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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2014	May 13, 2014
Document And Entity Information
Entity Registrant Name	Nxt-ID, Inc.
Entity Central Index Key	0001566826
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		22,001,345
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2014

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2014	Dec. 31, 2013
Current Assets
Cash	$ 338,177	$ 303,626
Inventory	29,468	6,533
Prepaid expenses	3,313	3,313
Total Current Assets	370,958	313,472
Property and equipment, net of accumulated depreciation of $396 and $99	9,308	7,734
Total Assets	380,266	321,206
Current Liabilities
Accounts payable	81,912	244,094
Accrued expenses	25,157	135,017
Convertible notes payable, net of discount of $0 and 26,755, respectively	0	123,245
Derivative liability - warrants	0	1,531,303
Conversion feature liability	0	118,940
Total Current Liabilities	107,069	2,152,599
Commitments and Contingencies
Stockholders' Deficit
Preferred stock, $0.0001 par value: 10,000,000 shares authorized; none issued and outstanding	0	0
Common stock, $0.0001 par value: 100,000,000 shares authorized; 22,001,345 and 21,937,822 issued and outstanding, respectively	2,200	2,194
Additional paid-in capital	3,630,116	(80,177)
Accumulated deficit	(3,359,119)	(1,753,410)
Total Stockholders' Equity (Deficiency)	273,197	(1,831,393)
Total Liabilities and Stockholders' Equity (Deficiency)	$ 380,266	$ 321,206

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Mar. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Accumulated Depreciation	$ 1,105	$ 684
Net of discount of convertible notes payable	$ 0	$ 26,755
Preferred Stock, Par Value	$ 0.0001	$ 0.0001
Preferred Stock, Authorized	10,000,000	10,000,000
Preferred Stock, Issued	0	0
Preferred Stock, Outstanding	0	0
Common Stock, Par Value	$ 0.0001	$ 0.0001
Common Stock, Authorized	100,000,000	100,000,000
Common Stock, Issued	22,001,345	21,937,822
Common Stock, Outstanding	22,001,345	21,937,822

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Income Statement [Abstract]
Revenues	$ 0	$ 0
Costs of goods sold	0	0
Gross Profit	0	0
Operating Expenses
General and administrative	295,926	258,468
Selling	60,184	5,000
Research and development	164,278	177,783
Total Operating Expenses	520,388	441,251
Operating Loss	(520,388)	(441,251)
Other Expense
Interest expenses	(30,744)	(3,750)
Unrealized loss on change in fair value of derivative liabilities	(1,054,577)	0
Total Other Expense	(1,085,321)	(3,750)
Net Loss	$ (1,605,709)	$ (445,001)
Net Loss Per Common Share - Basic and Diluted	$ (0.07)	$ (0.02)
Weighted Average Number of Common Shares Outstanding - Basic and Diluted	21,956,200	20,971,556

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash Flows from Operating Activities
Net loss	$ (1,605,709)	$ (445,001)
Adjustment to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation	421	99
Stock- based compensation	34,000	45,000
Amortization of debt discount	26,755	0
Unrealized loss on change in fair value of derivative liabilities	1,054,577	0
Changes in operating assets and liabilities:
Inventory	(22,935)	0
Accounts payable	(162,182)	116,905
Accrued expenses	(88,375)	0
Total Adjustments	842,261	162,004
Net Cash Used in Operating Activities	(763,448)	(282,997)
Cash flows from Investing Activities
Purchase of equipment	(1,995)	0
Net Cash Used in Investing Activities	(1,995)	0
Cash flows from Financing Activities
Proceeds received in connection with issuance of common stock and warrants, net	799,994	0
Proceeds received in connection with issuance of common, net	0	51,000
Proceeds from convertible notes payable	0	75,000
Proceeds from advances made by officer	0	25,000
Net Cash Provided by Financing Activities	799,994	151,000
Net Increase (Decrease) in Cash	34,551	(131,997)
Cash - Beginning of Period	303,626	135,820
Cash - End of Period	338,177	3,823
Supplemental Disclosures of Cash Flow Information:
Interest	0	0
Taxes	0	0
Non-cash financing activities:
Recognition of liability in connection with warrant issuance	3,431,541	0
Reclassification of warrant liability to additional paid in capital in connection with warrant modification	6,037,639	0
Issuance of common stock in connection with conversion of note payable and accrued interest	171,485	0
Reclassification of conversion feature liability in connection with note conversion	98,722	0
Retirement of common stock by officers	$ 28	$ 0

