v2.4.0.6
Fair Value Measurements
 6 Months Ended
Jun. 30, 2012
Fair Value Measurements
5. Fair Value Measurements

The Company adopted ASC Topic 820-10 at the beginning of 2009 to measure the fair value of certain of its financial assets required to be measured on a recurring basis. The adoption of ASC Topic 820-10 did not impact the Company’s financial condition or results of operations. ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:

 

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.

 

Level 2 – Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.

 

Level 3 – Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability.

 

The Company has no level 3 assets or liabilities and therefore no reconciliation has been presented for the change in level 3 assets.

 

The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of June 30, 2012:

 

    Level 1     Level 2     Level 3     Fair Value  
Cash   $ 5,784     $ -     $ -     $ 5,784  
Accounts & other receivables     -       20,374       -       20,374  
Prepaid expenses     -       4,289       -       4,289  
Accounts payable     -       414,135       -       414,135  
Notes payable – related party     -       39,200       -       39,200  
Convertible debentures, net of disc.     -       633,306       -       633,306  

 

The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:

 

    Level 1     Level 2     Level 3     Fair Value  
Cash   $ 2,609     $ -     $ -     $ 2,609  
Accounts & other receivables     -       46,417       -       46,417  
Prepaid expenses     -       79,464       -       79,464  
Accounts payable     -       565,552       -       565,552  
Notes payable     -       202,484       -       202,484  
Convertible debentures, net of disc.     -       2,797,511       -       2,797,511  
Accrued interest     -       456,638       -       456,638  
Royalty interest payable     -       113,164       -       113,164  
Loan Guarantee     -       94,860       -       94,860