Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)

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CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (USD $)
Jun. 30, 2012
Dec. 31, 2011
ASSETS    
Cash and cash equivalents $ 20,916 $ 222,775
Accounts receivable, net of allowances of $9,600 at March 31, 2012 and December 31, 2011 241,726 269,237
Inventories 975,897 1,069,013
Prepaid income taxes 7,381 4,739
Prepaid expenses and other current assets 374,588 143,591
Total current assets 1,620,508 1,709,355
PROPERTY AND EQUIPMENT, NET 56,319 89,171
OTHER ASSETS    
Deposits 6,472 6,472
Intangible assets, net 109,446 133,762
TOTAL ASSETS 1,792,745 1,938,760
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Accounts payable 1,195,567 890,676
Accrued employee compensation 182,697 180,437
Accrued professional fees and other 236,845 247,738
Deferred revenue 29,118 36,669
Promissory note 150,000 150,000
Funds held for private placement 295,000   
Convertible debt, net of unamortized discount of $0 at March 31, 2012 and $17,088 as of December 31, 2011 13,139 394,912
Make-whole dividend liability 328,480   
Warrant derivative liability 168,588 436,553
Total current liabilities 2,599,434 2,336,985
LONG TERM LIABILITIES    
Deferred revenue 5,266 10,111
TOTAL LIABILITIES 2,604,700 2,347,096
STOCKHOLDERS' DEFICIT    
Series C convertible preferred stock, $.01 par value; 88,098 shares authorized; 0 shares issued and outstanding on June 30, 2012 and 88,098 shares issued and outstanding on December 31, 2011    881
Series D convertible preferred stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on June 30, 2012 and 743 shares issued and outstanding on December 31, 2011 (Liquidation value of $300,000) 3 7
Series E convertible preferred stock, $.01 par value; 500 shares authorized; 350 shares issued and outstanding on June 30, 2012 and 0 shares issued and outstanding on December 31, 2011 (Liquidation value of $350,000) 4   
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 104,055 67,240
Warrants to acquire preferred stock and common stock 2,828,713 2,203,101
Additional paid-in capital 14,935,697 13,823,875
Accumulated deficit (18,680,427) (16,503,440)
Total stockholders' deficit (811,955) (408,336)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,792,745 $ 1,938,760