As filed with the Securities and Exchange Commission on August 5, 2013 |
Registration No. 333- |
Nevada | 6794 | 23-3023677 |
(State or other jurisdiction of | (Primary Standard Industrial | (I.R.S. Employer |
incorporation or organization) | Classification Code Number) | Identification Number) |
3112 M Street NW | ||
Washington, D.C. 20007 | ||
(202) 400-3700 | ||
(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices) |
Neil Alpert | ||
President and Chief Executive Officer | ||
LaserLock Technologies, Inc. | ||
3112 M Street NW | ||
Washington, D.C. 20007 | ||
(202) 400-3700 | ||
(Name, address, including zip code and telephone number, including area code, of agent for service) | ||
Copies to: | ||
Justin W. Chairman, Esq. Morgan, Lewis & Bockius LLP 1701 Market Street Philadelphia, Pennsylvania 19103 (215) 963-5000 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer o | Smaller reporting company x |
(Do not check if a smaller reporting company) |
CALCULATION OF REGISTRATION FEE | |||||
Title of Each Class of Securities to be Registered | Amount to be Registered(1) | Proposed Maximum Offering Price Per Share (2) | Proposed Maximum Aggregate Offering Price | Amount of Registration Fee | |
Common Stock, $0.001 par value per share | 44,444,444 | $0.15 | $6,666,667 | $1,030.58 | |
Warrants(3) | 87,777,777 | -- | -- | (3) | |
Shares of Common Stock, $0.001 par value per share, underlying Warrants | 87,777,777 | $0.15 | $13,166,667 | $2,035.39 | |
Total(4) | 132,222,221 | $0.15 | $19,833,333 | $3,065.97 |
(1) | Pursuant to Rule 416 under the Securities Act of 1933, as amended (the “Securities Act”),the number of shares of common stock registered hereby shall also include an indeterminate number of additional shares of common stock issuable as a result of stock splits, stock dividends, recapitalizations or reorganizations in accordance with Rule 416. |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act, based upon the average of the high and low prices of the Registrant’s common stock onPink OTC Markets, Inc. on July 29, 2013. |
(3) | Pursuant to Rule 457(g) under the Securities Act, no separate registration fee is required for the Warrants because the Registrant is registering these securities in the same Registration Statement as the underlying common stock to be offered pursuant thereto. |
(4) | Excludes warrants. |
The information in this preliminary prospectus is not complete and may be changed. The distributing stockholder may not distribute these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities, and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted. |
● | 44,444,444 shares of our common stock, $0.001 par value |
● | warrant(s) to purchase up to 87,777,777 shares of our common stock; and |
● | up to 87,777,777 shares of our common stock that are issuable upon the exercise of the warrants offered hereunder. |
TABLE OF CONTENTS | |||
Page | |||
ABOUT THIS PROSPECTUS | i | ||
PROSPECTUS SUMMARY | 2 | ||
RISK FACTORS | 9 | ||
USE OF PROCEEDS | 15 | ||
DETERMINATION OF OFFER PRICE | 16 | ||
DISTRIBUTING STOCKHOLDER | 17 | ||
PLAN OF DISTRIBUTION | 18 | ||
DESCRIPTION OF CAPITAL STOCK | 19 | ||
DESCRIPTION OF PROPERTY | 22 | ||
LEGAL PROCEEDINGS | 23 | ||
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 24 | ||
DIRECTORS AND OFFICERS | 33 | ||
EXECUTIVE COMPENSATION | 39 | ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 41 | ||
TRANSACTIONS WITH RELATED PERSONS | 43 | ||
LEGAL MATTERS | 44 | ||
EXPERTS | 45 | ||
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION | 46 | ||
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 47 | ||
WHERE YOU CAN FIND MORE INFORMATION | 48 | ||
FINANCIAL STATEMENTS | F-1 |
i |
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3 |
1. | Optical technologies - use of light, i.e. holograms; |
2. | Electronic - magnetic strips and smart cards; |
3. | Biotechnologies - uses characteristics of biological proteins such as antibodies, enzymes and DNA; and |
4. | Chemical technologies - includes photochromic (light-reactive) and thermochromic (heat-reactive) inks. |
4 |
5 |
6 |
1. | Documents of Value | |||
a. | Currency, | |||
b. | Stock certificates and bonds, | |||
c. | Event tickets, and | |||
d. | Lottery tickets. | |||
2. | Homeland Security | |||
a. | Container seals, | |||
b. | Pallet security, | |||
c. | Passports, | |||
d. | ID cards, | |||
e. | Driver licenses, and | |||
f. | Visas. |
3. | Consumer Product Security | |||
a. | Tax stamps, | |||
b. | CDs/DVDs, | |||
c. | Apparel tags and labels, | |||
d. | Pharmaceuticals, | |||
e. | Tobacco, | |||
f. | Alcohol, | |||
g. | Auto parts, | |||
h. | Aviation parts, and | |||
i. | Any other packaging requirements. |
4. | Gaming | |||
a. | Chips, | |||
b. | Dice, | |||
c. | Playing cards, | |||
d. | E-proms/critical memory devices, and | |||
e. | Slot tickets. |
7 |
5. | Product Diversion Tracking | |||
a. | Fragrances, | |||
b. | Apparel/licensed merchandise, | |||
c. | Cosmetics, | |||
d. | Pharmaceuticals, and | |||
e. | Watches and jewelry. |
6. | Financial Services and Products | |||
a. | Credit cards, | |||
b. | Bank checks, and | |||
c. | Financial documents/promissory notes. |
1. | Security Ink Manufacturers. These are generally well-established companies such as SICPA and Sun Chemical, whose core business is printing inks; | |
2. | System Integrators. These companies have often evolved from other sectors in the printing industry, mainly security printing manufacturers, technology providers, or packaging and label manufacturers. These companies offer a range of security solutions, enabling them to provide a complete suite of solutions tailored to the customer’s specific needs and requirements. The companies in this space include 3M, DuPont, Honeywell, and Avery Dennison; | |
3. | System Consultancy Groups. These companies offer a range of technologies from several different providers and tailor specific solutions to end-users; | |
4. | Traditional Authentication Technology Providers. These purveyors include American Banknote Holographics, and Digimarc, which provide holograms and digital watermarking, respectively; | |
5. | Product Diversion Tracking Providers. Next-Generation Technology Providers LLC falls into this group, along with several companies such as Authentix, DNA Technologies, and Identif, which provide on-product and in-product tagging technologies; and |
6. | Traditional Security Printers. Traditional security printers such as Thomas de la Rue and Portals whose core products are printing the world’s currencies. |
8 |
The Company’s outstanding preferred stock may be converted at any time, from time to time, which would result in additional common stock of ours possibly trading in the market, which could cause the price of our common stock to decline.
9 |
10 |
11 |
12 |
13 |
14 |
15 |
16 |
17 |
18 |
● | Options to purchase an aggregate of 56,400,000 shares of our common stock at a weighted average exercise price of $0.05 per share; |
● | Warrants to purchase an aggregate of 119,483,331 shares of our common stock at an exercise price ranging from $0.01 to $0.15 per share, held by a total of 25 entities; and |
● | Convertible notes convertible into 18,375,000 shares of common stock at a conversion price of $0.005333. |
19 |
Number of Warrants | Number of Holders | Per Share Exercise Price | Expiration Date | |||
119,483,331 | 25 | $0.01-$0.15 | 9/30/2015 – 1/31/2023 |
20 |
High | Low | |
Quarter ended March 31, 2013 | $0.50 | $0.025 |
Quarter ended June 30, 2013 | $0.28 | $0.14 |
Quarter ended September 30, 2013 (through July 29) | $0.21 | $0.14 |
Fiscal Year Ended December 31, 2012 | High | Low |
Quarter ended March 31, 2012 | $0.07 | $0.01 |
Quarter ended June 30, 2012 | $0.07 | $0.05 |
Quarter ended September 30, 2012 | $0.06 | $0.02 |
Quarter ended December 31, 2012 | $0.05 | $0.02 |
Fiscal Year Ended December 31, 2011 | High | Low |
Quarter ended March 31, 2011 | $0.01 | $0.005 |
Quarter ended June 30, 2011 | $0.05 | $0.0075 |
Quarter ended September 30, 2011 | $0.07 | $0.025 |
Quarter ended December 31, 2011 | $0.16 | $.0299 |
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27 |
(a) | $450,000 on the date of the agreement (December 31, 2012), consisting of $250,000 in cash and warrants to purchase 4,444,444 shares of common stock under a cashless exercise initially at an exercise price of $0.045 on the terms set forth under the warrants issued by the Company to Zaah, dated as of December 31, 2012, |
(b) | $100,000, accrued in full as of the date of the agreement, but payable in twelve (12) months from the date hereof to a designee of Zaah’s selection, with a right to convert (at Zaah’s sole discretion, from time to time at any time) to shares of common stock at the prevailing market price per share of common stock (which, as long as the common stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the common stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.)), and |
(c) | a commission of 10% of the revenue generated by any Company transaction originated through the efforts of Zaah, as substantiated by a written agreement between the Company and Zaah, specifically referencing the transaction in which Zaah is entitled to such commission, payable by the Company to Zaah in cash. Such payment shall be made on the earlier of (i) the date of the signing of such transaction, (ii) the date of the closing of such transaction, or (iii) any date on which any funds are paid to the Company in respect to such transaction. |
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(a) | Payment 1, payable upon execution of the agreement on December 31, 2012: The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of common stock, of the Company equal to (x) $100,000 divided by (y) $0.045 (2,222,222 shares) and (ii) cashless exercise warrants to purchase an equal number of shares exercisable at a price of Ten Cents ($0.10) per share with a term of five (5) years. |
(b) | Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of shares exercisable at a price of Ten Cents ($0.10) per share with a term of five (5) years. |
(c) | Payment 3, payable on January 1, 2015: The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of shares exercisable at a price of Ten Cents ($0.10) per share with a term of five (5) years. |
(d) | Future Payments Contingent: The Company’s payment of Payment 2 and Payment 3 is contingent. To the extent that VerifyMe does not develop and license to the Company at a time subsequent to Payment 1, further technology and/or a further patent right related to the local, mobile and cloud based biometric security systems, then any payments not already paid, will no longer be due to VerifyMe, this nonperformance being a likelihood, more likely than not. |
29 |
