10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2015

¨ 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 000-31927

LASERLOCK TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	23-3023677
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
3112 M Street NW, Washington, DC	20007
(Address of Principal Executive Offices)	(Zip Code)

(202) 400-3700

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal year, if Changed Since Last Report)

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    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 Regulations 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  ¨    No  x

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.

Large accelerated filer	¨	Accelerated file	¨
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  ¨    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 307,578,149 shares of common stock outstanding at May 11, 2015.

	PART I FINANCIAL INFORMATION
Cautionary Note Regarding Forward-Looking Statements
ITEM 1.	Financial Statements
Condensed Balance Sheets (Unaudited)		5
Condensed Statements of Operations (Unaudited)		6
Condensed Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited)		7
Condensed Statements of Cash Flows (Unaudited)		8
Notes to Condensed Financial Statements (Unaudited)		9
ITEM 2.	Management’s Discussions and Analysis of Financial Condition and Results of Operations	22
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	26
ITEM 4.	Controls and Procedures	26
	PART II OTHER INFORMATION
ITEM 1.	Legal Proceedings	27
ITEM 1A.	Risk Factors	27
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
ITEM 3.	Defaults Upon Senior Securities	27
ITEM 4.	Mine Safety Disclosures	27
ITEM 5.	Other Information	27
ITEM 6.	Exhibits	27
SIGNATURES		28

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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 Quarterly Report on Form 10-Q, including without limitation, statements regarding our future financial position, business strategy, budgets, projected revenues, projected costs and plans and objectives of management for future operations, are forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “projects,” “estimates,” “anticipates,” “believes,” “contemplates,” “targets,” “could,” “would” or “should” or the negative thereof or any variation thereon or similar terminology or expressions. Management cautions readers not to place undue reliance on any of the Company’s forward-looking statements, which speak only as of the date made.

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, the absence of any operating history or revenue, our ability to attract and retain qualified personnel, our dependence on third party developers who we cannot control, our ability to develop and introduce a new service to the market in a timely manner, market acceptance of our services, our limited experience in a relatively new industry, the ability to successfully develop licensing programs and generate business, rapid technological change in relevant markets, unexpected network interruptions or security breaches, 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 risks discussed in this filing, the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, as filed with filed with the Securities and Exchange Commission (the “SEC”), and the Company’s other filings with the SEC.

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. The Company has no obligation to and does not undertake to update, revise, or correct any of these forward-looking statements after the date of this report.

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PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LaserLock Technologies, Inc.

CONTENTS

	PAGE
BALANCE SHEETS		5
STATEMENTS OF OPERATIONS		6
STATEMENTS OF STOCKHOLDERS’ DEFICIT		7
STATEMENTS OF CASH FLOWS		8
NOTES TO FINANCIAL STATEMENTS		9-21

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Balance Sheets

and December 31, 2014

	March 31, 2015			December 31, 2014
	(Unaudited)			(Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	74,572		$	63,956
Inventory		109,360			97,360
Prepaid expenses		178,454			181,086
TOTAL CURRENT ASSETS		362,386			342,402
PROPERTY AND EQUIPMENT
Capital equipment, net of accumulated depreciation of $178,518 and $161,205 as of March 31, 2015 and December 31, 2014		57,508			74,821
OTHER ASSETS
Deposits		37,197			37,197
Patents and Trademark, net of accumulated amortization of $122,615 and $118,502 as of March 31, 2015 and December 31, 2014		103,473			107,586
		140,670			144,783
TOTAL ASSETS	$	560,564		$	562,006
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	5,544,281		$	5,217,770
Accrued interest—related parties		175,794			43,215
Deferred revenue		10,417			16,667
Senior secured convertible notes payable—related parties		114,000			114,000
Notes payable		959,102			812,553
TOTAL CURRENT LIABILITIES		6,803,594			6,204,205
LONG-TERM LIABILITIES
Warrant liability	$	6,201,233		$	6,370,709
Accrued interest—related parties		—			112,885
TOTAL LONG-TERM LIABILITIES		6,201,233			6,483,594
TOTAL LIABILITIES		13,004,827			12,687,799
CONTINGENCIES
STOCKHOLDERS’ DEFICIT
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 21,111,111 shares issued and outstanding as of March 31, 2015 and December 31, 2014		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 March 31, 2015 and December 31, 2014		337,374			337,374
Additional paid in capital		24,658,460			24,713,294
Treasury stock, at cost (29,795,903 shares at March 31, 2015 and December 31, 2014		(113,389	)		(113,389	)
Accumulated deficit		(37,960,041	)		(37,696,405	)
STOCKHOLDERS’ DEFICIT		(12,444,263	)		(12,125,793	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	560,564		$	562,006

See the accompanying notes to the condensed financial statements.

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Statements of Operations

For the Three Months Ended and 2014

(Unaudited)

	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
NET REVENUES
Sales	$	—		$	—
Royalties		6,250			—
TOTAL NET REVENUE		6,250			—
COST OF SALES		—			—
GROSS PROFIT		6,250			—
OPERATING EXPENSES
General and administrative		83,901			244,496
Legal and accounting		11,113			113,326
Payroll expenses (a)		170,904			954,328
Research and development		120,386			864,729
Sales and marketing		22,808			51,922
Total operating expenses		409,112			2,228,801
LOSS BEFORE OTHER INCOME		(402,862	)		(2,228,801	)
OTHER INCOME (EXPENSE)
Interest expense		(30,250	)		(10,907	)
Change in fair value of warrants		169,476			(890,000	)
Change in fair value of embedded derivative liability		—			(300,000	)
		139,226			(1,200,907	)
NET LOSS	$	(263,636	)	$	(3,429,708	)
BASIC	$	(0.00	)	$	(0.01	)
DILUTED	$	(0.00	)	$	(0.01	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC		307,578,149			297,571,958
DILUTED		307,578,149			297,571,958

(a) - includes share based compensation of $(54,834) and $740,954 for the three months ended March 31, 2015 and 2014

See the accompanying notes to the condensed financial statements.

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Statements of Changes in Stockholders’ Deficit

For the Three Months Ended

	Convertible Preferred Stock				Common Stock				Additional
	Number of Shares		Amount		Number of Shares		Amount		Paid-In Capital			Treasury Stock			Accumulated Deficit			Total
Balance at December 31, 2014 (Audited)		21,111,111		633,333		307,578,149		337,374		24,713,294			(113,389	)		(37,696,405	)		(12,125,793	)
Fair value of employee stock options		—		—		—		—		(54,834	)		—			—			(54,834	)
Net loss		—		—		—		—		—			—			(263,636	)		(263,636	)
Balance at March 31, 2015 (Unaudited)		21,111,111	$	633,333		307,578,149	$	337,374	$	24,658,460		$	(113,389	)	$	(37,960,041	)	$	(12,444,263	)

See the accompanying notes to the condensed financial statements.

