DERIVATIVE LIABILITIES

3 Months Ended

Mar. 31, 2014

DERIVATIVE LIABILITIES [Abstract]

DERIVATIVE LIABILITIES

NOTE 12 – DERIVATIVE LIABILITIES

Certain of the Company’s warrants (as well as its formerly outstanding preferred stock and Convertible 8% Senior Secured Notes issued in 2008 and 2010) have reset provisions to the exercise price if the Company issues equity or other derivatives at a price less than the exercise price set forth in such warrants. This ratchet provision results in a derivative liability in our financial statements.

Our derivative liabilities decreased to $46,861 at March 31, 2014 from $95,049 at December 31, 2013.  The change in fair value during the three months ended March 31, 2014 was $48,188 as compared to $4,418,050 for the three months ended March 31, 2013.

The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at March 31, 2014 and December 31, 2013:

	3/31/2014			12/31/2013
Common stock warrants	$	46,861		$	95,049
Embedded conversion features for
convertible debt or preferred shares		-			-
Total	$	46,861		$	95,049
Beginning balance	$	95,049		$	8,025,381
Bifurcated amount		-			-
Change in derivative liability valuation		(48,188	)		(966,736	)
Change in derivative liability - settlements		-			(6,963,596	)
Total	$	46,861		$	95,049