----

----

|   | x      | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934     |
|--------|--------|------------------------------------------------------------------------------------------|
|   |   |                                                                                     |
|   |   | For the fiscal year ended: December 31, 2011                                             |
|   |   |                                                                                     |
|   | o      | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

|                           |   |                       |
|--------------------------------|--------|----------------------------|
| Nevada                         |   | 20-5506885                 |
| State or other jurisdiction of |   | (I.R.S. Employer I.D. No.) |
| incorporation or organization  |   |                       |

| (Address of principal executive offices) |   | (Zip Code) |
|------------------------------------------|--------|------------|

|                |   |                                      |
|---------------------|--------|-------------------------------------------|
| Title of each class |   | Name of each exchange on which registered |
| None                |   | N/A                                       |

----

|   |                    |   |                                                                    |   |
|--------|-------------------------|--------|-------------------------------------------------------------------------|--------|
|   | Large Accelerated filer | o      | Accelerated filer                                                       | o      |
|   |                    |   |                                                                    |   |
|   | Non-accelerated filer   | o      | (Do not check if a smaller reporting company) Smaller reporting company | x      |

----

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| -      | Category 1: Radioactive Isotope Identifier Products.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The current product is termed the SAM Radioactive Isotope Identifiers (RIID). This hand-held instrument is a self-contained radiation detector, low-noise signal processor, and user interface. Our proprietary analysis software provides an intuitive color display suitable for both First Responders as well as more technically trained Health Physicists. This product and product versions are mainly used for large homeland security market applications, as well as for environmental, industrial and medical purposes. Last year a common application was to detect radioactive isotope leaks coming from Nuclear Power plants as a result of Fukushima nuclear power plant disaster in Japan. The Company has customized its RIID to detect such isotopes according to the required specifications from the local Health authorities. This product detects neutron and gamma radiation from over 100 isotopes. The SAM was designed to meet the latest American National Standards Institute "ANSI" and other government standards for portable radiation detection equipment. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | We previously introduced a Fixed Installation unit, called Area Monitor, to our product offering. That product is being offered and used in e.g. building security applications, hospitals, industrial applications and generally in security applications where an identified area or facility needs to be secured. A new application is a vehicle and cargo Portal monitoring for security purposes. Area Monitors can also be used to detect the Radioactive Isotopes coming from Nuclear Power plants as well as measuring the Radiation level in the food items e.g. water, milk, vegetables, fish, beef etc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| -      | Category 2: Nuclear/ Gamma-ray detectors and spectrometers:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | Princeton is one of the handful of companies worldwide that manufactures High Purity Germanium Detectors and associated electronics and software for the most sensitive and accurate detection and analysis of radioactive samples in a laboratory environment. A typical application is the measurement of very low-levels of radioisotopes in soil, water or geological samples to determine the efficacy of radioactive waste cleanup or to conduct geophysics research. This type of lab-based instrumentation is also used by the nuclear power industry for on-line monitoring. Customers include Federal and State governmental authorities, research laboratories and large corporations.                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | We introduced last year a new version of High Purity Germanium detector system with a Sterling cooler. This system is more customer friendly and eliminates the usage of Liquid Nitrogen in the detector cooling procedure.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| -      | Category 3: X-ray detectors and spectrometers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   | These products address the research and industrial analysis need in the Microanalysis or XRF market. The Microanalysis Market is the branch of industry and scientific research that requires the non-destructive analysis of materials on a sub-millimeter dimensional scale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | The non-destructive testing of materials by X-ray analysis utilizes a range of detector products from small hand-held units to large systems installed on a Synchrotron and used for the fundamental research of materials. Princeton supplies both detector components as an OEM supplier and also complete X-ray spectrometer systems. Applications include quality control (e.g., for Silicon wafer fabrication), fundamental material research (e.g., on a synchrotron), and industrial control and monitoring, (e.g., engine wear analysis). A typical application is analyzing various metals for quality or research purposes. Company's core competence is high end Silicon Drift Detectors and other custom design x-ray detectors.                                                                                                                                                                                                                                                                                                                                               |