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2014

Accounting Policies [Abstract]

3. Summary Of Significant Accounting Policies

Use of Estimates in the Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates and assumptions include the valuation allowance relating to the Company’s deferred tax asset, the fair value of the Company’s stock, derivative financial instruments and stock-based compensation.

Principles of Consolidation

The consolidated financial statements include the accounts of Nxt-ID and its wholly-owned subsidiary, 3D-ID. Intercompany balances and transactions have been eliminated upon consolidation.

Inventory

Inventory is valued at the lower of cost or market with cost determined using the first-in, first-out method and with market defined as the lower of replacement cost or realizable value. Inventory is comprised principally of raw materials.

Revenue Recognition

The Company’s 3D facial recognition and identification products are currently available for sale. The Company recognizes revenue in connection with the sale of these products when persuasive evidence of an arrangement exists, the service has been rendered or product delivery has occurred, the price is fixed or readily determinable and collectability of the sale is reasonably assured.

The Company requires all of its product sales to be supported by evidence of a sale transaction that clearly indicates the selling price to the customer, shipping terms and payment terms. Evidence of an arrangement generally consists of a contract or purchase order approved by the customer. The Company recognizes revenue at the time in which it receives a confirmation that the goods were either tendered at their destination, when shipped “FOB destination,” or transferred to a shipping agent, when shipped “FOB shipping point.” Delivery to the customer is deemed to have occurred when the customer takes title to the product. Generally, title passes to the customer upon shipment, but could occur when the customer receives the product based on the terms of the agreement with the customer. The selling prices of all goods that the Company sells are fixed, and agreed to with the customer, prior to shipment.

In the event a sale is made to a customer under circumstances in which collectability is not reasonably assured, the Company either requires the customer to remit payment prior to shipment or defers recognition of the revenue until payment is received. The Company maintains a reserve for amounts which may not be collectible due to risk of credit losses.

The Company’s sales typically do not include multiple deliverable arrangements.

Convertible Instruments

The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations.

Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument.

The Company accounts for convertible debt instruments when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. See Note 5.

Debt discount and amortization of debt discount

Debt discount represents the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of other expenses in the accompanying statements of operations.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company will classify as income tax expense any interest and penalties. The Company has no material uncertain tax positions for any of the reporting periods presented. Generally, the tax authorities may examine the partnership/corporate tax returns for three years from the date of filing.

Stock-Based Compensation

The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock options using the Black-Scholes option pricing model. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards. Compensation expense includes the impact of an estimate for forfeitures for all stock options.

The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned.

Net Loss per Share

Basic loss per share was computed using the weighted average number of common shares outstanding. Diluted loss per share includes the effect of diluted common stock equivalents. Potentially dilutive securities realizable from the exercise of 1,396,139 warrants as of March 31, 2014, were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. As of March 31, 2013 there were no potentially dilutive securities.

Research and Development

Research and development costs consist of expenditures incurred during the course of planned research and investigation aimed at the discovery of new knowledge, which will be useful in developing new products or processes. The Company expenses all research and development costs as incurred.