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Statements of Cash Flows

For the Years Ended and 2013

(Unaudited)

	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(263,636	)	$	(3,429,708	)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of options issued in exchange for services		(54,834	)		740,954
Accretion of discount on notes payable		10,447			—
Change in fair value of warrant liability		(169,476	)		890,000
Change in fair value of embedded derivative liability		—			300,000
Amortization and depreciation		21,426			20,590
Stock and warrants issued in exchange for technology		—			844,000
(Increase) decrease in assets
Inventory		(12,000	)		—
Prepaid expenses		2,632			2,632
Increase (decrease) in liabilities
Accounts payable and accrued expenses		346,205			(75,100	)
Deferred revenue		(6,250	)		—
Net cash used in operating activities	$	(125,486	)	$	(706,632	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable		136,102			—
Net cash provided by financing activities		136,102			—
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		10,616			(706,632	)
CASH AND CASH EQUIVALENTS—BEGINNING OF PERIOD		63,956			1,285,973
CASH AND CASH EQUIVALENTS—END OF PERIOD	$	74,572		$	579,341
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	—		$	—
Income taxes	$	—		$	—
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Cashless exercise of options	$	—		$	2,714

See the accompanying notes to the condensed financial statements.

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NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies Inc. (the “Company” or “LaserLock”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is quoted on the OTC Pink 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 Wi-Fi 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 unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on form 10-K for the year ended December 31, 2014, as filed with the SEC. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

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.

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.

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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 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.

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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 $158 and $27,283 for the three months ended March 31, 2015 and 2014 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 three months ended March 31, 2015 and 2014 were $120,386 and $864,729.

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 the three months ended March 31, 2015 and 2014, 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 financial statements.

Recently Adopted Accounting Pronouncements

As of March 31, 2015 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

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Recently Issued Accounting Pronouncements Not Yet Adopted

As of March 31, 2015, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements through 2016.

Reclassifications

Certain amounts in 2014 statement of operations have been reclassified in order for them to conform with the 2015 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 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.

NOTE 3 – PROPERTY AND EQUIPMENT

Equipment consists of the following:

	March 31, 2015		December 31, 2014
Furniture and Fixtures	$	219,871	$	219,871
Equipment		16,155		16,155
		236,026		236,026
Less: Accumulated depreciation		178,518		161,205
	$	57,508	$	74,821

Depreciation of property and equipment was $17,313 and $17,313, respectively, for the three months ended March 31, 2015 and 2014.

NOTE 4 – PATENTS AND TRADEMARK

The Company has seven issued patents and filed for four additional provisional patents for anti-counterfeiting technology. Accordingly, costs associated with the registration of these patents and legal defense have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents (17 to 20 years). During three months ended March 31, 2015 and 2014, the Company capitalized $0 and $21,954 of patent costs. Amortization expense for patents was $4,114 and $3,277 for the three months ended March 31, 2015 and 2014.

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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.

NOTE 5 – INCOME TAXES

Income tax expense was $0 for the three months ended March 31, 2015 and 2014.

As of January 1, 2015, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2014 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three months ended March 31, 2015, and there was no accrual for uncertain tax positions as of March 31, 2015. Tax years from 2011 through 2014 remain subject to examination by major tax jurisdictions.

There is no income tax benefit for the losses for the three months ended March 31, 2015 and 2014, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits.

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.

As of March 31, 2015, the outstanding principal balance on these notes was $114,000. Accrued interest at March 31, 2015 amounted to $115,925. The notes and accrued interest are due on September 15, 2015.

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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NOTE 7 – NOTES PAYABLE

Notes payable consists of the following at March 31, 2015 and December 31, 2014:

	March 31, 2015		December 31, 2014
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	114,000	$	114,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)		50,000		50,000
Notes payable; interest at 8% per annum, principal and accrued interest due at December 1, 2014 (past due)		650,000		650,000
Notes payable; interest at 5% and 8% per annum, principal and accrued interest due at April 2015		123,000		123,000
Notes payable; interest at 5% per annum, principal and accrued interest due at June 10, 2015		25,000		—
Notes payable; interest at 8% per annum, principal and accrued interest due at June 25, 2015		111,102		—
Less: Debt discount		—		(10,447	)
		1,073,102		926,553
Less: Current portion		1,073,102		926,553
	$	—	$	—

The notes payable balance as of March 31, 2015 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 $21,667 as of March 31, 2015. The notes are 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 year ended December 31, 2014, $34,222 was accreted through interest expense. The note and accrued interest at 8% per annum as was originally due on December 11, 2014, but the Company received approval to extend the maturity until December 31, 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 December 31, 2014, the fair value of the warrant liability was $17,741 and the note payable balance was $250,000. As of March 31, 2015, the fair value of the warrant liability was $19,950 and the note payable balance was $250,000. The 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. 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. As of March 31, 2015, the fair value of the warrant liability was $12,322 and the note payable balance was $100,000. The notes are in default.

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On August 12, 2014, the Company issued a 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. 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. As of March 31, 2015, the fair value of the warrant liability was $5,583 and the note payable balance was $50,000. The note is in default.

On August 14, 2014, the Company issued a note 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. 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. As of March 31, 2015, the fair value of the warrant liability was $11,169 and the note payable balance was $100,000. The 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. 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. As of March 31, 2015, the fair value of the warrant liability was $16,767 and the notes payable balance was $150,000. The notes are 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. The 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 three months ended March 31, 2015, $10,447 was accreted through interest expense. The note and accrued interest at 8% per annum were due in

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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. As of March 31, 2015, the fair value of the warrant liability was $11,325 and the note payable balance was $100,000. This note is in default.

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 March 27, 2015, the Company issued a note payable for $111,102, bearing interest at 8.0% to an accredited investor. The note and accrued interest is due on June 25, 2015. The principal amount of the note and accrued interest is convertible into the next equity financing of the Company. The conversion price under the conversion option will be equal to the price paid by third-party investors in the financing. On March 20, 2014, VerifyMe waived its contractual rights as it relates to this transaction.

NOTE 8 – 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 March 31, 2015 and December 31, 2014, the fair value of the warrant liability was $865,277 and $787,544.

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 March 31, 2015 and December 31, 2014, the fair value of the warrant liability was $116,789 and $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 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 as of December 31, 2014, 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. The warrants were valued at $4,615,841 as of March 31, 2015, 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 190.9%, risk free interest rate of 1.37% and expected life of five years.

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NOTE 9 – 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 $0 at March 31, 2015 and December 31, 2014. 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. 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 March 31, 2015 and December 31, 2014, the fair value of the warrants was $526,210 and $494,939, 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.

NOTE 10 – 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.

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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 warrants	$	—	$	—	$	6,201,233	$	6,201,233
Total	$	—	$	—	$	6,201,233	$	6,201,233

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

Balance at January 1, 2015	$	6,370,709
Change in fair value of derivative liabilities		(169,476	)
Balance at March 31, 2015	$	6,201,233

As of March 31, 2015, 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:

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 three months ended March 31, 2014.

