Quarterly report pursuant to Section 13 or 15(d)

NOTE M - FAIR VALUE MEASUREMENTS

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NOTE M - FAIR VALUE MEASUREMENTS
 9 Months Ended
Sep. 30, 2011
Fair Value Disclosures [Text Block]
NOTE M- FAIR VALUE MEASUREMENTS

The financial assets of the Company measured at fair value on a recurring basis are cash equivalents and long-term marketable securities.  The Company’s derivative liabilities are classified in level 3 of the fair value hierarchy using inputs which are not actively observable either directly or indirectly.

 
●
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
     
 
●
Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability; or
     
 
●
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and are unobservable.

The following table sets forth the Company’s short and long-term investments as of December 31, 2010 which are measured at fair value on a recurring basis by level within the fair value hierarchy. These are classified based on the lowest level of input that is significant to the fair value measurement:

   
Level 1
   
Level 2
   
Level 3
   
Total
 
Derivative liabilities
   
-
     
-
     
1,901,775
     
1,901,775
 
Total
 
$
-
   
$
-
   
$
1,901,775
   
$
1,901,775
 

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities (derivative liability) for the nine months ended September 30, 2011.

   
2011
 
Balance at beginning of year
 
$
1,901,775
 
Repayment of debt, cancellation of warrants and related derivative liability
   
(1,158,729
) 
Change in fair value of derivative liability
   
(172,477
) 
Retirement of derivative liability related to warrant obligation
   
(570,569
) 
         
Balance at end of period
 
$
-