Board of Directors will determine the appropriate increase in salary; and

   3.1.3.    For the third year of the Employment Period, the minimum sum of Two Hundred Thousand Dollars ($200,000) payable in weekly or semi-monthly installments.   The compensation committee of the Board of Directors will determine the appropriate increase in salary.

  3.2        Bonus. In addition to the Salary, the Company shall pay to Executive a bonus (with respect to any fiscal year of the Company during the Employment Period in which the Company’s net income before taxes, as determined solely by an independent accounting firm engaged by the Company, exceeds expectations as set forward by the Company’s business plan). The Compensation Committee of the Board of Directors shall determine the amount of such bonus at its first meeting of each fiscal year and shall promptly communicate such expectations and amount to Executive.

   3.2.1     Once the Company becomes profitable, the compensation committee of the Board of Directors will add vehicle reimbursements to the Executive’s compensation agreement; and

  3.3        Stock Option Grant. In addition to the Salary and Bonuses, the Company shall, upon full execution of this Agreement, issue to Executive the option to purchase five percent (5%) of the shares of Common Stock of the Company at the same price as the offering ($0.05) upon full dilution and those shares will vest immediately.

ARTICLE FOUR

Expenses

  4.1       Expenses. During the Employment Period, the Company shall pay all reasonable and documented business-related expenses incurred by Executive in furtherance of or in connection with the business of the Company or any of its affiliates, whether in his capacity as Chief Executive Officer of the Company or as a Director of the Board of the Company.

ARTICLE FIVE

Non-Competition; Non-Solicitation

  5.1        Non-Competition. Executive agrees that for so long as this Agreement is in full force and effect, Executive will not, directly or indirectly, as a partner, member, stockholder, employee, officer, or director, or in any other capacity, engage or have a financial interest in any business that is Competitive to the business of the Company or its affiliates, except that nothing contained herein shall preclude Executive from purchasing or owning stock in any business that is Competitive to the business of the Company if such stock does not exceed five percent (5%) of the issued and outstanding capital stock. The term “Competitive” means involves the production, manufacture, or distribution of any product similar to a product produced, manufactured, or distributed by the Company or any of its affiliates. Executive agrees that the restriction set forth in this Section 5.1 is a reasonable restriction to protect the Company’s legitimate business interests.

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  5.2        Non-Solicitation. To the extent permitted by law, Executive shall not, for a period of 12 months following the termination of this Agreement any reason, solicit, induce, recruit, or encourage, either directly or indirectly, any person who then is or who was at any time in the preceding six month period an employee of the Company to leave the Company’s employment or accept any other employment or independent contractor position with Executive or any other person or entity.

ARTICLE SIX

Confidentiality

  6.1        Confidentiality. Executive shall not disclose to any third party during the Employment Period or thereafter, except as necessary in the ordinary course of the business of the Company or any of its affiliates, any Company proprietary information, technical data, trade secrets, or know-how of any nature whatsoever, including research, product plans, products, services, customer lists, customers, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, data, engineering, marketing, financial or other business information disclosed by the Company or otherwise obtained by Executive in connection with his employment with the Company (collectively, Confidential Information). The term Confidential Information does not include information that has become publicly known and generally available through no wrongful act of Executive. If Executive is required by law to disclose any Confidential Information, Executive agrees to give the Company prompt written notice thereof and to provide the Company with reasonable assistance in obtaining an order to protect the Confidential Information from public disclosure.

ARTICLE SEVEN
Benefits

  7.1        Generally.  Executive shall be  eligible to receive benefits,  including health insurance, dental insurance, vision insurance, life insurance, disability insurance, and retirement plans, generally available to employees of the Company in accordance with the terms and eligibility requirements of the Company’s benefit plans, which may be modified, suspended, or terminated by the Company in its sole discretion.  The Executive will also be entitled to five weeks of paid six leave per calendar year.   Additionally, should any legal matters arise in the Executive’s capacity as Chief Executive Officer of the Company or as a Director of the Board of the Company, all legal expenses will be paid by the Company.

  7.2       Vacation. Executive shall be entitled to five weeks of vacation per calendar year, which may be taken consecutively or otherwise, at Executive’s option. Any unused vacation in one calendar year shall carry over to the following calendar year.

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  7.3       Upon Death. If Executive dies during the Employment Period, the Company shall pay to his surviving spouse, or his estate in the event he has no surviving spouse, an amount equal to one year of his then-current Salary (the Death Benefit). Such payment shall be made in equal monthly installments over a period of one year from the date of Executive’s death. If Executive’s spouse survives him but dies before the Death Benefit is paid in full, then the balance of the Death Benefit shall be paid to Executive’s estate in one lump sum. This Section 7.3 shall survive the termination of this Agreement in accordance with Section 8.1.

ARTICLE EIGHT

Termination

  8.1        Upon Death. This Agreement shall automatically terminate upon Executive’s death.

  8.2       Upon Disability. If Executive becomes physically or mentally incapable of performing his duties under this Agreement for more than 120 days during the Employment Period, the Company shall have the right, upon 30 days’ prior written notice, to terminate this Agreement; provided that if Executive becomes physically and mentally capable of performing his duties under this Agreement during such 30-day period then he shall be entitled to resume his duties under this Agreement as though such notice had never been given. If the Company terminates the Agreement in accordance with this Section 8.2, the Company shall, upon the effectiveness of such termination, pay to Executive an amount equal to fifty percent (50%) of Executive’s then-current Salary in one lump sum within 30 days following the effective date of such termination.

  8.3        For Cause. The Company may, in its sole discretion, terminate this Agreement if: (i) Executive breaches his obligations under the terms of this Agreement and such breach continues for 30 days following written notice of such breach from the Company;  or (ii) Executive commits an act of fraud or moral turpitude during the Employment Period, or (iii) Executive breaches his duty of care or loyalty to the Company.

  8.4       For Convenience: The Company and Executive may terminate this Agreement for any reason whatsoever upon 60 days’ prior written notice to the other party; provided that, if the Company terminates this Agreement for convenience, the Company shall pay to Executive the Salary for the remainder of the Employment Period in one lump sum within 30 days following the effective date of such termination and, subject to applicable law and the terms and conditions of any applicable benefit plan, shall continue to provide benefits to Executive pursuant to Section 7.1 through the end of the Employment Period.

  8.5        Effect. If this Agreement is terminated:

   (i)        except pursuant to Section 8.1, Executive may, at his option, purchase any life insurance policies on his life held by the Company for the cash value thereof or, if such policies have no cash value, upon payment of One Hundred Dollars ($100.00);

   (ii)        for any reason, the Salary shall cease to accrue as of the effective date of such termination and, except as otherwise set forth herein, all benefits shall immediately terminate; provided that Executive shall receive, through the effective date of such termination, (w) all accrued but unpaid Salary, (x) all earned but unpaid Bonuses, (y) the cash value of all accrued but unused vacation, and (z) all accrued but unpaid benefits; and

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   (iii)      for any reason (and upon expiration of this Agreement), Executive shall immediately deliver to the Company (and will not keep in his possession, recreate, or deliver to anyone else) (i) any and all software, devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents, or other intellectual property related to the Company’s business; and (ii) any and all reproductions, excerpts, or summaries of any of the foregoing developed by Executive pursuant to his employment with the Company or otherwise belonging to the Company.

ARTICLE NINE
Company Representations, Warranties, and Covenants

  9.1        Representations  and  Warranties.   The  Company represents  and  warrants to Executive that the Company’s execution and delivery of, and performance under this Agreement have been duly approved by the Company’s Board of Directors and do not conflict with any agreement to which it is a party, and that the person executing this Agreement on behalf of the Company is duly authorized to do so.

  9.2        Covenant as to Board Nomination. Except as prohibited or restricted by the Company’s bylaws, the Company shall, at each Company shareholder meeting in which Company directors are elected during the Employment Period, nominate Executive as a Director of the Company to represent the management of the Company and support Executive’s nomination in the Company’s annual proxy statement.

ARTICLE TEN
Arbitration; Equitable Relief

  10.1      Arbitration. Subject to Section 10.2, all disputes or controversies arising out of or relating to this Agreement, shall be settled by arbitration to be held in the District of Columbia in accordance with the Employment Rules of the American Arbitration Association then in effect. The arbitrator may grant injunctions or other relief in any such dispute or controversy. The decision of the arbitrator shall be final, conclusive, and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court of competent jurisdiction. The prevailing party shall pay the costs and expenses of such arbitration except that each party shall separately pay its counsel fees and expenses.

  10.2      Equitable Remedies. Each party agrees that it would be impossible or inadequate to measure and calculate the damages from any breach of Articles Two, Five, or Six and, that upon such breach or threatened breach, the non-breaching party shall be entitled, in addition to all other remedies at law or in equity, to seek injunctive relief in any court of competent jurisdiction.

ARTICLE ELEVEN
Miscellaneous

  11.1      Bind and Inure. This Agreement shall inure to the benefit of and be binding upon Executive and the Company, and their respective heirs, executors, personal representatives, successors and permitted assigns.

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  11.2      Assignment. Executive may not assign any of his rights or obligations under this Agreement. The Company may assign any of its rights and obligations under this Agreement.

  11.3      Severability. If one or more of the provisions in this Agreement are deemed invalid, illegal, or unenforceable, then the remaining provisions will continue in full force and effect and, if legally permitted, such offending provision or provisions shall be replaced with an enforceable provision or enforceable provisions that as nearly as possible effects the parties’ intent.

  11.4      Entire Agreement: Amendment. The parties agree that this Agreement contains the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements, whether oral or in writing, between the parties with respect to the subject matter hereof. This Agreement cannot be amended, modified, or supplemented in any respect except by written agreement executed by both parties.

              11.5      Governing Law. This Agreement shall be construed according to the laws of the State of Nevada without regard to its conflicts of law principles.

              11.6     Counterparts. This Agreement may be executed in two counterparts each of which shall be an original and both of which, when taken together, shall constitute one and the same instrument. Any counterpart delivered by facsimile or portable document format shall be an original.

  In witness whereof, the parties hereto have executed this Agreement as of the Effective Date.

Date:

/s/ Norman Gardner

Norman Gardner

LASERLOCK TECHNOLOGIES, INC
By:	/s/ Michael Prevot
Name:        Michael Prevot
Title:          Director

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EX-10.24

Exhibit 10.24

Employment Agreement

 This Employment Agreement (this Agreement) is made and entered into as of October 8, 2012 (the Effective Date) by and between NEIL S. ALPERT, a resident of Washington, DC (Executive), and LASERLOCK TECHNOLOGIES, INC., a Nevada corporation (the Company).

Recitals

A.            The Company desires to employ a President and Chief Operating Officer of the Company to serve as an executive reporting directly to its Board of Directors.

B.            Executive has valuable leadership, management, and other skills necessary to serve as President and Chief Operating Officer of the Company.

C.            The Company desires to employ Executive, and Executive desires to be employed by the Company, as its President and Chief Operating Officer on the terms and conditions set forth herein.

Agreement

 Therefore, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

ARTICLE ONE

Employment; Term

 1.1         Employment. The Company hereby employs Executive, and Executive hereby agrees to be employed by the Company, as President and Chief Operating Officer of the Company. Executive’s duties shall be the duties of a president and chief operating officer of a company of similar size and he shall be responsible for the finances, leadership, hiring and firing of staff and day-to-day management of the Company.

 1.2          Term. Executive’s employment shall commence on the Effective Date and continue for three years thereafter (the Employment Period), subject to renewal for subsequent, consecutive one-year periods upon the mutual agreement of the parties.

ARTICLE TWO

Duties

 2.1         Time and Efforts. Subject to Article Seven, Executive agrees to devote his full time and efforts during the Employment Period to the business of the Company and its affiliates, if any, and to serve as a Director of the Board of the Company, if elected as such.

 2.2         Nature of Duties. Executive shall perform his duties faithfully, diligently, and to the best of his abilities during the Employment Period, both in his capacity as President and Chief Operating Officer of the Company and, if elected, as a Director of the Board of the Company.

ARTICLE THREE

Compensation

 3.1           Salary. The Company shall pay to Executive an annual salary during the Employment Period (the Salary) as follows:

 3.1.1        A annual sum of Two Hundred Thousand Dollars ($200,000) payable in weekly or semi-monthly installments;

 3.1.2        For the second year of the Employment Period, the minimum sum of Two Hundred Thousand Dollars ($200,000) payable in weekly or semi-monthly installments. The compensation committee of the Board of Directors will determine the appropriate increase in salary; and

 3.1.3        For the third year of the Employment Period, the minimum sum of Two Hundred Thousand Dollars ($200,000) payable in weekly or semi-monthly installments. The compensation committee of the Board of Directors will determine the appropriate increase in salary.

 3.2         Bonus. In addition to the Salary, the Company shall pay to Executive a bonus (with respect to any fiscal year of the Company during the Employment Period in which the Company’s net income before taxes, as determined solely by an independent accounting firm engaged by the Company, exceeds expectations as set forward by the Company’s business plan). The Compensation Committee of the Board of Directors shall determine the amount of such bonus at its first meeting of each fiscal year and shall promptly communicate such expectations and amount to Executive.

 3.2.1        Once the Company becomes profitable, the compensation committee of the Board of Directors will add vehicle reimbursements to the Executive’s compensation agreement; and

 3.2.2         Once the Company completes its $3-$5 million dollar investment period, the Company shall pay to the Executive a bonus of $25,000 in recognition for his unpaid efforts in service to the Company.

 3.3          Stock Option Grant. In addition to the Salary and Bonuses, the Company shall, upon full execution of this Agreement, issue to Executive the option to purchase five percent (5%) of the shares of Common Stock of the Company at the same price as the offering ($0.05) upon full dilution and those shares will vest immediately.

ARTICLE FOUR

Expenses

 4.1          Expenses. During the Employment Period, the Company shall pay all reasonable and documented business-related expenses incurred by Executive in furtherance of or in connection with the business of the Company or any of its affiliates, whether in his capacity as President and Chief Operating Officer of the Company or as a Director of the Board of the Company.

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ARTICLE FIVE

Non-Competition; Non-Solicitation

 5.1          Non-Competition. Executive agrees that for so long as this Agreement is in full force and effect, Executive will not, directly or indirectly, as a partner, member, stockholder, employee, officer, or director, or in any other capacity, engage or have a financial interest in any business that is Competitive to the business of the Company or its affiliates, except that nothing contained herein shall preclude Executive from purchasing or owning stock in any business that is Competitive to the business of the Company if such stock does not exceed five percent (5%) of the issued and outstanding capital stock. The term “Competitive” means involves the production, manufacture, or distribution of any product similar to a product produced, manufactured, or distributed by the Company or any of its affiliates. Executive agrees that the restriction set forth in this Section 5.1 is a reasonable restriction to protect the Company’s legitimate business interests.

 5.2          Non-Solicitation. To the extent permitted by law, Executive shall not, for a period of 12 months following the termination of this Agreement any reason, solicit, induce, recruit, or encourage, either directly or indirectly, any person who then is or who was at any time in the preceding six month period an employee of the Company to leave the Company’s employment or accept any other employment or independent contractor position with Executive or any other person or entity.

ARTICLE SIX
Confidentiality

 6.1          Confidentiality. Executive shall not disclose to any third party during the Employment Period or thereafter, except as necessary in the ordinary course of the business of the Company or any of its affiliates, any Company proprietary information, technical data, trade secrets, or know-how of any nature whatsoever, including research, product plans, products, services, customer lists, customers, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, data, engineering, marketing, financial or other business information disclosed by the Company or otherwise obtained by Executive in connection with his employment with the Company (collectively, Confidential Information). The term Confidential Information does not include information that has become publicly known and generally available through no wrongful act of Executive. If Executive is required by law to disclose any Confidential Information, Executive agrees to give the Company prompt written notice thereof and to provide the Company with reasonable assistance in obtaining an order to protect the Confidential Information from public disclosure.

ARTICLE SEVEN

Benefits

 7.1          Generally. Executive shall be eligible to receive benefits, including health insurance, dental insurance, vision insurance, life insurance, disability insurance, and retirement plans, generally available to employees of the Company in accordance with the terms and eligibility requirements of the Company’s benefit plans, which may be modified, suspended, or terminated by the Company in its sole discretion. The Executive will also be entitled to five weeks of paid six leave per calendar year. Additionally, should any legal matters arise in the Executive’s capacity as President and Chief Operating Officer of the Company or as a Director of the Board of the Company, all legal expenses will be paid by the Company.

 7.2          Vacation. Executive shall be entitled to five weeks of vacation per calendar year, which may be taken consecutively or otherwise, at Executive’s option. Any unused vacation in one calendar year shall carry over to the following calendar year.

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 7.3          Upon Death. If Executive dies during the Employment Period, the Company shall pay to his surviving spouse, or his estate in the event he has no surviving spouse, an amount equal to one year of his then-current Salary (the Death Benefit). Such payment shall be made in equal monthly installments over a period of one year from the date of Executive’s death. If Executive’s spouse survives him but dies before the Death Benefit is paid in full, then the balance of the Death Benefit shall be paid to Executive’s estate in one lump sum. This Section 7.3 shall survive the termination of this Agreement in accordance with Section 8.1.

ARTICLE EIGHT

Termination

 8.1           Upon Death. This Agreement shall automatically terminate upon Executive’s death.

 8.2          Upon Disability. If Executive becomes physically or mentally incapable of performing his duties under this Agreement for more than 120 days during the Employment Period, the Company shall have the right, upon 30 days’ prior written notice, to terminate this Agreement; provided that if Executive becomes physically and mentally capable of performing his duties under this Agreement during such 30-day period then he shall be entitled to resume his duties under this Agreement as though such notice had never been given. If the Company terminates the Agreement in accordance with this Section 8.2, the Company shall, upon the effectiveness of such termination, pay to Executive an amount equal to fifty percent (50%) of Executive’s then-current Salary in one lump sum within 30 days following the effective date of such termination.

 8.3         For Cause. The Company may, in its sole discretion, terminate this Agreement if: (i) Executive breaches his obligations under the terms of this Agreement and such breach continues for 30 days following written notice of such breach from the Company; or (ii) Executive commits an act of fraud or moral turpitude during the Employment Period, or (iii) Executive breaches his duty of care or loyalty to the Company.

 8.4          For Convenience: The Company and Executive may terminate this Agreement for any reason whatsoever upon 60 days’ prior written notice to the other party; provided that, if the Company terminates this Agreement for convenience, the Company shall pay to Executive the Salary for the remainder of the Employment Period in one lump sum within 30 days following the effective date of such termination and, subject to applicable law and the terms and conditions of any applicable benefit plan, shall continue to provide benefits to Executive pursuant to Section 7.1 through the end of the Employment Period.

 8.5           Effect. If this Agreement is terminated:

 (i)         except pursuant to Section 8.1, Executive may, at his option, purchase any life insurance policies on his life held by the Company for the cash value thereof or, if such policies have no cash value, upon payment of One Hundred Dollars ($100.00);

 (ii)       for any reason, the Salary shall cease to accrue as of the effective date of such termination and, except as otherwise set forth herein, all benefits shall immediately terminate; provided that Executive shall receive, through the effective date of such termination, (w) all accrued but unpaid Salary, (x) all earned but unpaid Bonuses, (y) the cash value of all accrued but unused vacation, and (z) all accrued but unpaid benefits; and

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(iii)      for any reason (and upon expiration of this Agreement), Executive shall immediately deliver to the Company (and will not keep in his possession, recreate, or deliver to anyone else) (i) any and all software, devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents, or other intellectual property related to the Company’s business; and (ii) any and all reproductions, excerpts, or summaries of any of the foregoing developed by Executive pursuant to his employment with the Company or otherwise belonging to the Company.

ARTICLE NINE

Company Representations, Warranties, And Covenants

 9.1          Representations and Warranties. The Company represents and warrants to Executive that the Company’s execution and delivery of, and performance under this Agreement have been duly approved by the Company’s Board of Directors and do not conflict with any agreement to which it is a party, and that the person executing this Agreement on behalf of the Company is duly authorized to do so.

 9.2          Covenant as to Board Nomination. Except as prohibited or restricted by the Company’s bylaws, the Company shall, at each Company shareholder meeting in which Company directors are elected during the Employment Period, nominate Executive as a Director of the Company to represent the management of the Company and support Executive’s nomination in the Company’s annual proxy statement.

