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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Schedule of liabilities carried at fair value measured on a recurring basis

The following table provides our liabilities carried at fair value measured on a recurring basis as of September 30, 2014:


	Level 1		Level 2		Level 3		Total

Derivative liability	$	—	$	—	$	165,488	$	165,488

Schedule of reconciliation of beginning and ending balances for financial instruments carried at fair value measured on a recurring basis

For the nine month period ended September 30, 2014, the following table reconciles the beginning and ending balances for financial instruments that are carried at fair value measured on a recurring basis:


Derivative liability as of December 31, 2013	$	—
Additions to derivative liability for convertible debt conversion feature recorded as debt discount		151,937
Additions to derivative liability for interest payable conversion feature recorded as interest expense		11,609
Loss on revaluation of derivative liability at period end		1,942
Derivative liability as of September 30, 2014	$	165,488

Schedule of key inputs in valuation of embedded conversion features

The key inputs to this valuation model during the nine months ended September 30, 2014, were as follows:


Risk-free interest rate						0.43% – 0.58%
Dividend yield						—
Volatility						146% – 157%
Expected life in years						1.96 – 2.09
Exercise price						$3.00

Schedule of components of derivative financial instruments on condensed balance sheets

The following tabular presentation reflects the components of derivative financial instruments on our condensed balance sheets at September 30, 2014 and December 31, 2013:


	September 30, 2014		December 31, 2013
Derivative Liabilities:
Embedded derivative liability in convertible debt	$	153,879	$	—
Embedded derivative liability in interest payable		11,609		—
Total derivative liability	$	165,488	$	—

- Definition

Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

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- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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