----

----

----

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 1)     | Use internal contacts or existing customer base within government agencies to identify new opportunities. Once a new opportunity or person is being identified we can determine if the potential new sales opportunity will be handled directly or by our OEM partners or representatives.                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 2)     | Once the proper Points of Contact have been qualified, an account executive or our partners will present the technology and overcome sales objections. During this time the sales person will confirm the details of the opportunity, if any. Onsite demonstrations will be critical in customer acceptance.                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 3)     | Onsite demonstrations will include an account executive and possibly a sales engineer. We currently sell to several state and federal agencies including the Environmental Protection Agency, Department of Energy, NASA, National Institute of Standards and Technology , Pacific Northwest National Laboratory, Los Alamos National Laboratory, Princeton Plasma Physics Lab, Idaho National Lab, US Geological Survey and The Savannah River Company. |

|        |   |            |   |                                                        |
|-------------|--------|-----------------|--------|-------------------------------------------------------------|
| US Patent # |   | Expiration Date |   | Title                                                       |
| 5,349,193   |   | May 20, 2013    |   | Highly sensitive nuclear spectrometer apparatus and method. |
|        |   |            |   |                                                        |
| 5,393,982   |   | May 20, 2013    |   | Highly sensitive nuclear spectrometer apparatus and method. |
|        |   |            |   |                                                        |
| 5,608,222   |   | April 7, 2015   |   | Analog to digital conversion technique for spectroscopy.    |

----

|    |                                                                                                                                                                                                                   |
|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ● | Nuclear Regulatory Commission licenses for the possession and distribution of radioactive sources used for testing and calibrating equipment has been taken over by New Jersey Department of Environmental Protection. |
|    |                                                                                                                                                                                                                   |
| ● | OSHA (Occupational and Safety Health Administration) regulations relating to the handling and use of hazardous chemicals.                                                                                              |
|    |                                                                                                                                                                                                                   |
| ● | EPA (Environmental Protection Agency) regulations relating to the storage, use and disposal of hazardous substances.                                                                                                   |
|    |                                                                                                                                                                                                                   |
| ● | Department of Commerce Export Administration regulations relating to the sale of equipment overseas.                                                                                                                   |
|    |                                                                                                                                                                                                                   |
| ● | Various State and Federal Labor laws.                                                                                                                                                                                  |

----

|           |   |       |   |      |   |   |   |
|----------------|--------|------------|--------|-----------|--------|--------|--------|
| Quarter Ended  |   | High Price |   | Low Price |   |
| December 2011  |   | $          | 0.40   |      | $      | 0.16   |   |
| September 2011 |   | $          | 0.25   |      | $      | 0.17   |   |
| June 2011      |   | $          | 0.51   |      | $      | 0.20   |   |
| March 2011     |   | $          | 0.75   |      | $      | 0.05   |   |
| December 2010  |   | $          | 0.10   |      | $      | 0.05   |   |
| September 2010 |   | $          | 0.18   |      | $      | 0.02   |   |
| June 2010      |   | $          | 0.19   |      | $      | 0.01   |   |
| March 2010     |   | $          | 1.01   |      | $      | 0.05   |   |

|                                                       |   |                                                                                        |    |                                                                        |   |                                                                                                                                      |   |   |       |   |
|------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------|---------|-----------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|
| Plan Category                                              |   | Number of Securities to be issued upon exercise of outstanding options, warrants and rights |    | Weighted-average exercise price of outstanding options, warrants and rights |   | Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a) |   |
|                                                       |   | (a)                                                                                         |    | (b)                                                                         |   | (c)                                                                                                                                       |   |
| Equity compensation plans approved by security holders     |   |                                                                                        | 0       |                                                                        |   | 0                                                                                                                                         |   |   | 0          |   |
| Equity compensation plans not approved by security holders |   |                                                                                        | 386,000 |                                                                        | $      | 1.02                                                                                                                                      |   |   | 14,869,513 |   |
| Total                                                      |   | $                                                                                           | 386,000 |                                                                        |   | 1.02                                                                                                                                      |   |   | 14,869,513 |   |