ARTICLE TEN

Arbitration; Equitable Relief

10.1         Arbitration. Subject to Section 10.2, all disputes or controversies arising out of or relating to this Agreement, shall be settled by arbitration to be held in the District of Columbia in accordance with the Employment Rules of the American Arbitration Association then in effect. The arbitrator may grant injunctions or other relief in any such dispute or controversy. The decision of the arbitrator shall be final, conclusive, and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court of competent jurisdiction. The prevailing party shall pay the costs and expenses of such arbitration except that each party shall separately pay its counsel fees and expenses.

10.2        Equitable Remedies. Each party agrees that it would be impossible or inadequate to measure and calculate the damages from any breach of Articles Two, Five, or Six and, that upon such breach or threatened breach, the non-breaching party shall be entitled, in addition to all other remedies at law or in equity, to seek injunctive relief in any court of competent jurisdiction.

ARTICLE ELEVEN

Miscellaneous

11.1         Bind and Inure. This Agreement shall inure to the benefit of and be binding upon Executive and the Company, and their respective heirs, executors, personal representatives, successors and permitted assigns.

11.2         Assignment. Executive may not assign any of his rights or obligations under this Agreement. The Company may assign any of its rights and obligations under this Agreement.

5

11.3          Severability. If one or more of the provisions in this Agreement are deemed invalid, illegal, or unenforceable, then the remaining provisions will continue in full force and effect and, if legally permitted, such offending provision or provisions shall be replaced with an enforceable provision or enforceable provisions that as nearly as possible effects the parties’ intent.

11.4         Entire Agreement: Amendment. The parties agree that this Agreement contains the entire understanding and agreement between the parties with respect to the subject matter hereof and supersedes all prior understandings and agreements, whether oral or in writing, between the parties with respect to the subject matter hereof. This Agreement cannot be amended, modified, or supplemented in any respect except by written agreement executed by both parties.

11.5          Governing Law. This Agreement shall be construed according to the laws of the State of Nevada without regard to its conflicts of law principles.

11.6         Counterparts. This Agreement may be executed in two counterparts each of which shall be an original and both of which, when taken together, shall constitute one and the same instrument. Any counterpart delivered by facsimile or portable document format shall be an original.

In witness whereof, the parries hereto have executed this Agreement as of the Effective Date.

/s/ Neil S. Alpert
Neil S. Alpert
LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Michael Prevot
Name:        Michael Prevot
Title:          Director

6

EX-10.25

Exhibit 10.25

Scott A. McPherson

319 North Woodmont Drive

Downingtown, PA 19335

(484) 888-8171

December 14, 2012

Mr. Neil Alpert

President and Chief Executive Officer

LaserLock Technologies, Inc.

837 Lindy Lane

Bala Cynwyd, PA 19004

Dear Mr. Alpert:

This letter constitutes an agreement between LaserLock Technologies, Inc. and Scott A. McPherson, under which I will assist you with your financial reporting as your Chief Financial Officer.

The professional consulting services I currently expect to provide include the following:

●         Update QuickBooks files from books of original entry.

●         Assistance with the preparation of quarterly and annual financial statements that will be used in Securities and Exchange Commission filings and also submitted to your auditors for their audit and/or review. We will not audit or review these financial statements and, accordingly, will not express an opinion or any other form of assurance on the financial statements.

●         Assist management in assembling schedules to assist the auditors with the quarterly reviews and year end audit.

●         The financial statements that are included are December 31, 2012, March 31, 2013, June 30, 2013, and September 30, 2013.

●         Preparation of corporate income tax returns for December 31, 2012 for LaserLock Technologies, Inc. and LL Security Products, Inc.

You are responsible for making all management decisions and performing all management functions, and for designating an individual with suitable skill, knowledge, or experience to oversee any bookkeeping services, tax services or other services I provide. You are responsible for evaluating the adequacy and results of the services performed and accepting responsibility for such services. You are responsible for establishing and maintaining internal controls, including monitoring ongoing activities.

LaserLock Technologies, Inc. -2-  December 14, 2012

None of these services can be relied on to disclose errors, fraud, or illegal acts that may exist. However, I will inform you of any material errors and of any evidence or information that comes to my attention during the performance of my procedures that fraud may have occurred. In addition, I will report to you any evidence or information that comes to my attention during the performance of my procedures regarding illegal acts that may have occurred, unless they are clearly inconsequential. I have no responsibility to identify and communicate deficiencies in your internal control as part of this engagement.

My engagement includes only the services specially described above and does not include services relative to any future mergers or acquisitions, option valuations or bringing XBRL or Edgarization of financial statements in-house. While these and other services are not included in my current engagement, I would be glad to discuss any future opportunities.

During the course of this engagement it may be necessary for me to prepare written reports that support my conclusions. These reports are to be used only in connection with this engagement and may not be published or used in any manner without the written consent of me.

It is understood that Scott A. McPherson has been retained for this engagement by LaserLock Technologies, Inc. I estimate that my fees for these services will be:

Quarterly for Forms 10Q	$11,000
Annually for Form 10K	15,000
Annually for Corporate Income Tax Returns	3,000

My billings will be sent to LaserLock Technologies, Inc., c/o Neil Alpert and are payable upon receipt.

Prior to the beginning of any services, I will need to be paid for our outstanding invoices for previous services totaling $17,800.

This agreement will become effective as soon as you sign and date the original copy of this letter and return the signed copy to me. If the need for additional services arises, my agreement with you will need to be revised. It is customary for me to describe these revisions in an addendum to this letter.

LaserLock Technologies, Inc.  -3-  December 14, 2012

If this letter correctly describes my engagement, I would appreciate you signing the original copy of this letter and returning it for my files.

Sincerely,

/s/ Scott A. McPherson

Scott A. McPherson

RESPONSE:

This letter correctly sets forth the understanding of LaserLock Technologies, Inc.

Officer’s Signature:  /s/ Neil Alpert

Title:  President

Date:  01/01/13 

EX-10.26

Exhibit 10.26

LASERLOCK TECHNOLOGIES, INC.

NONQUALIFIED STOCK OPTION GRANT

This NONQUALIFIED STOCK OPTION GRANT AGREEMENT (this “Agreement”), dated as of November 21, 2012 (the “Date of Grant”), is delivered by LaserLock Technologies, Inc. (the “Company”) to Norman A. Gardner (the “Grantee”).

RECITALS

WHEREAS, the Company maintains the LaserLock Technologies, Inc. 2003 Stock Option Plan (the “Plan”) which provides for the grant of options to purchase shares of common stock of the Company;

WHEREAS, the Board of Directors of the Company (the “Board”) has decided to make a stock option grant to the Grantee;

WHEREAS, while the Company maintains the Plan, the grant described above is to be made outside of the Plan; and

WHEREAS, while this grant is made outside of the Plan, the material terms of the Plan are incorporated into this Agreement by reference.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

1.             Grant of Option.  Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to the Grantee a nonqualified stock option (the “Option”) to purchase 1,000,000 shares of common stock of the Company (“Shares”) at an exercise price of $0.05 per Share.  The Option shall become exercisable according to Paragraph 2 below.

2.             Exercisability of Option.  The Option shall become exercisable on the following dates, if the Grantee is providing service to the Company (including as a member of its Board of Directors) on the applicable date:

Date	Shares for Which the Option is Exercisable
Date of Grant	1,000,000

The exercisability of the Option is cumulative, but shall not exceed 100% of the Shares subject to the Option.  If the foregoing schedule would produce fractional Shares, the number of Shares for which the Option becomes exercisable shall be rounded down to the nearest whole Share.

3.             Term of Option.

(a)           The Option shall have a term of ten years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.

(b)           The Option shall automatically terminate upon the happening of the first of the following events:

(i)           The expiration of the 90-day period after the Grantee ceases to provide service to the Company if the termination is for any reason other than death or Cause (as defined in the Plan).

(ii)          The expiration of the one-year period after the Grantee ceases to provide service to the Company if the Grantee dies while providing service to the Company or within 90 days after the Grantee ceases to so provide such services on account of a termination described in subparagraph (i) above.

(iii)         The date on which the Grantee ceases to provide service to the Company for Cause.  In addition, notwithstanding the prior provisions of this Paragraph 3, if the Grantee engages in conduct that constitutes Cause after the Grantee’s service terminates, the Option shall immediately terminate.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is immediately before the tenth anniversary of the Date of Grant.  Any portion of the Option that is not exercisable at the time the Grantee ceases to provide service to the Company shall immediately terminate.  For purposes of this paragraph (b), service to the Company as an employee, independent contractor or outside Board member shall constitute “service to the Company.”

4.             Exercise Procedures.

(a)           Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the exercisable Option by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised and the method of payment.  Payment of the exercise price shall be made in accordance with procedures established by the Board from time to time based on type of payment being made but, in any event, prior to issuance of the Shares.  The Grantee shall pay the exercise price (i) in cash, (ii) unless the Board determines otherwise, by delivering Shares owned by the Grantee and having a Fair Market Value (as defined in the Plan) on the date of exercise at least equal to the exercise price or by attestation (on a form prescribed by the Board) to ownership of Shares having a Fair Market Value on the date of exercise at least equal to the exercise price, (iii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iv) by surrender of all or any part of the vested Shares for the Option is exercisable to the Company for an appreciation distribution payable in shares of common stock with a Fair Market Value at the time of the Option surrender equal to the dollar amount by which the then Fair Market Value of the shares of common stock subject to the surrendered portion exceeds the aggregate exercise price payable for those shares, or (v) by such other method as the Board may approve.  The Board may impose from time to time such limitations as it deems appropriate on the use of Shares of the Company to exercise the Option.

-2-

(b)           The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Board, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations.

(c)           All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable.  Subject to Board approval, the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Option by having Shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.

5.             Change of Control.  The provisions of the Plan applicable to a Change of Control (as defined in the Plan) shall apply to the Option, and, in the event of a Change of Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

6.             Restrictions on Exercise.  Except as the Board may otherwise permit pursuant to the Plan, only the Grantee may exercise the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

7.             Grant Subject to Plan Provisions.  This grant shall be interpreted in accordance with the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The grant and exercise of the Option are subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Board in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the Shares, (c) changes in capitalization of the Company and (d) other requirements of applicable law.  The Board shall have the authority to interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

8.             No Employment or Other Rights.  The grant of the Option shall not confer upon the Grantee any right to be retained by or in the employ or service of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment or service at any time. The right of the Company to terminate the Grantee’s employment or service at any time for any reason is specifically reserved.

-3-

9.             No Stockholder Rights.  Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of a stockholder with respect to the Shares subject to the Option, until certificates for Shares have been issued upon the exercise of the Option.

10.           Assignment and Transfers.  Except as the Board may otherwise permit pursuant to the Plan, the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by the laws of descent and distribution.  In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.

11.           Applicable Law.  The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to the conflicts of laws provisions thereof.

12.           Notice.  Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the President at the headquarters of the Company, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.  Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

[SIGNATURE PAGE FOLLOWS]

-4-

IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Neil Alpert
Name:			Neil Alpert
Title:		President and COO

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement.  I hereby further agree that all the decisions and determinations of the Board shall be final and binding.

Grantee: /s/  Norman A. Gardner

[Signature Page to Option Agreement]

EX-10.28

Exhibit 10.28

LASERLOCK TECHNOLOGIES, INC.

NONQUALIFIED STOCK OPTION GRANT

This NONQUALIFIED STOCK OPTION GRANT AGREEMENT (this “Agreement”), dated as of November 21, 2012 (the “Date of Grant”), is delivered by LaserLock Technologies, Inc. (the “Company”) to Michael Sonnenreich (the “Grantee”).

RECITALS

WHEREAS, the Company maintains the LaserLock Technologies, Inc. 2003 Stock Option Plan (the “Plan”) which provides for the grant of options to purchase shares of common stock of the Company;

WHEREAS, the Board of Directors of the Company (the “Board”) has decided to make a stock option grant to the Grantee;

WHEREAS, while the Company maintains the Plan, the grant described above is to be made outside of the Plan; and

WHEREAS, while this grant is made outside of the Plan, the material terms of the Plan are incorporated into this Agreement by reference.

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound hereby, agree as follows:

1.             Grant of Option.  Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to the Grantee a nonqualified stock option (the “Option”) to purchase 2,000,000 shares of common stock of the Company (“Shares”) at an exercise price of $0.05 per Share.  The Option shall become exercisable according to Paragraph 2 below.

2.             Exercisability of Option.  The Option shall become exercisable on the following dates, if the Grantee is providing service to the Company (including as a member of its Board of Directors) on the applicable date:

Date	Shares for Which the Option is Exercisable
Date of Grant	1,000,000
November 21, 2013	1,000,000

The exercisability of the Option is cumulative, but shall not exceed 100% of the Shares subject to the Option.  If the foregoing schedule would produce fractional Shares, the number of Shares for which the Option becomes exercisable shall be rounded down to the nearest whole Share.

3.             Term of Option.

(a)           The Option shall have a term of ten years from the Date of Grant and shall terminate at the expiration of that period, unless it is terminated at an earlier date pursuant to the provisions of this Agreement or the Plan.

(b)           The Option shall automatically terminate upon the happening of the first of the following events:

 (i)             The expiration of the 90-day period after the Grantee ceases to provide service to the Company if the termination is for any reason other than death or Cause (as defined in the Plan).

 (ii)            The expiration of the one-year period after the Grantee ceases to provide service to the Company if the Grantee dies while providing service to the Company or within 90 days after the Grantee ceases to so provide such services on account of a termination described in subparagraph (i) above.

 (iii)          The date on which the Grantee ceases to provide service to the Company for Cause.  In addition, notwithstanding the prior provisions of this Paragraph 3, if the Grantee engages in conduct that constitutes Cause after the Grantee’s service terminates, the Option shall immediately terminate.

Notwithstanding the foregoing, in no event may the Option be exercised after the date that is immediately before the tenth anniversary of the Date of Grant.  Any portion of the Option that is not exercisable at the time the Grantee ceases to provide service to the Company shall immediately terminate.  For purposes of this paragraph (b), service to the Company as an employee, independent contractor or outside Board member shall constitute “service to the Company.”

4.             Exercise Procedures.

(a)           Subject to the provisions of Paragraphs 2 and 3 above, the Grantee may exercise part or all of the exercisable Option by giving the Company written notice of intent to exercise in the manner provided in this Agreement, specifying the number of Shares as to which the Option is to be exercised and the method of payment.  Payment of the exercise price shall be made in accordance with procedures established by the Board from time to time based on type of payment being made but, in any event, prior to issuance of the Shares.  The Grantee shall pay the exercise price (i) in cash, (ii) unless the Board determines otherwise, by delivering Shares owned by the Grantee and having a Fair Market Value (as defined in the Plan) on the date of exercise at least equal to the exercise price or by attestation (on a form prescribed by the Board) to ownership of Shares having a Fair Market Value on the date of exercise at least equal to the exercise price, (iii) by payment through a broker in accordance with procedures permitted by Regulation T of the Federal Reserve Board, (iv) by surrender of all or any part of the vested Shares for the Option is exercisable to the Company for an appreciation distribution payable in shares of common stock with a Fair Market Value at the time of the Option surrender equal to the dollar amount by which the then Fair Market Value of the shares of common stock subject to the surrendered portion exceeds the aggregate exercise price payable for those shares, or (v) by such other method as the Board may approve.  The Board may impose from time to time such limitations as it deems appropriate on the use of Shares of the Company to exercise the Option.

-2-

(b)           The obligation of the Company to deliver Shares upon exercise of the Option shall be subject to all applicable laws, rules, and regulations and such approvals by governmental agencies as may be deemed appropriate by the Board, including such actions as Company counsel shall deem necessary or appropriate to comply with relevant securities laws and regulations.

(c)           All obligations of the Company under this Agreement shall be subject to the rights of the Company as set forth in the Plan to withhold amounts required to be withheld for any taxes, if applicable.  Subject to Board approval, the Grantee may elect to satisfy any tax withholding obligation of the Company with respect to the Option by having Shares withheld up to an amount that does not exceed the minimum applicable withholding tax rate for federal (including FICA), state and local tax liabilities.

5.             Change of Control.  The provisions of the Plan applicable to a Change of Control (as defined in the Plan) shall apply to the Option, and, in the event of a Change of Control, the Board may take such actions as it deems appropriate pursuant to the Plan.

6.             Restrictions on Exercise.  Except as the Board may otherwise permit pursuant to the Plan, only the Grantee may exercise the Option during the Grantee’s lifetime and, after the Grantee’s death, the Option shall be exercisable (subject to the limitations specified in the Plan) solely by the legal representatives of the Grantee, or by the person who acquires the right to exercise the Option by will or by the laws of descent and distribution, to the extent that the Option is exercisable pursuant to this Agreement.

7.             Grant Subject to Plan Provisions.  This grant shall be interpreted in accordance with the Plan, the terms of which are incorporated herein by reference, and in all respects shall be interpreted in accordance with the Plan.  The grant and exercise of the Option are subject to interpretations, regulations and determinations concerning the Plan established from time to time by the Board in accordance with the provisions of the Plan, including, but not limited to, provisions pertaining to (a) rights and obligations with respect to withholding taxes, (b) the registration, qualification or listing of the Shares, (c) changes in capitalization of the Company and (d) other requirements of applicable law.  The Board shall have the authority to interpret and construe the Option pursuant to the terms of the Plan, and its decisions shall be conclusive as to any questions arising hereunder.

8.             No Employment or Other Rights.  The grant of the Option shall not confer upon the Grantee any right to be retained by or in the employ or service of the Company and shall not interfere in any way with the right of the Company to terminate the Grantee’s employment or service at any time. The right of the Company to terminate the Grantee’s employment or service at any time for any reason is specifically reserved.

-3-

9.             No Stockholder Rights.  Neither the Grantee, nor any person entitled to exercise the Grantee’s rights in the event of the Grantee’s death, shall have any of the rights and privileges of a stockholder with respect to the Shares subject to the Option, until certificates for Shares have been issued upon the exercise of the Option.

10.           Assignment and Transfers.  Except as the Board may otherwise permit pursuant to the Plan, the rights and interests of the Grantee under this Agreement may not be sold, assigned, encumbered or otherwise transferred except, in the event of the death of the Grantee, by will or by the laws of descent and distribution.  In the event of any attempt by the Grantee to alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any right hereunder, except as provided for in this Agreement, or in the event of the levy or any attachment, execution or similar process upon the rights or interests hereby conferred, the Company may terminate the Option by notice to the Grantee, and the Option and all rights hereunder shall thereupon become null and void.  The rights and protections of the Company hereunder shall extend to any successors or assigns of the Company and to the Company’s parents, subsidiaries, and affiliates.  This Agreement may be assigned by the Company without the Grantee’s consent.

11.           Applicable Law.  The validity, construction, interpretation and effect of this instrument shall be governed by and construed in accordance with the laws of the State of Nevada, without giving effect to the conflicts of laws provisions thereof.

12.           Notice.  Any notice to the Company provided for in this instrument shall be addressed to the Company in care of the President at the headquarters of the Company, and any notice to the Grantee shall be addressed to such Grantee at the current address shown on the payroll of the Company, or to such other address as the Grantee may designate to the Company in writing.  Any notice shall be delivered by hand, sent by telecopy or enclosed in a properly sealed envelope addressed as stated above, registered and deposited, postage prepaid, in a post office regularly maintained by the United States Postal Service.

[SIGNATURE PAGE FOLLOWS]

-4-

IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest this Agreement, and the Grantee has executed this Agreement, effective as of the Date of Grant.

LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Norman A Gardner
Name: Norman A. Gardner
Title: Chief Executive Officer

I hereby accept the Option described in this Agreement, and I agree to be bound by the terms of the Plan and this Agreement.  I hereby further agree that all the decisions and determinations of the Board shall be final and binding.

Grantee:   /s/ Michael Sonnenreich

[Signature Page to Option Agreement]

EX-14.1

Exhibit 14.1

LASERLOCK TECHNOLOGIES, INC.

