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 June 30, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 0-31927

LASERLOCK TECHNOLOGIES INC.

(Exact Name of Registrant as Specified in Its Charter)

	Nevada		23-3023677
(State or Other Jurisdiction of Incorporation or Organization)		(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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of 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 þ No o

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

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

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

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 August 19, 2014.

	PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets ( Unaudited )		1
Condensed Consolidated Statements of Operations (Unaudited)		2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited)		3
Condensed Consolidated Statements of Cash Flows (Unaudited)		4
Notes to Condensed Consolidated Financial Statements (Unaudited)		5
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		19
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk		28
ITEM 4. Controls and Procedures		28
	PART II OTHER INFORMATION
ITEM 6. Exhibits		29
SIGNATURES		30

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LaserLock Technologies Inc.

CONTENTS

	PAGE
CONDENSED CONSOLIDATED BALANCE SHEETS	1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS	2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT	3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	4
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	5 - 18

LaserLock Technologies Inc.

Condensed Consolidated Balance Sheets

June 30, 2014 and December 31, 2013

	June 30, 2014			December 31, 2013
	(unaudited)			(audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	107,770		$	1,285,973
Accounts receivable, net of allowance of $0 at June 30, 2014 and December 31, 2013		58,721			3,573
Inventory		84,283			34,271
Prepaid expenses		184,210			189,474
TOTAL CURRENT ASSETS		434,984			1,513,291
PROPERTY AND EQUIPMENT
Capital equipment, net of accumulated depreciation of $126,579 and $91,952 as of June 30, 2014 and December 31, 2013		109,448			144,074
OTHER ASSETS
Deposits		37,197			37,197
Patents and trademarks, net of accumulated amortization of $111,948 and $105,393 as of June 30, 2014 and December 31, 2013		114,141			120,695
TOTAL ASSETS	$	695,770		$	1,815,257
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	409,439		$	316,784
Accrued interest - related party		19,763			16,668
Embedded derivative liability		200,000			800,000
Notes payable - net of accumulated discount of $26,617 as of June 30, 2014		273,383			50,000
TOTAL CURRENT LIABILITIES		902,585			1,183,452
LONG-TERM LIABILITIES
Warrant liability		3,641,650			6,000,000
Accrued interest - related parties		105,665			300,677
Senior secured convertible notes payable - related parties		114,000			330,249
TOTAL LONG-TERM LIABILITIES		3,861,315			6,630,926
STOCKHOLDERS’ DEFICIT
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 21,111,111 shares issued and outstanding as of June 30, 2014 and December 31, 2013		633,333			633,333
Common stock, $ .001 par value; 675,000,000 shares authorized; 337,374,052 shares issued and 307,578,149 outstanding at June 30, 2014 and 319,862,042 shares issued and 290,066,139 outstanding at December 31, 2013		337,374			319,862
Additional paid in capital		24,630,326			22,938,983
Treasury stock, at cost (29,795,903 shares at June 30, 2014 and December 31, 2013)		(113,389	)		(113,389	)
Accumulated deficit		(29,555,774	)		(29,777,910	)
STOCKHOLDERS’ DEFICIT		(4,068,130	)		(5,999,121	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	695,770		$	1,815,257

See the accompanying notes to these condensed consolidated financial statements.

-1-

LaserLock Technologies Inc.

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2014 and 2013

(Unaudited) 

	Three Months			Three Months			Six Months			Six Months
	Ended			Ended			Ended			Ended
	June 30,			June 30,			June 30,			June 30,
	2014			2013			2014			2013
NET REVENUES
Sales	$	65,148		$	-		$	65,148		$	3,140
Royalties		-			-			-			-
TOTAL NET REVENUE		65,148			-			65,148			3,140
COST OF SALES		54,440			-			54,440			2,710
GROSS PROFIT		10,708			-			10,708			430
OPERATING EXPENSES
General and administrative		180,820			170,699			305,581			231,859
Legal and accounting		178,302			55,651			310,497			177,580
Patent costs		-			-			-			-
Payroll expenses (a)		427,178			8,204,468			1,501,858			8,952,497
Research and development (b)		30,120			162,819			875,849			137,424
Sales and marketing		73,895			52,197			125,331			95,006
Total operating expenses		890,315			8,645,834			3,119,116			9,594,366
LOSS BEFORE OTHER INCOME (EXPENSE)		(879,607	)		(8,645,834	)		(3,108,408	)		(9,593,936	)
OTHER INCOME (EXPENSE)
Interest income		-			1			-			1
Interest expense		(13,121	)		(32,978	)		(24,028	)		(74,219	)
Loss on extinguishment of debt		(82,000	)		(1,221,875	)		(82,000	)		(1,221,875	)
Change in fair value of warrants		3,726,572			(858,864	)		2,836,572			(12,780,374	)
Change in fair value of embedded derivative liability		900,000			-			600,000			-
Fair value of warrants in excess of consideration		-			-
for convertible preferred stock		-			-			-			(2,995,791	)
		4,531,451			(2,113,716	)		3,330,544			(17,072,258	)
NET INCOME (LOSS) BEFORE INCOME TAX BENEFIT		3,651,844			(10,759,550	)		222,136			(26,666,194	)
INCOME TAX BENEFIT		-			-			-			-
NET INCOME (LOSS)		3,651,844			(10,759,550	)		222,136			(26,666,194	)
Less: Deemed dividend distribution		-			-			-			(1,000,000	)
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS	$	3,651,844		$	(10,759,550	)	$	222,136		$	(27,666,194	)
NET INCOME (LOSS) PER COMMON SHARE
BASIC	$	0.01		$	(0.04	)	$	0.00		$	(0.11	)
DILUTED	$	0.01		$	(0.04	)	$	0.00		$	(0.11	)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC		302,039,675			240,935,887			299,856,170			233,374,035
DILUTED		323,600,786			240,935,887			321,417,281			233,374,035

(a)	Includes share based compensation of $61,312 and $802,267 for the three and six months ended June 30, 2014 and $7,939,629 and $8,272,227 for the three and six months ended June 30, 2013.
(b)	Includes share based compensation of $400,000 for the six months ended June 30, 2014 related to the Patent and Technology License Agreement.

See the accompanying notes to these condensed consolidated financial statements.

-2-

LaserLock Technologies Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Deficit

For the Six Months Ended June 30, 2014

	Convertible Preferred Stock				Common Stock				Deferred		Additional						Deficit Accumulated During the
	Number of Shares		Amount		Number of  Shares		Amount		Consulting Fees		Paid-In Capital			Treasury Stock			Development Stage			Total
Balance at December 31, 2013 (audited)		21,111,111	$	633,333		290,066,139	$	319,862		-		22,938,983		$	(113,389	)		(29,777,910	)	$	(5,999,121	)
Issuance of shares of common stock for services						6,349,206		6,349		-		393,651			-			-			400,000
Cashless exercise of options						2,714,285		2,714		-		(2,714	)		-			-			-
Fair value of employee stock options		-		-		-		-		-		802,267			-			-			802,267
Issuance of common stock for settlement of debt						8,448,519		8,449				498,139									506,588
Net Income for the six months ended June 30, 2014		-		-		-		-		-		-			-			222,136			222,136
Balance at June 30, 2014 (unaudited)		21,111,111	$	633,333		307,578,149	$	337,374	$	-		24,630,326		$	(113,389	)		(29,555,774	)	$	(4,068,130	)

See the accompanying notes to these condensed consolidated financial statements.

-3-

LaserLock Technologies Inc.

Condensed Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2014 and 2013

(Unaudited)

	Six Months			Six Months
	Ended			Ended
	June 30,			June 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss)	$	222,136		$	(26,666,194	)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Fair value of options issued in exchange for services		802,267			8,272,227
Accretion of discount on notes payable		-			2,478
Change in fair value warrant liability		(2,836,572	)		12,780,374
Change in fair value embedded derivative liability		(600,000	)		-
Fair value of warrants in excess of consideration for convertible preferred stock		-			2,995,791
Fair value of stock in excess of converted notes payable and accrued interest		82,000			1,221,875
Amortization and depreciation		41,180			40,749
Stock & warrants issued in exchange for services		844,000			-
(Increase) decrease in assets
Accounts receivable		(55,148	)		(3,140	)
Inventory		(50,013	)		(19,454	)
Prepaid expenses		5,263			280,263
Deposit		-			(37,197	)
Increase (decrease) in liabilities
Accounts payable and accrued expenses		116,684			(220,674	)
Net cash used in operating activities		(1,428,203	)		(1,352,902	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		-			(10,573	)
Purchase of patents and trademarks		-			(21,954	)
Net cash used in investing activities		-			(32,527	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock		-			1,000,000
Proceeds from issuance of common stock		-			235,000
Proceeds from exercise of stock options		-			17,919
Proceeds from exercise of warrants		-			10,000
Proceeds from issuance of notes payable		250,000			-
Net cash provided by financing activities		250,000			1,262,919
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,178,203	)		(122,510	)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR		1,285,973			2,994,350
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	107,770		$	2,871,840
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cash paid during the year for:
Interest	$	-		$	13,896
Income taxes	$	-		$	-
Fair value of stock issued for conversion of notes payable and accrued interest	$	424,588		$	668,125
Accretion of discount on preferred stock as deemed dividend distribution	$	-		$	1,000,000
Fair value of beneficial conversion feature	$	-		$	1,000,000
Fair value of warrants issued as debt discount	$	34,222		$	-

See the accompanying notes to these condensed consolidated financial statements.

-4-

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies Inc., together with its wholly-owned subsidiary, LL Security Products, Inc., is referred to as the “Company.” LaserLock Technologies Inc. was incorporated in the State of Nevada on November 10, 1999.  The Company is based in Washington, D.C. And is publicly traded on the OTC Market 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 LaserLock, or as licensed software product for operation on the client’s premises.

The solution integrates three independent authentication factors – something you have (for instance a smartphone), something you know (for instance a color gesture swipe) and something you are (for instance your facial geometry) - into a simple, fast, intuitive solution. The system can also accurately determine the precise location of the individual using a variety of mechanisms including GPS, cell tower triangulation, IP or WIFI address. Because the solution incorporates biometrics it completely eliminates the possibility that users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for a 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, 2013 as filed with the Securities and Exchange Commission (the “SEC”). Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

Principle of Consolidation

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

-5-

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP 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 (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that involves disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

Fair Value of Financial Instruments

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

Cash and Cash Equivalents

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

Concentration of Credit Risk Involving Cash and Cash Equivalents

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

Inventory

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

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. Depreciation of property and equipment was $17,313 and $34,627 for the three and six months ended June 30, 2014 and $33,900 and $34,212 for the three and six months ended June 30, 2013.

Patents and Trademark

The Company has five issued patents, filed for three provisional patents for anti-counterfeiting technology and purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents that 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 is 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.

-6-

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 or not 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 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.

