Accrued Expenses

9 Months Ended

Sep. 30, 2011

Notes to Financial Statements

Accrued Expenses

5 – ACCRUED EXPENSES

Other current liabilities consisted of the following at September 30, 2011 and December 31, 2010:

	September 30,		December 31,
	2011		2010
Accrued Payroll	$	20,028	$	45,835
Accrued interest		290,391		147,107
Warrant liability		22,597		14,159
Deferred rent		10,383		12,721
Miscellaneous accrued expenses		49,081		42,807
	$	392,480	$	262,629

The Company has outstanding warrants for the purchase of 2,116,934 shares. 1,291,928 of the warrants expire July 2015 and have an exercise price of $.02131.  825,006 of the warrants have an exercise price of $.25, 225,006 expire May 2013 and 600,000 expire July 2013.   Because these warrants contain provisions that protect the holder from declines in stock price, the Company recognizes these warrants as liabilities at their respective fair value on each reporting date. Fair value is estimated using the Black-Scholes valuation model. The significant assumptions considered by the model were the amount of outstanding warrants, the remaining term of the warrants, the per share stock price of $.03, a risk-free rate of 3.30% and estimated volatility of 60%. The resulting fair value of the warrants was calculated to be $22,597.