As of March 31, 2015, 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:

Annual Dividend Yield	0.0%
Expected Life (Years)	2.75 - 4.76
Risk-Free Interest Rate	.89% - 1.37%
Expected Volatility	177.1% - 193.7%

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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NOTE 11 – 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 (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 74,004 shares of our common stock available for issuance under the 2003 Plan, will be sufficient to meet the objective.

As of March 31, 2015, there are 22,725,996 options that have been issued, and 15,274,004 options that are available to be issued under the Plan.

The 2013 Plan is administered by a committee of the Board (“Stock Option Committee”) which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

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

The Company issued Non-Statutory Stock Options pursuant to contractual agreements 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.

Option expense for the three months ended March 31, 2015 was ($54,834).

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The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2014:

	Option/Warrant Shares		Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2014		121,165,874	$	0.01 - $0.20	$	0.10
Granted		—		—		—
Exercised		—		—		—
Expired		—		—		—
Outstanding, March 31, 2015		121,165,874	$	0.01 to $0.20	$	0.10
Exercisable, March 31, 2015		121,165,874	$	0.01 to $0.20	$	0.10
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)		5.5

A summary of incentive stock option transactions for employees since December 31, 2014 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2014		53,866,667		$	0.05 - $0.15	$	0.05
Granted		—			—		—
Exercised		—			—		—
Expired/Returned		(1,000,000	)		0.15		—
Outstanding, March 31, 2015		52,866,667		$	0.05 to $0.15	$	0.05
Exercisable, March 31, 2015		52,866,667		$	0.05 to $0.15	$	0.06
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)		9.0

NOTE 12 – OPERATING LEASES

For the three months ended March 31, 2015 and 2014, total rent expense under leases amounted to $19,369 and $17,727. At March 31, 2015, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2015		56,403
2016		31,605
	$	88,008

The Company has advised the landlord that the Company was not going to continue to occupy the space at 3112 M. Street, NW, Washington, DC effective May 1, 2015. Settlement negotiations regarding the lease balance are underway.

NOTE 13 – RELATED PARTY TRANSACTIONS

At March 31, 2015 and 2014, 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 $115,925 and $328,251.

NOTE 14 – 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 15 – SUBSEQUENT EVENTS

The Company continues its efforts to raise additional capital. The Company anticipates that current negotiations with a potential investment group may result in a cash infusion in the near term future. There can, however, be no assurance that the Company will be successful in this matter, nor on terms that would be acceptable to the Company.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

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

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.

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.

Strategic Outlook

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

Sustained spending on technology, our ability to raise additional financing, and the continued growth of the security and authentication markets are all external conditions that may affect our ability to execute our business plan. In addition, certain potential customers may view our small size and limited financial resources negatively, 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, have limited financial resources, and face an uncertain economic environment. We may not be successful in addressing such risks and difficulties.

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Results of Operations

Comparison of the Three Months Ended March 31, 2015 and 2014

The following discussion analyzes our results of operations for the three months ended March 31, 2015 and 2014. The following information should be considered together with our consolidated financial statements for such period and the accompanying notes thereto.

Net Revenue/Net Loss

We have not generated significant revenue since our inception. For the three months ended March 31, 2015 and 2014, we generated sales of $6,250 and $0. For the three months ended March 31, 2015 and 2014, we showed a net loss of $263,636 and $3,429,708. These changes are primarily as a result of the change resulting from valuation adjustment of warrant liability and embedded derivative liability associated with the Investment Agreement entered into on December 31, 2012 and the Subscription Agreement entered into on January 31, 2013, as well as the measures implemented to conserve funds.

Cost of Sales

Cost of sales for the three months ended March 31, 2105 and 2014 was $0.

General and Administrative Expenses

General and administrative expenses decreased $160,595 to $83,901 for the three months ended March 31, 2015 from $244,496 for the three months ended March 31, 2014. The Company is attempting to reduce general and administrative expenses while generating revenue in order to develop profitability. The reduction is mainly due to reductions in insurance and office expenses.

Legal and Accounting

Legal and accounting fees decreased $102,213 to $11,113 for the three months ended March 31, 2015 from $113,326 for the three months ended March 31, 2014. The decrease in legal and accounting fees between the periods was primarily due to an effort to more effectively use professionals.

Payroll Expenses

Payroll expenses were $170,904 for the three months ended March 31, 2015, a decrease of $783,424 from $954,328 for the three months ended March 31, 2014. The decrease relates to share based compensation issued in the first quarter of 2014, which did not occur in the first quarter of 2015. The option expense during the first quarter of 2014 was $740,954 compared to $(54,834) in the first quarter of 2015 which is related to the reversal of unvested options that were previously expensed due to terminated employees.

Research and Development

Research and development expenses were $120,386 and $864,729, for the three months ended March 31, 2015 and 2014, a decrease of $744,343. The Company continued its fund raising and limited spending for the first quarter 2015. The 2014 expense includes a charge for the technology service agreement entered into on December 31, 2012 and the reduction of resources to the research and development effort in 2015.

Sales and Marketing

Sales and marketing expenses for the three months ended March 31, 2015 were $22,808 as compared to $51,922 for the three months ended March 31, 2014, a decrease of $29,114. The Company has reduced expenditures such as sales related travel and certain advertising programs that it has concluded were not generating revenue.

-23-

Interest Expense

During the three months ended March 31, 2015, the Company incurred interest expense of $30,250 as compared to $10,907 for the three months ended March 31, 2014, an increase of $19,343. The increase in interest expense was a result of an increase in debt related to the requirement for additional financing since June of 2014.

Change in Fair Value of Warrants

During the three months ended March 31, 2015, the Company incurred an unrealized gain on the market value of warrants of $169,476 as compared to a loss of $890,000 for the three months ended March 31, 2014. The change resulted from the valuation of warrants associated with the Investment Agreement entered into on December 31, 2012 and the Subscription Agreement entered into on January 31, 2013. The values of the warrants have increased because the stock price has increased and the difference between the warrant exercise price and the stock price has increased.

Change in Fair Value of Embedded Derivative Liability

During the three months ended March 31, 2015, the Company incurred $0 for the change in the fair value of the embedded derivative liability as compared to a loss of $300,000 for the three months ended March 31, 2014. The change resulted from the stock price falling below the value of the conversion option associated with the Subscription Agreement entered into on January 31, 2013.

Liquidity and Capital Resources

As of March 31, 2015, we had cash on hand of $74,572.

Net cash used in operating activities for the three months ended March 31, 2015 decreased to $125,488 from $706,632 for the three months ended March 31, 2014, a decrease of $581,144. The decrease in net cash used in operating activities was primarily as a result of an increase in accounts payable.

Net cash provided by financing activities was $136,102 and $0, for the three months ended March 31, 2015 and 2014. The $136,102 of cash provided by financing activities during the three months ended March 31, 2015 related to short-term bridge loans from investors.