6. STOCKHOLDERS' EQUITY

3 Months Ended

Mar. 31, 2014

Equity [Abstract]

6. STOCKHOLDERS' EQUITY

On January 13, 2014, the Company closed a “best efforts” private offering of $1,000,000 (the “Offering”) with a group of accredited investors (the “Purchasers”) and the Company exercised the oversubscription amount allowed in the Offering of $350,000, for total gross proceeds to the Company of $1,350,000 before deducting placement agent fees and other expenses. Pursuant to a securities purchase agreement with the Purchasers (the “Purchase Agreement”), the Company issued to the Purchasers (i) 415,387 shares (the “Shares”) of the Company’s common stock, par value, $0.0001 (the “Common Stock”) and (ii) 1,350,000 warrants (the “Warrants”) to purchase shares (the “Warrant Shares” and together with the Shares and the Warrants, the “Securities”) of the Company’s Common Stock at an exercise price of $3.25 per share. In connection with the Offering, 138,463 units were sold at the end of December of 2013 and 276,924 units were sold in January 2014, all at $3.25 per unit. As a result, the Company received aggregate gross proceeds of $450,000 in December 2013 from the issuance of 138,463 shares of common stock and 450,000 warrants, and the Company received $900,000 in January 2014 from the issuance of 276,924 shares of common stock and 900,000 warrants. Costs incurred associated with the Offering in December 2013 and January 2014 were $56,820 and $100,006, respectively. In January 2014, the placement agent received 41,539 warrants from the Offering.

Pursuant to the Purchase Agreement, the Company’s founders who are members of management (the “Founders”) agreed to cancel a corresponding number of shares to those Shares issued in the Offering and place in escrow a corresponding number of shares to be cancelled for each Warrant Share issued. As a result, the Founders retired 138,463 and 276,924 shares of common stock in December 2013 and January 2014, respectively.

The Warrants are exercisable for a period of five years from the original issue date. The initial exercise price with respect to the Warrants was $3.25 per share. On the date of issuance, the warrants were recognized as derivative liabilities as they did not have fixed settlement provisions because their exercise prices could be lowered if the Company was to issue securities at a lower price in the future. As a result, the Company recorded $3,431,541 as derivative liability- warrants on the condensed consolidated balance sheet on January 13, 2014.

On February 21, 2014, the Company amended the terms of the 1,359,539 warrants issued in the offering to eliminate the anti-dilution provision and to lower the exercise price of the warrants from $3.25 to $3.00. As a result of the warrant modifications, the Company re-measured the warrant liability on the modification date and recorded an unrealized loss on derivative liabilities of $1,074,795 and reclassified the aggregate re-measured value of the warrants of $6,136,361 to additional paid in capital. See Note 7.

The following table summarizes the Company's warrants outstanding at March 31, 2014:

					Weighted
			Weighted		Average
			Average		Remaining
	Number of		Exercise		Life		Intrinsic
	Warrants		Price		In Years		Value
Outstanding at December 31, 2013		454,600	$	3.25		4.97		436,416
Issued in connection with offering		941,539		3.00		4.97		903,877
Exercised		–		–		–		–
Cancelled		–		–		–		–
Outstanding at March 31, 2014		1,396,139	$	3.00		4.97	$	1,340,293

Exercisable at March 31, 2014		1,396,139	$	3.00		4.97	$	1,340,293

On January 4, 2013, a majority the Company’s stockholders approved by written consent the Company’s 2013 Long-Term Stock Incentive Plan (“LTIP”). The maximum aggregate number of shares of common stock that may be issued under the LTIP, including stock awards and stock appreciation rights, is limited to 10% of the shares of common stock outstanding on the first business or trading day of any fiscal year, which is 2,193,782 at January 1, 2014. During the three months ended March 31, 2014, the Company issued 3,789 restricted shares under the plan to three non-executive directors with an aggregate fair value of $15,000.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

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Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/extlink&oid=6405834&loc=d3e23285-112656

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
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-URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Glossary Preferred Stock
-URI http://asc.fasb.org/extlink&oid=6521494

Reference 12: http://www.xbrl.org/2003/role/presentationRef
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Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
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Reference 15: http://www.xbrl.org/2003/role/presentationRef
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Reference 16: http://www.xbrl.org/2003/role/presentationRef
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Reference 17: http://www.xbrl.org/2003/role/presentationRef
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+ Details

7. DERIVATIVE LIABILITIES

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

7. DERIVATIVE LIABILITIES

Fair value of financial instruments is defined as an exit price, which is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date. The degree of judgment utilized in measuring the fair value of assets and liabilities generally correlates to the level of pricing observability. Financial assets and liabilities with readily available, actively quoted prices or for which fair value can be measured from actively quoted prices in active markets generally have more pricing observability and require less judgment in measuring fair value. Conversely, financial assets and liabilities that are rarely traded or not quoted have less price observability and are generally measured at fair value using valuation models that require more judgment. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency of the asset, liability or market and the nature of the asset or liability. The Company has categorized its financial assets and liabilities measured at fair value into a three-level hierarchy.

