Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 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	$	—	$	—	$	3,182,504	$	3,182,504
Total	$	—	$	—	$	3,182,504	$	3,182,504

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:

	Total
Balance at January 1, 2015	$	6,370,709
Conversion of notes payable, net of interest expense	$	(33,943	)
Conversion of warrants related to licensing fees	$	(1,867,417	)
Change in fair value of derivative liabilities		(1,286,845	)
Balance at June 30, 2015	$	3,182,504

Schedule of Common Stock Purchase Warrants Valuation Assumptions

As of June 30, 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:

	June 30, 2015
Annual Dividend Yield		0.0	%
Expected Life (Years)		2.50 - 3.51
Risk-Free Interest Rate		1.01	%
Expected Volatility		162.0% - 169.8	%

Stockholders' Equity

NOTE 12 – STOCKHOLDERS’ EQUITY

On January 1, 2014, under the terms of the Patent and Technology License Agreement, the Company issued 6,349,206 shares of common stock to VerifyMe, in addition to the warrants described in Note 9 above. The shares were issued in payment for the technology received. Under the agreement, $400,000 worth of the Company’s common stock was to be paid by the Company to VerifyMe at a 10% discount to the market at time of payment. The closing price was $0.07 per share discounted 10% to $0.063. The $400,000 payment divided by the $0.063 per share resulted in 6,349,206 shares (pre reverse-split) to be issued. The entire $400,000 payment was expensed to research and development.

On June 12, 2015, the Company sold 304,785 shares of common stock (25,906,735 pre reverse split shares) and raised $50,000.

During the three months ended June 30, 2015, one stockholder exercised 2,353 warrants and received 2,353 shares of the Company’s common stock in a cashless exercise.

On June 11, 2015, the Company issued 525,000 restricted stock units (44,625,000 pre reverse-split units) to two officers of the Company. The restricted stock units were valued at the closing stock price of $0.01 on June 11, 2015, at $446,250, fair value. These restricted stock units are being expensed over the vesting terms. For the three and six months ended June 30, 2015, the Company expensed $6,198 related to the restricted stock units.