STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2014

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE 11 – STOCKHOLDERS’ EQUITY

In January and February 2013, the Company received $185,000 from the sale of 3,700,000 units from private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.05 per unit.

In January 2013, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.12 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.045 per unit. The company sold 1,111,111 units and raised $50,000.

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

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

On January 1, 2014, per the Patatent and Technology agreement the company issued 6,349,206 shares of common stock to VerifyMe. The shares were in payment for technology received. Per the Agreement, payment of $400,000 worth of the Company’s common stock was to be paid at a 10% discount to the market at time of payment. The closing price was $.07 per share discounted 10% to $.063. The $400,000 payment divided by the $.063 per share resulted in 6,349,206 shares to be issued. The entire $400,000 payment was expensed to research and development.

At the time of payment, the Company made the payment, on a good faith basis, on the assumption that the technology conveyed to it 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 is patentable and licensable, the Company would be required to make, on January 1, 2015, an additional payment pursuant to December 31, 2012 Patent and Technology Agreement in the amount of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of Shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to 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 ten cents ($0.10) per share.  Based upon the current share price of $0.07 per share, this would result in the issuance of approximately an additional 70 million shares of common stock and warrants to purchase an additional 70 million shares.

The authorized shares of the Company’s common stock were increased on May 23, 2013 from 425,000,000 to 675,000,000.