Annual report pursuant to Section 13 and 15(d)

FAIR VALUE MEASUREMENT (Tables)

FAIR VALUE MEASUREMENT (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Derivative Liabilities at Fair Value

Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31, 2017:

	Level 1		Level 2		Level 3		Total
Derivative liability	$	-	$	-	$	-	$	-
Warrant liability						175,975		175,975
Total	$	-	$	-	$	175,975	$	175,975

Items recorded or measured at fair value on a recurring basis in the accompanying consolidated financial statements consisted of the following items as of December 31, 2016:

	Level 1		Level 2		Level 3		Total
Derivative liability	$	-	$	-	$	5,115,280	$	5,115,280
Warrant liability						26,903		26,903
Total	$	-	$	-	$	5,142,183	$	5,142,183

Changes in the fair value of the Company's Level 3 financial liabilities

	Debt Derivative Liability			Warrant Liability
Balance, December 31, 2015	$	170,531		$	22,746
Transfers in (out):
Initial fair value of debt derivative at note issuance		2,537,229			-
Transfers out of Level 3 upon conversion and settlement of notes		(262,271	)		-
Mark-to-market at December 31, 2016:
Embedded derivative		2,669,971			4,157
Balance, December 31, 2016		5,115,280			26,903
Transfers in (out):
Initial fair value of debt derivative at note issuance		11,023,244			-
Transfers out of Level 3 upon conversion and settlement of notes		(1,146,201	)		-
Transfers out of Level 3 upon note modification		(30,806,073	)		-
Mark-to-market at December 31, 2017:
Embedded derivative		15,813,750			149,072
Balance, December 31, 2017	$	0		$	175,975