DERIVATIVE LIABILITIES

12 Months Ended

Dec. 31, 2011

DERIVATIVE LIABILITIES [Abstract]

DERIVATIVE LIABILITIES

The Company’s warrants and its Convertible 8% Senior Secured Notes issued in 2010, 2009, and 2008 have reset provisions to the exercise price and conversion price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants and notes. This ratchet provision results in a derivative liability in our financial statements.

Our derivative liabilities decreased from $13,528,355 at December 31, 2010 to $11,031,432 at December 31, 2011.  For the year ended December 31, 2011, the change in fair value was a positive $3,807,490.  The company also recognized a derivative loss in the amount of $411,192.  The change in fair value during the year ended December 31, 2010 resulted in a gain of $2,434,939 of which $507,028 is recorded as a derivative loss for a total change of $1,927,911.

The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at December 31, 2011 and December 31, 2010:

	12/31/11	12/31/10
Common stock warrants	$8,829,215	$9,041,049
Embedded conversion features –part of note discount	2,202,217	4,487,306
Total	$11,031,432	$13,528,355
Beginning Balance	$13,528,355	$10,285,578
Bifurcated Amount	3,386,697	6,560,569
Change in Derivative Liability	(3,396,298)	(1,927,911)
Change in Derivative Liability-Conversion	(2,487,322)	(1,389,881)
Total