Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Apr. 15, 2015 | Apr. 10, 2015 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | LLTI | ||
Entity Registrant Name | LASERLOCK TECHNOLOGIES INC | ||
Entity Central Index Key | 1104038 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Common Stock, Shares Outstanding | 307,578,149 | ||
Entity Public Float | $1,843,020 |
Balance_Sheets
Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ||
Cash and cash equivalents | $63,956 | $1,285,973 |
Accounts receivable, net of allowance of $0 at December 31, 2014 and 2013 | 3,573 | |
Inventory | 97,360 | 34,271 |
Prepaid expenses | 181,086 | 189,474 |
TOTAL CURRENT ASSETS | 342,402 | 1,513,291 |
PROPERTY AND EQUIPMENT | ||
Capital equipment, net of accumulated depreciation of $161,205 and $91,952 as of December 31, 2014 and 2013 | 74,821 | 144,074 |
OTHER ASSETS | ||
Deposits | 37,197 | 37,197 |
Patents and Trademark, net of accumulated amortization of $118,502 and $105,393 as of December 31, 2014 and 2013 | 107,586 | 120,695 |
TOTAL OTHER ASSETS | 144,783 | 157,892 |
TOTAL ASSETS | 562,006 | 1,815,257 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | 5,217,770 | 316,785 |
Accrued interest - related parties | 43,215 | 16,667 |
Deferred revenue | 16,667 | |
Embedded derivative liability | 800,000 | |
Senior convertible notes payable - related parties | 114,000 | |
Notes payable | 812,553 | 50,000 |
TOTAL CURRENT LIABILITIES | 6,204,205 | 1,183,452 |
LONG-TERM LIABILITIES | ||
Warrant liability | 6,370,709 | 6,000,000 |
Accrued interest - related parties | 112,885 | 300,677 |
Senior secured convertible notes payable - related parties | 330,249 | |
TOTAL LONG-TERM LIABILITIES | 6,483,594 | 6,630,926 |
TOTAL LIABILITIES | 12,712,799 | 7,814,378 |
CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT | ||
Convertible Preferred Stock, $ .001 par value; 75,000,000 shares authorized; 21,111,111 shares issued and outstanding as of December 31, 2014 and 2013 | 633,333 | 633,333 |
Common stock, $ .001 par value; 675,000,000 shares authorized; 337,374,052 shares issued and 307,578,149 outstanding at December 31, 2014 and 319,862,042 shares issued and 290,066,139 outstanding at December 31, 2013 | 337,374 | 319,862 |
Additional paid in capital | 24,713,294 | 22,938,983 |
Treasury stock, at cost (29,795,903 shares at December 31, 2014 and 2013) | -113,389 | -113,389 |
Accumulated deficit | -37,696,405 | -29,777,910 |
STOCKHOLDERS' DEFICIT | -12,125,793 | -5,999,121 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $562,006 | $1,815,257 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ||
Allowance for accounts receivable (in dollars) | $0 | $0 |
Accumulated depreciation on capital equipment (in dollars) | 161,205 | 91,952 |
Accumulated amortization, patent and trademarks (in dollars) | $118,502 | $105,393 |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 75,000,000 | 75,000,000 |
Preferred stock, shares issued | 21,111,111 | 21,111,111 |
Preferred stock, shares outstanding | 21,111,111 | 21,111,111 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 675,000,000 | 675,000,000 |
Common stock, shares issued | 337,374,052 | 319,862,042 |
Common stock, shares outstanding | 307,578,149 | 290,066,139 |
Treasury stock, shares | 29,795,903 | 29,795,903 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | |||
NET REVENUE | ||||
Sales | $116,265 | $3,140 | ||
Royalties | 8,333 | |||
TOTAL NET REVENUE | 124,598 | 3,140 | ||
COST OF SALES | 113,024 | 2,710 | ||
GROSS PROFIT | 11,574 | 430 | ||
OPERATING EXPENSES | ||||
General and administrative | 811,916 | 762,668 | ||
Legal and accounting | 344,903 | 475,948 | ||
Payroll expenses | 1,611,376 | [1] | 9,485,339 | [1] |
Research and development | 10,590,271 | 655,840 | ||
Sales and marketing | 218,443 | 261,804 | ||
Total operating expenses | 13,576,909 | 11,641,599 | ||
(LOSS) BEFORE OTHER INCOME | -13,565,335 | -11,641,169 | ||
OTHER INCOME (EXPENSE) | ||||
Interest income | 0 | 0 | ||
Interest expense | -199,364 | -127,825 | ||
Loss on extinguishment of debt | -82,000 | -1,221,875 | ||
Change in fair value of warrants | 5,128,204 | -604,209 | ||
Change in fair value of embedded derivative liability | 800,000 | 200,000 | ||
Fair value of warrants in excess of consideration for convertible preferred stock | -2,995,791 | |||
TOTAL OTHER INCOME (EXPENSE) | 5,646,840 | -4,749,700 | ||
LOSS BEFORE INCOME TAX BENEFIT | -7,918,495 | -16,390,869 | ||
INCOME TAX BENEFIT | 0 | 0 | ||
NET LOSS | -7,918,495 | -16,390,869 | ||
Less: Deemed dividend distribution | -1,000,000 | |||
NET LOSS APPLICABLE TO COMMON STOCKHOLDERS | ($7,918,495) | ($17,390,869) | ||
BASIC (in dollars per share) | ($0.03) | ($0.07) | ||
DILUTED (in dollars per share) | ($0.03) | ($0.07) | ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING | ||||
BASIC (in shares) | 303,748,409 | 250,043,403 | ||
DILUTED (in shares) | 303,748,409 | 250,043,403 | ||
[1] | - includes share based compensation of $860,235 for the year ended December 31, 2014 and $8,619,137 for the year ended December 31, 2013 |
Statements_of_Operations_Paren
Statements of Operations (Parenthetical) (Payroll expenses, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Payroll expenses | ||
Share based compensation | $860,235 | $8,619,137 |
Statement_of_Changes_in_Stockh
Statement of Changes in Stockholders' Equity (Deficit) (USD $) | Total | Warrant Group One | Warrant Group Two | Convertible Preferred Stock | Common Stock | Common Stock | Common Stock | Additional Paid-In Capital | Additional Paid-In Capital | Additional Paid-In Capital | Treasury Stock | Deficit Accumulated During the Development Stage |
Warrant Group One | Warrant Group Two | Warrant Group One | Warrant Group Two | |||||||||
Balance at Dec. 31, 2012 | ($1,864,257) | $248,244 | $11,387,929 | ($113,389) | ($13,387,041) | |||||||
Balance (in shares) at Dec. 31, 2012 | 218,448,109 | |||||||||||
Issuance of shares for services | 1,000,000 | 1,000,000 | ||||||||||
Issuance of shares for services (in shares) | 33,333,333 | |||||||||||
Conversion of shares of preferred stock to common stock | -366,667 | 12,222 | 354,445 | |||||||||
Conversion of shares of preferred stock to common stock ( in shares) | -12,222,222 | 12,222,222 | ||||||||||
Issuance of shares of common stock | 235,000 | 4,811 | 230,189 | |||||||||
Fair value of employee stock options | 8,619,136 | 8,619,136 | ||||||||||
Issuance of shares of common stock ( in shares) | 4,811,111 | |||||||||||
Shares issued for conversion of notes payable and accrued interest | 1,890,000 | 18,275 | 1,871,725 | |||||||||
Shares issued for conversion of notes payable and accrued interest ( in shares) | 18,275,000 | |||||||||||
Exercise of options | 17,919 | 3,335 | 14,584 | |||||||||
Exercise of options ( in shares) | 3,335,000 | |||||||||||
Exercise of warrants | 10,000 | 59,999 | 1,000 | 6,000 | 9,000 | 53,999 | ||||||
Exercise of warrants (in shares) | 1,000,000 | 6,000,000 | ||||||||||
Stockholders' Equity, Other | 1,423,951 | 25,975 | 1,397,976 | |||||||||
Stockholders' Equity, Other ( in shares) | 25,974,697 | |||||||||||
Net loss | -16,390,869 | -16,390,869 | ||||||||||
Deemed dividend distribution | -1,000,000 | -1,000,000 | ||||||||||
Balance at Dec. 31, 2013 | -5,999,121 | 633,333 | 319,862 | 22,938,983 | -113,389 | -29,777,910 | ||||||
Balance (in shares) at Dec. 31, 2013 | 21,111,111 | 290,066,139 | ||||||||||
Balance at Sep. 30, 2013 | ||||||||||||
Shares issued for conversion of notes payable and accrued interest | 25,974,697 | |||||||||||
Balance at Dec. 31, 2013 | -5,999,121 | 319,862 | 22,938,983 | -113,389 | -29,777,910 | |||||||
Balance (in shares) at Dec. 31, 2013 | 290,066,139 | |||||||||||
Issuance of shares for services | 400,000 | 6,349 | 393,651 | |||||||||
Issuance of shares for services (in shares) | 6,349,206 | |||||||||||
Cashless exercise of options | 0 | 2,714 | -2,714 | |||||||||
Cashless exercise of options (in shares) | 2,714,285 | |||||||||||
Fair value of employee stock options | 860,235 | 860,235 | ||||||||||
Issuance of shares of common stock for settlement of debt | 506,588 | 8,449 | 498,139 | |||||||||
Issuance of shares of common stock for settlement of debt (in shares) | 8,448,519 | |||||||||||
Forgiveness of related party debt | 25,000 | 25,000 | ||||||||||
Net loss | -7,918,495 | -7,918,495 | ||||||||||
Balance at Dec. 31, 2014 | ($12,125,793) | $633,333 | $337,374 | $24,713,294 | ($113,389) | ($37,696,405) | ||||||
Balance (in shares) at Dec. 31, 2014 | 21,111,111 | 307,578,149 |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | ($7,918,495) | ($16,390,869) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Fair value of options issued in exchange for services | 860,235 | 8,619,137 |
Accretion of discount on notes payable | 202,377 | 3,718 |
Change in fair value warrant liability | -5,128,204 | 604,209 |
Change in fair value of embedded derivative liability | -800,000 | -200,000 |
Fair value of warrants in excess of consideration for convertible preferred stock | 2,995,791 | |
Fair value of stock in excess of converted notes payable and accrued interest | 82,000 | 1,221,875 |
Amortization and depreciation | 82,362 | 81,929 |
Stock and warrants issued in exchange for technology | 5,736,089 | |
(Increase) decrease in assets | ||
Accounts receivable | 3,573 | -100 |
Inventory | -63,089 | -14,291 |
Prepaid expenses | 8,388 | 560,526 |
Deposits | -37,197 | |
Increase (decrease) in liabilities | ||
Accounts payable and accrued expenses | 4,898,080 | -233,497 |
Deferred revenue | 16,667 | |
Net cash used in operating activities | -2,020,017 | -2,788,769 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchase of property and equipment | -10,573 | |
Purchase of intangibles | -21,954 | |
Net cash used in investing activities | -32,527 | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from issuance of preferred stock | 1,000,000 | |
Proceeds from issuance of common stock | 235,000 | |
Proceeds from exercise of stock options | 17,919 | |
Proceeds from exercise of warrants | 10,000 | |
Proceeds from issuance of notes payable | 798,000 | |
Repayments of notes payable | -150,000 | |
Net cash provided by financing activities | 798,000 | 1,112,919 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | -1,222,017 | -1,708,377 |
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR | 1,285,973 | 2,994,350 |
CASH AND CASH EQUIVALENTS - END OF YEAR | 63,956 | 1,285,973 |
Cash paid during the year for: | ||
Interest | 13,895 | |
Income taxes | 0 | 0 |
Fair value of stock issued for conversion of notes payable and accrued interest | 506,588 | 2,092,075 |
Fair value of stock issued for conversion of preferred stock to common stock | 366,667 | |
Accretion of discount on preferred stock as deemed dividend distribution | 1,000,000 | |
Fair value of beneficial conversion feature | 1,500,000 | |
Conversion of warrant in lieu of cash repayment of notes payable | 60,000 | |
Fair value of warrants issued as debt discount | 211,576 | |
Forgiveness of related party debt | $25,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Nature of the Business | |
LaserLock Technologies, Inc. (the “Company”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is traded on the OTCQB under the ticker symbol “LLTI”. A high-tech solutions company in the field of authenticating people and products, LaserLock offers state-of-the-art solutions to combat identity fraud and counterfeiting utilizing multi-factor authentication and a suite of security pigments for governments, health care providers, the gaming industry, the financial services industry and high-end retailers. | |
The Company invests in developing new proprietary color shifting inks that it believes will allow it to penetrate broader markets and result in increased revenues. The Company refines its technologies and their applications, and now has what it believes to be one of the most cost effective and efficient authentication technologies available. Its most recent technology takes advantage of the new ubiquitous energy efficient fluorescent lighting to change the color of ink, resulting in numerous potential new applications ranging from credit cards to drivers licenses, passports, stock certificates, clothing labels, currency, ID cards, and tax stamps. The technologies can also be used to protect DVDs, apparel, pharmaceuticals, and virtually any other physical product. | |
The Company’s digital solution is a multi-platform (iOS and Android) strong authentication solution that integrates biometrics and geo-location tagging. The solution completely eliminates passwords and the inherently weak security they provide. The solution also removes the user complexity associated with having to manage many complex passwords. The solution can be delivered either as a high availability cloud service, managed by the Company, or as licensed software product for operation on the client’s premises. | |
The solution integrates three independent authentication factors – something you have (for instance a smartphone), something you know (for instance a color gesture swipe) and something you are (for instance your facial geometry)—into a simple, fast, intuitive solution. The system can also accurately determine the precise location of the individual using a variety of mechanisms including GPS, cell tower triangulation, IP or WIFI address. Because the solution incorporates biometrics it completely eliminates the possibility that users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for an end-user to refute having been part of a transaction. | |
The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to operationalize the Company’s current technology. | |
Basis of Presentation | |
The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America. | |
Use of Estimates | |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. | |
Comprehensive Income | |
The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss). | |
Fair Value of Financial Instruments | |
The Company’s financial instruments consist of cash, accounts payable and accrued expenses and notes payable. The carrying value of cash, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable and convertible debt approximates its fair value based on rates and other terms currently available to the Company for similar debt instruments. | |
Cash and Cash Equivalents | |
For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents. | |
Concentration of Credit Risk Involving Cash and Cash Equivalents | |
The Company’s cash and cash equivalents are held at two financial institutions. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits. | |
Inventory | |
Inventory principally consists of penlights and pigments and is stated at the lower of cost (determined by the first-in, first-out method) or market. | |
Property and Equipment | |
Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operations. | |
Patents and Trademark | |
The Company has filed eleven patent applications relating to the company technology. Currently we have 7 U.S. patents, 4 U.S. applications pending for allowance, and 5 foreign applications pending for allowance. The Company has also purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be17 to 20 years. | |
Long-Lived Assets | |
The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360 “Property, Plant, and Equipment.” The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets. | |
Deferred Financing Costs | |
Costs incurred in securing long-term debt are deferred and amortized, as a charge to interest expense, over the term of the related debt. In the case of long-term debt modifications, the Company follows the guidance provided by ASC 470-50, “Debt – Modification and Extinguishments.” | |
Convertible Notes Payable | |
Convertible notes payable, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature (BCF) as a debt discount, which is then accreted to interest expense over the life of the related debt using the straight-line method which approximates the effective interest method. | |
Derivative Instruments | |
The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Topic 480 of the FASB ASC and Topic 815 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the Statement of Operations as a component of other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. | |
In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. | |
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. | |
Revenue Recognition | |
In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition (Codified in FASB ASC 605), the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process. | |
Income Taxes | |
The Company follows FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Tax years from 2011 through 2013 remain subject to examination by major tax jurisdictions. | |
Stock-based Payments | |
The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. | |
The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. | |
All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional paid-in capital in stockholders’ equity over the applicable service periods. | |
Advertising Costs | |
Advertising costs are expensed as incurred. Advertising costs were approximately $62,835 and $53,979 for the years ended December 31, 2014 and 2013 and are included in sales and marketing expenses. | |
Research and Development Costs | |
In accordance with FASB ASC 730, research and development costs are expensed when incurred. Research and development costs for the years ended December 31, 2014 and 2013 were $10,590,271 and $655,840. | |
Basic and Diluted Net Income per Share of Common Stock | |
The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Since the Company reported a net loss for years ended December 31, 2014 and 2013, common stock equivalents, including convertible preferred stock, convertible debt, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share during the years were the same. | |