The conversion feature embedded within the Company’s convertible notes payable and the warrants issued in connection with the Offering (as defined in Note 6) did not have fixed settlement provisions on their respective issuance dates as the conversion and exercises prices could have been lowered if the Company would have issued securities at lower prices.

The derivative liabilities were valued using the Black-Scholes option valuation model and the following weighted average assumptions on the following dates:

	February 21, 2014		February 18, 2014		January 14, 2014		December 31, 2013
Embedded Conversion Feature and Warrant Liability:
Risk-free interest rate		0.30%		0.30%		0.30%		0.30%
Expected volatility		124%		123%		123%		123.54%
Expected life (in years)		4.9		0.75		5.00		4.59
Expected dividend yield		–		–		–		–
Number of shares		1,391,539		55,497		941,539		500,000
Fair value	$	6,037,639	$	98,722	$	3,431,541	$	1,650,243

The risk-free interest rate was based on rates established by the Federal Reserve. Since the Company’s stock has not been publicly traded for a sufficiently long period of time, the Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The expected life of the conversion feature was determined by the maturity date of the Note and the expected life of the warrants was determined by their expiration dates. The expected dividend yield was based upon the fact that the Company has not historically paid dividends on its common stock, and does not expect to pay dividends on its common stock in the future.

Fair Value Measurement

Valuation Hierarchy

ASC 820, “Fair Value Measurements and Disclosures,” establishes a valuation hierarchy for disclosure of the inputs to valuation used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following table provides the liabilities carried at fair value measured on a recurring basis as of March 31, 2014:

Fair Value Measurements at March 31, 2014

Total

Carrying

Value at

March 31, 2014

Quoted

prices in

active

markets

(Level 1)

Significant

other

observable

inputs

(Level 2)

Significant

unobservable

inputs

(Level 3)

Derivative liabilities

–

The carrying amounts of cash, inventory, prepaid expenses, accounts payable and accrued liabilities approximate their fair value due to their short maturities. The Company’s other financial instruments include its convertible notes payable obligations. The carrying value of these instruments approximate fair value, as they bear terms and conditions comparable to market, for obligations with similar terms and maturities. The Company measures the fair value of financial assets and liabilities based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value.

Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the derivative liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s accounting department, who reports to the Principal Financial Officer, determines its valuation policies and procedures. The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s accounting department and are approved by the Principal Financial Officer.

Level 3 Valuation Techniques

Level 3 financial liabilities consist of the conversion feature liability and common stock purchase warrants for which there are no current market for these securities such that the determination of fair value requires significant judgment or estimation. Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate. A significant decrease in the volatility or a significant decrease in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement.

As of March 31, 2014, there were no transfers in or out of level 3 from other levels in the fair value hierarchy.

The following table sets forth a summary of the changes in the fair value of our Level 3 financial liabilities that are measured at fair value on a recurring basis:

	For the thee months ended
	March 31, 2014
Beginning balance	$	1,650,243
Recognition of derivative liability - warrants		3,431,541
Net unrealized loss on derivative liabilities		1,074,795
Net unrealized gain on derivative conversion feature liabilities		(20,218	)
Adjustment to additional paid in capital upon conversion and modification		(6,136,361	)
Ending balance	$	–

8. COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

8. COMMITMENTS AND CONTINGENCIES

Legal Matters

From time to time, the Company is subject to legal proceedings arising in the ordinary course of business. Such matters are subject to uncertainties and outcomes are not predictable with assurance. Management believes at this time, there are no ongoing matters that will have a material adverse effect on the Company's business, financial position, results of operations, or cash flows.