During the three months ended March 31, 2015 and 2014, the Company’s operational resources were used primarily to fund general and administrative expenses, pay employees and continue the research and development projects.

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.

Since our inception, we have focused on developing and implementing our business plan. Our business plan is dependent on our ability to raise capital through private placements of our common stock and/or preferred stock, through the possible exercise of outstanding options and warrants, through debt financing and/or through a future public offering of our securities. There is no assurance that we will raise sufficient capital in order to meet our goals of implementing a sales and marketing effort to introduce our products.

Our existing cash resources will not be sufficient to sustain our operations during the next twelve months, and we may need to raise additional funds. We intend to raise such financing through private placements and/or the sale of debt and equity securities. The issuance of additional equity could result in dilution to our existing stockholders. If we are unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms favorable to us, we may be unable to execute our business plan or pay our costs and expenses as they are incurred, which could have a material, adverse effect on our business, financial condition and results of operations.

-24-

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

Off-Balance Sheet Arrangements

As of March 31, 2015, we do not have any off-balance sheet arrangements.

Critical Accounting Policies

Our financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. 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, 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 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) collectability 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.

License fee revenue is recognized on a straight-line basis over the term of the license agreement.

Recently Issued Accounting Pronouncements

Recently issued accounting pronouncements are discussed in Note 1 of the notes to consolidated financial statements contained in this report.

-25-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Evaluation of Disclosure Controls and Procedures. The Company’s chief executive officer and chief financial officer have evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as that term is defined in Rule 13a-15(e) under the Exchange Act) as of March 31, 2015, the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the chief executive officer and chief financial officer have concluded that the Company’s disclosure controls and procedures are effective.

(b) Changes in Internal Controls. There has been no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-26-

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

Not applicable.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS

Exhibit No.	Description
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 Certification).
101	Interactive Data Files.*

* The documents formatted in XBRL (Extensible Business Reporting Language) and attached as Exhibit 101 to this report are deemed not filed as part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, are deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under these sections.

-27-

SIGNATURES

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

LASERLOCK TECHNOLOGIES, INC.
By:	/s/ Paul Donfried
	Paul Donfried
	On behalf of the registrant and as Chief Executive Officer (Principal Executive Officer)

Date: May 15, 2015

-28-

EXHIBIT INDEX

Exhibit No.	Description
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) (Section 302 Certification).
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 (Section 906 Certification).
101	Interactive Data Files.*

* The documents formatted in XBRL (Extensible Business Reporting Language) and attached as Exhibit 101 to this report are deemed not filed as part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act, are deemed not filed for purposes of Section 18 of the Exchange Act, and otherwise are not subject to liability under these sections.

-29-

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Paul Donfried, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LaserLock Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2015	By:	/s/ Paul Donfried
		Paul Donfried
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Scott McPherson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of LaserLock Technologies, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 15, 2015	By:	/s/ Scott McPherson
		Scott McPherson
		Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION 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, Paul Donfried, the Chief Executive Officer of LaserLock Technologies, Inc. (the “Company”), and Scott McPherson, Chief Financial Officer of the Company, certifies, pursuant to Rule 13a-14(b) under the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, that (1) this Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, 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 May 15, 2015.

By:	/s/ Paul Donfried
	Paul Donfried Chief Executive Officer
By:	/s/ Scott McPherson
	Scott McPherson Chief Financial Officer

XML

Convertible Preferred Stock - Additional Information (Detail) (USD $)	3 Months Ended	12 Months Ended	1 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014	Jan. 31, 2013	Jan. 31, 2013
Class of Stock [Line Items]
Preferred stock value	$ 633,333	$ 633,333
Fair value of warrants	526,210	494,939
Convertible Preferred Stock Subject to Mandatory Redemption [Member]
Class of Stock [Line Items]
Preferred stock value			1,000,000	1,000,000
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
Fair value of warrants			2,995,791
Subscription Agreement | Verify Me
Class of Stock [Line Items]
Beneficial conversion feature at fair market value	0	0
Deemed dividend distribution				1,000,000
Subscription Agreement | Convertible Preferred Stock | Verify Me
Class of Stock [Line Items]
Number of preferred stock purchased			33,333,333
Subscription Agreement | Common Stock | Verify Me
Class of Stock [Line Items]
Number of common stock called by warrants (in shares)			33,333,333	33,333,333
Value of shares issued			$ 1,000,000
Exercise price of warrants			$ 0.12	$ 0.12
Subscription Agreement | Preferred Class
Class of Stock [Line Items]
Initial conversion price per share (in dollars per share)	$ 0.03

XML

Operating Leases - Additional Information (Detail) (General and Administrative Expense, USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
General and Administrative Expense
Operating Leased Assets [Line Items]
Total rent expense under leases	$ 19,369	$ 17,727

XML

Stock Options - Non-Employee Stock Option/Warrant Activity (Detail) (Stock Options And Warrants, USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Option/Warrant Shares
Outstanding, beginning balance	121,165,874
Granted	0
Exercised	0
Expired	0
Outstanding, ending balance	121,165,874
Exercisable, March 31, 2015	121,165,874
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)	5 years 6 months
Exercise Price
Granted	$ 0
Exercised	$ 0
Expired	$ 0
Weighted Average Exercise Price
Outstanding, beginning balance	$ 0.1
Granted	$ 0
Exercised	$ 0
Expired	$ 0
Outstanding, ending balance	$ 0.1
Exercisable, March 31, 2015	$ 0.1
Minimum
Exercise Price
Outstanding, beginning balance		$ 0.01
Outstanding, ending balance	$ 0.01	$ 0.01
Exercisable, March 31, 2015	$ 0.01
Maximum
Exercise Price
Outstanding, beginning balance		$ 0.20
Outstanding, ending balance	$ 0.20	$ 0.20
Exercisable, March 31, 2015	$ 0.20

XML

Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Income Tax Expense (Benefit)	$ 0	$ 0
Unrecognized tax benefits			0
Interest or penalties related to unrecognized tax benefits			0
Change in unrecognized tax benefits	0
Accrual for uncertain tax positions	$ 0

XML

Notes Payable (Tables)

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Schedule of Notes Payable

Notes payable consists of the following at March 31, 2015 and December 31, 2014:

	March 31, 2015		December 31, 2014
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	114,000	$	114,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)		50,000		50,000
Notes payable; interest at 8% per annum, principal and accrued interest due at December 1, 2014 (past due)		650,000		650,000
Notes payable; interest at 5% and 8% per annum, principal and accrued interest due at April 2015		123,000		123,000
Notes payable; interest at 5% per annum, principal and accrued interest due at June 10, 2015		25,000		—
Notes payable; interest at 8% per annum, principal and accrued interest due at June 25, 2015		111,102		—
Less: Debt discount		—		(10,447	)
		1,073,102		926,553
Less: Current portion		1,073,102		926,553
	$	—	$	—