Segment Information | |
The Company is organized and operates as one operating segment wherein the Company’s patented technologies are utilized to address counterfeiting issues. In accordance with ASC 280, Segment Reporting, the chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Since the Company operates in one segment and provides one group of similar products, all financial segment and product line information required by ASC 280 can be found in the consolidated financial statements. | |
Recently Adopted Accounting Pronouncements | |
In June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. | |
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principle operations. | |
The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which must be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. | |
For public business entities, the amendment eliminating the exception to the sufficiency-of-equity-at-risk criterion for development stage entities in paragraph 810-10-15-16 should be applied retrospectively for annual reporting periods beginning after December 15, 2015, and interim periods therein. | |
Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption entities will no longer present or disclose any information required by Topic 915. | |
The Company adopted the amendment retrospectively commencing with the interim period ending June 30, 2014. | |
Recently Issued Accounting Pronouncements Not Yet Adopted | |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update provide guidance about management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the potential impact of this standard. | |
Reclassifications | |
Certain amounts in the 2013 statement of operations have been reclassified in order for them to conform with the 2014 presentation. |
MANAGEMENT_PLANS
MANAGEMENT PLANS | 12 Months Ended |
Dec. 31, 2014 | |
Text Block [Abstract] | |
MANAGEMENT PLANS | NOTE 2 – MANAGEMENT PLANS |
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has incurred significant losses and experienced negative cash flow from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |
The Company does not believe that its existing cash resources will not be sufficient to sustain operations during the next twelve months. The Company currently needs to generate revenue in order to sustain its operations. In the event that the Company cannot generate sufficient revenue to sustain its operations, the Company will need to reduce expenses or obtain financing through the sale of debt and/or equity securities. The issuance of additional equity would result in dilution to existing stockholders. If the Company is unable to obtain additional funds when they are needed or if such funds cannot be obtained on terms acceptable to the Company, the Company may be unable to execute upon the business plan or pay costs and expenses as they are incurred, which could have a material, adverse effect on the business, financial condition and results of operations. | |
If sufficient revenues are not generated to sustain operations or additional funding cannot be obtained in the short term, the Company will need to reduce monthly expenditures to a level that will enable the Company to continue until such funds can be obtained. | |
Successful completion of the Company’s development program, and the attainment of profitable operations are dependent upon future events, including obtaining adequate financing to fulfill its development activities and achieving a level of sales adequate to support the Company’s cost structure. However, there can be no assurances that the Company will be able to secure additional equity investment or achieve an adequate sales level. |
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
PROPERTY AND EQUIPMENT | NOTE 3 – PROPERTY AND EQUIPMENT | ||||||||
Equipment consists of the following: | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Furniture and Fixtures | $ | 219,871 | $ | 219,871 | |||||
Equipment | 16,155 | 16,155 | |||||||
236,026 | 236,026 | ||||||||
Less: Accumulated depreciation | 161,205 | 91,952 | |||||||
$ | 74,821 | $ | 144,074 | ||||||
PATENTS_AND_TRADEMARK
PATENTS AND TRADEMARK | 12 Months Ended |
Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
PATENTS AND TRADEMARK | NOTE 4 – PATENTS AND TRADEMARK |
The Company has seven issued patents, four U.S. applications pending, and five foreign applications pending for allowance. Accordingly, costs associated with the registration of these patents and legal defense have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents (17 to 20 years). During the years ended December 31, 2014 and 2013, the Company capitalized $0 and $21,954 of patent costs. |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||
INCOME TAXES | NOTE 5 – INCOME TAXES | ||||||||||||||||
The Company follows FASB ASC 740-10-10 whereby an entity recognizes deferred tax assets and liabilities for future tax consequences or events that have been previously recognized in the Company’s financial statements or tax returns. The measurement of deferred tax assets and liabilities is based on provisions of enacted tax law. The effects of future changes in tax laws or rates are not anticipated. | |||||||||||||||||
At December 31, 2014 the Company has a net operating loss (“NOL”) that approximates $26.0 million. Consequently, the Company may have NOL carryforwards available for federal income tax purposes, which would begin to expire in 2019. Due to changes in ownership, a portion of the NOL carryforward may be subject to certain annual limitations imposed under Section 382 of the Internal Revenue Code. Deferred tax assets would arise from the recognition of anticipated utilization of these net operating losses to offset future taxable income. | |||||||||||||||||
The income tax benefit (provision) consists of the following: | |||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Current | ($ | 5,505,000 | ) | $ | 1,837,000 | ||||||||||||
Deferred | (372,000 | ) | 3,284,000 | ||||||||||||||
Change in valuation allowance | 5,877,000 | (5,121,000 | ) | ||||||||||||||
$ | — | $ | — | ||||||||||||||
The following is a reconciliation of the tax derived by applying the U.S. Federal Statutory Rate of 35% to the earnings before income taxes and comparing that to the recorded tax provisions: | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
Amount | % | Amount | % | ||||||||||||||
U.S federal income tax benefit at federal statutory rate | $ | (2,771,000 | ) | (35 | ) | $ | (5,718,000 | ) | (35 | ) | |||||||
State tax, net of federal tax effect | (463,000 | ) | (6 | ) | (956,000 | ) | (6 | ) | |||||||||
— | — | — | — | ||||||||||||||
Deductible share based compensation | — | — | (318,000 | ) | (2 | ) | |||||||||||
Non-deductible changes in derviative liability and share based transactions | (2,639,000 | ) | (33 | ) | 1,895,000 | 12 | |||||||||||
Other | (4,000 | ) | — | (24,000 | ) | ||||||||||||
Change in valuation allowance | 5,877,000 | 74 | 5,121,000 | 31 | |||||||||||||
$ | — | — | $ | — | — | ||||||||||||
The primary components of the Company’s December 31, 2014 and 2013 deferred tax assets, liabilities and related valuation allowance are as follows: | |||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Deferred tax asset for NOL carryforwards | $ | 10,649,000 | $ | 5,144,000 | |||||||||||||
Deferred tax liability for intangibles | (165,000 | ) | (165,000 | ) | |||||||||||||
Share based compensation | 4,205,000 | 3,683,000 | |||||||||||||||
Non deductible accrued expenses | — | 150,000 | |||||||||||||||
Valuation allowance | (14,689,000 | ) | (8,812,000 | ) | |||||||||||||
$ | — | $ | — | ||||||||||||||
Management has determined that the realization of the net deferred tax asset is not assured and has created a valuation allowance for the entire amount of such benefits. | |||||||||||||||||
The Company follows FASB ASC 740-10, which provides guidance for the recognition and measurement of certain tax positions in an enterprise’s financial statements. Recognition involves a determination whether it is more likely than not that a tax position will be sustained upon examination with the presumption that the tax position will be examined by the appropriate taxing authority having full knowledge of all relevant information. | |||||||||||||||||
The Company’s policy is to record interest and penalties associated with unrecognized tax benefits as additional income taxes in the consolidated statement of operations. As of December 31, 2014 and 2013, the Company had no unrecognized tax benefits. There were no changes in the Company’s unrecognized tax benefits during the years ended December 31, 2014 and 2013. The Company did not recognize any interest or penalties during 2014 and 2013 related to unrecognized tax benefits. |
SENIOR_SECURED_CONVERTIBLE_NOT
SENIOR SECURED CONVERTIBLE NOTES PAYABLE - RELATED PARTIES | 12 Months Ended |
Dec. 31, 2014 | |
Text Block [Abstract] | |
SENIOR SECURED CONVERTIBLE NOTES PAYABLE - RELATED PARTIES | NOTE 6 – SENIOR SECURED CONVERTIBLE NOTES PAYABLE – RELATED PARTIES |
In February 2006, the Company commenced a private placement of up to $800,000 principal amount of 10% senior secured convertible promissory notes due twelve months from the date of issue to certain Company shareholders and other accredited investors. As of December 31, 2006, the Company completed this private placement by selling all notes payable totaling $800,000. The notes are secured by a first priority lien on all of the tangible and intangible personal property of the Company. In May 2007, the due date of these notes was extended to August 2008 and the interest rate increased to 12% per annum during the extension period. In June 2011, the interest rate on all of the notes was reset to 10% and $596,500 of the notes and accrued interest was extended until September 15, 2015. During the fourth quarter of 2012 the remaining $178,749 of unextended notes and the associated accrued interest were extended to September 30, 2015. In June 2013, $225,000 of these notes payable plus accrued interest of $181,125 were converted into 7.4 million shares of the Company’s common stock, which was valued at $1,628,000. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50. | |
During the fourth quarter of 2013, $220,000 of senior convertible notes plus accrued interest of $395,000, were converted into 7,900,000 shares of common stock. Since this transaction was with related parties, the conversion was treated as a capital transaction in accordance with FASB ASC 470-50-40-3. | |
As of December 31, 2014 and December 31, 2013, the outstanding principal balance on these notes was $114,000 and $330,249. Accrued interest at December 30, 2014 and December 31, 2013 amounted to $112,885 and $300,677. | |
During the second quarter of 2014, $216,249 of principal of the Company’s outstanding senior convertible notes held by a significant shareholder of the Company, plus accrued interest of $208,339, were converted into 8,448,519 shares of common stock. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest, $82,000, was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50. | |
As of December 31, 2014, the outstanding principal balance on these notes was $114,000. Accrued interest at December 31, 2014 amounted to $112,885. | |
If an equity financing with total proceeds of more than $5,000,000 occurs while any of these notes are outstanding, holders of notes will have the right, at their option, to convert the outstanding principal and interest of the notes into shares of common stock at a discount of 30% of the price per share in the qualified financing. Since the embedded conversion feature is contingent upon the occurrence of the qualified financing, the value of the contingent conversion feature, if beneficial, will be recognized if the triggering event occurs and the contingency is resolved. |
CONVERTIBLE_NOTES_PAYABLE
CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
Dec. 31, 2014 | |
Text Block [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 7 – CONVERTIBLE NOTES PAYABLE |
During 2007, the Company commenced a private placement of up to $400,000 principal amount of 10% Convertible Promissory Notes originally due in August 2008 (the “Notes”). The Company raised $375,000 under this private placement in 2007 and the remaining $25,000 was raised in 2008. Previously $260,000 of the Notes were converted into shares of the Company’s common stock. Holders of Notes will have the right, at their option, to convert the outstanding principal and interest of the Notes into shares of the Company’s Series A Preferred Stock at any time and from time to time at the option of the holder at the initial conversion price of $0.005333 per share. It is the intention, however, that the option holder will convert the Notes into shares of the Company’s common stock. The Notes are unsecured. | |
In accordance with ASC 470, a beneficial conversion feature of $375,000 and $25,000 was required to be recorded in 2007 and 2008, respectively, since the fair value of the Company’s common stock at the date of issuance ($0.016 per share) was greater than the conversion price of $0.005333 per share. The value of the beneficial conversion feature was recorded to additional paid-in capital with the offset to discount on notes payable. The debt discount was accreted to interest expense over the one-year original term of the notes. | |
In August 2009, noteholders exercised their option to convert $260,000 of the notes payable plus accrued interest into 48,750,000 shares of common stock. The noteholder of the remaining $140,000 under this convertible note issue agreed to extend the maturity date of these notes to September 30, 2015 at an interest rate of 10% per annum. Additionally, the noteholder agreed in writing to suspend its right to convert its note until such as the Company’s authorized shares have been increased. Remaining shares to be potentially issued under this convertible note issue is 26,250,000. | |
On March 19, 2013, the investor holding $140,000 of convertible notes 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 $28,000 of the investor’s remaining $126,000 of convertible notes into 5,250,000 shares of the Company’s common stock. | |
On March 19, 2013, the Vice Chairman of the Company agreed to convert $14,000 of convertible notes into 2,625,000 of the Company’s common stock. | |
During the fourth quarter of 2013, the remaining $98,000 of convertible notes plus accrued interest of $87,150 were converted into 12,375,000 shares of common stock. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3. |
WARRANT_LIABILITY
WARRANT LIABILITY | 12 Months Ended |
Dec. 31, 2014 | |
Text Block [Abstract] | |
WARRANT LIABILITY | NOTE 9 – WARRANT LIABILITY |
On December 31, 2012, the Company entered into an Investment Agreement, a Technology and Service Agreement, a Patent and Technology License Agreement and an Asset Purchase Agreement with VerifyMe, and on the same date entered into a Technology and Service Agreement with Zaah Technologies, Inc. (collectively with the VerifyMe agreements, the “Agreements”). Contemplated by those Agreements were warrants issuances by the Company for the purchase of the Company’s common stock. | |
The warrants associated with these Agreements are subject to anti-dilution adjustments outlined in the Agreements. In accordance with FASB ASC 815, the warrants were classified as a liability in the total amount of $2.4 million at December 31, 2012. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014 and December 31, 2013, the fair value of the warrant liability was $787,544 and $3,700,000. | |
On January 1, 2014, the Company issued warrants to purchase 6,349,206 shares of the Company’s common stock as consideration for technology received from VerifyMe under to the Patent and Technology License Agreement dated December 31, 2012. The warrants are exercisable at $0.10 per share. The warrants are subject to anti-dilution adjustments outlined in the Agreement. In accordance with FASB ASC 815, the warrants were classified as a liability with an initial fair value of $444,000, which was immediately expensed as research and development costs. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014, the fair value of the warrant liability was $121,209. | |
The Company made the payment of warrants to VerifyMe on a good faith basis, based on the assumption that the technology conveyed to the Company would be patentable and licensable. The Company has not reached a conclusion that the technology will be patentable and licensable, and can provide no assurance to this effect. | |
Should the Company ultimately conclude that the technology received from VerifyMe is patentable and licensable, the Company would be required to make, on January 1, 2015, an additional payment pursuant to Patent and Technology Agreement in the amount of $4,500,000, to be paid by issuing (i) a number of shares of common stock equal to (x) $4,500,000 divided by (y) a price which equals a 10% discount to the market price at the time of issuance and (ii) warrants to purchase an equal number of shares of common stock exercisable at a price of $0.10 per share. Based upon the current share price of $0.04 per share, this would result in the issuance of approximately an additional 125 million shares of common stock and warrants to purchase an additional 125 million shares. The $4,500,000 was accrued at December 31, 2014. The number of warrants to be issued based on a stock price of $0.02 at December 31, 2014 was 250 million warrants. The warrants were valued at $4,892,089 using the Black-Scholes pricing model to calculate the grant-date fair value of the warrants with the following assumptions: no dividend yield, expected volatility of 229.1%, risk free interest rate of 1.65% and expected life of five years. |
CONVERTIBLE_PREFERRED_STOCK
CONVERTIBLE PREFERRED STOCK | 12 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
