Annual report pursuant to Section 13 and 15(d)

FAIR VALUE MEASUREMENT (Tables)

FAIR VALUE MEASUREMENT (Tables)

12 Months Ended

Dec. 31, 2014

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, 2014:

	Level 1		Level 2		Level 3		Total
Warrant liability	$		$		$	98,702	$	98,702
Total	$	-	$	-	$	98,702	$	98,702

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, 2013:

	Level 1		Level 2		Level 3		Total
Debt derivative liability	$		$		$	1,019,103		1,019,103
Warrant liability	$		$		$	287,731		287,731
Total	$	-	$	-	$	1,306,834	$	1,306,834

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

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities for the years ended December 31, 2014 and 2013:

	Debt Derivative Liability			Warrant Liability
Balance, December 31, 2012	$	80,039			-
Transfers in (out):
Initial fair value of debt derivative at note issuance		76,480			99,061
Mark-to-market at December 31, 2013:
Embedded derivative		862,584			188,670
Balance, December 31, 2013		1,019,103			287,731
Transfers in (out):
Fair value of debt derivative at note extinguishment transferred to equity		(800,987	)		-
Fair value of warrant liability at date of cancellation transferred to equity					(129,551	)
Mark-to-market at December 31, 2014:
Embedded derivative		(218,116	)		(59,478	)
Balance, December 31, 2014	$	-		$	98,702