Subsequent to the acquisition of 3D-ID, the Company licensed sixteen (16) U.S. patents. The Company does not generally conduct exhaustive patent searches to determine whether the technology used in our products infringes patents held by third parties. The Company may face claims by third parties that its products or technology infringe their patents or other intellectual property rights in the future. Any claim of infringement could cause the Company to incur substantial costs defending against the claim, even if the claim is invalid, and could distract the attention of the Company’s management. If any of the Company’s products are found to violate third-party proprietary rights, it may be required to pay substantial damages.

Commitments

On August 19, 2011, the Company signed a licensing agreement with Technest Holdings, Inc. and Genex Technologies, Inc., which granted 3D-ID a perpetual sub-licensable, exclusive, worldwide license to use their intellectual property in U.S. Federal and State markets, and a non-exclusive license in all other markets. The Company’s Chief Executive Officer (“CEO”) is a stockholder of and was the former CEO of Technest Holdings, Inc. In consideration of the license of rights affected by this Agreement, 3D-ID is obligated to pay Technest a royalty equal to 5% of net sales. To date, no royalties have been paid. Since the Technest patents do not constitute part of the Company’s core intellectual property in its present or anticipated future product offerings it has decided to forgo the exclusive rights to the Technest patents. As a result the Company reversed an accrual of $35,000 which represented a minimum royalty to maintain certain exclusive rights. The Company retains a perpetual non-exclusive worldwide license to these patents.

In October 2012, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of three months. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $5,000 and to issue the consultant shares of common stock per month with a fair value of $10,000 as compensation for services provided. The Company entered into a new agreement with this consultant on November 1, 2013 for a period of six months and agreed to pay the consultant a monthly cash fee of $5,000. During the three months ended March 31, 2014 the Company paid the consultant $15,000 pursuant to this agreement. During the quarter ended March 31, 2013, 120,000 shares of common stock with a fair value of $30,000 as compensation for services provided from January 1, 2013, to March 31, 2013, were issued on March 31, 2013.

In January 2013, the Company entered into an agreement with a development and manufacturing company to provide samples of the Company’s smart card design for an aggregate of $150,000. Unless terminated early, the agreement will continue in full force and effect until the samples have been delivered to the Company. During the three months ended March 31, 2014 and 2013 the Company paid $0 and $125,000 in consulting fees pursuant to this agreement.

In July 2013, the Company entered into an agreement with a consultant to provide public relations and marketing services to the Company for a period of six months. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $4,000 and to issue the consultant 4,000 shares of common stock per month as compensation for services provided. Commencing September 16, 2013, the agreement was amended to a monthly cash fee of $4,000 and to issue the consultant $4,000 in shares of common stock per month. During the three months ending March 31, 2014, the consultant was issued 833 shares with an aggregate grant date fair value of $4,000.

On October 16, 2013, the Company entered into a lease agreement for office space in Palm Bay, Florida. The term of the lease is for three years with a monthly rent of $1,250 per month in the first year, increasing 3% annually thereafter. The Company incurred $3,750 and $0 of rent expense for the three months ended March 31, 2014 and 2013, respectively. Minimum lease payments for non-cancelable operating leases are as follows:

Future Lease Obligation

2014	$	11,622
2015		15,496
2016		15,496
Total future lease obligation	$	42,614

On November 7, 2013, the Company entered into a three-year distribution and supply agreement with Voice of Big Data Solutions, Pvt. Ltd. (“VOBD”) for the distribution of the Company’s 3D facial recognition products in India and Sri Lanka on an exclusive basis and the Middle East and Singapore on a non-exclusive basis. The agreement is subject to termination at any time after the initial three-year term by either the Company or VOBD upon sixty (60) days written notice.

On January 6, 2014, the Company entered into an agreement with a business consulting firm to provide consulting services to the Company for a period of a year. Pursuant to the agreement, the Company agreed to pay the consultant a monthly cash fee of $5,000 and to issue the consultant $5,000 worth of restricted shares of common stock per month as compensation for services provided. During the three months ended March 31, 2014, the consultant was issued 3,403 shares with an aggregate grant date fair value of $15,000 and $15,000 in cash for a total aggregate consulting fee of $30,000.