In accordance with ASC 480 and 815, the Preferred Stock has been classified as permanent equity and has been valued at $1million. |
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32 |
Name | Age | Position with Company | ||||
Michael R. Sonnenreich | 74 | Chairman of the Board of Directors | ||||
Norman A. Gardner | 70 | Vice Chairman of the Board of Directors and Chief Operating Officer | ||||
Neil Alpert | 35 | Director, President and Chief Executive Officer | ||||
Constance Harriman | 64 | Director | ||||
General Peter Pace | 67 | Director | ||||
Paul Wolfowitz | 68 | Director | ||||
Jonathan Weinberger | 36 | Director | ||||
Claudio R. Ballard | 54 | Director | ||||
Michael Chertoff | 59 | Director | ||||
Scott A. McPherson | 52 | Chief Financial Officer |
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38 |
Name and Principal Position | Year | Salary ($) | Option Awards(1) ($) | All Other Compensation (3)(4)($) | Total ($) |
Norman A. Gardner (2) Vice Chairman & CEO | 2012 2011 | 50,000 180,000 | 44,769 40,946 | 56,414 35,880 | 151,183 256,826 |
Neil Alpert President & COO | 2012 2011 | 50,000 - | 44,769 - | - - | 94,769 - |
Scott A. McPherson CFO | 2012 2011 | - - | 11,638 - | 16,325 19,500 | 27,963 19,500 |
(1) | Represents the grant date fair value of the option award, calculated in accordance with FASB Accounting Standard Codification 718, “Compensation – Stock Compensation,” or ASC 718. The assumptions used in calculating the grant date fair value of the option awards are set forth in Note 9 of our Consolidated Financial Statements. |
(2) | Mr. Gardner was appointed as our President and Chief Executive Officer on November 10, 1999. The $180,000 of salary in 2011 was forgiven in 2012 by Mr. Gardner. |
(3) | Company car, insurance, occupancy costs and expenses. |
(4) | Mr. McPherson was appointed as Chief Financial Officer in December 2012 and the amounts received were paid to the accounting firm owned by Mr. McPherson. |
Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration Date |
Norman A. Gardner | 1,000,000 | - | $0.05 | 11/20/2022 |
Neil Alpert | 1,000,000 | - | $0.05 | 11/20/2022 |
Scott A. McPherson | 200,000 | - | $0.05 | 7/16/2022 |
39 |
Name | Fees earned or paid in cash ($) | Option awards ($)(1) | Total ($) | |||||
Michael Sonnenreich | 2012 2011 | - - | 89,568 - | 89,568 - | ||||
Neil Alpert | 2012 2011 | - - | - - | - - | ||||
Constance Harriman | 2012 2011 | - - | 89,568 - | 89,568 - | ||||
General Peter Pace | 2012 2011 | - - | 89,568 - | 89,568 - | ||||
Paul Wolfowitz | 2012 2011 | - - | 89,568 - | 89,568 - | ||||
Jonathan Weinberger | 2012 2011 | - - | 89,568 - | 89,568 - |
(1) | Represents the grant date fair value of the option award, calculated in accordance with FASB Accounting Standard Codification 718, “Compensation – Stock Compensation,” or ASC 718. The assumptions used in calculating the grant date fair value of the option awards are set forth in Note 9 of our Consolidated Financial Statements. |
40 |
Name and Address of Beneficial Owner | Amount & Nature of Beneficial Ownership(1) | Percentage of Shares Beneficially Owned | |||
5% Beneficial Owners | |||||
Robert L. Bast 110 Spruce Lane Ambler, PA 19002 | 28,423,622(2) | 6.00% | |||
Clydesdale Partners II LLC 201 Spear Street, Suite 1150 San Francisco, CA 94105 | 53,275,000(3) | 11.25% | |||
Nob Hill Capital Partners L.P. 1 Ferry Building, Suite 225 San Francisco, CA 94105 | 29,625,000(4) | 6.26% | |||
VerifyMe, Inc. c/o Nix Patterson & Roach, L.L.P. 205 Linda Drive Daingerfield, TX 75638 | 153,333,332(5) | 32.39% | |||
Executive Officers and Directors | |||||
Michael R. Sonnenreich | 5,000,000(6) | 1.06% | |||
Norman A. Gardner | 39,046,339(7) | 8.25% | |||
Neil Alpert | 20,000,000(8) | 4.22% | |||
Constance Harriman | 3,000,000(9) | * | |||
Peter Pace | 1,000,000(10) | * | |||
Paul Wolfowitz | 1,000,000(11) | * | |||
Jonathan Weinberger | 1,090,000(12) | * | |||
Claudio R. Ballard | 1,000,000(13) | * | |||
Scott A. McPherson | 200,000(14) | * | |||
Michael Chertoff | 1,000,000(15) | * | |||
*Less than 1% | |||||
All officers and directors as a group (10 people) | 72,336,339 | 15.28% |
(1) | This table has been prepared based on 275,665,122 shares of our common stock outstanding on July 25, 2013. |
(2) | Consists of 28,423,622 shares of common stock. |
(3) | Consists of 43,875,000 shares of common stock and 9,400,000 shares held by PFK Acquisition Group II LLC, which is under common control. |
(4) | Consists of 5,250,000 shares of common stock, 18,375,000 shares underlying convertible notes payable at an exercise price of $0.00533 and 6,000,000 shares underlying warrants at an exercise price of $0.01. |
(5) | Consists of 44,444,444 shares of common stock, 21,111,1111 shares underlying convertible preferred stock, 87,777,777 shares underlying warrants exercisable at $0.10 or $0.12 per share. |
(6) | Consists of 2,000,000 shares of common stock, 1,000,000 shares underlying options exercisable at $0.05 per share and 2,000,000 shares underlying warrants exercisable at $0.15 per share. |
41 |
(7) | Consists of 19,046,339 shares of common stock, and 20,000,000 shares underlying options exercisable at $0.05 per share. |
(8) | Consists of 20,000,000 shares of common stock underlying options exercisable at $0.05 per share. |
(9) | Consists of 1,333,333 shares of common stock, 1,000,000 shares underlying options exercisable at $0.05 per share and 666,667 shares underlying warrants exercisable at $0.15 per share. |
(10) | Consists of 1,000,000 shares of common stock underlying options exercisable at $0.05 per share. |
(11) | Consists of 1,000,000 shares of common stock underlying options exercisable at $0.05 per share. |
(12) | Consists of 90,000 shares of common stock and 1,000,000 shares of common stock underlying options exercisable at $0.05 per share. |
(13) | Consists of 1,000,000 shares of common stock underlying options exercisable at $0.05 per share. |
(14) | Consists of 200,000 shares underlying options exercisable at $0.05 per share. |
(15) | Consists of 1,000,000 shares of common stock underlying options exercisable at $0.05 per share. |
42 |
TRANSACTIONS WITH RELATED PERSONS
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46 |
● | the sufficiency of our cash and cash equivalents to fund our operations, debt service and interest obligations; |
● | our ability to obtain additional capital in sufficient amounts or on terms acceptable to us, and the consequences of failing to do so; |
● | future expenses and capital requirements; |
● | our development and commercialization capabilities; |
● | the performance of our partners and other third parties; |
● | our ability to obtain and maintain intellectual property protection and the scope of such protection; and |
● | the effect of legal and regulatory developments in the U.S. and foreign countries. |
47 |
48 |
(A Development Stage Enterprise)
PAGE | ||
CONSOLIDATED BALANCE SHEETS | F-1 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | F-2 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT | F-3 | |
CONSOLIDATED STATEMENTS OF CASH FLOWS | F-9 | |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS | F-11 – F-24 |
March 31, 2013 | December 31, 2012 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 3,485,334 | $ | 2,994,350 | ||||
Accounts receivable, net of allowance of $0 at March 31, 2013 and December 31, 2012 | 6,613 | 3,473 | ||||||
Inventory | 29,852 | 19,980 | ||||||
Prepaid expenses | 612,868 | 750,000 | ||||||
TOTAL CURRENT ASSETS | 4,134,667 | 3,767,803 | ||||||
PROPERTY AND EQUIPMENT | ||||||||
Capital equipment | 32,782 | 34,964 | ||||||
Less accumulated depreciation | 23,425 | 32,624 | ||||||
9,357 | 2,340 | |||||||
Patents and Trademark, net of accumulated amortization of $98,077 and $92,302 as of March 31, 2013 and December 31, 2012 | 324,542 | 311,832 | ||||||
TOTAL ASSETS | $ | 4,468,566 | $ | 4,081,975 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 413,568 | $ | 660,493 | ||||
Accrued interest | 13,667 | 97,563 | ||||||
Notes payable | 50,000 | 200,000 | ||||||
TOTAL CURRENT LIABILITIES | 477,235 | 958,056 | ||||||
LONG-TERM LIABILITIES | ||||||||
Embedded derivative liability | 1,000,000 | - | ||||||
Warrant liability | 17,317,301 | 2,400,000 | ||||||
Accrued interest | 1,015,561 | 975,559 | ||||||
Senior secured convertible notes payable | 775,249 | 775,249 | ||||||
Convertible notes payable | 98,000 | 140,000 | ||||||
Notes payable, net of discount of $12,393 and $13,632 as of March 31, 2013 and December 31, 2012 | 698,607 | 697,368 | ||||||
TOTAL LONG-TERM LIABILITIES | 20,904,718 | 4,988,176 | ||||||
CONTINGENCIES | ||||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 33,333,333 shares issued and outstanding as of March 31, 2013 and no shares issed and outstanding at December 31, 2012 | 1,000,000 | - | ||||||
Common stock, $ .001 par value; 675,000,000 shares authorized; 268,265,122 shares issued and 238,469,220 outstanding at March 31, 2013 and 248,244,012 shares issued and 174,940,506 outstanding at December 31, 2012 | 268,265 | 248,244 | ||||||
Additional paid in capital | 11,225,425 | 11,387,929 | ||||||
Treasury stock, at cost (29,795,903 shares at March 31, 2013 and December 31, 2012) | (113,389 | ) | (113,389 | ) | ||||
Deficit accumulated during the development stage | (29,293,688 | ) | (13,387,041 | ) | ||||
STOCKHOLDERS’ DEFICIT | (16,913,387 | ) | (1,864,257 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 4,468,566 | $ | 4,081,975 |
F-1 |
Three Months | Three Months | |||||||||||
Cumulative | Ended | Ended | ||||||||||
Since | March 31, | March 31, | ||||||||||
Inception | 2013 | 2012 | ||||||||||
NET REVENUES | ||||||||||||
Sales | $ | 464,295 | $ | 3,140 | $ | 3,740 | ||||||
Royalties | 645,180 | - | 10,000 | |||||||||
TOTAL NET REVENUE | 1,109,475 | 3,140 | 13,740 | |||||||||
COST OF SALES | 431,741 | 2,710 | 2,036 | |||||||||
GROSS PROFIT | 677,734 | 430 | 11,704 | |||||||||
OPERATING EXPENSES | ||||||||||||
General and administrative | 1,641,668 | 98,309 | 26,690 | |||||||||
Legal and accounting | 1,651,223 | 112,437 | 90,347 | |||||||||
Patent costs | 65,000 | - | - | |||||||||
Payroll expenses(a) | 3,949,311 | 536,329 | 45,000 | |||||||||
Research and development | 1,016,948 | 149,156 | 1,257 | |||||||||
Sales and marketing | 5,072,036 | 52,304 | 12,308 | |||||||||
Total operating expenses | 13,396,186 | 948,535 | 175,602 | |||||||||
LOSS BEFORE OTHER INCOME | (12,718,452 | ) | (948,105 | ) | (163,898 | ) | ||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Interest income | 63,664 | - | - | |||||||||
Interest expense | (2,231,673 | ) | (41,241 | ) | (71,707 | ) | ||||||
Change in fair value of warrants | (11,921,510 | ) | (11,921,510 | ) | - | |||||||
Fair value of warrants in excess of consideration for convertible preferred stock | (2,995,791 | ) | (2,995,791 | ) | - | |||||||