-7-

Stock-based Payments

The Company accounts for stock-based compensation under the provisions of ASC 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. 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 $25,955 and $53,238 for the three and six months ended June 30, 2014 and $3,453 and $5,756 for the three and six months ended June 30, 2013, and are included in sales and marketing expenses.

Research and Development Costs

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

Basic and Diluted Net Income per Share of Common Stock

Basic net income per common share are based on the weighted average number of shares outstanding during the periods presented. Diluted net income per common share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive, i.e. the exercise prices of the outstanding stock options were greater than the market price of the common stock. Anti-dilutive common stock equivalents, which were excluded from the calculation of number of dilutive common stock equivalents, amounted to 171,582,538 shares for the three and six months ended June 30, 2014, respectively. Because the Company reported a net loss for the three and six months ended June 30, 2013, common stock equivalents, including stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same.

-8-

	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
Numerator
Net income	$	3,651,844	$	222,136
Denominator
Basic: Weighted-average common shares outstanding during the period		302,039,675		299,856,170
Add: dilutive effect of warrants		450,000		450,000
dilutive effect of conversion of preferred stock		21,111,111		21,111,111
Diluted		323,600,786		321,417,281
Net Income Per Share
Basic	$	0.01	$	0.00
Diluted	$	0.01	$	0.00

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 FASB ASC 280 can be found in the consolidated financial statements.

Recently Adopted Accounting Pronouncements

In June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

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

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

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

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

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

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Recently Issued Accounting Pronouncements Not Yet Adopted

As of June 30, 2014, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

Reclassifications

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

NOTE 2 – MANAGEMENT PLANS

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations during the development stage. 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 believes that its existing cash resources will not be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing stockholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company may be unable to execute upon the business plan or pay costs and expenses as they are incurred, which could have a material, adverse effect on the business, financial condition and results of operations.

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

On June 5, 2014 the Company entered into an exclusive agreement with Merriman Capital, Inc. to raise up to but no more than $5 million in additional capital for the Company. Prior to that, on May 23, VerifyMe, Inc. waived its non-dilution rights as they relate to parameters of the raise based on the Company’s revised budget.

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 – PATENTS AND TRADEMARK

The Company has five issued patents and filed for three 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 the three and six months ended June 30, 2014, the Company capitalized $0 of patent cost and during the three and six months ended June 30, 2013, the Company capitalized patent costs of $3,511 and $21,594, respectively, . Amortization expense for patents was $3,277 and $6,554 for the three and six months ended June 30, 2014 and $3,262 and $6,495 for the three and six months ended June 30, 2013, respectively. Future estimated annual amortization over the next five years is approximately $13,100 per year for the years ended December 31, 2014 through 2018.

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NOTE 4 – INCOME TAXES

Income tax expense was $0 for the three and six months ended June 30, 2014 and 2013.

As of January 1, 2014, 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 six months ended June 30, 2014, and there was no accrual for uncertain tax positions as of June 30, 2014. Tax years from 2010 through 2013 remain subject to examination by major tax jurisdictions.

The Company has income for the three and six months ended June 30, 2014; however, due to tax adjustments, the Company has a net loss for tax purposes. There is no income tax benefit for the three and six months ended June 30, 2014 and 2013 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 5 - SENIOR SECURED CONVERTIBLE NOTES PAYABLE –RELATED PARTIES

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

As of June 30, 2014, the outstanding principal balance on these notes was $114,000. Accrued interest at June 30, 2014 amounted to $105,665.

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 common shares at a discount of 30% of the price per share in the qualified financing. Since the embedded conversion feature is contingent upon the occurrence of the qualified financing, the value of the contingent conversion feature, if beneficial, will be recognized if the triggering event occurs and the contingency is resolved.

NOTE 6 - NOTES PAYABLE

On June 10, 2014, the Company issued a note payable for $250,000 which included warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share, expiring in five years. The warrants were valued at 39,650, using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 248.2%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $34,222 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition and is being accreted over the term of the note payable for financial statement purposes. For the three and six months ended June 30, 2014, $7,605 was accreted through interest expense. The note and accrued interest at 8% per annum are due in full on September 11, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of June 30,2014, the fair value of the warrant liability was $39,650 and the note payable balance was $223,383, net of $26,617 discount.

The notes payable balance as of June 30, 2014 also included a Series A note payable in the amount of $50,000 with interest of 8% per annum. This note and accrued interest matured in October 2011 and is past due. Accrued interest associated with this note was $18,667 as of June 30, 2014.

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NOTE 7 – 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 June 30, 2014 and December 31, 2013, the fair value of the warrant liability was $2,061,000 and $3,700,000.

On January 1, 2014 the Company issued 6,349,206 warrants as consideration for technology received from VerifyMe related to the December 31, 2012 Agreement. The warrants have an exercise price of $.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 June 30, 2014, the fair value of the warrant liability was $253,000.

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 common 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 $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.

NOTE 8 – 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 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.

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

The conversion feature of the Preferred Stock is an embedded derivative, which is classified as a liability in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair value of $1 million at January 31, 2013, $800,000 at December 31, 2013 and $200,000 at June 30, 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 of $2,995,791 at January 31, 2013. Because this amount was entirely in excess of the transaction price, this amount was recorded as a charge to expenses of $2,995,791 in 2013. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of June 30, 2014 and December 31, 2013, the fair value of the warrants was $1,288,000 and $2,300,000, respectively.

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

The conversion price of the shares of Preferred Stock is currently $0.03 per share. There are no arrearages on cumulative dividends.

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

NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Derivative Liabilities

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

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

	Level 1		Level 2		Level 3		Total
Derivative liability related to fair value of beneficial conversion feature	$	-	$	200,000	$	--	$	200,000
Derivative liability related to fair value of warrants		-		-		3,641,650		3,641,650
Total	$	-	$	200,000	$	3,641,650	$	3,841,650

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

	Total
Balance at January 1, 2014	$	6,000,000
Additional Warrants issued January 2014		444,000
Additional Warrants issued June 2014		34,222
Change in fair value of derivative liabilities		(2,836,572	)
Balance at June 30, 2014	$	3,641,650

As of June 30, 2014, the beneficial conversion feature of the Preferred Stock is treated as an embedded derivative liability and changes in the fair value were recognized in earnings. The Preferred Stock shares are convertible into shares of the Company’s common stock, which did traded in an active securities market, therefore the embedded derivative liability was valued using the following market based inputs:

Closing trade price of Common Stock	$	0.04
Series A Preferred Stock Conversion Price	$	0.03
Intrinsic value of conversion option per share	$	0.01

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 six months ended June 30, 2014.

As of June 30, 2014, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These common stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions:

	June 30, 2014
Annual Dividend Yield	0.0%
Expected Life (Years)	3.5 – 4.51
Risk-Free Interest Rate	1.67%
Expected Volatility	237.8% -244.3%

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

NOTE 10 – 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 7 above. The shares were issued in payment for the technology received. Under the agreement, payment of $400,000 worth of the Company’s common stock was to be paid by the Company to VerifyMe at a 10% discount to the market at time of payment. The closing price was $0.07 per share discounted 10% to $0.063. The $400,000 payment divided by the $0.063 per share resulted in 6,349,206 shares to be issued. The entire $400,000 payment was expensed to research and development.

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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 the 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 number of shares of our common stock subject to outstanding grants under the 2003 Plan as of the date of the Annual Meeting, plus (iii) the number of shares of our common stock remaining available for issuance under the 2003 Plan but not subject to previously exercised, vested or paid grants, for issuance under the 2013 Plan will be sufficient.

As of June 30, 2014, there are 23,725,996 shares subject to outstanding options under the Plans, and 14,274,004 shares remain available for issuance.

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.

The Company issued Non-Statutory Stock Options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided.

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

On January 22, 2013, the Company issued options to an employee to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 250,000 immediately, 250,000 on the first anniversary of the grant date and 500,000 on the second anniversary of the grant date. The Company used the Black- Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 222%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of the options issued was $99,972 of which $25,000 was expensed immediately and the remainder is being expensed over the vesting terms. The total expense for the three and six months ended June 30, 2014 was $6,231 and $13,900, respectively. The total expense for the three and six months ended June 30, 2013 was $12,462 and $46,768, respectively.

On February 25, 2013, the Company issued options to an employee to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 200,000 on the first anniversary of the grant date, 200,000 on the second anniversary of the grant date and 100,000 on the third anniversary of the grant date. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 259%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of options issued was $89,998. The total expense recognized for the three months ended March 31, 2013, was $5,000. The options were cancelled during the three months ended June 30, 2013. The total expense recognized of $5,000 was reversed upon cancellation of the options.

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On March 13, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vested 50% immediately and 50% on March 13, 2014. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 235%, risk-free interest rate of 2.0% and expected option life of ten years. The fair value of the option issued was $439,963 of which $219,982 was expensed immediately and the remainder will be expensed over one year. There was no expense recognized for the three months ended June 30, 2014. The total expense recognized for the six months ended June 30, 2014 was $43,394. The total expense for the three and six months ended June 30, 2013 was $54,845 and $285,675, respectively.

On May 4, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vest 50% immediately and 50% on May 4, 2014. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 235%, risk-free interest rate of 1.78% and expected option life of ten years. The fair value of the option issued was $460,000 of which $230,000 was expensed immediately and the remainder will be expensed over one year. The total expense for the three and six months ended June 30, 2014 was $21,425 and $78,137.

On September 30, 2013, the Company issued an option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Operating Officer. The options vest 50% after the first year and 50% at the end of 24 months after the grant date. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of ranging from 268.4% to 272.8%, risk-free interest rate of 1.39% and expected option life ranging from 10 years. The fair value of the option issued was $99,840. The total expense for the three and six months ended June 30, 2014 was $18,698 and $37,190, respectively.

On December 2, 2013, the Company issued an option to purchase 1 million shares of the Company’s common stock at an exercise after the grant date price of $0.15 per share, with a term of ten years, to the Company’s Chief Financial Officer. The options vest 50% after the first year and 50% at the end of 24 months. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of ranging from 266.1%, risk-free interest rate of 2.64% and expected option life of 10 years. The fair value of the option issued was $79,994, which will be expensed over the vesting term. The total expense for the three and six months ended June 30, 2014 was $14,958 and $29,752, respectively.

On March 28, 2014, the Company issued options to purchase an aggregate of 6,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to one member of the Board. The fair value of options issued was $599,893 of which all was expensed immediately.

All of the options issued on March 28, 2014 were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 229%, risk-free interest rate of 2.73% and expected option life of ten years.

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On February 7, 2014, options to purchase 6,000,000 shares of the Company’s common stock were exercised on a cashless basis. Based on a stock price of $0.07 per share and an exercise price of $0.05 per share, the option exercise resulted in the issuance of 1,714,285 shares of common stock to the holder.

On February 25, 2014, options to purchase 6,000,000 shares of the Company’s Common Stock were exercised by the Company’s Chief Executive Officer on a cashless basis. Based on a stock price of $0.06 per share and an exercise price of $0.05 per share, the option exercise resulted in the issuance of 1,000,000 shares of common stock to the holder.

