DERIVATIVE LIABILITIES

3 Months Ended

Mar. 31, 2016

DERIVATIVE LIABILITIES [Abstract]

DERIVATIVE LIABILITIES

NOTE 11 – DERIVATIVE LIABILITIES

Certain of the Company’s convertible preferred stock and warrants 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 convertible preferred stock and warrants. This ratchet provision results in a derivative liability in our financial statements.

Our derivative liabilities decreased to $651,955 at March 31, 2016 from $742,833 at December 31, 2015.  The income recognized during the first quarter ended March 31, 2016 was $102,776 as compared to an expense of $2,233,776 for the three months ended March 31, 2015.

The following tabular presentation reflects the components of derivative financial instruments on the Company’s balance sheet at March 31, 2016 and December 31, 2015:

Components of derivative financial instruments
	3/31/2016			12/31/2015
Common stock warrants	$	540,063		$	130,028
Embedded conversion features for convertible debt or preferred shares		111,892			612,805
Total	$	651,955		$	742,833
Beginning balance	$	742,833		$	20,166
Change in derivative liability valuation		(102,776	)		1,265,611
Change in derivative liability - warrant issuance		11,898			(542,944	)
Total	$	651,955		$	742,833