10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2014

OR

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

For the transition period from                      to                     

Commission File Number 0-31927

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.)

3112 M Street, NW

Washington, DC 20007

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (202) 400-3700

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  ¨ or No  x

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  ¨ or No  x

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

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  x or No  ¨

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.  ¨

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

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

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

The aggregate market value of the common stock held by non-affiliates of the registrant was $1,843,020 as of April 10, 2015 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 307,578,149 shares of common stock outstanding as of the close of business on April 15, 2015.

DOCUMENTS INCORPORATED BY REFERENCE

NONE

LASERLOCK TECHNOLOGIES, INC.

FORM 10-K ANNUAL REPORT

Year Ended December 31, 2014

		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		19
Item 8.	Financial Statements and Supplementary Data		20
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		20
Item 9A.	Controls and Procedures		20
Item 9B.	Other Information		21
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		21
Item 11.	Executive Compensation		25
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		27
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, the 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 Discussions and Analysis of Financial Condition and Results of Operation” 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,” “LaserLock,” “we,” “us,” or “our”) was incorporated in Nevada on November 10, 1999. Our principal offices are located at 3112 M Street, NW, Washington, DC 20007, and our telephone number is (202) 400-3700.

Following initial development and commercialization, the Company invested in developing new proprietary color changing and shifting inks that it believed would allow it to penetrate broader markets and result in increased revenues. During the past fourteen 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 commercially ready authentication technologies available. Our 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 driver’s 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 - e.g., 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.

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Overview

The Company is a technology pioneer and leader in the markets for Identity & Access Management and Anti-Counterfeiting. We deliver security solutions for identification and authentication of people, products and packaging. We develop and market technologies for a variety of applications in the security field for both digital and physical transactions.

The challenges associated with digital access control and identity theft are problems that are in the news daily. Consumers, citizens, employees, governments and employers are all demanding solutions. The current widespread use of passwords or PINs for authentication has been proven insecure and inadequate. Individuals increasingly expect anywhere-anytime experiences—whether they are making purchases, crossing borders, accessing services or logging onto corporate resources. They expect those experiences to insure the protection of their privacy and to provide confidentiality.

We believe that the digital technologies we own will enable businesses and consumers to reconstruct their overall approaches to security—from identity and authentication to the management of legacy passwords and PINs. We empower our customers to take advantage of the full capabilities of smart mobile devices and provide solutions that are both delightful to use and deliver the highest level of security. These solutions can be applied to corporate networks, financial services, e-gov services, digital wallets, mobile payments, entertainment, social media, etc. We generate sales through licenses to utilize our high availability cloud services or operate our solutions directly by a customer.

Brand owners, government agencies, professional associations, and others all share in the challenge of responding to counterfeit goods and product protection issues. Counterfeit goods span across multiple industries including everything from money, passports, ID cards, medicines, pharmaceuticals, apparel, accessories, music, software, food, beverages cigarettes, automobile and airplane parts, consumer goods, toys and electronics, etc. Described by the FBI as the crime of the 21st century, product counterfeiting accounts for an estimated 5% of global trade and wreaks dire global health, safety and economic consequences on individuals, corporations, government and society.

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

We have filed a total of eleven patent applications relating to our technology. Currently we have 7 U.S. patents, 4 U.S. applications pending allowance, and 5 foreign applications pending allowance.

On September 30, 2014, the Company’s pigment patents were valued by an independent third party at approximately $9.5 million.

The physical technologies involve the utilization of invisible and/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. We believe that some of our patents may have non-security applications, and we are attempting to commercialize these opportunities.

The digital technologies involve the utilization of multiple authentication mechanisms, some of which we own and some of which we license. These mechanisms include knowledge factors (something you know), possession factors (something you have) and biometric factors (something you are). We surround these authentication mechanisms with proprietary systems that improve the usability and the security of the solutions. Our solutions allow the assessment and quantification of risk using a sophisticated heuristic scoring mechanism. We have specialized systems that perform ‘liveness’ detection to insure the subject of authentication is in fact a live human being. We have systems that introduce learning capabilities into our solutions to improve the ease of use and flexibility.

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, in the case of its laser and color shifting technologies, it 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. 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.

In the past, 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.

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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 near 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. Thus, 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 fiscal 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.

Losses by companies and governments from counterfeiting and diversion range 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 - includes photochromic (or light-reactive) and thermochromic (or 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.

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Recent developments in printing technologies have made it easier to counterfeit a wide variety of documents. Lottery tickets, gift certificates, event and transportation tickets and travelers’ checks are all susceptible to counterfeiting, and we believe that losses from such counterfeiting have increased substantially due to improvements in 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.

In April 2010, the United States Government Accountability Office (“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 only based on imported goods and not goods produced in the United States.

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

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 others having their intellectual property rights compromised, continue to escalate, we believe that those 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^TM 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^TM 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.

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InkJetSecure^TM 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.

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^TM Technology. Following the development and commercialization of LaserLock, the Company invested in developing new proprietary color shifting inks that could penetrate broader markets and result in far greater revenues. During the past nine years, LaserLock 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. Our most recent technology, known as SecureLight™, takes advantage of the new ubiquitous energy efficient fluorescent lighting to change the color of ink, resulting in hundreds of new applications ranging from credit cards to driver’s 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 digital solution is an iOS app that assists with Single Sign On and Username/Password management. It securely stores Username/Password combinations for multiple websites and allows the user to authenticate with a simple color, gesture swipe rather than having to remember which Username/Password is required for every website. The application is available in the Apple Online App Store and support iPod, iPhone and iPad.

The digital services is an enterprise, multi-factor, strong authentication solution that can also provide authenticated attributes like GeoLocation. It combines 3 independent authentication factors – something you know (for instance a color, gesture swipe), something you have (for instance a smartphone) and something you are (for instance your facial geometry). It can also determine Geolocation utilizing a number of mechanisms including GPS, cell tower triangulation and IP/WIFI address. Because the services utilizes biometrics it completely eliminates the possibility that Users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for an end-user to refute having been part of a transaction.

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 seven granted patents, four U.S. applications pending and five foreign applications pending. While some are commercially ready now, we also 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.

5

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 for four 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.

Since January 2013, the Company has filed five foreign patent applications. 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.

Research and Development

We have been involved in research and development, since our inception and intend to continue our research and development activities, funds permitting. Until January 1, 2013, the Company’s research and development focus was on pigment technologies. Since January 1, 2013, the Company has split its research and development efforts between digital and pigment technologies. We hope to expand our technology into new areas of implementation and to develop unique customer applications.

For the years ended December 31, 2014 and 2013, we incurred research and development costs of $5,698,182 and $142,163.

Our Revenue Model

To date, the Company has not generated significant revenue. We believe to create demand for our products and services, requires a marketing program that effectively reaches potential customers. 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.

According to the Bureau of Engraving and Printing (the “Bureau”), the color pigment market is estimated to be worth $2.6 billion per year, of which the color-shifting segment is valued at someplace between $55 million and $235 million annually, and this is 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.

Currently, the Bureau produces 38.0 million notes per day valued at $545 million (or 9.8 billion notes annually). If the Company were to be part of the printing and security process of the $100 bill (which is the most counterfeited bill) at $ .003 for each piece of currency, then the cost to the Bureau would be approximately $8.6 million annually. If the Company were to provide security for the American currency, at $.003, then the cost to the Bureau would be approximately $29.4 million annually. At a one cent royalty, the cost to the Bureau would be approximately $98.0 million annually.

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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.

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’s 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.

We plan for our sales and marketing strategy to include an outreach program and sales programs that tailor the product to the governmental body or merchant, as well as key partnerships with authorities and merchants whose products or audiences can be complementary to our own.

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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 effected 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.

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Employees

As of December 31, 2014, we had six full time employees and two part time employees to assist us with our marketing and sales strategy, research and development, technical assistance and distribution services. None of our employees are represented by a union or covered by a collective bargaining agreement. We also utilize the services of outside contractors. We believe that our relations with our employees, consultants and contractors 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 1800 square feet of space rented by the Company at 3112 M Street, NW, Washington, DC, 20007.

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. There are no ongoing negotiations.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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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 the OTC Bulletin Board under the trading symbol “LLTI”. The following table sets forth the range of high and low bid prices of our common stock for the periods indicated as reported by the OTC Bulletin Board, 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, 2013	High		Low
Quarter ended March 31, 2013	$	0.50	$	0.03
Quarter ended June 30, 2013	$	0.28	$	0.14
Quarter ended September 30, 2013	$	0.21	$	0.09
Quarter ended December 31, 2013	$	0.13	$	0.06

Fiscal Year Ended December 31, 2014	High		Low
Quarter ended March 31, 2014	$	0.10	$	0.05
Quarter ended June 30, 2014	$	0.10	$	0.04
Quarter ended September 30, 2014	$	0.12	$	0.04
Quarter ended December 31, 2014	$	0.05	$	0.01

Common Stockholders

As of April 13, 2015, our shares of common stock were held by approximately 1,329 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.

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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		3,335,000	$	.00		19,074,004
Equity compensation plans not approved by security holders		13,900,000	$	.05		—
Total:		35,335,000	$	.05		19,074,004

2003 and 2013 Stock Option Plans

We adopted our 2003 Stock Option Plan as of December 17, 2003 (the “2003 Plan”). Awards were available to be made under the 2003 Plan for up to 18,000,000 shares of our common stock in the form of stock options or deferred stock awards. Awards were available to be made to our employees, officers or directors as well as our consultants or advisors. The Plan is administered by our board of directors 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.

During 2013, our Board adopted, and our shareholders approved, a new comprehensive incentive compensation plan (the “2013 Plan”, and together with the 2003 Plan, the “Plans”) which serves as the successor incentive compensation plan to the 2003 Plan, and provides the Company with an omnibus plan to design and structure grants of stock options, stock units, stock awards, stock appreciation rights and other stock-based awards for selected individuals in our employ or service. Our Board believes that the availability of (i) 20,000,000 new shares of our common stock, plus (ii) the number of shares of our common stock subject to outstanding grants under the 2003 Plan as of the date of the 2013 Annual Meeting, plus (iii) the number of shares of our common stock remaining available for issuance under the 2003 Plan but not subject to previously exercised, vested or paid grants, for issuance under the 2013 Plan, as sufficient to meet the current needs of the Company.

All stock options granted under the Plans 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 Plans of the death, disability, retirement, resignation, termination or other change in employment or other status of any participant in the Plans.

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Upon the occurrence of a “Change in Control”, as defined in the Plans, the Board may take any number of actions. These actions include, providing for all options outstanding under the Plans 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 Plans to purchase 15,425,996 shares of common stock.

Recent Sales of Unregistered Securities

On September 8, 2014, the Company issued notes payable for $150,000, which included fully vested warrants to purchase 900,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $62,544 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $44,140 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition and is being accreted over the term of the note payable for financial statement purposes. For the three and nine months ended September 30, 2014, $11,700 was accreted through interest expense. The note and accrued interest at 8% per annum are due in full on December 1, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of September 30, 2014, the fair value of the warrant liability was $44,566 and the note payable balance was $117,560, net of $32,440 discount. This note is in default.

On August 14, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $47,676 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $32,274 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition and is being accreted over the term of the note payable for financial statement purposes. For the three and nine months ended September 30, 2014, $14,045 was accreted through interest expense. The note and accrued interest at 8% per annum are due in full on December 1, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of September 30, 2014, the fair value of the warrant liability was $29,697 and the note payable balance was $81,771, net of $18,229 discount. This note is in default.

On August 12, 2014, the Company issued notes payable for $50,000, which included fully vested warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $26,817 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $17,455 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition and is being accreted over the term of the note payable for financial statement purposes. For the three and nine months ended September 30, 2014, $7,775 was accreted through interest expense. The note and accrued interest at 8% per annum are due in full on December 1, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of September 30, 2014, the fair value of the warrant liability was $14,848 and the note payable balance was $40,320, net of $9,680 discount. This note is in default.

On August 5, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $29,725 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $22,914 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition and is being accreted over the term of the note payable for financial statement purposes. For the three and nine months ended September 30, 2014, $10,653 was accreted through interest expense. The note and accrued interest at 8% per annum are due in full on December 1, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of September 30, 2014, the fair value of the warrant liability was $29,692 and the note payable balance was $87,739, net of $12,261 discount. This note is in default.

On June 10, 2014, the Company issued a note payable for $250,000, which included fully vested warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share, expiring in five years. The warrants were valued at $39,650 using 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 248.2%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $34,222 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition and is being accreted over the term of the note payable for financial statement purposes. For the three and nine months ended September 30, 2014, $26,617 and $34,222, respectively, were accreted through interest expense. The note and accrued interest at 8% per annum as was originally due on September 11, 2014, but the Company received approval to extend the maturity until December 11, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of September 30, 2014, the fair value of the warrant liability was $49,026 and the note payable balance was $250,000. This note is in default.

The foregoing issuances of the securities were exempt from the registration requirements of the Securities Act of 1933 by virtue of Section 4(a)(2) as transactions not involving a public offering.

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 factors. The following should be read in conjunction with our annual financial statements contained elsewhere in this report.

Overview

The Company is a technology pioneer and leader in the markets for Identity & Access Management and Anti-Counterfeiting. We deliver security solutions for identification and authentication of people, products and packaging. We develop and market technologies for a variety of applications in the security field for both digital and physical transactions.

The challenges associated with digital access control and identity theft have now become problems that make the news daily. Consumers, citizens, employees, governments and employers are all demanding solutions. The current widespread use of passwords or PINs for authentication has been proven insecure and inadequate. Individuals increasingly expect anywhere-anytime experiences – whether they are making purchases, crossing borders, accessing services or logging onto corporate resources. They expect those experiences to insure the protection of their privacy and to provide confidentiality.

We believe that the digital technologies we own will enable businesses and consumers to reconstruct their overall approaches to security – from identity and authentication to the management of legacy passwords and PINs. We empower our customers to take advantage of the full capabilities of smart mobile devices and provide solutions that are both delightful to use and deliver the highest level of security. These solutions can be applied to corporate networks, financial services, e-gov services, digital wallets, mobile payments, entertainment, social media, etc. We generate sales through licenses to utilize our high availability cloud services or operate our solutions directly by a customer.

Brand owners, government agencies, professional associations, and others all share in the challenge of responding to counterfeit goods and product protection issues. Counterfeit goods span across multiple industries including everything from money, passports, ID cards, medicines, pharmaceuticals, apparel, accessories, music, software, food, beverages cigarettes, automobile and airplane parts, consumer goods, toys and electronics, etc. Described by the FBI as the crime of the 21st century, product counterfeiting accounts for an estimated 5% of global trade and wreaks dire global health, safety and economic consequences on individuals, corporations, government and society.

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

We have filed a total of eleven patent applications relating to our technology. Currently we have 7 U.S. patents, 4 U.S. applications pending for allowance, and 5 foreign applications pending for allowance.

On September 30, 2014, the Company’s pigment patents were valued by an independent third party at approximately $9.5 million.

The physical technologies involve the utilization of invisible and/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. We believe that some of our patents may have non-security applications, and we are attempting to commercialize these opportunities.

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The digital technologies involve the utilization of multiple authentication mechanisms, some of which we own and some of which we license. These mechanisms include knowledge factors (something you know), possession factors (something you have) and biometric factors (something you are). We surround these authentication mechanisms with proprietary systems that improve the usability and the security of the solutions. Our solutions allow the assessment and quantification of risk using a sophisticated heuristic scoring mechanism. We have specialized systems that perform ‘liveness’ detection to insure the subject of authentication is in fact a live human being. We have systems that introduce learning capabilities into our solutions to improve the ease of use and flexibility.

Strategic Outlook

We believe that the security, identification and authentication industries will continue to grow over time as more commerce is conducted online. 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.

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, 2014 and 2013

The following discussion analyzes our results of operations for the years ended December 31, 2014 and 2013. The following information should be considered together with our financial statements for such periods and the accompanying notes thereto.

Revenue/Net Loss

We have not generated significant revenue since our inception. For the years ended December 31, 2014 and 2013, we generated revenues of $124,598 and $3,140, respectively. Our net loss was $7,918,494 for the year ended December 31, 2014, an decrease of $8,472,375 from a net loss of $16,390,869 for the year ended December 31, 2013, primarily as a result of fair value adjustments related to warrant liability and option grants.

Cost of Sales

For the years ended December 31, 2014 and 2013, we incurred proprietary technology costs of sales of $113,024 and $2,710. The increase in cost of sales is a result of costs related to the production of pigments used in the generation of revenue.

General and Administrative Expenses

General and administrative expenses were $791,775 for the year ended December 31, 2014 compared to $762,668 for the year ended December 31, 2013, an increase of $29,107. The increase is attributable to increases in depreciation, insurance, office expenses, payroll taxes and rent. This increase mostly resulted from increases in payroll taxes and utilities from the hiring of additional staff and expanding office space.

Legal and Accounting

Legal and accounting fees decreased $131,045 to $344,903 for the year ended December 31, 2014 from $475,948 for the year ended December 31, 2013. The decrease in legal and accounting fees between the periods was related to patent costs and costs associated with the Form S-1 Registration Statement filed with the Securities and Exchange Commission in August 2013 and associated matters, which did not occur in 2014.

Payroll Expenses

Payroll expenses decreased to $1,611,376 for the year ended December 31, 2014 from $9,485,339 for the year ended December 31, 2013, a decrease of $7,873,963. The majority of the decrease was the expense of the fair market value of options issued to the Board and the officers of the Company aggregating approximately $8.5 million in 2013, which did not occur in 2014.

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Research and Development

Research and development expenses increased $9,934,431 to $10,590,271 for the year ended December 31, 2014 from $655,840 for the year ended December 31, 2013. The increase in research and development expenses was due to warrants and shares issues issued in the quarter ended March 31, 2014 and the quarter ended December 31, 2014 related to the Patent and Technology License Agreement entered into on December 31, 2012. Additionally, the Company is obligated under the December 31, 2012 agreements to pay $4.5 million for the technology acquired.

Sales and Marketing

Sales and marketing expenses for the year ended December 31, 2014 were $238,584 as compared to $261,804 for the year ended December 31, 2013, a decrease of $23,220. The Company has reduced expenditures such as sales related travel and certain advertising programs that it has concluded were not generating revenue.

Interest Expense

During the year ended December 31, 2014, we incurred interest expense of $199,364, as compared to $127,825 for the year ended December 31, 2013, an increase of $71,539. The increase in interest expense relates to the conversion of notes payable and accrued interest into common stock in 2014.

Loss on Extinguishment of Debt

The loss from extinguishment of debt was $57,000 for the year ended December 31, 2014, compared to $1,221,875 for the year ended December 31, 2013. The decrease in loss on extinguishment of debt was a result of the excess fair value of the common stock issued over the value of the notes payable, and accrued interest thereon, that were retired in the three months ended June 30, 2013.

Change in Fair Value of Warrants

During the year ended December 31, 2014, the Company incurred a change in the fair value of warrants of $5128204 as compared to $604,209 for the year ended December 31, 2013. The change resulted from the re-valuation of warrants associated with the Investment Agreement entered into on December 31, 2012, the Subscription Agreement entered into on January 31, 2013 and the notes payable issued during 2014. The value of the warrant liability has decreased because the stock price has decreased.

Change in Fair Value Embedded Derivative Liability

As of December 31, 2014, the embedded derivative liability associated with the beneficial conversion feature of the preferred stock decreased to $0 resulting in an unrealized gain of $800,000 compared to an unrealized gain of $200,000 as of December 31, 2013.

Fair Value of Warrants in Excess of Consideration for Convertible Preferred Stock

During the year ended December 31, 2013, the Company issued warrants with convertible preferred stock. The fair value of the warrants were in excess of consideration for the convertible stock and resulted in a loss of $2,995,791. No such transaction for the year ended December 31, 2014.

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Liquidity and Capital Resources

Since our inception, we have focused on developing and implementing our business plan. Our business plans are 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 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 the products. We do not believe that our existing cash resources will be sufficient to sustain our operations during the next twenty-four 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 upon 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, in order 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.

As of April 13, 2015 we had cash resources of approximately $5,000.

Net cash used in operating activities decreased $768,752 to $2,020,017 for the year ended December 31, 2014 as compared to $2,788,769 for the year ended December 31, 2013. The decrease in net cash used in operating activities is mainly related to the change in the fair value of the warrant liability offset by an increase in accounts payable and accrued expenses.

Net cash used in investing activities was $0 for the year ended December 31, 2014 as compared to $32,527 for the year ended December 31, 2013, a decrease of $32,527.