CONVERTIBLE PREFERRED STOCK | NOTE 10 – CONVERTIBLE PREFERRED STOCK |
Subscription Agreement | |
The Company entered into a Subscription Agreement with VerifyMe on January 31, 2013 (the “Subscription Agreement”). Under the terms of the Subscription Agreement, VerifyMe subscribed to purchase 33,333,333 shares of the Company’s Series A preferred stock (the “Preferred Stock”) and a warrant to purchase 33,333,333 shares of the Company’s common stock at an exercise price of $0.12 per share, for $1 million. | |
At any time before January 31, 2015, VerifyMe has the right, but not the obligation, to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by VerifyMe in exchange for the price originally paid by VerifyMe therefor upon the occurrence of any of the following events:(i) the consummation of any bona fide business acquisition, (ii) the incurrence of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share. This right has not been exercised. | |
In accordance with FASB ASC 480 and 815, the Preferred Stock has been classified as permanent equity and was valued at $1 million at January 31, 2013. | |
The conversion feature of the Preferred Stock is an embedded derivative, which is classified as a liability in accordance with FASB ASC 815 and was valued in accordance with FASB ASC 470 as a beneficial conversion feature at a fair value of $1 million at January 31, 2013, $0 at December 31, 2014 and $800,000 at December 31, 2013. This was classified as an embedded derivative liability and a discount to Preferred Stock. Because the Preferred Stock can be converted at any time, the full amount of the original fair value was accreted and classified as a reduction to the discount on Preferred Stock and a deemed dividend distribution in the full amount of $1 million, in 2013. | |
The warrants associated with the Preferred Stock were also classified as a liability since they are subject to anti-dilutive adjustments outlined in the warrant agreement and valued at a fair market value of $2,995,791 at January 31, 2013. Because this amount was entirely in excess of the transaction price, this amount was recorded as a charge to expenses of $2,995,791 in 2013. In addition, the warrants must be valued every reporting period and adjusted to market with the increase or decrease being adjusted through earnings. As of December 31, 2014 and December 31, 2013, the fair value of the warrants was $494,939 and $2,300,000, respectively. | |
The Preferred Stock has a preference in liquidation that the holders of the Preferred Stock are to be paid out of assets available for distribution prior to holders of common stock. The Preferred Stockholders may cast the number of votes equal to the number of whole shares of common stock into which the shares of Preferred Stock can be converted. In addition, the Preferred Stockholders are to be paid dividends, based on the number of shares of Preferred Stock as if the shares had been converted to common shares, prior to the common stockholders receiving a dividend. | |
The conversion price of the shares of Preferred Stock is currently $0.03 per share. | |
In August 2013, VerifyMe elected to convert in a cashless transaction an equal number of shares of Preferred Stock valued at $366,667 to 12,222,222 shares of common stock. |
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 11 – FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||
Derivative Liabilities | |||||||||||||||||
For purposes of determining whether certain instruments are derivatives for accounting treatment, the Company follows the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entity’s own stock. The standard applies to any freestanding financial instruments or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. | |||||||||||||||||
Liabilities measured at fair value on a recurring basis are summarized as follows: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability related to fair value of beneficial conversion feature | $ | — | $ | — | $ | — | $ | — | |||||||||
Derivative liability related to fair value of warrants | — | — | 6,370,709 | 6,370,709 | |||||||||||||
Total | $ | — | $ | — | $ | 6,370,709 | $ | 6,370,709 | |||||||||
The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs: | |||||||||||||||||
Total | |||||||||||||||||
Balance at January 1, 2014 | $ | 6,000,000 | |||||||||||||||
Additional Warrants issued January 2014 | 444,000 | ||||||||||||||||
Additional Warrants issued June 2014 | 34,222 | ||||||||||||||||
Additional Warrants issued 3rd Quarter 2014 | 166,791 | ||||||||||||||||
Additional Warrants Issued 4th Quarter 2014 | 4,903,900 | ||||||||||||||||
Change in fair value of derivative liabilities | (5,178,204 | ) | |||||||||||||||
Balance at December 31, 2014 | $ | 6,370,709 | |||||||||||||||
As of December 31, 2014, the beneficial conversion feature of the Preferred Stock is treated as an embedded derivative liability and changes in the fair value were recognized in earnings. The Preferred Stock shares are convertible into shares of the Company’s common stock, which did traded in an active securities market, therefore the embedded derivative liability was valued using the following market based inputs: | |||||||||||||||||
Closing trade price of Common Stock | $ | 0.02 | |||||||||||||||
Series A Preferred Stock Conversion price | $ | 0.03 | |||||||||||||||
Intrinsic value of conversion option per share | $ | — | |||||||||||||||
The Company has no assets that are measured at fair value on a recurring basis. There were no assets or liabilities measured at fair value on a non-recurring basis during the year ended December 31, 2014. | |||||||||||||||||
As of December 31, 2014, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These common stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions: | |||||||||||||||||
December 31, 2014 | |||||||||||||||||
Annual Dividend Yield | 0.00% | ||||||||||||||||
Expected Life (Years) | 3.0 - 4.69 | ||||||||||||||||
Risk-Free Interest Rate | 1.10% -1.65% | ||||||||||||||||
Expected Volatility | 174.8% - 203.6% | ||||||||||||||||
Expected volatility was based primarily on historical volatility. Historical volatility was computed using daily pricing observations for recent periods. The Company believes this method produced an estimate that was representative of the Company’s expectations of future volatility over the expected term of these warrants. The Company had no reason to believe future volatility over the expected remaining life of these warrants was likely to differ materially from historical volatility. The expected life was based on the remaining contractual term of the warrants. The risk-free rate was based on the U.S. Treasury rate that corresponded to the expected term of the warrants. |
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2014 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 12 – STOCKHOLDERS’ EQUITY |
In January and February 2013, the Company received $185,000 from the sale of 3,700,000 units from private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.10 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.05 per unit. | |
In January 2013, the Company commenced private placements consisting of shares of the Company’s common stock and warrants to purchase shares of the Company’s common stock at an exercise price of $0.12 per share. The shares and warrants were sold in units with each unit comprised of one share and one warrant at a purchase price of $.045 per unit. The company sold 1,111,111 units and raised $50,000. | |
On February 1, 2013, an investor exercised a warrant to purchase 1 million shares of the Company’s common stock that raised $10,000 for the Company. | |
In February and March 2013, four investors exercised options to purchase 3,335,000 shares of the Company’s common stock that raised $17,919 for the Company. | |
On January 1, 2014, under the terms of the Patent and Technology License Agreement, the Company issued 6,349,206 shares of common stock to VerifyMe, in addition to the warrants described in Note 8 above. The shares were issued in payment for the technology received. Under the agreement, $400,000 worth of the Company’s common stock was to be paid by the Company to VerifyMe at a 10% discount to the market at time of payment. The closing price was $0.07 per share discounted 10% to $0.063. The $400,000 payment divided by the $0.063 per share resulted in 6,349,206 shares to be issued. The entire $400,000 payment was expensed to research and development. | |
During the second quarter of 2014, $216,249 of principal of the Company’s outstanding senior convertible notes plus accrued interest of $208,339, were converted into 8,448,519 shares of common stock. The excess of the fair value of the Company’s common stock over the value of the notes payable and accrued interest, $82,000, was recorded as loss on extinguishment of debt in accordance with FASB ASC 470-50. |
STOCK_OPTIONS
STOCK OPTIONS | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
STOCK OPTIONS | NOTE 13 – STOCK OPTIONS | ||||||||||||
During 1999, the Board of Directors (“Board”) of the Company adopted, with the approval of the stockholders, a Stock Option Plan. In 2000, the Board superseded that plan and created a new Stock Option Plan, pursuant to which it is authorized to grant options to purchase up to 1.5 million shares of common stock. On December 17, 2003, the Board, with approval of the stockholders, superseded the 2000 plan and created the 2003 Stock Option Plan (the “2003 Plan”). Under the 2003 Plan the Company is authorized to grant options to purchase up to 18,000,000 shares of common stock to the Company’s employees, officers, directors, consultants, and other agents and advisors. The Plan is intended to permit stock options granted to employees under the Plan to qualify as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (“Incentive Stock Options”). All options granted under the 2003 Plan, which are not intended to qualify as Incentive Stock Options, are deemed to be non-qualified options (“Non-Statutory Stock Options”). | |||||||||||||
During 2013, our Board adopted a new omnibus incentive compensation plan that was ratified by the shareholders at the 2013 annual meeting, (the “2013 Plan”) which will serve as the successor incentive compensation plan to the 2003 Plan, and will provide the Company with an comprehensive plan to design and structure grants of stock options, stock units, stock awards, stock appreciation rights and other stock-based awards for our employees, non-employee directors and certain consultants and advisors. Our Board of Directors believes that the availability of (i) 20,000,000 new shares of our common stock, plus (ii) the 1,274,004 shares of our common stock available for issuance under the 2003 Plan, will be sufficient to meet the objective. | |||||||||||||
As of December 31, 2014, there are 23,225,996 options that have been issued, and 14,774,004 options that are available to be issued under the Plan. | |||||||||||||
The 2013 Plan is administered by a committee of the Board (“Compensation Committee”) which determines the persons to whom awards will be granted, the number of awards to be granted and the specific terms of each grant, including the vesting thereof, subject to the provisions of the plan. | |||||||||||||
In connection with Incentive Stock Options, the exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock for which an employee may exercise Incentive Stock Options under all plans of the company shall not exceed $1,000,000 per calendar year. If any employee shall have the right to exercise any options in excess of $100,000 during any calendar year, the options in excess of $100,000 shall be deemed to be Non-Statutory Stock Options, including prices, duration, transferability and limitations on exercise. | |||||||||||||
The Company issued Non-Statutory Stock Options pursuant to contractual agreements with non-employees. Options granted under the agreements are expensed when the related service or product is provided. | |||||||||||||
Determining the appropriate fair value of stock-based awards requires the input of subjective assumptions. The Company uses the Black-Scholes option pricing model to value its stock option awards. The assumptions used in calculating the fair value represent management’s best estimates and involve inherent uncertainties and judgments. | |||||||||||||
On January 22, 2013, the Company issued options to an employee to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 250,000 immediately, 250,000 on the first anniversary of the grant date and 500,000 on the second anniversary of the grant date. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 222%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of the options issued was $99,972, of which $25,000 was expensed immediately and the remainder is being expensed over the vesting terms. The total expense for the years ended December 31, 2014 and 2013 was $26,500 and $12,600. | |||||||||||||
On February 25, 2013, the Company issued options to an employee to purchase 500,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years. The options vest as follows: 200,000 on the first anniversary of the grant date, 200,000 on the second anniversary of the grant date and 100,000 on the third anniversary of the grant date. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 259%, risk-free interest rate of 1.9% and expected option life of ten years. The fair value of options issued was $89,998. The total expense recognized for the three months ended March 31, 2013 was $5,000. The employee was dismissed and the options were cancelled during the three months ended June 30, 2013. The total expense recognized of $5,000 was reversed upon cancellation of the options. | |||||||||||||
On March 13, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vested 50% immediately and 50% on March 13, 2014. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 235%, risk-free interest rate of 2.0% and expected option life of ten years. The fair value of the option issued was $439,963 of which $219,982 was expensed immediately and the remainder will be expensed over one year. The total expense recognized for the years ended December 31, 2014 and 2013 was $43,394 and $55,447. | |||||||||||||
On May 4, 2013, the Company issued an option to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board. The options vest 50% immediately and 50% on May 4, 2014. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 235%, risk-free interest rate of 1.78% and expected option life of ten years. The fair value of the option issued was $460,000 of which $230,000 was expensed immediately and the remainder will be expensed over one year. The total expense for the three and years ended December 31, 2014 and 2013 was $78,137 and $57,973. | |||||||||||||
Effective October 8, 2012, the Company entered into a three year agreement with the then Vice Chairman of the Board of the Company, with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company agreed to issue 10 year options to the then Vice Chairman to purchase 5% of the shares of the Company’s fully diluted common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million. The Company raised the $2.5 million in funding and on June 25, 2013, the Company issued the Vice Chairman 19 million 10 year options in satisfaction of the 5% of the shares of the Company’s fully diluted common stock clause. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 146.1%, risk-free interest rate of 2.6% and expected option life of ten years. The fair value of options issued was $3,767,700, which was expensed immediately. | |||||||||||||
Effective October 16, 2012, the Company entered into a three year agreement with the then President and current Chief Executive Officer of the Company with an annual compensation of $200,000 per year. In addition, upon execution of the agreement the Company agreed to issue 10 year options to the President to purchase 5% of the shares of the Company’s fully diluted common stock at an exercise price of $.05 per share, subsequent to the Company receiving funding of $2.5 million and on June 25, 2013, the Company issued the President and Chief Executive Officer 19 million 10 year options in satisfaction of the 5% of the shares of the Company’s fully diluted common stock clause. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 146.1%, risk-free interest rate of 2.6% and expected option life of ten years. The fair value of options issued was $3,767,700, which was expensed immediately. | |||||||||||||
On September 30, 2013, the Company issued an option to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Operating Officer. The options vest 50% after the first year and 50% at the end of 24 months after the grant date. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of ranging from 268.4% to 272.8%, risk-free interest rate of 1.39% and expected option life ranging from 10 years. The fair value of the option issued was $99,840. The total expense for the years ended December 31, 2014 and 2013 was $62,395 and $18,903, respectively. | |||||||||||||
On December 2, 2013, the Company issued an option to purchase 1 million shares of the Company’s common stock at an exercise price of $0.15 per share, with a term of ten years, to the Company’s Chief Financial Officer. The options vest 50% after the first year and 50% at the end of 24 months. The Company used the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of ranging from 266.1%, risk-free interest rate of 2.64% and expected option life of 10 years. The fair value of the option issued was $79,994, which will be expensed over the vesting term. The total expense for the years ended December 31, 2014 and 2013 was $49,916 and $15,123, respectively. | |||||||||||||