CODE

OF

BUSINESS CONDUCT AND ETHICS

TABLE OF CONTENTS

	Page
POLICY STATEMENT	1
APPROVALS AND WAIVERS; AMENDMENTS; INTERPRETATION	2
CONFLICTS OF INTEREST	2
Activities Outside the Company	3
Community Activities	3
Service on Outside Boards of Directors	3
Competitor Relationships	3
Corporate Opportunities & Resources	4
Indirect Interests and Relationships	4
BUSINESS RELATIONSHIPS	4
Customer Relationships	4
Suppliers	4
FAIR COMPETITION	5
GIFTS, GRATUITIES, ENTERTAINMENT AND OTHER CONSIDERATIONS	5
Gifts	6
Loans	6
Meals, Entertainment, and Travel	6
Investment Activities	7
Bribes and Kickbacks	7
DOING BUSINESS INTERNATIONALLY	7
Facilitating Payments to Low-Level Non-U.S. Governmental Employees and Officials for Non-Discretionary Action	8
Antiboycott Compliance	8
GOVERNMENT CONTRACTING	9
POLITICAL CONTRIBUTIONS AND LOBBYING	9
ACCURACY OF REPORTS, RECORDS AND ACCOUNTS	10
GOVERNMENT INVESTIGATIONS	10
REGULATORY COMPLIANCE	11
INSIDER TRADING; COMMUNICATIONS WITH THIRD PARTIES	11

i

Insider Trading	11
Confidential Information	11
TECHNOLOGY USE AND PRIVACY	12
Authorization	12
Prohibition Against Violating Copyright Laws	13
Other Prohibited Uses	13
OUR WORK ENVIRONMENT	13
ENVIRONMENTAL	13
COMPLIANCE AND REPORTING	13
Compliance	13
Reporting Procedures and Other Inquiries	13
Policy Prohibiting Unlawful Retaliation or Discrimination	14

ii

LASERLOCK’S CODE OF BUSINESS CONDUCT AND ETHICS

POLICY STATEMENT

It is the policy of Laserlock Technologies, Inc. (“Laserlock Technologies” or the “Company”) to conduct its affairs in accordance with all applicable laws, rules and regulations of the jurisdictions in which it does business.  This Code of Business Conduct and Ethics (“Code”) applies to the Company’s employees, officers and non-employee directors, including the Company's principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions (“Designated Executives”).  This Code is the Company’s “code of ethics” as defined in Item 406 of Regulation S-K.  This Code is designed to promote:

● honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

● full, fair, accurate, timely and understandable disclosure in the reports and documents the Company files with, or submits to, the Securities and Exchange Commission and in other public communications made by the Company;

● compliance with applicable governmental laws, rules and regulations;

● the protection of Company assets, including corporate opportunities and confidential information;

● fair dealing practices;

● the prompt internal reporting to the appropriate person of violations of this Code; and

● accountability for adherence to this Code.

Laserlock Technologies, Inc. has established standards for behavior that affects the Company, and employees, officers and directors must comply with those standards.  The Company promotes ethical behavior and encourages employees to talk to supervisors, managers, or other appropriate personnel when in doubt about the best course of action in a particular situation.  Non-employee directors are encouraged to talk to the chief of the board committee responsible for compliancein such situations.  Anyone aware of a situation that he or she believes may violate or lead to a violation of this Code should follow the guidelines under “Compliance and Reporting” below.

The Code covers a wide range of business practices and procedures.  It does not cover every issue that may arise, but it sets out basic principles to guide you.  Specific Company policies and procedures provide details pertinent to many of the provisions of the Code.  Many of these policies and procedures can be found at http://www.laserlock.com.  Although there can be no better course of action than to apply common sense and sound judgment, do not hesitate to use the resources available whenever it is necessary to seek clarification.

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APPROVALS AND WAIVERS; AMENDMENTS; INTERPRETATION

Certain provisions of this Code require you to act, or refrain from acting, unless prior approval is received from the appropriate person. Employees requesting approval pursuant to this Code should request such approval in writing from the President of the Company.  Approvals relating to executive officers and directors must be obtained from the Company’s Board of Directors.  All other approvals may be granted by the President of the Company, or such officer’s designee.

Other provisions of this Code require you to act, or refrain from acting, in a particular manner and do not permit exceptions based on obtaining an approval.  Waiver of those provisions relating to executive officers and directors may only be granted by the Company’s Board of Directors and waivers relating to executive officers and directors must be promptly disclosed to shareholders.  All other waivers may be granted by the President of the Company, or such officer’s designee.

Changes in this Code may only be made by the Board of Directors and must be promptly disclosed to shareholders.  In some situations it may not be clear whether a provision of the Code is intended to apply to particular conduct.  In such situations the Board of Directors and the Nominating and Governance Committee have full power and authority to interpret the Code in a manner that they believe reflects the intent of the Board, and no determination that the Code was not intended to apply to such conduct shall be deemed to be a waiver of the Code’s prohibitions.

CONFLICTS OF INTEREST

A conflict of interest arises when your personal interests interfere with your ability to act in the best interests of the Company.  Employees must discharge their responsibilities on the basis of what is in the best interest of the Company independent of personal consideration or relationships.  Non-employee directors must discharge their fiduciary duties as directors of the Company.

Employees should disclose any potential conflicts of interest to the President of the Company or such officer’s designees, who can advise the employee as to whether or not the Company believes a conflict of interest exists.  An employee should also disclose potential conflicts of interest involving the employee’s spouse, siblings, parents, in-laws, children and members of the employee’s household.  Non-employee directors may discuss any concerns with the chief of the committee of the Board of Directors responsible for conflicts of interest matters.

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Activities Outside the Company

Although Laserlock Technologies has no interest in preventing employees from engaging in lawful activities during nonworking hours, employees must make sure that their outside activities do not conflict or interfere with their responsibilities to the Company.  For example, without approval by the Company, a Laserlock Technologies employee generally may not:

● engage in self-employment or perform paid or unpaid work for others in a field of interest similar to the Company;

● use proprietary or confidential Company information for personal gain or to the Company’s detriment;

● use Company assets or labor for personal use, except for incidental use permitted under the Company’s policies;

● acquire any interest in property or assets of any kind for the purpose of selling or leasing it to the Company; or

● appear to represent Laserlock Technologies as the participant in an outside activity unless the Company has authorized the employee to represent Laserlock Technologies.

Community Activities

Laserlock Technologies encourages you to be actively involved in your community through volunteer service to charitable, civic and public service organizations, and through participation in the political process and trade associations.

Employees must make sure, however, that their service is consistent with their employment with Laserlock Technologies and does not pose a conflict of interest.  This is particularly important before accepting any leadership position (such as membership on the board of a charitable or civic organization), before seeking or accepting political office and before soliciting a charitable contribution.

Service on Outside Boards of Directors

Serving as a director of another corporation may create a conflict of interest.  Employees must disclose such service to the President of the Company and obtain prior approval before serving on the board of another company, whether or not such company is a competitor of Laserlock Technologies.

Competitor Relationships

Employees should avoid even the appearance of a conflict of interest in their relationships with competitors. Without approval employees may not:

● provide compensated or uncompensated services to a competitor, except for services rendered under a valid Laserlock Technologies contract with the competitor;

● disclose any Company proprietary information to a competitor, unless a nondisclosure agreement is in place; or

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● utilize for any unauthorized purposes or disclose to a competitor or other third-party any proprietary data that has been entrusted to the Company by a customer or supplier.

Corporate Opportunities & Resources

You are prohibited from taking for yourself personal opportunities that are discovered through the use of corporate property, information or position without approval.  Without approval, you may not use corporate property, information or position for personal gain.  No employee may compete with the Company, directly or indirectly, except as permitted by Company policies.

All employees should protect the Company's assets and ensure their efficient use.  Theft, carelessness and waste have a direct impact on the Company's profitability.  All Company assets should be used for legitimate business purposes.

Company resources may be used for minor personal uses, so long as such use is reasonable, does not interfere with your duties, is not done for pecuniary gain, does not conflict with the Company’s business and does not violate any Company policy.

Indirect Interests and Relationships

A conflict of interest can also arise because of the business activities of your close relations.  For example, an employee may have a potential conflict of interest wherever a close relative has a significant relationship with, or has a significant financial interest in, any supplier, customer or competitor.

An employee may not make or attempt to influence any decision that could directly or indirectly benefit his or her close relative.  To protect the employee and the Company from the appearance of a conflict of interest, he or she should make appropriate disclosure of the interest to the President of the Company or such officer’s designee.

BUSINESS RELATIONSHIPS

Laserlock Technologies seeks to outperform its competition fairly and honestly.  The Company seeks competitive advantages through superior performance, not unethical or illegal business practices.  Each employee must endeavor to deal fairly with the Company's customers, suppliers, competitors and employees and must not take advantage of them through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair-dealing practice.

Customer Relationships

Our customers are of the utmost importance to Laserlock Technologies.  Laserlock Technologies’ employees must always treat customers and potential customers according to the highest standards of business conduct.

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Moreover, the Company may be entrusted with property or valuable information belonging to customers, suppliers, the Company’s employees, or other persons.  Without approval, you may not use for personal gain any property or valuable information provided to the Company by customers, suppliers, the Company’s employees, or other persons.

All employees must use the same care to protect any property or valuable information entrusted to the Company which belongs to customers, suppliers, the Company’s employees, or other persons, as must be used to protect the Company’s assets.

You may never use for any personal purpose any property or valuable information entrusted to the Company which belongs to customers, suppliers, the Company’s employees, or other persons.

It is Laserlock Technologies’ policy to sell our products and services on their merits and to avoid making disparaging comments about the products and services of competitors unless they can be substantiated.  Employees should be careful in this regard in commenting upon the character, financial condition, or potential legal or regulatory problems of competitors.

Suppliers

Laserlock Technologies’ suppliers - companies and individuals that sell products and services to the Company - are important to our business.  Laserlock Technologies’ employees should always treat suppliers and potential suppliers in accordance with the highest standards of business conduct.

Suppliers must be selected on the basis of objective criteria, such as value (quality for price), price, technical excellence, service reputation and production/service capacity.

Employees working with current suppliers must never intentionally interfere with a supplier’s contracts or business relations with a competitor of Laserlock Technologies.

Individuals with procurement responsibility should review the sections of this Code concerning fair competition and should be familiar with applicable laws and Company policies.

FAIR COMPETITION

Fair competition laws, including the U.S. antitrust rules, limit what Laserlock Technologies can do with another company and what Laserlock Technologies can do on its own.  Generally, the laws are designed to prohibit agreements or actions that reduce competition and harm consumers.  You may not enter into agreements or discussions with competitors that have the effect of fixing or controlling prices, dividing and allocating markets or territories, or boycotting suppliers or customers.  U.S. and foreign antitrust laws also apply to imports and exports.

GIFTS, GRATUITIES, ENTERTAINMENT AND OTHER CONSIDERATIONS

Use of Company funds or other Company property for illegal, unethical or otherwise improper purposes is prohibited.  The purpose of business entertainment and gifts in a commercial setting is to create goodwill and a sound working relationship, not to gain personal advantage with customers or suppliers.

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Gifts

Except as set out below, without approval by the President of the Company or such officer’s designees, employees must refrain from giving and receiving business-related gifts.

● No Laserlock Technologies employee or agent may solicit or accept a gift (including any payment, compensation, loan or other financial favor) to or from a person or organization with the intention of influencing the recipient’s business judgment or conduct.  Giving or accepting any unsolicited gifts having a value of not more than $50.00 where there is a business benefit or purpose for the gift and any benefits received do not influence, or appear to influence, selection and purchasing decisions is permitted.  In some countries, gifts having a greater value are customary and may be given or accepted with the approval of the President of the Company or such officer’s designees.

● It is never appropriate or permissible to accept or give cash or a cash equivalent from or to a vendor, supplier or customer outside the Company’s normal business.  Cash equivalents include, among other things, checks, money orders and vouchers.

● Rules relating to U.S. and foreign government personnel are more stringent.  See “Doing Business Internationally” and “Government Contracting” below.

● No employee may accept a customer, vendor or supplier discount for themselves unless it is generally available to the public or is approved and available to all Laserlock Technologies employees.

Laserlock Technologies’ employees may entertain socially friends or relatives doing business with the Company provided that the entertainment is clearly not related to Company business.  No expenses of such entertainment are reimbursable by the Company.

Loans

Employees may not accept loans from any person or entities having or seeking business with the Company.  Designated Executives and directors may not receive loans from the Company, nor may the Company arrange for any loan.

Meals, Entertainment, and Travel

Employees may provide or accept meals and entertainment, including attendance at sporting or cultural events, as long as it is associated with an occasion at which business is discussed and is provided as a normal part of business.  The value of the activity must be reasonable and permissible under Laserlock Technologies’ expense account procedures.  Each employee should express care to insure that such activities are necessary and that their value and frequency are not excessive under all the applicable circumstances.  Rules relating to U.S. and foreign government personnel are more stringent.  See “Doing Business Internationally” and “Government Contracting” below.

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Investment Activities

Unless an employee has sought and received pre-approval, an employee may not:

● participate in so-called “directed shares,” “friends and family,” and similar stock purchase programs of customers, vendors or suppliers of Laserlock Technologies;

● invest in non-public companies that are, or are likely to be, customers, vendors or suppliers of Laserlock Technologies; or

● invest in non-public companies in which Laserlock Technologies has made or is expected to make an investment.

Investments in non-public companies that do not exceed the lesser of five thousand dollars ($5,000) or 5% of that company’s equity securities are exempt from this restriction.

Bribes and Kickbacks

The use of Company funds, facilities or property for any illegal or unethical purpose is strictly prohibited; provided, that certain facilitating payments discussed in “Doing Business Internationally” are permitted.

● You are not permitted to offer, give or cause others to give, any payments or anything of value for the purpose of influencing the recipient’s business judgment or conduct in dealing with the Company other than facilitating payments.

● You may not solicit or accept a kickback or bribe, in any form, for any reason.

DOING BUSINESS INTERNATIONALLY

Laserlock Technologies is committed to the highest business conduct standards wherever it operates.  The Company observes these standards worldwide, even at the risk of losing business.  While no one can anticipate all the situations that may present challenges to Laserlock Technologies employees doing business in the worldwide marketplace, the following guidelines always apply:

● Observe all laws and regulations, both U.S. and non-U.S., that apply to business abroad.

● Paying bribes to government officials is absolutely prohibited, even if those bribes are common practice, except for facilitating payments.  You may not give, promise to give or authorize the giving to a foreign official, a foreign political party, or official thereof or any candidate for foreign political office any money or offer, gift, promise to give or authorize the giving of anything of value to influence any act or decision, to induce such official, party or candidate to do or omit to do any act in violation of the lawful duty of such official, party or candidate, or to induce such official, party or candidate to use his or her influence with a foreign government or agency to affect or influence any act or decision of such foreign government or agency.

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● Do not cooperate with illegal boycotts.

● Observe all licensing requirements and the requirements of applicable import and export control laws.

● Do not enter into an agreement with an agent or consultant that relates to Laserlock Technologies’ business outside the United States unless it has been approved by the Company.

● Observe all privacy and data protection laws and regulations of other countries (such as Japan, Hong Kong, Australia, Canada and Argentina) and authorities (such as the European Union).

The laws governing Laserlock Technologies’ business in foreign countries are extensive and complex, and may be different from those in the United States.  No new Laserlock Technologies services or products should be offered in any new country without prior approval, and then only in accordance with the applicable local country’s regulations and requirements.

Facilitating Payments to Low-Level Non-U.S. Governmental Employees and Officials for Non-Discretionary Action

Laserlock Technologies is committed to complying with the laws of the countries where it operates.  In some countries, a very limited category of small payments to facilitate or expedite routine nondiscretionary governmental actions may be permitted as exceptions to antibribery laws, including the U.S. Foreign Corrupt Practices Act (“FCPA”).  The requirements pertaining to such payments are complex.  Laserlock Technologies employees engaged in international business activities must obtain prior approval of the President of the Company before making any such payment.

These “facilitating payments” to non-U.S. governmental officials are distinguished from payments made to influence a discretionary decision or to cause violation of, or an act in conflict with, the interests of an individual’s employer, which are strictly prohibited.  

Antiboycott Compliance

The United States has enacted antiboycott regulations which make it unlawful for U.S. persons to participate in any activity that could have the effect of promoting or supporting a boycott or restrictive trade practice of another country against customers or suppliers located in a country friendly to the U.S. or against a U.S. person, firm or corporation.  Boycott issues arise most frequently in connection with the Arab boycott of Israel.  Prohibited actions include, but are not limited to, furnishing information about business relationships with boycotted countries, or information about race, religion, sex or national origin.  Any request to participate in such activity relating to Laserlock Technologies should be immediately reported to the President of the Company or the officer’s designee.

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GOVERNMENT CONTRACTING

Detailed laws and regulations govern virtually every aspect of doing business with the U.S. government and its agencies.  Activities that might be permitted when working with the private sector may be improper or even illegal when a national or local government is the customer.

Laserlock Technologies employees should seek to adhere to the highest standards of honesty and integrity in their relations with government officials and employees. For example, employees should observe the following principles when bidding or performing government contracts:

● Do not offer or provide meals, transportation, gifts or other consideration to government employees except as permitted under applicable law and Company policy.

● Obey the regulations governing current and post-government employee conflicts of interests.  Obtain all appropriate government approvals prior to recruiting or hiring current or former government employees.

● Obtain appropriate licenses prior to exporting or even discussing certain technologies with citizens of other countries.

● Obey any requirements that may restrict access to source selection or competitive information.

Employees of the Company who deal with government representatives are responsible for knowing and obeying the laws and regulations applicable to doing business with the U.S. government.

POLITICAL CONTRIBUTIONS AND LOBBYING

No political contributions are to be made using Laserlock Technologies’ funds or assets, or the funds or assets of any Laserlock Technologies subsidiary, to any political party, political campaign, political candidate or public official in the United States or any foreign country, unless the contribution is lawful and expressly authorized in writing.  In addition, you may not make a political contribution on behalf of Laserlock Technologies, or with the appearance that such contribution is being made on behalf of Laserlock Technologies, unless expressly authorized in writing.  A “contribution” is any direct or indirect payment, distribution, loan, advance, deposit, or gift of money, services or anything of value in connection with an election or to an organization or group formed to support or defend a referendum or ballot issue.

Nothing in this Code is intended to discourage you from making contributions of your own time or funds to political parties or candidates of your choice.  However, you will not be compensated or reimbursed by Laserlock Technologies for any personal contributions.

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Employees must obtain prior written approval to hire outside counsel or a public affairs firm to contact government officials regarding legislation, regulatory policy, or rule making.  This includes grassroots lobbying contacts.

ACCURACY OF REPORTS, RECORDS AND ACCOUNTS

You are responsible for the accuracy of your records, time sheets and reports.  Accurate information is essential to Laserlock Technologies’ ability to meet legal and regulatory obligations and to compete effectively.  The records and books of account of Laserlock Technologies must meet the highest standards and accurately reflect the true nature of the transactions they record.  Destruction of any records, books of account or other documents except in accordance with Laserlock Technologies’ document retention policy is strictly prohibited.

You must not create false or misleading documents or accounting, financial or electronic records for any purpose relating to Laserlock Technologies, and no one may direct an employee to do so.  For example, expense reports must accurately document expenses actually incurred in accordance with the Company’s policies.  You must not obtain or create “false” invoices or other misleading documentation or invent or use fictitious entities, sales, purchases, services, loans or other financial arrangements for any purpose relating to Laserlock Technologies.  Employees are also responsible for accurately reporting time worked.

No undisclosed or unrecorded account or fund may be established for any purpose.  No false or misleading entries may be made in the Company’s books or records for any reason.  No disbursement of corporate funds or other corporate property may be made without adequate supporting documentation or for any purpose other than as described in the documents.  All employees must comply with generally accepted accounting principles and the Company’s internal controls at all times.

GOVERNMENT INVESTIGATIONS

  You must promptly notify counsel of any government investigation or inquiries from government agencies concerning Laserlock Technologies.  You may not destroy any record, books of account, or other documents relating to Laserlock Technologies except in accordance with the Company’s document retention policy.  If you are aware of a government investigation or inquiry, you may not destroy any record, books of account, or other documents relating to Laserlock Technologies unless advised by the President of the Company or the officer’s designee, that you may continue to follow the Company’s normal document retention policy.

You must not obstruct the collection of information, data or records relating to Laserlock Technologies.  The Company provides information to the government that it is entitled to during an inspection, investigation, or request for information.  You must not lie to government investigators or make misleading statements in any investigation relating to Laserlock Technologies.  You must not attempt to cause any employee to fail to provide accurate information to government investigators.

Employees have the right to consult their own legal counsel at their own expense.

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REGULATORY COMPLIANCE

The Company operates in a highly regulated environment.  The agencies that regulate its business include the Securities and Exchange Commission, plus many other federal, state and local agencies.  The Company and its employees must comply with the regulatory requirements of these agencies.  Employees are expected to take an active role by being knowledgeable about all applicable laws and regulations, attending trainings and requesting information.  Employees are required to immediately report regulatory violations, suspected regulatory violations, or potentially harmful or dangerous conditions to a supervisor or the President of the Company.