Net cash provided by financing activities decreased by $314,919 to $798,000 for the year ended December 31, 2014 from $1,112,919 for the year ended December 31, 2013. The cash provided consisted of proceeds from the issuance of debt securities.

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.

During the years ended December 31, 2014 and 2013, the Company’s operational resources were used primarily to fund general and administrative expenses to continue operations and to develop a sales and marketing program.

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 has the right to 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.

After receiving extensions to the required timing, the Company filed a Form S-1 Registration Statement with respect to the shares owned by VerifyMe on August 5, 2013 in accordance with the terms of the Registration Rights Agreement.

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 was 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 no 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 warrants associated with these Agreements are subject to anti-dilution adjustments outlined in the Agreements. In accordance with ASC 815, the warrants were classified as a liability in the total amount of $2.4 million at December 31, 2012. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings.

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.

At any time within two years after January 31, 2013, the subscriber has the right, but not the obligation to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by subscriber in exchange for the price originally paid by the subscriber therefor upon the occurrence of any of the following events:(i) the consummation of any bona fide business acquisition, (ii) the incurring of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share.

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In accordance with ASC 480 and 815, the Preferred Stock has been classified as permanent equity and has been valued at $1 million.

The conversion feature of the Preferred Stock is an embedded derivative, which is classified as a liability in accordance with ASC 815 and was valued in accordance with ASC 470 as a beneficial conversion feature at a fair market value of $1 million at January 31, 2013. This was classified as an embedded derivative liability and a discount to Preferred Stock. Because the Preferred Stock can be converted at any time, the full amount was accreted and classified as a reduction to the discount on Preferred Stock and a deemed dividend distribution in the full amount of $1 million.

At December 31, 2013, the fair value of the embedded derivative (beneficial conversion feature) was evaluated based on the fair value of the Company’s stock price as compared to the Preferred A conversion price. The fair value of the embedded derivative at December 31, 2014 was $0.

The warrants associated with the Preferred Stock were also classified as a liability and valued at a fair value of $2,995,791 at January 31, 2013. Because this amount was entirely in excess of the transaction price, this amount was recorded as a charge to expenses of $2,995,791.

In August 2013, VerifyMe elected to convert in a cashless transaction an equal number of Preferred A stock valued at $366,667 to 12,222,222 shares of common stock.

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 $0.15 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 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.

In January and February 2013, 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 $0.15 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 2013, 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 February 1, 2013, an investor exercised a warrant to purchase 1 million shares of the Company’s common stock that raised $10,000 for the Company.

In February and March 2013, four investors exercised options to purchase 3,335,000 shares of the Company’s common stock that raised $17,919 for the Company.

On June 5, 2014, the Company entered into an exclusive 6 month agreement with Merriman Capital, Inc. to raise additional capital for the Company (the “Proposed Capital Raise”). The agreement has expired. Between June 2014 and September 2014, the Company issued notes payable for an aggregate price of $650,000 and fully-vested warrants to purchase an aggregate 3,400,000 shares of Common Stock at an exercise price of $0.05 per share, expiring in five (5) years (the “Notes Payable Transactions”). The Company and the David S. Pottruck Revocable Trust (the “Purchaser”) entered into that certain Note and Option Purchase Agreement, dated August 14, 2014 (the “Note and Option Purchase Agreement”), whereby the Company issued to the Purchaser (i) a promissory note in the aggregate principal amount of $100,000.00 (the “Note”), and (ii) an option to purchase up to 600,000 shares of Common Stock for an exercise price per share of $0.05 (the “Option”).

The Proposed Capital Raise, the Notes Payable Transactions, and the Note and Option Purchase Agreement purportedly violate the terms and conditions of the various transaction documents relating to the VerifyMe agreements, and would, among other things, have required the Company to obtain VerifyMe’s prior written consent for the Proposed Capital Raise, and triggered certain put rights, anti-dilution rights, and preemptive rights afforded to VerifyMe.

The Company is currently in negotiations with VerifyMe to obtain VerifyMe’s consent and waiver to any purported violations of the VerifyMe transaction documents by the Company.

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Off-Balance Sheet Arrangements

As of December 31, 2014, 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.

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 periods using variable accounting through the vesting dates based on the fair value of the options at the end of each period.

Revenue Recognition

In accordance with Securities and Exchange Commission (“SEC”) 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 Consolidated Financial Statements contained elsewhere in this report.

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

Not required.

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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.

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, 2014, 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, 2014 using criteria established in Internal Control — Integrated Framework issued (1992) by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our management has concluded that our internal control over financial reporting was not effective as of December 31, 2014 due to staffing changes in proximity to filing the 10K.

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

As of December 31, 2014, our management carried out the evaluation of the effectiveness of our disclosure controls and procedures required by Rule 13a-15(e) under the Exchange Act with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2014, our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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There has been no change in our internal control over financial reporting identified in connection with this evaluation that occurred during our fiscal quarter ended December 31, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

Paul Klapper was appointed to the Board on December 9, 2013. Mr. Klapper received the standard option-based compensation package offered by the Company for serving on the Board, in line with the compensation received by the other members of the Board, consisting of 1,000,000 options to purchase common stock of the Company, with an exercise price of $0.05, exercisable on the date of grant, and 1,000,000 options to purchase common stock of the Company, with an exercise price of $0.05, exercisable on the one-year anniversary of the date of grant.

Since the beginning of the Company’s last fiscal year, Mr. Klapper directly or indirectly participated in the following transactions with the Company:

PFK Acquisition Group II, LLC

1. Sold 2,000,000 shares of common stock in February 2013 for a total of approximately $505,000.

2. Converted notes from the Company representing indebtedness of approximately $370,000 into 7,400,000 shares of common stock.

Clydesdale Partners II, LLC

1. Was paid $150,000 in retirement of notes from the Company.

2. Converted notes from the Company representing indebtedness of approximately $671,000 into 4,473,334 shares of common stock.

3. Notes payable were issued to Clydesdale Partners II, LLC in the amounts of $48,000 during the year ended December 31, 2014.

Paul Klapper

1. Paul Klapper entered into a revenue sharing agreement with the Company based on the successful introduction to a customer, which results in revenues to the Company. The commission range is from 5% - 10% of net sales for a period of five years.

The schedule of customers as of December 31, 2014, is as follows: Intersections (May 21, 2014), Hewlett-Packard (September 21, 2014) and Mozido (November 21, 2014).

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

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

Name	Age	Position with Company
Constance Harriman-Whitfield**	66	Director
Claudio R. Ballard*	56	Director
Neil Alpert	37	Director, Chief Executive Officer
Paul Klapper**	76	Director
Jonathan Weinberger*	38	Director
Paul Donfried	53	Chief Technical Officer
Scott McPherson	53	Chief Financial Officer

* Appointed as Director by VerifyMe, Inc.

** Have resigned from the Board of Directors since December 31, 2014

Board of Directors

We believe that our board of directors 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; and 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:

CLAUDIO R. BALLARD

Claudio R. Ballard, 56, is the Chairman, Founder and one of the two Managing Members of VEEDIMS. Mr. Ballard is currently the President of VerifyMe, Inc. 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 that strengthen the Board’s collective qualifications, skills and experience. Mr. Ballard was elected to the Board on March 30, 2013.

PAUL F. KLAPPER

Paul F Klapper, 76, brings over 50 years of business experience in various enterprises. Mr. Klapper has an extensive entrepreneurial background in travel, real estate development, venture capital and private equity. In 1994 he and his investment partners acquired Long John Silver’s and A&W Restaurants where he served as the Chairman and Board Member, until this company was sold to Yum Brands.

Since 1994, he has dedicated most of his time to venture capital and private equity investing. ln 1997, he led an investment group, Applied Underwriters Inc. and served as an Advisor to the company until it was sold to Berkshire Hathaway in 2007.

In 1999, Mr. Klapper formalized his first venture fund, “PFK Acquisition Company I, LLC”, at the suggestion of his investing partners. He organized his second fund in 2000 and his third fund, and the first of the Clydesdale family of funds, in 2005. He helped launch Clydesdale Partners, LLC in 2005. Mr. Klapper is currently Managing Partner of Clydesdale Ventures, LLC, (the management company for the two Clydesdale funds).

Mr. Klapper is still involved in real estate, managing a family portfolio and serves as advisor for various real estate companies. Since 1981, Mr. Klapper has been Chairman of PFK Development Group, Ltd., a privately held real estate company. PFK Development Group, Ltd., is presently developing a time-share project in Lake Tahoe, CA.

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Mr. Klapper currently serves as a Director of American Suppliers, Inc., Airtreks International, and Business Calcium as well as Advisor for several of the companies in his funds’ portfolios.

As a result of these and other professional experiences, Mr. Klapper possesses particular knowledge and experience that strengthen the Board’s collective qualifications, skills and experience. Mr. Klapper was appointed to the Board on December 9, 2013.

NEIL ALPERT

Neil Alpert, 37, became the President, a Director and Chief Operating Officer of LaserLock Technologies, Inc. on October 16, 2012. On June 14, 2013, Neil Alpert became the Chief Executive Officer of the Company. 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.

CONSTANCE HARRIMAN-WHITFIELD

Constance B. Harriman, 66, has helped formulate U.S. trade, natural resource and legal policy in executive positions at three US government agencies: the US Export-Import Bank and the US 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 and environmental guidelines. Previously, Ms. Harriman was Assistant Secretary for Fish and Wildlife and Parks at the US 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 US 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 US Department of Justice and the US 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 antitrust 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-Whitfield 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.

JONATHAN WEINBERGER

Jonathan R. Weinberger, 38, is an experienced, accomplished, and well respected member of the Washington D.C. legal, government, and business communities. Jonathan 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.

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 the Department’s 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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PAUL DONFRIED

Paul Donfried, 53, joined LaserLock as Chief Technology Officer in 2013. He is responsible for leading the development of innovative, resilient and easy-to-use solutions for meeting the anti-counterfeiting and brand protection needs of our customers. In his role as CTO, Mr. Donfried is also responsible for IT services, both internal and external.

Prior to his current role at LaserLock Technologies, Mr. Donfried spent four years as CTO - Identity and Access Management for Verizon, responsible for the strategy, engineering and marketing direction of the company’s portfolio of enterprise identity services. He led Verizon’s strategic alignment of cloud-based identity technologies across market segments, helping deliver a new generation of identity services that enable organizations to address the complex challenges of authenticating and managing user identities.

Prior to his role at Verizon, Mr. Donfried was Vice President of SAIC Identity & Access Management Solutions for two years, where his responsibilities included overall strategy, product development and the introduction of identity technologies. Earlier in his career, Mr. Donfried worked for Apple, General Electric and The Bank of Montreal.

A recognized expert in the fields of identity life cycle and risk management, Mr. Donfried has led the development of numerous industry organizations including SAFE-BioPharma and Identrust. He is a frequent speaker on the role of trusted e-commerce and its application in heavily regulated industries and the federal government. As a member of the Open Identity Exchange (OIX), Mr. Donfried provides leadership on the creation of trust frameworks and the protection of critical infrastructure.

Mr. Donfried received a Bachelor of Science in computer science from Rensselaer Polytechnic Institute and holds multiple patents for identity, authentication, attributes and digital signing systems.

SCOTT MCPHERSON

Scott McPherson, 53, is currently the Chief Financial Officer of CannLabs, Inc. and became CFO of LaserLock Technologies on December 1, 2014. Mr. McPherson previously served as Chief Financial Officer of the Company from December 2012 to October 2013. 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.

Committees

Our board of directors has created a separately designated audit committee, governance committee and compensation committee. 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 cost 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, 2014, except that none of the Company’s directors filed his or her Form 4 on a timely basis.

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ITEM 11. EXECUTIVE COMPENSATION.

Summary Compensation Table

The following table sets forth the compensation earned by the Company’s principal executive officer and named executive officers during the years ended December 31, 2014 and 2013.

Name and Principal Position	Year	Salary ($)			Option Awards(1) ($)		All Other Compensation ($)		Total ($)
Norman A. Gardner Founder	2013 2014		171,333 200,000	*		3,787,700		—		3,959,033
Neil Alpert President & CEO	2013 2014		200,000 200,000	**		3,787,700		—   —		3,987,700
Paul Donfried CTO	2013 2014		282,692 300,000	***		24,993		—		307,685

(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 13 of our Consolidated Financial Statements.

As of December 31, 2014, employees have accrued the following:

* $50,000 accrued

** $38,827 accrued

*** $76,000 accrued

Outstanding Equity Awards At December 31, 2014

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, 2014.

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 19,000,000		—   —	$ $	0.05 0.05	11/20/2022 06/29/2023
Neil Alpert		1,000,000 1,000,000 1,000,000 19,000,000		—   —   —   —	$ $ $ $	0.05 0.05 0.05 0.05	11/20/2022 11/16/2023 11/20/2024 06/29/2023
Paul Donfried		250,000		—	$	0.05	1/22/2023
Scott McPherson		200,000		—	$	0.05	7/16/2022

Narrative Disclosure to Summary Compensation Table and Outstanding Equity Awards Table

Employment Agreements

On October 8, 2012 the Company entered into an agreement with the then 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 million. As of June 14, 2013, the agreement no longer exists, but all appropriate compensation has been awarded.

We currently have a three year employment agreement dated October 16, 2012 with our President 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 President 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 million.

25

Option Issuance

On November 21, 2012, the Company issued the then 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 2 million shares of the Company’s common stock at an exercise price of $0.05, with a term of ten years.

On March 28, 2014, the Company issued the President and Chief Executive Officer of the Company an option to purchase 1 million shares of the Company’s 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 ($)
Claudio Ballard Neil Alpert	2013 2013 2012		—   —   —		219,982 —   —		219,982 —   —
Jonathan Weinberger	2013 2012		—   —		89,568 89,568		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 13 of our Consolidated Financial Statements.

On February 20, 2014, the following members of the Board of Directors of LaserLock Technologies, Inc. resigned from the Board of Directors: Michael Chertoff, General Peter Pace, Michael R. Sonnenreich (Chairman) and Paul Wolfowitz.

On February 15, 2015, Constance Harriman resigned from the Board of Directors and on February 26, 2015, Paul Klapper resigned from the Board of Directors.

Narrative Disclosure to Directors Compensation Table

We did not pay an annual fee to any of our directors during 2013 or 2014. Each member of our board of directors receives reimbursement of expenses incurred in connection with his or her services as a member of our board or board committees.

26

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

The following table sets forth, as of December 31, 2014, 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 December 31, 2014 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., 3112 M Street, NW, Washington, DC 20007.

Name and Address of Beneficial Owner	Amount and Nature Of Beneficial Ownership†			Percentage of Class†
5% Beneficial Owners
Robert L. Bast 110 Spruce Lane Ambler, PA 19002		28,423,622	(1)		9.20	%
Clydesdale Partners II LLC 201 Spear Street, Suite 1750 San Francisco, CA 94105		57,748,334	(2)		18.78	%
Nob Hill c/o Stephen Ray 100 V Embarcadero PH San Francisco, CA 94105		32,751,363	(3)		10.65	%
VerifyMe, Inc. 205 Linda Drive Daingerfield, TX 75638		76,349,205	(4)		20.22	%
Executive Officers and Directors
Jonathan Weinberger		10,105,505	(5)		3.2	%
Norman A. Gardner		38,490,000	(6)		12.5	%
Neil Alpert		26,000,000	(7)		8.5	%
Constance Harriman-Whitfield		2,333,333	(8)		*
Claudio Ballard		3,000,000	(9)		*
All officers and directors as a group (5 people)		79,928,838			25.9	%

* Less than 1 percent

† In accordance with SEC rules, options, warrants and other securities exercisable for or convertible into shares of our common stock that were exercisable as of December 31, 2014, or would become exercisable within 60 days thereafter, are deemed to be outstanding and beneficially owned by the person holding such options, warrants or other securities for the purpose of computing such person’s percentage ownership, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person.

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

(2) Consists of 48,348,334 shares of common stock and 9,400,000 shares of PFK Acquisition Group II LLC, which is under common control.

(3) Consists of 32,751,363 shares of common stock.

(4) Consists of 6,349,206 shares of common stock, 21,111,111 shares underlying convertible preferred stock, 48,888,888 shares underlying warrants exercisable at 0.10 per share.

(5) Consists of 1,105,500 shares of common stock, 9,000,000 shares underlying options exercisable at $0.05 per share.

(6) Consists of 18,490,000 shares of common stock, and 20,000,000 shares underlying options exercisable at $0.05 per share.

(7) Consists of 3 million shares of common stock and of 23,000,000 shares underlying options exercisable at $0.05 per share.

(8) Consists of 333,333 shares of common stock, 2,000,000 shares underlying options exercisable at $.05 per share.

(9) Consists of 3,000,000 shares underlying options exercisable at $0.05 per share.

27

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, UT 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.

At December 31, 2014, two shareholders of the Company held $114,000 of the senior secured convertible notes payable.

Three shareholders held $323,000 of notes payable and accrued interest of $31,845.

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. Mr. Gardner’s employment agreement is no longer in place.

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 of Directors 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. At December 31, 2014, the Board determined that Constance Harriman-Whitfield qualified as an “independent director” pursuant to such rules. As of the date of this filing, the Board determined that no member of the Board qualified as an “independent director” pursuant to such rules subsequent to Ms. Harriman-Whitfield’s resignation from the Board on February 15, 2015. 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, 2014 and 2013 and the review of the financial statements included in each of our quarterly reports during the years ended December 31, 2014 and 2013, were $40,500 and $40,500, respectively.

28

Audit-Related Fees

There were no fees billed by our independent accountants for audit-related services during the fiscal year ended December 31, 2014 and 2013.

Tax Fees

During the fiscal years ended December 31, 2014 and 2013, there were no fees billed for tax compliance, tax advice and/or tax planning by our principal accountants.

All Other Fees

During the for the year ended December 31, 2014 and 2013, 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 of directors regarding material changes to any service.

29

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

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 as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
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).
3.5	Certificate of Amendment to Amended and Restated Articles of Incorporation of LaserLock Technologies, Inc., dated as of May 23, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 30, 2013 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	Regulations 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. 2013 Omnibus Equity Compensation Plan adopted on December 9, 2013 (filed as an exhibit to the Company’s Definitive Proxy Statement filed with the Securities and Exchange Commission on November 19, 2013 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 March 31, 2014 and incorporated herein by reference).
10.17	Investment Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.18	Registration Rights Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.19	Technology and Services Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.20	Patent and Technology License Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.21	Asset Purchase Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.22	Technology and Services Agreement (Zaah), dated as of December 31, 2012, between LaserLock Technologies, Inc. and Zaah Technologies, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.23	Employment Agreement between LaserLock Technologies, Inc. and Norman Gardner, dated as of October 8, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.24	Employment Agreement between LaserLock Technologies, Inc. and Neil Alpert, dated as of October 8, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.25	Employment Agreement between LaserLock Technologies, Inc. and Scott McPherson, dated as of December 14, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
10.26	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Norman Gardner, dated as of November 21, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
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 as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
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).
10.34	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Paul Klapper, dated as of December 9, 2013 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28).
10.35	Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Michael Chertoff, dated as of May 4, 2013 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28).
14.1	Code of Ethics (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
23.1**	Consent of Asher & Company, Ltd.
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 and 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.

LaserLock Technologies, Inc.
By:	/s/ Neil Alpert
	Neil Alpert Chief Executive Officer
	Date: April 15, 2015

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report 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/ Neil Alpert	Chief Executive Officer	April 15, 2015
Neil Alpert	(Principal Executive Officer)
Signature	Title	Date
/s/ Scott McPherson	Chief Financial Officer	April 15, 2015
Scott McPherson	(Principal Financial Accounting Officer)
Signature	Title	Date
/s/ Claudio Ballard	Director	April 15, 2015
Claudio Ballard
Signature	Title	Date
/s/ Jonathan Weinberger	Director	April 15, 2015
Jonathan Weinberger

32

CONTENTS

	PAGE
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		1
BALANCE SHEETS		2
STATEMENTS OF OPERATIONS		3
STATEMENTS OF STOCKHOLDERS’ DEFICIT		4
STATEMENTS OF CASH FLOWS		5
NOTES FINANCIAL STATEMENTS		6-28

Report of Independent Registered Public Accounting Firm

To the Board of Directors

LaserLock Technologies, Inc. and Subsidiary

We have audited the accompanying balance sheets of LaserLock Technologies, Inc. and its Subsidiary as of December 31, 2014 and 2013 and the related statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended. 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 audits.

We conducted our audits 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 audits provide a reasonable basis for our opinion.