Gain on debt forgiveness | 340,352 | - | - | |||||||||
Gain on disposition of assets | 4,722 | - | - | |||||||||
(16,740,236 | ) | (14,958,542 | ) | (71,707 | ) | |||||||
LOSS BEFORE INCOME TAX BENEFIT | (29,458,688 | ) | (15,906,647 | ) | (235,605 | ) | ||||||
INCOME TAX BENEFIT | (165,000 | ) | - | - | ||||||||
NET LOSS | (29,293,688 | ) | (15,906,647 | ) | (235,605 | ) | ||||||
Less: Deemed dividend distribution | (1,000,000 | ) | (1,000,000 | ) | - | |||||||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | $ | (30,293,688 | ) | $ | (16,906,647 | ) | $ | (235,605 | ) | |||
BASIC AND DILUTED NET LOSS PER COMMON SHARE | $ | (0.07 | ) | $ | (0.00 | ) | ||||||
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 227,124,683 | 145,144,603 |
(a) | includes share based compensation of $1,048,121 cumulative, $332,599 for the three months ended March 31, 2013 and $0 for the three months ended March 31, 2012. |
F-2 |
LaserLock Technologies, Inc. and Subsidiary
(A Development Stage Enterprise)
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)
For the Period November 10, 1999 (Date of Inception) to March 31, 2013
Convertible | Deficit | |||||||||||||||||||||||||||||||||||
Preferred | Common | Accumulated | ||||||||||||||||||||||||||||||||||
Stock | Stock | Deferred | Additional | During the | ||||||||||||||||||||||||||||||||
Number of | Number of | Consulting | Paid-In | Treasury | Development | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||||||||
Issuance of initial 4,278,000 shares on November 10, 1999 | $ | - | $ | - | 4,278,000 | $ | 4,278 | $ | - | $ | 16,595 | $ | - | $ | - | $ | 20,873 | |||||||||||||||||||
Issuance of shares of common stock in exchange for services | - | - | 1,232,000 | 1,232 | - | 35,728 | - | - | 36,960 | |||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 2,090,000 | 2,090 | - | 60,610 | - | - | 62,700 | |||||||||||||||||||||||||||
Stock issuance costs | - | - | - | - | - | (13,690 | ) | - | - | (13,690 | ) | |||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (54,113 | ) | (54,113 | ) | |||||||||||||||||||||||||
Balance, December 31, 1999 | - | - | 7,600,000 | 7,600 | - | 99,243 | - | (54,113 | ) | 52,730 | ||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 5,449,999 | 5,450 | - | 921,050 | - | - | 926,500 | |||||||||||||||||||||||||||
Issuance of shares of common stock in exchange for services | - | - | 240,000 | 240 | (40,800 | ) | 40,560 | - | - | - | ||||||||||||||||||||||||||
Stock issuance costs | - | - | - | - | - | (16,335 | ) | - | - | (16,335 | ) | |||||||||||||||||||||||||
Fair value of non-employee stock options grants | - | - | - | - | - | 50,350 | - | - | 50,350 | |||||||||||||||||||||||||||
Amortization of deferred consulting fees | - | - | - | - | 20,117 | - | - | - | 20,117 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (367,829 | ) | (367,829 | ) | |||||||||||||||||||||||||
Balance, December 31, 2000 | - | - | 13,289,999 | 13,290 | (20,683 | ) | 1,094,868 | - | (421,942 | ) | 665,533 | |||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 217,500 | 218 | - | 77,723 | - | - | 77,941 | |||||||||||||||||||||||||||
Issuance of shares of common stock and stock options for acquisition of subsidiary | - | - | 2,000,000 | 2,000 | - | 736,000 | - | - | 738,000 | |||||||||||||||||||||||||||
Issuance of stock options | - | - | - | - | - | 15,000 | - | - | 15,000 | |||||||||||||||||||||||||||
Exercise of options | - | - | 1,450,368 | 1,450 | - | 230,609 | - | - | 232,059 | |||||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 323,250 | - | - | 323,250 | |||||||||||||||||||||||||||
Amortization of deferred consulting fees | - | - | - | - | 20,683 | - | - | - | 20,683 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (1,052,299 | ) | (1,052,299 | ) | |||||||||||||||||||||||||
Balance, December 31, 2001 | - | - | 16,957,867 | 16,958 | - | 2,477,450 | - | (1,474,241 | ) | 1,020,167 |
See the accompanying notes to these consolidated financial statements.
F-3 |
Convertible | Deficit | |||||||||||||||||||||||||||||||||||
Preferred | Common | Accumulated | ||||||||||||||||||||||||||||||||||
Stock | Stock | Deferred | Additional | During the | ||||||||||||||||||||||||||||||||
Number of | Number of | Consulting | Paid-In | Treasury | Development | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 3,376,875 | 3,377 | - | 687,223 | - | - | 690,600 | |||||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 94,000 | - | - | 94,000 | |||||||||||||||||||||||||||
Salary due to shareholder contributed capital | - | - | - | - | - | 15,000 | - | - | 15,000 | |||||||||||||||||||||||||||
Return of shares of common stock related to purchase price adjustment | - | - | (1,000,000 | ) | (1,000 | ) | - | (353,000 | ) | - | - | (354,000 | ) | |||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (1,195,753 | ) | (1,195,753 | ) | |||||||||||||||||||||||||
Balance, December 31, 2002 | - | - | 19,334,742 | 19,335 | - | 2,920,673 | - | (2,669,994 | ) | 270,014 | ||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 22,512,764 | 22,512 | - | 1,387,109 | - | - | 1,409,621 | |||||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 213,300 | - | - | 213,300 | |||||||||||||||||||||||||||
Issuance of shares of common stock in exchange for services | - | - | 143,000 | 143 | - | 23,857 | - | - | 24,000 | |||||||||||||||||||||||||||
Stock issuance costs | - | - | - | - | - | (49,735 | ) | - | - | (49,735 | ) | |||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (1,107,120 | ) | (1,107,120 | ) | |||||||||||||||||||||||||
Balance, December 31, 2003 | - | - | 41,990,506 | 41,990 | - | 4,495,204 | - | (3,777,114 | ) | 760,080 | ||||||||||||||||||||||||||
Stock issuance costs | - | - | - | - | - | (25,000 | ) | - | - | (25,000 | ) | |||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 493,600 | - | - | 493,600 | |||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 18,600,000 | 18,600 | - | 939,881 | - | - | 958,481 | |||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | (1,406,506 | ) | (1,406,506 | ) | |||||||||||||||||||||||||
Balance, December 31, 2004 | - | - | 60,590,506 | 60,590 | - | 5,903,685 | - | (5,183,620 | ) | 780,655 |
F-4 |
Convertible | Deficit | |||||||||||||||||||||||||||||||||||
Preferred | Common | Accumulated | ||||||||||||||||||||||||||||||||||
Stock | Stock | Deferred | Additional | During the | ||||||||||||||||||||||||||||||||
Number of | Number of | Consulting | Paid-In | Treasury | Development | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 286,762 | - | - | 286,762 | |||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 3,000,000 | 3,000 | - | 102,000 | - | - | 105,000 | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2005 | - | - | - | - | - | - | - | (1,266,811 | ) | (1,266,811 | ) | |||||||||||||||||||||||||
Balance at December 31, 2005 | - | - | 63,590,506 | 63,590 | - | 6,292,447 | - | (6,450,431 | ) | (94,394 | ) | |||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 215,463 | - | - | 215,463 | |||||||||||||||||||||||||||
Fair value of employee stock options | - | - | - | - | - | 135,098 | - | - | 135,098 | |||||||||||||||||||||||||||
Fair value of warrants issued for deferred finance charges | - | - | - | - | - | 392,376 | - | - | 392,376 | |||||||||||||||||||||||||||
Exercise of warrants | - | - | 5,550,000 | 5,550 | - | 49,950 | - | - | 55,500 | |||||||||||||||||||||||||||
Exercise of options | - | - | 4,300,000 | 4,300 | - | (3,870 | ) | - | - | 430 | ||||||||||||||||||||||||||
Shares retired upon cancellation of consulting agreements | - | - | (1,200,000 | ) | (1,200 | ) | - | 1,080 | - | - | (120 | ) | ||||||||||||||||||||||||
Issuance of shares for services | - | - | 1,200,000 | 1,200 | - | 53,800 | - | - | 55,000 | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2006 | - | - | - | - | - | - | - | (1,607,017 | ) | (1,607,017 | ) | |||||||||||||||||||||||||
Balance at December 31, 2006 | - | - | 73,440,506 | 73,440 | - | 7,136,344 | - | (8,057,448 | ) | (847,664 | ) | |||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 47,692 | - | - | 47,692 | |||||||||||||||||||||||||||
Fair value of employee stock options | - | - | - | - | - | 67,651 | - | - | 67,651 | |||||||||||||||||||||||||||
Recognition of beneficial conversion feature | - | - | - | - | - | 375,000 | - | - | 375,000 | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2007 | - | - | - | - | - | - | - | (1,117,334 | ) | (1,117,334 | ) | |||||||||||||||||||||||||
Balance at December 31, 2007 | - | - | 73,440,506 | 73,440 | - | 7,626,687 | - | (9,174,782 | ) | (1,474,655 | ) |
See the accompanying notes to these consolidated financial statements.
F-5 |
Convertible | Deficit | |||||||||||||||||||||||||||||||||||
Preferred | Common | Accumulated | ||||||||||||||||||||||||||||||||||
Stock | Stock | Deferred | Additional | During the | ||||||||||||||||||||||||||||||||
Number of | Number of | Consulting | Paid-In | Treasury | Development | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 28,752 | - | - | 28,752 | |||||||||||||||||||||||||||
Fair value of employee stock options | - | - | - | - | - | 19,720 | - | - | 19,720 | |||||||||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | - | - | 25,000 | - | - | 25,000 | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2008 | - | - | - | - | - | - | - | (931,338 | ) | (931,338 | ) | |||||||||||||||||||||||||
Balance at December 31, 2008 | - | - | 73,440,506 | 73,440 | - | 7,700,159 | - | (10,106,120 | ) | (2,332,521 | ) | |||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 1,524 | - | - | 1,524 | |||||||||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | - | - | 15,450 | - | - | 15,450 | |||||||||||||||||||||||||||
Issuance of shares for services | - | - | 7,200,000 | 7,200 | - | 40,500 | - | - | 47,700 | |||||||||||||||||||||||||||
Shares issued for conversion of notes payable | - | - | 48,750,000 | 48,750 | - | 263,291 | - | - | 312,041 | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2009 | - | - | - | - | - | - | - | (694,910 | ) | (694,910 | ) | |||||||||||||||||||||||||
Balance at December 31, 2009 | - | - | 129,390,506 | 129,390 | - | 8,020,924 | - | (10,801,030 | ) | (2,650,716 | ) | |||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 364 | - | - | 364 | |||||||||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | - | - | 20,143 | - | - | 20,143 | |||||||||||||||||||||||||||
Issuance of shares for services | - | - | 25,950,000 | 25,950 | - | 182,650 | - | - | 208,600 | |||||||||||||||||||||||||||
Net loss for the year ended Decemberr 31, 2010 | - | - | - | - | - | - | - | (721,841 | ) | (721,841 | ) | |||||||||||||||||||||||||
Balance at December 31, 2010 | - | - | 155,340,506 | 155,340 | - | 8,224,081 | - | (11,522,871 | ) | (3,143,450 | ) |
See the accompanying notes to these consolidated financial statements.
