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4. CONVERTIBLE NOTES PAYABLE AND FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2012

Convertible Notes Payable And Fair Value Measurements Tables

Short Term Convertible Debt

										Convertible
										Notes Payable,
		Amount				Discount				net of discount
Pegasus Note		$	100,000			$	–			$	100,000
Gemini Master Fund – Second Amended Note and Note Five		$	1,190,307			$	153,529			$	1,036,778
Gemini Master Fund – Note 2010-3		$	65,635			$	8,466			$	57,169
		$	1,355,942			$	161,995			$	1,193,947

Assets and liabilities measured at fair value on a recurring and non-recurring basis

		Carrying Value at				Fair value Measurements at September 30, 2012
		September 30, 2012				(Level 1)				(Level 2)				(Level 3)

Embedded Conversion Option Liability		$	108,999			$	–			$	–			$	108,999

Summary of activity of Level 3 liabilities

Balance December 31, 2011		$	647,977
Change in Fair Value		$	(538,978	)
Balance September 30, 2012		$	108,999

Assumptions the Company utilized to estimate the fair value of the embedded conversion option

Assumptions
Expected term	0.25
Expected Volatility	108.31%
Risk free rate	0.21%
Dividend Yield	0.00%

Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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