XML

Related Party Transactions - Additional Information (Detail) (USD $)	Mar. 31, 2015	Dec. 31, 2014	Mar. 31, 2014 Shareholder
Related Party Transaction [Line Items]
Convertible notes payable	$ 114,000	$ 114,000
Senior Secured Convertible Promissory Notes
Related Party Transaction [Line Items]
Number of shareholders			5
Convertible notes payable			330,249
Amount of accrued interest owed by shareholders			328,251
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	$ 115,925

XML

Fair Value of Financial Instruments - Embedded Derivative Liability Valuation Assumptions (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015
Fair Value Disclosures [Abstract]
Series A Preferred Stock Conversion price	$ 0.03
Intrinsic value of conversion option per share	$ 0

XML

Notes Payable - Additional Information (Detail) (USD $)	3 Months Ended		12 Months Ended	0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2014	Jun. 10, 2014	Aug. 05, 2014	Aug. 12, 2014	Aug. 14, 2014	Sep. 08, 2014	Mar. 27, 2015	Feb. 10, 2015	Dec. 05, 2014
Debt Instrument [Line Items]
Note payable balance	$ 959,102		$ 812,553
Proceeds from issuance of notes payable	136,102
Accumulated discount, notes payable (in dollars)			10,447
Interest expense	30,250	10,907
Warrant | June 10, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	19,950		17,741
Warrant | August 5, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	12,322		11,178
Warrant | August 12, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	5,583		5,585
Warrant | August 14, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	11,169		11,226
Warrant | September 8, 2014
Debt Instrument [Line Items]
Fair value of warrant liability	16,767		17,385
Warrant | Debt Instrument Date December 2014
Debt Instrument [Line Items]
Fair value of warrant liability	11,325		11,812
Series A Notes Payable
Debt Instrument [Line Items]
Note payable balance	50,000
Interest rate, notes payable	8.00%
Accrued interest	21,667
Notes Payable | June 10, 2014
Debt Instrument [Line Items]
Note payable balance	250,000		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		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		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		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		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	100,000		89,553
Interest rate, notes payable	8.00%
Interest expense	10,447
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 | Director
Debt Instrument [Line Items]
Interest rate, notes payable									8.00%	5.00%
Proceeds from issuance of notes payable									111,102	25,000
Note due date									Jun. 25, 2015	Jun. 10, 2015
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

XML

Stock Options - Incentive Stock Option Transactions (Detail) (Incentive Stock Options [Member], USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Option/Warrant Shares
Outstanding, beginning balance	53,866,667
Granted	0
Exercised	0
Expired/Returned	(1,000,000)
Outstanding, ending balance	52,866,667
Exercisable, March 31, 2015	52,866,667
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)	9 years
Exercise Price
Granted	$ 0
Exercised	$ 0
Expired/Returned	$ 0.15
Weighted Average Exercise Price
Outstanding, beginning balance	$ 0.05
Granted	$ 0
Exercised	$ 0
Expired/Returned	$ 0
Outstanding, ending balance	$ 0.05
Exercisable, March 31, 2015	$ 0.06
Minimum
Exercise Price
Outstanding, beginning balance		$ 0.05
Outstanding, ending balance	$ 0.05	$ 0.05
Exercisable, March 31, 2015	$ 0.05
Maximum
Exercise Price
Outstanding, beginning balance		$ 0.15
Outstanding, ending balance	$ 0.15	$ 0.15
Exercisable, March 31, 2015	$ 0.15

XML

Management Plans

3 Months Ended

Mar. 31, 2015

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 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.

XML

Fair Value of Financial Instruments - Additional Information (Detail) (USD $)	Mar. 31, 2014
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Abstract]
Assets measured at fair value on recurring basis	$ 0
Assets or liabilities measured at fair value on non-recurring basis	$ 0

XML

Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015 Segment Institution	Mar. 31, 2014
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	$ 120,386	$ 864,729
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	$ 158	$ 27,283
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

XML

Operating Leases (Tables)

3 Months Ended

Mar. 31, 2015

Leases [Abstract]

Schedule of Non-cancelable Operating Lease Arrangements for Property

At March 31, 2015, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2015		56,403
2016		31,605
	$	88,008

XML

Fair Value of Financial Instruments - Schedule of Common Stock Purchase Warrants Valuation Assumptions (Detail) (Warrant)	3 Months Ended
	Mar. 31, 2015
Fair Value, Option, Quantitative Disclosures [Line Items]
Annual Dividend Yield	0.00%
Minimum
Fair Value, Option, Quantitative Disclosures [Line Items]
Expected Life (Years)	2 years 9 months
Risk-Free Interest Rate	0.89%
Expected volatility	177.10%
Maximum
Fair Value, Option, Quantitative Disclosures [Line Items]
Expected Life (Years)	4 years 9 months 4 days
Risk-Free Interest Rate	1.37%
Expected volatility	193.70%

XML

Property and Equipment - Equipment (Detail) (USD $)	Mar. 31, 2015	Dec. 31, 2014
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	178,518	161,205
Capital equipment, net of accumulated depreciation of $178,518 and $161,205 as of March 31, 2015 and 2014	$ 57,508	$ 74,821

XML

Plant and Equipment - Additional Information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Property, Plant and Equipment, Net [Abstract]
Depreciation of property and equipment	$ 17,313	$ 17,313

XML

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies Inc. (the “Company” or “LaserLock”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is quoted on the OTC Pink 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 Wi-Fi 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 unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on form 10-K for the year ended December 31, 2014, as filed with the SEC. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

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 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.

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 $158 and $27,283 for the three months ended March 31, 2015 and 2014 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 three months ended March 31, 2015 and 2014 were $120,386 and $864,729.

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 the three months ended March 31, 2015 and 2014, 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 financial statements.

Recently Adopted Accounting Pronouncements

As of March 31, 2015 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

As of March 31, 2015, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements through 2016.

Reclassifications

Certain amounts in 2014 statement of operations have been reclassified in order for them to conform with the 2015 presentation.

