Quarterly report pursuant to Section 13 or 15(d)

Condensed Consolidated Balance Sheets (unaudited)

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Condensed Consolidated Balance Sheets (unaudited) (USD $)
Sep. 30, 2012
Dec. 31, 2011
Current assets    
Cash and cash equivalents $ 106,000 $ 2,460,000
Receivables 481,000 333,000
Inventory 236,000 151,000
Restricted cash 0 330,000
Prepaid expenses and other current assets 28,000 39,000
Total current assets 851,000 3,313,000
Property and equipment, net 46,000 51,000
Patents, net 291,000 362,000
Other assets 46,000 59,000
Total assets 1,234,000 3,785,000
Current liabilities    
Accounts payable 2,347,000 1,713,000
Accrued expenses 857,000 857,000
Dividends payable 2,765,000 6,487,000
Accrued interest payable 19,000 98,000
Debt 2,750,000 2,750,000
Current portion of deferred revenue 248,000 285,000
Total current liabilities 8,986,000 12,190,000
Dividends payable to be converted to equity 5,297,000 0
Derivative liability - warrants 271,000 1,507,000
Derivative liability - preferred stock 30,200,000 4,430,000
Long-term deferred revenue 2,768,000 3,264,000
Total liabilities 47,522,000 21,391,000
Commitments and contingencies      
Stockholders' deficit    
Convertible Series A preferred stock - $.01 par value; authorized 2,000,000 shares; 2,938.3617 shares issued at September 30, 2012 and 2,938.3617 shares issued at December 31, 2011 0 0
Common stock - $.01 par value; authorized 130,000,000 shares; issued, 24,182,153 at September 30, 2012 and 23,890,787 at December 31, 2011 242,000 239,000
Additional paid-in capital 240,597,000 237,600,000
Treasury stock, at cost - 163 shares (4,000) (4,000)
Accumulated deficit (287,123,000) (255,441,000)
Total stockholders' deficit (46,288,000) (17,606,000)
Total liabilities and stockholders' deficit $ 1,234,000 $ 3,785,000