Employment Agreement

Effective October 1, 2012, Nxt-ID entered into an employment agreement with its Chief Executive Officer. The employment agreement provides for:

	·	An initial term of 3 years beginning on October 1, 2012.

	·	An initial base salary of $150,000 per year. In January 2014, upon the successful completion of the MobileWocket prototype, the salary was increased to $300,000 in accordance with the agreement.

	·	Payment of all necessary and reasonable out-of-pocket expenses incurred by the executive in the performance of his duties under the agreement.

	·	Eligibility to participate in bonus or incentive compensation plans that may be established by the board of directors from time to time applicable to the executive's services.

	·	Eligibility to receive equity awards as determined by the board of directors, or a committee of the board of directors, composed in compliance with the corporate governance standards of any applicable listing exchange.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2014
Accounting Policies [Abstract]
Use of Estimates	*Use of Estimates in the Financial Statements* The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates and assumptions include the valuation allowance relating to the Company’s deferred tax asset, the fair value of the Company’s stock, derivative financial instruments and stock-based compensation.
Principles of Consolidation and basis of presentation	*Principles of Consolidation* The consolidated financial statements include the accounts of Nxt-ID and its wholly-owned subsidiary, 3D-ID. Intercompany balances and transactions have been eliminated upon consolidation.
Inventory	*Inventory* Inventory is valued at the lower of cost or market with cost determined using the first-in, first-out method and with market defined as the lower of replacement cost or realizable value. Inventory is comprised principally of raw materials.
Revenue Recognition	*Revenue Recognition* The Company’s 3D facial recognition and identification products are currently available for sale. The Company recognizes revenue in connection with the sale of these products when persuasive evidence of an arrangement exists, the service has been rendered or product delivery has occurred, the price is fixed or readily determinable and collectability of the sale is reasonably assured. The Company requires all of its product sales to be supported by evidence of a sale transaction that clearly indicates the selling price to the customer, shipping terms and payment terms. Evidence of an arrangement generally consists of a contract or purchase order approved by the customer. The Company recognizes revenue at the time in which it receives a confirmation that the goods were either tendered at their destination, when shipped “FOB destination,” or transferred to a shipping agent, when shipped “FOB shipping point.” Delivery to the customer is deemed to have occurred when the customer takes title to the product. Generally, title passes to the customer upon shipment, but could occur when the customer receives the product based on the terms of the agreement with the customer. The selling prices of all goods that the Company sells are fixed, and agreed to with the customer, prior to shipment. In the event a sale is made to a customer under circumstances in which collectability is not reasonably assured, the Company either requires the customer to remit payment prior to shipment or defers recognition of the revenue until payment is received. The Company maintains a reserve for amounts which may not be collectible due to risk of credit losses. The Company’s sales typically do not include multiple deliverable arrangements.
Convertible Instruments	*Convertible Instruments* The Company applies the accounting standards for derivatives and hedging and for distinguishing liabilities from equity when accounting for hybrid contracts that feature conversion options. The accounting standards require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria includes circumstances in which (i) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (ii) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (iii) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument. The derivative is subsequently marked to market at each reporting date based on current fair value, with the changes in fair value reported in the results of operations. Conversion options that contain variable settlement features such as provisions to adjust the conversion price upon subsequent issuances of equity or equity linked securities at exercise prices more favorable than that featured in the hybrid contract generally result in their bifurcation from the host instrument. The Company accounts for convertible debt instruments when the Company has determined that the embedded conversion options should not be bifurcated from their host instruments in accordance with ASC 470-20 “Debt with Conversion and Other Options”. The Company records, when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt. See Note 5.
Debt Discount And Amortization Of Debt Discount	*Debt discount and amortization of debt discount* Debt discount represents the fair value of embedded conversion options of various convertible debt instruments and attached convertible equity instruments issued in connection with debt instruments. The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the straight-line method which approximates the interest method. The amortization of debt discount is included as a component of other expenses in the accompanying statements of operations.
Income Taxes	*Income Taxes* The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. ASC Topic 740-10-30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740-10-40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. The Company will classify as income tax expense any interest and penalties. The Company has no material uncertain tax positions for any of the reporting periods presented. Generally, the tax authorities may examine the partnership/corporate tax returns for three years from the date of filing.
Stock-Based Compensation	*Stock-Based Compensation* The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock options using the Black-Scholes option pricing model. The Company amortizes the fair value of employee stock options on a straight-line basis over the requisite service period of the awards. Compensation expense includes the impact of an estimate for forfeitures for all stock options. The Company accounts for equity instruments issued to non-employees at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests or becomes non-forfeitable. Non-employee stock-based compensation charges are amortized over the vesting period or as earned.
Net Loss per Common Share	*Net Loss per Share* Basic loss per share was computed using the weighted average number of common shares outstanding. Diluted loss per share includes the effect of diluted common stock equivalents. Potentially dilutive securities realizable from the exercise of 1,396,139 warrants as of March 31, 2014, were excluded from the computation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive. As of March 31, 2013 there were no potentially dilutive securities.
Research and Development	*Research and Development* Research and development costs consist of expenditures incurred during the course of planned research and investigation aimed at the discovery of new knowledge, which will be useful in developing new products or processes. The Company expenses all research and development costs as incurred.