On March 28, 2014, the Company issued options to purchase an aggregate of 6,000,000 shares of the Company’s common stock at an exercise price of $0.05 per share, with a term of ten years, to a member of the Board of Directors. The fair value of options issued was $599,893 of which all was expensed immediately. These options were valued using the Black-Scholes option pricing model to calculate the grant-date fair value of the options, with the following assumptions: no dividend yield, expected volatility of 229%, risk-free interest rate of 2.73% and expected option life of ten years. | |||||||||||||
On March 28, 2014 at the urging of the Company’s previous Chairman, Michael Sonnenreich, and after discussion by the Board and suggestions by Board Observers attending the meeting, the Board unanimously voted to extend the exercise period of all existing 10 year options, for a full ten years (as opposed to six months) regardless of their status with the Company. This charge was memorialized and sent in writing to previous Directors by then general counsel Morgan, Lewis & Bockius. | |||||||||||||
The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2012: | |||||||||||||
Weighted Average | |||||||||||||
Option/Warrant | Exercise | Exercise | |||||||||||
Shares | Price | Price | |||||||||||
Outstanding, December 31, 2012 | 82,807,221 | $ | 0.00125 to $0.20 | $ | 0.01 | ||||||||
Granted | 38,144,444 | 0.10 - 0.15 | 0.03 | ||||||||||
Exercised | (9,435,000 | ) | 0.00125 - 0.07 | — | |||||||||
Expired | — | — | — | ||||||||||
Outstanding, December 31, 2013 | 111,516,665 | 0.00125 to 0.20 | 0.09 | ||||||||||
Granted | 10,349,209 | 0.05 - 0.10 | 0.01 | ||||||||||
Exercised | — | — | — | ||||||||||
Expired | (700,000 | ) | — | — | |||||||||
*Outstanding, December 31, 2014 | 121,165,874 | $ | 0.01 to $.20 | $ | 0.1 | ||||||||
*Exercisable, December 31, 2014 | 121,165,874 | $ | 0.01 to $.20 | $ | 0.1 | ||||||||
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years) | 5.7 | ||||||||||||
* Does not include 250,000,000 warrants that are due to be issued on January 1, 2015. The warrants has a fair value of $4,892,089 and are reflected in warrant liabilities on the balance sheet as of December 31, 2014 and the corresponding expense is reflected in research and development expense. | |||||||||||||
A summary of incentive stock option transactions for employees since December 31, 2013 is as follows: | |||||||||||||
Option/Warrant | Exercise Price | Weighted Average | |||||||||||
Shares | Exercise Price | ||||||||||||
Outstanding, December 31, 2012 | 15,766,667 | $ | 0.00125 to $0.10 | $ | 0.06 | ||||||||
Granted | 45,500,000 | 0.05 - 0.15 | 0.04 | ||||||||||
Exercised | (900,000 | ) | 0.00125 | — | |||||||||
Expired | (500,000 | ) | 0.05 | — | |||||||||
Outstanding, December 31, 2013 | 59,866,667 | 0.00125 to 0.15 | 0.06 | ||||||||||
Granted | 6,000,000 | 0.05 | 0.01 | ||||||||||
Exercised | (12,000,000 | ) | 0.05 | 0.01 | |||||||||
Expired | — | — | — | ||||||||||
Outstanding, December 31, 2014 | 53,866,667 | $ | 0.05 - $0.15 | $ | 0.05 | ||||||||
Exercisable, December 31, 2014 | 51,366,667 | $ | 0.05 - $0.15 | $ | 0.06 | ||||||||
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years) | 8.3 | ||||||||||||
OPERATING_LEASES
OPERATING LEASES | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Leases [Abstract] | |||||
OPERATING LEASES | NOTE 14 – OPERATING LEASES | ||||
For the year ended December 31, 2014 and 2013, total rent expense under leases amounted to $65,950 and $59,272. At December 31, 2014, the Company was obligated under various non-cancelable operating lease arrangements for property as follows: | |||||
2015 | 74,637 | ||||
2016 | 31,605 | ||||
$ | 106,242 | ||||
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2014 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 15 – RELATED PARTY TRANSACTIONS |
During the fourth quarter of 2013, the company converted outstanding debt owed to shareholders into 25,974,697 shares of common stock (See Notes 6,7,8). | |
At December 31, 2014 and 20123, two and five shareholders of the Company held $114,000 and $330,249 of the senior secured convertible notes payable and were owed accrued interest of $112,505 and 300,677. | |
One shareholder held $140,000 of convertible notes payable as of December 31, 2012, that was satisfied by December 31, 2013. | |
At December 31, 2014, two stockholders of the Company held $114,000 in principal of the Company’s senior secured convertible notes payable, and were owed accrued interest of $112,505 related to such notes. |
CONTINGENCIES
CONTINGENCIES | 12 Months Ended |
Dec. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | NOTE 16 – CONTINGENCIES |
In October 2010, the Company filed suit in the Western District of Pennsylvania against WS Packaging Group, Inc. (“WS”) alleging that WS infringed on one of the Company’s patents in the manufacture of MONOPOLY game pieces on behalf of McDonald’s Corp. On June 4, 2012, both WS and the Company filed a stipulation to dismiss the action without prejudice and enter into settlement negotiations. There are no ongoing negotiations. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 17 – SUBSEQUENT EVENTS |
On February 10, 2015, the Company issued a note payable for $25,000, bearing interest at 5.0% to an accredited investor and director of the Company. The note is due on June 10, 2015. | |
On February 15, 2015, a Board member advised the Company that her two year term as a Director expired on February 21, 2015 and that she would not stand for re-election or continue to serve as a director. | |
On February 26, 2015, a Board member advised the Company that he was resigning from the Board of Directors. | |
At December 31, 2014, three stockholders of the Company held $323,000 in principal of the Company’s notes payable, and were owed accrued interest of $31,845 related to such notes. | |
On March 27, 2015, the Company issued a note payable for $111,102, bearing interest at 8.0% to an accredited investor. The note is due on June 25, 2015. On March 20, 2014, VerifyMe waived its contractual rights as it relates to this transaction. | |
On March 30, 2015, the Company was advised by the United States Patent and Trademark Office (“USPTO”) that its petition for an unintentional delayed payment for an unpaid maintenance fee to reinstate its patent was granted by the USPTO. The patent, for a counterfeiting ink detection system, was granted on November 2, 2004. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2014 | |
Accounting Policies [Abstract] | |
Nature of the Business | Nature of the Business |
LaserLock Technologies, Inc. (the “Company”) was incorporated in the State of Nevada on November 10, 1999. The Company is based in Washington, D.C. and its common stock is traded on the OTCQB under the ticker symbol “LLTI”. A high-tech solutions company in the field of authenticating people and products, LaserLock offers state-of-the-art solutions to combat identity fraud and counterfeiting utilizing multi-factor authentication and a suite of security pigments for governments, health care providers, the gaming industry, the financial services industry and high-end retailers. | |
The Company invests in developing new proprietary color shifting inks that it believes will allow it to penetrate broader markets and result in increased revenues. The Company refines its technologies and their applications, and now has what it believes to be one of the most cost effective and efficient authentication technologies available. Its most recent technology takes advantage of the new ubiquitous energy efficient fluorescent lighting to change the color of ink, resulting in numerous potential new applications ranging from credit cards to drivers licenses, passports, stock certificates, clothing labels, currency, ID cards, and tax stamps. The technologies can also be used to protect DVDs, apparel, pharmaceuticals, and virtually any other physical product. | |
The Company’s digital solution is a multi-platform (iOS and Android) strong authentication solution that integrates biometrics and geo-location tagging. The solution completely eliminates passwords and the inherently weak security they provide. The solution also removes the user complexity associated with having to manage many complex passwords. The solution can be delivered either as a high availability cloud service, managed by the Company, or as licensed software product for operation on the client’s premises. | |
The solution integrates three independent authentication factors – something you have (for instance a smartphone), something you know (for instance a color gesture swipe) and something you are (for instance your facial geometry)—into a simple, fast, intuitive solution. The system can also accurately determine the precise location of the individual using a variety of mechanisms including GPS, cell tower triangulation, IP or WIFI address. Because the solution incorporates biometrics it completely eliminates the possibility that users might share their authentication credentials. The combination of biometrics and geolocation provides extremely strong transactional evidence, making it nearly impossible for an end-user to refute having been part of a transaction. | |
The Company’s activities are subject to significant risks and uncertainties, including the need to secure additional funding to operationalize the Company’s current technology. | |
Basis of Presentation | Basis of Presentation |
The accompanying financial statements are presented in accordance with accounting principles generally accepted in the United States of America. | |
Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. | |
Comprehensive Income | Comprehensive Income |
The Company follows Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) 220 in reporting comprehensive income. Comprehensive income is a more inclusive financial reporting methodology that includes disclosure of certain financial information that historically has not been recognized in the calculation of net income. Since the Company has no items of other comprehensive income (loss), comprehensive income (loss) is equal to net income (loss). | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
The Company’s financial instruments consist of cash, accounts payable and accrued expenses and notes payable. The carrying value of cash, accounts payable and accrued expenses approximate their fair value because of their short maturities. The Company believes the carrying amount of its notes payable and convertible debt approximates its fair value based on rates and other terms currently available to the Company for similar debt instruments. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
For purposes of reporting cash flows, the Company considers all cash accounts, which are not subject to withdrawal restrictions or penalties, and certificates of deposit and commercial paper with original maturities of 90 days or less to be cash or cash equivalents. | |
Concentration of Credit Risk Involving Cash and Cash Equivalents | Concentration of Credit Risk Involving Cash and Cash Equivalents |
The Company’s cash and cash equivalents are held at two financial institutions. At times, the Company’s deposits may exceed Federal Deposit Insurance Corporation (FDIC) coverage limits. The Company has not experienced any losses from maintaining cash accounts in excess of federally insured limits. | |
Inventory | Inventory |
Inventory principally consists of penlights and pigments and is stated at the lower of cost (determined by the first-in, first-out method) or market. | |
Property and Equipment | Property and Equipment |
Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, principally five to seven years. Maintenance and repairs of property are charged to operations, and major improvements are capitalized. Upon retirement, sale, or other disposition of property and equipment, the costs and accumulated depreciation are eliminated from the accounts, and any resulting gain or loss is included in operation | |
Patents and Trademark | Patents and Trademark |
The Company has filed eleven patent applications relating to the company technology. Currently we have 7 U.S. patents, 4 U.S. applications pending for allowance, and 5 foreign applications pending for allowance. The Company has also purchased a trademark. Costs associated with the registration and legal defense of the patents have been capitalized and are amortized on a straight-line basis over the estimated lives of the patents which were determined to be17 to 20 years. | |
Long-Lived Assets | Long-Lived Assets |
The Company evaluates the recoverability of its long-lived assets in accordance with ASC 360 “Property, Plant, and Equipment.” The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets are measured by a comparison of the carrying amount of an asset to future cash flows expected to be generated by the asset, undiscounted and without interest or independent appraisals. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the assets. | |
Deferred Financing Costs | Deferred Financing Costs |
Costs incurred in securing long-term debt are deferred and amortized, as a charge to interest expense, over the term of the related debt. In the case of long-term debt modifications, the Company follows the guidance provided by ASC 470-50, “Debt – Modification and Extinguishments.” | |
Convertible Notes Payable | Convertible Notes Payable |
Convertible notes payable, for which the embedded conversion feature does not qualify for derivative treatment, are evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature (BCF) as a debt discount, which is then accreted to interest expense over the life of the related debt using the straight-line method which approximates the effective interest method. | |
Derivative Instruments | Derivative Instruments |
The Company evaluates its convertible debt, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Topic 480 of the FASB ASC and Topic 815 of the FASB Accounting Standards Codification. The result of this accounting treatment is that the fair value of the embedded derivative, if required to be bifurcated, is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the Statement of Operations as a component of other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. | |
In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. | |
The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether net-cash settlement of the derivative instrument is expected within 12 months of the balance sheet date. | |
Revenue Recognition | Revenue Recognition |
In accordance with Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition (Codified in FASB ASC 605), the Company recognizes revenue when (i) persuasive evidence of a customer or distributor arrangement exists, (ii) a retailer, distributor or wholesaler receives the goods and acceptance occurs, (iii) the price is fixed or determinable, and (iv) collectability of the revenue is reasonably assured. Subject to these criteria, the Company recognizes revenue from product sales, consisting mainly of pigments and penlights, upon shipment to the customer. Royalty revenue is recognized upon receipt of notification from a customer that the Company’s product has been used in the customer’s production process. | |
Income Taxes | Income Taxes |
The Company follows FASB ASC 740 when accounting for income taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for temporary differences between the financial statements and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. Tax years from 2011 through 2013 remain subject to examination by major tax jurisdictions. | |
Stock-based Payments | Stock-based Payments |
The Company accounts for stock-based compensation under the provisions of ASC 718, Compensation—Stock Compensation (“ASC 718”), which requires the measurement and recognition of compensation expense for all stock-based awards made to employees and directors based on estimated fair values on the grant date. The Company estimates the fair value of stock-based awards on the date of grant using the Black-Scholes model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods using the straight-line method. | |
The Company accounts for stock-based compensation awards to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). Under ASC 505-50, the Company determines the fair value of the warrants or stock-based compensation awards granted as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. | |
All issuances of stock options or other equity instruments to non-employees as consideration for goods or services received by the Company are accounted for based on the fair value of the equity instruments issued. Any stock options issued to non-employees are recorded as an expense and additional paid-in capital in stockholders’ equity over the applicable service periods. | |
Advertising Costs | Advertising Costs |
Advertising costs are expensed as incurred. Advertising costs were approximately $62,835 and $53,979 for the years ended December 31, 2014 and 2013 and are included in sales and marketing expenses. | |
Research and Development Costs | Research and Development Costs |
In accordance with FASB ASC 730, research and development costs are expensed when incurred. Research and development costs for the years ended December 31, 2014 and 2013 were $10,590,271 and $655,840. | |
Basic and Diluted Net Income per Share of Common Stock | Basic and Diluted Net Income per Share of Common Stock |
The Company follows FASB ASC 260 when reporting Earnings Per Share resulting in the presentation of basic and diluted earnings per share. Since the Company reported a net loss for years ended December 31, 2014 and 2013, common stock equivalents, including convertible preferred stock, convertible debt, stock options and warrants were anti-dilutive; therefore, the amounts reported for basic and dilutive loss per share during the years were the same. | |
Segment Information | Segment Information |