INSIDER TRADING; COMMUNICATIONS WITH THIRD PARTIES

Employees, officers and directors who have access to the Company’s confidential information are not permitted to use any confidential information for their personal benefit or the benefit of others, or share that information for stock trading purposes or for any other purpose, except when the use is primarily for the purpose of benefiting the Company in the conduct of its business.

Insider Trading

Inside information is material information about a publicly traded company that is not known by the public.  Information is deemed “material” if it could affect the market price of a security or if a reasonable investor would attach importance to the information in deciding whether to buy, sell or hold a security.  Inside information typically relates to financial conditions, such as progress toward achieving revenue and earnings targets or projections of future earnings or losses of the Company.  To the extent material and nonpublic, inside information also includes changes in strategy regarding a proposed merger, acquisition or tender offer, new products or services, contract awards and other similar information.  Inside information is not limited to information about Laserlock Technologies.  It also includes material non-public information about others, including the Company’s customers, suppliers, and competitors.

Insider trading is prohibited by law.  It occurs when an individual with material, non-public information trades securities or communicates such information to others who trade.  The person who trades or “tips” information violates the law if he or she has a duty or relationship of trust and confidence not to use the information.

Trading or helping others trade while aware of inside information has potential serious legal consequences, even if the Insider does not receive any personal financial benefit.  Insiders may also have an obligation to take appropriate steps to prevent insider trading by others.

Confidential Information

You must maintain the confidentiality of information entrusted to you by the Company or its customers, suppliers, employees or other persons except when disclosure is authorized or legally mandated.  Confidential information includes all non-public information, including information that might be of use to competitors or harmful to the Company or its customers if disclosed.

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The Company expects all of its employees to educate themselves about and be alert to threats to security of confidential information entrusted to the Company and its employees.

Confidential information within the Company’s possession falls into three general categories:  (1) confidential proprietary information about the Company’s business including but not limited to trade secrets, other proprietary information, and information which may be patentable (“Proprietary Information”); (2) confidential information entrusted to the Company by third parties such as customers (including the U.S. government and its agencies), suppliers, or other third parties (“Third Party Information”); and (3) personally identifiable information received from employees, customers, suppliers, or other third parties (including but not limited to names, addresses, Social Security Numbers, background information, credit card or bank information, telephone or facsimile numbers, e-mail addresses and health information) (“Personal Information”) which if misused could result in identity theft, credit card fraud or other serious harm.

 Personal Information may be subject to protection under federal, state or local laws in the U.S., or under laws of other countries.  No Personal Information may be transmitted from one country to another country without prior managerial approval.  No Personal Information may be disposed of except pursuant to the Company’s approved methods of disposal.

The Company has an extensive Information Security Program protecting Proprietary, Third Party and Personal Information, which all employees are required to carry out while performing their daily duties.  The Information Security Program has three important elements:  (1) Physical security; (2) Network security; and (3) Workforce security.

Each of these elements is discussed in detail in the Company’s policies located at [insert appropriate location].  Any employees with questions about how to appropriately handle or dispose of Proprietary, Third Party or Personal Information should immediately bring their questions to the attention of management before taking any action with respect to such Proprietary, Third Party or Personal Information.

TECHNOLOGY USE AND PRIVACY

Laserlock Technologies provides various technology resources (including computers, telephones, software, copying machines, Internet access, and voice mail) to you to assist in performing your duties on behalf of the Company.  You have the responsibility to use the Company’s technology resources in a manner that complies with applicable laws and Company policies.

Authorization

Access to the Company’s technology resources is within the sole discretion of the Company and subject to Company policies.  Generally, employees are given access to the Company’s various technologies consistent with their job functions.  The Company reserves the right to limit such access by any means available to it, including revoking access altogether.

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Prohibition Against Violating Copyright Laws

You may not use the Company’s technology resources to copy, retrieve, forward or send copyrighted materials unless you have the author’s permission or are accessing a single copy only for your own reference.

Other Prohibited Uses

You may not use any of the Company’s technology resources for any illegal purpose, in violation of any Company policy, in a manner contrary to the best interests of the Company, in any way that discloses Proprietary Information, Third Party Information, or Personal Information on an unauthorized basis, or for personal gain.

OUR WORK ENVIRONMENT

The diversity of the Company’s employees is a tremendous asset.  Laserlock Technologies is firmly committed to providing equal opportunity in all aspects of employment and will not tolerate any illegal discrimination, harassment, or retaliation.  In addition, the Company strives to provide each employee with a safe and healthy work environment.  Each employee has responsibility for maintaining a safe and healthy workplace for all employees by following health and safety rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.

ENVIRONMENTAL

Laserlock Technologies must fully comply with all state and federal laws relating to the protection of the environment in the conduct of its business.  Employees must use, store and dispose all hazardous materials properly and in accordance with applicable regulations.  Employees must report, in accordance with Company policies, all circumstances under which hazardous materials or wastes come in contact with the environment, are improperly handled or disposed of, or where a potential violation of law may exist.

COMPLIANCE AND REPORTING

Compliance

Any employee who violates the provisions of this Code will be subject to disciplinary action, up to and including termination.  Willful disregard of criminal statutes underlying this Code may require the Company to refer such violation for criminal prosecution or civil action.

Reporting Procedures and Other Inquiries

Questions regarding the policies in this Code may be directed to the President of the Company or the Board of Directors.  Managers and supervisors are also resources who can provide timely advice and guidance to employees on ethics and compliance concerns.  Any employee having knowledge of, or questions or concerns about, an actual or possible violation of the provisions of this Code is encouraged to promptly report the matter to his or her immediate supervisor or the President of the Company.  Directors are encouraged to discuss any issues or concerns with the chief of the board committee responsible for overseeing such matters.

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If you have concerns relating to Laserlock Technologies’ accounting, internal controls or auditing matters, you may also confidentially, and anonymously if you desire, submit the information in writing to the President of the Company or the Board of Directors.

When submitting concerns, you are asked to provide as much detailed information as possible.  Providing detailed, rather than general, information will assist us in effectively investigating complaints.  This is particularly important when you submit a complaint on an anonymous basis, since we may be unable to contact you with requests for additional information or clarification.  If you submit your concerns anonymously, please provide details in a manner that does not inadvertently disclose your identity (e.g. refer to “John Smith” rather than “my supervisor, John Smith”).

We are providing these anonymous reporting procedures so that you may disclose genuine concerns without feeling threatened.  However, the Company prohibits retaliation against employees who choose to identify themselves when submitting a report in good faith, and takes measures to keep confidential the identities of employees who choose to identify themselves when submitting their reports.  Employees who identify themselves may be contacted in order to gain additional information.

All conversations, calls and reports made under this policy in good faith will be taken seriously.  Any allegations that are knowingly false or without a reasonable belief in the truth and accuracy of such information will be viewed as a serious disciplinary offense.

Policy Prohibiting Unlawful Retaliation or Discrimination

Neither the Company nor any of its employees may discharge, demote, suspend, threaten, harass or in any manner discriminate against any employee in the terms and conditions of employment based upon any lawful actions of such employee who in good faith:

● provides information or assists in an investigation relating to or regarding any conduct which the employee reasonably believes constitutes a violation of Fraud Laws (as defined below);

● files, testifies, participates or otherwise assists in a proceeding that is filed or about to be filed (with any knowledge of the Company) relating to an alleged violation of a Fraud Law;

● provides truthful information to a law enforcement officer relating to the commission or possible commission of any federal offense; or

● engages in any other conduct protected by law.

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This policy applies in any instance where such information or assistance provided to, or the investigation is conducted by, a federal regulatory or law enforcement agency, any member or committee of Congress, or any person with supervisory authority over the employee or the authority to investigate misconduct relating to potential securities violations by the Company or its employees.  For purposes of this policy, a “Fraud Law” is a violation of federal criminal law involving:

● securities fraud, mail fraud, bank fraud or wire, radio or television fraud;

● violations of SEC rules or regulations; or

● violations of any federal law relating to fraud against shareholders.

This document is not an employment contract between Laserlock Technologies and its employees, nor does it modify their employment relationship with the Company.

This Code is intended to clarify your existing obligation for proper conduct.  The standards and the supporting policies and procedures may change from time to time in the Company’s discretion.  You are responsible for knowing and complying with the current laws, regulations, standards, policies and procedures that apply to the Company’s work.  The most current version of this document can be found at www.laserlock.com.

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BOARD MEMBER ACKNOWLEDGEMENT

I acknowledge that I have received and read a copy of Laserlock Technologies’ Code of Business Conduct and Ethics (the “Code”).  I understand that I am responsible for knowing and complying with the policies set forth in the Code during my tenure as a member of the Board of Directors of the Company.

I also acknowledge my responsibility to report any violation of this Code to the Board of Directors or President of the Company.

I further understand that the policies contained in the Code are not intended to create any contractual rights or obligations, express or implied.  I also understand that, consistent with applicable law, the Board of Directors of the Company has the right to amend, interpret, modify or withdraw any of the provisions of the Code at any time in its sole discretion, with or without notice.

Finally, I understand and agree that the terms of this Acknowledgement, and my relationship with the Company, may not be modified or superseded except by a written agreement signed by the President of the Company; that no other employee or representative of the Company has the authority to enter into any such agreement; and that any agreement inconsistent with this Acknowledgement or agreeing to employ me for a specified term will be unenforceable unless in writing and signed by the President of the Company.

Board Member Name:
	(please print)

Signature Date

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EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-133396) of LaserLock Technologies, Inc. and its subsidiary of our report dated April 1, 2013 with respect to the consolidated balance sheets of LaserLock Technologies, Inc. and its subsidiary as of December 31, 2012 and the related consolidated statements of operations, changes in stockholders’ deficit and cash flows for the year ended December 31, 2012 which appears in the December 31, 2012 Annual Report on Form 10-K of LaserLock Technologies, Inc. and its subsidiary.

/s/ Morison Cogen LLP

Bala Cynwyd, Pennsylvania

April 1, 2013

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13a-14a AND 15d-14a

OF THE SECURITIES AND EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Norman A. Gardner, certify that:

1.  I have reviewed this annual report on Form 10-K for the year ended December 31, 2012 of LaserLock Technologies, Inc. and Subsidiary;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 1, 2013	By:	/s/ Norman A. Gardner
		Norman A. Gardner
		Vice Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13a-14a AND 15d-14a

OF THE SECURITIES AND EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Scott A. McPherson, certify that:

1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2012 of LaserLock Technologies, Inc. and Subsidiary;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  April 1, 2013	By:	/s/ Scott A. McPherson
		Scott A. McPherson
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

OF LASERLOCK TECHNOLOGIES, INC.

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of LaserLock Technologies, Inc. and Subsidiary (the “Company“) for the year ended December 31, 2012, as filed with the Securities and Exchange Commission (the “Report“), I, Norman A. Gardner, Vice Chairman and Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

  (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: April 1, 2013	By:	/s/ Norman A. Gardner
		Norman A. Gardner
		Vice Chairman and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

OF LASERLOCK TECHNOLOGIES, INC.

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Annual Report on Form 10-K of LaserLock Technologies, Inc. and Subsidiary (the “Company“) for the year ended December 31, 2012, as filed with the Securities and Exchange Commission (the “Report“), I, Scott A. McPherson, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

  (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  April 1, 2013	By:	/s/ Scott A. McPherson
		Scott A. McPherson
		Chief Financial Officer

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NOTES PAYABLE (Detail Textuals 1) (USD $)	158 Months Ended			1 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2008	Jan. 31, 2010 Series A Notes Payable note	Aug. 31, 2009 Series A Notes Payable units	Dec. 31, 2012 Series A Notes Payable	Dec. 31, 2011 Series A Notes Payable	Dec. 31, 2009 Series A Notes Payable units	Sep. 30, 2011 Series A Notes Payable	Jun. 30, 2011 Series A Notes Payable
Debt Instrument [Line Items]
Convertible notes payable	$ 140,000	$ 140,000	$ 400,000	$ 25,000	$ 300,000			$ 200,000	$ 50,000
Number of units					6			4
Number of units sold				0.5
Interest rate				8.00%		8.00%	8.00%	8.00%	8.00%	8.00%
Number of shares of common stock									2,000,000
Warrants issued				1,000,000				8,000,000
Proceeds from note payable				17,500				180,000
Amount of commissions				7,500				20,000
Amortization of deferred charges	$ 40,800					$ 0	$ 10,650

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STOCK OPTIONS AND WARRANTS (Detail Textuals 2) (USD $)	1 Months Ended	0 Months Ended		1 Months Ended	0 Months Ended
	Apr. 28, 2011	Apr. 07, 2011 Board member	Apr. 07, 2011 President	Nov. 21, 2012 Stock options	May 09, 2011 Stock options	May 09, 2011 Stock options Board member	May 09, 2011 Stock options President	May 09, 2011 Stock options Option holder	Jul. 16, 2012 Stock options Consultant	May 09, 2011 Stock options Consultant	May 09, 2011 Stock options Exercise price of $.01 Board member	May 09, 2011 Stock options Exercise price of $.01 President	May 09, 2011 Stock options Exercise price of $.01 Option holder	May 09, 2011 Stock options Exercise price of $.03 Board member	May 09, 2011 Stock options Exercise price of $.03 President	May 09, 2011 Stock options Exercise price of $.03 Option holder	May 09, 2011 Stock options Exercise price of $.00125 Board member	May 09, 2011 Stock options Exercise price of $.00125 President	May 09, 2011 Stock options Exercise price of $.00125 Option holder	May 09, 2011 Stock options Exercise price of $.00125 Consultant
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise of options (in shares)									200,000		750,000	3,600,000	2,800,000	250,000	2,500,000	3,056,662	900,000	5,490,000	5,000,996	750,000
Exercise price of common stock									$ 0.05		$ 0.01	$ 0.01	$ 0.01	$ 0.03	$ 0.03	$ 0.03	$ 0.00125	$ 0.00125	$ 0.00125	$ 0.00125
Term for options									10 years								10 years	10 years	10 years	10 years
Fair value of options issued						$ 6,712	$ 40,946	$ 37,186	$ 11,638	$ 5,594
Method used to calculate the grant-date fair value of the warrants				Black-Scholes option pricing model	Black-Scholes option pricing model				Black-Scholes option pricing model
Expected volatility				131.00%	150.00%				133.00%
Risk-free interest rate				1.70%	3.70%				1.50%
Expected option life (in years)				10 years	10 years				10 years
Treasury shares acquired (in shares)	17,795,903	2,000,000	10,000,000							17,795,903
Consulting expense									$ 11,638

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STOCKHOLDERS' EQUITY (Detail Textuals) (USD $)	1 Months Ended	2 Months Ended	12 Months Ended						1 Months Ended			0 Months Ended		1 Months Ended
	Apr. 28, 2011	Dec. 31, 1999	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2006	Dec. 31, 2003	May 25, 2011 Consultant	Feb. 17, 2011 Consultant	Nov. 21, 2012 Board of Directors Chairman	Apr. 07, 2011 Board of Directors Chairman	Apr. 07, 2011 President	May 25, 2011 Investor	Dec. 20, 2012 Investor	Jun. 24, 2011 Investor
Stockholders Equity Note [Line Items]
Issuance of shares of common stock in exchange for services (in shares)									2,100,000	1,000,000
Issuance of shares of common stock in exchange for services		$ 36,960	$ 46,500	$ 30,000	$ 208,600	$ 47,700	$ 55,000	$ 24,000	$ 2,100	$ 30,000
Common stock received from entity that were issued (in shares)	17,795,903											2,000,000	10,000,000
Common stock received from entity that were issued	17,796		113,389	113,389								15,000	75,000
Sale of stock		20,873									46,500			400,000
Sale of stock number of shares issued (in shares)											1,000,000			15,500,000
Number warrants exercised to purchase common stock (in shares)															333,333	1,000,000
Warrants exercised to purchase common stock value															$ 50,000	$ 10,000

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STOCK OPTIONS AND WARRANTS (Details Textuals 3) (Stock options, USD $)	1 Months Ended
	Nov. 21, 2012
Chief Executive Officer and Chief Operating Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options issued to purchase aggregate common stocks	2,000,000
Exercisable common stock share price	$ 0.05
Term for options	10 years
Fair value of options issued	$ 89,538
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options issued to purchase aggregate common stocks	10,000,000
Exercisable common stock share price	$ 0.05
Term for options	10 years
Fair value of options issued	447,689
Fair value of option issued expensed immediately	223,844
Fair value of option issued expensed over one year	$ 18,564
Number of board of directors	5

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MAJOR AGREEMENTS (Details Textuals 2) (USD $)	2 Months Ended			12 Months Ended
	Dec. 31, 1999	Dec. 31, 1999 Common Stock	Dec. 31, 2012 Patent and Technology License Agreement Prepaid Expenses	Dec. 31, 2012 Patent and Technology License Agreement Common Stock Payable on 31 December 2012	Dec. 31, 2012 Patent and Technology License Agreement Common Stock Payable on 01 January 2014	Dec. 31, 2012 Patent and Technology License Agreement Common Stock Payable on 01 January 2015
Major Agreements [Line Items]
Patent and technology license agreement, description				Payment 1, payable upon execution of the Agreement (on December 31, 2012): The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of Common Stock, par value $.001 per shares ("Shares"), of the Company equal to (x) $100,000 divided by (y) $0.045 (2,222,222 shares) and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.	Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of Shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five(5) years.	Payment 3, payable on January 1, 2015: The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of Shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.
Value of common stock shares issued	$ 20,873	$ 4,278		$ 100,000	$ 400,000	$ 4,500,000
Fair value of the shares of common stock			100,000
Fair value of the cashless exercise warrants			$ 100,000
Common Stock, par value				$ 0.001
Number warrants exercised to purchase common stock (in shares)				2,222,222
Warrants exercise price (in dollars per share)				0.045
Exercisable common stock share price				$ 0.10	$ 0.10	$ 0.10
Term of warrants				5 years	5 years	5 years
Percentage of discount to market price					10.00%	10.00%

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CONVERTIBLE NOTES PAYABLE (Detail Textuals) (USD $)	1 Months Ended	12 Months Ended
	Aug. 31, 2009	Dec. 31, 2008	Dec. 31, 2007	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2011
Debt Instrument [Line Items]
Convertible notes payable		$ 400,000		$ 140,000	$ 140,000
Convertible notes payable
Debt Instrument [Line Items]
Private placement of convertible notes principal amount			400,000
Interest rate	10.00%		10.00%			10.00%
Maturity date	2015-09		2008-08
Proceeds from note payable		25,000	375,000
Amount of notes converted in to common stock shares			260,000
Conversion price per share (in dollars per share)			$ 0.005333
Convertible notes payable	140,000	400,000		140,000	140,000
Beneficial conversion feature related to the issuance of convertible notes payable		$ 25,000	$ 375,000
Common stock issuance price per share for convertible notes payable (in dollars per share)			$ 0.016
Convertible notes payable | Series A Preferred Stock
Debt Instrument [Line Items]
Conversion price per share (in dollars per share)			$ 0.005333

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RELATED PARTY TRANSACTIONS (Detail Textuals 1) (Chief Executive Officer, USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Chief Executive Officer
Related Party Transaction [Line Items]
Occupancy costs	$ 32,414	$ 13,220
Accrued and unpaid salary		208,514
Unpaid accrued salary forgiven by related party treated as additional paid in capital		$ 349,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Finite-Lived Intangible Assets [Line Items]
Depreciation of property and equipment	$ 20	$ 0
Advertising costs	$ 0	$ 2,686
Property and equipment estimated useful lives	five to seven years
Property and equipment depreciation method	straight-line method
Patents and Trademark
Finite-Lived Intangible Assets [Line Items]
Number of patents issued	5
Amortization method of patents	Straight-line basis
Estimated lives of patents	17 years

