Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED CONDENSED BALANCE SHEETS

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CONSOLIDATED CONDENSED BALANCE SHEETS (USD $)
Dec. 31, 2013
Dec. 31, 2012
ASSETS    
Cash and cash equivalents $ 31,417 $ 1,461
Accounts receivable 147,635 216,265
Inventories, net of reserves of $50,000 at December 31, 2013 and December 31, 2012 736,676 923,362
Prepaid income taxes 7,381 7,381
Prepaid expenses and other current assets 85,573 83,435
Total current assets 1,008,682 1,231,904
PROPERTY AND EQUIPMENT, NET 58,102 30,282
Deposits    6,472
Intangible assets, net 36,498 85,130
TOTAL ASSETS 1,103,282 1,353,788
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Accounts payable 1,102,772 1,199,846
Accrued employee compensation 149,333 119,338
Accrued professional fees and other 615,244 267,936
Deferred revenue 28,189 46,466
Promissory note 75,000 75,000
Dividend liability    60,000
Related party debt 25,182 98,675
Convertible debt, net of debt discount of $331,806 at December 31, 2013 and $0 at December 31, 2012 281,796 863,004
Other debt 89,989  
Conversion option liability 356,197   
Warrant derivative liability 344,570 160,812
Total current liabilities 3,068,272 2,891,077
LONG TERM LIABILITIES    
Deferred revenue 2,785 2,487
TOTAL LIABILITIES 3,071,057 2,893,564
STOCKHOLDERS' DEFICIT    
Series D convertible preferred stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on December 31, 2013 and December 31, 2012 (Liquidation value of $300,000) 3 3
Series G convertible preferred stock, $.01 par value; 240,000 shares authorized;  145,320 shares issued and outstanding on December 31, 2013 and December 31, 2012 1,453 1,453
Series H convertible preferred stock $.01 par value 10,000 shares authorized; 10,000 shares issued and outstanding on December 31, 2013 and  0  at December 31, 2012 100   
Series J convertible preferred stock $.01 par value 6,250 shares authorized; 5,087.5 shares issued and outstanding on December 31, 2013 and 0 at December 31, 2012 51   
Series K convertible preferred stock $.01 par value 15,000 shares authorized; 4,000 shares issued and outstanding on December 31, 2013 and 0 at December 31, 2012 40  
Common Stock, $.01 par value; 50,000,000 and 20,000,000 shares authorized; 12,024,267 and 12,149,267 shares issued and outstanding on December 31, 2013 and December 31, 2012, respectively 120,243 121,493
Warrants to acquire preferred stock and common stock 4,267,402 3,015,996
Additional paid-in capital 19,509,921 15,940,818
Accumulated deficit (25,866,988) (20,619,539)
Total stockholders' deficit (1,967,775) (1,539,776)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,103,282 $ 1,353,788