Quarterly report pursuant to Section 13 or 15(d)

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)
Sep. 30, 2014
Dec. 31, 2013
ASSETS    
Cash and cash equivalents $ 98,216 $ 31,417
Accounts receivable 335,041 147,635
Inventories, net of $50,000 reserve at September 30, 2014 and December 31, 2013 852,523 736,676
Prepaid income taxes 7,381 7,381
Prepaid expenses and other current assets 120,055 85,573
Total current assets 1,413,216 1,008,682
Property and equipment, net 42,375 58,102
Intangible assets, net    36,498
TOTAL ASSETS 1,455,591 1,103,282
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Accounts payable 1,085,796 1,102,772
Accrued employee compensation 163,159 149,333
Accrued professional fees and other 783,075 615,244
Deferred revenue 18,461 28,189
Promissory note    75,000
Related party debt 18,788 25,182
Convertible debt, net of debt discount of $576,116 and $331,806 respectively 617,160 281,796
Other debt    89,989
Warrant derivative liability 235,724 344,570
Conversion option liability 611,312 356,197
Total current liabilities 3,553,475 3,068,272
LONG TERM LIABILITIES    
Deferred revenue    2,785
TOTAL LIABILITIES 3,553,475 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 September 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 September 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 September 30, 2014 and on December 31, 2013 100 100
Series J Convertible Preferred Stock, $.01 par value; 6,250 shares authorized; 3,546 and 5,087.5 shares issued and outstanding on September 30, 2014 and on December 31, 2013, respectively 35 51
Series K Convertible Preferred Stock, $.01 par value; 15,000 shares authorized; 11,399 shares issued and outstanding on September 30, 2014 and 4,000 shares issued and outstanding on December 31, 2013 114 40
Common stock, $.01 par value; 50,000,000 shares authorized; 15,727,560 and 12,024,267 shares issued and outstanding on September 30, 2014 and on December 31, 2013, respectively 157,276 120,243
Warrants to acquire preferred stock and common stock 4,967,377 4,267,402
Additional paid-in capital 23,471,244 19,509,921
Accumulated deficit (30,674,898) (25,866,988)
Total stockholders' deficit (2,077,884) (1,967,775)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,455,591 $ 1,103,282