Balance Sheet top

2008     2007                 ASSETS                           CURRENT ASSETS             Cash and cash equivalents   $ 868,208     $ 5,424,486   Restricted cash     50,000       -   Accounts receivable     209,117       118,471   Inventories     571,831       172,548   Deposits     382,236       553,483   Prepaid income taxes     6,600       56,863   Income tax receivable     -       249,541   Prepaid expenses and other current assets     235,111       94,783   Total current assets     2,323,103       6,670,175                     PROPERTY AND EQUIPMENT, NET     252,249       257,797                     OTHER ASSETS                 Intangible assets, net     279,658       328,290   TOTAL ASSETS   $ 2,855,010     $ 7,256,262                     LIABILITIES AND STOCKHOLDERS' EQUITY                                   CURRENT LIABILITIES                 Accounts payable   $ 263,486     $ 152,729   Accrued employee compensation     161,374       377,190   Accrued professional fees and other expenses     278,982       191,359   Deferred revenue     16,705       15,075   Total current liabilities     720,547       736,353                     LONG TERM LIABILITIES                 Deferred revenue     10,821       6,767   TOTAL LIABILITIES     731,368       743,120                     COMMITMENTS AND CONTINGENCIES (Note 9)                                   STOCKHOLDERS' EQUITY                 Preferred stock; 1,000,000 shares authorized; 0 outstanding     -       -   Common stock, $.01 par value; 20,000,000 shares authorized; 2,195,283 shares issued and outstanding on December 31, 2008 and 2,192,175 shares issued and outstanding on December 31, 2007     21,953       21,922   Additional paid-in capital     6,803,530       6,284,616   Retained (deficit) earnings     (4,701,841 )     206,604   Total stockholders' equity     2,123,642       6,513,142   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $ 2,855,010     $

Cash Flow Statement top       For the Year Ended       December 31,                     2008     2007   CASH FLOWS FROM OPERATING ACTIVITIES:             Net loss   $ (4,908,445 )   $ (1,155,661 ) Less gain on sale of discontinued operations     -       (1,155,973 ) Loss from continuing operations   $ (4,908,445 )   $ (2,311,634 )                   Adjustments to reconcile net loss to net cash used in operating activities:                 Depreciation and amortization     199,999       179,446   Stock-based compensation expense     509,195       367,110   Realized gain on sale of marketable securities     -       (2,028,720 )                   Changes in operating assets and liabilities:                 Restricted cash     (50,000 )     -   Accounts receivable     (90,646 )     (80,976 ) Inventories     (399,283 )     (152,890 ) Deposits     171,247       (378,183 ) Accounts payable     110,757       (21,560 ) Accrued employee compensation     (215,816 )     134,693   Deferred revenue and other accrued expenses     93,307       18,746   Prepaid expenses and other current assets and other current liabilities     159,476       377,546   Net cash used in operating activities from continuing operations     (4,420,209 )     (3,896,422 )                   CASH FLOWS FROM INVESTING ACTIVITIES:                 Additions to property and equipment     (145,819 )     (180,915 ) Proceeds from sale of marketable securities     -       2,033,397   Net cash (used in) provided by investing activities from continuing operations     (145,819 )     1,852,482                     CASH FLOWS FROM FINANCING ACTIVITIES:                 Proceeds from the issuance of common stock     9,750       571,133   Net cash provided by financing activities from continuing operations     9,750       571,133                     CASH FLOWS FROM DISCONTINUED OPERATIONS:                 Operating cash flows             (218,060 ) Cash flows from investing activities     -       1,780,071           Net cash provided by discontinued operations     -       1,562,011                     CHANGE IN CASH AND CASH EQUIVALENTS:     (4,556,278 )     89,204   Cash and cash equivalents, beginning of period     5,424,486       5,335,282   Cash and cash equivalents, end of period   $ 868,208     $ 5,424,486                     SUPPLEMENTAL INFORMATION:                 Income taxes paid   $ 6,177     $ 20,800   Income taxes received     301,060       723,801