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2013:

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2013		111,516,665		$	0.01 to 0.20		0.09
Granted		1,000,000			0.10		0.001
Exercised		6,349,209			0.10		0.01
Expired/Returned		(700,000	)		.07 - .20		-
Outstanding, June 30, 2014		118,165,874			$0.01 to $.20	$	0.10
Exercisable, June 30, 2014		118,165,874			$0.01 to $.20	$	0.10
Weighted Average Remaining Life, Exercisable, June 30, 2014 (years)		6.3

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

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2013		59,866,667		$	.05 to .15		0.05
Granted		6,000,000			0.05		0.01
Exercised		(12,000,000	)		0.05		0.01
Expired/Returned		-			-		-
Outstanding, June 30, 2014		53,866,667			$0.05 to $0.15	$	0.05
Exercisable, June 30, 2014		45,366,667			$0.05 to $0.15	$	0.06
Weighted Average Remaining Life, Exercisable, June 30, 2014 (years)		9.1

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NOTE 12 - OPERATING LEASES

For the three and six months ended June 30, 2014, total rent expense under leases amounted to $17,766 and $35,493. For the three and six months ended June 30, 2013, total rent expense under leases amounted to $12,344 and $18,344. At June 30, 2014, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2014	$	36,468
2015		74,637
2016		31,605
	$	142,710

NOTE 13 – RELATED PARTY TRANSACTIONS

At June 30, 2014, three stockholders of the Company held $164,000 in principal of the Company’s convertible notes payable and were owed accrued interest of $124,332 related to such notes.

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. Settlement negotiations are ongoing.

NOTE 15 – SUBSEQUENT EVENTS

On July 31, 2014, the Company announced it has signed a 10-year, $7 million contract with a Mexican gaming company to license its VerifyMe™ Identity Services. The technology will be used to authenticate players in online casinos run by the gaming company and to meet the requirements of recently passed anti-money laundering legislation in Mexico.

On August 11, 2014 the Company was notified by the United States Patent and Trademark Office that a third independent patent for it's state-of-the-art SecureLight+ technology had been allowed.

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

Cautionary Statements Regarding Forward-Looking Statements

This report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included or incorporated by reference in this 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, 2013 as filed with 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 an does not undertake to update, revise , or correct any of these forward-looking statements after the date of this report.

Overview

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

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

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

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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.

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 additional 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. 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.

Results of Operations

Comparison of the Three Months Ended June 30, 2014 and 2013

The following discussion analyzes our results of operations for the three months ended June 30, 2014 and 2013. 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 June 30, 2014 and 2013, we generated sales of $65,148 and $0, respectively. For the three months ended June 30, 2014, we showed net revenue of $3,651,844 as compared to a loss of $10,759,550 for the three months ended June 30, 2013, as a result of decrease in expenses primarily resulting from 2013 share based compensation and a positive 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.

Cost of Sales

For the three months ended June 30, 2014, costs of sales were $54,440, resulting in a gross profit of $10,708 or 16%. There was no revenue or costs of sales for the three months ended June 30, 2013.

General and Administrative Expenses

General and administrative expenses increased $10,121 to $180,820 for the three months ended June 30, 2014 from $170,699 for the three months ended June 30, 2013. The Company is attempting to maintain the general and administrative expenses while generating revenue in order to develop profitability.

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Legal and Accounting

Legal and accounting fees increased $122,651 to $178,302 for the three months ended June 30, 2014 from $55,651 for the three months ended June 30, 2013. The increase in legal and accounting fees between the periods was primarily related to the development of contracts for potential long-term revenue agreements, guidance in protection of patents, and document review in relation to the Company’s fundraising efforts.

Payroll Expenses

Payroll expenses were $427,178 for the three months ended June 30, 2014, a decrease of $7,777,290 from $8,204,468 for the three months ended June 30, 2013. The decrease related primarily to the 2013 stock-based compensation of $7,939,629 relating to the Company’s Board of Directors and employees. This included the Vice Chairman and President and Chief Executive Officer, who received their stock options related to their employment agreements in June 2013, which were valued at $7,534,000.

Research and Development

Research and development expenses were $30,120 and $162,819, respectively, for the three months ended June 30, 2014 and 2013, a decrease of $132,699. The decrease in research and development expenses was due to primarily to the 2013 charge for the technology service agreement entered into on December 31, 2012 and the allocation of resources to the research and development effort in 2013.

Sales and Marketing

Sales and marketing expenses for the three months ended June 30, 2014 were $73,895 as compared to $52,197 for the three months ended June 30, 2013, an increase of $21,698. The expenses consisted largely of expenses for marketing the new technology associated with the patents and the new patent applications, as well as a more active marketing program in 2014.

Interest Expense

During the three months ended June 30, 2014, the Company incurred interest expense of $13,121 as compared to $32,978 for the three months ended June 30, 2013, a decrease of $19,857. The decrease in interest expense was a result of a reduction in interest expense from the conversion and settlement of various notes payable in previous years and quarters.

Loss on Extinguishment of Debt

The loss from extinguishment of debt was $1,221,875 for the three months ended June 30, 2013, compared to $82,000 for the three months ended June 30, 2014. The decrease in loss on extinguishment of debt was a result of the excess fair value of the common stock issued over the value of the notes payable, and accrued interest thereon, that were retired in the three months ended June 30, 2013.

Change in Fair Value of Warrants

During the three months ended June 30, 2014, the Company incurred an unrealized gain on the market value of warrants of $3,726,572 as compared to a loss of $858,864 for the three months ended June 30, 2013. 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 decreased because the stock price has fallen and the difference between the warrant exercise price and the stock price has decreased.

Comparison of the Six Months Ended June 30, 2014 and 2013

The following discussion analyzes our results of operations for the six months ended June 30, 2014 and 2013. The following information should be considered together with our consolidated financial statements for such period and the accompanying notes thereto.

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Net Revenue/Net Loss

For the six months ended June 30, 2014 and 2013, we generated $65,148 and $3,140 in net revenues, respectively. We had net profit of $222,136 for the six months ended June 30, 2014 as compared to a net loss of $27,666,194 for the six months ended June 30, 2013. The gain is primarily as a result of decreases in expenses resulting from 2013 share based compensation and favorable adjustments in the valuation 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 described below.

Cost of Sales

For the six months ended June 30, 2014 and 2013, we incurred proprietary technology costs of sales of $54,440 and $2,710.

General and Administrative Expenses

General and administrative expenses increased $73,722 to $305,581 for the six months ended June 30, 2014 from $231,859 for the six months ended June 30, 2013. These cost are expected to remain relatively constant.

Legal and Accounting

Legal and accounting fees increased $132,917 to $310,497 for the six months ended June 30, 2014 from $177,580 for the six months ended June 30, 2013. The increase in legal and accounting fees between the periods was primarily related to the development of contracts for potential long term revenue agreements, guidance in protection of patents, and document review in relation to the Company’s fundraising efforts.

Payroll Expenses

Payroll expenses were $1,501,858 for the six months ended June 30, 2014, a decrease of $7,450,639 from $8,952,497 for the six months ended June 30, 2013. The decrease related primarily to the 2013 stock based compensation of the Vice Chairman and President and Chief Executive Officer related to their employment agreements in June 2013, which were valued at $7,534,000.

Research and Development

Research and development expenses were $875,849 and $137,424, respectively, for the six months ended June 30, 2014 and 2013, an increase of $738,425. The increase in research and development expenses was due to primarily to warrants and shares of stock issued in the quarter ended March 31, 2014 related to the Patent and Technology License Agreement entered into on December 31, 2012.

Sales and Marketing

Sales and marketing expenses for the six months ended June 30, 2014 were $125,331 as compared to $95,006 for the six months ended June 30, 2013, an increase of $30,325. The expenses consisted largely of expenses for marketing the new technology associated with the patents and the new patent applications, as well as a more active marketing program in 2014.

Interest Expense

During the six months ended June 30, 2014, the Company incurred interest expense of $24,028 as compared to $74,219 for the six months ended June 30, 2013, a decrease of $50,191. The decrease in interest expense was a result of the conversion and settlement of various notes payable in previous years and quarters.

-22-

Loss on Extinguishment of Debt

The loss from extinguishment of debt was $1,221,875 for the six months ended June 30, 2013, compared to $82,000 for the six months ended June 30, 2014. The decrease in loss on extinguishment of debt was a result of the excess fair value of the common stock issued over the value of the notes payable, and accrued thereon, interest that were retired in the three months ended June 30, 2013.

Change in Fair Value of Warrants

During the six months ended June 30, 2013, the Company incurred an unrealized loss on the market value of warrants of $12,780,374 as compared to a gain of $2,836,572 for the six months ended June 30, 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 decreased because the stock price has fallen and the difference between the warrant exercise price and the stock price has decreased.

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

During the six months ended June 30, 2013, the Company incurred an unrealized loss on the market value of warrants that were issued in excess of consideration for convertible preferred stock of $2,995,791 as compared to $0 for the six months ended June 30, 2014. The loss resulted from the valuation of warrants associated with the Subscription Agreement entered into on January 31, 2013.

Liquidity and Capital Resources

As of the date of this report, we had cash on hand of $178,000.

Net cash used in operating activities for the six months ended June 30, 2014 increased to $1,428,203 from $1,352,902 for the six months ended June 30, 2013, an increase of $75,301. The increase in net cash used in operating activities was primarily as a result of increased accounts receivable and inventory offset by increases in accounts payable.

Net cash used in investing activities, consisting of equipment purchases and patent costs, was $32,527 for the six months ended June 30, 2014 and $0 for the six months ended June 30, 2014.

Net cash provided by financing activities was $250,000 and $1,262,919, respectively, for the six months ended June 30, 2014 and 2013. The net cash provided by financing activities for the six months ended June 30, 2013 relates to $1 million from the sale of the Company’s preferred stock and a warrant, and $262,919 in proceeds received from the issuance of common stock and exercise of stock options. The $250,000 of cash provided by financing activities during the six months ended June 30, 2014 related to a short term bridge loan from an investor.

During the six months ended June 30, 2014 and 2013, the Company’s operational resources were used primarily to fund general and administrative expenses, hire employees and expand the continuing sales and marketing program.

As we have not realized significant revenues since our inception, we have financed our operations through public and private offerings of debt and equity securities. We do not currently maintain a line of credit or term loan with any commercial bank or other financial institution.

-23-

On June 5, 2014, we entered into an exclusive agreement with Merriman Capital, Inc. to raise up to $5 million in additional capital.

Also, on July 31, 2014, we announced that we signed a 10-year, $7 million contract with a Mexican gaming company to license our VerifyMe^TM Identity Services. We are currently evaluating the impact of this new contract.

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.

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. There can be no assurance that we will raise sufficient proceeds, or any proceeds, for us to implement fully our proposed business plan. Moreover, there can be no assurance that even if our products are marketed effectively, that we will generate revenues sufficient to fund our operations. In either situation, we may not be able to continue our operations and our business might fail.