The Company is organized and operates as one operating segment wherein the Company’s patented technologies are utilized to address counterfeiting issues. In accordance with ASC 280, Segment Reporting, the chief operating decision-maker has been identified as the Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. Since the Company operates in one segment and provides one group of similar products, all financial segment and product line information required by ASC 280 can be found in the consolidated financial statements. | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements |
In June 2014, the FASB issued Accounting Standards Update No. 2014-10, Development State Entities (Topic 915), Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this update remove the definition of a development stage entity from the Master Glossary of the Accounting Standard Codification, thereby removing the financial reporting distinction that previously required development stage entities to (1) present inception-to-date information in the statements of income, cash flow, and stockholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. | |
The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principle operations. | |
The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of Topic 915 should be applied retrospectively except for the clarification to Topic 275, which must be applied prospectively. For public business entities, those amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein. | |
For public business entities, the amendment eliminating the exception to the sufficiency-of-equity-at-risk criterion for development stage entities in paragraph 810-10-15-16 should be applied retrospectively for annual reporting periods beginning after December 15, 2015, and interim periods therein. | |
Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption entities will no longer present or disclose any information required by Topic 915. | |
The Company adopted the amendment retrospectively commencing with the interim period ending June 30, 2014. | |
Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Issued Accounting Pronouncements Not Yet Adopted |
In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this Update provide guidance about management’s responsibility to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued and to provide related footnote disclosures. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued. The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently evaluating the potential impact of this standard. | |
Reclassifications | Reclassifications |
Certain amounts in the 2013 statement of operations have been reclassified in order for them to conform with the 2014 presentation. |
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Property, Plant and Equipment [Abstract] | |||||||||
Equipment | Equipment consists of the following: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Furniture and Fixtures | $ | 219,871 | $ | 219,871 | |||||
Equipment | 16,155 | 16,155 | |||||||
236,026 | 236,026 | ||||||||
Less: Accumulated depreciation | 161,205 | 91,952 | |||||||
$ | 74,821 | $ | 144,074 | ||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||
Income Tax Benefit (Provision) | The income tax benefit (provision) consists of the following: | ||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Current | ($ | 5,505,000 | ) | $ | 1,837,000 | ||||||||||||
Deferred | (372,000 | ) | 3,284,000 | ||||||||||||||
Change in valuation allowance | 5,877,000 | (5,121,000 | ) | ||||||||||||||
$ | — | $ | — | ||||||||||||||
Income Tax Reconciliation | The following is a reconciliation of the tax derived by applying the U.S. Federal Statutory Rate of 35% to the earnings before income taxes and comparing that to the recorded tax provisions: | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Amount | % | Amount | % | ||||||||||||||
U.S federal income tax benefit at federal statutory rate | $ | (2,771,000 | ) | (35 | ) | $ | (5,718,000 | ) | (35 | ) | |||||||
State tax, net of federal tax effect | (463,000 | ) | (6 | ) | (956,000 | ) | (6 | ) | |||||||||
— | — | — | — | ||||||||||||||
Deductible share based compensation | — | — | (318,000 | ) | (2 | ) | |||||||||||
Non-deductible changes in derviative liability and share based transactions | (2,639,000 | ) | (33 | ) | 1,895,000 | 12 | |||||||||||
Other | (4,000 | ) | — | (24,000 | ) | ||||||||||||
Change in valuation allowance | 5,877,000 | 74 | 5,121,000 | 31 | |||||||||||||
$ | — | — | $ | — | — | ||||||||||||
Deferred Tax Assets, Liabilities And Related Valuation Allowance | The primary components of the Company’s December 31, 2014 and 2013 deferred tax assets, liabilities and related valuation allowance are as follows: | ||||||||||||||||
December 31, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Deferred tax asset for NOL carryforwards | $ | 10,649,000 | $ | 5,144,000 | |||||||||||||
Deferred tax liability for intangibles | (165,000 | ) | (165,000 | ) | |||||||||||||
Share based compensation | 4,205,000 | 3,683,000 | |||||||||||||||
Non deductible accrued expenses | — | 150,000 | |||||||||||||||
Valuation allowance | (14,689,000 | ) | (8,812,000 | ) | |||||||||||||
$ | — | $ | — | ||||||||||||||
WARRANT_LIABILITY_Tables
WARRANT LIABILITY (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Text Block [Abstract] | |||||||||
NOTES PAYABLE | NOTE 8 – NOTES PAYABLE | ||||||||
During the fourth quarter of 2013, all of the $561,000 of unsecured notes payable, less 9,914 of unamortized discount, plus accrued interest of $83,715 was converted into 4,473,333 shares of common stock plus a cash repayment of $150,000. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3. | |||||||||
Private Placement of 8% Series A Notes Payable | |||||||||
In August 2009, the Company commenced a private placement of up to $300,000 consisting of up to 6 units. Each unit consists of a $50,000, 8% Series A Note Payable, due September 30, 2011, and a non-detachable warrant to purchase 2 million shares of the Company’s common stock. During 2009, the Company sold 4 units, issued $200,000 of 8% Series A Notes Payable, issued 8 million warrants, and raised $180,000, net of commission of $20,000. In January 2010, the Company sold .5 units, issued $25,000 of 8% Series A Notes Payable, issued 1 million warrants, and raised $17,500 net of commissions of $7,500. The commissions were treated as deferred finance charges and fully expensed over the term of notes payable. | |||||||||
The 8 million warrants in 2009 were valued at $15,450, fair value, using the Black-Scholes option pricing model to calculate the fair-value of the warrants, with the following assumptions: no dividend yield, expected volatility of between 30.9% and 34.5%, risk free interest rate between .95% and 1.06% and warrant life of approximately 2 years. The 1 million warrants in 2010 were valued at $20,143, fair value, using the Black-Scholes option pricing model to calculate the fair-value of the warrants, with the following assumptions: no dividend yield, expected volatility of 28.6 %, risk free interest rate of .84% and warrant life of approximately 2 years. | |||||||||
In June 2011, the maturity date on the $150,000 of the 8% Series A Notes Payable and the term on the associated 6 million warrants were extended to September 30, 2015. As a result, the warrants were revalued using the Black-Scholes option pricing model to calculate the incremental fair-value of the warrants of $21,275, with the following assumptions: no dividend yield, expected volatility of 60%, risk free interest rate of 1.52% and warrant life of approximately 1.25 years. As part of the debt extension, the lender holding the 6 million warrants agreed in writing to suspend its right to exercise these warrants until such time that the Company’s authorized shares have been increased. The authorized shares of the Company’s common stock were increased on May 23, 2013 from 425,000,000 to 675,000,000. | |||||||||
The relative fair value of the warrants issued in conjunction with the 8% Series A Notes Payable have been treated as a debt discount with an offsetting credit to additional paid-in capital. The debt discount related to the warrant issuances is being accreted to interest expense over the term of the notes. When the warrants were revalued the incremental amount of $21,275 was also treated as additional debt discount and is being accreted over the new term of the 8% Series A Notes Payable. As of December 31, 2012 the unaccreted debt discount related to warrants issued in conjunction with the 8% Series A Notes payable was $13,632. | |||||||||
During the third quarter of 2011, $25,000 plus accrued interest of the 8% Series A Notes Payable were repaid and 3 million of the associated warrants expired unexercised. | |||||||||
During the fourth quarter of 2013, the remaining series A notes payable of $150,000 was reduced by $60,000 for the exercise of 6,000,000 warrants into 6,000,000 shares of common stock. The balance of $90,000 plus accrued interest of $49,000 was converted into 1,226,363 shares of common stock. Since this conversion was with a related party it was treated as a capital transaction in accordance with FASB ASC 470-50-40-3. | |||||||||
Private Placement of 25% Notes Payable | |||||||||
In 2010, the Company issued $400,000 in notes payable in order to finance a patent infringement lawsuit (see Note 15 - Contingencies to these consolidated financial statements). The notes payable accrue interest at 25% per annum and mature upon the earlier of September 1, 2013 or the date on which the Company receives net proceeds from the patent infringement claim. In addition to the base interest of 25% per annum, the lenders are entitled to Bonus Interest equal to the following: | |||||||||
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. | ||||||||
The Lenders have a security interest in the Company’s patent infringement claim in which the Lender has the right to the net proceeds of this lawsuit to satisfy outstanding principal and interest under the notes. | |||||||||
As part of the private placement of the 25% notes payable, the Company incurred debt placement fees of $34,500 in 2010. These debt placement fees have been treated as deferred finance charges and were being amortized to interest expense over two years. The remainder of amortization $13,625 was recorded the years ended December 31, 2012. | |||||||||
In December 2012, 250,000 of these notes payable and accrued interest of $122,397 were converted into 8,219,911 shares of the Company’s common stock. In March 2013, the remaining $150,000 of the notes payable and accrued interest of $70,000 were converted into 3 million shares of the Company’s common stock. Accrued interest of $13,895 was paid in cash. | |||||||||
Notes payable consists of the following as of December 31: | |||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 | $ | 114,000 | $ | 330,249 | |||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) | 50,000 | 50,000 | |||||||
Notes payable; interest at 8% per annum; principal and accrued interest due at December 1, 2014 (past due) | 650,000 | — | |||||||
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015 | 123,000 | — | |||||||
Less: Debt discount | (10,447 | ) | — | ||||||
926,553 | 380,249 | ||||||||
Less: Current portion | 926,553 | 50,000 | |||||||
Long-term portion | $ | — | $ | 330,249 | |||||
At December 31, 2014 and 2013 accrued interest on notes payable was $155,992 and $317,344. | |||||||||
The notes payable balance as of December 31, 2014 includes a Series A note payable in the amount of $50,000 with interest of 8% per annum. This note matured in October 2011 and is past due. Accrued interest associated with this note was $20,667 as of December 31, 2014. The Company has been unable to locate this shareholder. | |||||||||
On June 10, 2014, the Company issued a note payable for $250,000, which included fully vested warrants to purchase 1,000,000 shares of the Company’s common stock at an exercise price of $0.10 per share, expiring in five years. The warrants were valued at $39,650 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 248.2%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $34,222 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $34,222 was accreted through interest expense. The note and accrued interest at 8% per annum was originally due on December 11, 2014, but the Company received approval to extend the maturity until December 31, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $17,741 and the note payable balance was $250,000. This note is in default. | |||||||||
On August 5, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $29,725 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $22,914 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $22,914 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,178 and the note payable balance was $100,000. This note is in default. | |||||||||
On August 12, 2014, the Company issued notes payable for $50,000, which included fully vested warrants to purchase 300,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $26,817 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $17,455 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $17,455 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $5,585 and the note payable balance was $50,000. This note is in default. | |||||||||
On August 14, 2014, the Company issued notes payable for $100,000, which included fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $47,676 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $32,274 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $32,274 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the note is in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,226 and the note payable balance was $100,000. This note is in default. | |||||||||
On September 8, 2014, the Company issued notes payable for $150,000, which included fully vested warrants to purchase 900,000 shares of the Company’s common stock at an exercise price of $0.05 per share, expiring in five years. The warrants were valued at $62,544 using Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 233.8%, risk free interest rate of 1.67% and expected life of 5 years. The relative fair value of the warrants was $44,140 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $44,140 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on December 1, 2014. As of December 31, 2014 the notes are in default. The warrants are subject to anti-dilutive adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is re-valued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $17,385 and the note payable balance was $150,000. This note is in default. | |||||||||
On December 5, 2014, the Company issued a note payable for $23,000 to a stockholder, which bears interest at 5.0% and is due on April 5, 2015. This note is in default. | |||||||||
On December 31, 2014, the Company issued a note payable for $100,000, which include fully vested warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $0.05 per share expiring in five years. The warrants were valued at $11,812 using the Black-Scholes option pricing model to calculate the grant-date fair value of the warrants, with the following assumptions: no dividend yield, expected volatility of 229.0%, risk free interest rate of 1.68% and expected life of 5 years. The relative fair value of the warrants was $10,563 and was recorded as a discount to the notes payable in accordance with FASB ASC 835-30-25, Recognition, and is being accreted over the term of the note payable for financial statement purposes. For the year ended December 31, 2014, $116 was accreted through interest expense. The note and accrued interest at 8% per annum were due in full on April 1, 2015. This note is currently in default. The warrants are subject to anti-dilution adjustments and are therefore classified as a liability in accordance with FASB ASC 815. The warrant liability is revalued at each reporting period with the change in fair value recorded through earnings. As of December 31, 2014, the fair value of the warrant liability was $11,812 and the note payable balance was $89,553, net of a discount of $10,447. This note is in default. |
NOTES_PAYABLE_Tables
NOTES PAYABLE (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Debt Disclosure [Abstract] | |||||||||
Schedule of notes payable | Notes payable consists of the following as of December 31: | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 | $ | 114,000 | $ | 330,249 | |||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) | 50,000 | 50,000 | |||||||
Notes payable; interest at 8% per annum; principal and accrued interest due at December 1, 2014 (past due) | 650,000 | — | |||||||
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015 | 123,000 | — | |||||||
Less: Debt discount | (10,447 | ) | — | ||||||
926,553 | 380,249 | ||||||||
Less: Current portion | 926,553 | 50,000 | |||||||
Long-term portion | $ | — | $ | 330,249 | |||||
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Schedule of Liabilities Measured at Fair Value on a Recurring Basis | Liabilities measured at fair value on a recurring basis are summarized as follows: | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability related to fair value of beneficial conversion feature | $ | — | $ | — | $ | — | $ | — | |||||||||
Derivative liability related to fair value of warrants | — | — | 6,370,709 | 6,370,709 | |||||||||||||
Total | $ | — | $ | — | $ | 6,370,709 | $ | 6,370,709 | |||||||||
Fair Value Measurements within the Fair Value Hierarchy of Derivative Liabilities Using Level 3 Inputs | The following table details the approximate fair value measurements within the fair value hierarchy of the Company’s derivative liabilities using Level 3 inputs: | ||||||||||||||||
Total | |||||||||||||||||
Balance at January 1, 2014 | $ | 6,000,000 | |||||||||||||||
