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5. DERIVATIVE LIABILITIES(Tables)
 3 Months Ended
Mar. 31, 2014
Re-acquisition of distributorship  
Schedule of financial assets and liabilities by level

The following table sets forth the fair value hierarchy within our financial assets and liabilities by level that they were accounted for at fair value on a recurring basis as of March 31, 2014 and December 31, 2013.

 

    Carrying Value at        
    March 31,     Fair Value Measurement at March 31, 2014  
    2014     Level 1     Level 2     Level 3  
Liabilities:                        
  Warrant derivative liabilities   $ 49,035     $ -     $ -     $ 49,035  
  Convertible debt derivative liabilities     -       -       -       -  
Total   $ 49,035     $ -     $ -     $ 49,035  

 

    Carrying Value at        
    December 31,     Fair Value Measurement at December 31, 2013  
    2013     Level 1     Level 2     Level 3  
Liabilities:                        
  Warrant derivative liabilities   $ 955,350     $ -     $ -     $ 955,350  
  Convertible debt derivative liabilities     85,500       -       -       85,500  
Total   $ 1,040,850     $ -     $ -     $ 1,040,850  

 
Fair Value Of Derivative Warrant Liabilities Using American Option Binomial Model

The Company estimated the fair value of the derivative warrant liabilities by using the Black-Scholes Option Pricing Model and the derivative liabilities related to the conversion features in the outstanding convertible notes using the Black-Scholes Option Pricing Model assuming maximum value, Level 3 inputs, with the following assumptions used:

 

Dividend yield: 0%
Expected volatility 82% to 174%
Risk free interest rate 0.03% to 1.73%
Expected life (years) 0.00 to 4.52

 
The Following Table Sets Forth The Changes In Derivative Liabilities

The following table sets forth the changes in the fair value of derivative liabilities for the three months ended March 31, 2014:

 

Balance, December 31, 2013   $ (1,040,850 )
  Convertible debt derivatives recognized as derivative loss     (22,500 )
  Convertible debt derivatives recognized as debt discount     (90,000 )
  Resolution of convertible debt derivatives upon conversions     132,417  
  Resolution of convertible debt derivatives upon debt payoff     59,311  
  Resolution of warrant derivatives no longer qualifying as derivative liabilities     918,580  
  Loss on change in fair value of derivative liabilities     (5,993 )
Balance, March 31, 2014   $ (49,035 )