Off-Balance Sheet Arrangements

As of June 30, 2014, there have been no material changes in off-balance sheet arrangements since our disclosure in our Annual Report on Form 10-K for the year ended December 31, 2013.

-24-

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) collectibility of the sales revenues is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process.

Recently Issued Accounting Pronouncements

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

-25-

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not Applicable

 

ITEM 4. CONTROLS AND PROCEDURES.

As of June 30, 2014, our management carried out the evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) required by Rule 13a-15(b) under the Exchange Act with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2014, our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has been no change in our internal control over financial reporting identified in connection with this evaluation that occurred during our fiscal quarter ended June 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

-26-

 PART II – OTHER INFORMATION

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

On June 10, 2014, the Company issued a note payable for $250,000 to an accredited investor, which included warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share. The warrant expires in five years and may be exercised on a cashless basis. The warrants were valued at $39,650 using the Black-Scholes option pricing model. See Note 6 of the consolidated financial statements for more information about the value of the warrants. The note payable and the associated warrants were issued pursuant to the private offering exemption from federal securities registration provided under Section 4(a)(2) of the Securities Act.

ITEM 6. EXHIBITS

3.1	Amended and Restated Articles of Incorporation of LaserLock Technologies Inc. dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).
3.2	Certificate of Amendment to Amended and Restated Articles of Incorporation of LaserLock Technologies Inc., dated as of November 29, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
3.3	Amended Certificate of Designation of Series A Preferred Stock, dated as of January 31, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2013 and incorporated herein by reference).
3.4	Certificate of Amendment to Amended and Restated Articles of Incorporation of LaserLock Technologies Inc., dated as of May 23, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 30, 2013 and incorporated herein by reference).
3.5	Amended and Restated Bylaws of LaserLock Technologies Inc. dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS XBRL Instance Document*
101.SCH XBRL Taxonomy Extension Schema Document*
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB XBRL Taxonomy Extension Label Linkbase Document*
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document*
*Included herewith.

-27-

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LASERLOCK TECHNOLOGIES INC.

Date: August 19, 2014	By:	/s/ Neil Alpert
		Neil Alpert
		Chief Executive Officer

-28-

EXHIBIT INDEX

3.1	Amended and Restated Articles of Incorporation of LaserLock Technologies Inc. dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).
3.2	Certificate of Amendment to Amended and Restated Articles of Incorporation of LaserLock Technologies Inc., dated as of November 29, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference).
3.3	Amended Certificate of Designation of Series A Preferred Stock, dated as of January 31, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2013 and incorporated herein by reference).
3.4	Certificate of Amendment to Amended and Restated Articles of Incorporation of LaserLock Technologies Inc., dated as of May 23, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 30, 2013 and incorporated herein by reference).
3.5	Amended and Restated Bylaws of LaserLock Technologies Inc. dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference).
31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
101.INS XBRL Instance Document*
101.SCH XBRL Taxonomy Extension Schema Document*
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB XBRL Taxonomy Extension Label Linkbase Document*
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document*
*Included herewith.

-29-

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULES 13a-14a AND 15d-14a

OF THE SECURITIES AND EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Neil Alpert, 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 Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date: August 19, 2014	By:	/s/ Neil Alpert
		Neil Alpert
		Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULES 13a-14a AND 15d-14a

OF THE SECURITIES AND EXCHANGE ACT OF 1934

AS ADOPTED PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

I, Edward Weisberger, 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 Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

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

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

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

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

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

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

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

Date: August 19, 2014	By:	/s/ Edward Weisberger
		Edward Weisberger
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF

CHIEF EXECUTIVE OFFICER

OF LASERLOCK TECHNOLOGIES INC.

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of LaserLock Technologies Inc. (the “Company”) for the period ended June 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Neil Alpert, Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of June 30, 2014 and for the period then ended.

Date: August 19, 2014	/s/ Neil Alpert
	Neil Alpert
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF

CHIEF FINANCIAL OFFICER

OF LASERLOCK TECHNOLOGIES INC.

PURSUANT TO 18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO SECTION 906 OF THE

 SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of LaserLock Technologies Inc. (the “Company”) for the period ended June 30, 2014, as filed with the Securities and Exchange Commission (the “Report”), I, Edward Weisberger, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. Section 1350, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of June 30, 2014 and for the period then ended.

Date: August 19, 2014	/s/ Edward Weisberger
	Edward Weisberger
	Chief Financial Officer

XML

FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair value measurements within fair value hierarchy of derivative liabilities using Level 3 inputs (Details 1) (USD $)	6 Months Ended
	Jun. 30, 2014
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at January 1, 2014	$ 6,000,000
Additional Warrants issued January 2014	444,000
Additional Warrants issued June 2014	34,222
Change in fair value of derivative liabilities	(2,836,572)
Balance at June 30, 2014	$ 3,641,650

XML

OPERATING LEASES (Details) (USD $)	Jun. 30, 2014
Leases, Operating [Abstract]
2014	$ 36,468
2015	74,637
2016	31,605
Total	$ 142,710

XML

STOCK OPTIONS (Detail Textuals 1) (Stock options, USD $)	3 Months Ended		6 Months Ended						3 Months Ended	6 Months Ended					3 Months Ended	6 Months Ended					3 Months Ended	6 Months Ended					3 Months Ended	6 Months Ended					3 Months Ended	6 Months Ended
	Jun. 30, 2014 January 22, 2013 Employee	Jun. 30, 2013 January 22, 2013 Employee	Jun. 30, 2014 January 22, 2013 Employee	Jun. 30, 2014 January 22, 2013 Employee	Jun. 30, 2013 January 22, 2013 Employee	Jun. 30, 2014 January 22, 2013 Employee Options Vests Immediately	Jun. 30, 2014 January 22, 2013 Employee Option Vests One Year	Jun. 30, 2014 January 22, 2013 Employee Options Vested Year Two	Mar. 31, 2013 February 25, 2013 Employee	Jun. 30, 2014 February 25, 2013 Employee	Jun. 30, 2014 February 25, 2013 Employee	Jun. 30, 2014 February 25, 2013 Employee Option Vests One Year	Jun. 30, 2014 February 25, 2013 Employee Options Vested Year Two	Jun. 30, 2014 February 25, 2013 Employee Options Vested Year Three	Jun. 30, 2013 March 13, 2013 Director	Jun. 30, 2014 March 13, 2013 Director	Jun. 30, 2014 March 13, 2013 Director	Jun. 30, 2013 March 13, 2013 Director	Jun. 30, 2014 March 13, 2013 Director Options Vests Immediately	Jun. 30, 2014 March 13, 2013 Director Vested on March 13, 2014	Jun. 30, 2014 May 4, 2013 Director	Jun. 30, 2014 May 4, 2013 Director	Jun. 30, 2014 May 4, 2013 Director	Jun. 30, 2014 May 4, 2013 Director Options Vests Immediately	Jun. 30, 2014 May 4, 2013 Director Vested after the first year	Jun. 30, 2014 September 30, 2013 Director Vested after the first year	Jun. 30, 2014 September 30, 2013 Chief Operating Officer	Jun. 30, 2014 September 30, 2013 Chief Operating Officer	Jun. 30, 2014 September 30, 2013 Chief Operating Officer	Jun. 30, 2014 September 30, 2013 Chief Operating Officer Vested at the end of 24 months	Jun. 30, 2014 September 30, 2013 Chief Operating Officer Maximum	Jun. 30, 2014 September 30, 2013 Chief Operating Officer Minimum	Jun. 30, 2014 December 2, 2013 Chief Financial Officer	Jun. 30, 2014 December 2, 2013 Chief Financial Officer	Jun. 30, 2014 December 2, 2013 Chief Financial Officer Vested at the end of 24 months	Jun. 30, 2014 March 28, 2014 Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of option issued				1,000,000							500,000						2,000,000						2,000,000						1,000,000					1,000,000		6,000,000
Exercisable common stock share price				$ 0.05							$ 0.05						$ 0.05						$ 0.05						$ 0.15					$ 0.15		$ 0.05
Term for options				10 years							10 years						10 years						10 years						10 years					10 years		10 years
Fair value of options issued				$ 99,972							$ 89,998						$ 439,963						$ 460,000						$ 99,840					$ 79,994		$ 599,893
Fair value of option issued expensed immediately				25,000													219,982						230,000
Number of options vested						250,000	250,000	500,000				200,000	200,000	100,000
Percentage of option vested																			50.00%	50.00%				50.00%	50.00%	50.00%				50.00%					50.00%
Expected volatility				222.00%							259.00%						235.00%						235.00%								272.80%	268.40%		266.10%		229.00%
Risk-free interest rate				1.90%							1.90%						2.00%						1.78%						1.39%					2.64%		2.73%
Expected option life (in years)				10 years							10 years						10 years						10 years						10 years					10 years		10 years
Method used to calculate the grant-date fair value of the warrants				Black-Scholes option pricing model							Black-Scholes option pricing model						Black-Scholes option pricing model						Black-Scholes option pricing model						Black-Scholes option pricing model					Black-Scholes option pricing model		Black-Scholes option pricing model
Allocated share-based compensation expense	6,231	12,462	13,900		46,768				5,000						54,845	43,394		285,675			21,425	78,137					18,698	37,190					14,958	29,752
Stock based compensation reversed upon cancellation of stock options										$ 5,000

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Detail Textuals) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Debt Instrument [Line Items]
Loss on extinguishment of debt	$ (82,000)	$ (1,221,875)	$ (82,000)	$ (1,221,875)
Senior Secured Convertible Notes Payable
Debt Instrument [Line Items]
Amount of notes converted into common stock shares	216,249
Accrued interest of notes converted into common stock shares	208,339
Common stock shares issued on conversion of debt (in shares)	8,448,519
Loss on extinguishment of debt	82,000
Outstanding principal balance on notes	114,000		114,000
Accrued interest	$ 105,665		$ 105,665

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Schedule of liabilities measured at fair value on a recurring basis

	Level 1		Level 2		Level 3		Total
Derivative liability related to fair value of beneficial conversion feature	$	-	$	200,000	$	--	$	200,000
Derivative liability related to fair value of warrants		-		-		3,641,650		3,641,650
Total	$	-	$	200,000	$	3,641,650	$	3,841,650

Schedule of fair value measurements within the fair value hierarchy of derivative liabilities using Level 3 inputs

	Total
Balance at January 1, 2014	$	6,000,000
Additional Warrants issued January 2014		444,000
Additional Warrants issued June 2014		34,222
Change in fair value of derivative liabilities		(2,836,572	)
Balance at June 30, 2014	$	3,641,650

Schedule of embedded derivative liability valuation assumptions

Closing trade price of Common Stock	$	0.04
Series A Preferred Stock Conversion Price	$	0.03
Intrinsic value of conversion option per share	$	0.01

Schedule of common stock purchase warrants valuation assumptions

	June 30, 2014
Annual Dividend Yield	0.0%
Expected Life (Years)	3.5 – 4.51
Risk-Free Interest Rate	1.67%
Expected Volatility	237.8% -244.3%

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RELATED PARTY TRANSACTIONS (Detail Textuals) (Senior secured convertible notes payable, USD $)	Jun. 30, 2014 Shareholder
Senior secured convertible notes payable
Debt Instrument [Line Items]
Number of shareholders	3
Convertible notes payable	$ 164,000
Amount of accrued interest owed by shareholders	$ 124,332

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STOCKHOLDERS' EQUITY (Detail Textuals) (USD $)	3 Months Ended				6 Months Ended				12 Months Ended	6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013		Dec. 31, 2012 Patent And Technology Agreement	Jun. 30, 2014 Patent And Technology Agreement Verify Me
Stockholders Equity Note [Line Items]
Issuance of shares for services (in shares)									70,000,000	6,349,206
Worth of common stock to be paid					$ 400,000					$ 400,000
Percentage of discount										10.00%
Closing price of share										$ 0.07
Closing price of share after discount										$ 0.063
Research and development (b)	$ 30,120	[1]	$ 162,819	[1]	$ 875,849	[1]	$ 137,424	[1]		$ 400,000

[1] Includes share based compensation of $400,000 for the six months ended June 30, 2014 related to the Patent and Technology License Agreement.