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STOCK OPTIONS AND WARRANTS - Non-Employee Stock Option/Warrant Activity (Details) (Stock Options and Warrants, USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Nonemployee Compensation Arrangement By Payment Award Options And Warrants Outstanding [Roll Forward]
Option/Warrant Shares Outstanding, Beginning balance	15,585,996	19,856,662
Option/Warrant Shares Granted	72,422,221	7,235,996
Option/Warrant transferred to employee options	(200,000)
Option/Warrant Shares Exercised	(5,000,996)	(1,000,000)
Option/Warrant Shares Expired/Returned		(10,506,662)
Option/Warrant Shares Outstanding, Ending balance	82,807,221	15,585,996
Option/Warrant Shares Exercisable, December 31, 2012	82,807,221
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years)	6 years 4 months 24 days
Nonemployee Compensation Arrangement By Payment Award Options And Warrants Outstanding Exercise Price [Roll Forward]
Exercise Price Granted		$ 0.00125
Exercise Price transferred to employee options	$ (0.05)
Exercise Price Exercised	$ 0.00125	$ 0.01
Exercise Price Expired/Returned
Nonemployee Compensation Arrangement By Share Based Payment Award Options and Warrants Outstanding Weighted Average Exercise Price [Roll Forward]
Weighted Average Price Outstanding, Beginning balance	$ 0.01	$ 0.02
Weighted Average Price Granted	$ 0.08
Weighted Average transferred to employee options
Weighted Average Price Exercised
Weighted Average Price Expired/Returned		$ (0.01)
Weighted Average Price Outstanding, Ending balance	$ 0.09	$ 0.01
Weighted Average Exercise Price Exercisable	$ 0.09
Minimum
Nonemployee Compensation Arrangement By Payment Award Options And Warrants Outstanding Exercise Price [Roll Forward]
Exercise Price, Beginning balance	$ 0.00125	$ 0.01
Exercise Price Granted	$ 0.05
Exercise Price Expired/Returned		$ 0.01
Exercise Price, Ending balance	$ 0.00125	$ 0.00125
Exercise Price Exercisable, December 31, 2012	$ 0.00125
Maximum
Nonemployee Compensation Arrangement By Payment Award Options And Warrants Outstanding Exercise Price [Roll Forward]
Exercise Price, Beginning balance	$ 0.20	$ 0.20
Exercise Price Granted	$ 0.10
Exercise Price Expired/Returned		$ 0.03
Exercise Price, Ending balance	$ 0.20	$ 0.20
Exercise Price Exercisable, December 31, 2012	$ 0.20

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NOTES PAYABLE (Detail Textuals 4) (USD $)	12 Months Ended
	Dec. 31, 2010
Litigation Case Three
Debt Instrument [Line Items]
Proceeds from litigation settlement	$ 825,000
Percentage allocated to company	50.00%
Percentage allocated to lenders	50.00%
Litigation Case Four
Debt Instrument [Line Items]
Proceeds from litigation settlement	1,000,000
Percentage allocated to company	90.00%
Percentage allocated to lenders	10.00%
Litigation Case Five
Debt Instrument [Line Items]
Proceeds from litigation settlement	$ 1,000,000
Percentage allocated to company	85.00%
Percentage allocated to lenders	15.00%
Litigation Case Six
Debt Instrument [Line Items]
Percentage allocated to company	80.00%
Percentage allocated to lenders	20.00%

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NOTES PAYABLE - Aggregate Maturities of Long-term Debt (Details 1) (USD $)	Dec. 31, 2012
Debt Disclosure [Abstract]
2013	$ 200,000
2014
2015	1,626,249
2016
2017

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STOCK OPTIONS AND WARRANTS (Detail Textuals)	12 Months Ended			12 Months Ended
	Dec. 31, 2012 Incentive stock options	Dec. 31, 2000 Stock option 2000 plan Stock options	Dec. 17, 2003 Stock option 2003 plan Stock options	Dec. 31, 2012 Stock option 2003 plan Incentive stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant options		1,500,000	18,000,000
Exercise of options (in shares)	(5,823,333)			13,590,996
Number of options issued and unexercised				3,335,000
Number of options available to be issued				1,074,004

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SUBSEQUENT EVENTS (Details Textuals 2) (USD $)	12 Months Ended					1 Months Ended	2 Months Ended	1 Months Ended		1 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2006	Dec. 31, 2001	Sep. 30, 2011	Feb. 28, 2013 Subsequent Event	Mar. 31, 2013 Subsequent Event	Feb. 28, 2013 Subsequent Event Board of Directors Chairman	Mar. 31, 2013 Subsequent Event Board of Directors Chairman	Mar. 31, 2013 Subsequent Event Note payable
Subsequent Event [Line Items]
Stock option exercised share (in shares)						900,000	2,435,000	2,000,000
Number of common stock called by warrants (in shares)							1,000,000
Total value of option and warrants exercised							$ 26.794
Stock option exercised value	13,113	10,000	430	232,059		1,125
Notes payable bearing interest rate										25.00%
Accrued interest										83,896
Common stock shares										3,000,000
Cash payment										$ 13,896
Common stock, shares authorized	675,000,000	675,000,000			175,000,000				250,000,000
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001							$ 0.001
Stock option exercised per share (in dollars per share)								$ 0.05
Term of option								10 years

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MAJOR AGREEMENTS (Details Textuals 3) (USD $) In Millions, except Share data, unless otherwise specified		12 Months Ended	1 Months Ended
	Mar. 31, 2013 Subsequent Event	Dec. 31, 2012 Asset Purchase Agreement Trademark Rights, Software and Domain Name	Jan. 31, 2013 Subscription Agreement Subsequent Event	Jan. 31, 2013 Subscription Agreement Preferred Class A Subsequent Event
Major Agreements [Line Items]
Value of common stock shares issued		100,000
Exercise price of warrants		0.045		0.12
Number of common stock called by warrants (in shares)	1,000,000	2,222,222	33,333,333
Percentage of discount to market price		10.00%
Term of warrants		5 years	5 years
Number of preferred stock purchased				33,333,333
Value of common stock shares issued			$ 1

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PATENTS AND TRADEMARK

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

PATENTS AND TRADEMARK

NOTE 2 – PATENTS AND TRADEMARK

The Company has five issued patents for anti-counterfeiting technology. Accordingly, costs associated with the registration of these patents and legal defense have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents (17 years). During the years ended December 31, 2012 and 2011, the Company capitalized patent costs of $6,665 and $3,577. Amortization expense for patents was $13,451 and $10,904 for the years ended December 31, 2012 and 2011. Future estimated annual amortization over the next five years is approximately $11,000 per year for the years ended December 31, 2013 through 2017.  On December 31, 2012, the Company entered into an asset purchase agreement describe in Note 7 to these financial statements.

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NOTES PAYABLE (Detail Textuals 5) (USD $)	158 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Private placement	Dec. 31, 2011 Private placement	Dec. 31, 2010 Private placement	Dec. 31, 2012 Notes Payable
Debt Instrument [Line Items]
Interest rate					25.00%
Debt placement fees					$ 34,500
Amortization of deferred charges	40,800		13,625	17,250
Private placement of convertible notes						250,000
Accrued interest	$ 394,281	$ 362,806				$ 122,397
Amount of note converted in to common stock (in shares)						8,219,911

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INCOME TAXES - Primary components of deferred tax assets, liabilities and related valuation allowances (Details 2) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Deferred tax asset for NOL carryforwards	$ 3,308,000	$ 2,354,000
Deferred tax liability for intangibles	(165,000)	(165,000)
Non taxable income	162,000	47,000
(Deductible) non deductible accrued expenses	386,000	702,000
Valuation allowance	(3,691,000)	(2,938,000)
Deferred tax liabilities, net

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INCOME TAXES - Reconciliation of tax (Details 1) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
U.S federal income tax benefit at Federal statutory rate, amount	$ (298,000)	$ (226,000)
State tax, net of federal tax effect, amount	(50,000)	(38,000)
Non deductible accrued expense, amount	(238,000)
Non deductible share based compensation, amount	(167,000)	25,000
Change in valuation allowance, amount	753,000	239,000
Income tax expense (benefit), Total
U.S federal income tax benefit at Federal statutory rate	(35.00%)	(34.00%)
State tax, net of federal tax effect, rate	(6.00%)	(6.00%)
Non deductible accrued expense, rate	(28.00%)
Non deductible share based compensation, rate	(20.00%)	4.00%
Change in valuation allowance, rate	89.00%	36.00%
Effective income tax rate, Total

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RELATED PARTY TRANSACTIONS (Detail Textuals) (USD $)	Dec. 31, 2012 Shareholder	Dec. 31, 2011 Shareholder
Senior secured convertible notes payable
Debt Instrument [Line Items]
Number of shareholders	6	5
Senior secured convertible notes payable	$ 732,249	$ 577,500
Convertible notes payable
Debt Instrument [Line Items]
Number of shareholders	1	1
Senior secured convertible notes payable	140,000	140,000
Unsecured notes payable
Debt Instrument [Line Items]
Number of shareholders	3	3
Unsecured notes payable	$ 711,000	$ 711,000

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MAJOR AGREEMENTS (Details Textuals) (USD $) In Millions, except Share data, unless otherwise specified	2 Months Ended	1 Months Ended			12 Months Ended
	Dec. 31, 1999 Common Stock	May 25, 2011 Investor	Dec. 20, 2012 Investor	Jun. 24, 2011 Investor	Dec. 31, 2012 Investment Agreement Investor Common Stock	Dec. 31, 2012 Registration Rights Agreement Investor	Dec. 31, 2012 Registration Rights Agreement Investor Common Stock
Major Agreements [Line Items]
Common stock share issued (in shares)	4,278,000	15,500,000			22,222,222
Number of common stock called by warrants (in shares)			333,333	1,000,000	22,222,222
Proceeds from issuance of common stock and warrants					$ 1
Exercise price of common stock							$ 0.01
Percentage of preferred stock voting rights						51%

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INCOME TAXES (Detail Textuals) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Net operating loss	$ 8.3
U.S. Federal Statutory Rate	35.00%

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Detail Textuals) (USD $)	1 Months Ended	3 Months Ended	12 Months Ended
	May 31, 2007	Dec. 31, 2012	Dec. 31, 2006	Dec. 31, 2011	Jun. 30, 2011	Feb. 28, 2006
Debt Instrument [Line Items]
Outstanding principal balance on notes		$ 775,249		$ 781,500
Accrued interest		394,281		362,806
Senior secured convertible notes payable
Debt Instrument [Line Items]
Private placement of convertible notes principal amount					596,500	800,000
Interest rate					10.00%	10.00%
Sale price of notes payable			800,000
Amount of interest rate increased	12.00%
Accrued interest was extended until September 15, 2015		178,749
Outstanding principal balance on notes		775,249		781,500
Accrued interest		$ 600,091		$ 521,665

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies, Inc. and Subsidiary (“the Company”) is a development stage enterprise incorporated in the state of Nevada on November 10, 1999. The Company was established to address counterfeiting issues, initially with respect to the gaming industry. Since inception, substantially all of the efforts of the company have been developing technologies for the prevention of product and document counterfeiting. The Company is in the development stage of raising capital, financial planning, and establishing sources of supply. The Company anticipates establishing markets for its technologies in North America, Europe and Asia. The Company has more recently developed proprietary technologies that could penetrate broader markets in a cost effective manner.

Principle of Consolidation

The accompanying consolidated financial statements include the accounts of LaserLock Technologies, Inc. and its wholly-owned subsidiary, LL Security Products, Inc. All inter-company transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.

Comprehensive Income

The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220 in reporting comprehensive income.  Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income.  Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts receivable, accounts payable and accrued expenses and notes payable.  The carrying value of cash, accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable and convertible debt approximates its fair value based on rates and other terms currently available to the Company for similar debt instruments.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents.

Concentration of Credit Risk Involving Cash and Cash Equivalents

The Company’s cash and cash equivalents are held at two financial institutions. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits.  The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits.

Inventory

Inventory principally consists of penlights and pigments and is stated at the lower of cost (determined by the first-in, first-out method) or market.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. Depreciation of property and equipment was $20 and $0 for the years ended December 31, 2012 and 2011.

Patents and Trademark

The Company has five issued patents for anti-counterfeiting technology and purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be 17 years.

Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360 “Property, Plant, and Equipment.” The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets.

Deferred Financing Costs

Costs incurred in securing long-term debt are deferred and amortized, as a charge to interest expense, over the term of the related debt. In the case of long-term debt modifications, the Company follows the guidance provided by ASC 470-50 “Debt – Modification and Extinguishments.”

Convertible Notes Payable

Convertible notes payable, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature (BCF) as a debt discount, which is then accreted to interest expense over the life of the related debt using the straight-line method which approximates the effective interest method.

Revenue Recognition

In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition (Codified in FASB ASC 605), the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process.

Income Taxes

The Company follows FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes.  Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.  Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities.  Tax years from 2009 through 2012 remain subject to examination by major tax jurisdictions.

Stock-based Payments

The Company accounts for stock-based compensation under the provisions of ASC 718,  Compensation—Stock Compensation   (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model.  The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional paid-in capital in stockholders’ equity over the applicable service periods.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were approximately $0 and $2,686 for the years ended December 31, 2012 and 2011, and are included in sales and marketing expenses.

Research and  Development Costs

In accordance with FASB ASC 730, research and development costs are expensed when incurred.

Loss Per Share

The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss for the years ended December 31, 2012 and 2011, common stock equivalents, including convertible notes payable, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same.

Segment Information

The Company is organized and operates as one operating segment wherein the Company’s patented technologies are utilized to address counterfeiting issues. In accordance with ASC 280, Segment Reporting, the chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company.  Since the Company operates in one segment and provides one group of similar products, all financial segment and product line information required by ASC 280 can be found in the consolidated financial statements.

Recently Adopted Accounting Pronouncements

In January 2010, FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This update provides amendments to ASC Topic 820 that provide disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company adopted the disclosure requirements effective January 1, 2011. The adoption of this standard did not have a material impact on the Company’s consolidated statements of financial position or results of operations.

 

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about the fair value measurements. The amendments include the following:

1. Those that clarify the Board’s intent about the application of existing fair value measurement and disclosure requirements.

2. Those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.

The amendments in this update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.

The Company adopted the amendments effective January 1, 2012 and their adoption did not have any impact on the Company’s financial position or results of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of December 31, 2012, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company's financial statements.

Reclassifications

Certain reclassifications were made to current and long term accrued interest and payroll expense as a separate line item in the 2011 financial statement in order to conform to the 2012 financial statement presentation.

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Detail Textuals 1) (USD $)	158 Months Ended	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012 Senior secured convertible notes payable	Dec. 31, 2012 Senior secured convertible notes payable Maximum	Dec. 31, 2012 Senior secured convertible notes payable Minimum
Debt Instrument [Line Items]
Repurchase of notes issued exercise by warrants		8,000,000
Term of warrants		10 years
Exercise price (in dollars per share)		0.01
Fair value of warrants issued for deferred finance charges	$ 392,376	$ 392,376
Expected volatility			284.00%	169.00%
Risk-free interest rate			4.50%	3.60%
Expected warrant term		10 years
Amortization period		1 year
Method used to calculate fair value of warrants		Black-Scholes option pricing model
Amount received for exercised of warrants		70,000
Number of warrants issued		7,000,000
Proceeds from equity finance		$ 5,000,000
Percent discount on transfer		30.00%

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NOTES PAYABLE (Detail Textuals 2) (USD $)	12 Months Ended	158 Months Ended		1 Months Ended	12 Months Ended					12 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2012	Sep. 30, 2011	Jun. 30, 2011 Series A Notes Payable Due September 2015	Dec. 31, 2009 Series A Notes Payable Due September 2015	Dec. 31, 2012 Series A Notes Payable Due September 2015	Nov. 12, 2012 Series A Notes Payable Due September 2015	Nov. 11, 2012 Series A Notes Payable Due September 2015	Dec. 31, 2011 Series A Notes Payable Due September 2015	Dec. 31, 2009 Series A Notes Payable Due September 2015 Minimum	Dec. 31, 2009 Series A Notes Payable Due September 2015 Maximum	Jan. 31, 2010 Series A Notes Payable	Sep. 30, 2011 Series A Notes Payable	Dec. 31, 2012 Series A Notes Payable	Dec. 31, 2011 Series A Notes Payable	Dec. 31, 2009 Series A Notes Payable	Jun. 30, 2011 Series A Notes Payable
Debt Instrument [Line Items]
Amount of note payable				$ 150,000
Interest rate				8.00%		8.00%			8.00%			8.00%	8.00%	8.00%	8.00%	8.00%	8.00%
Warrants issued				6,000,000	8,000,000							1,000,000				8,000,000
Method used to calculate fair value of warrants				Black-Scholes option pricing model	Black-Scholes option pricing model							Black-Scholes option pricing model
Fair-value of the warrants				21,275	15,450							20,143
Dividend yield					0.00%
Expected volatility				60.00%						30.90%	34.50%	28.60%
Risk-free interest rate				1.52%						0.95%	1.06%	0.84%
Expected warrant term				1 year 3 months	2 years							2 years
Discount, notes payable (in dollars)	18,589	13,632												13,632	18,589
Interest Expense														4,957	17,415	2,230
Amount of notes payable repaid with accrued interest													25,000
Number of warrants expired unexercised													3,000,000
Common stock, shares authorized	675,000,000	675,000,000	175,000,000				425,000,000	175,000,000
Fair value of warrants issued for debt discount	$ 21,275	$ 78,043

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STOCK OPTIONS AND WARRANTS (Detail Textuals 1) (Stock option 2003 plan, Incentive stock options, USD $)	Dec. 31, 2012
Stock option 2003 plan | Incentive stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Minimum percentage for exercise price of option, percentage of the fair market value of the common stock	100.00%
Minimum percentage for exercise price of option in case outstanding stock held by grantee, percentage of the fair market value of the common stock	110.00%
Percentage of outstanding stock held by grantee	10.00%
Maximum threshold limit for aggregate fair market value of stock for which an employee may exercise incentive stock options	$ 1,000,000
Maximum value of options to be exercised	100,000
Maximum value of options shall be deemed to be Non-Statutory Stock Options	$ 100,000

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Consolidated Balance Sheets (USD $)	Dec. 31, 2012	Dec. 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 2,994,350	$ 53,573
Accounts receivable, net of allowance of $0 at December 31, 2012 and December 31, 2011	3,473
Inventory	19,980	35,137
Deferred finance charges		13,625
Prepaid expenses	750,000	117,760
TOTAL CURRENT ASSETS	3,767,803	220,095
PROPERTY AND EQUIPMENT
Capital equipment	34,964	32,604
Less accumulated depreciation	32,624	32,604
TOTAL PROPERTY AND EQUIPMENT	2,340
Patents and Trademark, net of accumulated amortization of $92,302 and $78,851 as of December 31, 2012 and December 31, 2011	311,832	118,618
TOTAL ASSETS	4,081,975	338,713
CURRENT LIABILITIES
Accounts payable and accrued expenses	660,493	634,632
Accrued interest	97,563	8,667
Notes payable	200,000	50,000
TOTAL CURRENT LIABILITIES	958,056	693,299
LONG-TERM LIABILITIES
Accrued interest	975,559	940,554
Senior secured convertible notes payable	775,249	781,500
Convertible notes payable	140,000	140,000
Notes payable, net of discount of $13,632 and $18,589 as of December 31, 2012 and December 31, 2011	697,368	1,092,411
TOTAL LONG-TERM LIABILITIES	2,588,176	2,954,465
CONTINGENCIES
STOCKHOLDERS' DEFICIT
Preferred Stock, $ .001 par value; 75,000,000 shares authorized; no shares issued and outstanding
Common stock, $ .001 par value; 675,000,000 shares authorized; 248,244,012 shares issued and 218,448,109 outstanding at December 31, 2012 and 174,940,506 shares issued and 145,144,603 outstanding at December 31, 2011	248,244	174,940
Additional paid in capital	13,787,929	8,817,382
Treasury stock, at cost (29,795,903 shares at December 31, 2012 and December 31, 2011)	(113,389)	(113,389)
Deficit accumulated during the development stage	(13,387,041)	(12,187,984)
STOCKHOLDERS' DEFICIT	535,743	(3,309,051)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 4,081,975	$ 338,713

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MAJOR AGREEMENTS (Details Textuals 1) (USD $)	12 Months Ended	158 Months Ended				12 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 20, 2012 Investor	Jun. 24, 2011 Investor	Dec. 31, 2012 Technology and Service Agreement Technology Company	Dec. 31, 2012 Technology and Service Agreement Technology Company Warrant	Dec. 31, 2012 Technology and Service Agreement Investor Technology Company Business_Developer
Major Agreements [Line Items]
Number warrants exercised to purchase common stock (in shares)				333,333	1,000,000		4,444,444	22,222,222
Proceeds from issuance of warrants	$ 1,000,000	$ 1,000,000						$ 1,000,000
Proceeds from technology and service agreement								550,000
Number of business developers								2
Amount required to pay on agreement date							450,000
Cash paid							250,000
Exercise price (in dollars per share)				0.15			0.045
Prepaid Expenses	750,000	750,000	117,760			450,000
Accrued amount payable in twelve month	$ 975,559	$ 975,559	$ 940,554			$ 100,000
Percentage of commission on revenue generated						10.00%