Additional Warrants issued January 2014 | 444,000 | ||||||||||||||||
Additional Warrants issued June 2014 | 34,222 | ||||||||||||||||
Additional Warrants issued 3rd Quarter 2014 | 166,791 | ||||||||||||||||
Additional Warrants Issued 4th Quarter 2014 | 4,903,900 | ||||||||||||||||
Change in fair value of derivative liabilities | (5,178,204 | ) | |||||||||||||||
Balance at December 31, 2014 | $ | 6,370,709 | |||||||||||||||
Embedded Derivative Liability Valuation Assumptions | The Preferred Stock shares are convertible into shares of the Company’s common stock, which did traded in an active securities market, therefore the embedded derivative liability was valued using the following market based inputs: | ||||||||||||||||
Closing trade price of Common Stock | $ | 0.02 | |||||||||||||||
Series A Preferred Stock Conversion price | $ | 0.03 | |||||||||||||||
Intrinsic value of conversion option per share | $ | — | |||||||||||||||
Schedule of Common Stock Purchase Warrants Valuation Assumptions | As of December 31, 2014, the Company’s outstanding warrants were treated as derivative liabilities and changes in the fair value were recognized in earnings. These common stock purchase warrants did not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using Black-Scholes and the following assumptions: | ||||||||||||||||
December 31, 2014 | |||||||||||||||||
Annual Dividend Yield | 0.00% | ||||||||||||||||
Expected Life (Years) | 3.0 - 4.69 | ||||||||||||||||
Risk-Free Interest Rate | 1.10% -1.65% | ||||||||||||||||
Expected Volatility | 174.8% - 203.6% |
STOCK_OPTIONS_Tables
STOCK OPTIONS (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||
Schedule of Non-employee Stock Option/Warrant Activity | The following tables summarize non-employee stock option/warrant activity of the Company since December 31, 2012: | ||||||||||||
Weighted Average | |||||||||||||
Option/Warrant | Exercise | Exercise | |||||||||||
Shares | Price | Price | |||||||||||
Outstanding, December 31, 2012 | 82,807,221 | $ | 0.00125 to $0.20 | $ | 0.01 | ||||||||
Granted | 38,144,444 | 0.10 - 0.15 | 0.03 | ||||||||||
Exercised | (9,435,000 | ) | 0.00125 - 0.07 | — | |||||||||
Expired | — | — | — | ||||||||||
Outstanding, December 31, 2013 | 111,516,665 | 0.00125 to 0.20 | 0.09 | ||||||||||
Granted | 10,349,209 | 0.05 - 0.10 | 0.01 | ||||||||||
Exercised | — | — | — | ||||||||||
Expired | (700,000 | ) | — | — | |||||||||
*Outstanding, December 31, 2014 | 121,165,874 | $ | 0.01 to $.20 | $ | 0.1 | ||||||||
*Exercisable, December 31, 2014 | 121,165,874 | $ | 0.01 to $.20 | $ | 0.1 | ||||||||
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years) | 5.7 | ||||||||||||
* Does not include 250,000,000 warrants that are due to be issued on January 1, 2015. The warrants has a fair value of $4,892,089 and are reflected in warrant liabilities on the balance sheet as of December 31, 2014 and the corresponding expense is reflected in research and development expense. | |||||||||||||
Schedule of Incentive Stock Option Transactions for Employees | A summary of incentive stock option transactions for employees since December 31, 2013 is as follows: | ||||||||||||
Option/Warrant | Exercise Price | Weighted Average | |||||||||||
Shares | Exercise Price | ||||||||||||
Outstanding, December 31, 2012 | 15,766,667 | $ | 0.00125 to $0.10 | $ | 0.06 | ||||||||
Granted | 45,500,000 | 0.05 - 0.15 | 0.04 | ||||||||||
Exercised | (900,000 | ) | 0.00125 | — | |||||||||
Expired | (500,000 | ) | 0.05 | — | |||||||||
Outstanding, December 31, 2013 | 59,866,667 | 0.00125 to 0.15 | 0.06 | ||||||||||
Granted | 6,000,000 | 0.05 | 0.01 | ||||||||||
Exercised | (12,000,000 | ) | 0.05 | 0.01 | |||||||||
Expired | — | — | — | ||||||||||
Outstanding, December 31, 2014 | 53,866,667 | $ | 0.05 - $0.15 | $ | 0.05 | ||||||||
Exercisable, December 31, 2014 | 51,366,667 | $ | 0.05 - $0.15 | $ | 0.06 | ||||||||
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years) | 8.3 | ||||||||||||
OPERATING_LEASES_Tables
OPERATING LEASES (Tables) | 12 Months Ended | ||||
Dec. 31, 2014 | |||||
Leases [Abstract] | |||||
Schedule of Non-cancelable Operating Lease Arrangements for Property | At December 31, 2014, the Company was obligated under various non-cancelable operating lease arrangements for property as follows: | ||||
2015 | 74,637 | ||||
2016 | 31,605 | ||||
$ | 106,242 | ||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Textuals) (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Segment | ||
Institution | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Number of financial institutions at which company's cash and cash equivalents are held | 2 | |
Depreciation method of property and equipment | Straight-line method | |
Research and development costs | $10,590,271 | $655,840 |
Number of operating segment | 1 | |
Patents and Trademark | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Number of provisional patents filed | 11 | |
Number of patents issued | 7 | |
Amortization method of patents | Straight-line basis | |
Patents and Trademark | UNITED STATES | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Number of provisional patents pending for allowance. | 4 | |
Patents and Trademark | Foreign Countries | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Number of provisional patents pending for allowance. | 5 | |
Sales and marketing expenses | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Advertising costs | $62,835 | $53,979 |
Minimum | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Estimated useful lives of property and equipment | 5 years | |
Minimum | Patents and Trademark | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Estimated lives of patents | 17 years | |
Maximum | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Estimated useful lives of property and equipment | 7 years | |
Maximum | Patents and Trademark | ||
Schedule Of Significant Accounting Policies [Line Items] | ||
Estimated lives of patents | 20 years |
PROPERTY_AND_EQUIPMENT_Detail
PROPERTY AND EQUIPMENT (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property, Plant and Equipment, Net [Abstract] | ||
Furniture and Fixtures | $219,871 | $219,871 |
Equipment | 16,155 | 16,155 |
Property, Plant and Equipment, Gross, Total | 236,026 | 236,026 |
Less: Accumulated depreciation | 161,205 | 91,952 |
Capital equipment, net of accumulated depreciation of $161,205 and $91,952 as of December 31, 2014 and 2013 | $74,821 | $144,074 |
PROPERTY_AND_EQUIPMENT_Textual
PROPERTY AND EQUIPMENT (Textuals) (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Property, Plant and Equipment, Net [Abstract] | ||
Depreciation of property and equipment | $69,253 | $68,839 |
PATENTS_AND_TRADEMARK_Textuals
PATENTS AND TRADEMARK (Textuals) (Detail) (Patents and Trademark, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of patents issued | 7 | |
Amortization method of patents | Straight-line basis | |
Capitalized patent costs | $0 | $21,954 |
UNITED STATES | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of provisional patents pending for allowance | 4 | |
Foreign Countries | ||
Finite-Lived Intangible Assets [Line Items] | ||
Number of provisional patents pending for allowance | 5 | |
Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated lives of patents | 17 years | |
Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated lives of patents | 20 years |
INCOME_TAX_Textuals_Detail
INCOME TAX (Textuals) (Detail) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 |
Income Tax Disclosure [Abstract] | ||
Net operating loss ("NOL") | $26 | |
Federal Statutory Rate | -35.00% | -35.00% |
INCOME_TAX_BENEFIT_PROVISION_D
INCOME TAX BENEFIT (PROVISION) (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Components of Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||
Current | ($5,505,000) | $1,837,000 |
Deferred | -372,000 | 3,284,000 |
Change in valuation allowance | 5,877,000 | -5,121,000 |
INCOME TAX BENEFIT | $0 | $0 |
RECONCILIATION_OF_TAX_DERIVED_
RECONCILIATION OF TAX DERIVED BY APPLYING U.S. FEDERAL STATUTORY RATE (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Effective Income Tax Rate Reconciliation, Amount [Abstract] | ||
U.S federal income tax benefit at federal statutory rate | ($2,771,000) | ($5,718,000) |
State tax, net of federal tax effect | -463,000 | -956,000 |
Deductible share based compensation | -318,000 | |
Non-deductible changes in derviative liability and share based transactions | -2,639,000 | 1,895,000 |
Other | -4,000 | -24,000 |
Change in valuation allowance | 5,877,000 | 5,121,000 |
INCOME TAX BENEFIT | $0 | $0 |
U.S federal income tax benefit at federal statutory rate | -35.00% | -35.00% |
State tax, net of federal tax effect | -6.00% | -6.00% |
Deductible share based compensation | -2.00% | |
Non-deductible changes in derviative liability and share based transactions | -33.00% | 12.00% |
Other | 0.00% | 0.00% |
Change in valuation allowance | 74.00% | 31.00% |
Effective Income Tax Rate Reconciliation, Percent, Total | 0.00% | 0.00% |
PRIMARY_COMPONENTS_OF_ASSETS_L
PRIMARY COMPONENTS OF ASSETS, LIABILITIES AND RELATED VALUATION ALLOWANCE (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred Tax Assets, Net, Classification [Abstract] | ||
Deferred tax asset for NOL carryforwards | $10,649,000 | $5,144,000 |
Deferred tax liability for intangibles | -165,000 | -165,000 |
Share based compensation | 4,205,000 | 3,683,000 |
Non deductible accrued expenses | 150,000 | |
Valuation allowance | -14,689,000 | -8,812,000 |
Deferred Tax Assets, Net, Total | $0 | $0 |
SENIOR_SECURED_CONVERTIBLE_NOT1
SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Detail Textuals) (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||
Dec. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2006 | Dec. 31, 2014 | Jun. 30, 2011 | 31-May-07 | Feb. 28, 2006 | |
Debt Instrument [Line Items] | ||||||||||
Accrued interest | $300,677 | $300,677 | $112,885 | |||||||
Common stock shares issued on conversion of debt (in shares) | 1,890,000 | |||||||||
10% Senior Secured Convertible Promissory Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Debt instrument principal amount | 220,000 | 225,000 | 220,000 | 596,500 | 800,000 | |||||
Interest rate | 10.00% | 12.00% | 10.00% | |||||||
Sale price of notes payable | 800,000 | |||||||||
Remaining debt and accrued interest was extended until September 15, 2015 | 178,749 | |||||||||
Accrued interest | 395,000 | 181,125 | 395,000 | |||||||
Common stock shares issued on conversion of debt (in shares) | 7,400,000 | 8,448,519 | 7,900,000 | |||||||
Amount of notes converted in to common stock shares | $1,628,000 | $216,249 |
SENIOR_SECURED_CONVERTIBLE_NOT2
SENIOR SECURED CONVERTIBLE NOTES PAYABLE (Textuals) (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 3 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | |
Debt Instrument [Line Items] | |||||
Common stock shares issued on conversion of debt (in shares) | 1,890,000 | ||||
Gains (Losses) on Extinguishment of Debt | ($82,000) | ($1,221,875) | |||
Outstanding principal balance on notes | 114,000 | 330,249 | 330,249 | ||
Accrued interest | 112,885 | 300,677 | 300,677 | ||
10% Senior Secured Convertible Promissory Notes | |||||
Debt Instrument [Line Items] | |||||
Amount of notes converted into common stock shares | 1,628,000 | 216,249 | |||
Accrued interest of notes converted into common stock shares | 208,339 | ||||
Common stock shares issued on conversion of debt (in shares) | 7,400,000 | 8,448,519 | 7,900,000 | ||
Gains (Losses) on Extinguishment of Debt | -82,000 | ||||
Accrued interest | $395,000 | $181,125 | $395,000 | ||
Debt instrument conditional covenants amount | If an equity financing with total proceeds of more than $5,000,000 occurs while any of these notes are outstanding, holders of notes will have the right, at their option, to convert the outstanding principal and interest of the notes into shares of common stock at a discount of 30% of the price per share in the qualified financing. | ||||
Percentage of discount on price per share | 30.00% |
CONVERTIBLE_NOTES_PAYABLE_Deta
CONVERTIBLE NOTES PAYABLE (Detail Textuals) (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Aug. 31, 2009 | Dec. 31, 2013 | Dec. 31, 2008 | Dec. 31, 2007 | Mar. 19, 2013 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of notes payable | $798,000 | |||||||
Convertible notes payable | 126,000 | 140,000 | ||||||
Common stock shares issued on conversion of debt (in shares) | 1,890,000 | |||||||
Convertible Notes Payable [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument principal amount | 400,000 | |||||||
Interest rate | 10.00% | 10.00% | ||||||
Maturity date | 2015-09 | 2008-08 | ||||||
Proceeds from issuance of notes payable | 25,000 | 375,000 | ||||||
Amount of notes converted in to common stock shares | 260,000 | 260,000 | ||||||
Number of common stock shares issued on conversion of notes | 48,750,000 | |||||||
Initial conversion price per share (in dollars per share) | $0.01 | |||||||
Convertible notes payable | 98,000 | 140,000 | 98,000 | |||||
Common stock shares issued on conversion of debt (in shares) | 12,375,000 | |||||||
Warrants issued | 26,250,000 | |||||||
Accrued interest | 87,150 | 87,150 | ||||||
Beneficial conversion feature related to the issuance of convertible notes payable | 25,000 | 375,000 | ||||||
Common stock issuance price per share for convertible notes payable (in dollars per share) | $0.02 | |||||||
Convertible Notes Payable [Member] | Vice Chairman [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Convertible notes payable | 14,000 | |||||||
Common stock shares issued on conversion of debt (in shares) | 2,625,000 | |||||||
Convertible Notes Payable [Member] | Accredited Investor | ||||||||
Debt Instrument [Line Items] | ||||||||
Convertible notes payable | $28,000 | |||||||
Common stock shares issued on conversion of debt (in shares) | 5,250,000 | |||||||
Convertible Notes Payable [Member] | Series A Preferred Stock [Member] | ||||||||
Debt Instrument [Line Items] | ||||||||
Initial conversion price per share (in dollars per share) | $0.01 |
NOTES_PAYABLE_Summary_of_notes
NOTES PAYABLE - Summary of notes payable (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ||
Less: Debt discount | ($10,447) | |
Notes payable | 926,553 | 380,249 |
Less: Current portion | 812,553 | 50,000 |
Long-term portion | 330,249 | |
Adjustment | ||
Debt Instrument [Line Items] | ||
Less: Current portion | 926,553 | |
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 | ||
Debt Instrument [Line Items] | ||
Notes payable | 114,000 | 330,249 |
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) | ||
Debt Instrument [Line Items] | ||
Notes payable | 50,000 | 50,000 |
Notes payable; interest at 8% per annum; principal and accrued interest due at December 1, 2014 (past due) | ||
Debt Instrument [Line Items] | ||
Notes payable | 650,000 | |
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015 | ||
Debt Instrument [Line Items] | ||
Notes payable | $123,000 |
NOTES_PAYABLE_Summary_of_notes1
NOTES PAYABLE - Summary of notes payable (Parenthetical) (Detail) | Dec. 31, 2014 | Dec. 31, 2013 |
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 | ||
Debt Instrument [Line Items] | ||
Interest rate | 10.00% | 10.00% |
Series A notes payable; interest at 8% per annum; principal and accrued interest due at maturity in October 2011 (past due) | ||
Debt Instrument [Line Items] | ||
Interest rate | 8.00% | 8.00% |
Notes payable; interest at 8% per annum; principal and accrued interest due at December 1, 2014 (past due) | ||
Debt Instrument [Line Items] | ||
Interest rate | 8.00% | |
Notes payable, interest at 5% and 8% per annum; principal and interest due April 2015 | ||
Debt Instrument [Line Items] | ||
Interest rate | 5.00% | 8.00% |
NOTES_PAYABLE_Textuals_Detail
NOTES PAYABLE (Textuals) (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Jun. 10, 2014 | Aug. 05, 2014 | Aug. 12, 2014 | Aug. 14, 2014 | Sep. 08, 2014 | Dec. 05, 2014 | |
Debt Instrument [Line Items] | ||||||||
Note payable balance | $812,553 | $50,000 | ||||||
Proceeds from issuance of notes payable | 798,000 | |||||||
Accumulated discount, notes payable (in dollars) | 10,447 | |||||||
Interest expense | 199,364 | 127,825 | ||||||
Warrant | June 10, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Fair value of warrant liability | 17,741 | |||||||
Warrant | August 5, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Fair value of warrant liability | 11,178 | |||||||
Warrant | August 12, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Fair value of warrant liability | 5,585 | |||||||
Warrant | August 14, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Fair value of warrant liability | 11,226 | |||||||
Warrant | September 8, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Fair value of warrant liability | 17,385 | |||||||
Warrant | Debt Instrument Date December 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Fair value of warrant liability | 11,812 | |||||||
Series A Notes Payable | ||||||||
Debt Instrument [Line Items] | ||||||||
Note payable balance | 50,000 | |||||||
Interest rate, notes payable | 8.00% | |||||||
Accrued interest | 20,667 | |||||||
Notes Payable | ||||||||
Debt Instrument [Line Items] | ||||||||
Accrued interest | 155,992 | 317,344 | ||||||
Notes Payable | June 10, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Note payable balance | 250,000 | |||||||
Interest rate, notes payable | 8.00% | |||||||
Interest expense | 34,222 | |||||||
Notes Payable | August 5, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Note payable balance | 100,000 | |||||||
Interest rate, notes payable | 8.00% | |||||||
Interest expense | 22,914 | |||||||
Notes Payable | August 12, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Note payable balance | 50,000 | |||||||
Interest rate, notes payable | 8.00% | |||||||