In our opinion the 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, 2014 and 2013, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred significant losses and experienced negative cash flow from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MORISON COGEN LLP

Bala Cynwyd, Pennsylvania

April 15, 2015

Balance Sheets

	December 31, 2014			December 31, 2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	63,956		$	1,285,973
Accounts receivable, net of allowance of $0 at December 31, 2014 and 2013		—			3,573
Inventory		97,360			34,271
Prepaid expenses		181,086			189,474
TOTAL CURRENT ASSETS		342,402			1,513,291
PROPERTY AND EQUIPMENT
Capital equipment, net of accumulated depreciation of $161,205 and $91,952 as of December 31, 2014 and 2013		74,821			144,074
OTHER ASSETS
Deposits		37,197			37,197
Patents and Trademark, net of accumulated amortization of $118,502 and $105,393 as of December 31, 2014 and 2013		107,586			120,695
		144,783			157,892
TOTAL ASSETS	$	562,006		$	1,815,257
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	5,217,770		$	316,785
Accrued interest - related parties		43,215			16,667
Deferred revenue		16,667			—
Embedded derivative liability		—			800,000
Senior convertible notes payable — related parties		114,000			—
Notes payable		812,553			50,000
TOTAL CURRENT LIABILITIES		6,204,205			1,183,452
LONG-TERM LIABILITIES
Warrant liability	$	6,370,709		$	6,000,000
Accrued interest - related parties		112,885			300,677
Senior secured convertible notes payable - related parties		—			330,249
TOTAL LONG-TERM LIABILITIES		6,483,594			6,630,926
TOTAL LIABILITIES		12,712,799			7,814,378
CONTINGENCIES
STOCKHOLDERS’ DEFICIT
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 21,111,111 shares issued and outstanding as of December 31, 2014 and 2013		633,333			633,333
Common stock, $ .001 par value; 675,000,000 shares authorized; 337,374,052 shares issued and 307,578,149 outstanding at December 31, 2014 and 319,862,042 shares issued and 290,066,139 outstanding at December 31, 2013		337,374			319,862
Additional paid in capital		24,713,294			22,938,983
Treasury stock, at cost (29,795,903 shares at December 31, 2014 and 2013)		(113,389	)		(113,389	)
Accumulated deficit		(37,696,405	)		(29,777,910	)
STOCKHOLDERS’ DEFICIT		(12,125,793	)		(5,999,121	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	562,006		$	1,815,257

The accompanying notes are an integral part to these financial statements.

-2-

Statements of Operations

For the Years Ended and 2014

	Year Ended December 31, 2014			Year Ended December 31, 2013
NET REVENUE
Sales	$	116,265		$	3,140
Royalties		8,333			—
TOTAL NET REVENUE		124,598			3,140
COST OF SALES		113,024			2,710
GROSS PROFIT		11,574			430
OPERATING EXPENSES
General and administrative		811,916			762,668
Legal and accounting		344,903			475,948
Payroll expenses (a)		1,611,376			9,485,339
Research and development		10,590,271			655,840
Sales and marketing		218,443			261,804
Total operating expenses		13,576,909			11,641,599
(LOSS) BEFORE OTHER INCOME		13,565,335			(11,641,169	)
OTHER INCOME (EXPENSE)
Interest income		—			—
Interest expense		(199,364	)		(127,825	)
Loss on extinguishment of debt		(82,000	)		(1,221,875	)
Change in fair value of warrants		5,128,204			(604,209	)
Change in fair value of embedded derivative liability		800,000			200,000
Fair value of warrants in excess of consideration for convertible preferred stock		—			(2,995,791	)
		5,646,840			(4,749,700	)
LOSS BEFORE INCOME TAX BENEFIT		(7,918,495	)		(16,390,869	)
INCOME TAX BENEFIT		—			—
NET LOSS		(7,918,495	)		(16,390,869	)
Less: Deemed dividend distribution		—			(1,000,000	)
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS	$	(7,918,495	)	$	(17,390,869	)
BASIC	$	(.03	)	$	(0.07	)
DILUTED	$	(.03	)	$	(0.07	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC		303,748,409			250,043,403
DILUTED		303,748,409			250,043,403

(a) - includes share based compensation of $860,235 for the year ended December 31, 2014 and $8,619,137 for the year ended December 31, 2013

The accompanying notes are an integral part to these financial statements.

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Statement of Changes in Stockholders’ Equity (Deficit)

For the Years Ended and 2014

	Convertible Preferred Stock						Common Stock				Additional Paid-In Capital						Deficit Accumulated During the
	Number of Shares			Amount			Number of Shares		Amount					Treasury Stock			Development Stage			Total
Balance at December 31, 2012		—		$	—			218,448,109	$	248,244	$	11,387,929		$	(113,389	)	$	(13,387,041	)	$	(1,864,257	)
Issuance of shares of preferred stock		33,333,333		$	1,000,000			—		—		—			—			—			1,000,000
Conversion of shares of preferred stock to common stock		(12,222,222	)	$	(366,667	)		12,222,222		12,222		354,445			—			—			—
Issuance of shares of common stock		—			—			4,811,111		4,811		230,189			—			—			235,000
Shares issued for conversion of notes payable and accrued interest		—			—			18,275,000		18,275		1,871,725			—			—			1,890,000
Exercise of options		—			—			3,335,000		3,335		14,584			—			—			17,919
Exercise of warrants		—			—			1,000,000		1,000		9,000			—			—			10,000
Fair value of employee stock options		—			—			—		—		8,619,136			—			—			8,619,136
Deemed dividend distribution		—			—			—		—		(1,000,000	)		—			—			(1,000,000	)
Exercise of warrants		—			—			6,000,000		6,000		53,999			—			—			59,999
		—			—			25,974,697		25,975		1,397,976			—			—			1,423,951
Net loss for the year ended June 30, 2013		—			—			—		—		—			—			(16,390,869	)		(16,390,869	)
Balance at December 31, 2013		21,111,111			633,333			290,066,139		319,862		22,938,983			(113,389	)		(29,777,910	)		(5,999,121	)
Issuance of shares of common stock for services		—			—			6,349,206		6,349		393,651			—			—			400,000
Cashless exercise of options		—			—			2,714,285		2,714		(2,714	)		—			—			0
Fair value of employee stock options		—			—			—		—		860,235			—			—			860,235
Issuance of shares of common stock for settlement of debt		—			—			8,448,519		8,449		498,139			—			—			506,588
Forgiveness of related party debt		—			—			—		—		25,000			—			—			25,000
Net loss for the year ended December 31, 2014		—			—			—		—		—			—			(7,918,495	)		(7,918,495	)
Balance at December 31, 2014		21,111,111		$	633,333			307,578,149	$	337,374	$	24,713,294		$	(113,389	)	$	(37,696,405	)	$	(12,125,793	)

The accompanying notes are an integral part to these financial statements.

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Statements of Cash Flows

For the Years Ended and 2014

	Year Ended December 31, 2014			Year Ended December 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(7,918,495	)		(16,390,869	)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of options issued in exchange for services		860,235			8,619,137
Accretion of discount on notes payable		202,377			3,718
Change in fair value warrant liability		(5,128,204	)		604,209
Change in fair value of embedded derivative liability		(800,000	)		(200,000	)
Fair value of warrants in excess of consideration for convertible preferred stock		—			2,995,791
Fair value of stock in excess of converted notes payable and accrued interest		82,000			1,221,875
Amortization and depreciation		82,362			81,929
Stock and warrants issued in exchange for technology		5,736,089			—
(Increase) decrease in assets
Accounts receivable		3,573			(100	)
Inventory		(63,089	)		(14,291	)
Prepaid expenses		8,388			560,526
Deposits		—			(37,197	)
Increase (decrease) in liabilities
Accounts payable and accrued expenses		4,898,080			(233,497	)
Deferred revenue		16,667			—
Net cash used in operating activities	$	(2,020,017	)	$	(2,788,769	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		—			(10,573	)
Purchase of intangibles		—			(21,954	)
Net cash used in investing activities		—			(32,527	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock		—			1,000,000
Proceeds from issuance of common stock		—			235,000
Proceeds from exercise of stock options		—			17,919
Proceeds from exercise of warrants		—			10,000
Proceeds from issuance of notes payable		798,000			—
Repayments of notes payable		—			(150,000	)
Net cash provided by financing activities		798,000			1,112,919
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,222,017	)		(1,708,377	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		1,285,973			2,994,350
CASH AND CASH EQUIVALENTS - END OF YEAR	$	63,956		$	1,285,973
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	—		$	13,895
Income taxes	$	—		$	—
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Fair value of stock issued for conversion of notes payable and accrued interest	$	506,588		$	2,092,075
Fair value of stock issued for conversion of preferred stock to common stock	$	—		$	366,667
Accretion of discount on preferred stock as deemed dividend distribution	$	—		$	1,000,000
Fair value of beneficial conversion feature	$	—		$	1,500,000
Conversion of warrant in lieu of cash repayment of notes payable	$	—		$	60,000
Fair value of warrants issued as debt discount	$	211,576		$	—
Forgiveness of related party debt	$	25,000			—

The accompanying notes are an integral part to these financial statements.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies, Inc. (the “Company”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is traded on the OTCQB under the ticker symbol “LLTI”. A high-tech solutions company in the field of authenticating people and products, LaserLock offers state-of-the-art solutions to combat identity fraud and counterfeiting utilizing multi-factor authentication and a suite of security pigments for governments, health care providers, the gaming industry, the financial services industry and high-end retailers.

The Company invests in developing new proprietary color shifting inks that it believes will allow it to penetrate broader markets and result in increased revenues. The Company refines 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 Company’s digital solution is a multi-platform (iOS and Android) strong authentication solution that integrates biometrics and geo-location tagging. The solution completely eliminates passwords and the inherently weak security they provide. The solution also removes the user complexity associated with having to manage many complex passwords. The solution can be delivered either as a high availability cloud service, managed by the Company, or as licensed software product for operation on the client’s premises.

The solution integrates three independent authentication factors – something you have (for instance a smartphone), something you know (for instance a color gesture swipe) and something you are (for instance your facial geometry)—into a simple, fast, intuitive solution. The system can also accurately determine the precise location of the individual using a variety of mechanisms including GPS, cell tower triangulation, IP or WIFI address. Because the solution incorporates biometrics it completely eliminates the possibility that users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for an end-user to refute having been part of a transaction.

The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to operationalize the Company’s current technology.

Basis of Presentation

The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America.

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.

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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 payable and accrued expenses and notes payable. The carrying value of cash, 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.

Patents and Trademark

The Company has filed eleven patent applications relating to the company technology. Currently we have 7 U.S. patents, 4 U.S. applications pending for allowance, and 5 foreign applications pending for allowance. The Company has also 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 be17 to 20 years.

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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.

Derivative Instruments

The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Topic 480 of the FASB ASC and Topic 815 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the Statement of Operations as a component of other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

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

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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 2011 through 2013 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 $62,835 and $53,979 for the years ended December 31, 2014 and 2013 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. Research and development costs for the years ended December 31, 2014 and 2013 were $10,590,271 and $655,840.

Basic and Diluted Net Income per Share of Common Stock

The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Since the Company reported a net loss for years ended December 31, 2014 and 2013, common stock equivalents, including convertible preferred stock, convertible debt, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share during the years were the same.

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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 June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove

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the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principle operations.

The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which must be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.

For public business entities, the amendment eliminating the exception to the sufficiency-of-equity-at-risk criterion for development stage entities in paragraph 810-10-15-16 should be applied retrospectively for annual reporting periods beginning after December 15, 2015, and interim periods therein.

Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption entities will no longer present or disclose any information required by Topic 915.

The Company adopted the amendment retrospectively commencing with the interim period ending June 30, 2014.

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update provide guidance about management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the potential impact of this standard.

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Reclassifications

Certain amounts in the 2013 statement of operations have been reclassified in order for them to conform with the 2014 presentation.

NOTE 2 – MANAGEMENT PLANS

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company does not believe that its existing cash resources will not be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing stockholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company may be unable to execute upon the business plan or pay costs and expenses as they are incurred, which could have a material, adverse effect on the business, financial condition and results of operations.

If sufficient revenues are not generated to sustain operations or additional funding cannot be obtained in the short term, the Company will need to reduce monthly expenditures to a level that will enable the Company to continue until such funds can be obtained.

Successful completion of the Company’s development program, and the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure. However, there can be no assurances that the Company will be able to secure additional equity investment or achieve an adequate sales level.

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NOTE 3 – PROPERTY AND EQUIPMENT

Equipment consists of the following:

	December 31,		December 31,
	2014		2013
Furniture and Fixtures	$	219,871	$	219,871
Equipment		16,155		16,155
		236,026		236,026
Less: Accumulated depreciation		161,205		91,952
	$	74,821	$	144,074

Depreciation of property and equipment was $69,253 and $68,839, respectively, for the years ended December 31, 2014 and 2013.

NOTE 4 – PATENTS AND TRADEMARK

The Company has seven issued patents, four U.S. applications pending, and five foreign applications pending for allowance. 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 to 20 years). During the years ended December 31, 2014 and 2013, the Company capitalized $0 and $21,954 of patent costs.

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NOTE 5 – 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, 2014 the Company has a net operating loss (“NOL”) that approximates $26.0 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			Year Ended
	December 31,			December 31,
	2014			2013
Current	($	5,505,000	)	$	1,837,000
Deferred		(372,000	)		3,284,000
Change in valuation allowance		5,877,000			(5,121,000	)
	$	—		$	—

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:

	2014						2013
	Amount			%			Amount			%
U.S federal income tax benefit at federal statutory rate	$	(2,771,000	)		(35	)	$	(5,718,000	)		(35	)
State tax, net of federal tax effect		(463,000	)		(6	)		(956,000	)		(6	)
		—			—			—			—
Deductible share based compensation		—			—			(318,000	)		(2	)
Non-deductible changes in derviative liability and share based transactions		(2,639,000	)		(33	)		1,895,000			12
Other		(4,000	)		—			(24,000	)
Change in valuation allowance		5,877,000			74			5,121,000			31
	$	—			—		$	—			—

The primary components of the Company’s December 31, 2014 and 2013 deferred tax assets, liabilities and related valuation allowance are as follows:

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	December 31,			December 31,
	2014			2013
Deferred tax asset for NOL carryforwards	$	10,649,000		$	5,144,000
Deferred tax liability for intangibles		(165,000	)		(165,000	)
Share based compensation		4,205,000			3,683,000
Non deductible accrued expenses		—			150,000
Valuation allowance		(14,689,000	)		(8,812,000	)
	$	—		$	—

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, 2014 and 2013, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2014 and 2013. The Company did not recognize any interest or penalties during 2014 and 2013 related to unrecognized tax benefits.

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NOTE 6 – SENIOR SECURED CONVERTIBLE NOTES PAYABLE – RELATED PARTIES

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. In June 2013, $225,000 of these notes payable plus accrued interest of $181,125 were converted into 7.4 million shares of the Company’s common stock, which was valued at $1,628,000. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50.

During the fourth quarter of 2013, $220,000 of senior convertible notes plus accrued interest of $395,000, were converted into 7,900,000 shares of common stock. Since this transaction was with related parties, the conversion was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

As of December 31, 2014 and December 31, 2013, the outstanding principal balance on these notes was $114,000 and $330,249. Accrued interest at December 30, 2014 and December 31, 2013 amounted to $112,885 and $300,677.

During the second quarter of 2014, $216,249 of principal of the Company’s outstanding senior convertible notes held by a significant shareholder of the Company, plus accrued interest of $208,339, were converted into 8,448,519 shares of common stock. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest, $82,000, was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50.

As of December 31, 2014, the outstanding principal balance on these notes was $114,000. Accrued interest at December 31, 2014 amounted to $112,885.

If an equity financing with total proceeds of more than $5,000,000 occurs while any of these 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 of common stock 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 if the triggering event occurs and the contingency is resolved.

NOTE 7 – 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.

On March 19, 2013, the investor holding $140,000 of convertible notes transferred $14,000 of the $140,000 convertible notes to the Vice Chairman of the Company. Also on March 19, 2013, the investor agreed to convert $28,000 of the investor’s remaining $126,000 of convertible notes into 5,250,000 shares of the Company’s common stock.

On March 19, 2013, the Vice Chairman of the Company agreed to convert $14,000 of convertible notes into 2,625,000 of the Company’s common stock.

During the fourth quarter of 2013, the remaining $98,000 of convertible notes plus accrued interest of $87,150 were converted into 12,375,000 shares of common stock. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

NOTE 8 – NOTES PAYABLE

During the fourth quarter of 2013, all of the $561,000 of unsecured notes payable, less 9,914 of unamortized discount, plus accrued interest of $83,715 was converted into 4,473,333 shares of common stock plus a cash repayment of $150,000. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

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 fully expensed over the term of notes payable.

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 May 23, 2013 from 425,000,000 to 675,000,000.

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 the unaccreted debt discount related to warrants issued in conjunction with the 8% Series A Notes payable was $13,632.

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.

During the fourth quarter of 2013, the remaining series A notes payable of $150,000 was reduced by $60,000 for the exercise of 6,000,000 warrants into 6,000,000 shares of common stock. The balance of $90,000 plus accrued interest of $49,000 was converted into 1,226,363 shares of common stock. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

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 15 - Contingencies to these 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 were being amortized to interest expense over two years. The remainder of amortization $13,625 was recorded the years ended December 31, 2012.

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. In March 2013, the remaining $150,000 of the notes payable and accrued interest of $70,000 were converted into 3 million shares of the Company’s common stock. Accrued interest of $13,895 was paid in cash.

Notes payable consists of the following as of December 31:

	December 31, 2014			December 31, 2013
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	114,000		$	330,249
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 8% per annum; principal and accrued interest due at December 1, 2014 (past due)		650,000			—
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015		123,000			—
Less: Debt discount		(10,447	)		—
		926,553			380,249
Less: Current portion		926,553			50,000
Long-term portion	$	—		$	330,249

At December 31, 2014 and 2013 accrued interest on notes payable was $155,992 and $317,344.

The notes payable balance as of December 31, 2014 includes a Series A note payable in the amount of $50,000 with interest of 8% per annum. This note matured in October 2011 and is past due. Accrued interest associated with this note was $20,667 as of December 31, 2014. The Company has been unable to locate this shareholder.

On June 10, 2014, the Company issued a note payable for $250,000, which included fully vested warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share, expiring in five years. The warrants were valued at $39,650 using 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 248.2%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $34,222 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $34,222 was accreted through interest expense. The note and accrued interest at 8% per annum was originally due on December 11, 2014, but the Company received approval to extend the maturity until December 31, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $17,741 and the note payable balance was $250,000. This note is in default.

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On August 5, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $29,725 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $22,914 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $22,914 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,178 and the note payable balance was $100,000. This note is in default.

On August 12, 2014, the Company issued notes payable for $50,000, which included fully vested warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $26,817 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $17,455 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $17,455 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $5,585 and the note payable balance was $50,000. This note is in default.

On August 14, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $47,676 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $32,274 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $32,274 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,226 and the note payable balance was $100,000. This note is in default.

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On September 8, 2014, the Company issued notes payable for $150,000, which included fully vested warrants to purchase 900,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $62,544 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $44,140 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $44,140 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the notes are in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $17,385 and the note payable balance was $150,000. This note is in default.

On December 5, 2014, the Company issued a note payable for $23,000 to a stockholder, which bears interest at 5.0% and is due on April 5, 2015. This note is in default.

On December 31, 2014, the Company issued a note payable for $100,000, which include fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share expiring in five years. The warrants were valued at $11,812 using 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 229.0%, risk free interest rate of 1.68% and expected life of 5 years. The relative fair value of the warrants was $10,563 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $116 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on April 1, 2015. This note is currently in default. The warrants are subject to anti-dilution adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is revalued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,812 and the note payable balance was $89,553, net of a discount of $10,447. This note is in default.

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NOTE 9 – WARRANT LIABILITY

On December 31, 2012, the Company entered into an Investment Agreement, a Technology and Service Agreement, a Patent and Technology License Agreement and an Asset Purchase Agreement with VerifyMe, and on the same date entered into a Technology and Service Agreement with Zaah Technologies, Inc. (collectively with the VerifyMe agreements, the “Agreements”). Contemplated by those Agreements were warrants issuances by the Company for the purchase of the Company’s common stock.

The warrants associated with these Agreements are subject to anti-dilution adjustments outlined in the Agreements. In accordance with FASB ASC 815, the warrants were classified as a liability in the total amount of $2.4 million at December 31, 2012. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014 and December 31, 2013, the fair value of the warrant liability was $787,544 and $3,700,000.