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CONVERTIBLE PREFERRED STOCK (Detail textuals) (USD $)	6 Months Ended	12 Months Ended	1 Months Ended		6 Months Ended	12 Months Ended		1 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jan. 31, 2013 Subscription Agreement	Jan. 31, 2013 Subscription Agreement Verify Me	Jun. 30, 2014 Subscription Agreement Verify Me	Dec. 31, 2013 Subscription Agreement Verify Me	Dec. 31, 2013 Subscription Agreement Preferred Class	Aug. 31, 2013 Subscription Agreement Convertible Preferred Stock Verify Me	Jan. 31, 2013 Subscription Agreement Convertible Preferred Stock Verify Me	Aug. 31, 2013 Subscription Agreement Common Stock Verify Me	Jan. 31, 2013 Subscription Agreement Common Stock Verify Me
Class of Stock [Line Items]
Number of preferred stock purchased									33,333,333
Number of common stock called by warrants (in shares)											33,333,333
Value of shares issued											$ 1,000,000
Exercise price of warrants									$ 0.12		$ 0.12
Convertible preferred stock description			(i) the consummation of any bona fide business acquisition, (ii) the incurring of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share.
Excess amount for incurring indebtedness			2,000,000
Exercise price of capital stock or warrant			$ 0.03
Preferred stock value	633,333	633,333	1,000,000
Beneficial conversion feature at fair market value				1,000,000	200,000	800,000
Fair value of warrants	1,288,000	2,300,000	2,995,791
Fair value of warrants recorded as charge to expenses			2,995,791
Initial conversion price per share (in dollars per share)							$ 0.03
Preferred stock value in noncash transaction								$ 366,667
Shares of common stock shares issued on conversion										12,222,222

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STOCK OPTIONS (Detail Textuals 2) (Stock options, USD $)	0 Months Ended	1 Months Ended
	Feb. 07, 2014	Feb. 25, 2014 Chief Executive Officer
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option exercised share (in shares)	6,000,000	6,000,000
Closing price of share	$ 0.07	$ 0.06
Exercise price	$ 0.05	$ 0.05
Number of options received	6,000,000	6,000,000
Number of stock issued	1,714,285	1,000,000

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MANAGEMENT PLANS

6 Months Ended

Jun. 30, 2014

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

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

On June 5, 2014 the Company entered into an exclusive agreement with Merriman Capital, Inc. to raise up to but no more than $5 million in additional capital for the Company. Prior to that, on May 23, VerifyMe, Inc. waived its non-dilution rights as they relate to parameters of the raise based on the Company’s revised budget.

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

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STOCK OPTIONS - Non-Employee Stock Option/Warrant Activity (Details) (Stock Options and Warrants, USD $)	6 Months Ended
	Jun. 30, 2014
Option/Warrant Shares
Outstanding, December 31, 2013	111,516,665
Granted	1,000,000
Exercised	6,349,209
Expired/Returned	(700,000)
Outstanding, June 30, 2014	118,165,874
Exercisable, June 30, 2014	118,165,874
Weighted Average Remaining Life, Exercisable, June 30, 2014 (years)	6 years 3 months 18 days
Exercise Price
Granted	$ 0.10
Exercised	$ 0.10
Weighted Average Exercise Price
Outstanding, December 31, 2013	$ 0.09
Granted	$ 0.001
Exercised	$ 0.01
Expired/Returned
Outstanding, June 30, 2014	$ 0.10
Exercisable, June 30, 2014	$ 0.10
Minimum
Exercise Price
Outstanding, December 31, 2013	$ 0.01
Expired/Returned	$ 0.07
Outstanding, June 30, 2014	$ 0.01
Exercisable, June 30, 2014	$ 0.01
Maximum
Exercise Price
Outstanding, December 31, 2013	$ 0.20
Expired/Returned	$ 0.20
Outstanding, June 30, 2014	$ 0.20
Exercisable, June 30, 2014	$ 0.20

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Detail Textuals) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Segment Institution	Jun. 30, 2013
Schedule Of Significant Accounting Policies [Line Items]
Number of financial institutions at which company's cash and cash equivalents are held			2
Depreciation method of Property and equipment			straight-line method
Estimated useful lives Property and equipment			five to seven years
Depreciation on Property and equipment	$ 17,313	$ 33,900	$ 34,627	$ 34,212
Anti-dilutive common stock equivalents, excluded from the calculation of earnings per share	171,582,538		171,582,538
Number of operating segment			1
Sales and marketing expenses
Schedule Of Significant Accounting Policies [Line Items]
Advertising costs	$ 25,955	$ 3,453	$ 53,238	$ 5,756
Patents and Trademark
Schedule Of Significant Accounting Policies [Line Items]
Number of patents issued			5
Number of provisional patents filed			3
Amortization method of patents			straight-line basis
Patents and Trademark | Minimum
Schedule Of Significant Accounting Policies [Line Items]
Estimated lives of patents			17 years
Patents and Trademark | Maximum
Schedule Of Significant Accounting Policies [Line Items]
Estimated lives of patents			20 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Numerator
Net income	$ 3,651,844	$ (10,759,550)	$ 222,136	$ (26,666,194)
Dinominator
Basic: Weighted-average common shares outstanding during the period	302,039,675	240,935,887	299,856,170	233,374,035
Add: dilutive effect of warrants	450,000		450,000
dilutive effect of conversion of preferred stock	21,111,111		21,111,111
Diluted	323,600,786	240,935,887	321,417,281	233,374,035
Net Income Per Share
Basic (in dollars per share)	$ (0.01)	$ 0.04	$ 0.00	$ 0.11
Diluted (in dollars per share)	$ (0.01)	$ 0.04	$ 0.00	$ 0.11

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STOCK OPTIONS - Incentive Stock Option Transactions (Details 1) (Incentive stock options, USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2014 Minimum	Dec. 31, 2013 Minimum	Jun. 30, 2014 Maximum	Dec. 31, 2013 Maximum
Option/Warrant Shares
Outstanding, December 31, 2013	59,866,667
Granted	6,000,000
Exercised	(12,000,000)
Expired/Returned
Outstanding, June 30, 2014	53,866,667
Exercisable, June 30, 2014	45,366,667
Weighted Average Remaining Life, Exercisable, June 30, 2014 (years)	9 years 1 month 6 days
Exercise Price
Outstanding, December 31, 2013		$ 0.05	$ 0.05	$ 0.15	$ 0.15
Granted	$ 0.05
Exercised	$ 0.05
Expired/Returned
Outstanding, June 30, 2014		$ 0.05	$ 0.05	$ 0.15	$ 0.15
Exercisable, June 30, 2014		$ 0.05		$ 0.15
Weighted Average Exercise Price
Outstanding	$ 0.05
Granted	$ 0.01
Exercised	$ 0.01
Expired/Returned
Outstanding	$ 0.05
Weighted Average Remaining Life, Exercisable, June 30, 2014 (years)	$ 0.06

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MANAGEMENT PLANS (Detail Textuals) (Exclusive Agreement, USD $) In Millions, unless otherwise specified	Jun. 05, 2014
Exclusive Agreement
Management Plans [Line Items]
Threshold limit for additional borrowing	$ 5

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PATENTS AND TRADEMARK (Detail Textuals) (Patents and Trademark, USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 Patent	Jun. 30, 2013
Finite-Lived Intangible Assets [Line Items]
Number of patents issued			5
Number of provisional patents filed			3
Amortization method of patents			straight-line basis
Capitalized patent costs	$ 0	$ 3,511	$ 0	$ 21,594
Amortization expense	3,277	3,262	6,554	6,495
Future estimated annual amortization in December 31, 2014	13,100		13,100
Future estimated annual amortization in December 31, 2015	13,100		13,100
Future estimated annual amortization in December 31, 2016	13,100		13,100
Future estimated annual amortization in December 31, 2017	13,100		13,100
Future estimated annual amortization in December 31, 2018	$ 13,100		$ 13,100
Minimum
Finite-Lived Intangible Assets [Line Items]
Estimated lives of patents			17 years
Maximum
Finite-Lived Intangible Assets [Line Items]
Estimated lives of patents			20 years

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of the Business

LaserLock Technologies Inc., together with its wholly-owned subsidiary, LL Security Products, Inc., is referred to as the “Company.” LaserLock Technologies Inc. was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. And is publicly traded on the OTC Market 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 LaserLock, or as licensed software product for operation on the client’s premises.

The solution integrates three independent authentication factors – something you have (for instance a smartphone), something you know (for instance a color gesture swipe) and something you are (for instance your facial geometry) - into a simple, fast, intuitive solution. The system can also accurately determine the precise location of the individual using a variety of mechanisms including GPS, cell tower triangulation, IP or WIFI address. Because the solution incorporates biometrics it completely eliminates the possibility that users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for a 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, 2013 as filed with the Securities and Exchange Commission (the “SEC”). Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014.

Principle of Consolidation

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

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP 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 (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that involves disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

Fair Value of Financial Instruments

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

Cash and Cash Equivalents

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

Concentration of Credit Risk Involving Cash and Cash Equivalents

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

Inventory

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

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. Depreciation of property and equipment was $17,313 and $34,627 for the three and six months ended June 30, 2014 and $33,900 and $34,212 for the three and six months ended June 30, 2013.

Patents and Trademark

The Company has five issued patents, filed for three provisional patents for anti-counterfeiting technology and purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents that 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 is 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 or not 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 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, 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 $25,955 and $53,238 for the three and six months ended June 30, 2014 and $3,453 and $5,756 for the three and six months ended June 30, 2013, and are included in sales and marketing expenses.