Interest expense | 17,455 | |||||||
Notes Payable | August 14, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Note payable balance | 100,000 | |||||||
Interest rate, notes payable | 8.00% | |||||||
Interest expense | 32,274 | |||||||
Notes Payable | September 8, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Note payable balance | 150,000 | |||||||
Interest rate, notes payable | 8.00% | |||||||
Interest expense | 44,140 | |||||||
Notes Payable | Debt Instrument Date December 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Note payable balance | 89,553 | |||||||
Interest rate, notes payable | 8.00% | |||||||
Interest expense | 116 | |||||||
Notes Payable | Warrant | June 10, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of notes payable | 250,000 | |||||||
Number of common stock called by warrants (in shares) | 1,000,000 | |||||||
Exercise price (in dollars per share) | $0.10 | |||||||
Fair value of warrant liability | 39,650 | |||||||
Expected volatility | 248.20% | |||||||
Risk-free interest rate | 1.67% | |||||||
Expected warrant term | 5 years | |||||||
Accumulated discount, notes payable (in dollars) | 34,222 | |||||||
Notes Payable | Warrant | August 5, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of notes payable | 100,000 | |||||||
Number of common stock called by warrants (in shares) | 600,000 | |||||||
Exercise price (in dollars per share) | $0.05 | |||||||
Fair value of warrant liability | 29,725 | |||||||
Expected volatility | 233.80% | |||||||
Risk-free interest rate | 1.67% | |||||||
Expected warrant term | 5 years | |||||||
Accumulated discount, notes payable (in dollars) | 22,914 | |||||||
Notes Payable | Warrant | August 12, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of notes payable | 50,000 | |||||||
Number of common stock called by warrants (in shares) | 300,000 | |||||||
Exercise price (in dollars per share) | $0.05 | |||||||
Fair value of warrant liability | 26,817 | |||||||
Expected volatility | 233.80% | |||||||
Risk-free interest rate | 1.67% | |||||||
Expected warrant term | 5 years | |||||||
Accumulated discount, notes payable (in dollars) | 17,455 | |||||||
Notes Payable | Warrant | August 14, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of notes payable | 100,000 | |||||||
Number of common stock called by warrants (in shares) | 600,000 | |||||||
Exercise price (in dollars per share) | $0.05 | |||||||
Fair value of warrant liability | 47,676 | |||||||
Expected volatility | 233.80% | |||||||
Risk-free interest rate | 1.67% | |||||||
Expected warrant term | 5 years | |||||||
Accumulated discount, notes payable (in dollars) | 32,274 | |||||||
Notes Payable | Warrant | September 8, 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of notes payable | 150,000 | |||||||
Number of common stock called by warrants (in shares) | 900,000 | |||||||
Exercise price (in dollars per share) | $0.05 | |||||||
Fair value of warrant liability | 62,544 | |||||||
Expected volatility | 233.80% | |||||||
Risk-free interest rate | 1.67% | |||||||
Expected warrant term | 5 years | |||||||
Accumulated discount, notes payable (in dollars) | 44,140 | |||||||
Notes Payable | Warrant | Debt Instrument Date December 2014 | ||||||||
Debt Instrument [Line Items] | ||||||||
Proceeds from issuance of notes payable | 100,000 | |||||||
Number of common stock called by warrants (in shares) | 600,000 | |||||||
Exercise price (in dollars per share) | $0.05 | |||||||
Fair value of warrant liability | 11,812 | |||||||
Expected volatility | 229.00% | |||||||
Risk-free interest rate | 1.68% | |||||||
Expected warrant term | 5 years | |||||||
Accumulated discount, notes payable (in dollars) | 10,447 | |||||||
Notes Payable | Warrant | Debt Instrument Date December 2014 | During the issuance | ||||||||
Debt Instrument [Line Items] | ||||||||
Accumulated discount, notes payable (in dollars) | 10,563 | |||||||
Notes Payable | Stockholder | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate, notes payable | 5.00% | |||||||
Proceeds from issuance of notes payable | $23,000 | |||||||
Note due date | 5-Apr-15 |
NOTES_PAYABLE_Detail_Textuals_
NOTES PAYABLE (Detail Textuals) (Detail) (USD $) | 12 Months Ended | 3 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||
Amount of unamortized discount | $10,447 | ||
Number of shares issued upon conversion of debt | 1,890,000 | ||
Amount of cash repaid | 150,000 | ||
Unsecured notes payable due to related parties; interest at 10% per annum; principal and accrued interest due at maturity in September 2015 | |||
Debt Instrument [Line Items] | |||
Amount of note payable | 561,000 | 561,000 | |
Amount of unamortized discount | 9,914 | 9,914 | |
Accrued interest | 83,715 | 83,715 | |
Number of shares issued upon conversion of debt | 4,473,333 | ||
Amount of cash repaid | $150,000 |
NOTES_PAYABLE_Detail_Textuals_1
NOTES PAYABLE (Detail Textuals 2) (Detail) (USD $) | 1 Months Ended | 12 Months Ended | ||||
Jan. 31, 2010 | Dec. 31, 2009 | Mar. 19, 2013 | Dec. 31, 2012 | Sep. 30, 2011 | Aug. 31, 2009 | |
Unit | Unit | Unit | ||||
Debt Instrument [Line Items] | ||||||
Convertible notes payable | $126,000 | $140,000 | ||||
8% Series A Notes Payable | ||||||
Debt Instrument [Line Items] | ||||||
Convertible notes payable | 25,000 | 200,000 | 50,000 | 300,000 | ||
Number of units | 0.5 | 4 | 6 | |||
Interest rate | 8.00% | 8.00% | 8.00% | |||
Number of shares of common stock | 2,000,000 | |||||
Warrants issued | 1,000,000 | 8,000,000 | ||||
Proceeds from issuance of units | 17,500 | 180,000 | ||||
Commissions charges | $7,500 | $20,000 |
NOTES_PAYABLE_Detail_Textuals_2
NOTES PAYABLE (Detail Textuals 3) (Detail) (USD $) | 12 Months Ended | 3 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Dec. 31, 2013 | Dec. 31, 2013 | Jun. 30, 2011 | Dec. 31, 2009 | Jan. 31, 2010 | Sep. 30, 2011 | Dec. 31, 2010 | Dec. 31, 2014 | 23-May-13 | 22-May-13 | Dec. 31, 2012 | |
Debt Instrument [Line Items] | |||||||||||
Common stock, shares authorized | 675,000,000 | 675,000,000 | 675,000,000 | ||||||||
Discount, notes payable (in dollars) | $10,447 | ||||||||||
Number of shares issued upon conversion of debt | 1,890,000 | ||||||||||
Common Stock | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of shares issued upon conversion of debt | 18,275 | 25,974,697 | |||||||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Warrants issued | 6,000,000 | ||||||||||
Amount of note payable | 150,000 | ||||||||||
Interest rate | 8.00% | ||||||||||
Common stock, shares authorized | 675,000,000 | 425,000,000 | |||||||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | Warrant | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Warrants issued | 8,000,000 | ||||||||||
Fair value of the warrants | 21,275 | 15,450 | |||||||||
Method used to calculate fair value of warrants | Black-Scholes option pricing model | Black-Scholes option pricing model | |||||||||
Dividend yield | 0.00% | 0.00% | |||||||||
Expected volatility | 60.00% | ||||||||||
Risk-free interest rate | 1.52% | ||||||||||
Expected warrant term | 1 year 3 months | 2 years | |||||||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | Warrant | Minimum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Expected volatility | 30.90% | ||||||||||
Risk-free interest rate | 0.95% | ||||||||||
Series A notes payable; interest at 8% per annum; principal and accrued interest due at extended maturity date in September 2015 | Warrant | Maximum | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Expected volatility | 34.50% | ||||||||||
Risk-free interest rate | 1.06% | ||||||||||
8% Series A Notes Payable | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Warrants issued | 8,000,000 | 1,000,000 | |||||||||
Amount of note payable | 150,000 | 150,000 | |||||||||
Interest rate | 8.00% | 8.00% | 8.00% | ||||||||
Discount, notes payable (in dollars) | 13,632 | ||||||||||
Amount of notes payable repaid with accrued interest | 25,000 | ||||||||||
Number of warrants expired unexercised | 3,000,000 | ||||||||||
Reduction in value of debt | 60,000 | ||||||||||
Number of warrants exercised for conversion of securities | 6,000,000 | ||||||||||
Balance amount of debt | 90,000 | ||||||||||
Amount of accrued interest | 49,000 | 49,000 | |||||||||
Number of common stock called by warrants (in shares) | 2,000,000 | ||||||||||
8% Series A Notes Payable | Common Stock | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Number of common stock called by warrants (in shares) | 6,000,000 | 6,000,000 | |||||||||
Number of shares issued upon conversion of debt | 1,226,363 | ||||||||||
8% Series A Notes Payable | Warrant | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Warrants issued | 1,000,000 | ||||||||||
Fair value of the warrants | $20,143 | ||||||||||
Method used to calculate fair value of warrants | Black-Scholes option pricing model | ||||||||||
Dividend yield | 0.00% | ||||||||||
Expected volatility | 28.60% | ||||||||||
Risk-free interest rate | 0.84% | ||||||||||
Expected warrant term | 2 years |
NOTES_PAYABLE_Detail_Textuals_3
NOTES PAYABLE (Detail Textuals 4) (Detail) (Private Placement of 25% Notes Payable, USD $) | Dec. 31, 2010 |
Private Placement of 25% Notes Payable | |
Debt Instrument [Line Items] | |
Note payable, amount | $400,000 |
Interest rate | 25.00% |
NOTES_PAYABLE_Detail_Textuals_4
NOTES PAYABLE (Detail Textuals 5) (Detail) (Private Placement of 25% Notes Payable, USD $) | 12 Months Ended |
Dec. 31, 2010 | |
Litigation Case Three [Member] | |
Debt Instrument [Line Items] | |
Proceeds from litigation settlement | $825,000 |
Percentage allocated to company | 50.00% |
Percentage allocated to lenders | 50.00% |
Litigation Case Four [Member] | |
Debt Instrument [Line Items] | |
Proceeds from litigation settlement | 1,000,000 |
Percentage allocated to company | 90.00% |
Percentage allocated to lenders | 10.00% |
Litigation Case Five [Member] | |
Debt Instrument [Line Items] | |
Proceeds from litigation settlement | $1,000,000 |
Percentage allocated to company | 85.00% |
Percentage allocated to lenders | 15.00% |
Litigation Case Six [Member] | |
Debt Instrument [Line Items] | |
Percentage allocated to company | 80.00% |
Percentage allocated to lenders | 20.00% |
NOTES_PAYABLE_Detail_Textuals_5
NOTES PAYABLE (Detail Textuals 6) (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||||
Accrued interest paid in cash | $13,895 | ||||
Number of shares issued upon conversion of debt | 1,890,000 | ||||
Private Placement of 25% Notes Payable | |||||
Debt Instrument [Line Items] | |||||
Interest rate | 25.00% | ||||
Debt placement fees | 34,500 | ||||
Amortization of deferred finance charges | 13,625 | ||||
Private placement of convertible notes | 150,000 | 250,000 | |||
Accrued interest | 70,000 | 122,397 | |||
Accrued interest paid in cash | 13,895 | ||||
Number of shares issued upon conversion of debt | 3,000,000 | 8,219,911 | |||
Notes Payable | |||||
Debt Instrument [Line Items] | |||||
Accrued interest | $317,344 | $155,992 |
WARRANT_LIABILITY_Detail
WARRANT LIABILITY (Detail) (USD $) | 0 Months Ended | 12 Months Ended | ||
Jan. 02, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Major Agreements [Line Items] | ||||
Warrant liability | $6,370,709 | $6,000,000 | ||
Current share price (in dollars per share) | $0.02 | |||
Verify Me | Warrants issued on January 1, 2014 | ||||
Major Agreements [Line Items] | ||||
Fair value of warrant liability | 121,209 | |||
Number of warrants issued | 6,349,206 | |||
Exercise price (in dollars per share) | $0.10 | |||
Agreements | Zaah Technologies | ||||
Major Agreements [Line Items] | ||||
Warrant liability | 2,400,000 | |||
Fair value of warrant liability | 787,544 | 3,700,000 | ||
Agreements | Verify Me | Research and Development Expense | ||||
Major Agreements [Line Items] | ||||
Initial fair value of warrant expensed as research and development cost | 444,000 | |||
Patent And Technology Agreement | ||||
Major Agreements [Line Items] | ||||
Exercise price (in dollars per share) | $0.10 | |||
Additional payment for patent and technology | 4,500,000 | |||
Discount to market price at time of issuance | 10.00% | |||
Current share price (in dollars per share) | $0.04 | |||
Additional shares issued for patent and technology agreement (in shares) | 125,000,000 | |||
Number of common stock shares purchased under warrants (in shares) | 125,000,000 | |||
Patent And Technology Agreement | Stock Options And Warrants | ||||
Major Agreements [Line Items] | ||||
Number of warrants to be issued(in shares) | 250,000,000 | |||
Exercise price of warrant to be issued(in dollars per share) | $0.02 | |||
Warrant to be issued value | $4,892,089 | |||
Patent And Technology Agreement | Stock Options And Warrants | Warrant | ||||
Major Agreements [Line Items] | ||||
Dividend yield | 0.00% | |||
Expected volatility | 229.10% | |||
Risk free interest | 1.65% | |||
Expected warrant term | 5 years | |||
Patent And Technology Agreement | Verify Me | ||||
Major Agreements [Line Items] | ||||
Additional shares issued for patent and technology agreement (in shares) | 6,349,206 |
CONVERTIBLE_PREFERRED_STOCK_De
CONVERTIBLE PREFERRED STOCK (Detail) (USD $) | 12 Months Ended | 1 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | Jan. 31, 2013 | Aug. 31, 2013 | |
Class of Stock [Line Items] | |||||
Preferred stock value | $633,333 | $633,333 | $633,333 | ||
Fair value of warrants | 494,939 | 2,300,000 | |||
Common Stock | |||||
Class of Stock [Line Items] | |||||
Number of preferred stock purchased | 4,811,111 | ||||
Subscription Agreement | |||||
Class of Stock [Line Items] | |||||
Convertible preferred stock description | At any time before January 31, 2015, VerifyMe has the right, but not the obligation, to require the Company to repurchase all, but not less than all, of the capital stock of the Company and warrants exercisable for capital stock of the Company held by VerifyMe in exchange for the price originally paid by VerifyMe therefor upon the occurrence of any of the following events:(i) the consummation of any bona fide business acquisition, (ii) the incurrence of any indebtedness by the Company in an amount in excess of $2 million, (iii) the issuance or sale of any security having a preference on liquidation senior to common stock, or (iv) the sale by the Company of capital stock or warrants exercisable for its capital stock at a price below $0.03 per share. | ||||
Excess amount for incurring indebtedness | 2,000,000 | ||||
Exercise price of capital stock or warrant | $0.03 | ||||
Preferred stock value | 1,000,000 | ||||
Fair value of warrants | 2,995,791 | ||||
Fair value of warrants recorded as charge to expenses | 2,995,791 | ||||
Subscription Agreement | Verify Me | |||||
Class of Stock [Line Items] | |||||
Beneficial conversion feature at fair market value | 0 | 800,000 | 1,000,000 | ||
Subscription Agreement | Convertible Preferred Stock | Verify Me | |||||
Class of Stock [Line Items] | |||||
Number of preferred stock purchased | 33,333,333 | ||||
Preferred stock value in noncash transaction | 366,667 | ||||
Subscription Agreement | Common Stock | Verify Me | |||||
Class of Stock [Line Items] | |||||
Number of common stock called by warrants (in shares) | 33,333,333 | ||||
Value of shares issued | $1,000,000 | ||||
Exercise price of warrants | $0.12 | ||||
Shares of common stock shares issued on conversion | 12,222,222 | ||||
Subscription Agreement | Preferred Class | |||||
Class of Stock [Line Items] | |||||
Initial conversion price per share (in dollars per share) | $0.03 | $0.03 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS - Liabilities measured at fair value on recurring basis (Detail) (Fair value on a recurring basis, USD $) | Dec. 31, 2014 |
Total | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of beneficial conversion feature | $0 |
Derivative liability related to fair value of warrants | 6,370,709 |
Total | 6,370,709 |
Level 1 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of beneficial conversion feature | 0 |
Level 2 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of beneficial conversion feature | 0 |
Level 3 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Derivative liability related to fair value of beneficial conversion feature | 0 |
Derivative liability related to fair value of warrants | 6,370,709 |
Total | $6,370,709 |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS - Fair value measurements within fair value hierarchy of derivative liabilities using Level 3 inputs (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at January 1, 2014 | $6,000,000 |
Additional Warrants issued January 2014 | 444,000 |
Additional Warrants issued June 2014 | 34,222 |
Additional Warrants issued 3rd Quarter 2014 | 166,791 |
Additional Warrants Issued 4th Quarter 2014 | 4,903,900 |
Change in fair value of derivative liabilities | -5,178,204 |
Balance at December 31, 2014 | $6,370,709 |
FAIR_VALUE_OF_FINANCIAL_INSTRU4
FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated fair value of embedded derivative liability using Black-Scholes (Detail) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Fair Value Disclosures [Abstract] | |
Closing trade price of Common Stock | $0.02 |
Series A Preferred Stock Conversion price | $0.03 |
Intrinsic value of conversion option per share | $0 |
FAIR_VALUE_OF_FINANCIAL_INSTRU5
FAIR VALUE OF FINANCIAL INSTRUMENTS - Estimated fair value of warrants using Black-Scholes (Detail) (Warrant) | 12 Months Ended |
Dec. 31, 2014 | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |
Annual Dividend Yield | 0.00% |
Minimum | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |
Expected Life (Years) | 3 years |
Risk-free interest rate | 1.10% |
Expected volatility | 174.80% |
Maximum | |
Fair Value, Option, Quantitative Disclosures [Line Items] | |
Expected Life (Years) | 4 years 8 months 9 days |
Risk-free interest rate | 1.65% |
Expected volatility | 203.60% |
STOCKHOLDERS_EQUITY_Detail
