Note 10. Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Text Block]

Note 10.  Fair Value Measurements

The Company has issued several convertible promissory notes, convertible debentures and stock warrants that have conversion features that represent freestanding derivative instruments that meet the requirements for liability classification under ASC Topic 815, Derivatives and Hedging (“ASC 815”).  As a result, the fair value of the derivative financial instruments in these securities is reflected in the Company’s balance sheet as a liability.  The fair value of the derivative financial instruments in these securities was measured at the inception date of the securities and each subsequent balance sheet date.  Any changes in the fair value of the derivative financial instruments were recorded as non-operating, non-cash income or expense at each balance sheet date.

The following table presents the Company’s derivative liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of June 30, 2011 and December 31, 2010:

	Level 1		Level 2		Level 3
Derivative liabilities – June 30, 2011		-0-		-0-	$	431,414
Derivative liabilities – December 31, 2010		-0-		-0-	$	1,460,472

The following table presents a Level 3 reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs as of June 30, 2011 and December 31, 2010:

	Derivative  Liabilities
Balance, December 31, 2009	$	14,456,424
Purchases, sales, issuances and settlements (net)		(12,995,952	)
Balance, December 31, 2010		1,460,472
Purchases, sales, issuances and settlements (net)		(1,029,058	)
Balance, December 31, 2010	$	431,414

The Company’s other financial instruments consist of cash and equivalents, deposits, accounts payable, notes payable and convertible debentures.  The estimated fair value of the cash and equivalents, deposits and accounts payable approximates their respective carrying amounts due to the short-term nature of these instruments.  The estimated fair value of the notes payable and convertible debentures also approximates their respective carrying amounts since their terms are similar to those in the lending market for comparable loans with comparable risks.  None of these instruments are held for trading purposes.