Research and Development Costs

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

Basic and Diluted Net Income per Share of Common Stock

Basic net income per common share are based on the weighted average number of shares outstanding during the periods presented. Diluted net income per common share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive, i.e. the exercise prices of the outstanding stock options were greater than the market price of the common stock. Anti-dilutive common stock equivalents, which were excluded from the calculation of number of dilutive common stock equivalents, amounted to 171,582,538 shares for the three and six months ended June 30, 2014, respectively. Because the Company reported a net loss for the three and six months ended June 30, 2013, common stock equivalents, including stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same.

	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
Numerator
Net income	$	3,651,844	$	222,136
Denominator
Basic: Weighted-average common shares outstanding during the period		302,039,675		299,856,170
Add: dilutive effect of warrants		450,000		450,000
dilutive effect of conversion of preferred stock		21,111,111		21,111,111
Diluted		323,600,786		321,417,281
Net Income Per Share
Basic	$	0.01	$	0.00
Diluted	$	0.01	$	0.00

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 FASB ASC 280 can be found in the consolidated financial statements.

Recently Adopted Accounting Pronouncements

In June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

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

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

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

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

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

Recently Issued Accounting Pronouncements Not Yet Adopted

As of June 30, 2014, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

Reclassifications

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

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INCOME TAXES (Detail Textuals) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Tax Disclosure [Abstract]
Income Tax Expense (Benefit)

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated fair value of embedded derivative liability using Black-Scholes (Details 2) (USD $)	Jun. 30, 2014
Fair Value Disclosures [Abstract]
Closing trade price of Common Stock	$ 0.04
Series A Preferred Stock Conversion Price	$ 0.03
Intrinsic value of conversion option per share	$ 0.01

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Condensed Consolidated Balance Sheets (USD $)	Jun. 30, 2014	Dec. 31, 2013
CURRENT ASSETS
Cash and cash equivalents	$ 107,770	$ 1,285,973
Accounts receivable, net of allowance of $0 at June 30, 2014 and December 31, 2013	58,721	3,573
Inventory	84,283	34,271
Prepaid expenses	184,210	189,474
TOTAL CURRENT ASSETS	434,984	1,513,291
PROPERTY AND EQUIPMENT
Capital equipment, net of accumulated depreciation of $126,579 and $91,952 as of June 30, 2014 and December 31, 2013	109,448	144,074
OTHER ASSETS
Deposits	37,197	37,197
Patents and trademarks, net of accumulated amortization of $111,948 and $105,393 as of June 30, 2014 and December 31, 2013	114,141	120,695
TOTAL ASSETS	695,770	1,815,257
CURRENT LIABILITIES
Accounts payable and accrued expenses	409,439	316,784
Accrued interest - related party	19,763	16,668
Embedded derivative liability	200,000	800,000
Notes payable - net of accumulated discount of $26,617 as of June 30, 2014	273,383	50,000
TOTAL CURRENT LIABILITIES	902,585	1,183,452
LONG-TERM LIABILITIES
Warrant liability	3,641,650	6,000,000
Accrued interest - related parties	105,665	300,677
Senior secured convertible notes payable - related parties	114,000	330,249
TOTAL LONG-TERM LIABILITIES	3,861,315	6,630,926
STOCKHOLDERS' DEFICIT
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 21,111,111 shares issued and outstanding as of June 30, 2014 and December 31, 2013	633,333	633,333
Common stock, $ .001 par value; 675,000,000 shares authorized; 337,374,052 shares issued and 307,578,149 outstanding at June 30, 2014 and 319,862,042 shares issued and 290,066,139 outstanding at December 31, 2013	337,374	319,862
Additional paid in capital	24,630,326	22,938,983
Treasury stock, at cost (29,795,903 shares at June 30, 2014 and December 31, 2013)	(113,389)	(113,389)
Accumulated deficit	(29,555,774)	(29,777,910)
STOCKHOLDERS' DEFICIT	(4,068,130)	(5,999,121)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$ 695,770	$ 1,815,257

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STOCK OPTIONS (Detail Textuals)				6 Months Ended
	Dec. 17, 2013 Stock option 2000 plan Stock options	Dec. 31, 2000 Stock option 2000 plan Stock options	Dec. 31, 2013 Stock option 2003 plan Common Stock	Jun. 30, 2014 Stock option 2003 plan Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized to grant options	18,000,000	1,500,000	20,000,000
Number of option issued				23,725,996
Number of options available to be issued				14,274,004

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Condensed Consolidated Statement of Changes in Stockholders' Deficit (USD $)	Convertible Preferred Stock	Common Stock	Deferred Consulting Fees	Additional Paid-In Capital	Treasury Stock	Deficit Accumulated During the Development Stage	Total
Balance at Dec. 31, 2013	$ 633,333	$ 319,862		$ 22,938,983	$ (113,389)	$ (29,777,910)	$ (5,999,121)
Balance (in shares) at Dec. 31, 2013	21,111,111	290,066,139
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of shares of common stock for services		6,349		393,651			400,000
Issuance of shares of common stock for services (in shares)		6,349,206
Cashless exercise of options		2,714		(2,714)
Cashless exercise of options (in shares)		2,714,285
Fair value of employee stock options				802,267			802,267
Fair value of employee stock options (in shares)
Issuance of common stock for settlement of debt		8,449		498,139			506,588
Issuance of common stock for settlement of debt (in shares)		8,448,519
Net Income						222,136	222,136
Balance at Jun. 30, 2014	$ 633,333	$ 337,374		$ 24,630,326	$ (113,389)	$ (29,555,774)	$ (4,068,130)
Balance (in shares) at Jun. 30, 2014	21,111,111	307,578,149

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NOTES PAYABLE (Detail Textuals) (USD $)	3 Months Ended		6 Months Ended			3 Months Ended	6 Months Ended	0 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Notes Payable	Jun. 30, 2014 Notes Payable	Jun. 10, 2014 Notes Payable Warrant	Jun. 30, 2014 Series A Notes Payable
Debt Instrument [Line Items]
Proceeds from issuance of notes payable			$ 250,000					$ 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		39,650					39,650
Expected volatility								248.20%
Risk-free interest rate								1.67%
Expected warrant term								5 years
Interest expense	13,121	32,978	24,028	74,219		7,605	7,605
Notes payable									50,000
Interest rate, notes payable						8.00%	8.00%		8.00%
Accrued interest									18,667
Discount, notes payable (in dollars)	26,617		26,617					34,222
Note payable balance	$ 273,383		$ 273,383		$ 50,000

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2014

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

NOTE 15 – SUBSEQUENT EVENTS

On July 31, 2014, the Company announced it has signed a 10-year, $7 million contract with a Mexican gaming company to license its VerifyMe™ Identity Services. The technology will be used to authenticate players in online casinos run by the gaming company and to meet the requirements of recently passed anti-money laundering legislation in Mexico.

On August 11, 2014 the Company was notified by the United States Patent and Trademark Office that a third independent patent for it's state-of-the-art SecureLight+ technology had been allowed.

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WARRANT LIABILITY (Detail Textuals) (USD $)								0 Months Ended	12 Months Ended	6 Months Ended
	Jun. 30, 2014	Dec. 31, 2013	Jun. 30, 2014 Verify Me Warrants issued on January 1, 2014	Jan. 01, 2014 Verify Me Warrants issued on January 1, 2014	Jun. 30, 2014 Agreements Zaah Technologies	Dec. 31, 2013 Agreements Zaah Technologies	Dec. 31, 2012 Agreements Zaah Technologies	Jan. 01, 2014 Agreements Verify Me Research and Development Expense	Dec. 31, 2012 Patent And Technology Agreement	Jun. 30, 2014 Patent And Technology Agreement Verify Me
Major Agreements [Line Items]
Warrant liability	$ 3,641,650	$ 6,000,000					$ 2,400,000
Fair value of warrant liability	39,650		253,000		2,061,000	3,700,000
Number of warrants issued				6,349,206
Exercise price (in dollars per share)				$ 0.10					$ 0.10
Initial fair value of warrant expensed as research and development cost								444,000
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								$ 0.07
Additional shares issued for patent and technology agreement (in shares)									70,000,000	6,349,206
Number of common stock shares purchased under warrants (in shares)									70,000,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Schedule of basic and diluted net income per share of common stock

	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
Numerator
Net income	$	3,651,844	$	222,136
Denominator
Basic: Weighted-average common shares outstanding during the period		302,039,675		299,856,170
Add: dilutive effect of warrants		450,000		450,000
dilutive effect of conversion of preferred stock		21,111,111		21,111,111
Diluted		323,600,786		321,417,281
Net Income Per Share
Basic	$	0.01	$	0.00
Diluted	$	0.01	$	0.00

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (loss)	$ 222,136	$ (26,666,194)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Fair value of options issued in exchange for services	802,267	8,272,227
Accretion of discount on notes payable		2,478
Change in fair value warrant liability	(2,836,572)	12,780,374
Change in fair value embedded derivative liability	(600,000)
Fair value of warrants in excess of consideration for convertible preferred stock		2,995,791
Fair value of stock in excess of converted notes payable and accrued interest	82,000	1,221,875
Amortization and depreciation	41,180	40,749
Stock & warrants issued in exchange for services	844,000
(Increase) decrease in assets
Accounts receivable	(55,148)	(3,140)
Inventory	(50,013)	(19,454)
Prepaid expenses	5,263	280,263
Deposit		(37,197)
Increase (decrease) in liabilities
Accounts payable and accrued expenses	116,684	(220,674)
Net cash used in operating activities	(1,428,203)	(1,352,902)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(10,573)
Purchase of patents and trademarks		(21,954)
Net cash used in investing activities		(32,527)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of preferred stock		1,000,000
Proceeds from issuance of common stock		235,000
Proceeds from exercise of stock options		17,919
Proceeds from exercise of warrants		10,000
Proceeds from issuance of notes payable	250,000
Net cash provided by financing activities	250,000	1,262,919
NET DECREASE IN CASH AND CASH EQUIVALENTS	(1,178,203)	(122,510)
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR	1,285,973	2,994,350
CASH AND CASH EQUIVALENTS - END OF PERIOD	107,770	2,871,840
Cash paid during the year for:
Interest		13,896
Income taxes
Fair value of stock issued for conversion of notes payable and accrued interest	424,588	668,125
Accretion of discount on preferred stock as deemed dividend distribution		1,000,000
Fair value of beneficial conversion feature		1,000,000
Fair value of warrants issued as debt discount	$ 34,222

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Condensed Consolidated Balance Sheets (Parentheticals) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Statement Of Financial Position [Abstract]
Allowance for accounts receivable (in dollars)	$ 0	$ 0
Accumulated depreciation on capital equipment (in dollars)	126,579	91,952
Accumulated amortization, patent and trademarks (in dollars)	111,948	105,393
Discount, notes payable (in dollars)	$ 26,617
Convertible preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Convertible preferred stock, shares authorized	75,000,000	75,000,000
Convertible preferred stock, shares issued	21,111,111	21,111,111
Convertible preferred stock, shares outstanding	21,111,111	21,111,111
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	675,000,000	675,000,000
Common stock, shares issued	337,374,052	319,862,042
Common stock, shares outstanding	307,578,149	290,066,139
Treasury stock, shares	29,795,903	29,795,903

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STOCKHOLDERS' EQUITY

6 Months Ended

Jun. 30, 2014

Stockholders' Equity Note [Abstract]

STOCKHOLDERS' EQUITY

NOTE 10 – 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 7 above. The shares were issued in payment for the technology received. Under the agreement, payment of $400,000 worth of the Company’s common stock was to be paid by the Company to VerifyMe at a 10% discount to the market at time of payment. The closing price was $0.07 per share discounted 10% to $0.063. The $400,000 payment divided by the $0.063 per share resulted in 6,349,206 shares to be issued. The entire $400,000 payment was expensed to research and development.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 19, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	LASERLOCK TECHNOLOGIES INC
Entity Central Index Key	0001104038
Trading Symbol	llti
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		307,578,149
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

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STOCK OPTIONS

6 Months Ended

Jun. 30, 2014

Equity [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 the 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 number of shares of our common stock subject to outstanding grants under the 2003 Plan as of the date of the Annual Meeting, plus (iii) the number of shares of our common stock remaining available for issuance under the 2003 Plan but not subject to previously exercised, vested or paid grants, for issuance under the 2013 Plan will be sufficient.