7. DERIVATIVE LIABILITIES (Tables)

3 Months Ended

Mar. 31, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Valuation of Derivative liabilities

	February 21, 2014		February 18, 2014		January 14, 2014		December 31, 2013
Embedded Conversion Feature and Warrant Liability:
Risk-free interest rate		0.30%		0.30%		0.30%		0.30%
Expected volatility		124%		123%		123%		123.54%
Expected life (in years)		4.9		0.75		5.00		4.59
Expected dividend yield		–		–		–		–
Number of shares		1,391,539		55,497		941,539		500,000
Fair value	$	6,037,639	$	98,722	$	3,431,541	$	1,650,243

Fair value of liabilities measured on a recurring basis

Fair Value Measurements at March 31, 2014

Total

Carrying

Value at

March 31, 2014

Quoted

prices in

active

markets

(Level 1)

Significant

other

observable

inputs

(Level 2)

Significant

unobservable

inputs

(Level 3)

Derivative liabilities

–

Changes in the fair value of Level 3 financial liabilities that are measured at fair value on a recurring basis

	For the thee months ended
	March 31, 2014
Beginning balance	$	1,650,243
Recognition of derivative liability - warrants		3,431,541
Net unrealized loss on derivative liabilities		1,074,795
Net unrealized gain on derivative conversion feature liabilities		(20,218	)
Adjustment to additional paid in capital upon conversion and modification		(6,136,361	)
Ending balance	$	–

4. ACCRUED EXPENSES (Details) - USD ($)	Mar. 31, 2014	Dec. 31, 2013
Payables and Accruals [Abstract]
Salaries	$ 23,653	$ 18,750
Reimbursable expenses	1,504	196
Consulting fees	0	18,574
Royalty fees	0	35,000
Investment banking fees	0	45,000
Interest expense - convertible note	0	17,497
Total accrued expenses	$ 25,157	$ 135,017

