In November 2008, the Company entered into an interest rate swap agreement to hedge the interest rate risk exposure on its $25 million Nedbank Credit Facility expiring between 2009 and 2012. Under the terms of the interest rate swap contract, the Company receives USD three-month LIBOR and pays a fixed rate of interest of 2.48% . The program requires no cash margins, collateral or other security from the Company. Under the terms of the interest rate swap, settlements began on March 31, 2009 and occur every three months thereafter until the contract expires on September 28, 2012.

Under ASC guidance for derivative instruments and hedging activities, the interest rate swap agreement is carried on the consolidated balance sheets at estimated fair value which was ($54,896) and ($222,770) as of December 31, 2011 and 2010, respectively. Until July 1, 2010, this contract was designated as a cash flow hedge with changes in estimated fair value reflected in AOCI. As noted above, the Company continues to be in default on the Nedbank Credit Facility as it failed to make the requisite debt service payments for the period from March 31, 2010 to December 31, 2011. Accordingly, given that the Company is not performing under the terms of the underlying Nedbank Credit Facility, effective July 1, 2010, the Company de-designated 100% of the interest rate swap previously classified as a cash-flow hedge and reclassified the estimated fair value of ($319,542) of the interest rate swap from AOCI to unrealized loss on de-designation of cash flow hedges.

During the years ended December 31, 2011 and 2010, the Company recognized $209,185 and $356,296, respectively, in interest expense in the consolidated statements of operations related to the quarterly settlements under the terms of the interest rate swap. In addition, the Company recognized an unrealized gain of $169,568 and $96,772 related to the changes in estimated fair value of the interest rate swap that occurred during the year ended December 31, 2011 and in 2010 subsequent to the swap being de-designated as a cash flow hedge.

As of December 31, 2011 and 2010 estimated fair value balances include a credit valuation adjustment of $1,694 and $13,827, respectively, which was based upon the Company’s estimated credit risk adjustment of 9.06% above the risk free rate, and is reported in unrealized gain on derivatives classified as trading securities within the consolidated statement of operations for the years ended December 31, 2011 and 2010.

Although this estimate is subject to changes in the forward interest rate curve for LIBOR, as of December 31, 2011, the estimated amount of the interest rate swap derivatives that will settle over the next twelve months in accordance with their normal operating terms stated in the contracts is $56,590 ($54,896 after proportionate credit valuation adjustment).

	Balance Sheet
	Location		Fair Value
As of December 31, 2011
Interest rate swap contracts	Current liabilities	$	54,896

As of December 31, 2010
Interest rate swap contracts	Current liabilities	$	222,770