XML

Patents and Trademark - Additional Information (Detail) (Patents and Trademark, USD $)	3 Months Ended
	Mar. 31, 2015 Patents	Mar. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Number of patents issued	7
Number of provisional patents filed	11
Amortization method of patents	Straight-line basis
Capitalized patent costs	$ 0	$ 21,954
Amortization expense	$ 4,114	$ 3,277
Anti Counterfeiting Technology
Finite-Lived Intangible Assets [Line Items]
Number of patents issued	7
Number of provisional patents filed	4
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

XML

Fair Value of Financial Instruments - Schedule of Liabilities Measured at Fair Value on a Recurring Basis (Detail) (Fair Value on a Recurring Basis, USD $)	Mar. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of warrants	$ 6,201,233
Total	6,201,233
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of warrants	6,201,233
Total	$ 6,201,233

XML

Balance Sheets (USD $)	Mar. 31, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 74,572	$ 63,956
Inventory	109,360	97,360
Prepaid expenses	178,454	181,086
TOTAL CURRENT ASSETS	362,386	342,402
PROPERTY AND EQUIPMENT
Capital equipment, net of accumulated depreciation of $178,518 and $161,205 as of March 31, 2015 and December 31, 2014	57,508	74,821
OTHER ASSETS
Deposits	37,197	37,197
Patents and Trademark, net of accumulated amortization of $122,615 and $118,502 as of March 31, 2015 and December 31, 2014	103,473	107,586
TOTAL OTHER ASSETS	140,670	144,783
TOTAL ASSETS	560,564	562,006
CURRENT LIABILITIES
Accounts payable and accrued expenses	5,544,281	5,217,770
Accrued interest-related parties	175,794	43,215
Deferred revenue	10,417	16,667
Senior secured convertible notes payable-related parties	114,000	114,000
Notes payable	959,102	812,553
TOTAL CURRENT LIABILITIES	6,803,594	6,204,205
LONG-TERM LIABILITIES
Warrant liability	6,201,233	6,370,709
Accrued interest-related parties		112,885
TOTAL LONG-TERM LIABILITIES	6,201,233	6,483,594
TOTAL LIABILITIES	13,004,827	12,687,799
CONTINGENCIES
STOCKHOLDERS' DEFICIT
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 21,111,111 shares issued and outstanding as of March 31, 2015 and December 31, 2014	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 March 31, 2015 and December 31, 2014	337,374	337,374
Additional paid in capital	24,658,460	24,713,294
Treasury stock, at cost (29,795,903 shares at March 31, 2015 and December 31, 2014	(113,389)	(113,389)
Accumulated deficit	(37,960,041)	(37,696,405)
STOCKHOLDERS' DEFICIT	(12,444,263)	(12,125,793)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 560,564	$ 562,006

XML

Stock Options - Additional information (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2013	Dec. 17, 2003	Dec. 31, 2000
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option expense	$ (54,834)
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		74,004
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 | Stock Option 2003 Plan
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	15,274,004
Number of option issued	22,725,996
Stock Options | Stock Option 2000 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant options				1,500,000

XML

Statements of Changes in Stockholders' Deficit (USD $)	Total	Convertible Preferred Stock	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Deficit
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
Fair value of employee stock options	(54,834)			(54,834)
Net loss	(263,636)					(263,636)
Balance at Mar. 31, 2015	$ (12,444,263)	$ 633,333	$ 337,374	$ 24,658,460	$ (113,389)	$ (37,960,041)
Balance (in shares) at Mar. 31, 2015		21,111,111	307,578,149

XML

Notes Payable - Schedule of Notes Payable (Detail) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Less: Debt discount		$ (10,447)
Notes payable	1,073,102	926,553
Notes payable	1,073,102	926,553
Less: Current portion	959,102	812,553
Long-term portion	0	0
Adjustment
Debt Instrument [Line Items]
Less: Current portion	1,073,102	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	114,000
Notes payable	114,000	114,000
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	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	650,000
Notes payable	650,000	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	123,000
Notes payable	123,000	123,000
Notes payable; interest at 5% per annum, principal and accrued interest due at June 10, 2015
Debt Instrument [Line Items]
Notes payable	25,000
Notes payable	25,000
Notes payable; interest at 8% per annum, principal and accrued interest due at June 25, 2015
Debt Instrument [Line Items]
Notes payable	111,102
Notes payable	$ 111,102

XML

Subsequent Events

3 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Events

NOTE 15 – SUBSEQUENT EVENTS

The Company continues its efforts to raise additional capital. The Company anticipates that current negotiations with a potential investment group may result in a cash infusion in the near term future. There can, however, be no assurance that the Company will be successful in this matter, nor on terms that would be acceptable to the Company.

XML

Notes Payable - Schedule of Notes Payable (Parenthetical) (Detail)	Mar. 31, 2015	Dec. 31, 2014
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%	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%
Notes payable; interest at 5% per annum, principal and accrued interest due at June 10, 2015
Debt Instrument [Line Items]
Interest rate	5.00%
Notes payable; interest at 8% per annum, principal and accrued interest due at June 25, 2015
Debt Instrument [Line Items]
Interest rate	8.00%

XML

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Equipment

Equipment consists of the following:

	March 31, 2015		December 31, 2014
Furniture and Fixtures	$	219,871	$	219,871
Equipment		16,155		16,155
		236,026		236,026
Less: Accumulated depreciation		178,518		161,205
	$	57,508	$	74,821

XML

Statements of Cash Flows (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (263,636)	$ (3,429,708)
Adjustments to reconcile net loss to net cash used in operating activities
Fair value of options issued in exchange for services	(54,834)	740,954
Accretion of discount on notes payable	10,447
Change in fair value of warrant liability	(169,476)	890,000
Change in fair value of embedded derivative liability		300,000
Amortization and depreciation	21,426	20,590
Stock and warrants issued in exchange for technology		844,000
(Increase) decrease in assets
Inventory	(12,000)
Prepaid expenses	2,632	2,632
Increase (decrease) in liabilities
Accounts payable and accrued expenses	346,205	(75,100)
Deferred revenue	(6,250)
Net cash used in operating activities	(125,486)	(706,632)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable	136,102
Net cash provided by financing activities	136,102
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	10,616	(706,632)
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD	63,956	1,285,973
CASH AND CASH EQUIVALENTS-END OF PERIOD	74,572	579,341
Cash paid during the year for:
Interest	0	0
Income taxes	0	0
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Cashless exercise of options		$ 2,714

XML

Balance Sheets (Parenthetical) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Accumulated depreciation on capital equipment	$ 178,518	$ 161,205
Accumulated amortization, patent and trademarks	$ 122,615	$ 118,502
Preferred stock, par value	$ 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	$ 0.001	$ 0.001
Common stock, shares authorized	675,000,000	675,000,000
Common stock, shares issued	337,374,052	337,374,052
Common stock, shares outstanding	307,578,149	307,578,149
Treasury stock, shares	29,795,903	29,795,903

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

NOTE 10 – 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 warrants	$	—	$	—	$	6,201,233	$	6,201,233
Total	$	—	$	—	$	6,201,233	$	6,201,233

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

Balance at January 1, 2015	$	6,370,709
Change in fair value of derivative liabilities		(169,476	)
Balance at March 31, 2015	$	6,201,233

As of March 31, 2015, 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:

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 three months ended March 31, 2014.

As of March 31, 2015, 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:

Annual Dividend Yield	0.0%
Expected Life (Years)	2.75 - 4.76
Risk-Free Interest Rate	.89% - 1.37%
Expected Volatility	177.1% - 193.7%

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	3 Months Ended
	Mar. 31, 2015	May 11, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	LLTI
Entity Registrant Name	LASERLOCK TECHNOLOGIES INC
Entity Central Index Key	0001104038
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		307,578,149

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Stock Options

3 Months Ended

Mar. 31, 2015

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

Stock Options

NOTE 11 – 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 (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 74,004 shares of our common stock available for issuance under the 2003 Plan, will be sufficient to meet the objective.

