DERIVATIVE LIABILITIES (Tables)

9 Months Ended

Sep. 30, 2012

DERIVATIVE LIABILITIES (Tables)

Derivative Instruments in Consolidated Balance Sheets

The fair value of outstanding derivative instruments not designed as hedging instruments on the accompanying Consolidated Balance Sheets was as follows:

Derivative Instruments		September 30, 2012		December 31, 2011
Put option		Expired – 3/30/12	$	25,193
Conversion option	$	188,560	$	230,714

Estimate the fair value derivatives using the assumptions

A Black-Scholes option-pricing model was used to estimate the fair value, using Level 2 inputs, of the Company’s derivatives using the following assumptions at September 30, 2012 and December 31, 2011:

	Number of Shares	Volatility	Risk-Free Rate	Expected Life (in years)		Stock price
September 30, 2012
Conversion option	414,589	80.91%	.10%	.13	$	1.15
December 31, 2011
Put option	60,824	116.41%	.06%	.164	$	1.15
Conversion option	407,435	91.72%	.90%	.77	$	1.15