Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measures and Disclosures

Fair Value Disclosures [Text Block]

NOTE 16 - FAIR VALUE MEASUREMENTS

For asset and liabilities measured at fair value, the Company uses the following hierarchy of inputs:

Level one -- Quoted market prices in active markets for identical assets or liabilities;

Level two -- Inputs other than level one inputs that are either directly or indirectly observable; and

Level three -- Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use.

Liabilities measured at fair value on a recurring basis at December 31, 2011 are summarized as follows:

	Level 1		Level 2		Level 3		Total
Fair value of derivatives	$	-	$	294,717	$	-	$	294,717

Liabilities measured at fair value on a recurring basis at December 31, 2010 are summarized as follows:

	Level 1		Level 2		Level 3		Total
Fair value of derivatives	$	-	$	1,412,646	$	-	$	1,412,646

As further described in Note 2, the fair value of the derivative liability as of December 31, 2011 was determined using the Multi-nomial Lattis model as of December 31, 2011 and the Black-Scholes option pricing model as of December 31, 2010.

The Company valued the conversion features and warrants in their convertible notes using a lattice valuation model, with the assistance of a valuation consultant. The lattice model values these instruments based on a probability weighted discounted cash flow model. The Company uses the model to develop a set of potential scenarios. Probabilities of each scenario occurring during the remaining term of the debentures are determined based on management's projections. These probabilities are used to create a cash flow projection over the term of the instruments and determine the probability that the projected cash flow will be achieved. A discounted weighted average cash flow for each scenario is then calculated and compared to the discounted cash flow of the instruments without the compound embedded derivative in order to determine a value for the compound embedded derivative.