Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)

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CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited) (USD $)
Sep. 30, 2013
Dec. 31, 2012
ASSETS    
Cash and cash equivalents $ 66,680 $ 1,461
Accounts receivable 200,914 216,265
Inventories, net of $50,000 reserve at March 31, 2013 and December 31, 2012 851,468 923,362
Prepaid income taxes 7,381 7,381
Prepaid expenses and other current assets 61,017 83,435
Total current assets 1,187,460 1,231,904
PROPERTY AND EQUIPMENT, NET 58,855 30,282
Deposits    6,472
Intangible assets, net 48,656 85,130
TOTAL ASSETS 1,294,971 1,353,788
LIABILITIES AND STOCKHOLDERS' DEFICIT    
Accounts payable 1,201,703 1,199,846
Accrued employee compensation 165,515 119,338
Accrued professional fees and other 570,595 267,936
Deferred revenue 18,099 46,466
Promissory note 75,000 75,000
Dividend liability    60,000
Related party debt 27,739 98,675
Convertible debt 358,514 863,004
Conversion option liability 281,127   
Warrant derivative liability 170,137 160,812
Total current liabilities 2,868,429 2,891,077
LONG TERM LIABILITIES    
Convertible debt - long term 100,000   
Deferred revenue    2,487
TOTAL LIABILITIES 2,968,429 2,893,564
STOCKHOLDERS' DEFICIT    
Series D convertible preferred stock, $.01 par value; 850 shares authorized; 300 shares issued and outstanding on September 30, 2013 and on December 31, 2012 3 3
Series G convertible preferred stock, $.01 par value; 240,000 shares authorized; 145,320 shares issued and outstanding on September 30, 2013 and on December 31, 2012 1,453 1,453
Series H convertible preferred stock, $.01 par value; 10,000 shares authorized; 10,000 shares and 0 shares issued and outstanding on September 30, 2013 and on December 31, 2012, respectively 100   
Series J convertible preferred stock, $.01 par value; 6,250 shares authorized; 5,087.5 shares and 0 shares issued and outstanding on September 30, 2013 and on December 31, 2012 51   
Common stock, $.01 par value; 50,000,000 shares authorized; 11,949,267 and 12,149,267 shares issued and outstanding on September 30, 2013 and on December 31, 2012 119,493 121,493
Warrants to acquire preferred stock and common stock 3,951,056 3,015,996
Additional paid-in capital 18,158,076 15,940,818
Accumulated deficit (23,903,690) (20,619,539)
Total stockholders' deficit (1,673,458) (1,539,776)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 1,294,971 $ 1,353,788