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Consolidated Statements of Changes in Stockholders' Equity (Deficit) (Parentheticals)	Nov. 10, 1999
Statement Of Stockholders' Equity [Abstract]
Issuance of shares	4,278,000

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SUBSEQUENT EVENTS (Detail Textuals) (USD $)	1 Months Ended	12 Months Ended		1 Months Ended			12 Months Ended
	Oct. 31, 2012 Private placement Warrant	Dec. 31, 2012 Private placement unit	Mar. 31, 2013 Subsequent Event	Jan. 31, 2013 Subsequent Event Subscription Agreement	Jan. 31, 2013 Subsequent Event Preferred Class [Member] Subscription Agreement	Jan. 31, 2013 Subsequent Event Private placement unit	Dec. 31, 2012 Subsequent Event Private placement unit
Subsequent Event [Line Items]
Exercise price (in dollars per share)	0.10				0.12	0.12	0.10
Sale of units under private offering, Issue price per unit (in dollars per unit)	0.045					0.045	0.05
Number of units sold under private offering (in units)		6,888,889				1,111,111	3,700,000
Number of units sold under private offering value		$ 310,000				$ 50,000	$ 185,000
Number of share of common stock consist in each offering unit	1						1
Number of warrant consist in each offering unit	1						1
Number of preferred stock sale (in shares)					33,333,333
Number of common stock called by warrants (in shares)			1,000,000	33,333,333
Value of common stock shares issued				$ 1,000,000
Term of warrants				5 years

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NOTES PAYABLE - Summary (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Less: Debt discount	$ (13,632)	$ (18,589)
Notes payable	897,368	1,142,411
Less: Current portion	200,000	50,000
Long-term portion	697,368	1,092,411
Unsecured notes payable due at maturity in September 2015
Debt Instrument [Line Items]
Notes payable	561,000	561,000
Series A Notes Payable Due September 2015
Debt Instrument [Line Items]
Notes payable	150,000	150,000
Series A Notes Payable Due October 2011 through January 2012
Debt Instrument [Line Items]
Notes payable	50,000	50,000
Notes Payable Due September 2013
Debt Instrument [Line Items]
Notes payable	$ 150,000	$ 400,000

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Schedule of income tax benefit (provision)

	Year Ended December 31, 2012			Year Ended December 31, 2011
Current	$	490,000		$	142,000
Deferred		263,000			97,000
Change in valuation allowance		(753,000	)		(239,000	)
	$	-		$	-

Schedule of reconciliation of the tax

	2012						2011
	Amount			%			Amount			%
U.S federal income tax benefit at Federal statutory rate	$	(298,000	)		(35	)	$	(226,000	)		(34	)
State tax, net of federal tax effect		(50,000	)		(6	)		(38,000	)		(6	)
Non deductible accrued expenses		(238,000	)		(28	)		-			-
Non deductible share based compensation		(167,000	)		(20	)		25,000			4
Change in valuation allowance		753,000			89			239,000			36
	$	-			-		$	-			-

Schedule of deferred tax assets, liabilities and related valuation

	December 31, 2012			December 31, 2011
Deferred tax asset for NOL carryforwards	$	3,308,000		$	2,354,000
Deferred tax liability for intangibles		(165,000	)		(165,000	)
Non taxable income		162,000			47,000
(Deductible) non deductible accrued expenses		386,000			702,000
Valuation allowance		(3,691,000	)		(2,938,000	)
	$	-		$	-

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NOTES PAYABLE - Information regarding notes payable - Parentheticals (Details)	Dec. 31, 2012	Dec. 31, 2011	Jun. 30, 2011
Unsecured notes payable due at maturity in September 2015
Debt Instrument [Line Items]
Interest rate	10.00%	10.00%
Series A Notes Payable Due September 2015
Debt Instrument [Line Items]
Interest rate	8.00%	8.00%	8.00%
Series A Notes Payable Due October 2011 through January 2012
Debt Instrument [Line Items]
Interest rate	8.00%
Notes Payable Due September 2013
Debt Instrument [Line Items]
Interest rate	25.00%

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STOCK OPTIONS AND WARRANTS (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of non-employee stock option/warrant activity

	Option/Warrant Shares			Exercise Price			Weighted Average Exercise Price
Outstanding, December 31, 2010		19,856,662			$0.01 to $0.20		$	0.02
Granted		7,235,996			0.00125			-
Exercised		(1,000,000	)		0.01			-
Expired/Returned		(10,506,662	)	0.01 to 0.03				(0.01	)
Outstanding, December 31, 2011		15,585,996			$0.00125 to $0.20		$	0.01
Granted		72,422,221		0.05 to 0.10				0.08
Transferred to employee options		(200,000	)		(0.05	)		-
Exercised		(5,000,996	)		0.00125			-
Expired		-			-			-
Outstanding, December 31, 2012		82,807,221			$.00125 to $.20		$	0.09
Exercisable, December 31, 2012		82,807,221			$.00125 to $.20		$	0.09
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years)		6.4

Schedule of incentive stock options

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2010		7,100,000			$.01 to $.28	$	0.07
Granted		6,390,000			$0.00125	$	0.00125
Exercised		-			-		-
Expired/Returned		(7,100,000	)		$.01 - $.03		(0.07	)
Outstanding, December 31, 2011		6,390,000			$0.00125	$	0.00125
Granted		15,000,000			0.05 - 0.15		0.06
Transferred from non-employee options		200,000			0.05		-
Exercised		(5,823,333	)		0.00125 - 0.15		-
Expired/Returned		-			-		-
Outstanding, December 31, 2012		15,766,667			$0.00125 to $0.10	$	0.06
Exercisable, December 31, 2012		10,766,667			$0.00125 to $0.10	$	0.07
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years)		9.8

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Consolidated Statements of Cash Flows (USD $)	12 Months Ended		158 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,199,057)	$ (665,113)	$ (13,387,041)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of options issued in exchange for services	343,674	96,032	2,417,232
Accretion of interest on deferred finance charges	13,625	27,149	453,625
Accretion of discount on notes payable	4,957	17,416	443,236
Salary due to stockholder contributed to capital			15,000
Amortization and depreciation	13,471	10,904	530,055
Gain on disposition of assets			(4,722)
Gain on debt forgiveness	(156,110)	(184,242)	(340,352)
Stock issued in exchange for services	46,500	30,000	553,760
Financing expenses paid directly from stock proceeds			5,270
Amortization of deferred consulting fees			40,800
(Increase) decrease in assets
Accounts receivable	(3,473)	10,193	(3,473)
Inventory	15,157	(11,451)	19,980
Prepaid expenses	(232,240)	21,936	(350,000)
Increase in liabilities
Accounts payable and accrued expenses	786,436	333,291	2,567,362
Net cash used in operating activities	(367,060)	(313,885)	(7,039,268)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(2,360)		(38,109)
Purchase of intangibles	(6,665)	(3,577)	(224,134)
Proceeds from sale of assets			6,738
Net cash used in investing activities	(9,025)	(3,577)	(255,505)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock	2,060,000	400,000	6,551,447
Proceeds from exercise of stock options	13,113	10,000	255,482
Proceeds issuance of stock options			15,000
Proceeds from exercise of warrants	50,000		105,500
Proceeds from issuance of warrants	1,000,000		1,000,000
Proceeds from issuance of notes payable	200,000		2,789,000
Repayments of notes payable	(6,251)	(58,500)	(202,751)
Payment for treasury stock		(17,795)	(17,795)
Debt issuance costs			(62,000)
Stock issuance costs		(40,000)	(144,760)
Net cash provided by financing activities	3,316,862	293,705	10,289,123
NET DECREASE IN CASH AND CASH EQUIVALENTS	2,940,777	(23,757)	2,994,350
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD	53,573	77,330
CASH AND CASH EQUIVALENTS - END OF PERIOD	2,994,350	53,573	2,994,350
Cash paid during the year for:
Interest		6,557	39,440
Income taxes
Return of shares of common stock related to purchase price adjustment
Common stock			(1,000)
Additional paid-in capital			(353,000)
Intangible assets			(354,000)
Issuance of common stock and stock options for acquisition of subsidiary			738,000
Proceeds from common stock sales applied directly to debt and financing expenses repayment			55,270
Fair value of warrants issued for deferred finance charges			392,376
Fair value of stock issued for conversion of notes payable and accrued interest	581,564		893,605
Fair value of stock issued for purchase of assets	100,000		100,000
Fair value of warrants issued for purchase of assets	100,000		100,000
Fair value of stock issued for licensing costs	100,000		100,000
Fair value of warrants issued for licensing costs	300,000		300,000
Fair value of beneficial conversion option			400,000
Fair value of warrants issued as debt discount		21,275	78,043
Issuance of common stock for stock issuance costs		2,100	2,100
Issuance of options as stock cost for treasury stock		5,594	5,594
Forgiveness of debt-related party treated as additional paid in capital	$ 349,000		$ 349,000

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Consolidated Balance Sheets (Parentheticals) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Statement Of Financial Position [Abstract]
Allowance for accounts receivable (in dollars)	$ 0	$ 0
Accumulated amortization, patent and trademark costs (in dollars)	92,302	78,851
Discount, notes payable (in dollars)	$ 13,632	$ 18,589
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized	75,000,000	75,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	675,000,000	675,000,000
Common stock, shares issued	248,244,012	174,940,506
Common stock, shares outstanding	218,448,109	145,144,603
Treasury stock, shares	29,795,903	29,795,903

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 10 – RELATED PARTY TRANSACTIONS

At December 31, 2012 and 2011, six and five shareholders of the Company held $732,249 and $577,500 of the senior secured convertible notes payable.

One shareholder held $140,000 of convertible notes payable as of December 31, 2012 and 2011.

At December 31, 2012 and 2011 three shareholders of the Company held $711,000 of unsecured notes payable.

The Company maintains its office at the home of its Chief Executive Officer. No formal lease agreement exists and no direct rent expense has been incurred. However, related occupancy costs of $32,414 and $13,220 were incurred during the years ended December 31, 2012 and 2011.

At December 31, 2011, accrued and unpaid salary for the Chief Executive Officer was $208,514.  As of December 31, 2012, the Chief Executive Officer has forgiven $349,000 of unpaid accrued salary, which was treated as additional paid in capital.

On December 31, 2012, the Company liquidated its wholly owned subsidiary, LL Security Products, Inc.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Mar. 11, 2013	Jun. 30, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	LASERLOCK TECHNOLOGIES INC
Entity Central Index Key	0001104038
Trading Symbol	llti
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Well-Known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding		230,594,219
Entity Public Float			$ 2,656,351
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY

XML

MAJOR CUSTOMERS

12 Months Ended

Dec. 31, 2012

Major Customers [Abstract]

MAJOR CUSTOMERS

NOTE 11 – MAJOR CUSTOMERS

During the years ended 2012 and 2011, the Company earned a substantial portion of its revenue from two customers. During the years ended December 31, 2012 and 2011, revenue from those customers aggregated $15,289 and $7,984. At December 31, 2012 and 2011, amounts due from those customers included in trade accounts receivable were $3,473 and $0.

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Consolidated Statements of Operations (USD $)	12 Months Ended		158 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012
NET REVENUES
Sales	$ 7,029	$ 900	$ 461,155
Royalties	10,000	7,984	645,180
TOTAL NET REVENUE	17,029	8,884	1,106,335
COST OF SALES	4,083	373	429,031
GROSS PROFIT	12,946	8,511	677,304
OPERATING EXPENSES
General and administrative	129,329	114,376	1,543,359
Legal and Accounting	276,774	71,847	1,538,786
Patent costs			65,000
Payroll Expenses	612,721	227,658	3,412,982
Research and development	5,420	9,081	867,792
Sales and Marketing	66,499	113,377	5,019,732
Total operating expenses	1,090,743	536,339	12,447,651
LOSS BEFORE OTHER INCOME	(1,077,797)	(527,828)	(11,770,347)
OTHER INCOME (EXPENSE)
Interest income	1	59	63,664
Interest expense	(277,371)	(321,586)	(2,190,432)
Gain on debt forgiveness	156,110	184,242	340,352
Gain on disposition of assets			4,722
TOTAL OTHER INCOME (EXPENSE)	(121,260)	(137,285)	(1,781,694)
LOSS BEFORE INCOME TAX BENEFIT	(1,199,057)	(665,113)	(13,552,041)
INCOME TAX BENEFIT			(165,000)
NET LOSS	$ (1,199,057)	$ (665,113)	$ (13,387,041)
BASIC AND DILUTED NET LOSS PER COMMON SHARE (in dollars per share)	$ (0.01)	$ 0.00
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (in shares)	150,559,287	146,076,571

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CONVERTIBLE NOTES PAYABLE

12 Months Ended

Dec. 31, 2012

Convertible Notes Payable [Abstract]

CONVERTIBLE NOTES PAYABLE

NOTE 5 - CONVERTIBLE NOTES PAYABLE

During 2007, the Company commenced a private placement of up to $400,000 principal amount of 10% Convertible Promissory Notes originally due in August 2008 (the “Notes”). The Company raised $375,000 under this private placement in 2007 and the remaining $25,000 was raised in 2008. Previously $260,000 of the Notes were converted into shares of the Company’s common stock.  Holders of Notes will have the right, at their option, to convert the outstanding principal and interest of the Notes into shares of the Company’s Series A Preferred Stock at any time and from time to time at the option of the holder at the initial conversion price of $0.005333 per share. It is the intention, however, that the option holder will convert the Notes into shares of the Company’s common stock.  The Notes are unsecured.

 In accordance with ASC 470, a beneficial conversion feature of $375,000 and $25,000 was required to be recorded in 2007 and 2008, respectively, since the fair value of the Company’s common stock at the date of issuance ($0.016 per share) was greater than the conversion price of $0.005333 per share. The value of the beneficial conversion feature was recorded to additional paid-in capital with the offset to discount on notes payable. The debt discount was accreted to interest expense over the one-year original term of the notes. 

In August 2009, noteholders exercised their option to convert $260,000 of the notes payable plus accrued interest into 48,750,000 shares of common stock. The noteholder of the remaining $140,000 under this convertible note issue agreed to extend the maturity date of these notes to September 30, 2015 at an interest rate of 10% per annum. Additionally, the noteholder agreed in writing to suspend its right to convert its note until such as the Company’s authorized shares have been increased. Remaining shares to be potentially issued under this convertible note issue is 26,250,000.

As of December 31, 2012 and 2011, the remaining principal balance on the notes is $140,000.  Accrued interest at December 31, 2012 and 2011 amounted to $78,750 and $64,750.

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE

12 Months Ended

Dec. 31, 2012

Senior Secured Convertible Notes Payable [Abstract]

SENIOR SECURED CONVERTIBLE NOTES PAYABLE

NOTE 4 - SENIOR SECURED CONVERTIBLE NOTES PAYABLE

In February 2006, the Company commenced a private placement of up to $800,000 principal amount of 10% senior secured convertible promissory notes due twelve months from the date of issue to certain Company shareholders and other accredited investors. As of December 31, 2006, the Company completed this private placement by selling all notes payable totaling $800,000. The notes are secured by a first priority lien on all of the tangible and intangible personal property of the Company. In May 2007, the due date of these notes was extended to August 2008 and the interest rate increased to 12% per annum during the extension period.  In June 2011, the interest rate on all of the notes was reset to 10% and $596,500 of the notes and accrued interest was extended until September 15, 2015.  During the fourth quarter of 2012 the remaining $178,749 of unextended notes and the associated accrued interest were extended to September 30, 2015.  As of December 31, 2012 and 2011, the outstanding principal balance on these notes was $775,249 and $781,500. Accrued interest at December 31, 2012 and 2011 amounted to $600,091 and $521,665.

Purchasers of the notes were issued 8,000,000 10-year warrants exercisable into the Company’s shares at an exercise price of $0.01 per share. The warrants were valued at $392,376 and recorded as a debt discount on the notes payable. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 169% and 284%, risk-free interest rate between 3.6% and 4.5% and expected warrant life of ten years. The deferred finance charges were amortized over one year, which was the original term of the notes. As of December 31, 2012, the Company has received $70,000 for the exercise of 7,000,000 of the warrants.  The exercise of these options occurred prior to December 31, 2011.

In addition, if an equity financing with total proceeds of more than $5,000,000 occurs while any notes are outstanding, holders of notes will have the right, at their option, to convert the outstanding principal and interest of the notes into shares at a discount of 30% of the price per share in the qualified financing. Since the embedded conversion feature is contingent upon the occurrence of the qualified financing, the value of the contingent conversion feature, if beneficial, will be recognized when the triggering event occurs and the contingency is resolved.

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NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Schedule of notes payable

	December 31, 2012			December 31, 2011
Unsecured notes payable; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	561,000		$	561,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015		150,000			150,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)		50,000			50,000
Notes payable, interest at 25% per annum; principal and interest due September 2013		150,000			400,000
Less: Debt discount		(13,632	)		(18,589	)
		897,368			1,142,411
Less: Current portion		200,000			50,000
Long-term portion	$	697,368		$	1,092,411

Schedule of aggregate maturities of senior secured convertible notes

2013                 $    200,000

2014                                  -

2015                    1,626,249

2016                                  -

2017                                  -

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CONTINGENCIES

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES

NOTE 12 – CONTINGENCIES

In October 2010, the Company filed suit in the Western District of Pennsylvania against WS Packaging Group, Inc. (“WS”) alleging that WS infringed on one of the Company’s patents in the manufacture of MONOPOLY game pieces on behalf of McDonald’s Corp. On June 4, 2012, both WS and the Company filed a stipulation to dismiss the action without prejudice and enter into settlement negotiations. Settlement negotiations are ongoing.

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STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2012

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE 8 – STOCKHOLDERS’ EQUITY

On February 17, 2011, the Company issued 1 million shares of the Company’s common stock, valued at $30,000 to a consultant.

On April 7, 2011, a board member returned 2 million shares of the Company’s common stock, valued at $15,000 to the treasury.

On April 7, 2011, the President of the Company returned 10 million shares of the Company’s common stock, valued at $75,000 to the treasury.

On April 28, 2011, the Company purchased 17,795,903 shares of the Company’s outstanding common stock for $17,796 and placed them in the treasury.

On May 25, 2011, the Company sold 15.5 million shares of the Company’s stock to an investor for $400,000.

On May 25, 2011, the Company issued 2.1 million shares of the Company’s common stock, valued at $2,100 to a consultant for raising the $400,000 associated with the sale of the 15.5 million shares.

On June 24, 2011, an investor exercised a warrant to purchase 1 million shares of the Company’s common stock, that raised $10,000 for the Company.

In October, 2012, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.045 per unit. As of December 31, 2012, the Company sold 6,888,889 units that raised $310,000 for the Company.

In October, 2012, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.05 per unit. As of December 31, 2012, the Company sold 15 million units that raised $750,000 for the Company.

On November 13, 2012, an employee and consultant exercised options to purchase in the aggregate 10,490,996 shares of the Company’s common stock at an exercise price of $.00125 per share that raised $13,114 for the Company.

On November 21, 2012, the Company issued 1 million shares of the Company’s common stock, valued at $46,500 to a board member for services to the Company.

On December 5, 2012, the Company issued 12,923,622 shares of the Company’s common stock, valued at $581,564 for the retirement of two notes payable totaling $450,000 and accrued interest of $131,564.

On December 20, 2012, an investor exercised warrants to purchase 333,333 shares of the Company’s common stock at $0.15 per share, that raised $50,000 for the Company.

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SUBSEQUENT EVENTS (Detail Textuals 1) (Subsequent Event, USD $)	0 Months Ended
	Oct. 08, 2012 Vice Chairman of Board and Chief Executive Officer	Oct. 16, 2012 President and Chief Operating Officer
Subsequent Event [Line Items]
Annual compensation per year	$ 200,000	$ 200,000
Term of agreement	3 years	3 years
Percentage shares purchase (in shares)	5.00%	5.00%
Funding received by company	$ 2,500,000	$ 2,500,000
Exercise price of funding (in dollars per share)	$ 0.05	$ 0.05

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NOTES PAYABLE

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 6 - NOTES PAYABLE

Notes payable consists of the following as of December 31:

	December 31, 2012			December 31, 2011
Unsecured notes payable; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	561,000		$	561,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015		150,000			150,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)		50,000			50,000
Notes payable, interest at 25% per annum; principal and interest due September 2013		150,000			400,000
Less: Debt discount		(13,632	)		(18,589	)
		897,368			1,142,411
Less: Current portion		200,000			50,000
Long-term portion	$	697,368		$	1,092,411

At December 31, 2012 and 2011 accrued interest on notes payable was $394,281 and $362,806.