6. STOCKHOLDERS' EQUITY (Details-Warrant activity) - Warrant [Member]	3 Months Ended
	Mar. 31, 2014 USD ($) $ / shares $ / Warrant shares	Dec. 31, 2013 USD ($)
Number of Warrants
Number of Warrants Outstanding, beginning	454,600
Number of Warrants Issued in connection with offering	941,539
Number of Warrants Exercised
Number of Warrants Cancelled
Number of Warrants Outstanding, ending	1,396,139
Number of Warrants Exercisable	1,396,139
Weighted Average Exercise Price
Weighted Average Exercise Price Outstanding, beginning \| $ / Warrant	3.25
Weighted Average Exercise Price Granted \| $ / shares	$ 3.00
Weighted Average Exercise Price Exercised \| $ / shares
Weighted Average Exercise Price Cancelled \| $ / shares
Weighted Average Exercise Price Outstanding, ending \| $ / Warrant	3.00
Weighted Average Exercise Price Exercisable \| $ / shares	$ 3.00
Weighted Average Remaining Life In Years
Weighted Average Remaining Life In Years Outstanding	4 years 11 months 19 days
Weighted Average Remaining Life In Years Exercisable	4 years 11 months 19 days
Intrinsic Value
Intrinsic Value Outstanding \| $	$ 1,340,293	$ 436,416
Intrinsic value issued in connection with offering \| $	903,877
Intrinsic Value Exercisable \| $	$ 1,340,293

7. DERIVATIVE LIABILITIES (Details-Assumptions)	3 Months Ended
7. DERIVATIVE LIABILITIES (Details-Assumptions)	Mar. 31, 2014 USD ($) shares
Embedded Conversion Feature:
Financial liabilities, Ending balance	$ 0
February 21, 2014
Embedded Conversion Feature:
Risk-free interest rate	0.30%
Expected volatility	124.00%
Expected life (in years)	4 years 10 months 24 days
Expected dividend yield	0.00%
Number of shares, if converted \| shares	1,391,539
Financial liabilities, Ending balance	$ 6,037,639
February 18, 2014
Embedded Conversion Feature:
Risk-free interest rate	0.30%
Expected volatility	123.00%
Expected life (in years)	9 months
Expected dividend yield	0.00%
Number of shares, if converted \| shares	55,497
Financial liabilities, Ending balance	$ 98,722
January 14, 2014
Embedded Conversion Feature:
Risk-free interest rate	0.30%
Expected volatility	123.00%
Expected life (in years)	5 years
Expected dividend yield	0.00%
Number of shares, if converted \| shares	941,539
Financial liabilities, Ending balance	$ 3,431,541
December 31, 2014
Embedded Conversion Feature:
Risk-free interest rate	0.30%
Expected volatility	123.54%
Expected life (in years)	4 years 7 months 2 days
Expected dividend yield	0.00%
Number of shares, if converted \| shares	500,000
Financial liabilities, Ending balance	$ 1,650,243

2. GOING CONCERN AND MANAGMENT PLANS (Details Narrative)	Mar. 31, 2014 USD ($)
Risks and Uncertainties [Abstract]
Working capital	$ 263,889

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)	3 Months Ended
	Mar. 31, 2014 shares
Accounting Policies [Abstract]
Potentially dilutive securities	1,396,139

5. CONVERTIBLE NOTES PAYABLE (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Debt Disclosure [Abstract]
Unrealized gain on change in fair value of conversion feature	$ 20,218
Conversion feature in additional paid in capital	98,722
Unamortized debt discount expensed	$ 26,755	$ 0

7. DERIVATIVE LIABILITIES (Details-Liabilities at fair value)	Mar. 31, 2014 USD ($)
Derivative liabilities	$ 0
Quoted prices in active markets (Level 1) [Member]
Derivative liabilities	0
Significant unobservable inputs (Level 3) [Member]
Derivative liabilities	0
Significant other observable inputs (Level 2) [Member]
Derivative liabilities	$ 0

7. DERIVATIVE LIABILITIES (Details-Level 3)	3 Months Ended
7. DERIVATIVE LIABILITIES (Details-Level 3)	Mar. 31, 2014 USD ($)
Financial liabilities, Beginning balance	$ 1,650,243
Recognition of derivative liability - warrants	3,431,541
Net unrealized loss on derivative liabilities	1,074,795
Net unrealized gain on derivative conversion feature liabilities	(20,218)
Adjustment to additional paid in capital upon conversion and modification	(6,136,361)
Financial liabilities, Ending balance	$ 0

8. COMMITMENTS AND CONTINGENCIES (Details)	Mar. 31, 2014 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2014	$ 11,622
2015	15,496
2016	15,496
Total future lease obligation	$ 42,614