On January 1, 2014, the Company issued warrants to purchase 6,349,206 shares of the Company’s common stock as consideration for technology received from VerifyMe under to the Patent and Technology License Agreement dated December 31, 2012. The warrants are exercisable at $0.10 per share. The warrants are subject to anti-dilution adjustments outlined in the Agreement. In accordance with FASB ASC 815, the warrants were classified as a liability with an initial fair value of $444,000, which was immediately expensed as research and development costs. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014, the fair value of the warrant liability was $121,209.

The Company made the payment of warrants to VerifyMe on a good faith basis, based on the assumption that the technology conveyed to the Company would be patentable and licensable. The Company has not reached a conclusion that the technology will be patentable and licensable, and can provide no assurance to this effect.

Should the Company ultimately conclude that the technology received from VerifyMe is patentable and licensable, the Company would be required to make, on January 1, 2015, an additional payment pursuant to Patent and Technology Agreement in the amount of $4,500,000, to be paid by issuing (i) a number of shares of common stock equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to the market price at the time of issuance and (ii) warrants to purchase an equal number of shares of common stock exercisable at a price of $0.10 per share. Based upon the current share price of $0.04 per share, this would result in the issuance of approximately an additional 125 million shares of common stock and warrants to purchase an additional 125 million shares. The $4,500,000 was accrued at December 31, 2014. The number of warrants to be issued based on a stock price of $0.02 at December 31, 2014 was 250 million warrants. The warrants were valued at $4,892,089 using the Black-Scholes pricing model to calculate the grant-date fair value of the warrants with the following assumptions: no dividend yield, expected volatility of 229.1%, risk free interest rate of 1.65% and expected life of five years.

NOTE 10 – CONVERTIBLE PREFERRED STOCK

Subscription Agreement

The Company entered into a Subscription Agreement with VerifyMe on January 31, 2013 (the “Subscription Agreement”). Under the terms of the Subscription Agreement, VerifyMe subscribed to purchase 33,333,333 shares of the Company’s Series A preferred stock (the “Preferred Stock”) and a warrant to purchase 33,333,333 shares of the Company’s common stock at an exercise price of $0.12 per share, for $1 million.

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At any time before January 31, 2015, VerifyMe has the right, but not the obligation, to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by VerifyMe in exchange for the price originally paid by VerifyMe therefor upon the occurrence of any of the following events:(i) the consummation of any bona fide business acquisition, (ii) the incurrence of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share. This right has not been exercised.

In accordance with FASB ASC 480 and 815, the Preferred Stock has been classified as permanent equity and was valued at $1 million at January 31, 2013.

The conversion feature of the Preferred Stock is an embedded derivative, which is classified as a liability in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair value of $1 million at January 31, 2013, $0 at December 31, 2014 and $800,000 at December 31, 2013. This was classified as an embedded derivative liability and a discount to Preferred Stock. Because the Preferred Stock can be converted at any time, the full amount of the original fair value was accreted and classified as a reduction to the discount on Preferred Stock and a deemed dividend distribution in the full amount of $1 million, in 2013.

The warrants associated with the Preferred Stock were also classified as a liability since they are subject to anti-dilutive adjustments outlined in the warrant agreement and valued at a fair market value of $2,995,791 at January 31, 2013. Because this amount was entirely in excess of the transaction price, this amount was recorded as a charge to expenses of $2,995,791 in 2013. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014 and December 31, 2013, the fair value of the warrants was $494,939 and $2,300,000, respectively.

The Preferred Stock has a preference in liquidation that the holders of the Preferred Stock are to be paid out of assets available for distribution prior to holders of common stock. The Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Preferred Stock can be converted. In addition, the Preferred Stockholders are to be paid dividends, based on the number of shares of Preferred Stock as if the shares had been converted to common shares, prior to the common stockholders receiving a dividend.

The conversion price of the shares of Preferred Stock is currently $0.03 per share.

In August 2013, VerifyMe elected to convert in a cashless transaction an equal number of shares of Preferred Stock valued at $366,667 to 12,222,222 shares of common stock.

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NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Derivative Liabilities

For purposes of determining whether certain instruments are derivatives for accounting treatment, the Company follows the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entity’s own stock. The standard applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock.

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

	Level 1		Level 2		Level 3		Total
Derivative liability related to fair value of beneficial conversion feature	$	—	$	—	$	—	$	—
Derivative liability related to fair value of warrants		—		—		6,370,709		6,370,709
Total	$	—	$	—	$	6,370,709	$	6,370,709

The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs:

	Total
Balance at January 1, 2014	$	6,000,000
Additional Warrants issued January 2014		444,000
Additional Warrants issued June 2014		34,222
Additional Warrants issued 3rd Quarter 2014		166,791
Additional Warrants Issued 4th Quarter 2014		4,903,900
Change in fair value of derivative liabilities		(5,178,204	)
Balance at December 31, 2014	$	6,370,709

As of December 31, 2014, the beneficial conversion feature of the Preferred Stock is treated as an embedded derivative liability and changes in the fair value were recognized in earnings. The Preferred Stock shares are convertible into shares of the Company’s common stock, which did traded in an active securities market, therefore the embedded derivative liability was valued using the following market based inputs:

Closing trade price of Common Stock	$	0.02
Series A Preferred Stock Conversion price	$	0.03
Intrinsic value of conversion option per share	$	—

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The Company has no assets that are measured at fair value on a recurring basis. There were no assets or liabilities measured at fair value on a non-recurring basis during the year ended December 31, 2014.

As of December 31, 2014, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These common stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions:

	December 31, 2014
Annual Dividend Yield		0.0%
Expected Life (Years)		3.0 - 4.69
Risk-Free Interest Rate		1.10% -1.65%
Expected Volatility		174.8% - 203.6%

Expected volatility was based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods. The Company believes this method produced an estimate that was representative of the Company’s expectations of future volatility over the expected term of these warrants. The Company had no reason to believe future volatility over the expected remaining life of these warrants was likely to differ materially from historical volatility. The expected life was based on the remaining contractual term of the warrants. The risk-free rate was based on the U.S. Treasury rate that corresponded to the expected term of the warrants.

NOTE 12 – STOCKHOLDERS’ EQUITY

In January and February 2013, the Company received $185,000 from the sale 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 2013, 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.

On February 1, 2013, an investor exercised a warrant to purchase 1 million shares of the Company’s common stock that raised $10,000 for the Company.

In February and March 2013, four investors exercised options to purchase 3,335,000 shares of the Company’s common stock that raised $17,919 for the Company.

On January 1, 2014, under the terms of the Patent and Technology License Agreement, the Company issued 6,349,206 shares of common stock to VerifyMe, in addition to the warrants described in Note 8 above. The shares were issued in payment for the technology received. Under the agreement, $400,000 worth of the Company’s common stock was to be paid by the Company to VerifyMe at a 10% discount to the market at time of payment. The closing price was $0.07 per share discounted 10% to $0.063. The $400,000 payment divided by the $0.063 per share resulted in 6,349,206 shares to be issued. The entire $400,000 payment was expensed to research and development.

During the second quarter of 2014, $216,249 of principal of the Company’s outstanding senior convertible notes plus accrued interest of $208,339, were converted into 8,448,519 shares of common stock. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest, $82,000, was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50.

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NOTE 13 – STOCK OPTIONS

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 the 2000 plan and created the 2003 Stock Option Plan (the “2003 Plan”). Under the 2003 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 2003 Plan, which are not intended to qualify as Incentive Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock Options”).

During 2013, our Board adopted a new omnibus incentive compensation plan that was ratified by the shareholders at the 2013 annual meeting, (the “2013 Plan”) which will serve as the successor incentive compensation plan to the 2003 Plan, and will provide the Company with an comprehensive plan to design and structure grants of stock options, stock units, stock awards, stock appreciation rights and other stock-based awards for our employees, non-employee directors and certain consultants and advisors. Our Board of Directors believes that the availability of (i) 20,000,000 new shares of our common stock, plus (ii) the 1,274,004 shares of our common stock available for issuance under the 2003 Plan, will be sufficient to meet the objective.

As of December 31, 2014, there are 23,225,996 options that have been issued, and 14,774,004 options that are available to be issued under the Plan.

The 2013 Plan is administered by a committee of the Board (“Compensation 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

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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 with non-employees. Options granted under the agreements are expensed when the related service or product is provided.

Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgments.

On January 22, 2013, the Company issued options to an employee to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 250,000 immediately, 250,000 on the first anniversary of the grant date and 500,000 on the second anniversary of the grant date. 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 222%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of the options issued was $99,972, of which $25,000 was expensed immediately and the remainder is being expensed over the vesting terms. The total expense for the years ended December 31, 2014 and 2013 was $26,500 and $12,600.

On February 25, 2013, the Company issued options to an employee to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 200,000 on the first anniversary of the grant date, 200,000 on the second anniversary of the grant date and 100,000 on the third anniversary of the grant date. 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 259%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of options issued was $89,998. The total expense recognized for the three months ended March 31, 2013 was $5,000. The employee was dismissed and the options were cancelled during the three months ended June 30, 2013. The total expense recognized of $5,000 was reversed upon cancellation of the options.

On March 13, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vested 50% immediately and 50% on March 13, 2014. 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 235%, risk-free interest rate of 2.0% and expected option life of ten years. The fair value of the option issued was $439,963 of which $219,982 was expensed immediately and the remainder will be expensed over one year. The total expense recognized for the years ended December 31, 2014 and 2013 was $43,394 and $55,447.

-24-

On May 4, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vest 50% immediately and 50% on May 4, 2014. 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 235%, risk-free interest rate of 1.78% and expected option life of ten years. The fair value of the option issued was $460,000 of which $230,000 was expensed immediately and the remainder will be expensed over one year. The total expense for the three and years ended December 31, 2014 and 2013 was $78,137 and $57,973.

Effective October 8, 2012, the Company entered into a three year agreement with the then Vice Chairman of the Board of the Company, with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company agreed to issue 10 year options to the then Vice Chairman to purchase 5% of the shares of the Company’s fully diluted common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million. The Company raised the $2.5 million in funding and on June 25, 2013, the Company issued the Vice Chairman 19 million 10 year options in satisfaction of the 5% of the shares of the Company’s fully diluted common stock clause. 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 146.1%, risk-free interest rate of 2.6% and expected option life of ten years. The fair value of options issued was $3,767,700, which was expensed immediately.

Effective October 16, 2012, the Company entered into a three year agreement with the then President and current Chief Executive Officer of the Company with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company agreed to issue 10 year options to the President to purchase 5% of the shares of the Company’s fully diluted common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million and on June 25, 2013, the Company issued the President and Chief Executive Officer 19 million 10 year options in satisfaction of the 5% of the shares of the Company’s fully diluted common stock clause. 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 146.1%, risk-free interest rate of 2.6% and expected option life of ten years. The fair value of options issued was $3,767,700, which was expensed immediately.

On September 30, 2013, the Company issued an option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Operating Officer. The options vest 50% after the first year and 50% at the end of 24 months after the grant date. 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 ranging from 268.4% to 272.8%, risk-free interest rate of 1.39% and expected option life ranging from 10 years. The fair value of the option issued was $99,840. The total expense for the years ended December 31, 2014 and 2013 was $62,395 and $18,903, respectively.

-25-

On December 2, 2013, the Company issued an option to purchase 1 million shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Financial Officer. The options vest 50% after the first year and 50% at the end of 24 months. 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 ranging from 266.1%, risk-free interest rate of 2.64% and expected option life of 10 years. The fair value of the option issued was $79,994, which will be expensed over the vesting term. The total expense for the years ended December 31, 2014 and 2013 was $49,916 and $15,123, respectively.

On March 28, 2014, the Company issued options to purchase an aggregate of 6,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board of Directors. The fair value of options issued was $599,893 of which all was expensed immediately. These options 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 229%, risk-free interest rate of 2.73% and expected option life of ten years.

On March 28, 2014 at the urging of the Company’s previous Chairman, Michael Sonnenreich, and after discussion by the Board and suggestions by Board Observers attending the meeting, the Board unanimously voted to extend the exercise period of all existing 10 year options, for a full ten years (as opposed to six months) regardless of their status with the Company. This charge was memorialized and sent in writing to previous Directors by then general counsel Morgan, Lewis & Bockius.

-26-

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2012:

						Weighted Average
	Option/Warrant			Exercise		Exercise
	Shares			Price		Price
Outstanding, December 31, 2012		82,807,221		$	0.00125 to $0.20	$	0.01
Granted		38,144,444			0.10 - 0.15		0.03
Exercised		(9,435,000	)		0.00125 - 0.07		—
Expired		—			—		—
Outstanding, December 31, 2013		111,516,665			0.00125 to 0.20		0.09
Granted		10,349,209			0.05 - 0.10		0.01
Exercised		—			—		—
Expired		(700,000	)		—		—
*Outstanding, December 31, 2014		121,165,874		$	0.01 to $.20	$	0.10
*Exercisable, December 31, 2014		121,165,874		$	0.01 to $.20	$	0.10
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)		5.7

* Does not include 250,000,000 warrants that are due to be issued on January 1, 2015. The warrants has a fair value of $4,892,089 and are reflected in warrant liabilities on the balance sheet as of December 31, 2014 and the corresponding expense is reflected in research and development expense.

A summary of incentive stock option transactions for employees since December 31, 2013 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2012		15,766,667		$	0.00125 to $0.10	$	0.06
Granted		45,500,000			0.05 - 0.15		0.04
Exercised		(900,000	)		0.00125		—
Expired		(500,000	)		0.05		—
Outstanding, December 31, 2013		59,866,667			0.00125 to 0.15		0.06
Granted		6,000,000			0.05		0.01
Exercised		(12,000,000	)		0.05		0.01
Expired		—			—		—
Outstanding, December 31, 2014		53,866,667		$	0.05 - $0.15	$	0.05
Exercisable, December 31, 2014		51,366,667		$	0.05 - $0.15	$	0.06
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)		8.3

-27-

NOTE 14 – OPERATING LEASES

For the year ended December 31, 2014 and 2013, total rent expense under leases amounted to $65,950 and $59,272. At December 31, 2014, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2015		74,637
2016		31,605
	$	106,242

NOTE 15 – RELATED PARTY TRANSACTIONS

During the fourth quarter of 2013, the company converted outstanding debt owed to shareholders into 25,974,697 shares of common stock (See Notes 6,7,8).

At December 31, 2014 and 20123, two and five shareholders of the Company held $114,000 and $330,249 of the senior secured convertible notes payable and were owed accrued interest of $112,505 and 300,677.

One shareholder held $140,000 of convertible notes payable as of December 31, 2012, that was satisfied by December 31, 2013.

At December 31, 2014, two stockholders of the Company held $114,000 in principal of the Company’s senior secured convertible notes payable, and were owed accrued interest of $112,505 related to such notes.

NOTE 16 – 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. There are no ongoing negotiations.

NOTE 17 – SUBSEQUENT EVENTS

On February 10, 2015, the Company issued a note payable for $25,000, bearing interest at 5.0% to an accredited investor and director of the Company. The note is due on June 10, 2015.

On February 15, 2015, a Board member advised the Company that her two year term as a Director expired on February 21, 2015 and that she would not stand for re-election or continue to serve as a director.

On February 26, 2015, a Board member advised the Company that he was resigning from the Board of Directors.

At December 31, 2014, three stockholders of the Company held $323,000 in principal of the Company’s notes payable, and were owed accrued interest of $31,845 related to such notes.

-28-

On March 27, 2015, the Company issued a note payable for $111,102, bearing interest at 8.0% to an accredited investor. The note is due on June 25, 2015. On March 20, 2014, VerifyMe waived its contractual rights as it relates to this transaction.

On March 30, 2015, the Company was advised by the United States Patent and Trademark Office (“USPTO”) that its petition for an unintentional delayed payment for an unpaid maintenance fee to reinstate its patent was granted by the USPTO. The patent, for a counterfeiting ink detection system, was granted on November 2, 2004.

-29-

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

LaserLock Technologies, Inc.

Washington, D.C.

We consent to the incorporation by reference of our report, dated April 15, 2015, relating to the consolidated financial statements, which appear in this Form 10-K of LaserLock Technologies, Inc.

/s/ Morison Cogen LLP

Bala CynWyd Pennsylvania

April 15, 2015

EX-31.1

EXHIBIT 31.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A)/15(D)-14(A)

I, Neil Alpert, certify that:

1. I have reviewed this annual report on Form 10-K of LaserLock Technologies, Inc. for the fiscal year ended December 31, 2014;

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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-14(e)) 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

5. I have disclosed, based on my 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 15, 2015

By:	/s/ Neil Alpert
	Neil Alpert
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A)/15(D)-14(A)

I, Scott McPherson, certify that:

1. I have reviewed this annual report on Form 10-K of LaserLock Technologies, Inc. for the fiscal year ended December 31, 2014;

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. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-14(e)) 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

5. I have disclosed, based on my 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 15, 2015

By:	/s/ Scott McPherson
	Scott McPherson
	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND

CHIEF FINANCIAL OFFICER PURSUANT TO RULE 13a-14(b) UNDER

THE SECURITIES EXCHANGE ACT OF 1934 AND SECTION 1350 OF

CHAPTER 63 OF TITLE 18 OF THE UNITED STATES CODE

Each of the undersigned, Neil Alpert and Scott McPherson, certifies, pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, that (1) this Annual Report on Form 10-K for the year ended December 31, 2014 of LaserLock Technologies, Inc. (the “Company”) fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act, and (2) the information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company.

This Certification is signed on April 15, 2015.

/s/ Neil Alpert

Neil Alpert

Chief Executive Officer

/s/ Scott McPherson

Scott McPherson

Chief Financial Officer

XML

PRIMARY COMPONENTS OF ASSETS, LIABILITIES AND RELATED VALUATION ALLOWANCE (Detail) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Deferred Tax Assets, Net, Classification [Abstract]
Deferred tax asset for NOL carryforwards	$ 10,649,000	$ 5,144,000
Deferred tax liability for intangibles	(165,000)	(165,000)
Share based compensation	4,205,000	3,683,000
Non deductible accrued expenses		150,000
Valuation allowance	(14,689,000)	(8,812,000)
Deferred Tax Assets, Net, Total	$ 0	$ 0

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Liabilities measured at fair value on recurring basis (Detail) (Fair value on a recurring basis, USD $)	Dec. 31, 2014
Total
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature	$ 0
Derivative liability related to fair value of warrants	6,370,709
Total	6,370,709
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature	0
Derivative liability related to fair value of warrants	6,370,709
Total	$ 6,370,709

XML

NOTES PAYABLE (Detail Textuals 3) (Detail) (USD $)	12 Months Ended	3 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Jun. 30, 2011	Dec. 31, 2009	Jan. 31, 2010	Sep. 30, 2011	Dec. 31, 2010	Dec. 31, 2014	May 23, 2013	May 22, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Common stock, shares authorized	675,000,000	675,000,000						675,000,000
Discount, notes payable (in dollars)								$ 10,447
Number of shares issued upon conversion of debt	1,890,000
Common Stock
Debt Instrument [Line Items]
Number of shares issued upon conversion of debt	18,275	25,974,697
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015
Debt Instrument [Line Items]
Warrants issued			6,000,000
Amount of note payable			150,000
Interest rate			8.00%
Common stock, shares authorized									675,000,000	425,000,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | Warrant
Debt Instrument [Line Items]
Warrants issued				8,000,000
Fair value of the warrants			21,275	15,450
Method used to calculate fair value of warrants			Black-Scholes option pricing model	Black-Scholes option pricing model
Dividend yield			0.00%	0.00%
Expected volatility			60.00%
Risk-free interest rate			1.52%
Expected warrant term			1 year 3 months	2 years
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | Warrant | Minimum
Debt Instrument [Line Items]
Expected volatility				30.90%
Risk-free interest rate				0.95%
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | Warrant | Maximum
Debt Instrument [Line Items]
Expected volatility				34.50%
Risk-free interest rate				1.06%
8% Series A Notes Payable
Debt Instrument [Line Items]
Warrants issued				8,000,000	1,000,000
Amount of note payable	150,000	150,000
Interest rate				8.00%	8.00%	8.00%
Discount, notes payable (in dollars)											13,632
Amount of notes payable repaid with accrued interest						25,000
Number of warrants expired unexercised						3,000,000
Reduction in value of debt		60,000
Number of warrants exercised for conversion of securities		6,000,000
Balance amount of debt		90,000
Amount of accrued interest	49,000	49,000
Number of common stock called by warrants (in shares)						2,000,000
8% Series A Notes Payable | Common Stock
Debt Instrument [Line Items]
Number of common stock called by warrants (in shares)	6,000,000	6,000,000
Number of shares issued upon conversion of debt		1,226,363
8% Series A Notes Payable | Warrant
Debt Instrument [Line Items]
Warrants issued							1,000,000
Fair value of the warrants							$ 20,143
Method used to calculate fair value of warrants							Black-Scholes option pricing model
Dividend yield							0.00%
Expected volatility							28.60%
Risk-free interest rate							0.84%
Expected warrant term							2 years