F-6 |
Convertible | Deficit | |||||||||||||||||||||||||||||||||||
Preferred | Common | Accumulated | ||||||||||||||||||||||||||||||||||
Stock | Stock | Deferred | Additional | During the | ||||||||||||||||||||||||||||||||
Number of | Number of | Consulting | Paid-In | Treasury | Development | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||||||||
Issuance of shares for services | - | - | 1,000,000 | 1,000 | - | 29,000 | - | - | 30,000 | |||||||||||||||||||||||||||
Contribution of common stock from related parties | - | - | (12,000,000 | ) | - | - | 95,594 | (95,594 | ) | - | - | |||||||||||||||||||||||||
Purchase of common stock for treasury | - | - | (17,795,903 | ) | - | - | - | (17,795 | ) | - | (17,795 | ) | ||||||||||||||||||||||||
Sale of common stock | - | - | 15,500,000 | 15,500 | - | 384,500 | - | - | 400,000 | |||||||||||||||||||||||||||
Issuance of shares for stock issuance costs | - | - | 2,100,000 | 2,100 | - | (2,100 | ) | - | - | - | ||||||||||||||||||||||||||
Stock issuance costs | - | - | - | - | - | (40,000 | ) | - | - | (40,000 | ) | |||||||||||||||||||||||||
Exercise of options | - | - | 1,000,000 | 1,000 | - | 9,000 | - | - | 10,000 | |||||||||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | - | - | 21,275 | - | - | 21,275 | |||||||||||||||||||||||||||
Fair value of employee stock options | - | - | - | - | - | 47,658 | - | - | 47,658 | |||||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 48,374 | - | - | 48,374 | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2011 | - | - | - | - | - | - | - | (665,113 | ) | (665,113 | ) | |||||||||||||||||||||||||
Balance at December 31, 2011 | - | - | 145,144,603 | 174,940 | - | 8,817,382 | (113,389 | ) | (12,187,984 | ) | (3,309,051 | ) | ||||||||||||||||||||||||
Issuance of shares for services | - | - | 1,000,000 | 1,000 | - | 45,500 | - | - | 46,500 | |||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 44,111,111 | 44,111 | - | 1,015,889 | - | - | 1,060,000 | |||||||||||||||||||||||||||
Issuance of stock for licensing | - | - | 2,222,222 | 2,222 | - | 97,778 | - | - | 100,000 | |||||||||||||||||||||||||||
Issuance of stock for trademarks, etc. | - | - | 2,222,222 | 2,222 | - | 97,778 | - | - | 100,000 | |||||||||||||||||||||||||||
Shares issued for conversion of notes payable and accrued interest | - | - | 12,923,622 | 12,925 | - | 568,639 | - | - | 581,564 | |||||||||||||||||||||||||||
Exercise of options | - | - | 10,490,996 | 10,491 | - | 2,622 | - | - | 13,113 | |||||||||||||||||||||||||||
Exercise of warrants | - | - | 333,333 | 333 | - | 49,667 | - | - | 50,000 | |||||||||||||||||||||||||||
Fair value of employee stock options | - | - | - | - | - | 332,036 | - | - | 332,036 | |||||||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | - | - | 11,638 | - | - | 11,638 | |||||||||||||||||||||||||||
Forgiveness of debt - related party | - | - | - | - | - | 349,000 | - | - | 349,000 | |||||||||||||||||||||||||||
Net loss for the year ended December 31, 2012 | - | - | - | - | - | - | - | (1,199,057 | ) | (1,199,057 | ) | |||||||||||||||||||||||||
Balance at December 31, 2012 (Audited) | - | - | 218,448,109 | 248,244 | - | 11,387,929 | (113,389 | ) | (13,387,041 | ) | (1,864,257 | ) |
See the accompanying notes to these consolidated financial statements.
F-7 |
Convertible | Deficit | |||||||||||||||||||||||||||||||||||
Preferred | Common | Accumulated | ||||||||||||||||||||||||||||||||||
Stock | Stock | Deferred | Additional | During the | ||||||||||||||||||||||||||||||||
Number of | Number of | Consulting | Paid-In | Treasury | Development | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||||||||
Issuance of shares of preferred stock | 33,333,333 | $ | 1,000,000 | - | - | - | - | - | - | 1,000,000 | ||||||||||||||||||||||||||
Issuance of shares of common stock | - | - | 4,811,111 | 4,811 | - | 230,189 | - | - | 235,000 | |||||||||||||||||||||||||||
Shares issued for conversion of notes payable and accrued interest | - | - | 10,875,000 | 10,875 | - | 251,125 | - | - | 262,000 | |||||||||||||||||||||||||||
Exercise of options | - | - | 3,335,000 | 3,335 | - | 14,584 | - | - | 17,919 | |||||||||||||||||||||||||||
Exercise of warrants | - | - | 1,000,000 | 1,000 | - | 9,000 | - | - | 10,000 | |||||||||||||||||||||||||||
Fair value of employee stock options | - | - | - | - | - | 332,598 | - | - | 332,598 | |||||||||||||||||||||||||||
Deemed dividend distribution | - | - | - | - | - | (1,000,000 | ) | - | - | (1,000,000 | ) | |||||||||||||||||||||||||
Net loss for the year ended March 31, 2013 | - | - | - | - | - | - | - | (15,906,647 | ) | (15,906,647 | ) | |||||||||||||||||||||||||
Balance at March 31, 2013 (Unaudited) | 33,333,333 | $ | 1,000,000 | 238,469,220 | $ | 268,265 | $ | - | $ | 11,225,425 | $ | (113,389 | ) | $ | (29,293,688 | ) | $ | (16,913,387 | ) |
See the accompanying notes to these consolidated financial statements.
F-8 |
Three Months | Three Months | |||||||||||
Cumulative | Ended | Ended | ||||||||||
Since | March 31, | March 31, | ||||||||||
Inception | 2013 | 2012 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net loss | (29,293,688 | ) | (15,906,647 | ) | (235,605 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||
Fair value of options issued in exchange for services | 2,749,831 | 332,598 | - | |||||||||
Accretion of interest on deferred finance charges | 453,625 | - | 4,312 | |||||||||
Accretion of discount on notes payable | 444,475 | 1,239 | 1,239 | |||||||||
Change in fair value warrant liability | 11,921,510 | 11,921,510 | - | |||||||||
Fair value of warrants in excess of consideration for convertible preferred stock | 2,995,791 | 2,995,791 | ||||||||||
Salary due to stockholder contributed to capital | 15,000 | - | - | |||||||||
Amortization and depreciation | 536,100 | 6,045 | 2,768 | |||||||||
Gain on disposition of assets | (4,722 | ) | - | - | ||||||||
Gain on debt forgiveness | (340,352 | ) | - | - | ||||||||
Stock issued in exchange for services | 553,760 | - | - | |||||||||
Financing expenses paid directly from stock proceeds | 5,270 | - | - | |||||||||
Amortization of deferred consulting fees | 40,800 | - | - | |||||||||
(Increase) decrease in assets | ||||||||||||
Accounts receivable | (6,613 | ) | (3,140 | ) | (3,060 | ) | ||||||
Inventory | (29,852 | ) | (9,872 | ) | 2,036 | |||||||
Prepaid expenses | (212,868 | ) | 137,133 | 30,378 | ||||||||
Increase in liabilities | ||||||||||||
Accounts payable and accrued expenses | 2,386,502 | (220,820 | ) | 164,152 | ||||||||
Net cash used in operating activities | $ | (7,785,431 | ) | $ | (746,163 | ) | $ | (33,780 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchase of property and equipment | (45,438 | ) | (7,329 | ) | - | |||||||
Purchase of intangibles | (242,577 | ) | (18,443 | ) | - | |||||||
Proceeds from sale of assets | 6,738 | - | - | |||||||||
Net cash used in investing activities | (281,277 | ) | (25,772 | ) | - | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from issuance of preferred stock | 1,000,000 | 1,000,000 | - | |||||||||
Proceeds from issuance of common stock | 6,786,447 | 235,000 | - | |||||||||
Proceeds from exercise of stock options | 273,401 | 17,919 | - | |||||||||
Proceeds issuance of stock options | 15,000 | - | - | |||||||||
Proceeds from exercise of warrants | 115,500 | 10,000 | - | |||||||||
Proceeds from issuance of warrants | 1,000,000 | - | - | |||||||||
Proceeds from issuance of notes payable | 2,789,000 | - | - | |||||||||
Repayments of notes payable | (202,751 | ) | - | - | ||||||||
Payment for treasury stock | (17,795 | ) | - | - | ||||||||
Debt issuance costs | (62,000 | ) | - | - | ||||||||
Stock issuance costs | (144,760 | ) | - | - | ||||||||
Net cash provided by financing activities | 11,552,042 | 1,262,919 | - | |||||||||
NET DECREASE IN CASH AND CASH EQUIVALENTS | 3,485,334 | 490,984 | (33,780 | ) | ||||||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | - | 2,994,350 | 53,573 | |||||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 3,485,334 | $ | 3,485,334 | $ | 19,793 |
F-9 |
Three Months | Three Months | |||||||||||
Cumulative | Ended | Ended | ||||||||||
Since | March 31, | March 31, | ||||||||||
Inception | 2013 | 2012 | ||||||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
Cash paid during the year for: | ||||||||||||
Interest | $ | 53,336 | $ | 13,896 | $ | - | ||||||
Income taxes | $ | - | $ | - | $ | - | ||||||
Return of shares of common stock related to purchase price adjustment | ||||||||||||
Common stock | (1,000 | ) | - | - | ||||||||
Additional paid-in capital | (353,000 | ) | - | - | ||||||||
Intangible assets | $ | (354,000 | ) | $ | - | $ | - | |||||
Issuance of common stock and stock options for acquisition of subsidiary | $ | 738,000 | $ | - | $ | - | ||||||
Proceeds from common stock sales applied directly to debt and financing expenses repayment | $ | 55,270 | $ | - | $ | - | ||||||
Fair value of warrants issued for deferred finance charges | $ | 392,376 | $ | - | $ | - | ||||||
Fair value of stock issued for conversion of notes payable and accrued interest | $ | 1,155,605 | $ | 262,000 | $ | - | ||||||
Fair value of stock issued for purchase of assets | $ | 100,000 | $ | - | $ | - | ||||||
Fair value of warrants of issued for purchase of assets | $ | 100,000 | $ | - | $ | - | ||||||
Fair value of stock issued for licensing costs | $ | 100,000 | $ | - | $ | - | ||||||
Fair value of warrants issued for licensing costs | $ | 300,000 | $ | - | $ | - | ||||||
Accretion of discount on preferred stock as deemed dividend distribution | $ | 1,000,000 | $ | 1,000,000 | $ | - | ||||||
Fair value of beneficial conversion feature | $ | 1,400,000 | $ | 1,000,000 | $ | - | ||||||
Fair value of warrants issued as debt discount | $ | 78,043 | $ | - | $ | - | ||||||
Issuance of common stock for stock issuance costs | $ | 2,100 | $ | - | $ | - | ||||||
Issuance of options as stock cost for treasury stock | $ | 5,594 | $ | - | $ | - | ||||||
Forgiveness of debt-related party treated as additional paid in capital | $ | 349,000 | $ | - | $ | - |
F-10 |
F-11 |
F-12 |
F-13 |
a. | The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors. |
b. | Any additional amount the reporting entity expects to pay on behalf of its co-obligors. |
F-14 |
F-15 |
F-16 |
March 31, 2013 | December 31, 2012 | |||||||
Unsecured notes payable; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 | $ | 561,000 | $ | 561,000 | ||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | 150,000 | 150,000 | ||||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) | 50,000 | 50,000 | ||||||
Notes payable, interest at 25% per annum; principal and interest due September 2013 | - | 150,000 | ||||||
Less: Debt discount | (12,393 | ) | (13,632 | ) | ||||