As of June 30, 2014, there are 23,725,996 shares subject to outstanding options under the Plans, and 14,274,004 shares remain available for issuance.

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.

The Company issued Non-Statutory Stock Options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided.

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

On January 22, 2013, the Company issued options to an employee to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 250,000 immediately, 250,000 on the first anniversary of the grant date and 500,000 on the second anniversary of the grant date. The Company used the Black- Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 222%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of the options issued was $99,972 of which $25,000 was expensed immediately and the remainder is being expensed over the vesting terms. The total expense for the three and six months ended June 30, 2014 was $6,231 and $13,900, respectively. The total expense for the three and six months ended June 30, 2013 was $12,462 and $46,768, respectively.

On February 25, 2013, the Company issued options to an employee to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 200,000 on the first anniversary of the grant date, 200,000 on the second anniversary of the grant date and 100,000 on the third anniversary of the grant date. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 259%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of options issued was $89,998. The total expense recognized for the three months ended March 31, 2013, was $5,000. The options were cancelled during the three months ended June 30, 2013. The total expense recognized of $5,000 was reversed upon cancellation of the options.

On March 13, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vested 50% immediately and 50% on March 13, 2014. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 235%, risk-free interest rate of 2.0% and expected option life of ten years. The fair value of the option issued was $439,963 of which $219,982 was expensed immediately and the remainder will be expensed over one year. There was no expense recognized for the three months ended June 30, 2014. The total expense recognized for the six months ended June 30, 2014 was $43,394. The total expense for the three and six months ended June 30, 2013 was $54,845 and $285,675, respectively.

On May 4, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vest 50% immediately and 50% on May 4, 2014. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 235%, risk-free interest rate of 1.78% and expected option life of ten years. The fair value of the option issued was $460,000 of which $230,000 was expensed immediately and the remainder will be expensed over one year. The total expense for the three and six months ended June 30, 2014 was $21,425 and $78,137.

On September 30, 2013, the Company issued an option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Operating Officer. The options vest 50% after the first year and 50% at the end of 24 months after the grant date. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of ranging from 268.4% to 272.8%, risk-free interest rate of 1.39% and expected option life ranging from 10 years. The fair value of the option issued was $99,840. The total expense for the three and six months ended June 30, 2014 was $18,698 and $37,190, respectively.

On December 2, 2013, the Company issued an option to purchase 1 million shares of the Company’s common stock at an exercise after the grant date price of $0.15 per share, with a term of ten years, to the Company’s Chief Financial Officer. The options vest 50% after the first year and 50% at the end of 24 months. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of ranging from 266.1%, risk-free interest rate of 2.64% and expected option life of 10 years. The fair value of the option issued was $79,994, which will be expensed over the vesting term. The total expense for the three and six months ended June 30, 2014 was $14,958 and $29,752, respectively.

On March 28, 2014, the Company issued options to purchase an aggregate of 6,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to one member of the Board. The fair value of options issued was $599,893 of which all was expensed immediately.

All of the options issued on March 28, 2014 were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 229%, risk-free interest rate of 2.73% and expected option life of ten years.

On February 7, 2014, options to purchase 6,000,000 shares of the Company’s common stock were exercised on a cashless basis. Based on a stock price of $0.07 per share and an exercise price of $0.05 per share, the option exercise resulted in the issuance of 1,714,285 shares of common stock to the holder.

On February 25, 2014, options to purchase 6,000,000 shares of the Company’s Common Stock were exercised by the Company’s Chief Executive Officer on a cashless basis. Based on a stock price of $0.06 per share and an exercise price of $0.05 per share, the option exercise resulted in the issuance of 1,000,000 shares of common stock to the holder.

The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2013:

	Option/Warrant Shares			Exercise  Price		Weighted Average Exercise Price
Outstanding, December 31, 2013		111,516,665		$	0.01 to 0.20		0.09
Granted		1,000,000			0.10		0.001
Exercised		6,349,209			0.10		0.01
Expired/Returned		(700,000	)		.07 - .20		-
Outstanding, June 30, 2014		118,165,874			$0.01 to $.20	$	0.10
Exercisable, June 30, 2014		118,165,874			$0.01 to $.20	$	0.10
Weighted Average Remaining Life,  Exercisable, June 30, 2014 (years)		6.3

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

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2013		59,866,667		$	.05 to .15		0.05
Granted		6,000,000			0.05		0.01
Exercised		(12,000,000	)		0.05		0.01
Expired/Returned		-			-		-
Outstanding, June 30, 2014		53,866,667			$0.05 to $0.15	$	0.05
Exercisable, June 30, 2014		45,366,667			$0.05 to $0.15	$	0.06
Weighted Average Remaining Life,  Exercisable, June 30, 2014 (years)		9.1

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended				6 Months Ended
	Jun. 30, 2014		Jun. 30, 2013		Jun. 30, 2014		Jun. 30, 2013
NET REVENUES
Sales	$ 65,148				$ 65,148		$ 3,140
Royalties
TOTAL NET REVENUE	65,148				65,148		3,140
COST OF SALES	54,440				54,440		2,710
GROSS PROFIT	10,708				10,708		430
OPERATING EXPENSES
General and administrative	180,820		170,699		305,581		231,859
Legal and accounting	178,302		55,651		310,497		177,580
Patent costs
Payroll expenses (a)	427,178	[1]	8,204,468	[1]	1,501,858	[1]	8,952,497	[1]
Research and development (b)	30,120	[2]	162,819	[2]	875,849	[2]	137,424	[2]
Sales and marketing	73,895		52,197		125,331		95,006
Total operating expenses	890,315		8,645,834		3,119,116		9,594,366
LOSS BEFORE OTHER INCOME (EXPENSE)	(879,607)		(8,645,834)		(3,108,408)		(9,593,936)
OTHER INCOME (EXPENSE)
Interest income			1				1
Interest expense	(13,121)		(32,978)		(24,028)		(74,219)
Loss on extinguishment of debt	(82,000)		(1,221,875)		(82,000)		(1,221,875)
Change in fair value of warrants	3,726,572		(858,864)		2,836,572		(12,780,374)
Change in fair value of embedded derivative liability	900,000				600,000
Fair value of warrants in excess of consideration for convertible preferred stock							(2,995,791)
TOTAL OTHER INCOME (EXPENSE)	4,531,451		(2,113,716)		3,330,544		(17,072,258)
NET INCOME (LOSS) BEFORE INCOME TAX BENEFIT	3,651,844		(10,759,550)		222,136		(26,666,194)
INCOME TAX BENEFIT
NET INCOME (LOSS)	3,651,844		(10,759,550)		222,136		(26,666,194)
Less: Deemed dividend distribution							(1,000,000)
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS	$ 3,651,844		$ (10,759,550)		$ 222,136		$ (27,666,194)
NET INCOME (LOSS) PER COMMON SHARE
BASIC (in dollars per share)	$ 0.01		$ (0.04)		$ 0.00		$ (0.11)
DILUTED (in dollars per share)	$ 0.01		$ (0.04)		$ 0.00		$ (0.11)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC (in shares)	302,039,675		240,935,887		299,856,170		233,374,035
DILUTED (in shares)	323,600,786		240,935,887		321,417,281		233,374,035

[1] Includes share based compensation of $61,312 and $802,267 for the three and six months ended June 30, 2014 and $7,939,629 and $8,272,227 for the three and six months ended June 30, 2013.

[2] Includes share based compensation of $400,000 for the six months ended June 30, 2014 related to the Patent and Technology License Agreement.

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SENIOR SECURED CONVERTIBLE NOTES PAYABLE

6 Months Ended

Jun. 30, 2014

Senior Secured Convertible Notes Payable [Abstract]

SENIOR SECURED CONVERTIBLE NOTES PAYABLE

NOTE 5 - SENIOR SECURED CONVERTIBLE NOTES PAYABLE –RELATED PARTIES

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

As of June 30, 2014, the outstanding principal balance on these notes was $114,000. Accrued interest at June 30, 2014 amounted to $105,665.

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 common shares at a discount of 30% of the price per share in the qualified financing. Since the embedded conversion feature is contingent upon the occurrence of the qualified financing, the value of the contingent conversion feature, if beneficial, will be recognized if the triggering event occurs and the contingency is resolved.

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INCOME TAXES

6 Months Ended

Jun. 30, 2014

Income Tax Disclosure [Abstract]

INCOME TAXES

NOTE 4 – INCOME TAXES

Income tax expense was $0 for the three and six months ended June 30, 2014 and 2013.

As of January 1, 2014, 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 six months ended June 30, 2014, and there was no accrual for uncertain tax positions as of June 30, 2014. Tax years from 2010 through 2013 remain subject to examination by major tax jurisdictions.

The Company has income for the three and six months ended June 30, 2014; however, due to tax adjustments, the Company has a net loss for tax purposes. There is no income tax benefit for the three and six months ended June 30, 2014 and 2013 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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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Principle of Consolidation

Principle of Consolidation

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

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP 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 (“FASB”) Accounting Standards Codification (“ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that involves disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss).

Fair Value of Financial Instruments

Fair Value of Financial Instruments

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

Cash and Cash Equivalents

Cash and Cash Equivalents

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

Concentration of Credit Risk Involving Cash and Cash Equivalents

Concentration of Credit Risk Involving Cash and Cash Equivalents

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

Inventory

Inventory

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

Property and Equipment

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. Depreciation of property and equipment was $17,313 and $34,627 for the three and six months ended June 30, 2014 and $33,900 and $34,212 for the three and six months ended June 30, 2013.