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair value measurements within fair value hierarchy of derivative liabilities using Level 3 inputs (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at January 1, 2014	$ 6,000,000
Additional Warrants issued January 2014	444,000
Additional Warrants issued June 2014	34,222
Additional Warrants issued 3rd Quarter 2014	166,791
Additional Warrants Issued 4th Quarter 2014	4,903,900
Change in fair value of derivative liabilities	(5,178,204)
Balance at December 31, 2014	$ 6,370,709

XML

NOTES PAYABLE (Detail Textuals) (Detail) (USD $)	12 Months Ended	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Dec. 31, 2014
Debt Instrument [Line Items]
Amount of unamortized discount			$ 10,447
Number of shares issued upon conversion of debt	1,890,000
Amount of cash repaid	150,000
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015
Debt Instrument [Line Items]
Amount of note payable	561,000	561,000
Amount of unamortized discount	9,914	9,914
Accrued interest	83,715	83,715
Number of shares issued upon conversion of debt		4,473,333
Amount of cash repaid		$ 150,000

XML

PROPERTY AND EQUIPMENT (Detail) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment, Net [Abstract]
Furniture and Fixtures	$ 219,871	$ 219,871
Equipment	16,155	16,155
Property, Plant and Equipment, Gross, Total	236,026	236,026
Less: Accumulated depreciation	161,205	91,952
Capital equipment, net of accumulated depreciation of $161,205 and $91,952 as of December 31, 2014 and 2013	$ 74,821	$ 144,074

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated fair value of warrants using Black-Scholes (Detail) (Warrant)	12 Months Ended
	Dec. 31, 2014
Fair Value, Option, Quantitative Disclosures [Line Items]
Annual Dividend Yield	0.00%
Minimum
Fair Value, Option, Quantitative Disclosures [Line Items]
Expected Life (Years)	3 years
Risk-free interest rate	1.10%
Expected volatility	174.80%
Maximum
Fair Value, Option, Quantitative Disclosures [Line Items]
Expected Life (Years)	4 years 8 months 9 days
Risk-free interest rate	1.65%
Expected volatility	203.60%

XML

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Equipment

Equipment consists of the following:

	December 31,		December 31,
	2014		2013
Furniture and Fixtures	$	219,871	$	219,871
Equipment		16,155		16,155
		236,026		236,026
Less: Accumulated depreciation		161,205		91,952
	$	74,821	$	144,074

XML

NOTES PAYABLE (Detail Textuals 5) (Detail) (Private Placement of 25% Notes Payable, USD $)	12 Months Ended
	Dec. 31, 2010
Litigation Case Three [Member]
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 [Member]
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 [Member]
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 [Member]
Debt Instrument [Line Items]
Percentage allocated to company	80.00%
Percentage allocated to lenders	20.00%

XML

CONVERTIBLE NOTES PAYABLE (Detail Textuals) (Detail) (USD $)	12 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended		1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Aug. 31, 2009	Dec. 31, 2013	Dec. 31, 2008	Dec. 31, 2007	Mar. 19, 2013	Dec. 31, 2012
Debt Instrument [Line Items]
Proceeds from issuance of notes payable	$ 798,000
Convertible notes payable							126,000	140,000
Common stock shares issued on conversion of debt (in shares)		1,890,000
Convertible Notes Payable [Member]
Debt Instrument [Line Items]
Debt instrument principal amount						400,000
Interest rate			10.00%			10.00%
Maturity date			2015-09			2008-08
Proceeds from issuance of notes payable					25,000	375,000
Amount of notes converted in to common stock shares			260,000			260,000
Number of common stock shares issued on conversion of notes			48,750,000
Initial conversion price per share (in dollars per share)					$ 0.005333
Convertible notes payable		98,000	140,000	98,000
Common stock shares issued on conversion of debt (in shares)				12,375,000
Warrants issued			26,250,000
Accrued interest		87,150		87,150
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 [Member] | Vice Chairman [Member]
Debt Instrument [Line Items]
Convertible notes payable							14,000
Common stock shares issued on conversion of debt (in shares)							2,625,000
Convertible Notes Payable [Member] | Accredited Investor
Debt Instrument [Line Items]
Convertible notes payable							$ 28,000
Common stock shares issued on conversion of debt (in shares)							5,250,000
Convertible Notes Payable [Member] | Series A Preferred Stock [Member]
Debt Instrument [Line Items]
Initial conversion price per share (in dollars per share)						$ 0.005333

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INCOME TAX BENEFIT (PROVISION) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract]
Current	$ (5,505,000)	$ 1,837,000
Deferred	(372,000)	3,284,000
Change in valuation allowance	5,877,000	(5,121,000)
INCOME TAX BENEFIT	$ 0	$ 0

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WARRANT LIABILITY (Detail) (USD $)	0 Months Ended	12 Months Ended
	Jan. 02, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Major Agreements [Line Items]
Warrant liability		$ 6,370,709	$ 6,000,000
Current share price (in dollars per share)		$ 0.02
Verify Me | Warrants issued on January 1, 2014
Major Agreements [Line Items]
Fair value of warrant liability		121,209
Number of warrants issued	6,349,206
Exercise price (in dollars per share)	$ 0.10
Agreements | Zaah Technologies
Major Agreements [Line Items]
Warrant liability				2,400,000
Fair value of warrant liability		787,544	3,700,000
Agreements | Verify Me | Research and Development Expense
Major Agreements [Line Items]
Initial fair value of warrant expensed as research and development cost	444,000
Patent And Technology Agreement
Major Agreements [Line Items]
Exercise price (in dollars per share)		$ 0.10
Additional payment for patent and technology		4,500,000
Discount to market price at time of issuance		10.00%
Current share price (in dollars per share)		$ 0.04
Additional shares issued for patent and technology agreement (in shares)		125,000,000
Number of common stock shares purchased under warrants (in shares)		125,000,000
Patent And Technology Agreement | Stock Options And Warrants
Major Agreements [Line Items]
Number of warrants to be issued(in shares)		250,000,000
Exercise price of warrant to be issued(in dollars per share)		$ 0.02
Warrant to be issued value		$ 4,892,089
Patent And Technology Agreement | Stock Options And Warrants | Warrant
Major Agreements [Line Items]
Dividend yield		0.00%
Expected volatility		229.10%
Risk free interest		1.65%
Expected warrant term		5 years
Patent And Technology Agreement | Verify Me
Major Agreements [Line Items]
Additional shares issued for patent and technology agreement (in shares)		6,349,206

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SUBSEQUENT EVENTS (Textuals) (Detail) (USD $)	12 Months Ended	0 Months Ended
	Dec. 31, 2014	Mar. 27, 2015	Feb. 10, 2015
Subsequent Event [Line Items]
Proceeds from issuance of notes payable	$ 798,000
Notes Payable | Director | Subsequent Event
Subsequent Event [Line Items]
Proceeds from issuance of notes payable		$ 111,102	$ 25,000
Interest rate, notes payable		8.00%	5.00%
Note due date		Jun. 25, 2015	Jun. 10, 2015

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STOCK OPTIONS - Non-Employee Stock Option/Warrant Activity (Detail) (Stock Options And Warrants, USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
Option/Warrant Shares
Outstanding, beginning balance	111,516,665		82,807,221
Granted	10,349,209		38,144,444
Exercised			(9,435,000)
Expired	(700,000)
Outstanding, ending balance	121,165,874	[1]	111,516,665
Exercisable, December 31, 2014	121,165,874	[1]
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)	5 years 8 months 12 days
Exercise Price
Expired	$ 0		$ 0
Weighted Average Exercise Price
Outstanding, beginning balance	$ 0.09		$ 0.01
Granted	$ 0.01		$ 0.03
Exercised	$ 0		$ 0
Expired	$ 0		$ 0
Outstanding, ending balance	$ 0.10		$ 0.09
Exercisable, December 31, 2014	$ 0.10
Minimum
Exercise Price
Outstanding, beginning balance	$ 0.00125		$ 0.00125
Granted	$ 0.05		$ 0.10
Exercised			$ 0.00125
Outstanding, ending balance	$ 0.01		$ 0.00125
Exercisable, December 31, 2014	$ 0.01
Maximum
Exercise Price
Outstanding, beginning balance	$ 0.20		$ 0.20
Granted	$ 0.10		$ 0.15
Exercised			$ 0.07
Outstanding, ending balance	$ 0.20		$ 0.20
Exercisable, December 31, 2014	$ 0.20

[1] Does not include 250,000,000 warrants that are due to be issued on January 1, 2015. The warrants has a fair value of $4,892,089 and are reflected in warrant liabilities on the balance sheet as of December 31, 2014 and the corresponding expense is reflected in research and development expense.

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NOTES PAYABLE (Detail Textuals 2) (Detail) (USD $)	1 Months Ended	12 Months Ended
	Jan. 31, 2010 Unit	Dec. 31, 2009 Unit	Mar. 19, 2013	Dec. 31, 2012	Sep. 30, 2011	Aug. 31, 2009 Unit
Debt Instrument [Line Items]
Convertible notes payable			$ 126,000	$ 140,000
8% Series A Notes Payable
Debt Instrument [Line Items]
Convertible notes payable	25,000	200,000			50,000	300,000
Number of units	0.5	4.0				6.0
Interest rate	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 issuance of units	17,500	180,000
Commissions charges	$ 7,500	$ 20,000

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MANAGEMENT PLANS

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

MANAGEMENT PLANS

NOTE 2 – MANAGEMENT PLANS

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company does not believe that its existing cash resources will not be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing stockholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company may be unable to execute upon the business plan or pay costs and expenses as they are incurred, which could have a material, adverse effect on the business, financial condition and results of operations.

If sufficient revenues are not generated to sustain operations or additional funding cannot be obtained in the short term, the Company will need to reduce monthly expenditures to a level that will enable the Company to continue until such funds can be obtained.

Successful completion of the Company’s development program, and the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure. However, there can be no assurances that the Company will be able to secure additional equity investment or achieve an adequate sales level.

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STOCK OPTIONS - Non-Employee Stock Option/Warrant Activity (Parenthetical) (Detail) (Stock Options And Warrants, Patent And Technology Agreement, USD $) Share data in Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014
Stock Options And Warrants | Patent And Technology Agreement
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of warrants to be issued(in shares)	250
Warrant to be issued value	$ 4,892,089

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NOTES PAYABLE - Summary of notes payable (Detail) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Less: Debt discount	$ (10,447)
Notes payable	926,553	380,249
Less: Current portion	812,553	50,000
Long-term portion		330,249
Adjustment
Debt Instrument [Line Items]
Less: Current portion	926,553
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015
Debt Instrument [Line Items]
Notes payable	114,000	330,249
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)
Debt Instrument [Line Items]
Notes payable	50,000	50,000
Notes payable; interest at 8% per annum; principal and accrued interest due at December 1, 2014 (past due)
Debt Instrument [Line Items]
Notes payable	650,000
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015
Debt Instrument [Line Items]
Notes payable	$ 123,000

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

Schedule of Liabilities Measured at Fair Value on a Recurring Basis

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

	Level 1		Level 2		Level 3		Total
Derivative liability related to fair value of beneficial conversion feature	$	—	$	—	$	—	$	—
Derivative liability related to fair value of warrants		—		—		6,370,709		6,370,709
Total	$	—	$	—	$	6,370,709	$	6,370,709

Fair Value Measurements within the Fair Value Hierarchy of Derivative Liabilities Using Level 3 Inputs

The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs:

	Total
Balance at January 1, 2014	$	6,000,000
Additional Warrants issued January 2014		444,000
Additional Warrants issued June 2014		34,222
Additional Warrants issued 3rd Quarter 2014		166,791
Additional Warrants Issued 4th Quarter 2014		4,903,900
Change in fair value of derivative liabilities		(5,178,204	)
Balance at December 31, 2014	$	6,370,709

Embedded Derivative Liability Valuation Assumptions

The Preferred Stock shares are convertible into shares of the Company’s common stock, which did traded in an active securities market, therefore the embedded derivative liability was valued using the following market based inputs:

Closing trade price of Common Stock	$	0.02
Series A Preferred Stock Conversion price	$	0.03
Intrinsic value of conversion option per share	$	—

Schedule of Common Stock Purchase Warrants Valuation Assumptions

As of December 31, 2014, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These common stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions:

	December 31, 2014
Annual Dividend Yield		0.0%
Expected Life (Years)		3.0 - 4.69
Risk-Free Interest Rate		1.10% -1.65%
Expected Volatility		174.8% - 203.6%

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NOTES PAYABLE (Tables)

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Schedule of notes payable

Notes payable consists of the following as of December 31:

	December 31, 2014			December 31, 2013
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	114,000		$	330,249
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 8% per annum; principal and accrued interest due at December 1, 2014 (past due)		650,000			—
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015		123,000			—
Less: Debt discount		(10,447	)		—
		926,553			380,249
Less: Current portion		926,553			50,000
Long-term portion	$	—		$	330,249

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated fair value of embedded derivative liability using Black-Scholes (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014
Fair Value Disclosures [Abstract]
Closing trade price of Common Stock	$ 0.02
Series A Preferred Stock Conversion price	$ 0.03
Intrinsic value of conversion option per share	$ 0

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NOTES PAYABLE - Summary of notes payable (Parenthetical) (Detail)	Dec. 31, 2014	Dec. 31, 2013
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015
Debt Instrument [Line Items]
Interest rate	10.00%	10.00%
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)
Debt Instrument [Line Items]
Interest rate	8.00%	8.00%
Notes payable; interest at 8% per annum; principal and accrued interest due at December 1, 2014 (past due)
Debt Instrument [Line Items]
Interest rate	8.00%
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015
Debt Instrument [Line Items]
Interest rate	5.00%	8.00%

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STOCK OPTIONS (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Non-employee Stock Option/Warrant Activity

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2012:

						Weighted Average
	Option/Warrant			Exercise		Exercise
	Shares			Price		Price
Outstanding, December 31, 2012		82,807,221		$	0.00125 to $0.20	$	0.01
Granted		38,144,444			0.10 - 0.15		0.03
Exercised		(9,435,000	)		0.00125 - 0.07		—
Expired		—			—		—
Outstanding, December 31, 2013		111,516,665			0.00125 to 0.20		0.09
Granted		10,349,209			0.05 - 0.10		0.01
Exercised		—			—		—
Expired		(700,000	)		—		—
*Outstanding, December 31, 2014		121,165,874		$	0.01 to $.20	$	0.10
*Exercisable, December 31, 2014		121,165,874		$	0.01 to $.20	$	0.10
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)		5.7

* Does not include 250,000,000 warrants that are due to be issued on January 1, 2015. The warrants has a fair value of $4,892,089 and are reflected in warrant liabilities on the balance sheet as of December 31, 2014 and the corresponding expense is reflected in research and development expense.

Schedule of Incentive Stock Option Transactions for Employees

A summary of incentive stock option transactions for employees since December 31, 2013 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2012		15,766,667		$	0.00125 to $0.10	$	0.06
Granted		45,500,000			0.05 - 0.15		0.04
Exercised		(900,000	)		0.00125		—
Expired		(500,000	)		0.05		—
Outstanding, December 31, 2013		59,866,667			0.00125 to 0.15		0.06
Granted		6,000,000			0.05		0.01
Exercised		(12,000,000	)		0.05		0.01
Expired		—			—		—
Outstanding, December 31, 2014		53,866,667		$	0.05 - $0.15	$	0.05
Exercisable, December 31, 2014		51,366,667		$	0.05 - $0.15	$	0.06
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)		8.3

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OPERATING LEASES (Tables)

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

Schedule of Non-cancelable Operating Lease Arrangements for Property

 At December 31, 2014, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2015		74,637
2016		31,605
	$	106,242

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies, Inc. (the “Company”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is traded on the OTCQB under the ticker symbol “LLTI”. A high-tech solutions company in the field of authenticating people and products, LaserLock offers state-of-the-art solutions to combat identity fraud and counterfeiting utilizing multi-factor authentication and a suite of security pigments for governments, health care providers, the gaming industry, the financial services industry and high-end retailers.

The Company invests in developing new proprietary color shifting inks that it believes will allow it to penetrate broader markets and result in increased revenues. The Company refines 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 Company’s digital solution is a multi-platform (iOS and Android) strong authentication solution that integrates biometrics and geo-location tagging. The solution completely eliminates passwords and the inherently weak security they provide. The solution also removes the user complexity associated with having to manage many complex passwords. The solution can be delivered either as a high availability cloud service, managed by the Company, or as licensed software product for operation on the client’s premises.

The solution integrates three independent authentication factors – something you have (for instance a smartphone), something you know (for instance a color gesture swipe) and something you are (for instance your facial geometry)—into a simple, fast, intuitive solution. The system can also accurately determine the precise location of the individual using a variety of mechanisms including GPS, cell tower triangulation, IP or WIFI address. Because the solution incorporates biometrics it completely eliminates the possibility that users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for an end-user to refute having been part of a transaction.

The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to operationalize the Company’s current technology.

Basis of Presentation

The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America.

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 payable and accrued expenses and notes payable. The carrying value of cash, 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.

Patents and Trademark

The Company has filed eleven patent applications relating to the company technology. Currently we have 7 U.S. patents, 4 U.S. applications pending for allowance, and 5 foreign applications pending for allowance. The Company has also 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 be17 to 20 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.

Derivative Instruments

The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Topic 480 of the FASB ASC and Topic 815 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the Statement of Operations as a component of other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

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 2011 through 2013 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 $62,835 and $53,979 for the years ended December 31, 2014 and 2013 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. Research and development costs for the years ended December 31, 2014 and 2013 were $10,590,271 and $655,840.

Basic and Diluted Net Income per Share of Common Stock

The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Since the Company reported a net loss for years ended December 31, 2014 and 2013, common stock equivalents, including convertible preferred stock, convertible debt, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share during the years 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 June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principle operations.

The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which must be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.

For public business entities, the amendment eliminating the exception to the sufficiency-of-equity-at-risk criterion for development stage entities in paragraph 810-10-15-16 should be applied retrospectively for annual reporting periods beginning after December 15, 2015, and interim periods therein.

Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption entities will no longer present or disclose any information required by Topic 915.

The Company adopted the amendment retrospectively commencing with the interim period ending June 30, 2014.

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update provide guidance about management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the potential impact of this standard.