As of March 31, 2015, there are 22,725,996 options that have been issued, and 15,274,004 options that are available to be issued under the Plan.

The 2013 Plan is administered by a committee of the Board (“Stock Option Committee”) which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan.

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

The Company issued Non-Statutory Stock Options pursuant to contractual agreements 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.

Option expense for the three months ended March 31, 2015 was ($54,834).

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2014:

	Option/Warrant Shares		Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2014		121,165,874	$	0.01 - $0.20	$	0.10
Granted		—		—		—
Exercised		—		—		—
Expired		—		—		—
Outstanding, March 31, 2015		121,165,874	$	0.01 to $0.20	$	0.10
Exercisable, March 31, 2015		121,165,874	$	0.01 to $0.20	$	0.10
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)		5.5

A summary of incentive stock option transactions for employees since December 31, 2014 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2014		53,866,667		$	0.05 - $0.15	$	0.05
Granted		—			—		—
Exercised		—			—		—
Expired/Returned		(1,000,000	)		0.15		—
Outstanding, March 31, 2015		52,866,667		$	0.05 to $0.15	$	0.05
Exercisable, March 31, 2015		52,866,667		$	0.05 to $0.15	$	0.06
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)		9.0

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Statements of Operations (Unaudited) (USD $)	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
NET REVENUES
Sales	$ 0		$ 0
Royalties	6,250
TOTAL NET REVENUE	6,250
COST OF SALES	0		0
GROSS PROFIT	6,250
OPERATING EXPENSES
General and administrative	83,901		244,496
Legal and accounting	11,113		113,326
Payroll expenses	170,904	[1]	954,328	[1]
Research and development	120,386		864,729
Sales and marketing	22,808		51,922
Total operating expenses	409,112		2,228,801
LOSS BEFORE OTHER INCOME	(402,862)		(2,228,801)
OTHER INCOME (EXPENSE)
Interest expense	(30,250)		(10,907)
Change in fair value of warrants	169,476		(890,000)
Change in fair value of embedded derivative liability			(300,000)
TOTAL OTHER INCOME (EXPENSE)	139,226		(1,200,907)
NET LOSS	$ (263,636)		$ (3,429,708)
BASIC (in dollars per share)	$ 0.00		$ (0.01)
DILUTED (in dollars per share)	$ 0.00		$ (0.01)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC (in shares)	307,578,149		297,571,958
DILUTED (in shares)	307,578,149		297,571,958

[1] - includes share based compensation of $(54,834) and $740,954 for the three months ended March 31, 2015 and 2014

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 5 – INCOME TAXES

Income tax expense was $0 for the three months ended March 31, 2015 and 2014.

As of January 1, 2015, the Company had no unrecognized tax benefits, and accordingly, the Company did not recognize interest or penalties during 2014 related to unrecognized tax benefits. There has been no change in unrecognized tax benefits during the three months ended March 31, 2015, and there was no accrual for uncertain tax positions as of March 31, 2015. Tax years from 2011 through 2014 remain subject to examination by major tax jurisdictions.

There is no income tax benefit for the losses for the three months ended March 31, 2015 and 2014, since management has determined that the realization of the net tax deferred asset is not assured and has created a valuation allowance for the entire amount of such benefits.

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Patents and Trademark

3 Months Ended

Mar. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Patents and Trademark

NOTE 4 – PATENTS AND TRADEMARK

The Company has seven issued patents and filed for four additional provisional patents for anti-counterfeiting technology. Accordingly, costs associated with the registration of these patents and legal defense have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents (17 to 20 years). During three months ended March 31, 2015 and 2014, the Company capitalized $0 and $21,954 of patent costs. Amortization expense for patents was $4,114 and $3,277 for the three months ended March 31, 2015 and 2014.

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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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Accounting Policies [Abstract]

Nature of the Business

Nature of the Business

LaserLock Technologies Inc. (the “Company” or “LaserLock”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is quoted on the OTC Pink 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 Wi-Fi 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 unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions for Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on form 10-K for the year ended December 31, 2014, as filed with the SEC. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015.

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 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.

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 $158 and $27,283 for the three months ended March 31, 2015 and 2014 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 three months ended March 31, 2015 and 2014 were $120,386 and $864,729.

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 the three months ended March 31, 2015 and 2014, 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 financial statements.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

As of March 31, 2015 and for the period then ended, there were no recently adopted accounting pronouncements that had a material effect on the Company’s financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

As of March 31, 2015, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements through 2016.

Reclassifications

Reclassifications

Certain amounts in 2014 statement of operations have been reclassified in order for them to conform with the 2015 presentation.

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Operating Leases

3 Months Ended

Mar. 31, 2015

Leases [Abstract]

Operating Leases

NOTE 12 – OPERATING LEASES

For the three months ended March 31, 2015 and 2014, total rent expense under leases amounted to $19,369 and $17,727. At March 31, 2015, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2015		56,403
2016		31,605
	$	88,008

The Company has advised the landlord that the Company was not going to continue to occupy the space at 3112 M. Street, NW, Washington, DC effective May 1, 2015. Settlement negotiations regarding the lease balance are underway.

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Warrant Liability

3 Months Ended

Mar. 31, 2015

Text Block [Abstract]

Warrant Liability

NOTE 8 – 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 March 31, 2015 and December 31, 2014, the fair value of the warrant liability was $865,277 and $787,544.

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 March 31, 2015 and December 31, 2014, the fair value of the warrant liability was $116,789 and $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 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 as of December 31, 2014, 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. The warrants were valued at $4,615,841 as of March 31, 2015, 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 190.9%, risk free interest rate of 1.37% and expected life of five years.

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Senior Secured Convertible Notes Payable -Related Parties

3 Months Ended

Mar. 31, 2015

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.

As of March 31, 2015, the outstanding principal balance on these notes was $114,000. Accrued interest at March 31, 2015 amounted to $115,925. The notes and accrued interest are due on September 15, 2015.

