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Note 7. Embedded Derivative Liability.
 3 Months Ended
Jun. 30, 2012
Derivative Instruments and Hedging Activities Disclosure [Text Block]
7.          EMBEDDED DERIVATIVE LIABILITY.

As described in Note 4, the Company issued convertible debt notes in October 2009 and March 2010.  The notes are convertible at $0.50 per share, or $0.40 per share upon a change in control of the Company.  Based on the alternative conversion options, the Company determined that the conversion options in the notes should be accounted for as derivatives.  The Company used the Black-Scholes model to determine the fair value of each of the conversion options as of June 30, 2012, assigning a probability of occurrence to each conversion option.  The final fair value of each of the derivative liabilities considered the likelihood of conversion at the separate conversion prices.

October 2009 notes:

The table below summarizes the Black-Scholes Option Pricing Model range of inputs used to calculate the fair market values on the date of the amendment (June 24, 2011) and then at the end of each quarter afterwards.

2009 Convertible Debt Notes

Value Date
Stock Price
Dividend
Yield
Stock
Volatility
Risk Free
Rate
Expected
Term (Months)
                         
$0.39
-
0.61
0%
95.01%
-
195.20% 0.24%
-
0.80% 4
-
28

March 2010 notes:

The table below summarized the Black-Scholes Option Pricing Model information used to calculate the fair market values on the date of the amendment (June 24, 2011) and then at the end of each quarter afterwards.

2010 Convertible Debt Notes

Value Date
Stock Price
Dividend
Yield
Stock
Volatility
Risk Free
Rate
Expected
Term (Months)
                         
$0.39
-
0.61
0%
109.41%
-
189.35% 0.24%
-
0.80% 9
-
27

For the three-month period ended June 30, 2012 the Company recorded an aggregate loss of approximately $1,002,000; and for the three-month period June 30, 2011, the Company recorded an aggregate gain of approximately $225,000, as a result of these transactions.