748,607 | 897,368 | |||||||
Less: Current portion | 50,000 | 200,000 | ||||||
Long-term portion | $ | 698,607 | $ | 697,368 |
F-17 |
a. | First monies realized by the Company from its share of the net proceeds of the lawsuit shall be allocated and paid to the Lender until the principal and base interest accruing has been fully paid. |
b. | The next monies from the net proceeds of the litigation settlement will be paid to the Company to reimburse for out-of-pocket legal costs related to the lawsuit. |
c. | The next $825,000 of proceeds will be split 50%/50% between the Company and the Lenders. |
d. | The next $1 million realized by the Company shall be allocated 90% to the Company and 10% to the Lenders. |
e. | The next $1 million realized by Company shall be allocated 85% to Company and 15% to Lenders. |
f. | All remaining proceeds realized by Company shall be allocated 80% to Company and 20% to Lenders. |
F-18 |
2013 | $ | 50,000 | |||
2014 | - | ||||
2015 | 1,621,856 | ||||
2016 | - | ||||
2017 | - |
F-19 |
F-20 |
F-21 |
F-22 |
NOTE 10 – STOCK OPTIONS AND WARRANTS (Continued)
Weighted Average | ||||||||||||
Option/Warrant | Exercise | Exercise | ||||||||||
Shares | Price | Price | ||||||||||
Outstanding, December 31, 2011 | 15,585,996 | $0.00125 to $0.20 | $ | 0.01 | ||||||||
Granted | 72,422,221 | 0.05 to 0.10 | 0.08 | |||||||||
Transferred to employee options | (200,000 | ) | (0.05 | ) | - | |||||||
Exercised | (5,000,996 | ) | 0.00125 | - | ||||||||
Expired | - | - | - | |||||||||
Outstanding, December 31, 2012 | 82,807,221 | 0.00125 to 0.20 | 0 | |||||||||
Granted | 38,144,444 | 0.10 to 0.15 | 0.03 | |||||||||
Exercised | (3,435,000 | ) | 0.00125 - 0.07 | - | ||||||||
Expired | - | - | - | |||||||||
Outstanding, March 31, 2013 | 117,516,665 | $0.01 to $.20 | $ | 0.10 | ||||||||
Exercisable, March 31, 2013 | 117,516,665 | $0.01 to $.20 | $ | 0.10 | ||||||||
Weighted Average Remaining Life,Exercisable, March 31, 2013 (years) | 7.4 |
Weighted Average | ||||||||||||
Option/Warrant | Exercise | Exercise | ||||||||||
Shares | Price | Price | ||||||||||
Outstanding, December 31, 2011 | 6,390,000 | $ | 0.00125 | $ | 0.00125 | |||||||
Granted | 15,000,000 | 0.05 - 0.15 | 0.06 | |||||||||
Transferred from non-employee options | 200,000 | 0.05 | - | |||||||||
Exercised | (5,823,333 | ) | 0.00125 - 0.15 | - | ||||||||
Expired/Returned | - | - | - | |||||||||
Outstanding, December 31, 2012 | 15,766,667 | 0.00125 to 0.10 | 0.06 | |||||||||
Granted | 3,500,000 | 0.05 - 0.15 | 0.06 | |||||||||
Exercised | (900,000 | ) | 0.00125 | - | ||||||||
Expired/Returned | - | - | - | |||||||||
Outstanding, March 31, 2013 | 18,366,667 | $0.05 to $0.15 | $ | 0.06 | ||||||||
Exercisable, March 31, 2013 | 11,116,667 | $0.05 to $0.15 | $ | 0.07 | ||||||||
Weighted Average Remaining Life, Exercisable, March 31, 2013 (years) | 9.7 |
F-23 |
NOTE 11 – RELATED PARTY TRANSACTIONS
F-24 |
PAGE | ||
F-26 – F-27 | ||
F-28 | ||
F-29 | ||
F-30 | ||
F-35 | ||
F-36 – F-53 |
F-25 |
F-26 |
F-27 |
December 31, 2012 | December 31, 2011 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 2,994,350 | $ | 53,573 | ||||
Accounts receivable, net of allowance of $0 at December 31, 2012 and December 31, 2011 | 3,473 | - | ||||||
Inventory | 19,980 | 35,137 | ||||||
Deferred finance charges | - | 13,625 | ||||||
Prepaid expenses | 750,000 | 117,760 | ||||||
TOTAL CURRENT ASSETS | 3,767,803 | 220,095 | ||||||
PROPERTY AND EQUIPMENT | ||||||||
Capital equipment | 34,964 | 32,604 | ||||||
Less accumulated depreciation | 32,624 | 32,604 | ||||||
2,340 | - | |||||||
| ||||||||
Patents and Trademark, net of accumulated amortization of $92,302 and $78,851 as of December 31, 2012 and December 31, 2011 | 311,832 | 118,618 | ||||||
TOTAL ASSETS | $ | 4,081,975 | $ | 338,713 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued expenses | $ | 660,493 | $ | 634,632 | ||||
Accrued interest | 97,563 | 8,667 | ||||||
Notes payable | 200,000 | 50,000 | ||||||
TOTAL CURRENT LIABILITIES | 958,056 | 693,299 | ||||||
LONG-TERM LIABILITIES | ||||||||
Warrant Liability | 2,400,000 | - | ||||||
Accrued interest | 975,559 | 940,554 | ||||||
Senior secured convertible notes payable | 775,249 | 781,500 | ||||||
Convertible notes payable | 140,000 | 140,000 | ||||||
Notes payable, net of discount of $13,632 and $18,589 as of December 31, 2012 and December 31, 2011 | 697,368 | 1,092,411 | ||||||
TOTAL LONG-TERM LIABILITIES | 4,988,176 | 2,954,465 | ||||||
CONTINGENCIES | ||||||||
STOCKHOLDERS’ DEFICIT | ||||||||
Preferred Stock, $ .001 par value; 75,000,000 shares authorized; no shares issued and outstanding | - | - | ||||||
Common stock, $ .001 par value; 675,000,000 shares authorized; 248,244,012 shares issued and 218,448,109 outstanding at December 31, 2012 and 174,940,506 shares issued and 145,144,603 outstanding at December 31, 2011 | 248,244 | 174,940 | ||||||
Additional paid in capital | 11,387,929 | 8,817,382 | ||||||
Treasury stock, at cost (29,795,903 shares at December 31, 2012 and December 31, 2011) | (113,389 | ) | (113,389 | ) | ||||
Deficit accumulated during the development stage | (13,387,041 | ) | (12,187,984 | ) | ||||
STOCKHOLDERS’ DEFICIT | (1,864,257 | ) | (3,309,051 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 4,081,975 | $ | 338,713 |
The accompanying notes are an integral part of these consolidated financial statements.
F-28 |
Year Ended | Year Ended | |||||||||||
Cumulative | Ended | Ended | ||||||||||
Since | December 31, | December 31, | ||||||||||
Inception | 2012 | 2011 | ||||||||||
NET REVENUES | ||||||||||||
Sales | $ | 461,155 | $ | 7,029 | $ | 900 | ||||||
Royalties | 645,180 | 10,000 | 7,984 | |||||||||
TOTAL NET REVENUE | 1,106,335 | 17,029 | 8,884 | |||||||||
COST OF SALES | 429,031 | 4,083 | 373 | |||||||||
GROSS PROFIT | 677,304 | 12,946 | 8,511 | |||||||||
OPERATING EXPENSES | ||||||||||||
General and administrative | 1,543,359 | 129,329 | 114,376 | |||||||||
Legal and Accounting | 1,538,786 | 276,774 | 71,847 | |||||||||
Patent costs | 65,000 | - | - | |||||||||
Payroll Expenses | 3,412,982 | 612,721 | 227,658 | |||||||||
Research and development | 867,792 | 5,420 | 9,081 | |||||||||
Sales and Marketing | 5,019,732 | 66,499 | 113,377 | |||||||||
Total operating expenses | 12,447,651 | 1,090,743 | 536,339 | |||||||||
LOSS BEFORE OTHER INCOME | (11,770,347 | ) | (1,077,797 | ) | (527,828 | ) | ||||||
OTHER INCOME (EXPENSE) | ||||||||||||
Interest income | 63,664 | 1 | 59 | |||||||||
Interest expense | (2,190,432 | ) | (277,371 | ) | (321,586 | ) | ||||||
Gain on debt forgiveness | 340,352 | 156,110 | 184,242 | |||||||||
Gain on disposition of assets | 4,722 | - | - | |||||||||
(1,781,694 | ) | (121,260 | ) | (137,285 | ) | |||||||
LOSS BEFORE INCOME TAX BENEFIT | (13,552,041 | ) | (1,199,057 | ) | (665,113 | ) | ||||||
INCOME TAX BENEFIT | (165,000 | ) | - | - | ||||||||
NET LOSS | $ | (13,387,041 | ) | $ | (1,199,057 | ) | $ | (665,113 | ) | |||
BASIC AND DILUTED NET LOSS PER COMMON SHARE | $ | (0.01 | ) | $ | (0.00 | ) | ||||||
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | 150,559,287 | 146,076,571 |
F-29 |
Deficit | ||||||||||||||||||||||||||||
Common | Accumulated | |||||||||||||||||||||||||||
Stock | Deferred | Additional | During the | |||||||||||||||||||||||||
Number of | Consulting | Paid-In | Treasury | Development | ||||||||||||||||||||||||
Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||
Issuance of initial 4,278,000 shares on November 10, 1999 | 4,278,000 | $ | 4,278 | $ | - | $ | 16,595 | $ | - | $ | - | $ | 20,873 | |||||||||||||||
Issuance of shares of common stock in exchange for services | 1,232,000 | 1,232 | - | 35,728 | - | - | 36,960 | |||||||||||||||||||||
Issuance of shares of common stock | 2,090,000 | 2,090 | - | 60,610 | - | - | 62,700 | |||||||||||||||||||||
Stock issuance costs | - | - | - | (13,690 | ) | - | - | (13,690 | ) | |||||||||||||||||||
Net loss | - | - | - | - | - | (54,113 | ) | (54,113 | ) | |||||||||||||||||||
Balance, December 31, 1999 | 7,600,000 | 7,600 | - | 99,243 | - | (54,113 | ) | 52,730 | ||||||||||||||||||||
Issuance of shares of common stock | 5,449,999 | 5,450 | - | 921,050 | - | - | 926,500 | |||||||||||||||||||||
Issuance of shares of common stock in exchange for services | 240,000 | 240 | (40,800 | ) | 40,560 | - | - | - | ||||||||||||||||||||
Stock issuance costs | - | - | - | (16,335 | ) | - | - | (16,335 | ) | |||||||||||||||||||
Fair value of non-employee stock options grants | - | - | - | 50,350 | - | - | 50,350 | |||||||||||||||||||||
Amortization of deferred consulting fees | - | - | 20,117 | - | - | - | 20,117 | |||||||||||||||||||||
Net loss | - | - | - | - | - | (367,829 | ) | (367,829 | ) | |||||||||||||||||||
Balance, December 31, 2000 | 13,289,999 | 13,290 | (20,683 | ) | 1,094,868 | - | (421,942 | ) | 665,533 | |||||||||||||||||||
Issuance of shares of common stock | 217,500 | 218 | - | 77,723 | - | - | 77,941 | |||||||||||||||||||||
Issuance of shares of common stock and stock options for acquisition of subsidiary | 2,000,000 | 2,000 | - | 736,000 | - | - | 738,000 | |||||||||||||||||||||
Issuance of stock options | - | - | - | 15,000 | - | - | 15,000 | |||||||||||||||||||||
Exercise of options | 1,450,368 | 1,450 | - | 230,609 | - | - | 232,059 | |||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 323,250 | - | - | 323,250 | |||||||||||||||||||||
Amortization of deferred consulting fees | - | - | 20,683 | - | - | - | 20,683 | |||||||||||||||||||||
Net loss | - | - | - | - | - | (1,052,299 | ) | (1,052,299 | ) | |||||||||||||||||||
Balance, December 31, 2001 | 16,957,867 | 16,958 | - | 2,477,450 | - | (1,474,241 | ) | 1,020,167 |
F-30 |
Deficit | ||||||||||||||||||||||||||||
Common | Accumulated | |||||||||||||||||||||||||||
Stock | Deferred | Additional | During the | |||||||||||||||||||||||||
Number of | Consulting | Paid-In | Treasury | Development | ||||||||||||||||||||||||
Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||
Issuance of shares of common stock | 3,376,875 | 3,377 | - | 687,223 | - | - | 690,600 | |||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 94,000 | - | - | 94,000 | |||||||||||||||||||||
Salary due to shareholder contributed capital | - | - | - | 15,000 | - | - | 15,000 | |||||||||||||||||||||
Return of shares of common stock related to purchase price adjustment | (1,000,000 | ) | (1,000 | ) | - | (353,000 | ) | - | - | (354,000 | ) | |||||||||||||||||
Net loss | - | - | - | - | - | (1,195,753 | ) | (1,195,753 | ) | |||||||||||||||||||
Balance, December 31, 2002 | 19,334,742 | 19,335 | - | 2,920,673 | - | (2,669,994 | ) | 270,014 | ||||||||||||||||||||
Issuance of shares of common stock | 22,512,764 | 22,512 | - | 1,387,109 | - | - | 1,409,621 | |||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 213,300 | - | - | 213,300 | |||||||||||||||||||||