Reclassifications

Certain amounts in the 2013 statement of operations have been reclassified in order for them to conform with the 2014 presentation.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Textuals) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014 Segment Institution	Dec. 31, 2013
Schedule Of Significant Accounting Policies [Line Items]
Number of financial institutions at which company's cash and cash equivalents are held	2
Depreciation method of property and equipment	Straight-line method
Research and development costs	$ 10,590,271	$ 655,840
Number of operating segment	1
Patents and Trademark
Schedule Of Significant Accounting Policies [Line Items]
Number of provisional patents filed	11
Number of patents issued	7
Amortization method of patents	Straight-line basis
Patents and Trademark | UNITED STATES
Schedule Of Significant Accounting Policies [Line Items]
Number of provisional patents pending for allowance.	4
Patents and Trademark | Foreign Countries
Schedule Of Significant Accounting Policies [Line Items]
Number of provisional patents pending for allowance.	5
Sales and marketing expenses
Schedule Of Significant Accounting Policies [Line Items]
Advertising costs	$ 62,835	$ 53,979
Minimum
Schedule Of Significant Accounting Policies [Line Items]
Estimated useful lives of property and equipment	5 years
Minimum | Patents and Trademark
Schedule Of Significant Accounting Policies [Line Items]
Estimated lives of patents	17 years
Maximum
Schedule Of Significant Accounting Policies [Line Items]
Estimated useful lives of property and equipment	7 years
Maximum | Patents and Trademark
Schedule Of Significant Accounting Policies [Line Items]
Estimated lives of patents	20 years

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Detail Textuals) (Detail) (USD $)	12 Months Ended	1 Months Ended	3 Months Ended			12 Months Ended
	Dec. 31, 2013	Jun. 30, 2013	Jun. 30, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2006	Dec. 31, 2014	Jun. 30, 2011	May 31, 2007	Feb. 28, 2006
Debt Instrument [Line Items]
Accrued interest	$ 300,677			$ 300,677			$ 112,885
Common stock shares issued on conversion of debt (in shares)	1,890,000
10% Senior Secured Convertible Promissory Notes
Debt Instrument [Line Items]
Debt instrument principal amount	220,000	225,000		220,000				596,500		800,000
Interest rate								10.00%	12.00%	10.00%
Sale price of notes payable						800,000
Remaining debt and accrued interest was extended until September 15, 2015					178,749
Accrued interest	395,000	181,125		395,000
Common stock shares issued on conversion of debt (in shares)		7,400,000	8,448,519	7,900,000
Amount of notes converted in to common stock shares		$ 1,628,000	$ 216,249

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CONVERTIBLE PREFERRED STOCK (Detail) (USD $)	12 Months Ended		1 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2014	Jan. 31, 2013	Aug. 31, 2013
Class of Stock [Line Items]
Preferred stock value	$ 633,333	$ 633,333	$ 633,333
Fair value of warrants	494,939	2,300,000
Common Stock
Class of Stock [Line Items]
Number of preferred stock purchased		4,811,111
Subscription Agreement
Class of Stock [Line Items]
Convertible preferred stock description			At any time before January 31, 2015, VerifyMe has the right, but not the obligation, to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by VerifyMe in exchange for the price originally paid by VerifyMe therefor upon the occurrence of any of the following events:(i) the consummation of any bona fide business acquisition, (ii) the incurrence of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share.
Excess amount for incurring indebtedness			2,000,000
Exercise price of capital stock or warrant			$ 0.03
Preferred stock value				1,000,000
Fair value of warrants				2,995,791
Fair value of warrants recorded as charge to expenses		2,995,791
Subscription Agreement | Verify Me
Class of Stock [Line Items]
Beneficial conversion feature at fair market value	0	800,000		1,000,000
Subscription Agreement | Convertible Preferred Stock | Verify Me
Class of Stock [Line Items]
Number of preferred stock purchased				33,333,333
Preferred stock value in noncash transaction					366,667
Subscription Agreement | Common Stock | Verify Me
Class of Stock [Line Items]
Number of common stock called by warrants (in shares)				33,333,333
Value of shares issued				$ 1,000,000
Exercise price of warrants				$ 0.12
Shares of common stock shares issued on conversion					12,222,222
Subscription Agreement | Preferred Class
Class of Stock [Line Items]
Initial conversion price per share (in dollars per share)	$ 0.03		$ 0.03

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Balance Sheets (USD $)	Dec. 31, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash and cash equivalents	$ 63,956	$ 1,285,973
Accounts receivable, net of allowance of $0 at December 31, 2014 and 2013		3,573
Inventory	97,360	34,271
Prepaid expenses	181,086	189,474
TOTAL CURRENT ASSETS	342,402	1,513,291
PROPERTY AND EQUIPMENT
Capital equipment, net of accumulated depreciation of $161,205 and $91,952 as of December 31, 2014 and 2013	74,821	144,074
OTHER ASSETS
Deposits	37,197	37,197
Patents and Trademark, net of accumulated amortization of $118,502 and $105,393 as of December 31, 2014 and 2013	107,586	120,695
TOTAL OTHER ASSETS	144,783	157,892
TOTAL ASSETS	562,006	1,815,257
CURRENT LIABILITIES
Accounts payable and accrued expenses	5,217,770	316,785
Accrued interest - related parties	43,215	16,667
Deferred revenue	16,667
Embedded derivative liability		800,000
Senior convertible notes payable - related parties	114,000
Notes payable	812,553	50,000
TOTAL CURRENT LIABILITIES	6,204,205	1,183,452
LONG-TERM LIABILITIES
Warrant liability	6,370,709	6,000,000
Accrued interest - related parties	112,885	300,677
Senior secured convertible notes payable - related parties		330,249
TOTAL LONG-TERM LIABILITIES	6,483,594	6,630,926
TOTAL LIABILITIES	12,712,799	7,814,378
CONTINGENCIES
STOCKHOLDERS' DEFICIT
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 21,111,111 shares issued and outstanding as of December 31, 2014 and 2013	633,333	633,333
Common stock, $ .001 par value; 675,000,000 shares authorized; 337,374,052 shares issued and 307,578,149 outstanding at December 31, 2014 and 319,862,042 shares issued and 290,066,139 outstanding at December 31, 2013	337,374	319,862
Additional paid in capital	24,713,294	22,938,983
Treasury stock, at cost (29,795,903 shares at December 31, 2014 and 2013)	(113,389)	(113,389)
Accumulated deficit	(37,696,405)	(29,777,910)
STOCKHOLDERS' DEFICIT	(12,125,793)	(5,999,121)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 562,006	$ 1,815,257

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NOTES PAYABLE (Textuals) (Detail) (USD $)	12 Months Ended		0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jun. 10, 2014	Aug. 05, 2014	Aug. 12, 2014	Aug. 14, 2014	Sep. 08, 2014	Dec. 05, 2014
Debt Instrument [Line Items]
Note payable balance	$ 812,553	$ 50,000
Proceeds from issuance of notes payable	798,000
Accumulated discount, notes payable (in dollars)	10,447
Interest expense	199,364	127,825
Warrant | June 10, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	17,741
Warrant | August 5, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	11,178
Warrant | August 12, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	5,585
Warrant | August 14, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	11,226
Warrant | September 8, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	17,385
Warrant | Debt Instrument Date December 2014
Debt Instrument [Line Items]
Fair value of warrant liability	11,812
Series A Notes Payable
Debt Instrument [Line Items]
Note payable balance	50,000
Interest rate, notes payable	8.00%
Accrued interest	20,667
Notes Payable
Debt Instrument [Line Items]
Accrued interest	155,992	317,344
Notes Payable | June 10, 2014
Debt Instrument [Line Items]
Note payable balance	250,000
Interest rate, notes payable	8.00%
Interest expense	34,222
Notes Payable | August 5, 2014
Debt Instrument [Line Items]
Note payable balance	100,000
Interest rate, notes payable	8.00%
Interest expense	22,914
Notes Payable | August 12, 2014
Debt Instrument [Line Items]
Note payable balance	50,000
Interest rate, notes payable	8.00%
Interest expense	17,455
Notes Payable | August 14, 2014
Debt Instrument [Line Items]
Note payable balance	100,000
Interest rate, notes payable	8.00%
Interest expense	32,274
Notes Payable | September 8, 2014
Debt Instrument [Line Items]
Note payable balance	150,000
Interest rate, notes payable	8.00%
Interest expense	44,140
Notes Payable | Debt Instrument Date December 2014
Debt Instrument [Line Items]
Note payable balance	89,553
Interest rate, notes payable	8.00%
Interest expense	116
Notes Payable | Warrant | June 10, 2014
Debt Instrument [Line Items]
Proceeds from issuance of notes payable			250,000
Number of common stock called by warrants (in shares)			1,000,000
Exercise price (in dollars per share)			$ 0.10
Fair value of warrant liability			39,650
Expected volatility			248.20%
Risk-free interest rate			1.67%
Expected warrant term			5 years
Accumulated discount, notes payable (in dollars)			34,222
Notes Payable | Warrant | August 5, 2014
Debt Instrument [Line Items]
Proceeds from issuance of notes payable				100,000
Number of common stock called by warrants (in shares)				600,000
Exercise price (in dollars per share)				$ 0.05
Fair value of warrant liability				29,725
Expected volatility				233.80%
Risk-free interest rate				1.67%
Expected warrant term				5 years
Accumulated discount, notes payable (in dollars)				22,914
Notes Payable | Warrant | August 12, 2014
Debt Instrument [Line Items]
Proceeds from issuance of notes payable					50,000
Number of common stock called by warrants (in shares)					300,000
Exercise price (in dollars per share)					$ 0.05
Fair value of warrant liability					26,817
Expected volatility					233.80%
Risk-free interest rate					1.67%
Expected warrant term					5 years
Accumulated discount, notes payable (in dollars)					17,455
Notes Payable | Warrant | August 14, 2014
Debt Instrument [Line Items]
Proceeds from issuance of notes payable						100,000
Number of common stock called by warrants (in shares)						600,000
Exercise price (in dollars per share)						$ 0.05
Fair value of warrant liability						47,676
Expected volatility						233.80%
Risk-free interest rate						1.67%
Expected warrant term						5 years
Accumulated discount, notes payable (in dollars)						32,274
Notes Payable | Warrant | September 8, 2014
Debt Instrument [Line Items]
Proceeds from issuance of notes payable							150,000
Number of common stock called by warrants (in shares)							900,000
Exercise price (in dollars per share)							$ 0.05
Fair value of warrant liability							62,544
Expected volatility							233.80%
Risk-free interest rate							1.67%
Expected warrant term							5 years
Accumulated discount, notes payable (in dollars)							44,140
Notes Payable | Warrant | Debt Instrument Date December 2014
Debt Instrument [Line Items]
Proceeds from issuance of notes payable	100,000
Number of common stock called by warrants (in shares)	600,000
Exercise price (in dollars per share)	$ 0.05
Fair value of warrant liability	11,812
Expected volatility	229.00%
Risk-free interest rate	1.68%
Expected warrant term	5 years
Accumulated discount, notes payable (in dollars)	10,447
Notes Payable | Warrant | Debt Instrument Date December 2014 | During the issuance
Debt Instrument [Line Items]
Accumulated discount, notes payable (in dollars)	10,563
Notes Payable | Stockholder
Debt Instrument [Line Items]
Interest rate, notes payable								5.00%
Proceeds from issuance of notes payable								$ 23,000
Note due date								Apr. 05, 2015

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Statement of Changes in Stockholders' Equity (Deficit) (USD $)	Total	Warrant Group One	Warrant Group Two	Convertible Preferred Stock	Common Stock	Common Stock Warrant Group One	Common Stock Warrant Group Two	Additional Paid-In Capital	Additional Paid-In Capital Warrant Group One	Additional Paid-In Capital Warrant Group Two	Treasury Stock	Deficit Accumulated During the Development Stage
Balance at Dec. 31, 2012	$ (1,864,257)				$ 248,244			$ 11,387,929			$ (113,389)	$ (13,387,041)
Balance (in shares) at Dec. 31, 2012					218,448,109
Issuance of shares for services	1,000,000			1,000,000
Issuance of shares for services (in shares)				33,333,333
Conversion of shares of preferred stock to common stock				(366,667)	12,222			354,445
Conversion of shares of preferred stock to common stock ( in shares)				(12,222,222)	12,222,222
Issuance of shares of common stock	235,000				4,811			230,189
Fair value of employee stock options	8,619,136							8,619,136
Issuance of shares of common stock ( in shares)					4,811,111
Shares issued for conversion of notes payable and accrued interest	1,890,000				18,275			1,871,725
Shares issued for conversion of notes payable and accrued interest ( in shares)					18,275,000
Exercise of options	17,919				3,335			14,584
Exercise of options ( in shares)					3,335,000
Exercise of warrants		10,000	59,999			1,000	6,000		9,000	53,999
Exercise of warrants (in shares)						1,000,000	6,000,000
Stockholders' Equity, Other	1,423,951				25,975			1,397,976
Stockholders' Equity, Other ( in shares)					25,974,697
Net loss	(16,390,869)											(16,390,869)
Deemed dividend distribution	(1,000,000)							(1,000,000)
Balance at Dec. 31, 2013	(5,999,121)			633,333	319,862			22,938,983			(113,389)	(29,777,910)
Balance (in shares) at Dec. 31, 2013				21,111,111	290,066,139
Balance at Sep. 30, 2013
Shares issued for conversion of notes payable and accrued interest					25,974,697
Balance at Dec. 31, 2013	(5,999,121)				319,862			22,938,983			(113,389)	(29,777,910)
Balance (in shares) at Dec. 31, 2013					290,066,139
Issuance of shares for services	400,000				6,349			393,651
Issuance of shares for services (in shares)					6,349,206
Cashless exercise of options	0				2,714			(2,714)
Cashless exercise of options (in shares)					2,714,285
Fair value of employee stock options	860,235							860,235
Issuance of shares of common stock for settlement of debt	506,588				8,449			498,139
Issuance of shares of common stock for settlement of debt (in shares)					8,448,519
Forgiveness of related party debt	25,000							25,000
Net loss	(7,918,495)											(7,918,495)
Balance at Dec. 31, 2014	$ (12,125,793)			$ 633,333	$ 337,374			$ 24,713,294			$ (113,389)	$ (37,696,405)
Balance (in shares) at Dec. 31, 2014				21,111,111	307,578,149

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STOCK OPTIONS (Textuals) (Detail)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2000	Dec. 31, 2013	Dec. 17, 2003
Stock Option 2000 Plan | Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant options		1,500,000
Stock Option 2003 Plan | Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant options			20,000,000
Number of options available to be issued			1,274,004
Stock Option 2003 Plan | Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant options				18,000,000
Number of options available to be issued	14,774,004
Number of option issued	23,225,996

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PATENTS AND TRADEMARK (Textuals) (Detail) (Patents and Trademark, USD $)	12 Months Ended
	Dec. 31, 2014 Patents	Dec. 31, 2013
Finite-Lived Intangible Assets [Line Items]
Number of patents issued	7
Amortization method of patents	Straight-line basis
Capitalized patent costs	$ 0	$ 21,954
UNITED STATES
Finite-Lived Intangible Assets [Line Items]
Number of provisional patents pending for allowance	4
Foreign Countries
Finite-Lived Intangible Assets [Line Items]
Number of provisional patents pending for allowance	5
Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated lives of patents	17 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated lives of patents	20 years

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OPERATING LEASES (Detail) (USD $)	Dec. 31, 2014
Leases, Operating [Abstract]
2015	$ 74,637
2016	31,605
Total	$ 106,242

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CONTINGENCIES

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

CONTINGENCIES

NOTE 16 – 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. There are no ongoing negotiations.

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INCOME TAX (Textuals) (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Income Tax Disclosure [Abstract]
Net operating loss ("NOL")	$ 26.0
Federal Statutory Rate	(35.00%)	(35.00%)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Nature of the Business

Nature of the Business

LaserLock Technologies, Inc. (the “Company”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is traded on the OTCQB under the ticker symbol “LLTI”. A high-tech solutions company in the field of authenticating people and products, LaserLock offers state-of-the-art solutions to combat identity fraud and counterfeiting utilizing multi-factor authentication and a suite of security pigments for governments, health care providers, the gaming industry, the financial services industry and high-end retailers.

The Company invests in developing new proprietary color shifting inks that it believes will allow it to penetrate broader markets and result in increased revenues. The Company refines 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 Company’s digital solution is a multi-platform (iOS and Android) strong authentication solution that integrates biometrics and geo-location tagging. The solution completely eliminates passwords and the inherently weak security they provide. The solution also removes the user complexity associated with having to manage many complex passwords. The solution can be delivered either as a high availability cloud service, managed by the Company, or as licensed software product for operation on the client’s premises.

The solution integrates three independent authentication factors – something you have (for instance a smartphone), something you know (for instance a color gesture swipe) and something you are (for instance your facial geometry)—into a simple, fast, intuitive solution. The system can also accurately determine the precise location of the individual using a variety of mechanisms including GPS, cell tower triangulation, IP or WIFI address. Because the solution incorporates biometrics it completely eliminates the possibility that users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for an end-user to refute having been part of a transaction.

The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to operationalize the Company’s current technology.

Basis of Presentation

Basis of Presentation

The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America.

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 payable and accrued expenses and notes payable. The carrying value of cash, 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 operation

Patents and Trademark

Patents and Trademark

The Company has filed eleven patent applications relating to the company technology. Currently we have 7 U.S. patents, 4 U.S. applications pending for allowance, and 5 foreign applications pending for allowance. The Company has also 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 be17 to 20 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.

Derivative Instruments

Derivative Instruments

The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Topic 480 of the FASB ASC and Topic 815 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the Statement of Operations as a component of other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date.

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 2011 through 2013 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 $62,835 and $53,979 for the years ended December 31, 2014 and 2013 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. Research and development costs for the years ended December 31, 2014 and 2013 were $10,590,271 and $655,840.

Basic and Diluted Net Income per Share of Common Stock

Basic and Diluted Net Income per Share of Common Stock

The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Since the Company reported a net loss for years ended December 31, 2014 and 2013, common stock equivalents, including convertible preferred stock, convertible debt, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share during the years 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 June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principle operations.

The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which must be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.

For public business entities, the amendment eliminating the exception to the sufficiency-of-equity-at-risk criterion for development stage entities in paragraph 810-10-15-16 should be applied retrospectively for annual reporting periods beginning after December 15, 2015, and interim periods therein.

Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption entities will no longer present or disclose any information required by Topic 915.

The Company adopted the amendment retrospectively commencing with the interim period ending June 30, 2014.

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update provide guidance about management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the potential impact of this standard.

Reclassifications

Reclassifications

Certain amounts in the 2013 statement of operations have been reclassified in order for them to conform with the 2014 presentation.

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Statements of Cash Flows (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (7,918,495)	$ (16,390,869)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of options issued in exchange for services	860,235	8,619,137
Accretion of discount on notes payable	202,377	3,718
Change in fair value warrant liability	(5,128,204)	604,209
Change in fair value of embedded derivative liability	(800,000)	(200,000)
Fair value of warrants in excess of consideration for convertible preferred stock		2,995,791
Fair value of stock in excess of converted notes payable and accrued interest	82,000	1,221,875
Amortization and depreciation	82,362	81,929
Stock and warrants issued in exchange for technology	5,736,089
(Increase) decrease in assets
Accounts receivable	3,573	(100)
Inventory	(63,089)	(14,291)
Prepaid expenses	8,388	560,526
Deposits		(37,197)
Increase (decrease) in liabilities
Accounts payable and accrued expenses	4,898,080	(233,497)
Deferred revenue	16,667
Net cash used in operating activities	(2,020,017)	(2,788,769)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(10,573)
Purchase of intangibles		(21,954)
Net cash used in investing activities		(32,527)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock		1,000,000
Proceeds from issuance of common stock		235,000
Proceeds from exercise of stock options		17,919
Proceeds from exercise of warrants		10,000
Proceeds from issuance of notes payable	798,000
Repayments of notes payable		(150,000)
Net cash provided by financing activities	798,000	1,112,919
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,222,017)	(1,708,377)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR	1,285,973	2,994,350
CASH AND CASH EQUIVALENTS - END OF YEAR	63,956	1,285,973
Cash paid during the year for:
Interest		13,895
Income taxes	0	0
Fair value of stock issued for conversion of notes payable and accrued interest	506,588	2,092,075
Fair value of stock issued for conversion of preferred stock to common stock		366,667
Accretion of discount on preferred stock as deemed dividend distribution		1,000,000
Fair value of beneficial conversion feature		1,500,000
Conversion of warrant in lieu of cash repayment of notes payable		60,000
Fair value of warrants issued as debt discount	211,576
Forgiveness of related party debt	$ 25,000

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Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Allowance for accounts receivable (in dollars)	$ 0	$ 0
Accumulated depreciation on capital equipment (in dollars)	161,205	91,952
Accumulated amortization, patent and trademarks (in dollars)	$ 118,502	$ 105,393
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	21,111,111	21,111,111
Preferred stock, shares outstanding	21,111,111	21,111,111
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	337,374,052	319,862,042
Common stock, shares outstanding	307,578,149	290,066,139
Treasury stock, shares	29,795,903	29,795,903

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Derivative Liabilities

For purposes of determining whether certain instruments are derivatives for accounting treatment, the Company follows the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entity’s own stock. The standard applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock.

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

	Level 1		Level 2		Level 3		Total
Derivative liability related to fair value of beneficial conversion feature	$	—	$	—	$	—	$	—
Derivative liability related to fair value of warrants		—		—		6,370,709		6,370,709
Total	$	—	$	—	$	6,370,709	$	6,370,709

The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs:

	Total
Balance at January 1, 2014	$	6,000,000
Additional Warrants issued January 2014		444,000
Additional Warrants issued June 2014		34,222
Additional Warrants issued 3rd Quarter 2014		166,791
Additional Warrants Issued 4th Quarter 2014		4,903,900
Change in fair value of derivative liabilities		(5,178,204	)
Balance at December 31, 2014	$	6,370,709

As of December 31, 2014, the beneficial conversion feature of the Preferred Stock is treated as an embedded derivative liability and changes in the fair value were recognized in earnings. The Preferred Stock shares are convertible into shares of the Company’s common stock, which did traded in an active securities market, therefore the embedded derivative liability was valued using the following market based inputs:

Closing trade price of Common Stock	$	0.02
Series A Preferred Stock Conversion price	$	0.03
Intrinsic value of conversion option per share	$	—

The Company has no assets that are measured at fair value on a recurring basis. There were no assets or liabilities measured at fair value on a non-recurring basis during the year ended December 31, 2014.