Unsecured Notes Payable

During the second quarter of 2012, the Company received $200,000 for a 10% unsecured note payable, due April 27, 2013.  In December 2012, this note payable and accrued interest of $9,167 was converted into 4,703,711 shares of the Company’s common stock.

Private Placement of 8% Series A Notes Payable

In August 2009, the Company commenced a private placement of up to $300,000 consisting of up to 6 units. Each unit consists of a $50,000, 8% Series A Note Payable, due September 30, 2011, and a non-detachable warrant to purchase 2 million shares of the Company’s common stock. During 2009, the Company sold 4 units, issued $200,000 of 8% Series A Notes Payable, issued 8 million warrants, and raised $180,000, net of commission of $20,000. In January 2010, the Company sold .5 units, issued $25,000 of 8% Series A Notes Payable, issued 1 million warrants, and raised $17,500 net of commissions of $7,500. The commissions were treated as deferred finance charges and are expensed over the term of notes payable. For the years ended December 31, 2012 and 2011, amortization of deferred finance charges was $0 and $10,650.

The 8 million warrants in 2009 were valued at $15,450, fair value, using the Black-Scholes option pricing model to calculate the fair-value of the warrants, with the following assumptions: no dividend yield, expected volatility of between 30.9% and 34.5%, risk free interest rate between .95% and 1.06% and warrant life of approximately 2 years. The 1 million warrants in 2010 were valued at $20,143, fair value, using the Black-Scholes option pricing model to calculate the fair-value of the warrants, with the following assumptions: no dividend yield, expected volatility of 28.6 %, risk free interest rate of .84% and warrant life of approximately 2 years.

In June 2011, the maturity date on the $150,000 of the 8% Series A Notes Payable and the term on the associated 6 million warrants were extended to September 30, 2015. As a result, the warrants were revalued using the Black-Scholes option pricing model to calculate the incremental fair-value of the warrants of $21,275, with the following assumptions: no dividend yield, expected volatility of 60%, risk free interest rate of 1.52% and warrant life of approximately 1.25 years. As part of the debt extension, the lender holding the 6 million warrants agreed in writing to suspend its right to exercise these warrants until such time that the Company’s authorized shares have been increased.  The authorized shares of the Company’s common stock were increased on November 12, 2012 from 175,000,000 to 425,000,000.

The relative fair value of the warrants issued in conjunction with the 8% Series A Notes Payable have been treated as a debt discount with an offsetting credit to additional paid-in capital. The debt discount related to the warrant issuances is being accreted to interest expense over the term of the notes. When the warrants were revalued the incremental amount of $21,275 was also treated as additional debt discount and is being accreted over the new term of the 8% Series A Notes Payable.  As of December 31, 2012 and 2011, the unaccreted debt discount related to warrants issued in conjunction with the 8% Series A Notes payable was $13,632 and $18,589. As of the year ended December 31, 2012 and 2011, accreted interest expense from the accretion of the debt discount was $4,957 and $17,415. 

During the third quarter of 2011, $25,000 plus accrued interest of the 8% Series A Notes Payable were repaid and 3 million of the associated warrants expired unexercised.

Private Placement of 25% Notes Payable

In 2010, the Company issued $400,000 in notes payable in order to finance a patent infringement lawsuit (see Note 11 - Contingencies to these condensed consolidated financial statements). The notes payable accrue interest at 25% per annum and mature upon the earlier of September 1, 2013 or the date on which the Company receives net proceeds from the patent infringement claim. In addition to the base interest of 25% per annum, the lenders are entitled to bonus interest equal to the following:

a. First monies realized by the Company from its share of the net proceeds of the lawsuit shall be allocated and paid to the lender until the principal and base interest accruing has been fully paid.

b. The next monies from the net proceeds of the litigation settlement will be paid to the Company to reimburse for out-of-pocket legal costs related to the lawsuit.

c. The next $825,000 of proceeds will be split 50%/50% between the Company and the lenders.

d. The next $1 million realized by the Company shall be allocated 90% to the Company and 10% to the lenders.

e. The next $1 million realized by Company shall be allocated 85% to Company and 15% to lenders.

f. All remaining proceeds realized by Company shall be allocated 80% to Company and 20% to lenders.

The lenders have a security interest in the Company’s patent infringement claim in which the lender has the right to the net proceeds of this lawsuit to satisfy outstanding principal and interest under the notes.

As part of the private placement of the 25% notes payable, the Company incurred debt placement fees of $34,500 in 2010. These debt placement fees have been treated as deferred finance charges and are being amortized to interest expense over two years.  For the years ended December 31, 2012 and 2011 amortization of deferred finance charges was $13,625 and $17,250.

In December 2012, $250,000 of these notes payable and accrued interest of $122,397 were converted into 8,219,911 shares of the Company’s common stock.

Aggregate Maturities of Long-term Debt

Aggregate maturities of the senior secured convertible notes, convertible notes and notes payable over the next five years are as follows:

2013                 $    200,000

2014                                  -

2015                    1,626,249

2016                                  -

2017                                  -

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MAJOR AGREEMENTS

12 Months Ended

Dec. 31, 2012

Major Agreements [Abstract]

MAJOR AGREEMENTS

NOTE 7 – MAJOR AGREEMENTS

Investment Agreement

The Company entered into an Investment Agreement with VerifyMe, Inc, (“VerifyMe”) on December 31, 2012 (the “Investment Agreement”). Under the terms of the Investment Agreement, VerifyMe purchased 22,222,222 shares of the Company’s common stock as well as a warrant to purchase 22,222,222 shares of the Company’s common stock for $1 million.  In addition a Subscription Agreement (discussed below) was to be entered into on or before January 31,2013.

Registration Rights Agreement

In connection with the Investment Agreement, the Company entered into a Registration Rights Agreement with VerifyMe (the “Registration Rights Agreement”), pursuant to which VerifyMe can demand at any time on or after four months after December 31, 2012, that the Company file a registration statement relative to shares owned by VerifyMe.  If the Company has not filed the demand registration statement by the later of (i) two (2) months after the date of the request of demand registration and (ii) six (6) months after the date of the Registration Rights Agreement (such date, the “Filing Date”), then, (i) the Company shall not issue any (A) capital stock, (B) evidences of indebtedness, shares or other securities directly or indirectly convertible into or exchangeable for capital stock (“Convertible Securities”), or (C) rights, options or warrants to subscribe for, purchase or otherwise acquire capital stock or Convertible Securities to anyone other than the stockholder until it files the demand registration statement, (ii) beginning on the day following the Filing Date, the applicable exercise price shall be reduced by $0.01, (iii) until the Company has filed the registration statement with the SEC, on each subsequent one (1) month anniversary of the filing date, the applicable exercise price shall be reduced by $0.01, and (iv) all common stock held by the stockholder and all common stock held by the Company to be granted by the Company in respect of the exercise of the warrants, shall automatically convert into a class of preferred stock of the Company, established by the Company on terms acceptable to the stockholder, which such class of preferred stock shall have voting rights representing 51% of the aggregate voting power of the Company.

Technology and Service Agreement

In connection with the Investment Agreement, the Company entered into a Technology and Service Agreement with VerifyMe (the “Technology and Service Agreement ”), pursuant to which VerifyMe purchased warrants of the Company to purchase 22,222,222 shares of the Company’s common stock for $1 million.  Additionally, the Company executed a services agreement with Zaah Technologies, Inc. (“Zaah”) concurrently with this agreement (the “Zaah Technology and Service Agreement”).  The Company is to use up to $550,000 of the proceeds from the Technology and Service Agreement for the purpose of the Company’s hiring (i) a full-time Chief Technology Officer or Chief Information Officer and (ii) two full-time business developers.

Technology and Service Agreement with Zaah

Under the Zaah Technology and Service Agreement, Zaah will provide the Company (a) twelve (12) months of technical support, (b) up to twelve (12) days of meetings annually between the respective management teams of the Company and Zaah, (c) updates to technology as agreed in writing between the Company and Zaah, and (d) twelve (12) months of technical hosting.

The Company is required to pay Zaah the following:

(a) $450,000 on the date of the agreement (December 31, 2012), consisting of $250,000 in cash and warrants to purchase 4,444,444 shares of Common Stock under a cashless exercise initially at an exercise price of $0.045 on the terms set forth under the warrants issued by the Company to Zaah under the warrant, dated as of December 31, 2012. The $450,000 is reflected as prepaid expenses on the December 31, 2012 balance sheet.

(b) $100,000, accrued in full as of the date of this Agreement, and reflected as prepaid expenses on the December 31, 2012 balance sheet, but payable in twelve (12) months from the date hereof to a designee of Zaah’s selection, with a right to convert (at Zaah’s sole discretion, from time to time at any time) to shares of common stock at the prevailing market price per share of common stock (which, as long as the common stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the common stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.)); and

(c) a commission of 10% of the revenue generated by any Company transaction originated through the efforts of Zaah, as substantiated by a written agreement between the Company and Zaah, specifically referencing the transaction in which Zaah is entitled to such commission, payable by the Company to Zaah in cash. Such payment shall be made on the earlier of (i) the date of the signing of such transaction, (ii) the date of the closing of the transaction, or (iii) any date on which any funds are paid to the Company in respect of such transaction.

Patent and Technology License Agreement

In connection with the Investment Agreement, the Company entered into a Patent and Technology License Agreement with VerifyMe, pursuant to which VerifyMe granted the Company exclusive and non-exclusive licenses relative to a specific list of patents in return for the following:

(a) Payment 1, payable upon execution of the Agreement on December 31, 2012: The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of the Company equal to (x) $100,000 divided by (y) $0.045 (2,222,222 shares) and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years. The fair value of the shares of common stock ($100,000) and the fair value of the cashless exercise warrants ($100,000) are reflected as prepaid expenses on the December 31, 2012 balance sheet.

(b) Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of Shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

(c) Payment 3, payable on January 1, 2015: The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of Shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years.

(d) Future Payments Contingent: the Company’s payment of Payment 2 and Payment 3 is contingent. To the extent that VerifyMe does not develop and license to the Company, at a time subsequent to Payment 1, further technology and/or a further patent right related to the local, mobile and cloud based biometric security systems, then any payments not already paid, will not longer by due to VerifyMe, this nonperformance being a likelihood, more likely than not.

Asset Purchase Agreement

In connection with the Investment Agreement, the Company entered into an Asset Purchase Agreement with VerifyMe, pursuant to which the Company purchased trademark rights, software and a domain name at a purchase price of $100,000 to be paid by issuing shares equal to $100,000/0.045 (2,222,222 shares) and cashless exercise warrants to purchase an equal number of shares at an exercise price of ten cents per share with a term of five years.

Subscription Agreement

VerifyMe subscribed to purchase 33,333,333 shares of the Company’s preferred stock and a warrant to purchase 33,333,333 shares of the Company’s common stock for $1 million at an exercise price of $0.12.  This agreement was executed on January 31, 2013.

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STOCK OPTIONS AND WARRANTS

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

STOCK OPTIONS AND WARRANTS

NOTE 9 – STOCK OPTIONS AND WARRANTS

During 1999, the Board of Directors (“Board”) of the Company adopted, with the approval of the stockholders, a Stock Option Plan. In 2000, the Board superseded that plan and created a new Stock Option Plan, pursuant to which it is authorized to grant options to purchase up to 1.5 million shares of common stock. On December 17, 2003, the Board, with approval of the stockholders, superseded this plan and created the 2003 Stock Option Plan (the “Plan”). Under the Plan the Company is authorized to grant options to purchase up to 18,000,000 shares of common stock to the Company’s employees, officers, directors, consultants, and other agents and advisors. The Plan is intended to permit stock options granted to employees under the Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the Plan, which are not intended to qualify as Incentive Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock Options”). As of December 31, 2012, there are 13,590,996 options that have been issued and exercised, 3,335,000 options that have been issued and are unexercised, and 1,074,004 options that are available to be issued under the Plan.

The Plan is administered by a committee of the Board of Directors (“Stock Option Committee”) which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock for which an employee may exercise Incentive Stock Options under all plans of the company shall not exceed $1,000,000 per calendar year. If any employee shall have the right to exercise any options in excess of$100,000 during any calendar year, the options in excess of $100,000 shall be deemed to be Non-Statutory Stock Options, including prices, duration, transferability and limitations on exercise.

The Company issued non-statutory stock options pursuant to contractual agreements to non-employees. Options granted under the agreements are expensed when the related service or product is provided.

On May 9, 2011, an option holder agreed to return an option to purchase 3,056,662 shares of the Company’s common stock at an exercise price of $.03 and an option to purchase 2.8 million shares of the Company’s common stock at an exercise price of $.01, to the Company. On the same day, the Company agreed to issue to the option holder an option to purchase 5,000,996 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years. The fair value of the option issued was $37,186 and was expensed immediately.

On May 9, 2011, a board member agreed to return an option to purchase 250,000 shares of the Company’s common stock at an exercise price of $.03 and an option to purchase 750,000 shares of the Company’s common stock at an exercise price of $.01, to the Company. On the same day, the Company agreed to issue to the board member an option to purchase 900,000 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years. The fair value of option issued was $6,712 and was expensed immediately.

On May 9, 2011, the President of the Company agreed to return an option to purchase 2.5 million shares of the Company’s common stock at exercise prices of $.03 and an option to purchase 3.6 million shares of the Company’s common stock at an exercise price of $.01, to the Company. On the same day, the Company agreed to issue to the President of the Company an option to purchase 5,490,000 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years. The fair value of the option issued was $40,946 and was expensed immediately.

On May 9, 2011, the Company issued an option to purchase 750,000 shares of the Company’s common stock at an exercise price of $.00125, with a term of ten years, to a consultant in conjunction with his efforts to acquire the 17,795,903 treasury shares. The fair value of the option issued was $5,594 and was expensed immediately.

All of the options issued on May 9, 2011 were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 150%, risk-free interest rate of 3.7% and expected option life of ten years.

On July 16, 2012, the Company issued an option to purchase 200,000 shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to a consultant. The fair value of options issued was $11,638. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 133%, risk-free interest rate of 1.5% and expected option life of ten years. These options granted were fully vested as of the date of the agreement. As a result, the Company recorded $11,638 of consulting expense for the year ended December 31, 2012.

On November 21, 2012, the Company issued options to purchase an aggregate of 2 million shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to the Chief Executive Officer and the Chief Operating Officer. The fair value of options issued was $89,538 and was expensed immediately.

On November 21, 2012, the Company issued options to purchase an aggregate of 10 million shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to the five members of the Board of Directors. The fair value of options issued was $447,689 of which $223,844 was expensed immediately and the remainder will be expensed over one year with one month expense of $18,564 being expensed in 2012.

All of the options issued on November 21, 2012 were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 131%, risk-free interest rate of 1.7% and expected option life of ten years.

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2010:

	Option/Warrant Shares			Exercise Price			Weighted Average Exercise Price
Outstanding, December 31, 2010		19,856,662			$0.01 to $0.20		$	0.02
Granted		7,235,996			0.00125			-
Exercised		(1,000,000	)		0.01			-
Expired/Returned		(10,506,662	)	0.01 to 0.03				(0.01	)
Outstanding, December 31, 2011		15,585,996			$0.00125 to $0.20		$	0.01
Granted		72,422,221		0.05 to 0.10				0.08
Transferred to employee options		(200,000	)		(0.05	)		-
Exercised		(5,000,996	)		0.00125			-
Expired		-			-			-
Outstanding, December 31, 2012		82,807,221			$.00125 to $.20		$	0.09
Exercisable, December 31, 2012		82,807,221			$.00125 to $.20		$	0.09
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years)		6.4

A summary of incentive stock option transactions for employees since December 31, 2010 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2010		7,100,000			$.01 to $.28	$	0.07
Granted		6,390,000			$0.00125	$	0.00125
Exercised		-			-		-
Expired/Returned		(7,100,000	)		$.01 - $.03		(0.07	)
Outstanding, December 31, 2011		6,390,000			$0.00125	$	0.00125
Granted		15,000,000			0.05 - 0.15		0.06
Transferred from non-employee options		200,000			0.05		-
Exercised		(5,823,333	)		0.00125 - 0.15		-
Expired/Returned		-			-		-
Outstanding, December 31, 2012		15,766,667			$0.00125 to $0.10	$	0.06
Exercisable, December 31, 2012		10,766,667			$0.00125 to $0.10	$	0.07
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years)		9.8

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CONVERTIBLE NOTES PAYABLE (Detail Textuals 1) (USD $)	0 Months Ended				1 Months Ended	12 Months Ended
	Dec. 05, 2012	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2008	Aug. 31, 2009 Convertible notes payable	Dec. 31, 2007 Convertible notes payable	Dec. 31, 2012 Convertible notes payable	Dec. 31, 2011 Convertible notes payable	Jun. 30, 2011 Convertible notes payable	Dec. 31, 2008 Convertible notes payable
Debt Instrument [Line Items]
Common stock value issue for retired notes payable	$ 450,000				$ 260,000
Common stock share issue for retired notes payable and accrued interest (in shares)	12,923,622				48,750,000
Remaining principal balance		140,000	140,000	400,000	140,000		140,000	140,000		400,000
Interest rate					10.00%	10.00%			10.00%
Maturity date					2015-09	2008-08
Remaining shares to be potentially issued under this convertible note issued					26,250,000
Accrued interest		$ 394,281	$ 362,806				$ 78,750	$ 64,750

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STOCK OPTIONS AND WARRANTS - Incentive Stock Option Transactions (Details 1) (Incentive stock options, USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Option Shares Outstanding, Beginning balance	6,390,000	7,100,000
Option Shares Granted	15,000,000	6,390,000
Option/Warrant transferred to employee options	200,000
Option Shares Exercised	(5,823,333)
Option Shares Expired		(7,100,000)
Option Shares Outstanding, Ending balance	15,766,667	6,390,000
Option Shares Exercisable, December 31, 2011	10,766,667
Weighted Average Remaining Life, Exercisable, December 31, 2011 (years)	9 years 9 months 18 days
Share Based Compensation Arrangement By Share Based Payment Award Options and Warrants Outstanding Exercise Price [Roll Forward]
Exercise Price Outstanding, Beginning balance	$ 0.00125
Exercise Price Granted		$ 0.00125
Exercise Price transferred to employee options	$ 0.05
Exercise Price Exercised
Exercise Price Expired/Returned
Exercise Price Outstanding, Ending balance		$ 0.00125
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted Average Exercise Price Outstanding, Beginning balance	$ 0.00125	$ 0.07
Weighted Average Exercise Price Granted	$ 0.06	$ 0.00125
Weighted Average transferred to employee options
Weighted Average Exercise Price Exercised
Weighted Average Exercise Price Expired		$ (0.07)
Weighted Average Exercise Price Outstanding, Ending balance	$ 0.06	$ 0.00125
Weighted Average Exercise Price Exercisable, December 31, 2011	$ 0.07
Minimum
Share Based Compensation Arrangement By Share Based Payment Award Options and Warrants Outstanding Exercise Price [Roll Forward]
Exercise Price Outstanding, Beginning balance		$ 0.01
Exercise Price Granted	$ 0.05
Exercise Price Exercised	$ 0.00125
Exercise Price Expired/Returned		$ 0.01
Exercise Price Outstanding, Ending balance	$ 0.00125
Exercise Price Exercisable, December 31, 2012	$ 0.00125
Maximum
Share Based Compensation Arrangement By Share Based Payment Award Options and Warrants Outstanding Exercise Price [Roll Forward]
Exercise Price Outstanding, Beginning balance		$ 0.28
Exercise Price Granted	$ 0.15
Exercise Price Exercised	$ 0.15
Exercise Price Expired/Returned		$ 0.03
Exercise Price Outstanding, Ending balance	$ 0.10
Exercise Price Exercisable, December 31, 2012	$ 0.10

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Principle of Consolidation

Principle of Consolidation

The accompanying consolidated financial statements include the accounts of LaserLock Technologies, Inc. and its wholly-owned subsidiary, LL Security Products, Inc. All inter-company transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Comprehensive Income

Comprehensive Income

The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash, accounts receivable, accounts payable and accrued expenses and notes payable. The carrying value of cash, accounts receivable, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable and convertible debt approximates its fair value based on rates and other terms currently available to the Company for similar debt instruments.

Cash and Cash Equivalents

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents.

