Quarterly report pursuant to Section 13 or 15(d)

Condensed Consolidated Balance Sheets (Unaudited)

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Condensed Consolidated Balance Sheets (Unaudited) (USD $)
Jun. 30, 2011
Dec. 31, 2010
Current assets    
Cash and cash equivalents $ 4,346,000 $ 7,033,000
Receivables 51,000 1,018,000
Prepaid expenses and other current assets 75,000 70,000
Total current assets 4,472,000 8,121,000
Property and equipment, net 57,000 32,000
Patents, net 468,000 574,000
Other assets 68,000 44,000
Total assets 5,065,000 8,771,000
Current liabilities    
Accounts payable 2,947,000 2,984,000
Accrued expenses 857,000 857,000
Dividends payable 5,446,000 4,443,000
Accrued interest payable 525,000 126,000
Convertible debt, current portion 2,750,000 5,500,000
Current portion of deferred revenue 347,000 347,000
Total current liabilities 12,872,000 14,257,000
Derivative liability - warrants 2,913,000 5,087,000
Derivative liability - preferred stock 6,260,000 5,840,000
Long-term convertible debt 2,750,000 0
Long-term deferred revenue 4,209,000 4,382,000
Total liabilities 29,004,000 29,566,000
Commitments and contingencies    
Stockholders' deficit    
Convertible Series A preferred stock - $.01 par value; authorized 2,000,000 shares; 2,958.3617 shares issued at June 30,2011 and 2,978.3617 shares issued at December 31, 2010 0 0
Common stock - $.01 par value; authorized 100,000,000 shares; issued, 19,396,047 at June 30, 2011 and 19,115,010 at December 31, 2010 194,000 191,000
Additional paid-in capital 231,049,000 230,153,000
Treasury stock, at cost - 163 shares (4,000) (4,000)
Accumulated deficit (255,178,000) (251,135,000)
Total stockholders' deficit (23,939,000) (20,795,000)
Total liabilities and stockholders' deficit $ 5,065,000 $ 8,771,000