DERIVATIVE LIABILITIES

6 Months Ended

Jun. 30, 2012

DERIVATIVE LIABILITIES [Abstract]

DERIVATIVE LIABILITIES

NOTE 11 - DERIVATIVE LIABILITIES

The Company's warrants and its Convertible 8% Senior Secured Notes issued in 2008 and 2010 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 increased to $13,870,806 at June 30, 2012 from $11,031,432 at December 31, 2011.  The change in fair value during the six months ended June 30, 2012 was ($2,887,993) as compared to $965,154 for the six months ended June 30, 2011.

The following tabular presentation reflects the components of derivative financial instruments on the Company's balance sheet at June 30, 2012 and December 31, 2011:

	6/30/2012			12/31/2011
Common stock warrants	$	11,063,395		$	8,829,215
Embedded conversion features
-part of note discount		2,807,411			2,202,217
Total	$	13,870,806		$	11,031,432
Beginning Balance	$	11,031,432		$	13,528,355
Bifurcated Amount		-			3,386,697
Change in Derivative Liability		2,887,993			(3,396,298	)
Change in Derivative Liability - Conversion		(48,619	)		(2,487,322	)
Total	$	13,870,806		$	11,031,432