FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

The following table represents the fair value hierarchy for those financial assets measured at fair value on a recurring basis

	Fair Value at
	September 30,		Fair Value Measurement Using
	2014		Level 1	Level 2	Level 3
Derivative liability – Conversion Feature	$	3,929,000	-	-	$	3,929,000
	$	3,929,000	-	-	$	3,929,000

	Fair Value at
	December 31,		Fair Value Measurement Using
	2013		Level 1	Level 2	Level 3
Derivative liability – Conversion Feature	$	318,000	-	-	$	318,000
	$	318,000	-	-	$	318,000

Liabilities measured at fair value on a recurring basis using significant unobservable inputs

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (Derivative liability – Conversion Feature) for the Nine months ended September 30, 2014:

	September 30,
	2014
Balance at December 31, 2013	$	318,000
Change in fair market value of Conversion Feature		1,568,000
Issuance of equity instruments with debt greater than debt carrying amount		2,043,000
Balance at September 30, 2014	$	3,929,000

- 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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