Quarterly report pursuant to Section 13 or 15(d)

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
Jun. 30, 2014
Dec. 31, 2013
ASSETS    
Cash and cash equivalents $ 9,369 $ 31,417
Accounts receivable 190,725 147,635
Inventories, net of $50,000 reserve at June 30, 2014 and December 31, 2013 853,219 736,676
Prepaid income taxes 7,381 7,381
Investor receivable 200,000   
Prepaid expenses and other current assets 157,607 85,573
Total current assets 1,418,301 1,008,682
Property and equipment, net 49,826 58,102
Intangible assets, net 12,182 36,498
TOTAL ASSETS 1,480,309 1,103,282
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Accounts payable 1,162,081 1,102,772
Accrued employee compensation 120,346 149,333
Accrued professional fees and other 601,673 615,244
Deferred revenue 17,272 28,189
Promissory note    75,000
Related party debt    25,182
Convertible debt, net of debt discount of $100,108 and $331,806 respectively 295,056 281,796
Other debt 192,629 89,989
Warrant derivative liability 321,115 344,570
Conversion option liability 41,386 356,197
Total current liabilities 2,751,558 3,068,272
LONG TERM LIABILITIES    
Deferred revenue    2,785
TOTAL LIABILITIES 2,751,558 3,071,057
COMMITMENTS AND CONTINGENCIES (Note 4)      
STOCKHOLDERS' DEFICIT    
Series D Convertible Preferred Stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on June 30, 2014 and on December 31, 2013 3 3
Series G Convertible Preferred Stock, $.01 par value; 240,000 shares authorized; 86,570 and 145,320 shares issued and outstanding on June 30, 2014 and on December 31, 2013, respectively 865 1,453
Series H Convertible Preferred Stock, $.01 par value; 10,000 shares authorized; 10,000 shares issued and outstanding on June 30, 2014 and on December 31, 2013 100 100
Series J Convertible Preferred Stock, $.01 par value; 6,250 shares authorized; 4,995 and 5,087.5 shares issued and outstanding on June 30, 2014 and on December 31, 2013, respectively 50 51
Series K Convertible Preferred Stock, $.01 par value; 15,000 shares authorized; 11,463 shares issued and outstanding on June 30, 2014 and 4,000 shares issued and outstanding on December 31, 2013 115 40
Common stock, $.01 par value; 50,000,000 shares authorized; 13,796,594 and 12,024,267 shares issued and outstanding on June 30, 2014 and on December 31, 2013, respectively 137,966 120,243
Warrants to acquire preferred stock and common stock 4,920,633 4,267,402
Additional paid-in capital 23,341,504 19,509,921
Accumulated deficit (29,672,485) (25,866,988)
Total stockholders' deficit (1,271,249) (1,967,775)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,480,309 $ 1,103,282