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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Notes Payable

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Notes Payable

NOTE 7 – NOTES PAYABLE

Notes payable consists of the following at March 31, 2015 and December 31, 2014:

	March 31, 2015		December 31, 2014
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015	$	114,000	$	114,000
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due)		50,000		50,000
Notes payable; interest at 8% per annum, principal and accrued interest due at December 1, 2014 (past due)		650,000		650,000
Notes payable; interest at 5% and 8% per annum, principal and accrued interest due at April 2015		123,000		123,000
Notes payable; interest at 5% per annum, principal and accrued interest due at June 10, 2015		25,000		—
Notes payable; interest at 8% per annum, principal and accrued interest due at June 25, 2015		111,102		—
Less: Debt discount		—		(10,447	)
		1,073,102		926,553
Less: Current portion		1,073,102		926,553
	$	—	$	—

The notes payable balance as of March 31, 2015 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 $21,667 as of March 31, 2015. The notes are 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 year ended December 31, 2014, $34,222 was accreted through interest expense. The note and accrued interest at 8% per annum as was originally due on December 11, 2014, but the Company received approval to extend the maturity until December 31, 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 December 31, 2014, the fair value of the warrant liability was $17,741 and the note payable balance was $250,000. As of March 31, 2015, the fair value of the warrant liability was $19,950 and the note payable balance was $250,000. The 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. 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. As of March 31, 2015, the fair value of the warrant liability was $12,322 and the note payable balance was $100,000. The notes are in default.

On August 12, 2014, the Company issued a 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. 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. As of March 31, 2015, the fair value of the warrant liability was $5,583 and the note payable balance was $50,000. The note is in default.

On August 14, 2014, the Company issued a note 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. 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. As of March 31, 2015, the fair value of the warrant liability was $11,169 and the note payable balance was $100,000. The 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. 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. As of March 31, 2015, the fair value of the warrant liability was $16,767 and the notes payable balance was $150,000. The notes are 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. The 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 three months ended March 31, 2015, $10,447 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. As of March 31, 2015, the fair value of the warrant liability was $11,325 and the note payable balance was $100,000. This note is in default.

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 March 27, 2015, the Company issued a note payable for $111,102, bearing interest at 8.0% to an accredited investor. The note and accrued interest is due on June 25, 2015. The principal amount of the note and accrued interest is convertible into the next equity financing of the Company. The conversion price under the conversion option will be equal to the price paid by third-party investors in the financing. On March 20, 2014, VerifyMe waived its contractual rights as it relates to this transaction.

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Convertible Preferred Stock

3 Months Ended

Mar. 31, 2015

Equity [Abstract]

Convertible Preferred Stock

NOTE 9 – 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 $0 at March 31, 2015 and December 31, 2014. 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. 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 March 31, 2015 and December 31, 2014, the fair value of the warrants was $526,210 and $494,939, 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.

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Senior Secured Convertible Notes Payable -Related Parties - Additional Information (Detail) (USD $) Share data in Millions, unless otherwise specified	1 Months Ended	3 Months Ended		12 Months Ended
	Jun. 30, 2013	Mar. 31, 2015	Dec. 31, 2012	Dec. 31, 2006	Jun. 30, 2011	May 31, 2007	Feb. 28, 2006
Debt Instrument [Line Items]
Accrued interest		115,925
Outstanding principal balance on notes		114,000
Senior Secured Convertible Promissory Notes
Debt Instrument [Line Items]
Debt instrument principal amount	225,000				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	181,125
Common stock shares issued on conversion of debt (in shares)	7.4
Amount of notes converted into common stock shares	$ 1,628,000
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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Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies Disclosure [Abstract]

Contingencies

NOTE 14 – 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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Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2015

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 warrants	$	—	$	—	$	6,201,233	$	6,201,233
Total	$	—	$	—	$	6,201,233	$	6,201,233

Fair Value Measurements within 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:

Balance at January 1, 2015	$	6,370,709
Change in fair value of derivative liabilities		(169,476	)
Balance at March 31, 2015	$	6,201,233

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:

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 March 31, 2015, 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:

Annual Dividend Yield	0.0%
Expected Life (Years)	2.75 - 4.76
Risk-Free Interest Rate	.89% - 1.37%
Expected Volatility	177.1% - 193.7%

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Operating Leases - Schedule of Non-cancelable Operating Lease Arrangements for Property (Detail) (USD $)	Mar. 31, 2015
Leases, Operating [Abstract]
2015	$ 56,403
2016	31,605
Total	$ 88,008

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Fair Value of Financial Instruments - Fair Value Measurements within Fair Value Hierarchy of Derivative Liabilities Using Level 3 Inputs (Detail) (USD $)	3 Months Ended
	Mar. 31, 2015
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 6,370,709
Change in fair value of derivative liabilities	(169,476)
Ending balance	$ 6,201,233

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Statements of Operations (Unaudited) (Parenthetical) (Payroll expenses, USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Payroll expenses
Share based compensation	$ (54,834)	$ 740,954

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Property and Equipment

3 Months Ended

Mar. 31, 2015

Property, Plant and Equipment [Abstract]

Property and Equipment

NOTE 3 – PROPERTY AND EQUIPMENT

Equipment consists of the following:

	March 31, 2015		December 31, 2014
Furniture and Fixtures	$	219,871	$	219,871
Equipment		16,155		16,155
		236,026		236,026
Less: Accumulated depreciation		178,518		161,205
	$	57,508	$	74,821

Depreciation of property and equipment was $17,313 and $17,313, respectively, for the three months ended March 31, 2015 and 2014.

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Stock Options (Tables)

3 Months Ended

Mar. 31, 2015

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, 2014:

	Option/Warrant Shares		Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2014		121,165,874	$	0.01 - $0.20	$	0.10
Granted		—		—		—
Exercised		—		—		—
Expired		—		—		—
Outstanding, March 31, 2015		121,165,874	$	0.01 to $0.20	$	0.10
Exercisable, March 31, 2015		121,165,874	$	0.01 to $0.20	$	0.10
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)		5.5

Schedule of Incentive Stock Option Transactions for Employees

A summary of incentive stock option transactions for employees since December 31, 2014 is as follows:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2014		53,866,667		$	0.05 - $0.15	$	0.05
Granted		—			—		—
Exercised		—			—		—
Expired/Returned		(1,000,000	)		0.15		—
Outstanding, March 31, 2015		52,866,667		$	0.05 to $0.15	$	0.05
Exercisable, March 31, 2015		52,866,667		$	0.05 to $0.15	$	0.06
Weighted Average Remaining Life, Exercisable, March 31, 2015 (years)		9.0

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Warrant Liability - Additional Information (Detail) (USD $)	0 Months Ended		3 Months Ended	12 Months Ended
	Jan. 01, 2014	Jan. 01, 2015	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2012
Major Agreements [Line Items]
Warrant liability			$ 6,201,233	$ 6,370,709
Verify Me | Warrants issued on January 1, 2014
Major Agreements [Line Items]
Fair value of warrant liability			116,789	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			865,277	787,544
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			$ 4,615,841	$ 4,892,089
Patent And Technology Agreement | Stock Options And Warrants | Warrant
Major Agreements [Line Items]
Dividend yield			0.00%	0.00%
Expected volatility			190.90%	229.10%
Risk free interest			1.37%	1.65%
Expected warrant term			5 years	5 years

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Related Party Transactions

3 Months Ended

Mar. 31, 2015

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 13 – RELATED PARTY TRANSACTIONS

At March 31, 2015 and 2014, 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 $115,925 and $328,251.