Issuance of shares of common stock in exchange for services | 143,000 | 143 | - | 23,857 | - | - | 24,000 | |||||||||||||||||||||
Stock issuance costs | - | - | - | (49,735 | ) | - | - | (49,735 | ) | |||||||||||||||||||
Net loss | - | - | - | - | - | (1,107,120 | ) | (1,107,120 | ) | |||||||||||||||||||
Balance, December 31, 2003 | 41,990,506 | 41,990 | - | 4,495,204 | - | (3,777,114 | ) | 760,080 | ||||||||||||||||||||
Stock issuance costs | - | - | - | (25,000 | ) | - | - | (25,000 | ) | |||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 493,600 | - | - | 493,600 | |||||||||||||||||||||
Issuance of shares of common stock | 18,600,000 | 18,600 | - | 939,881 | - | - | 958,481 | |||||||||||||||||||||
Net loss | - | - | - | - | - | (1,406,506 | ) | (1,406,506 | ) | |||||||||||||||||||
Balance, December 31, 2004 | 60,590,506 | 60,590 | - | 5,903,685 | - | (5,183,620 | ) | 780,655 |
F-31 |
Deficit | ||||||||||||||||||||||||||||
Common | Accumulated | |||||||||||||||||||||||||||
Stock | Deferred | Additional | During the | |||||||||||||||||||||||||
Number of | Consulting | Paid-In | Treasury | Development | ||||||||||||||||||||||||
Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 286,762 | - | - | 286,762 | |||||||||||||||||||||
Issuance of shares of common stock | 3,000,000 | 3,000 | - | 102,000 | - | - | 105,000 | |||||||||||||||||||||
Net loss for the year ended December 31, 2005 | - | - | - | - | - | (1,266,811 | ) | (1,266,811 | ) | |||||||||||||||||||
Balance at December 31, 2005 | 63,590,506 | 63,590 | - | 6,292,447 | - | (6,450,431 | ) | (94,394 | ) | |||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 215,463 | - | - | 215,463 | |||||||||||||||||||||
Fair value of employee stock options | - | - | - | 135,098 | - | - | 135,098 | |||||||||||||||||||||
Fair value of warrants issued for deferred finance charges | - | - | - | 392,376 | - | - | 392,376 | |||||||||||||||||||||
Exercise of warrants | 5,550,000 | 5,550 | - | 49,950 | - | - | 55,500 | |||||||||||||||||||||
Exercise of options | 4,300,000 | 4,300 | - | (3,870 | ) | - | - | 430 | ||||||||||||||||||||
Shares retired upon cancellation of consulting agreements | (1,200,000 | ) | (1,200 | ) | - | 1,080 | - | - | (120 | ) | ||||||||||||||||||
Issuance of shares for services | 1,200,000 | 1,200 | - | 53,800 | - | - | 55,000 | |||||||||||||||||||||
Net loss for the year ended December 31, 2006 | - | - | - | - | - | (1,607,017 | ) | (1,607,017 | ) | |||||||||||||||||||
Balance at December 31, 2006 | 73,440,506 | 73,440 | - | 7,136,344 | - | (8,057,448 | ) | (847,664 | ) | |||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 47,692 | - | - | 47,692 | |||||||||||||||||||||
Fair value of employee stock options | - | - | - | 67,651 | - | - | 67,651 | |||||||||||||||||||||
Recognition of beneficial conversion feature | - | - | - | 375,000 | - | - | 375,000 | |||||||||||||||||||||
Net loss for the year ended December 31, 2007 | - | - | - | - | - | (1,117,334 | ) | (1,117,334 | ) | |||||||||||||||||||
Balance at December 31, 2007 | 73,440,506 | 73,440 | - | 7,626,687 | - | (9,174,782 | ) | (1,474,655 | ) |
F-32 |
Deficit | ||||||||||||||||||||||||||||
Common | Accumulated | |||||||||||||||||||||||||||
Stock | Deferred | Additional | During the | |||||||||||||||||||||||||
Number of | Consulting | Paid-In | Treasury | Development | ||||||||||||||||||||||||
Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 28,752 | - | - | 28,752 | |||||||||||||||||||||
Fair value of employee stock options | - | - | - | 19,720 | - | - | 19,720 | |||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | 25,000 | - | - | 25,000 | |||||||||||||||||||||
Net loss for the year ended December 31, 2008 | - | - | - | - | - | (931,338 | ) | (931,338 | ) | |||||||||||||||||||
Balance at December 31, 2008 | 73,440,506 | 73,440 | - | 7,700,159 | - | (10,106,120 | ) | (2,332,521 | ) | |||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 1,524 | - | - | 1,524 | |||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | 15,450 | - | - | 15,450 | |||||||||||||||||||||
Issuance of shares for services | 7,200,000 | 7,200 | - | 40,500 | - | - | 47,700 | |||||||||||||||||||||
Shares issued for conversion of notes payable | 48,750,000 | 48,750 | - | 263,291 | - | - | 312,041 | |||||||||||||||||||||
Net loss for the year ended December 31, 2009 | - | - | - | - | - | (694,910 | ) | (694,910 | ) | |||||||||||||||||||
Balance at December 31, 2009 | 129,390,506 | 129,390 | - | 8,020,924 | - | (10,801,030 | ) | (2,650,716 | ) | |||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 364 | - | - | 364 | |||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | 20,143 | - | - | 20,143 | |||||||||||||||||||||
Issuance of shares for services | 25,950,000 | 25,950 | - | 182,650 | - | - | 208,600 | |||||||||||||||||||||
Net loss for the year ended December 31, 2010 | - | - | - | - | - | (721,841 | ) | (721,841 | ) | |||||||||||||||||||
Balance at December 31, 2010 | 155,340,506 | 155,340 | - | 8,224,081 | - | (11,522,871 | ) | (3,143,450 | ) |
F-33 |
Deficit | ||||||||||||||||||||||||||||
Common | Accumulated | |||||||||||||||||||||||||||
Stock | Deferred | Additional | During the | |||||||||||||||||||||||||
Number of | Consulting | Paid-In | Treasury | Development | ||||||||||||||||||||||||
Shares | Amount | Fees | Capital | Stock | Stage | Total | ||||||||||||||||||||||
Issuance of shares for services | 1,000,000 | 1,000 | - | 29,000 | - | - | 30,000 | |||||||||||||||||||||
Contribution of common stock from related parties | (12,000,000 | ) | - | - | 95,594 | (95,594 | ) | - | - | |||||||||||||||||||
Purchase of common stock for treasury | (17,795,903 | ) | - | - | - | (17,795 | ) | - | (17,795 | ) | ||||||||||||||||||
Sale of common stock | 15,500,000 | 15,500 | - | 384,500 | - | - | 400,000 | |||||||||||||||||||||
Issuance of shares for stock issuance costs | 2,100,000 | 2,100 | - | (2,100 | ) | - | - | - | ||||||||||||||||||||
Stock issuance costs | - | - | - | (40,000 | ) | - | - | (40,000 | ) | |||||||||||||||||||
Exercise of options | 1,000,000 | 1,000 | - | 9,000 | - | - | 10,000 | |||||||||||||||||||||
Fair value of warrants issued in conjunction with debt financing | - | - | - | 21,275 | - | - | 21,275 | |||||||||||||||||||||
Fair value of employee stock options | - | - | - | 47,658 | - | - | 47,658 | |||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 48,374 | - | - | 48,374 | |||||||||||||||||||||
Net loss for the year ended December 31, 2011 | - | - | - | - | - | (665,113 | ) | (665,113 | ) | |||||||||||||||||||
Balance at December 31, 2011 | 145,144,603 | 174,940 | - | 8,817,382 | (113,389 | ) | (12,187,984 | ) | (3,309,051 | ) | ||||||||||||||||||
Issuance of shares for services | 1,000,000 | 1,000 | - | 45,500 | - | - | 46,500 | |||||||||||||||||||||
Issuance of shares of common stock | 44,111,111 | 44,111 | - | 1,015,889 | - | - | 1,060,000 | |||||||||||||||||||||
Issuance of stock for licensing | 2,222,222 | 2,222 | - | 97,778 | - | - | 100,000 | |||||||||||||||||||||
Issuance of stock for trademarks, etc. | 2,222,222 | 2,222 | - | 97,778 | - | - | 100,000 | |||||||||||||||||||||
Shares issued for conversion of notes payable and accrued interest | 12,923,622 | 12,925 | - | 568,639 | - | - | 581,564 | |||||||||||||||||||||
Exercise of options | 10,490,996 | 10,491 | - | 2,622 | - | - | 13,113 | |||||||||||||||||||||
Exercise of warrants | 333,333 | 333 | - | 49,667 | - | - | 50,000 | |||||||||||||||||||||
Fair value of employee stock options | - | - | - | 332,036 | - | - | 332,036 | |||||||||||||||||||||
Fair value of non-employee stock options | - | - | - | 11,638 | - | - | 11,638 | |||||||||||||||||||||
Forgiveness of debt-related party | - | - | - | 349,000 | - | - | 349,000 | |||||||||||||||||||||
Net loss for the year ended December 31, 2012 | - | - | - | - | - | (1,199,057 | ) | (1,199,057 | ) | |||||||||||||||||||
Balance at December 31, 2012 | 218,448,109 | $ | 248,244 | $ | - | $ | 11,387,929 | $ | (113,389 | ) | $ | (13,387,041 | ) | $ | (1,864,257 | ) |
F-34 |
Year | Year | |||||||||||
Cumulative | Ended | Ended | ||||||||||
Since | December 31, | December 31, | ||||||||||
Inception | 2012 | 2011 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
Net loss | (13,387,041 | ) | (1,199,057 | ) | (665,113 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities | ||||||||||||
Fair value of options issued in exchange for services | 2,417,232 | 343,674 | 96,032 | |||||||||
Accretion of interest on deferred finance charges | 453,625 | 13,625 | 27,149 | |||||||||
Accretion of discount on notes payable | 443,236 | 4,957 | 17,416 | |||||||||
Salary due to stockholder contributed to capital | 15,000 | - | - | |||||||||
Amortization and depreciation | 530,055 | 13,471 | 10,904 | |||||||||
Gain on disposition of assets | (4,722 | ) | - | - | ||||||||
Gain on debt forgiveness | (340,352 | ) | (156,110 | ) | (184,242 | ) | ||||||
Stock issued in exchange for services | 553,760 | 46,500 | 30,000 | |||||||||
Financing expenses paid directly from stock proceeds | 5,270 | - | - | |||||||||
Amortization of deferred consulting fees | 40,800 | - | - | |||||||||
(Increase) decrease in assets | ||||||||||||
Accounts receivable | (3,473 | ) | (3,473 | ) | 10,193 | |||||||
Inventory | 19,980 | 15,157 | (11,451 | ) | ||||||||
Prepaid expenses | (350,000 | ) | (232,240 | ) | 21,936 | |||||||
Increase in liabilities | ||||||||||||
Accounts payable and accrued expenses | 2,567,362 | 786,436 | 333,291 | |||||||||
Net cash used in operating activities | $ | (7,039,268 | ) | $ | (367,060 | ) | $ | (313,885 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||||||
Purchase of property and equipment | (38,109 | ) | (2,360 | ) | - | |||||||
Purchase of intangibles | (224,134 | ) | (6,665 | ) | (3,577 | ) | ||||||
Proceeds from sale of assets | 6,738 | - | - | |||||||||
Net cash used in investing activities | (255,505 | ) | (9,025 | ) | (3,577 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Proceeds from issuance of common stock | 5,551,447 | 1,060,000 | 400,000 | |||||||||
Proceeds from exercise of stock options | 255,482 | 13,113 | 10,000 | |||||||||
Proceeds issuance of stock options | 15,000 | - | - | |||||||||
Proceeds from exercise of warrants | 105,500 | 50,000 | - | |||||||||
Proceeds from issuance of warrants | 2,000,000 | 2,000,000 | - | |||||||||
Proceeds from issuance of notes payable | 2,789,000 | 200,000 | - | |||||||||
Repayments of notes payable | (202,751 | ) | (6,251 | ) | (58,500 | ) | ||||||
Payment for treasury stock | (17,795 | ) | - | (17,795 | ) | |||||||
Debt issuance costs | (62,000 | ) | - | - | ||||||||
Stock issuance costs | (144,760 | ) | - | (40,000 | ) | |||||||