Patents and Trademark

Patents and Trademark

The Company has five issued patents, filed for three provisional patents for anti-counterfeiting technology and purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents that 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 is 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 or not 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 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, 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 $25,955 and $53,238 for the three and six months ended June 30, 2014 and $3,453 and $5,756 for the three and six months ended June 30, 2013, and are included in sales and marketing expenses.

Research and Development Costs

Research and Development Costs

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

Basic and Diluted Net Income per Share of Common Stock

Basic and Diluted Net Income per Share of Common Stock

Basic net income per common share are based on the weighted average number of shares outstanding during the periods presented. Diluted net income per common share are computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period. Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive, i.e. the exercise prices of the outstanding stock options were greater than the market price of the common stock. Anti-dilutive common stock equivalents, which were excluded from the calculation of number of dilutive common stock equivalents, amounted to 171,582,538 shares for the three and six months ended June 30, 2014, respectively. Because the Company reported a net loss for the three and six months ended June 30, 2013, common stock equivalents, including stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share were the same.

	Three Months Ended June 30, 2014		Six Months Ended June 30, 2014
Numerator
Net income	$	3,651,844	$	222,136
Denominator
Basic: Weighted-average common shares outstanding during the period		302,039,675		299,856,170
Add: dilutive effect of warrants		450,000		450,000
dilutive effect of conversion of preferred stock		21,111,111		21,111,111
Diluted		323,600,786		321,417,281
Net Income Per Share
Basic	$	0.01	$	0.00
Diluted	$	0.01	$	0.00

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 FASB ASC 280 can be found in the consolidated financial statements.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

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

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

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

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

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

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

As of June 30, 2014, there are no recently issued accounting standards not yet adopted which would have a material effect on the Company’s financial statements.

Reclassification

Reclassifications

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

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OPERATING LEASES

6 Months Ended

Jun. 30, 2014

Leases, Operating [Abstract]

OPERATING LEASES

NOTE 12 - OPERATING LEASES

For the three and six months ended June 30, 2014, total rent expense under leases amounted to $17,766 and $35,493. For the three and six months ended June 30, 2013, total rent expense under leases amounted to $12,344 and $18,344. At June 30, 2014, the Company was obligated under various non-cancelable operating lease arrangements for property as follows:

2014	$	36,468
2015		74,637
2016		31,605
	$	142,710

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CONVERTIBLE PREFERRED STOCK

6 Months Ended

Jun. 30, 2014

Features of Convertible Preferred Stock [Abstract]

CONVERTIBLE PREFERRED STOCK

NOTE 8 – 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 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.

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

The conversion feature of the Preferred Stock is an embedded derivative, which is classified as a liability in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair value of $1 million at January 31, 2013, $800,000 at December 31, 2013 and $200,000 at June 30, 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 of $2,995,791 at January 31, 2013. Because this amount was entirely in excess of the transaction price, this amount was recorded as a charge to expenses of $2,995,791 in 2013. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of June 30, 2014 and December 31, 2013, the fair value of the warrants was $1,288,000 and $2,300,000, respectively.

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

The conversion price of the shares of Preferred Stock is currently $0.03 per share. There are no arrearages on cumulative dividends.

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

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NOTES PAYABLE

6 Months Ended

Jun. 30, 2014

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 6 - NOTES PAYABLE

On June 10, 2014, the Company issued a note payable for $250,000 which included warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share, expiring in five years. The warrants were valued at 39,650, using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 248.2%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $34,222 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition and is being accreted over the term of the note payable for financial statement purposes. For the three and six months ended June 30, 2014, $7,605 was accreted through interest expense. The note and accrued interest at 8% per annum are due in full on September 11, 2014. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of June 30,2014, the fair value of the warrant liability was $39,650 and the note payable balance was $223,383, net of $26,617 discount.

The notes payable balance as of June 30, 2014 also included a Series A note payable in the amount of $50,000 with interest of 8% per annum. This note and accrued interest matured in October 2011 and is past due. Accrued interest associated with this note was $18,667 as of June 30, 2014.

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WARRANT LIABILITY

6 Months Ended

Jun. 30, 2014

Warrants Liability [Abstract]

WARRANT LIABILITY

NOTE 7 – 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 June 30, 2014 and December 31, 2013, the fair value of the warrant liability was $2,061,000 and $3,700,000.

On January 1, 2014 the Company issued 6,349,206 warrants as consideration for technology received from VerifyMe related to the December 31, 2012 Agreement. The warrants have an exercise price of $.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 June 30, 2014, the fair value of the warrant liability was $253,000.

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 common 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 $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.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

FAIR VALUE OF FINANCIAL INSTRUMENTS

NOTE 9 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Derivative Liabilities

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

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

	Level 1		Level 2		Level 3		Total
Derivative liability related to fair value of beneficial conversion feature	$	-	$	200,000	$	--	$	200,000
Derivative liability related to fair value of warrants		-		-		3,641,650		3,641,650
Total	$	-	$	200,000	$	3,641,650	$	3,841,650

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

	Total
Balance at January 1, 2014	$	6,000,000
Additional Warrants issued January 2014		444,000
Additional Warrants issued June 2014		34,222
Change in fair value of derivative liabilities		(2,836,572	)
Balance at June 30, 2014	$	3,641,650

As of June 30, 2014, the beneficial conversion feature of the Preferred Stock is treated as an embedded derivative liability and changes in the fair value were recognized in earnings. The Preferred Stock shares are convertible into shares of the Company’s common stock, which did traded in an active securities market, therefore the embedded derivative liability was valued using the following market based inputs:

Closing trade price of Common Stock	$	0.04
Series A Preferred Stock Conversion Price	$	0.03
Intrinsic value of conversion option per share	$	0.01

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 six months ended June 30, 2014.

As of June 30, 2014, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These common stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions:

	June 30, 2014
Annual Dividend Yield	0.0%
Expected Life (Years)	3.5 – 4.51
Risk-Free Interest Rate	1.67%
Expected Volatility	237.8% -244.3%

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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SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Detail Textuals 1) (Senior Secured Convertible Notes Payable)	6 Months Ended
	Jun. 30, 2014
Senior Secured Convertible Notes Payable
Debt Instrument [Line Items]
Debt instrument conditional covenants amount	if an equity financing with total proceeds of more than $5,000,000 occurs while any notes are outstanding, holders of notes will have the right, at their option, to convert the outstanding principal and interest of the notes into shares at a discount of 30% of the price per share in the qualified financing.
Percentage of discount on price per share	30.00%

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SUBSEQUENT EVENTS (Detail Textuals) (Subsequent Event, Verify Me, USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2014
Subsequent Event | Verify Me
Subsequent Event [Line Items]
Duration of contract	10 years
Value of contract	$ 7

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CONTINGENCIES

6 Months Ended

Jun. 30, 2014

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. Settlement negotiations are ongoing.

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STOCK OPTIONS (Tables)

6 Months Ended

Jun. 30, 2014

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Schedule of non-employee stock option/warrant activity

	Option/Warrant Shares			Exercise  Price		Weighted Average Exercise Price
Outstanding, December 31, 2013		111,516,665		$	0.01 to 0.20		0.09
Granted		1,000,000			0.10		0.001
Exercised		6,349,209			0.10		0.01
Expired/Returned		(700,000	)		.07 - .20		-
Outstanding, June 30, 2014		118,165,874			$0.01 to $.20	$	0.10
Exercisable, June 30, 2014		118,165,874			$0.01 to $.20	$	0.10
Weighted Average Remaining Life,  Exercisable, June 30, 2014 (years)		6.3

Schedule of incentive stock option transactions for employees

	Option/Warrant Shares			Exercise Price		Weighted Average Exercise Price
Outstanding, December 31, 2013		59,866,667		$	.05 to .15		0.05
Granted		6,000,000			0.05		0.01
Exercised		(12,000,000	)		0.05		0.01
Expired/Returned		-			-		-
Outstanding, June 30, 2014		53,866,667			$0.05 to $0.15	$	0.05
Exercisable, June 30, 2014		45,366,667			$0.05 to $0.15	$	0.06
Weighted Average Remaining Life,  Exercisable, June 30, 2014 (years)		9.1

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OPERATING LEASES (Detail Textuals) (General and administrative expense, USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
General and administrative expense
Schedule Of Operating Lease [Line Items]
Total rent expense under leases	$ 17,766	$ 12,344	$ 35,493	$ 18,344

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated fair value of warrants using Black-Scholes (Details 3) (Warrants treated as Derivative Liabilities)	6 Months Ended
	Jun. 30, 2014
Fair Value Inputs Quantitative Information [Line Items]
Annual Dividend Yield	0.00%
Risk-Free Interest Rate	1.67%
Minimum
Fair Value Inputs Quantitative Information [Line Items]
Expected Life (Years)	3 years 6 months
Expected Volatility	237.80%
Maximum
Fair Value Inputs Quantitative Information [Line Items]
Expected Life (Years)	4 years 6 months 4 days
Expected Volatility	244.30%

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Condensed Consolidated Statements of Operations (Unaudited) (Parentheticals) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014 Payroll expenses	Jun. 30, 2013 Payroll expenses	Jun. 30, 2014 Payroll expenses	Jun. 30, 2013 Payroll expenses	Jun. 30, 2014 Research and development
Share based compensation	$ 61,312	$ 7,939,629	$ 802,267	$ 8,272,227	$ 400,000

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PATENTS AND TRADEMARK

6 Months Ended

Jun. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

PATENTS AND TRADEMARK

NOTE 3 – PATENTS AND TRADEMARK

The Company has five issued patents and filed for three 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 the three and six months ended June 30, 2014, the Company capitalized $0 of patent cost and during the three and six months ended June 30, 2013, the Company capitalized patent costs of $3,511 and $21,594, respectively, . Amortization expense for patents was $3,277 and $6,554 for the three and six months ended June 30, 2014 and $3,262 and $6,495 for the three and six months ended June 30, 2013, respectively. Future estimated annual amortization over the next five years is approximately $13,100 per year for the years ended December 31, 2014 through 2018.

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OPERATING LEASES (Tables)

6 Months Ended

Jun. 30, 2014

Leases, Operating [Abstract]

Schedule of non-cancelable operating lease arrangements for property

2014	$	36,468
2015		74,637
2016		31,605
	$	142,710

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FAIR VALUE OF FINANCIAL INSTRUMENTS - Liabilities measured at fair value on recurring basis (Details) (Fair value on a recurring basis, USD $)	Jun. 30, 2014
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature
Derivative liability related to fair value of warrants
Total
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature	200,000
Derivative liability related to fair value of warrants
Total	200,000
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature
Derivative liability related to fair value of warrants	3,641,650
Total	3,641,650
Total
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liability related to fair value of beneficial conversion feature	200,000
Derivative liability related to fair value of warrants	3,641,650
Total	$ 3,841,650

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2014

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

NOTE 13 – RELATED PARTY TRANSACTIONS

At June 30, 2014, three stockholders of the Company held $164,000 in principal of the Company’s convertible notes payable and were owed accrued interest of $124,332 related to such notes.