As of December 31, 2014, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These common stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions:

	December 31, 2014
Annual Dividend Yield		0.0%
Expected Life (Years)		3.0 - 4.69
Risk-Free Interest Rate		1.10% -1.65%
Expected Volatility		174.8% - 203.6%

Expected volatility was based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods. The Company believes this method produced an estimate that was representative of the Company’s expectations of future volatility over the expected term of these warrants. The Company had no reason to believe future volatility over the expected remaining life of these warrants was likely to differ materially from historical volatility. The expected life was based on the remaining contractual term of the warrants. The risk-free rate was based on the U.S. Treasury rate that corresponded to the expected term of the warrants.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Apr. 15, 2015	Apr. 10, 2015
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Trading Symbol	LLTI
Entity Registrant Name	LASERLOCK TECHNOLOGIES INC
Entity Central Index Key	0001104038
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		307,578,149
Entity Public Float			$ 1,843,020

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STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE 12 – STOCKHOLDERS’ EQUITY

In January and February 2013, the Company received $185,000 from the sale 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 2013, 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.

On February 1, 2013, an investor exercised a warrant to purchase 1 million shares of the Company’s common stock that raised $10,000 for the Company.

In February and March 2013, four investors exercised options to purchase 3,335,000 shares of the Company’s common stock that raised $17,919 for the Company.

On January 1, 2014, under the terms of the Patent and Technology License Agreement, the Company issued 6,349,206 shares of common stock to VerifyMe, in addition to the warrants described in Note 8 above. The shares were issued in payment for the technology received. Under the agreement, $400,000 worth of the Company’s common stock was to be paid by the Company to VerifyMe at a 10% discount to the market at time of payment. The closing price was $0.07 per share discounted 10% to $0.063. The $400,000 payment divided by the $0.063 per share resulted in 6,349,206 shares to be issued. The entire $400,000 payment was expensed to research and development.

During the second quarter of 2014, $216,249 of principal of the Company’s outstanding senior convertible notes plus accrued interest of $208,339, were converted into 8,448,519 shares of common stock. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest, $82,000, was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50.

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Statements of Operations (USD $)	12 Months Ended
	Dec. 31, 2014		Dec. 31, 2013
NET REVENUE
Sales	$ 116,265		$ 3,140
Royalties	8,333
TOTAL NET REVENUE	124,598		3,140
COST OF SALES	113,024		2,710
GROSS PROFIT	11,574		430
OPERATING EXPENSES
General and administrative	811,916		762,668
Legal and accounting	344,903		475,948
Payroll expenses	1,611,376	[1]	9,485,339	[1]
Research and development	10,590,271		655,840
Sales and marketing	218,443		261,804
Total operating expenses	13,576,909		11,641,599
(LOSS) BEFORE OTHER INCOME	(13,565,335)		(11,641,169)
OTHER INCOME (EXPENSE)
Interest income	0		0
Interest expense	(199,364)		(127,825)
Loss on extinguishment of debt	(82,000)		(1,221,875)
Change in fair value of warrants	5,128,204		(604,209)
Change in fair value of embedded derivative liability	800,000		200,000
Fair value of warrants in excess of consideration for convertible preferred stock			(2,995,791)
TOTAL OTHER INCOME (EXPENSE)	5,646,840		(4,749,700)
LOSS BEFORE INCOME TAX BENEFIT	(7,918,495)		(16,390,869)
INCOME TAX BENEFIT	0		0
NET LOSS	(7,918,495)		(16,390,869)
Less: Deemed dividend distribution			(1,000,000)
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS	$ (7,918,495)		$ (17,390,869)
BASIC (in dollars per share)	$ (0.03)		$ (0.07)
DILUTED (in dollars per share)	$ (0.03)		$ (0.07)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC (in shares)	303,748,409		250,043,403
DILUTED (in shares)	303,748,409		250,043,403

[1] - includes share based compensation of $860,235 for the year ended December 31, 2014 and $8,619,137 for the year ended December 31, 2013

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INCOME TAXES

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 5 – 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, 2014 the Company has a net operating loss (“NOL”) that approximates $26.0 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			Year Ended
	December 31,			December 31,
	2014			2013
Current	($	5,505,000	)	$	1,837,000
Deferred		(372,000	)		3,284,000
Change in valuation allowance		5,877,000			(5,121,000	)
	$	—		$	—

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:

	2014						2013
	Amount			%			Amount			%
U.S federal income tax benefit at federal statutory rate	$	(2,771,000	)		(35	)	$	(5,718,000	)		(35	)
State tax, net of federal tax effect		(463,000	)		(6	)		(956,000	)		(6	)
		—			—			—			—
Deductible share based compensation		—			—			(318,000	)		(2	)
Non-deductible changes in derviative liability and share based transactions		(2,639,000	)		(33	)		1,895,000			12
Other		(4,000	)		—			(24,000	)
Change in valuation allowance		5,877,000			74			5,121,000			31
	$	—			—		$	—			—

The primary components of the Company’s December 31, 2014 and 2013 deferred tax assets, liabilities and related valuation allowance are as follows:

	December 31,			December 31,
	2014			2013
Deferred tax asset for NOL carryforwards	$	10,649,000		$	5,144,000
Deferred tax liability for intangibles		(165,000	)		(165,000	)
Share based compensation		4,205,000			3,683,000
Non deductible accrued expenses		—			150,000
Valuation allowance		(14,689,000	)		(8,812,000	)
	$	—		$	—

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, 2014 and 2013, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2014 and 2013. The Company did not recognize any interest or penalties during 2014 and 2013 related to unrecognized tax benefits.

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PATENTS AND TRADEMARK

12 Months Ended

Dec. 31, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

PATENTS AND TRADEMARK

NOTE 4 – PATENTS AND TRADEMARK

The Company has seven issued patents, four U.S. applications pending, and five foreign applications pending for allowance. 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 to 20 years). During the years ended December 31, 2014 and 2013, the Company capitalized $0 and $21,954 of patent costs.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 17 – SUBSEQUENT EVENTS

On February 10, 2015, the Company issued a note payable for $25,000, bearing interest at 5.0% to an accredited investor and director of the Company. The note is due on June 10, 2015.

On February 15, 2015, a Board member advised the Company that her two year term as a Director expired on February 21, 2015 and that she would not stand for re-election or continue to serve as a director.

On February 26, 2015, a Board member advised the Company that he was resigning from the Board of Directors.

At December 31, 2014, three stockholders of the Company held $323,000 in principal of the Company’s notes payable, and were owed accrued interest of $31,845 related to such notes.

On March 27, 2015, the Company issued a note payable for $111,102, bearing interest at 8.0% to an accredited investor. The note is due on June 25, 2015. On March 20, 2014, VerifyMe waived its contractual rights as it relates to this transaction.

On March 30, 2015, the Company was advised by the United States Patent and Trademark Office (“USPTO”) that its petition for an unintentional delayed payment for an unpaid maintenance fee to reinstate its patent was granted by the USPTO. The patent, for a counterfeiting ink detection system, was granted on November 2, 2004.

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STOCK OPTIONS

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK OPTIONS

NOTE 13 – STOCK OPTIONS

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 the 2000 plan and created the 2003 Stock Option Plan (the “2003 Plan”). Under the 2003 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 2003 Plan, which are not intended to qualify as Incentive Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock Options”).

During 2013, our Board adopted a new omnibus incentive compensation plan that was ratified by the shareholders at the 2013 annual meeting, (the “2013 Plan”) which will serve as the successor incentive compensation plan to the 2003 Plan, and will provide the Company with an comprehensive plan to design and structure grants of stock options, stock units, stock awards, stock appreciation rights and other stock-based awards for our employees, non-employee directors and certain consultants and advisors. Our Board of Directors believes that the availability of (i) 20,000,000 new shares of our common stock, plus (ii) the 1,274,004 shares of our common stock available for issuance under the 2003 Plan, will be sufficient to meet the objective.

As of December 31, 2014, there are 23,225,996 options that have been issued, and 14,774,004 options that are available to be issued under the Plan.

The 2013 Plan is administered by a committee of the Board (“Compensation 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 with non-employees. Options granted under the agreements are expensed when the related service or product is provided.

Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgments.

On January 22, 2013, the Company issued options to an employee to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 250,000 immediately, 250,000 on the first anniversary of the grant date and 500,000 on the second anniversary of the grant date. 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 222%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of the options issued was $99,972, of which $25,000 was expensed immediately and the remainder is being expensed over the vesting terms. The total expense for the years ended December 31, 2014 and 2013 was $26,500 and $12,600.

On February 25, 2013, the Company issued options to an employee to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 200,000 on the first anniversary of the grant date, 200,000 on the second anniversary of the grant date and 100,000 on the third anniversary of the grant date. 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 259%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of options issued was $89,998. The total expense recognized for the three months ended March 31, 2013 was $5,000. The employee was dismissed and the options were cancelled during the three months ended June 30, 2013. The total expense recognized of $5,000 was reversed upon cancellation of the options.

On March 13, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vested 50% immediately and 50% on March 13, 2014. 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 235%, risk-free interest rate of 2.0% and expected option life of ten years. The fair value of the option issued was $439,963 of which $219,982 was expensed immediately and the remainder will be expensed over one year. The total expense recognized for the years ended December 31, 2014 and 2013 was $43,394 and $55,447.

On May 4, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vest 50% immediately and 50% on May 4, 2014. 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 235%, risk-free interest rate of 1.78% and expected option life of ten years. The fair value of the option issued was $460,000 of which $230,000 was expensed immediately and the remainder will be expensed over one year. The total expense for the three and years ended December 31, 2014 and 2013 was $78,137 and $57,973.

Effective October 8, 2012, the Company entered into a three year agreement with the then Vice Chairman of the Board of the Company, with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company agreed to issue 10 year options to the then Vice Chairman to purchase 5% of the shares of the Company’s fully diluted common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million. The Company raised the $2.5 million in funding and on June 25, 2013, the Company issued the Vice Chairman 19 million 10 year options in satisfaction of the 5% of the shares of the Company’s fully diluted common stock clause. 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 146.1%, risk-free interest rate of 2.6% and expected option life of ten years. The fair value of options issued was $3,767,700, which was expensed immediately.

Effective October 16, 2012, the Company entered into a three year agreement with the then President and current Chief Executive Officer of the Company with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company agreed to issue 10 year options to the President to purchase 5% of the shares of the Company’s fully diluted common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million and on June 25, 2013, the Company issued the President and Chief Executive Officer 19 million 10 year options in satisfaction of the 5% of the shares of the Company’s fully diluted common stock clause. 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 146.1%, risk-free interest rate of 2.6% and expected option life of ten years. The fair value of options issued was $3,767,700, which was expensed immediately.

On September 30, 2013, the Company issued an option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Operating Officer. The options vest 50% after the first year and 50% at the end of 24 months after the grant date. 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 ranging from 268.4% to 272.8%, risk-free interest rate of 1.39% and expected option life ranging from 10 years. The fair value of the option issued was $99,840. The total expense for the years ended December 31, 2014 and 2013 was $62,395 and $18,903, respectively.

On December 2, 2013, the Company issued an option to purchase 1 million shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Financial Officer. The options vest 50% after the first year and 50% at the end of 24 months. 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 ranging from 266.1%, risk-free interest rate of 2.64% and expected option life of 10 years. The fair value of the option issued was $79,994, which will be expensed over the vesting term. The total expense for the years ended December 31, 2014 and 2013 was $49,916 and $15,123, respectively.

On March 28, 2014, the Company issued options to purchase an aggregate of 6,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board of Directors. The fair value of options issued was $599,893 of which all was expensed immediately. These options 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 229%, risk-free interest rate of 2.73% and expected option life of ten years.

On March 28, 2014 at the urging of the Company’s previous Chairman, Michael Sonnenreich, and after discussion by the Board and suggestions by Board Observers attending the meeting, the Board unanimously voted to extend the exercise period of all existing 10 year options, for a full ten years (as opposed to six months) regardless of their status with the Company. This charge was memorialized and sent in writing to previous Directors by then general counsel Morgan, Lewis & Bockius.

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2012:

						Weighted Average
	Option/Warrant			Exercise		Exercise
	Shares			Price		Price
Outstanding, December 31, 2012		82,807,221		$	0.00125 to $0.20	$	0.01
Granted		38,144,444			0.10 - 0.15		0.03
Exercised		(9,435,000	)		0.00125 - 0.07		—
Expired		—			—		—
Outstanding, December 31, 2013		111,516,665			0.00125 to 0.20		0.09
Granted		10,349,209			0.05 - 0.10		0.01
Exercised		—			—		—
Expired		(700,000	)		—		—
*Outstanding, December 31, 2014		121,165,874		$	0.01 to $.20	$	0.10
*Exercisable, December 31, 2014		121,165,874		$	0.01 to $.20	$	0.10
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)		5.7

* Does not include 250,000,000 warrants that are due to be issued on January 1, 2015. The warrants has a fair value of $4,892,089 and are reflected in warrant liabilities on the balance sheet as of December 31, 2014 and the corresponding expense is reflected in research and development expense.

A summary of incentive stock option transactions for employees since December 31, 2013 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2012		15,766,667		$	0.00125 to $0.10	$	0.06
Granted		45,500,000			0.05 - 0.15		0.04
Exercised		(900,000	)		0.00125		—
Expired		(500,000	)		0.05		—
Outstanding, December 31, 2013		59,866,667			0.00125 to 0.15		0.06
Granted		6,000,000			0.05		0.01
Exercised		(12,000,000	)		0.05		0.01
Expired		—			—		—
Outstanding, December 31, 2014		53,866,667		$	0.05 - $0.15	$	0.05
Exercisable, December 31, 2014		51,366,667		$	0.05 - $0.15	$	0.06
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)		8.3

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WARRANT LIABILITY

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

WARRANT LIABILITY

NOTE 9 – WARRANT LIABILITY

On December 31, 2012, the Company entered into an Investment Agreement, a Technology and Service Agreement, a Patent and Technology License Agreement and an Asset Purchase Agreement with VerifyMe, and on the same date entered into a Technology and Service Agreement with Zaah Technologies, Inc. (collectively with the VerifyMe agreements, the “Agreements”). Contemplated by those Agreements were warrants issuances by the Company for the purchase of the Company’s common stock.

The warrants associated with these Agreements are subject to anti-dilution adjustments outlined in the Agreements. In accordance with FASB ASC 815, the warrants were classified as a liability in the total amount of $2.4 million at December 31, 2012. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014 and December 31, 2013, the fair value of the warrant liability was $787,544 and $3,700,000.

On January 1, 2014, the Company issued warrants to purchase 6,349,206 shares of the Company’s common stock as consideration for technology received from VerifyMe under to the Patent and Technology License Agreement dated December 31, 2012. The warrants are exercisable at $0.10 per share. The warrants are subject to anti-dilution adjustments outlined in the Agreement. In accordance with FASB ASC 815, the warrants were classified as a liability with an initial fair value of $444,000, which was immediately expensed as research and development costs. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014, the fair value of the warrant liability was $121,209.

The Company made the payment of warrants to VerifyMe on a good faith basis, based on the assumption that the technology conveyed to the Company would be patentable and licensable. The Company has not reached a conclusion that the technology will be patentable and licensable, and can provide no assurance to this effect.

Should the Company ultimately conclude that the technology received from VerifyMe is patentable and licensable, the Company would be required to make, on January 1, 2015, an additional payment pursuant to Patent and Technology Agreement in the amount of $4,500,000, to be paid by issuing (i) a number of shares of common stock equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to the market price at the time of issuance and (ii) warrants to purchase an equal number of shares of common stock exercisable at a price of $0.10 per share. Based upon the current share price of $0.04 per share, this would result in the issuance of approximately an additional 125 million shares of common stock and warrants to purchase an additional 125 million shares. The $4,500,000 was accrued at December 31, 2014. The number of warrants to be issued based on a stock price of $0.02 at December 31, 2014 was 250 million warrants. The warrants were valued at $4,892,089 using the Black-Scholes pricing model to calculate the grant-date fair value of the warrants with the following assumptions: no dividend yield, expected volatility of 229.1%, risk free interest rate of 1.65% and expected life of five years.

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STOCK OPTIONS (Textuals 1) (Detail) (USD $)	12 Months Ended	1 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended
	Dec. 31, 2013	Oct. 31, 2012	Dec. 31, 2014	Jun. 25, 2013	Mar. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Amount received in funding	$ 235,000
Three year agreement | Vice Chairman of the Board
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation		200,000
Three year agreement | President and Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share based compensation		200,000
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price, description			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.
Stock options | Three year agreement | Common Stock | Vice Chairman of the Board
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued		19,000,000
Exercisable common stock share price		$ 0.05
Term for options		10 years
Expected volatility		146.10%
Risk-free interest rate		2.60%
Expected option life (in years)		10 years
Fair value of option issued expensed immediately		3,767,700
Method used to calculate the grant-date fair value of the warrants		Black-Scholes option pricing model
Percentage of number of options to purchase common stock		5.00%
Amount raised in funding				2,500,000
Stock options | Three year agreement | Common Stock | President and Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued		19,000,000
Exercisable common stock share price		$ 0.05
Term for options		10 years
Expected volatility		146.10%
Risk-free interest rate		2.60%
Expected option life (in years)		10 years
Fair value of option issued expensed immediately		3,767,700
Method used to calculate the grant-date fair value of the warrants		Black-Scholes option pricing model
Percentage of number of options to purchase common stock		5.00%
Amount received in funding				2,500,000
Stock options | January 22, 2013 | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued			1,000,000
Exercisable common stock share price			0.05
Term for options			10 years
Expected volatility			222.00%
Risk-free interest rate			1.90%
Expected option life (in years)			10 years
Fair value of options issued			99,972
Fair value of option issued expensed immediately			25,000
Method used to calculate the grant-date fair value of the warrants			Black-Scholes option pricing model
Allocated share-based compensation expense	12,600		26,500
Stock options | January 22, 2013 | Employee | Options Vests Immediately
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options vested			250,000
Stock options | January 22, 2013 | Employee | Option Vests One Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options vested			250,000
Stock options | January 22, 2013 | Employee | Options Vested Year Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options vested			500,000
Stock options | February 25, 2013 | Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued			500,000
Exercisable common stock share price			0.05
Term for options			10 years
Expected volatility			259.00%
Risk-free interest rate			1.90%
Expected option life (in years)			10 years
Fair value of options issued			89,998
Method used to calculate the grant-date fair value of the warrants			Black-Scholes option pricing model
Allocated share-based compensation expense					5,000
Stock based compensation reversed upon cancellation of stock options			5,000
Stock options | February 25, 2013 | Employee | Option Vests One Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options vested			200,000
Stock options | February 25, 2013 | Employee | Options Vested Year Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options vested			200,000
Stock options | February 25, 2013 | Employee | Options Vested Year Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options vested			100,000
Stock options | March 13, 2013 | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued			2,000,000
Exercisable common stock share price			0.05
Term for options			10 years
Expected volatility			235.00%
Risk-free interest rate			2.00%
Expected option life (in years)			10 years
Fair value of options issued			439,963
Fair value of option issued expensed immediately			219,982
Method used to calculate the grant-date fair value of the warrants			Black-Scholes option pricing model
Allocated share-based compensation expense	55,447		43,394
Stock options | March 13, 2013 | Director | Options Vests Immediately
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | March 13, 2013 | Director | Vested on March 13, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | May 4, 2013 | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued			2,000,000
Exercisable common stock share price			0.05
Term for options			10 years
Expected volatility			235.00%
Risk-free interest rate			1.78%
Expected option life (in years)			10 years
Fair value of options issued			460,000
Fair value of option issued expensed immediately			230,000
Method used to calculate the grant-date fair value of the warrants			Black-Scholes option pricing model
Allocated share-based compensation expense	57,973		78,137
Stock options | May 4, 2013 | Director | Options Vests Immediately
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | May 4, 2013 | Director | Vested after the first year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | September 30, 2013 | Chief Operating Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued			1,000,000
Exercisable common stock share price			0.15
Term for options			10 years
Risk-free interest rate			1.39%
Expected option life (in years)			10 years
Fair value of options issued			99,840
Method used to calculate the grant-date fair value of the warrants			Black-Scholes option pricing model
Allocated share-based compensation expense	18,903		62,395
Stock options | September 30, 2013 | Chief Operating Officer | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			268.40%
Stock options | September 30, 2013 | Chief Operating Officer | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			272.80%
Stock options | September 30, 2013 | Chief Operating Officer | Option Vests One Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | September 30, 2013 | Chief Operating Officer | Vested at the end of 24 months
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | December 2, 2013 | Chief Financial Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued			1,000,000
Exercisable common stock share price			0.15
Term for options			10 years
Expected volatility			266.10%
Risk-free interest rate			2.64%
Expected option life (in years)			10 years
Fair value of options issued			79,994
Method used to calculate the grant-date fair value of the warrants			Black-Scholes option pricing model
Allocated share-based compensation expense	15,123		49,916
Stock options | December 2, 2013 | Chief Financial Officer | Option Vests One Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | December 2, 2013 | Chief Financial Officer | Vested at the end of 24 months
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of option vested			50.00%
Stock options | March 28, 2014 | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued			6,000,000
Exercisable common stock share price			0.05
Term for options			10 years
Expected volatility			229.00%
Risk-free interest rate			2.73%
Expected option life (in years)			10 years
Fair value of option issued expensed immediately			599,893
Method used to calculate the grant-date fair value of the warrants			Black-Scholes option pricing model

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

SENIOR SECURED CONVERTIBLE NOTES PAYABLE - RELATED PARTIES

NOTE 6 – SENIOR SECURED CONVERTIBLE NOTES PAYABLE – RELATED PARTIES

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. In June 2013, $225,000 of these notes payable plus accrued interest of $181,125 were converted into 7.4 million shares of the Company’s common stock, which was valued at $1,628,000. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50.