Net cash provided by financing activities | 10,289,123 | 3,316,862 | 293,705 | |||||||||
NET DECREASE IN CASH ANDCASH EQUIVALENTS | 2,994,350 | 2,940,777 | (23,757 | ) | ||||||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | - | 53,573 | 77,330 | |||||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 2,994,350 | $ | 2,994,350 | $ | 53,573 | ||||||
SUPPLEMENTAL DISCLOSURE OF NON-CASHINVESTING AND FINANCING ACTIVITIES: | ||||||||||||
Cash paid during the year for: | ||||||||||||
Interest | $ | 39,440 | $ | - | $ | 6,557 | ||||||
Income taxes | $ | - | $ | - | $ | - | ||||||
Return of shares of common stock related to purchase price adjustment | ||||||||||||
Common stock | (1,000 | ) | - | - | ||||||||
Additional paid-in capital | (353,000 | ) | - | - | ||||||||
Intangible assets | $ | (354,000 | ) | $ | - | $ | - | |||||
Issuance of common stock and stock options for acquisition of subsidiary | $ | 738,000 | $ | - | $ | - | ||||||
Proceeds from common stock sales applied directly to debt and financing expenses repayment | $ | 55,270 | $ | - | $ | - | ||||||
Fair value of warrants issued for deferred finance charges | $ | 392,376 | $ | - | $ | - | ||||||
Fair value of stock issued for conversion of notes payableand accrued interest | $ | 893,605 | $ | 581,564 | $ | - | ||||||
Fair value of stock issued for purchase of assets | $ | 100,000 | $ | 100,000 | $ | - | ||||||
Fair value of warrants issued for purchase of assets | $ | 100,000 | $ | 100,000 | $ | - | ||||||
Fair value of stock issued for licensing costs | $ | 100,000 | $ | 100,000 | $ | - | ||||||
Fair value of warrants issued for licensing costs | $ | 300,000 | $ | 300,000 | $ | - | ||||||
Fair value of beneficial conversion option | $ | 400,000 | $ | - | $ | - | ||||||
Fair value of warrants issued as debt discount | $ | 78,043 | $ | - | $ | 21,275 | ||||||
Issuance of common stock for stock issuance costs | $ | 2,100 | $ | - | $ | 2,100 | ||||||
Issuance of options as stock cost for treasury stock | $ | 5,594 | $ | - | $ | 5,594 | ||||||
Forgiveness of debt-related party treated as additional paid in capital | $ | 349,000 | $ | 349,000 | $ | - |
F-35 |
F-36 |
F-37 |
F-38 |
1. | Those that clarify the Board’s intent about the application of existing fair value measurement and disclosure requirements. |
2. | Those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. |
F-39 |
Year Ended December 31, 2012 | Year Ended December 31, 2011 | |||||||
Current | $ | 490,000 | $ | 142,000 | ||||
Deferred | 263,000 | 97,000 | ||||||
Change in valuation allowance | (753,000 | ) | (239,000 | ) | ||||
$ | - | $ | - |
2012 | 2011 | |||||||||||||||
Amount | % | Amount | % | |||||||||||||
U.S federal income tax benefit at Federal statutory rate | $ | (298,000 | ) | (35 | ) | $ | (226,000 | ) | (34 | ) | ||||||
State tax, net of federal tax effect | (50,000 | ) | (6 | ) | (38,000 | ) | (6 | ) | ||||||||
Non deductible accrued expenses | (238,000 | ) | (28 | ) | - | - | ||||||||||
Non deductible share based compensation | (167,000 | ) | (20 | ) | 25,000 | 4 | ||||||||||
Change in valuation allowance | 753,000 | 89 | 239,000 | 36 | ||||||||||||
$ | - | - | $ | - | - |
December 31, 2012 | December 31, 2011 | |||||||
Deferred tax asset for NOL carryforwards | $ | 3,308,000 | $ | 2,354,000 | ||||
Deferred tax liability for intangibles | (165,000 | ) | (165,000 | ) | ||||
Non taxable income | 162,000 | 47,000 | ||||||
(Deductible) non deductible accrued expenses | 386,000 | 702,000 | ||||||
Valuation allowance | (3,691,000 | ) | (2,938,000 | ) | ||||
$ | - | $ | - |
F-40 |
F-41 |
December 31, 2012 | December 31, 2011 | |||||||
Unsecured notes payable; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 | $ | 561,000 | $ | 561,000 | ||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | 150,000 | 150,000 | ||||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) | 50,000 | 50,000 | ||||||
Notes payable, interest at 25% per annum; principal and interest due September 2013 | 150,000 | 400,000 | ||||||
Less: Debt discount | (13,632 | ) | (18,589 | ) | ||||
897,368 | 1,142,411 | |||||||
Less: Current portion | 200,000 | 50,000 | ||||||
Long-term portion | $ | 697,368 | $ | 1,092,411 |
F-42 |
F-43 |
a. | First monies realized by the Company from its share of the net proceeds of the lawsuit shall be allocated and paid to the lender until the principal and base interest accruing has been fully paid. |
b. | The next monies from the net proceeds of the litigation settlement will be paid to the Company to reimburse for out-of-pocket legal costs related to the lawsuit. |
c. | The next $825,000 of proceeds will be split 50%/50% between the Company and the lenders. |
d. | The next $1 million realized by the Company shall be allocated 90% to the Company and 10% to the lenders. |
e. | The next $1 million realized by Company shall be allocated 85% to Company and 15% to lenders. |
f. | All remaining proceeds realized by Company shall be allocated 80% to Company and 20% to lenders. |
F-44 |
(a) | $450,000 on the date of the agreement (December 31, 2012), consisting of $250,000 in cash and warrants to purchase 4,444,444 shares of Common Stock under a cashless exercise initially at an exercise price of $0.045 on the terms set forth under the warrants issued by the Company to Zaah under the warrant, dated as of December 31, 2012. The $450,000 is reflected as prepaid expenses on the December 31, 2012 balance sheet. |
F-45 |
(b) | $100,000, accrued in full as of the date of this Agreement, and reflected as prepaid expenses on the December 31, 2012 balance sheet, but payable in twelve (12) months from the date hereof to a designee of Zaah’s selection, with a right to convert (at Zaah’s sole discretion, from time to time at any time) to shares of common stock at the prevailing market price per share of common stock (which, as long as the common stock is listed, shall be the closing price on the last trading day prior to such issuance or sale of the common stock as traded on a national securities exchange, the NASDAQ Global Market, the NASDAQ Capital Market, or another nationally recognized trading system (including Pink OTC Markets, Inc.)); and |
(c) | a commission of 10% of the revenue generated by any Company transaction originated through the efforts of Zaah, as substantiated by a written agreement between the Company and Zaah, specifically referencing the transaction in which Zaah is entitled to such commission, payable by the Company to Zaah in cash. Such payment shall be made on the earlier of (i) the date of the signing of such transaction, (ii) the date of the closing of the transaction, or (iii) any date on which any funds are paid to the Company in respect of such transaction. |
(a) | Payment 1, payable upon execution of the Agreement on December 31, 2012: The sum of One Hundred Thousand Dollars ($100,000), to be paid by issuing (i) a number of shares of Common Stock, par value $.001 per shares (“Shares”), of the Company equal to (x) $100,000 divided by (y) $0.045 (2,222,222 shares) and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years. The fair value of the shares of common stock ($100,000) and the fair value of the cashless exercise warrants ($100,000) are reflected as prepaid expenses on the December 31, 2012 balance sheet. |
(b) | Payment 2, payable on January 1, 2014: The sum of Four Hundred Thousand Dollars ($400,000), to be paid by issuing (i) a number of Shares equal to (x) $400,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years. |
(c) | Payment 3, payable on January 1, 2015: The sum of Four Million Five Hundred Thousand Dollars ($4,500,000), to be paid by issuing (i) a number of Shares equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to market and (ii) cashless exercise warrants to purchase an equal number of Shares exercisable at a price of Ten Cents ($0.10) per Share with a term of five (5) years. |
(d) | Future Payments Contingent: the Company’s payment of Payment 2 and Payment 3 is contingent. To the extent that VerifyMe does not develop and license to the Company, at a time subsequent to Payment 1, further technology and/or a further patent right related to the local, mobile and cloud based biometric security systems, then any payments not already paid, will not longer by due to VerifyMe, this nonperformance being a likelihood, more likely than not. |
F-46 |
F-47 |
F-48 |
F-49 |
Option/Warrant Shares | Exercise Price | Weighted Average Exercise Price | ||||||||||
Outstanding, December 31, 2010 | 19,856,662 | $0.01 to $0.20 | $ | 0.02 | ||||||||
Granted | 7,235,996 | 0.00125 | - | |||||||||
Exercised | (1,000,000 | ) | 0.01 | - | ||||||||
Expired/Returned | (10,506,662 | ) | 0.01 to 0.03 | (0.01 | ) | |||||||
Outstanding, December 31, 2011 | 15,585,996 | $0.00125 to $0.20 | $ | 0.01 | ||||||||
Granted | 72,422,221 | 0.05 to 0.10 | 0.08 | |||||||||
Transferred to employee options | (200,000 | ) | (0.05 | ) | - | |||||||
Exercised | (5,000,996 | ) | 0.00125 | - | ||||||||
Expired | - | - | - | |||||||||
Outstanding, December 31, 2012 | 82,807,221 | $.00125 to $.20 | $ | 0.09 | ||||||||
Exercisable, December 31, 2012 | 82,807,221 | $.00125 to $.20 | $ | 0.09 | ||||||||
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years) | 6.4 |
F-50 |
Option/Warrant Shares | Exercise Price | Weighted Average Exercise Price | ||||||||||
Outstanding, December 31, 2010 | 7,100,000 | $.01 to $.28 | $ | 0.07 | ||||||||
Granted | 6,390,000 | $0.00125 | $ | 0.00125 | ||||||||
Exercised | - | - | - | |||||||||
Expired/Returned | (7,100,000 | ) | $.01 - $.03 | (0.07 | ) | |||||||
Outstanding, December 31, 2011 | 6,390,000 | $0.00125 | $ | 0.00125 | ||||||||
Granted | 15,000,000 | 0.05 - 0.15 | 0.06 | |||||||||
Transferred from non-employee options | 200,000 | 0.05 | - | |||||||||
Exercised | (5,823,333 | ) | 0.00125 - 0.15 | - | ||||||||
Expired/Returned | - | - | - | |||||||||
Outstanding, December 31, 2012 | 15,766,667 | $0.00125 to $0.10 | $ | 0.06 | ||||||||
Exercisable, December 31, 2012 | 10,766,667 | $0.00125 to $0.10 | $ | 0.07 | ||||||||
Weighted Average Remaining Life, Exercisable, December 31, 2012 (years) | 9.8 |
F-51 |
F-52 |
December 31, 2012 | ||||||||||||
As Previously | ||||||||||||
Consolidated Balance Sheet | Reported | Correction | As Restated | |||||||||
Long-term liabilities | ||||||||||||
Warrant liability | $ | - | $ | 2,400,000 | $ | 2,400,000 | ||||||
Total long-term liabilities | 2,588,176 | 2,400,000 | 4,988,176 | |||||||||
Stockholders' deficit | ||||||||||||
Additional paid in capital | 13,787,929 | (2,400,000 | ) | 11,387,929 | ||||||||
Total stockholders' equity (deficit) | 535,743 | (2,400,000 | ) | (1,864,257 | ) | |||||||
