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

12 Months Ended

Dec. 31, 2013

Convertible Notes Payable And Fair Value Measurements

Short Term Convertible Debt

As of December 31, 2013, the following summarizes principal amounts owed under convertible notes:

		Amount				Discount				Convertible Notes Payable, net of discount
Pegasus Note		$	100,000			$	–			$	100,000
Gemini Master Fund – Second Amended Note and Note Five			1,313,877				–				1,313,877
Gemini Master Fund – Note 2010-3			92,449				–				92,449
		$	1,506,326			$	–			$	1,506,326

As of December 31, 2012, the following summarizes principal amounts owed under convertible notes:

		Amount				Discount				Convertible Notes Payable, net of discount
Pegasus Note		$	100,000			$	–			$	100,000
Gemini Master Fund – Second Amended Note and Note Five			1,313,877				426,092				887,785
Gemini Master Fund – Note 2010-3			92,449				29,981				62,468
		$	1,506,326			$	456,073			$	1,050,253

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

Assets and liabilities measured at fair value on a recurring and non-recurring basis consisted of the following at December 31, 2012 and 2013:

						Fair value Measurements at December 31, 2012
		Carrying Value at December 31, 2012				(Level 1)				(Level 2)				(Level 3)
Embedded Conversion Option Liability		$	456,073			$	–			$	–			$	456,073

						Fair value Measurements at December 31, 2013
		Carrying Value at December 31, 2013				(Level 1)				(Level 2)				(Level 3)
Embedded Conversion Option Liability		$	281,265			$	–			$	–			$	281,265

Summary of activity of Level 3 liabilities

The following is a summary of activity of Level 3 liabilities for the period ended December 31, 2012 and 2013:

Balance at December 31, 2011		$	647,977
Increase in liability due to debt modification			456,073
Change in fair value			(647,977	)
Balance at December 31, 2012		$	456,073
Increase in liability due to debt modification			–
Change in fair value			(174,808	)
Balance December 31, 2013		$	281,265

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

The following table summarizes the assumptions the Company utilized to estimate the fair value of the embedded conversion option at December 31, 2013 and 2012:

Assumptions	December 31, 2013	December 31, 2012
Expected term	0.0	1.0
Expected Volatility	134%	113%
Risk free rate	0.02%	0.16%
Dividend Yield	0.00%	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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