Concentration of Credit Risk Involving Cash and Cash Equivalents

Concentration of Credit Risk Involving Cash and Cash Equivalents

The Company’s cash and cash equivalents are held at two financial institutions. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits.

Inventory

Inventory

Inventory principally consists of penlights and pigments and is stated at the lower of cost (determined by the first-in, first-out method) or market.

Property and Equipment

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. Depreciation of property and equipment was $20 and $0 for the years ended December 31, 2012 and 2011.

Patents and Trademark

Patents and Trademark

The Company has five issued patents for anti-counterfeiting technology and purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be 17 years.

Long-Lived Assets

Long-Lived Assets

The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360 “Property, Plant, and Equipment.” The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets.

Deferred Financing Costs

Deferred Financing Costs

Costs incurred in securing long-term debt are deferred and amortized, as a charge to interest expense, over the term of the related debt. In the case of long-term debt modifications, the Company follows the guidance provided by ASC 470-50 “Debt – Modification and Extinguishments.”

Convertible Notes Payable

Convertible Notes Payable

Convertible notes payable, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature (BCF) as a debt discount, which is then accreted to interest expense over the life of the related debt using the straight-line method which approximates the effective interest method.

Revenue Recognition

Revenue Recognition

In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition (Codified in FASB ASC 605), the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process.

Income Taxes

Income Taxes

The Company follows FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Tax years from 2009 through 2012 remain subject to examination by major tax jurisdictions.

Stock-based Payments

Stock-based Payments

The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method.

The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.

All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional paid-in capital in stockholders’ equity over the applicable service periods.

Advertising Costs

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were approximately $0 and $2,686 for the years ended December 31, 2012 and 2011, and are included in sales and marketing expenses.

Research and Development Costs

Research and Development Costs

In accordance with FASB ASC 730, research and development costs are expensed when incurred.

Loss Per Share

Loss Per Share

The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Because the Company reported a net loss for the years ended December 31, 2012 and 2011, common stock equivalents, including convertible notes payable, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same.

Segment Information

Segment Information

The Company is organized and operates as one operating segment wherein the Company’s patented technologies are utilized to address counterfeiting issues. In accordance with ASC 280, Segment Reporting, the chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Since the Company operates in one segment and provides one group of similar products, all financial segment and product line information required by ASC 280 can be found in the consolidated financial statements.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In January 2010, FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements. This update provides amendments to ASC Topic 820 that provide disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company adopted the disclosure requirements effective January 1, 2011. The adoption of this standard did not have a material impact on the Company’s consolidated statements of financial position or results of operations.

In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS. The amendments change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about the fair value measurements. The amendments include the following:

1. Those that clarify the Board’s intent about the application of existing fair value measurement and disclosure requirements.

2. Those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements.

The amendments in this update are to be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after December 15, 2011. Early application by public entities is not permitted.

The Company adopted the amendments effective January 1, 2012 and their adoption did not have any impact on the Company’s financial position or results of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

As of December 31, 2012, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company's financial statements.

Reclassifications

Reclassifications

Certain reclassifications were made to current and long term accrued interest and payroll expense as a separate line item in the 2011 financial statement in order to conform to the 2012 financial statement presentation.

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PATENTS AND TRADEMARK (Detail Textuals) (Patents and Trademark, USD $)	12 Months Ended
	Dec. 31, 2012 Patent	Dec. 31, 2011
Patents and Trademark
Finite-Lived Intangible Assets [Line Items]
Number of patents issued	5
Amortization method of patents	Straight-line basis
Estimated lives of patents	17 years
Capitalized patent costs	$ 6,665	$ 3,577
Amortization expense	13,451	10,904
Future estimated annual amortization in December 31, 2013	11,000
Future estimated annual amortization in December 31, 2014	11,000
Future estimated annual amortization in December 31, 2015	11,000
Future estimated annual amortization in December 31, 2016	11,000
Future estimated annual amortization in December 31, 2017	$ 11,000

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STOCKHOLDERS' EQUITY (Details Textuals 1) (USD $)	0 Months Ended	2 Months Ended	12 Months Ended				0 Months Ended	1 Months Ended				1 Months Ended	12 Months Ended
	Dec. 05, 2012	Dec. 31, 1999	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2006	Dec. 31, 2001	Nov. 13, 2012 Employee and Consultant	Nov. 21, 2012 Board member	May 25, 2011 Investor	Dec. 20, 2012 Investor	Jun. 24, 2011 Investor	Oct. 31, 2012 Private placement Warrant	Dec. 31, 2012 Private placement unit	Dec. 31, 2012 Private placement unit	Oct. 31, 2012 Private placement
Stockholders Equity Note [Line Items]
Warrants exercise price (in dollars per share)										0.15		0.10			0.10
Sale of units under private offering, Issue price per unit (in dollars per unit)												0.045			0.05
Number of units sold under private offering (in units)													6,888,889	15,000,000
Number of units sold under private offering value													$ 310,000	$ 750,000
Number of share of common stock consist in each offering unit												1
Number of warrant consist in each offering unit												1
Stock option exercised share (in shares)							10,490,996
Stock option exercised value			13,113	10,000	430	232,059	13,114
Stock option exercised per share (in dollars per share)							$ 0.00125
Common stock share issued (in shares)								1,000,000	15,500,000
Value of common stock shares issued		20,873						46,500	400,000
Common stock share issue for retired notes payable and accrued interest (in shares)	12,923,622
Value of common stock issued	581,564
Common stock value issue for retired notes payable	450,000
Common stock value issued for accrued interest	131,564
Number of common stock called by warrants (in shares)										333,333	1,000,000
Amount received for exercised of warrants										$ 50,000	$ 10,000

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NOTES PAYABLE (Detail Textuals 3) (Notes Payable, USD $)	Dec. 31, 2012	Dec. 31, 2010
Notes Payable
Debt Instrument [Line Items]
Note payable, amount	$ 250,000	$ 400,000
Interest rate		25.00%

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Consolidated Statements of Changes in Stockholders' Equity (Deficit) (USD $)	Common Stock	Deferred Consulting Fees	Additional Paid-In Capital	Treasury Stock	Deficit Accumulated During the Development Stage	Total
Balance at Nov. 10, 1999
Balance (in shares) at Nov. 10, 1999						4,278,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of initial 4,278,000 shares on November 10, 1999	4,278		16,595			20,873
Issuance of initial 4,278,000 shares on November 10, 1999 (in shares)	4,278,000
Issuance of shares of common stock in exchange for services	1,232		35,728			36,960
Issuance of shares of common stock in exchange for services (in shares)	1,232,000
Issuance of shares of common stock	2,090		60,610			62,700
Issuance of shares of common stock (in shares)	2,090,000
Stock issuance costs			(13,690)			(13,690)
Net loss					(54,113)	(54,113)
Balance at Dec. 31, 1999	7,600		99,243		(54,113)	52,730
Balance (in shares) at Dec. 31, 1999	7,600,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock in exchange for services	240	(40,800)	40,560
Issuance of shares of common stock in exchange for services (in shares)	240,000
Issuance of shares of common stock	5,450		921,050			926,500
Issuance of shares of common stock (in shares)	5,449,999
Stock issuance costs			(16,335)			(16,335)
Fair value of non-employee stock options			50,350			50,350
Amortization of deferred consulting fees		20,117				20,117
Net loss					(367,829)	(367,829)
Balance at Dec. 31, 2000	13,290	(20,683)	1,094,868		(421,942)	665,533
Balance (in shares) at Dec. 31, 2000	13,289,999
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock	218		77,723			77,941
Issuance of shares of common stock (in shares)	217,500
Issuance of shares of common stock and stock options for acquisition of subsidiary	2,000		736,000			738,000
Issuance of shares of common stock and stock options for acquisition of subsidiary (in shares)	2,000,000
Exercise of options	1,450		230,609			232,059
Exercise of options (in shares)	1,450,368
Fair value of non-employee stock options			323,250			323,250
Issuance of stock options			15,000			15,000
Amortization of deferred consulting fees		20,683				20,683
Net loss					(1,052,299)	(1,052,299)
Balance at Dec. 31, 2001	16,958		2,477,450		(1,474,241)	1,020,167
Balance (in shares) at Dec. 31, 2001	16,957,867
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock	3,377		687,223			690,600
Issuance of shares of common stock (in shares)	3,376,875
Fair value of non-employee stock options			94,000			94,000
Salary due to shareholder contributed capital			15,000			15,000
Return of shares of common stock related to purchase price adjustment	(1,000)		(353,000)			(354,000)
Return of shares of common stock related to purchase price adjustment (in shares)	(1,000,000)
Net loss					(1,195,753)	(1,195,753)
Balance at Dec. 31, 2002	19,335		2,920,673		(2,669,994)	270,014
Balance (in shares) at Dec. 31, 2002	19,334,742
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock in exchange for services	143		23,857			24,000
Issuance of shares of common stock in exchange for services (in shares)	143,000
Issuance of shares of common stock	22,512		1,387,109			1,409,621
Issuance of shares of common stock (in shares)	22,512,764
Stock issuance costs			(49,735)			(49,735)
Fair value of non-employee stock options			213,300			213,300
Net loss					(1,107,120)	(1,107,120)
Balance at Dec. 31, 2003	41,990		4,495,204		(3,777,114)	760,080
Balance (in shares) at Dec. 31, 2003	41,990,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock	18,600		939,881			958,481
Issuance of shares of common stock (in shares)	18,600,000
Stock issuance costs			(25,000)			(25,000)
Fair value of non-employee stock options			493,600			493,600
Net loss					(1,406,506)	(1,406,506)
Balance at Dec. 31, 2004	60,590		5,903,685		(5,183,620)	780,655
Balance (in shares) at Dec. 31, 2004	60,590,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock	3,000		102,000			105,000
Issuance of shares of common stock (in shares)	3,000,000
Fair value of non-employee stock options			286,762			286,762
Net loss					(1,266,811)	(1,266,811)
Balance at Dec. 31, 2005	63,590		6,292,447		(6,450,431)	(94,394)
Balance (in shares) at Dec. 31, 2005	63,590,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock in exchange for services	1,200		53,800			55,000
Issuance of shares of common stock in exchange for services (in shares)	1,200,000
Exercise of options	4,300		(3,870)			430
Exercise of options (in shares)	4,300,000
Shares retired upon cancellation of consulting agreements	(1,200)		1,080			(120)
Shares retired upon cancellation of consulting agreements (in shares)	(1,200,000)
Exercise of warrants	5,550		49,950			55,500
Exercise of warrants (in shares)	5,550,000
Fair value of employee stock options			135,098			135,098
Fair value of non-employee stock options			215,463			215,463
Fair value of warrants issued for deferred finance charges			392,376			392,376
Net loss					(1,607,017)	(1,607,017)
Balance at Dec. 31, 2006	73,440		7,136,344		(8,057,448)	(847,664)
Balance (in shares) at Dec. 31, 2006	73,440,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Fair value of employee stock options			67,651			67,651
Fair value of non-employee stock options			47,692			47,692
Recognition of beneficial conversion feature			375,000			375,000
Net loss					(1,117,334)	(1,117,334)
Balance at Dec. 31, 2007	73,440		7,626,687		(9,174,782)	(1,474,655)
Balance (in shares) at Dec. 31, 2007	73,440,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Fair value of warrants issued in conjunction with debt financing			25,000			25,000
Fair value of employee stock options			19,720			19,720
Fair value of non-employee stock options			28,752			28,752
Net loss					(931,338)	(931,338)
Balance at Dec. 31, 2008	73,440		7,700,159		(10,106,120)	(2,332,521)
Balance (in shares) at Dec. 31, 2008	73,440,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock in exchange for services	7,200		40,500			47,700
Issuance of shares of common stock in exchange for services (in shares)	7,200,000
Shares issued for conversion of notes payable and accrued interest	48,750		263,291			312,041
Shares issued for conversion of notes payable and accrued interest (in shares)	48,750,000
Fair value of warrants issued in conjunction with debt financing			15,450			15,450
Fair value of non-employee stock options			1,524			1,524
Net loss					(694,910)	(694,910)
Balance at Dec. 31, 2009	129,390		8,020,924		(10,801,030)	(2,650,716)
Balance (in shares) at Dec. 31, 2009	129,390,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock in exchange for services	25,950		182,650			208,600
Issuance of shares of common stock in exchange for services (in shares)	25,950,000
Fair value of warrants issued in conjunction with debt financing			20,143			20,143
Fair value of non-employee stock options			364			364
Net loss					(721,841)	(721,841)
Balance at Dec. 31, 2010	155,340		8,224,081		(11,522,871)	(3,143,450)
Balance (in shares) at Dec. 31, 2010	155,340,506
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock in exchange for services	1,000		29,000			30,000
Issuance of shares of common stock in exchange for services (in shares)	1,000,000
Contribution of common stock from related parties			95,594	(95,594)
Contribution of common stock from related parties (in shares)	(12,000,000)
Purchase of common stock for treasury				(17,795)		(17,795)
Purchase of common stock for treasury (in shares)	(17,795,903)
Sale of common stock	15,500		384,500			400,000
Sale of common stock (in shares)	15,500,000
Issuance of shares for stock issuance costs	2,100		(2,100)
Issuance of shares for stock issuance costs (in shares)	2,100,000
Stock issuance costs			(40,000)			(40,000)
Exercise of options	1,000		9,000			10,000
Exercise of options (in shares)	1,000,000
Fair value of warrants issued in conjunction with debt financing			21,275			21,275
Fair value of employee stock options			47,658			47,658
Fair value of non-employee stock options			48,374			48,374
Net loss					(665,113)	(665,113)
Balance at Dec. 31, 2011	174,940		8,817,382	(113,389)	(12,187,984)	(3,309,051)
Balance (in shares) at Dec. 31, 2011	145,144,603
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock in exchange for services	1,000		45,500			46,500
Issuance of shares of common stock in exchange for services (in shares)	1,000,000
Issuance of shares of common stock	44,111		2,015,889			2,060,000
Issuance of shares of common stock (in shares)	44,111,111
Issuance of stock for licensing	2,222		97,778			100,000
Issuance of stock for licensing (in shares)	2,222,222
Issuance of warrants for licensing			100,000			100,000
Issuance of stock for trademarks, etc.	2,222		97,778			100,000
Issuance of stock for trademarks, etc. (in shares)	2,222,222
Issuance of warrants for trademarks, etc.			100,000			100,000
Shares issued for conversion of notes payable and accrued interest	12,925		568,639			581,564
Shares issued for conversion of notes payable and accrued interest (in shares)	12,923,622
Issuance of warrants for technology services agreement			1,200,000			1,200,000
Exercise of options	10,491		2,622			13,113
Exercise of options (in shares)	10,490,996
Exercise of warrants	333		49,667			50,000
Exercise of warrants (in shares)	333,333
Fair value of employee stock options			332,036			332,036
Fair value of non-employee stock options			11,638			11,638
Forgiveness of debt-related party			349,000			349,000
Net loss					(1,199,057)	(1,199,057)
Balance at Dec. 31, 2012	$ 248,244		$ 13,787,929	$ (113,389)	$ (13,387,041)	$ 535,743
Balance (in shares) at Dec. 31, 2012	218,448,109

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INCOME TAXES

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 3 – INCOME TAXES

The Company follows FASB ASC 740-10-10 whereby an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have been previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not anticipated.

At December 31, 2012 the Company has a net operating loss (“NOL”) that approximates $8.3 million. Consequently, the Company may have NOL carryforwards available for federal income tax purposes, which would begin to expire in 2019. Due to changes in ownership, a portion of the NOL carryforward may be subject to certain annual limitations imposed under Section 382 of the Internal Revenue Code. Deferred tax assets would arise from the recognition of anticipated utilization of these net operating losses to offset future taxable income.

The income tax benefit (provision) consists of the following:

	Year Ended December 31, 2012			Year Ended December 31, 2011
Current	$	490,000		$	142,000
Deferred		263,000			97,000
Change in valuation allowance		(753,000	)		(239,000	)
	$	-		$	-

The following is a reconciliation of the tax derived by applying the U.S. Federal Statutory Rate of 35% to the earnings before income taxes and comparing that to the recorded tax provisions:

	2012						2011
	Amount			%			Amount			%
U.S federal income tax benefit at Federal statutory rate	$	(298,000	)		(35	)	$	(226,000	)		(34	)
State tax, net of federal tax effect		(50,000	)		(6	)		(38,000	)		(6	)
Non deductible accrued expenses		(238,000	)		(28	)		-			-
Non deductible share based compensation		(167,000	)		(20	)		25,000			4
Change in valuation allowance		753,000			89			239,000			36
	$	-			-		$	-			-

The primary components of the Company’s December 31, 2012 and 2011 deferred tax assets, liabilities and related valuation allowances are as follows:

	December 31, 2012			December 31, 2011
Deferred tax asset for NOL carryforwards	$	3,308,000		$	2,354,000
Deferred tax liability for intangibles		(165,000	)		(165,000	)
Non taxable income		162,000			47,000
(Deductible) non deductible accrued expenses		386,000			702,000
Valuation allowance		(3,691,000	)		(2,938,000	)
	$	-		$	-

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 follows FASB ASC 740-10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information.

The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the consolidated statement of operations. As of December 31, 2012 and 2011, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2012 and 2011. The Company did not recognize any interest or penalties during 2012 and 2011 related to unrecognized tax benefits.

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MAJOR CUSTOMERS AND VENDORS (Detail Textuals) (USD $)	12 Months Ended
	Dec. 31, 2012 customer	Dec. 31, 2011
Revenue, Major Customer [Line Items]
Trade accounts receivable	$ 3,473
Customers
Revenue, Major Customer [Line Items]
Revenue from customer	15,289	7,984
Trade accounts receivable	$ 3,473	$ 0
Number Of Customer	2

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INCOME TAXES - Summary of income tax benefit (provision) (Details) (USD $)	12 Months Ended		158 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Current	$ 490,000	$ 142,000
Deferred	263,000	97,000
Change in valuation allowance	(753,000)	(239,000)
Income tax expense, total			$ (165,000)

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NOTES PAYABLE (Detail Textuals) (USD $)	3 Months Ended
	Jun. 30, 2012	Dec. 31, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Accrued interest		$ 394,281	362,806
Notes Payable Due September 2013
Debt Instrument [Line Items]
Interest rate		25.00%
Unsecured notes payable
Debt Instrument [Line Items]
Received unsecured note payable	200,000
Interest rate		10.00%	10.00%
Accrued interest		$ 9,167
Amount of note converted in to common stock (in shares)		4,703,711

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2012

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 13 – SUBSEQUENT EVENTS

The Company received $185,000 from the sales of 3,700,000 units from private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share.  The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.05 per unit.  

In January 2012, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.12 per share.  The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.045 per unit.  The company sold 1,111,111 units and raised $50,000 as of the date of this report.

On January 31, 2013, the Company sold 33,333,333 shares of the Company’s preferred A stock and issued a warrant to purchase 33,333,333 shares of the Company’s common stock at an exercise price of $0.12 per share and having a term of 5 years, beginning July 31, 2013, pursuant to a Subscription Agreement.  The Subscription Agreement raised $1 million (Note 7).

Effective October 8, 2012, the Company entered into a three year agreement with the Vice Chairman of the Board and Chief Executive Officer of the Company, with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company has agreed to issue options to the Vice Chairman to purchase 5% of the shares of the Company’s common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million.  The Company has raised the $2.5 million in funding, but has not issued the options as of the date of this report.

Effective October 16, 2012, the Company entered into a three year agreement with the President and Chief Operating Officer of the Company with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company has agreed to issue options to the President to purchase 5% of the shares of the Company’s common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million.  The Company has raised the $2.5 million in funding, but has not issued the options as of the date of this report.

During February and March 2013, three option holders and one warrant holder exercised options to purchase 2,435,000 shares of the Company’s common stock and a warrant to purchase 1 million shares of the Company’s common stock.  These exercises raised $26.794.

In February 2013, a former board member exercised an option to purchase 900,000 shares of the Company’s common stock.  This exercise raised $1,125.

In March 2013, the Company agreed to convert the Notes payable bearing interest at 25% per annum and due September 2013, plus the accrued interest thereon of $83,896 into 3 million shares of the Company’s common stock and a cash payment of $13,896.

In March 2013, the Board of Directors authorized an additional 250 million shares of common stock, with a par value of $.001, which is retroactively reflected on the Balance Sheet.

In March 2013, the Company issued options to purchase 2 million shares of the Company’s common stock at an exercise price of $.05, with a term of ten years, to a new member of the Board of Directors.