Total liabilities and stockholders' equity (deficit) | $ | 4,081,975 | $ | - | $ | 4,081,975 | ||||||
For the year ended December 31, 2012 | ||||||||||||
As Previously | ||||||||||||
Consolidated Statement of Cash Flows | Reported | Correction | As Restated | |||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of common stock | $ | 2,060,000 | $ | (1,000,000 | ) | $ | 1,060,000 | |||||
Proceeds from issuance of warrants | 1,000,000 | 1,000,000 | 2,000,000 | |||||||||
Net cash provided by financing activities | $ | 3,316,862 | $ | - | $ | 3,316,862 | ||||||
Cumulative Since Inception | ||||||||||||
As Previously | ||||||||||||
Consolidated Statement of Cash Flows | Reported | Correction | As Restated | |||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of common stock | $ | 6,551,447 | $ | (1,000,000 | ) | $ | 5,551,447 | |||||
Proceeds from issuance of warrants | 1,000,000 | 1,000,000 | 2,000,000 | |||||||||
Net cash provided by financing activities | $ | 10,289,123 | $ | - | $ | 10,289,123 |
F-53 |
Accounting, legal and professional fees and expenses | 40,000 |
Transfer agent and miscellaneous expenses | 5,000 |
EDGAR filing fees | 3,065.97 |
Total expenses | 48,065.97 |
II-1 |
In January and February 2013, the Company received $185,000 from the sales of 3,700,000 units from private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a price of $0.05 per unit.
In January 2013, the Company commenced a private placement consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.12 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $0.045 per unit. The Company sold 1,111,111 units and raised $50,000.
On February 1, 2013, an investor exercised warrants to purchase 1 million shares of the Company’s common stock at $.05 per share, which raised $50,000 for the Company.
In February and March 2013, four investors exercised options to purchase 3,335,000 shares of the Company’s common stock at $0.00125 and $0.07 per share, which raised $17,919 for the Company.
In March 2013, the Company issued 3 million shares of the Company’s common stock for the retirement of two notes payable totalling $150,000 accrued interest of $83,895. Of the accrued interest $13,895 was paid in cash. One note was entered into September 2, 2010 for $100,000 and the other was entered into on November 18, 2010 for $50,000.
On March 19, 2013, the investor holding $140,000 of convertible notes payable transferred $14,000 of the $140,000 convertible notes to the Vice Chairman of the Company. Also on March 19, 2013, the investor agreed to convert to $28,000 of the investor’s remaining $126,000 of convertible notes into 5,250,000 shares of the Company’s common stock. The Vice Chairman of the Company also agreed to convert $14, 000 of convertible notes into 2,625,000 shares of the Company’s common stock.
II-2 |
LASERLOCK TECHNOLOGIES, INC. | |||
By: | /s/ Neil Alpert | ||
Neil Alpert | |||
President and Chief Executive Officer | |||
Signature | Title | Date | ||
/s/ Michael R. Sonnenreich | August 1, 2013 | |||
Michael R. Sonnenreich | Chairman of the Board | |||
/s/ Norman A. Gardner | August 1, 2013 | |||
Norman A. Gardner | Vice Chairman, Chief Operating Officer and | |||
Director | ||||
/s/ Constance Harriman | August 1, 2013 | |||
Constance Harriman | Director | |||
Peter Pace | Director | |||
Paul Wolfowitz | Director | |||
/s/ Jonathan Weinberger | August 1, 2013 | |||
Jonathan Weinberger | Director | |||
/s/ Claudio R. Ballard | August 1, 2013 | |||
Claudio R. Ballard | Director | |||
Michael Chertoff | Director | |||
/s/ Neil Alpert | August 1, 2013 | |||
Neil Alpert | President, Chief Executive Officer and Director | |||
(Principal Executive Officer) | ||||
/s/ Scott A. McPherson | August 1, 2013 | |||
Scott A. McPherson | Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
3.1 | Amended and Restated Articles of Incorporation of the Company dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference). |
3.2 | Certificate of Amendment to Amended and Restated Articles of Incorporation of LaserLock Technologies, Inc., dated as of November 29, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
3.3 | 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). |
3.3 | Amended Certificate of Designation of Series A Preferred Stock, dated as of January 31, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2013 and incorporated herein by reference). |
3.4 | Amended and Restated Bylaws of the Company dated December 17, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference). |
5.1+ | Opinion of Morgan, Lewis & Bockius, LLP |
10.1 | Employment Agreement by and between the Company and Norman Gardner dated November 5, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference). |
10.2 | Stock Loan Agreement by and among Norman Gardner, Californian Securities, SA and Pacific Continental Securities (UK) Nominees Limited and the Company (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2003 and incorporated herein by reference). |
10.3 | Regulation S Stock Purchase Agreement, dated May 2, 2003, by and between the Company and Californian Securities, S.A. (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on August 14, 2003 and incorporated herein by reference). |
10.4 | Amendment to Regulation S Stock Purchase Agreement by and between the Company and Californian Securities, S.A., dated October 15, 2003 (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on November 14, 2003 and incorporated herein by reference). |
10.5 | Regulations S Stock Purchase Agreement, dated March 10, 2004, by and between the Company and California Securities, S.A. (filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on May 17, 2004 and incorporated herein by reference). |
10.6 | Senior Secured Convertible Note and Warrant Purchase Agreement, dated February 13, 2006, among the Company and Nob Hill Capital Partners, L.P. (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.7 | Schedule of Purchasers who have entered into the Senior Secured Convertible Note and Warrant Purchase Agreement (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.8 | Senior Secured Convertible Promissory Note, dated February 17, 2006, by the Company in favor of Nob Hill Capital Partners, L.P. in the amount of $100,000 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.9 | Schedule of Payees who have entered into a senior secured convertible promissory note substantially identical to the Senior Secured Convertible Promissory Note (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.10 | Warrant, issued by the Company in favor of Nob Hill Capital Partners, L.P., dated February 13, 2006 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.11 | Schedule of Holders to whom the Company has issued a warrant substantially identical to the Warrant (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.12 | Security Agreement, dated February 13, 2006, by and between the Company and Nob Hill Capital Partners, L.P. (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.13 | Schedule of Secured Parties who have entered into a security agreement substantially identical to the Security Agreement (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2006 and incorporated herein by reference). |
10.14 | Grant of 3,000,000 shares of the Company to Norman A. Gardner on January 3, 2006 in consideration for services provided to the Company (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 18, 2006 and incorporated herein by reference). |
10.15 | LaserLock Technologies, Inc. 2003 Stock Option Plan adopted on December 19, 2003 (filed as an exhibit to the Company’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 30, 2004 and incorporated herein by reference). |
10.16 | Option Agreement, dated as of March 23, 2012, between the Company and Gaming Partners International Corporation (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 13, 2012 and incorporated herein by reference). |
10.17 | Investment Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.18 | Registration Rights Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.19 | Technology and Services Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.20 | Patent and Technology License Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.21 | Asset Purchase Agreement, dated as of December 31, 2012, between LaserLock Technologies, Inc. and VerifyMe, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.22 | Technology and Services Agreement (Zaah), dated as of December 31, 2012, between LaserLock Technologies, Inc. and Zaah Technologies, Inc. (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.23 | Employment Agreement between LaserLock Technologies, Inc. and Norman Gardner, dated as of October 8, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.24 | Employment Agreement between LaserLock Technologies, Inc. and Neil Alpert, dated as of October 8, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.25 | Employment Agreement between LaserLock Technologies, Inc. and Scott McPherson, dated as of December 14, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.26 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Norman Gardner, dated as of November 21, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.27 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Neil Alpert, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.26). |
10.28 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Michael Sonnenreich, dated as of November 21, 2012 (filed as an exhibit to the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 1, 2013 and incorporated herein by reference). |
10.29 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Constance Harriman, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28). |
10.30 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Peter Pace, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28). |
10.31 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Jonathan Weinberger, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28). |
10.32 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Paul Wolfowitz, dated as of November 21, 2012 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28). |
10.33 | Subscription Agreement between LaserLock Technologies, Inc. and VerifyMe, Inc., dated as of January 31, 2013 (filed as an exhibit to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 6, 2013 and incorporated herein by reference). |
10.34 | Nonqualified Stock Option Grant Agreement between LaserLock Technologies, Inc. and Michael Chertoff, dated as of May 4, 2013 (option grant on identical terms and for same amount of options as pursuant to agreement filed as Exhibit 10.28). |
23.1** | Consent of Morison Cogen LLP (filed herewith). |
23.2+ | Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1). |