Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED BALANCE SHEETS

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CONSOLIDATED BALANCE SHEETS (USD $)
Mar. 31, 2012
Dec. 31, 2011
ASSETS    
Cash and cash equivalents $ 15,492 $ 222,775
Accounts receivable, net of allowances of $9,600 at March 31, 2012 and December 31, 2011 203,998 269,237
Inventories 1,021,295 1,069,013
Prepaid income taxes 8,181 4,739
Prepaid expenses and other current assets 269,828 143,591
Total current assets 1,518,794 1,709,355
PROPERTY AND EQUIPMENT, NET 72,006 89,171
OTHER ASSETS    
Deposits 6,472 6,472
Intangible assets, net 121,604 133,762
TOTAL ASSETS 1,718,876 1,938,760
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Accounts payable 1,129,515 890,676
Accrued employee compensation 224,766 180,437
Accrued professional fees and other 270,792 247,738
Deferred revenue 37,358 36,669
Promissory note 150,000 150,000
Convertible debt, net of unamortized discount of $0 at March 31, 2012 and $17,088 as of December 31, 2011 56,139 394,912
Warrant derivative liability 478,565 436,553
Total current liabilities 2,347,135 2,336,985
LONG TERM LIABILITIES    
Deferred revenue 7,579 10,111
TOTAL LIABILITIES 2,354,714 2,347,096
COMMITMENTS AND CONTINGENCIES (Note 4)      
STOCKHOLDERS' DEFICIT    
Common stock, $.01 par value; 20,000,000 shares authorized; 8,499,898 shares issued and outstanding on March 31, 2012 and 6,723,993 shares issued and outstanding on December 31, 2011 84,999 67,240
Warrants to acquire preferred stock and common stock 2,510,504 2,203,101
Additional paid-in capital 14,358,536 13,823,875
Accumulated deficit (17,590,761) (16,503,440)
Total stockholders' deficit (635,838) (408,336)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 1,718,876 1,938,760
Series C Convertible Preferred Stock [Member]
    
STOCKHOLDERS' DEFICIT    
Convertible preferred stock 881 881
Series D Convertible Preferred Stock [Member]
    
STOCKHOLDERS' DEFICIT    
Convertible preferred stock $ 3 $ 7