2. BALANCE SHEET ACCOUNTS (Tables)

9 Months Ended

Sep. 30, 2012

Notes to Financial Statements

Schedule of Amortized Capital Costs

	September 30, 2012		December 31, 2011
Capitalized software	$	921,670		172,510
Less Accumulated amortization		(48,439)		-
Capitalized software, net	$	873,231		172,510

Schedule of Intangilbe Assets

Intangible assets consist of the following:

	September 30, 2012		December 31, 2011
Software license	$	108,534		108,534
Patent development costs		26,399		9,151
Less Accumulated amortization		(9,044)		-
Intangible assets, net	$	125,889		117,685

Schedule of Accrued Liabilites

Accrued liabilities, including the accrued liabilities related to the Company’s litigation related to certain Nouri Parties (see Note 4 below), consisted of the following:

	September 30,		December 31,
	2012		2011
Nouri legal fee settlement	$	67,227	$	217,227
Accrued payroll and related costs		40,838		-
Custom accounting development cost		75,436		75,436
Hosting service costs		-		27,444
Professional services		12,430		3,791
Interest payable to IDB and Bondholders (See Note 3)		271,414		179,569
Other accrued items		5,508		17,500
	$	472,853	$	520,967

Schedule of derivative assets and liabilities

The following tabular presentation reflects the components of derivative assets and liabilities as of September 30, 2012 and December 31, 2011:

	September 30, 2012		December 31, 2011
Shares into which financial instrument liability can be settled:
Unrestricted shares of common stock, when issued		1,475,000		1,475,000

	September 30, 2012		December 31, 2011
Settlement related financial instrument liability at fair value:
Fair value of unrestricted shares of common stock	$	2,212,500	$	1,770,000

Schedule of Fair Value of Financial Instruments

The following tabular presentation reflects the (loss) in the fair value of financial instruments for the three and nine months ended September 30, 2012 and 2011:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Change in market value of settlement related financial instruments in the accompanying statement of operations is related to the Class Action settlement approved by the District Court on July 1, 2011
Unrestricted shares of common stock	$	-	$	295,000	$	442,500	$	295,000