STOCKHOLDERS' EQUITY (Detail) (USD $) | 12 Months Ended | 2 Months Ended | 1 Months Ended | 3 Months Ended | 1 Months Ended | 2 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Jan. 31, 2013 | Feb. 28, 2013 | Feb. 01, 2013 | |
Warrant | Unit | ||||||||
Unit | Warrant | ||||||||
Stockholders Equity Note [Line Items] | |||||||||
Worth of common stock to be paid | $400,000 | $1,000,000 | |||||||
Research and development | 10,590,271 | 655,840 | |||||||
Proceeds from exercise of stock options | 17,919 | ||||||||
Number of shares issued upon conversion of debt | 1,890,000 | ||||||||
Gains (Losses) on Extinguishment of Debt | -82,000 | -1,221,875 | |||||||
Accredited Investor | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Stock option exercised share (in shares) | 3,335,000 | ||||||||
Proceeds from exercise of stock options | 17,919 | ||||||||
Number of common stock called by warrants (in shares) | 1,000,000 | ||||||||
Amount received for exercised of warrants | 10,000 | ||||||||
10% Senior Secured Convertible Promissory Notes | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Debt Conversion, Converted Instrument, Amount | 1,628,000 | 216,249 | |||||||
Accrued interest of notes converted into common stock shares | 208,339 | ||||||||
Number of shares issued upon conversion of debt | 7,400,000 | 8,448,519 | 7,900,000 | ||||||
Gains (Losses) on Extinguishment of Debt | -82,000 | ||||||||
Private Placement | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Warrants exercise price (in dollars per share) | $0.12 | $0.10 | |||||||
Sale of units under private offering, Issue price per unit (in dollars per unit) | 0.045 | 0.05 | |||||||
Number of units sold under private offering (in units) | 1,111,111 | 3,700,000 | |||||||
Number of units sold under private offering value | 50,000 | 185,000 | |||||||
Number of share of common stock consist in each offering unit | 1 | 1 | |||||||
Number of warrant consist in each offering unit | 1 | 1 | |||||||
Patent And Technology Agreement | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Issuance of shares for services (in shares) | 125,000,000 | ||||||||
Warrants exercise price (in dollars per share) | $0.10 | ||||||||
Number of common stock called by warrants (in shares) | 125,000,000 | ||||||||
Patent And Technology Agreement | Verify Me | |||||||||
Stockholders Equity Note [Line Items] | |||||||||
Issuance of shares for services (in shares) | 6,349,206 | ||||||||
Worth of common stock to be paid | 400,000 | ||||||||
Percentage of discount | 10.00% | ||||||||
Closing price of share | $0.07 | ||||||||
Closing price of share after discount | $0.06 | ||||||||
Research and development | $400,000 |
STOCK_OPTIONS_Textuals_Detail
STOCK OPTIONS (Textuals) (Detail) | 12 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2000 | Dec. 31, 2013 | Dec. 17, 2003 | |
Stock Option 2000 Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized to grant options | 1,500,000 | |||
Stock Option 2003 Plan | Common Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized to grant options | 20,000,000 | |||
Number of options available to be issued | 1,274,004 | |||
Stock Option 2003 Plan | Stock options | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares authorized to grant options | 18,000,000 | |||
Number of options available to be issued | 14,774,004 | |||
Number of option issued | 23,225,996 |
STOCK_OPTIONS_Textuals_1_Detai
STOCK OPTIONS (Textuals 1) (Detail) (USD $) | 12 Months Ended | 1 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended |
Dec. 31, 2013 | Oct. 31, 2012 | Dec. 31, 2014 | Jun. 25, 2013 | Mar. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Amount received in funding | $235,000 | ||||
Three year agreement | Vice Chairman of the Board | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation | 200,000 | ||||
Three year agreement | President and Chief Executive Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share based compensation | 200,000 | ||||
Stock options | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Exercise price, description | The exercise price of each option may not be less than 100% of the fair market value of the common stock on the date of the grant (or 110% of the fair market value in the case of a grantee holding more than 10% of the outstanding stock of the Company). The aggregate fair market value (determined at the time of the grant) of stock for which an employee may exercise Incentive Stock Options under all plans of the company shall not exceed $1,000,000 per calendar year. If any employee shall have the right to exercise any options in excess of $100,000 during any calendar year, the options in excess of $100,000 shall be deemed to be Non-Statutory Stock Options, including prices, duration, transferability and limitations on exercise. | ||||
Stock options | Three year agreement | Common Stock | Vice Chairman of the Board | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 19,000,000 | ||||
Exercisable common stock share price | $0.05 | ||||
Term for options | 10 years | ||||
Expected volatility | 146.10% | ||||
Risk-free interest rate | 2.60% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of option issued expensed immediately | 3,767,700 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Percentage of number of options to purchase common stock | 5.00% | ||||
Amount raised in funding | 2,500,000 | ||||
Stock options | Three year agreement | Common Stock | President and Chief Executive Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 19,000,000 | ||||
Exercisable common stock share price | $0.05 | ||||
Term for options | 10 years | ||||
Expected volatility | 146.10% | ||||
Risk-free interest rate | 2.60% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of option issued expensed immediately | 3,767,700 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Percentage of number of options to purchase common stock | 5.00% | ||||
Amount received in funding | 2,500,000 | ||||
Stock options | January 22, 2013 | Employee | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 1,000,000 | ||||
Exercisable common stock share price | 0.05 | ||||
Term for options | 10 years | ||||
Expected volatility | 222.00% | ||||
Risk-free interest rate | 1.90% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of options issued | 99,972 | ||||
Fair value of option issued expensed immediately | 25,000 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Allocated share-based compensation expense | 12,600 | 26,500 | |||
Stock options | January 22, 2013 | Employee | Options Vests Immediately | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options vested | 250,000 | ||||
Stock options | January 22, 2013 | Employee | Option Vests One Year | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options vested | 250,000 | ||||
Stock options | January 22, 2013 | Employee | Options Vested Year Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options vested | 500,000 | ||||
Stock options | February 25, 2013 | Employee | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 500,000 | ||||
Exercisable common stock share price | 0.05 | ||||
Term for options | 10 years | ||||
Expected volatility | 259.00% | ||||
Risk-free interest rate | 1.90% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of options issued | 89,998 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Allocated share-based compensation expense | 5,000 | ||||
Stock based compensation reversed upon cancellation of stock options | 5,000 | ||||
Stock options | February 25, 2013 | Employee | Option Vests One Year | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options vested | 200,000 | ||||
Stock options | February 25, 2013 | Employee | Options Vested Year Two | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options vested | 200,000 | ||||
Stock options | February 25, 2013 | Employee | Options Vested Year Three | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of options vested | 100,000 | ||||
Stock options | March 13, 2013 | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 2,000,000 | ||||
Exercisable common stock share price | 0.05 | ||||
Term for options | 10 years | ||||
Expected volatility | 235.00% | ||||
Risk-free interest rate | 2.00% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of options issued | 439,963 | ||||
Fair value of option issued expensed immediately | 219,982 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Allocated share-based compensation expense | 55,447 | 43,394 | |||
Stock options | March 13, 2013 | Director | Options Vests Immediately | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | March 13, 2013 | Director | Vested on March 13, 2014 | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | May 4, 2013 | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 2,000,000 | ||||
Exercisable common stock share price | 0.05 | ||||
Term for options | 10 years | ||||
Expected volatility | 235.00% | ||||
Risk-free interest rate | 1.78% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of options issued | 460,000 | ||||
Fair value of option issued expensed immediately | 230,000 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Allocated share-based compensation expense | 57,973 | 78,137 | |||
Stock options | May 4, 2013 | Director | Options Vests Immediately | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | May 4, 2013 | Director | Vested after the first year | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | September 30, 2013 | Chief Operating Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 1,000,000 | ||||
Exercisable common stock share price | 0.15 | ||||
Term for options | 10 years | ||||
Risk-free interest rate | 1.39% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of options issued | 99,840 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Allocated share-based compensation expense | 18,903 | 62,395 | |||
Stock options | September 30, 2013 | Chief Operating Officer | Minimum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected volatility | 268.40% | ||||
Stock options | September 30, 2013 | Chief Operating Officer | Maximum | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Expected volatility | 272.80% | ||||
Stock options | September 30, 2013 | Chief Operating Officer | Option Vests One Year | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | September 30, 2013 | Chief Operating Officer | Vested at the end of 24 months | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | December 2, 2013 | Chief Financial Officer | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 1,000,000 | ||||
Exercisable common stock share price | 0.15 | ||||
Term for options | 10 years | ||||
Expected volatility | 266.10% | ||||
Risk-free interest rate | 2.64% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of options issued | 79,994 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model | ||||
Allocated share-based compensation expense | 15,123 | 49,916 | |||
Stock options | December 2, 2013 | Chief Financial Officer | Option Vests One Year | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | December 2, 2013 | Chief Financial Officer | Vested at the end of 24 months | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Percentage of option vested | 50.00% | ||||
Stock options | March 28, 2014 | Director | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of option issued | 6,000,000 | ||||
Exercisable common stock share price | 0.05 | ||||
Term for options | 10 years | ||||
Expected volatility | 229.00% | ||||
Risk-free interest rate | 2.73% | ||||
Expected option life (in years) | 10 years | ||||
Fair value of option issued expensed immediately | 599,893 | ||||
Method used to calculate the grant-date fair value of the warrants | Black-Scholes option pricing model |
STOCK_OPTIONS_NonEmployee_Stoc
STOCK OPTIONS - Non-Employee Stock Option/Warrant Activity (Detail) (Stock Options And Warrants, USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | ||
Option/Warrant Shares | |||
Outstanding, beginning balance | 111,516,665 | 82,807,221 | |
Granted | 10,349,209 | 38,144,444 | |
Exercised | -9,435,000 | ||
Expired | -700,000 | ||
Outstanding, ending balance | 121,165,874 | [1] | 111,516,665 |
Exercisable, December 31, 2014 | 121,165,874 | [1] | |
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years) | 5 years 8 months 12 days | ||
Exercise Price | |||
Expired | $0 | $0 | |
Weighted Average Exercise Price | |||
Outstanding, beginning balance | $0.09 | $0.01 | |
Granted | $0.01 | $0.03 | |
Exercised | $0 | $0 | |
Expired | $0 | $0 | |
Outstanding, ending balance | $0.10 | $0.09 | |
Exercisable, December 31, 2014 | $0.10 | ||
Minimum | |||
Exercise Price | |||
Outstanding, beginning balance | $0.00 | $0.00 | |
Granted | $0.05 | $0.10 | |
Exercised | $0.00 | ||
Outstanding, ending balance | $0.01 | $0.00 | |
Exercisable, December 31, 2014 | $0.01 | ||
Maximum | |||
Exercise Price | |||
Outstanding, beginning balance | $0.20 | $0.20 | |
Granted | $0.10 | $0.15 | |
Exercised | $0.07 | ||
Outstanding, ending balance | $0.20 | $0.20 | |
Exercisable, December 31, 2014 | $0.20 | ||
[1] | Does not include 250,000,000 warrants that are due to be issued on January 1, 2015. The warrants has a fair value of $4,892,089 and are reflected in warrant liabilities on the balance sheet as of December 31, 2014 and the corresponding expense is reflected in research and development expense. |
STOCK_OPTIONS_NonEmployee_Stoc1
STOCK OPTIONS - Non-Employee Stock Option/Warrant Activity (Parenthetical) (Detail) (Stock Options And Warrants, Patent And Technology Agreement, USD $) | 12 Months Ended |
Share data in Millions, unless otherwise specified | Dec. 31, 2014 |
Stock Options And Warrants | Patent And Technology Agreement | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of warrants to be issued(in shares) | 250 |
Warrant to be issued value | $4,892,089 |
STOCK_OPTIONS_Incentive_Stock_
STOCK OPTIONS - Incentive Stock Option Transactions (Details 1) (Detail) (Incentive Stock Options [Member], USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted Average Remaining Life, Exercisable, December 31, 2014 (years) | 8 years 3 months 18 days | |
Option/Warrant Shares | ||
Outstanding, beginning balance | 59,866,667 | 15,766,667 |
Granted | 6,000,000 | 45,500,000 |
Exercised | -12,000,000 | -900,000 |
Expired | -500,000 | |
Outstanding, ending balance | 53,866,667 | 59,866,667 |
Exercisable, December 31, 2014 | 51,366,667 | |
Exercise Price | ||
Granted | $0.05 | |
Exercised | $0.05 | $0.00 |
Expired | $0.05 | |
Weighted Average Exercise Price | ||
Outstanding, beginning balance | $0.06 | $0.06 |
Granted | $0.01 | $0.04 |
Exercised | $0.01 | |
Expired | $0 | $0 |
Outstanding, ending balance | $0.05 | $0.06 |
Exercisable, December 31, 2014 | $0.06 | |
Minimum | ||
Exercise Price | ||
Outstanding, beginning balance | $0.00 | |
Granted | $0.05 | |
Outstanding, ending balance | $0.05 | $0.00 |
Exercisable, December 31, 2014 | $0.05 | |
Maximum | ||
Exercise Price | ||
Outstanding, beginning balance | $0.10 | |
Granted | $0.15 | |
Outstanding, ending balance | $0.15 | $0.15 |
Exercisable, December 31, 2014 | $0.15 |
OPERATING_LEASES_Textuals_Deta
OPERATING LEASES (Textuals) (Detail) (General and administrative expense, USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
General and administrative expense | ||
Operating Leased Assets [Line Items] | ||
Total rent expense under leases | $65,950 | $59,272 |
OPERATING_LEASES_Detail
OPERATING LEASES (Detail) (USD $) | Dec. 31, 2014 |
Leases, Operating [Abstract] | |
2015 | $74,637 |
2016 | 31,605 |
Total | $106,242 |
RELATED_PARTY_TRANSACTIONS_Tex
RELATED PARTY TRANSACTIONS (Textuals) (Senior secured convertible notes payable, USD $) (Detail) (USD $) | 12 Months Ended | 3 Months Ended | 1 Months Ended | 3 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2013 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2012 | |
Shareholder | ||||||
Related Party Transaction [Line Items] | ||||||
Convertible notes payable | $114,000 | |||||
Common stock shares issued on conversion of debt (in shares) | 1,890,000 | |||||
Common Stock | ||||||
Related Party Transaction [Line Items] | ||||||
Common stock shares issued on conversion of debt (in shares) | 18,275 | 25,974,697 | ||||
10% Senior Secured Convertible Promissory Notes | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shareholders | 5 | 5 | ||||
Convertible notes payable | 330,249 | 330,249 | ||||
Amount of accrued interest owed by shareholders | 300,677 | 300,677 | ||||
Common stock shares issued on conversion of debt (in shares) | 7,900,000 | 7,400,000 | 8,448,519 | |||
10% Senior Secured Convertible Promissory Notes | 2 Shareholders | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shareholders | 2 | |||||
Convertible notes payable | 114,000 | |||||
Amount of accrued interest owed by shareholders | 112,505 | |||||
10% Senior Secured Convertible Promissory Notes | 3 Shareholders | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shareholders | 3 | |||||
Convertible notes payable | 323,000 | |||||
Amount of accrued interest owed by shareholders | 31,845 | |||||
Convertible Notes Payable [Member] | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shareholders | 1 | |||||
Convertible notes payable | 140,000 | |||||
Amount of accrued interest owed by shareholders | 87,150 | 87,150 | ||||
Common stock shares issued on conversion of debt (in shares) | 12,375,000 |
SUBSEQUENT_EVENTS_Textuals_Det
SUBSEQUENT EVENTS (Textuals) (Detail) (USD $) | 12 Months Ended | 0 Months Ended | |
Dec. 31, 2014 | Mar. 27, 2015 | Feb. 10, 2015 | |
Subsequent Event [Line Items] | |||
Proceeds from issuance of notes payable | $798,000 | ||
Notes Payable | Director | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Proceeds from issuance of notes payable | $111,102 | $25,000 | |
Interest rate, notes payable | 8.00% | 5.00% | |
Note due date | 25-Jun-15 | 10-Jun-15 |