Note 10. Accounts Payable and Accrued Expenses

6 Months Ended

Jun. 30, 2011

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Note 10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses included the following:

	December 31,		June 30,
	2010		2011
Accounts payable and accrued expenses	$	545,725	$	457,551
Accrued interest		164,694		76,170
Total Accounts Payable and Accrued Expenses	$	710,419	$	533,721

Issuance of Securities in exchange for payment of payables

Payment of Officer Salaries and Board of Director Fees

On March 21, 2011, we issued an aggregate 190,244 shares of our common stock, at a conversion price of $0.41, which was the closing price of our common stock on the day of issuance, to our Chief Financial Officer in lieu of $78,000 in accrued and unpaid payables for their services.

On March 17, 2011, the Company’s Compensation Committee issued 400,000 shares of the Company’s common stock.  Of this share issuance, 200,000 were issued to the Chief Executive Officer and the remaining 200,000 were issued to our Chief Technical Officer.  The stock price was $0.41 on the date of grant, resulting in $163,168 of compensation expense.

All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.

Payment of Consultant Fees

On March 30, 2011, we issued an aggregate 55,515 shares of our common stock, at a conversion price of $0.48, in lieu of $30,688 of fees related to consultants.  This entire amount related to services performed in 2011.

On May 23, 2011, we issued 25,000 shares of our common stock at a conversion price of $0.45 per share, in lieu of $11,250 to a consultant in exchange for research and marketing services.

All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.

Accrued Interest

On March 31, 2011, per the terms of the Spring 2008 Notes, we elected to convert the remaining accrued and unpaid interest balance of $76,051 into 56,334 shares of our common stock, at a conversion price of $1.35 per share.

On April 15, 2011, per the terms of the Spring 2009 Notes, we elected to convert accrued and unpaid interest of $67,041 into 155,919 shares of our common stock, at a conversion price of $0.43 per share.

On June 1, 2011, per the terms of the Spring 2010 Notes, we elected to convert accrued and unpaid interest of $46,986 into 100,092 shares of our common stock, at a conversion price of $0.47 per share.

During the six-month periods ended June 30, 2010 and 2011, we recorded $195,065 and $112,466 of interest expense related to the convertible notes outstanding, respectively.

All of these offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Exchange Act and/or Regulation D promulgated thereunder as not involving a public offering of securities.

Issuance of Stock Options in exchange for payment of payables

Officer and Board of Director payable

Officer and Board of Director payables were reduced as certain board members agreed to accept an option to purchase our common stock, at a conversion price of $0.41, as payment of an aggregate $45,775, all of which was outstanding as of December 31, 2010.

Accounts payable and accrued expenses

Accounts payable and accrued expenses were reduced as certain consultants agreed to accept an option to purchase our common stock, at a conversion price ranging between $0.41 – 0.47, as payment of an aggregate $36,205, all of which was outstanding as of December 31, 2010.