7. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Of Financial Instruments Tables

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized as follows:

	Fair value measurement using inputs						Carrying amount at
Financial instruments	Level 1		Level 2		Level 3		12/31/2012
Liabilities:
Derivative instruments	$	–	$	1,016,341	$	–	$	1,016,341
Total	$	–	$	1,016,341	$	–	$	1,016,341

	Fair value measurement using inputs						Carrying amount at
Financial instruments	Level 1		Level 2		Level 3		12/31/2011
Liabilities:
Derivative instruments	$	–	$	1,043,639	$	–	$	1,043,639
Total	$	–	$	1,043,639	$	–	$	1,043,639

Schedule of options convertible into common shares

Issue Date	Conversion Price Clause
01/26/12	Lower of (i) $2.00 or (ii) 50% of lowest closing bid price 30 trading days preceding conversion date
1/31/12	Lower of (i) $2.00 or (ii) 50% of lowest closing bid price 30 trading days preceding conversion date
2/16/12	Lower of (i) $2.00 or (ii) 50% of lowest closing bid price 30 trading days preceding conversion date
2/21/12	Lower of (i) $2.00 or (ii) 50% of lowest closing bid price 30 trading days preceding conversion date
6/6/12	Lower of (i) $0.50 or (ii) 50% of average closing bid price 3 trading days preceding conversion date
7/20/12	55% of Market Price / average of the lowest 3 trading prices, 10 trading days preceding conversion date
8/23/12	55% of Market Price / average of the lowest 3 trading prices, 10 trading days preceding conversion date
11/12/12	31% of Market Price / lowest trading price, 120 days preceding conversion date
12/24/12	55% of Market Price / lowest trading price, 120 days preceding conversion date

Schedule of fair value of the derivative liability

Funding Date	Amount of Debt	Fair Value of Derivative Liability	Amount Applied to Debt Discount	Recorded as Debt Issuance Cost
01/26/12	50,000	199,842	50,000	149,842
1/31/12	50,000	99,901	50,000	49,901
2/16/12	60,000	239,871	60,000	179,871
2/21/12	40,000	79,937	40,000	39,937
6/6/12	30,000	93,875	30,000	63,875
7/20/12	27,500	212,706	27,500	185,206
8/23/12	32,500	53,870	32,500	21,370
11/12/12	16,000	195,202	16,000	179,202
12/24/12	22,500	272,976	22,500	250,476
	328,500	1,448,180	328,500	1,119,680