During the fourth quarter of 2013, $220,000 of senior convertible notes plus accrued interest of $395,000, were converted into 7,900,000 shares of common stock. Since this transaction was with related parties, the conversion was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

As of December 31, 2014 and December 31, 2013, the outstanding principal balance on these notes was $114,000 and $330,249. Accrued interest at December 30, 2014 and December 31, 2013 amounted to $112,885 and $300,677.

During the second quarter of 2014, $216,249 of principal of the Company’s outstanding senior convertible notes held by a significant shareholder of the Company, plus accrued interest of $208,339, were converted into 8,448,519 shares of common stock. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest, $82,000, was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50.

As of December 31, 2014, the outstanding principal balance on these notes was $114,000. Accrued interest at December 31, 2014 amounted to $112,885.

If an equity financing with total proceeds of more than $5,000,000 occurs while any of these 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 of common stock 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 if the triggering event occurs and the contingency is resolved.

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CONVERTIBLE NOTES PAYABLE

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

CONVERTIBLE NOTES PAYABLE

NOTE 7 – 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.

On March 19, 2013, the investor holding $140,000 of convertible notes transferred $14,000 of the $140,000 convertible notes to the Vice Chairman of the Company. Also on March 19, 2013, the investor agreed to convert $28,000 of the investor’s remaining $126,000 of convertible notes into 5,250,000 shares of the Company’s common stock.

On March 19, 2013, the Vice Chairman of the Company agreed to convert $14,000 of convertible notes into 2,625,000 of the Company’s common stock.

During the fourth quarter of 2013, the remaining $98,000 of convertible notes plus accrued interest of $87,150 were converted into 12,375,000 shares of common stock. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

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CONVERTIBLE PREFERRED STOCK

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

CONVERTIBLE PREFERRED STOCK

NOTE 10 – CONVERTIBLE PREFERRED STOCK

Subscription Agreement

The Company entered into a Subscription Agreement with VerifyMe on January 31, 2013 (the “Subscription Agreement”). Under the terms of the Subscription Agreement, VerifyMe subscribed to purchase 33,333,333 shares of the Company’s Series A preferred stock (the “Preferred Stock”) and a warrant to purchase 33,333,333 shares of the Company’s common stock at an exercise price of $0.12 per share, for $1 million.

At any time before January 31, 2015, VerifyMe has the right, but not the obligation, to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by VerifyMe in exchange for the price originally paid by VerifyMe therefor upon the occurrence of any of the following events:(i) the consummation of any bona fide business acquisition, (ii) the incurrence of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share. This right has not been exercised.

In accordance with FASB ASC 480 and 815, the Preferred Stock has been classified as permanent equity and was valued at $1 million at January 31, 2013.

The conversion feature of the Preferred Stock is an embedded derivative, which is classified as a liability in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair value of $1 million at January 31, 2013, $0 at December 31, 2014 and $800,000 at December 31, 2013. This was classified as an embedded derivative liability and a discount to Preferred Stock. Because the Preferred Stock can be converted at any time, the full amount of the original fair value was accreted and classified as a reduction to the discount on Preferred Stock and a deemed dividend distribution in the full amount of $1 million, in 2013.

The warrants associated with the Preferred Stock were also classified as a liability since they are subject to anti-dilutive adjustments outlined in the warrant agreement and valued at a fair market value of $2,995,791 at January 31, 2013. Because this amount was entirely in excess of the transaction price, this amount was recorded as a charge to expenses of $2,995,791 in 2013. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014 and December 31, 2013, the fair value of the warrants was $494,939 and $2,300,000, respectively.

The Preferred Stock has a preference in liquidation that the holders of the Preferred Stock are to be paid out of assets available for distribution prior to holders of common stock. The Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Preferred Stock can be converted. In addition, the Preferred Stockholders are to be paid dividends, based on the number of shares of Preferred Stock as if the shares had been converted to common shares, prior to the common stockholders receiving a dividend.

The conversion price of the shares of Preferred Stock is currently $0.03 per share.

In August 2013, VerifyMe elected to convert in a cashless transaction an equal number of shares of Preferred Stock valued at $366,667 to 12,222,222 shares of common stock.

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OPERATING LEASES (Textuals) (Detail) (General and administrative expense, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
General and administrative expense
Operating Leased Assets [Line Items]
Total rent expense under leases	$ 65,950	$ 59,272

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RELATED PARTY TRANSACTIONS (Textuals) (Senior secured convertible notes payable, USD $) (Detail) (USD $)	12 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended
	Dec. 31, 2013	Dec. 31, 2013	Jun. 30, 2013	Jun. 30, 2014	Dec. 31, 2014	Dec. 31, 2012 Shareholder
Related Party Transaction [Line Items]
Convertible notes payable					$ 114,000
Common stock shares issued on conversion of debt (in shares)	1,890,000
Common Stock
Related Party Transaction [Line Items]
Common stock shares issued on conversion of debt (in shares)	18,275	25,974,697
10% Senior Secured Convertible Promissory Notes
Related Party Transaction [Line Items]
Number of shareholders	5	5
Convertible notes payable	330,249	330,249
Amount of accrued interest owed by shareholders	300,677	300,677
Common stock shares issued on conversion of debt (in shares)		7,900,000	7,400,000	8,448,519
10% Senior Secured Convertible Promissory Notes | 2 Shareholders
Related Party Transaction [Line Items]
Number of shareholders					2
Convertible notes payable					114,000
Amount of accrued interest owed by shareholders					112,505
10% Senior Secured Convertible Promissory Notes | 3 Shareholders
Related Party Transaction [Line Items]
Number of shareholders					3
Convertible notes payable					323,000
Amount of accrued interest owed by shareholders					31,845
Convertible Notes Payable [Member]
Related Party Transaction [Line Items]
Number of shareholders						1
Convertible notes payable						140,000
Amount of accrued interest owed by shareholders	87,150	87,150
Common stock shares issued on conversion of debt (in shares)		12,375,000

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STOCK OPTIONS - Incentive Stock Option Transactions (Details 1) (Detail) (Incentive Stock Options [Member], USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years)	8 years 3 months 18 days
Option/Warrant Shares
Outstanding, beginning balance	59,866,667	15,766,667
Granted	6,000,000	45,500,000
Exercised	(12,000,000)	(900,000)
Expired		(500,000)
Outstanding, ending balance	53,866,667	59,866,667
Exercisable, December 31, 2014	51,366,667
Exercise Price
Granted	$ 0.05
Exercised	$ 0.05	$ 0.00125
Expired		$ 0.05
Weighted Average Exercise Price
Outstanding, beginning balance	$ 0.06	$ 0.06
Granted	$ 0.01	$ 0.04
Exercised	$ 0.01
Expired	$ 0	$ 0
Outstanding, ending balance	$ 0.05	$ 0.06
Exercisable, December 31, 2014	$ 0.06
Minimum
Exercise Price
Outstanding, beginning balance		$ 0.00125
Granted		$ 0.05
Outstanding, ending balance	$ 0.05	$ 0.00125
Exercisable, December 31, 2014	$ 0.05
Maximum
Exercise Price
Outstanding, beginning balance		$ 0.10
Granted		$ 0.15
Outstanding, ending balance	$ 0.15	$ 0.15
Exercisable, December 31, 2014	$ 0.15

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PROPERTY AND EQUIPMENT (Textuals) (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment, Net [Abstract]
Depreciation of property and equipment	$ 69,253	$ 68,839

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NOTES PAYABLE (Detail Textuals 6) (Detail) (USD $)	12 Months Ended	1 Months Ended	12 Months Ended
	Dec. 31, 2013	Mar. 31, 2013	Dec. 31, 2012	Dec. 31, 2010	Dec. 31, 2014
Debt Instrument [Line Items]
Accrued interest paid in cash	$ 13,895
Number of shares issued upon conversion of debt	1,890,000
Private Placement of 25% Notes Payable
Debt Instrument [Line Items]
Interest rate				25.00%
Debt placement fees				34,500
Amortization of deferred finance charges			13,625
Private placement of convertible notes		150,000	250,000
Accrued interest		70,000	122,397
Accrued interest paid in cash			13,895
Number of shares issued upon conversion of debt		3,000,000	8,219,911
Notes Payable
Debt Instrument [Line Items]
Accrued interest	$ 317,344				$ 155,992

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 15 – RELATED PARTY TRANSACTIONS

During the fourth quarter of 2013, the company converted outstanding debt owed to shareholders into 25,974,697 shares of common stock (See Notes 6,7,8).

At December 31, 2014 and 20123, two and five shareholders of the Company held $114,000 and $330,249 of the senior secured convertible notes payable and were owed accrued interest of $112,505 and 300,677.

One shareholder held $140,000 of convertible notes payable as of December 31, 2012, that was satisfied by December 31, 2013.

At December 31, 2014, two stockholders of the Company held $114,000 in principal of the Company’s senior secured convertible notes payable, and were owed accrued interest of $112,505 related to such notes.

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Tax Benefit (Provision)

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

	Year Ended			Year Ended
	December 31,			December 31,
	2014			2013
Current	($	5,505,000	)	$	1,837,000
Deferred		(372,000	)		3,284,000
Change in valuation allowance		5,877,000			(5,121,000	)
	$	—		$	—

Income Tax Reconciliation

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:

	2014						2013
	Amount			%			Amount			%
U.S federal income tax benefit at federal statutory rate	$	(2,771,000	)		(35	)	$	(5,718,000	)		(35	)
State tax, net of federal tax effect		(463,000	)		(6	)		(956,000	)		(6	)
		—			—			—			—
Deductible share based compensation		—			—			(318,000	)		(2	)
Non-deductible changes in derviative liability and share based transactions		(2,639,000	)		(33	)		1,895,000			12
Other		(4,000	)		—			(24,000	)
Change in valuation allowance		5,877,000			74			5,121,000			31
	$	—			—		$	—			—

Deferred Tax Assets, Liabilities And Related Valuation Allowance

The primary components of the Company’s December 31, 2014 and 2013 deferred tax assets, liabilities and related valuation allowance are as follows:

	December 31,			December 31,
	2014			2013
Deferred tax asset for NOL carryforwards	$	10,649,000		$	5,144,000
Deferred tax liability for intangibles		(165,000	)		(165,000	)
Share based compensation		4,205,000			3,683,000
Non deductible accrued expenses		—			150,000
Valuation allowance		(14,689,000	)		(8,812,000	)
	$	—		$	—

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NOTES PAYABLE (Detail Textuals 4) (Detail) (Private Placement of 25% Notes Payable, USD $)	Dec. 31, 2010
Private Placement of 25% Notes Payable
Debt Instrument [Line Items]
Note payable, amount	$ 400,000
Interest rate	25.00%

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Textuals) (Detail) (USD $)	12 Months Ended		1 Months Ended	3 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Jun. 30, 2013	Jun. 30, 2014	Dec. 31, 2013
Debt Instrument [Line Items]
Common stock shares issued on conversion of debt (in shares)		1,890,000
Gains (Losses) on Extinguishment of Debt	$ (82,000)	$ (1,221,875)
Outstanding principal balance on notes	114,000	330,249			330,249
Accrued interest	112,885	300,677			300,677
10% Senior Secured Convertible Promissory Notes
Debt Instrument [Line Items]
Amount of notes converted into common stock shares			1,628,000	216,249
Accrued interest of notes converted into common stock shares				208,339
Common stock shares issued on conversion of debt (in shares)			7,400,000	8,448,519	7,900,000
Gains (Losses) on Extinguishment of Debt				(82,000)
Accrued interest		$ 395,000	$ 181,125		$ 395,000
Debt instrument conditional covenants amount	If an equity financing with total proceeds of more than $5,000,000 occurs while any of these 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 of common stock at a discount of 30% of the price per share in the qualified financing.
Percentage of discount on price per share	30.00%

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Statements of Operations (Parenthetical) (Payroll expenses, USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Payroll expenses
Share based compensation	$ 860,235	$ 8,619,137

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PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 3 – PROPERTY AND EQUIPMENT

Equipment consists of the following:

	December 31,		December 31,
	2014		2013
Furniture and Fixtures	$	219,871	$	219,871
Equipment		16,155		16,155
		236,026		236,026
Less: Accumulated depreciation		161,205		91,952
	$	74,821	$	144,074

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STOCKHOLDERS' EQUITY (Detail) (USD $)	12 Months Ended		2 Months Ended	1 Months Ended	3 Months Ended		1 Months Ended	2 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Mar. 31, 2013	Jun. 30, 2013	Jun. 30, 2014	Dec. 31, 2013	Jan. 31, 2013 Warrant Unit	Feb. 28, 2013 Unit Warrant	Feb. 01, 2013
Stockholders Equity Note [Line Items]
Worth of common stock to be paid	$ 400,000	$ 1,000,000
Research and development	10,590,271	655,840
Proceeds from exercise of stock options		17,919
Number of shares issued upon conversion of debt		1,890,000
Gains (Losses) on Extinguishment of Debt	(82,000)	(1,221,875)
Accredited Investor
Stockholders Equity Note [Line Items]
Stock option exercised share (in shares)			3,335,000
Proceeds from exercise of stock options			17,919
Number of common stock called by warrants (in shares)									1,000,000
Amount received for exercised of warrants									10,000
10% Senior Secured Convertible Promissory Notes
Stockholders Equity Note [Line Items]
Debt Conversion, Converted Instrument, Amount				1,628,000	216,249
Accrued interest of notes converted into common stock shares					208,339
Number of shares issued upon conversion of debt				7,400,000	8,448,519	7,900,000
Gains (Losses) on Extinguishment of Debt					(82,000)
Private Placement
Stockholders Equity Note [Line Items]
Warrants exercise price (in dollars per share)							$ 0.12	$ 0.10
Sale of units under private offering, Issue price per unit (in dollars per unit)							0.045	0.050
Number of units sold under private offering (in units)							1,111,111	3,700,000
Number of units sold under private offering value							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
Patent And Technology Agreement
Stockholders Equity Note [Line Items]
Issuance of shares for services (in shares)	125,000,000
Warrants exercise price (in dollars per share)	$ 0.10
Number of common stock called by warrants (in shares)	125,000,000
Patent And Technology Agreement | Verify Me
Stockholders Equity Note [Line Items]
Issuance of shares for services (in shares)	6,349,206
Worth of common stock to be paid	400,000
Percentage of discount	10.00%
Closing price of share	$ 0.07
Closing price of share after discount	$ 0.063
Research and development	$ 400,000

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WARRANT LIABILITY (Tables)

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

NOTES PAYABLE

NOTE 8 – NOTES PAYABLE

During the fourth quarter of 2013, all of the $561,000 of unsecured notes payable, less 9,914 of unamortized discount, plus accrued interest of $83,715 was converted into 4,473,333 shares of common stock plus a cash repayment of $150,000. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

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 fully expensed over the term of notes payable.

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 May 23, 2013 from 425,000,000 to 675,000,000.

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 the unaccreted debt discount related to warrants issued in conjunction with the 8% Series A Notes payable was $13,632.

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.

During the fourth quarter of 2013, the remaining series A notes payable of $150,000 was reduced by $60,000 for the exercise of 6,000,000 warrants into 6,000,000 shares of common stock. The balance of $90,000 plus accrued interest of $49,000 was converted into 1,226,363 shares of common stock. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3.

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 15 - Contingencies to these 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 were being amortized to interest expense over two years. The remainder of amortization $13,625 was recorded the years ended December 31, 2012.

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. In March 2013, the remaining $150,000 of the notes payable and accrued interest of $70,000 were converted into 3 million shares of the Company’s common stock. Accrued interest of $13,895 was paid in cash.

Notes payable consists of the following as of December 31:

	December 31, 2014			December 31, 2013
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	114,000		$	330,249
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 8% per annum; principal and accrued interest due at December 1, 2014 (past due)		650,000			—
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015		123,000			—
Less: Debt discount		(10,447	)		—
		926,553			380,249
Less: Current portion		926,553			50,000
Long-term portion	$	—		$	330,249

At December 31, 2014 and 2013 accrued interest on notes payable was $155,992 and $317,344.

The notes payable balance as of December 31, 2014 includes a Series A note payable in the amount of $50,000 with interest of 8% per annum. This note matured in October 2011 and is past due. Accrued interest associated with this note was $20,667 as of December 31, 2014. The Company has been unable to locate this shareholder.

On June 10, 2014, the Company issued a note payable for $250,000, which included fully vested warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share, expiring in five years. The warrants were valued at $39,650 using 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 248.2%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $34,222 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $34,222 was accreted through interest expense. The note and accrued interest at 8% per annum was originally due on December 11, 2014, but the Company received approval to extend the maturity until December 31, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $17,741 and the note payable balance was $250,000. This note is in default.

On August 5, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $29,725 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $22,914 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $22,914 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,178 and the note payable balance was $100,000. This note is in default.

On August 12, 2014, the Company issued notes payable for $50,000, which included fully vested warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $26,817 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $17,455 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $17,455 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $5,585 and the note payable balance was $50,000. This note is in default.

On August 14, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $47,676 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $32,274 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $32,274 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,226 and the note payable balance was $100,000. This note is in default.

On September 8, 2014, the Company issued notes payable for $150,000, which included fully vested warrants to purchase 900,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $62,544 using 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 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $44,140 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $44,140 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the notes are in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $17,385 and the note payable balance was $150,000. This note is in default.

On December 5, 2014, the Company issued a note payable for $23,000 to a stockholder, which bears interest at 5.0% and is due on April 5, 2015. This note is in default.

On December 31, 2014, the Company issued a note payable for $100,000, which include fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share expiring in five years. The warrants were valued at $11,812 using 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 229.0%, risk free interest rate of 1.68% and expected life of 5 years. The relative fair value of the warrants was $10,563 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $116 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on April 1, 2015. This note is currently in default. The warrants are subject to anti-dilution adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is revalued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,812 and the note payable balance was $89,553, net of a discount of $10,447. This note is in default.

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RECONCILIATION OF TAX DERIVED BY APPLYING U.S. FEDERAL STATUTORY RATE (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Effective Income Tax Rate Reconciliation, Amount [Abstract]
U.S federal income tax benefit at federal statutory rate	$ (2,771,000)	$ (5,718,000)
State tax, net of federal tax effect	(463,000)	(956,000)
Deductible share based compensation		(318,000)
Non-deductible changes in derviative liability and share based transactions	(2,639,000)	1,895,000
Other	(4,000)	(24,000)
Change in valuation allowance	5,877,000	5,121,000
INCOME TAX BENEFIT	$ 0	$ 0
U.S federal income tax benefit at federal statutory rate	(35.00%)	(35.00%)
State tax, net of federal tax effect	(6.00%)	(6.00%)
Deductible share based compensation		(2.00%)
Non-deductible changes in derviative liability and share based transactions	(33.00%)	12.00%
Other	0.00%	0.00%
Change in valuation allowance	74.00%	31.00%
Effective Income Tax Rate Reconciliation, Percent, Total	0.00%	0.00%

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OPERATING LEASES

12 Months Ended

Dec. 31, 2014

Leases [Abstract]

OPERATING LEASES

NOTE 14 – OPERATING LEASES

For the year ended December 31, 2014 and 2013, total rent expense under leases amounted to $65,950 and $59,272. At December 31, 2014, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2015		74,637
2016		31,605
	$	106,242