Derivative Liability

3 Months Ended

Mar. 31, 2013

Derivative Liability [Abstract]

Derivative Liability

10. Derivative Liability

During the three months ending March 31, 2013 the Company had the following activity in their derivative liability account:

	Derivative Liability at Inception			Conversion		(Gain) Loss on Derivative Liability			Derivative Liability at 3/31/13
Conversion feature of October 2012 $53,000 Convertible Note		$	57,089	$	-	$	(14,501	)	$	60,913	(1)
Conversion feature of November 2012 $37,500 Convertible Note			36,545		-		(3,704	)		48,099	(2)
Conversion feature of December 2012 $15,000 Related Party Convertible Note			8,898		-		(2,552	)		6,346	(3)
Conversion feature of February 2013 $47,500 Convertible Note			56,945		-		6,381			63,326	(4)
Total		$	159,477	$	-	$	(14,376	)	$	178,686

(1) At inception the Company recorded a derivative liability for the conversion feature of their $53,000 convertible note of $57,089, a debt discount of $53,000, and a loss on derivative liability of $4,089. At March 31, 2013 the Company measured the fair value of the derivative for the conversion feature at $60,913 and recorded a gain on derivative liability of $14,501. The fair values of the derivative liabilities were calculated using the Black-Scholes pricing model with the following assumptions:

	At Inception	At March 31, 2013
Risk-free interest rate	0.17%	0.07%
Expected life in years	0.80	0.30
Dividend yield	0%	0%
Expected volatility	151.83%	200.19%

(2) At inception the Company recorded a derivative liability for the conversion feature of their $37,500 convertible note and a debt discount of $36,545. At March 31, 2013 the Company measured the fair value of the derivative for the conversion feature at $48,099 and recorded a gain on derivative liability of $3,704 for the three months ending March 31, 2013. The fair values of the derivative liabilities were calculated using the Black-Scholes pricing model with the following assumptions:

	At Inception	At March 31, 2013
Risk-free interest rate	0.17%	0.11%
Expected life in years	0.80	0.43
Dividend yield	0%	0%
Expected volatility	121.17%	221.92%

(3) At inception, on December 31, 2012, the Company recorded a derivative liability for the conversion feature of their $15,000 related party convertible note and a debt discount of $8,898. At March 31, 2013, the Company measured the fair value of the derivative for the conversion feature at $6,346 and recorded a gain on derivative liability of $2,552 for the three months ending March 31, 2013. The fair value of the derivative liability was calculated using the Black-Scholes pricing model with the following assumptions:

	At Inception	At March 31, 2013
Risk-free interest rate	0.11%	0.06%
Expected life in years	0.40	0.17
Dividend yield	0%	0%
Expected volatility	213.63%	211.26%

(4) At inception, on February 5, 2013, the Company recorded a derivative liability for the conversion feature of their $47,500 convertible note and a debt discount of $47,500. At March 31, 2013, the Company measured the fair value of the derivative for the conversion feature at $63,326 and recorded a loss on derivative liability of $6,381 for the three months ending March 31, 2013. The fair value of the derivative liability was calculated using the Black-Scholes pricing model with the following assumptions:

	At Inception	At March 31, 2013
Risk-free interest rate	0.13%	0.13%
Expected life in years	0.75	0.60
Dividend yield	0%	0%
Expected volatility	190.10%	211.19%