Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED BALANCE SHEETS

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CONSOLIDATED BALANCE SHEETS (USD $)
Dec. 31, 2012
Dec. 31, 2011
Current assets    
Cash and cash equivalents $ 396,000 $ 2,460,000
Receivables 840,000 333,000
Inventory 194,000 151,000
Restricted cash 0 330,000
Prepaid expenses and other current assets 251,000 39,000
Total current assets 1,681,000 3,313,000
Property and equipment, net 7,000 51,000
Patents, net 0 362,000
Other assets 42,000 59,000
Total assets 1,730,000 3,785,000
Current liabilities    
Accounts payable 2,039,000 1,713,000
Accrued expenses 857,000 857,000
Dividends payable 3,486,000 6,487,000
Accrued interest payable 0 98,000
Debt, current portion 0 2,750,000
Current portion of deferred revenue 247,000 285,000
Total current liabilities 6,629,000 12,190,000
Derivative liability - warrants 271,000 1,507,000
Derivative liability - preferred stock 9,200,000 4,430,000
Long-term deferred revenue 2,706,000 3,264,000
Total liabilities 18,806,000 21,391,000
Commitments and contingencies      
Stockholders' deficit    
Common stock - $.01 par value; authorized 130,000,000 shares; issued 24,732,312 at December 31, 2012; issued 23,890,787 at December 31, 2011 247,000 239,000
Additional paid-in capital 250,653,000 237,600,000
Treasury stock, at cost - 163 shares (4,000) (4,000)
Accumulated deficit (267,972,000) (255,441,000)
Total stockholders' deficit (17,076,000) (17,606,000)
Total liabilities and stockholders' deficit 1,730,000 3,785,000
Series A Convertible Preferred Stock [Member]
    
Stockholders' deficit    
Convertible preferred stock 0 0
Series B Convertible Preferred Stock [Member]
    
Stockholders' deficit    
Convertible preferred stock $ 0 $ 0