Fair Value Measurement of Assets and Liabilities

6 Months Ended

Jun. 30, 2011

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

5.  Fair Value Measurement of Assets and Liabilities

Accounting guidance defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements about fair value measurements. The accounting guidance does not mandate any new fair-value measurements and is applicable to assets and liabilities that are required to be recorded at fair value under other accounting pronouncements.

The three levels of the fair-value hierarchy are described as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. We had no level 1 assets or liabilities.

Level 2: Inputs other than Level 1 that are observable, either directly or indirectly. We had no level 2 assets or liabilities.

Level 3: Unobservable inputs. We valued warrants and embedded conversion features that were without observable market values and the valuation required a high level of judgment to determine fair value (level 3 inputs). The Company estimates the fair value of these warrants and embedded conversion features using the Black-Scholes option pricing model using the following assumptions:

	For the Six
	Months Ended June 30, 2011
Annual dividend yield		--
Expected life (years)		0.08 – 3.0
Risk-free interest rate		0.08% - 1.27	%
Expected volatility		110% - 263	%

The following table shows the classification of our liabilities that are subject to fair value measurements and the roll-forward of these liabilities for the six months ended June 30, 2011 (in thousands):

Fair Value of Embedded Conversion Features and Warrants

December 31, 2010		6,718
Derivatives added in connection with issuance of convertible debt		4,762
Derivatives reclassified to equity in connection with repayment and conversions of debt		(13,379)
Net increase in fair value		8,089
June 30, 2011	$	6,190