----

|                                                        |   |                                 |       |                                 |   |       |   |
|-------------------------------------------------------------|--------|--------------------------------------|------------|--------------------------------------|--------|------------|--------|
|                                                        |   | For the Year Ended December 31, 2010 |       | For the Year Ended December 31, 2009 |   |
| Revenues                                                    |   | $                                    | 4,157,675  |                                 | $      | 2,565,512  |   |
| General and Administrative Expenses                         |   |                                 | 758,120    |                                 |   | 629,885    |   |
| Net Profit (Loss)                                           |   |                                 | 495,599    |                                 |   | 44,700     |   |
| Basic Income (Loss) per Share                               |   |                                 | .04        |                                 |   | .00        |   |
| Diluted Income (Loss) per Share                             |   |                                 | .04        |                                 |   | .00        |   |
| Weighted Average Number of Shares Outstanding               |   |                                 | 14,144,238 |                                 |   | 13,771,332 |   |
| Weighted Average Number of Fully Diluted Shares Outstanding |   |                                 | 14,144,238 |                                 |   | 13,771,332 |   |

|                      |   | December 31, 2010 |      | December 31, 2009 |   |
|---------------------------|--------|-------------------|-----------|-------------------|--------|
| Total Current Assets      |   | $                 | 1,253,337 |              | $      | 615,025 |   |
| Total Assets              |   |              | 1,288,250 |              |   | 639,621 |   |
| Total Current Liabilities |   |              | 702,646   |              |   | 479,381 |   |
| Working Capital           |   |              | 550,691   |              |   | 135,644 |   |
| Stockholders' Equity      |   |              | 585,604   |              |   | 160,240 |   |

----

----

----

----

|            |   |   |   |                        |   |           |
|-----------------|--------|--------|--------|-----------------------------|--------|----------------|
| Name            |   | Age    |   | Position                    |   | Director Since |
| Juhani Taskinen |   | 55     |   | CEO, Director               |   | 2005           |
| David Brown     |   | 40     |   | Director                    |   | 2005           |
| Trupti Mehta    |   | 53     |   | Principal Financial Officer |   | 2007           |

----

----

|                        |   |   |   |   |   |    |   |        |   |         |   |                                   |   |                   |   |   |   |   |   |   |    |   |   |    |   |
|-----------------------------|--------|--------|--------|--------|--------|---------|--------|-------------|--------|--------------|--------|----------------------------------------|--------|------------------------|--------|--------|--------|--------|--------|--------|---------|--------|--------|---------|--------|
| Name and Principal Position |   | Year   |   | Salary |   | Bonus   |   | StockAwards |   | OptionAwards |   | Non-Equity Incentive Plan Compensation |   | All Other Compensation |   | Total  |   |
| Juhani Taskinen, CEO        |   |   | 2011   |   |   | -       |   |        | -      |         |   | -                                      |   |                   | -      |   |   | -      |   | $      | 203,000 |   | $      | 203,000 |   |
|                        |   |   | 2010   |   |   | -       |   |        | -      |         |   | -                                      |   |                   | -      |   |   | -      |   | $      | 168,000 |   | $      | 168,000 |   |
| Trupti Mehta                |   |   | 2011   |   | $      | 103,000 |   |        |   |         | $      | 8,600                                  |   |                   |   |   |   |   |   |   |    |   | $      | 111,600 |   |

|            |   |                                                                |   |                                                                  |   |                                                                                           |   |                      |   |                   |   |                                                        |   |                                                              |       |                                                                                                   |   |                                                                                                                   |   |   |   |   |   |   |   |   |   |
|-----------------|--------|---------------------------------------------------------------------|--------|-----------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------|--------|---------------------------|--------|------------------------|--------|-------------------------------------------------------------|--------|-------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|            |   | Option Awards                                                       |   |                                                                  |   |                                                                                           |   |                      |   | Stock Awards           |   |                                                        |
| Name            |   | Number of securities underlying unexercised Options (#) Exercisable |   | Number of Securities Underlying Unexercised Options (#) Unexercisable |   | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) |   | Option Exercise Price ($) |   | Option Expiration Date |   | Number of Shares or Units of Stock That Have Not Vested (#) |   | Market Value of Shares or Units of Stock That Have Not Vested ($) |       | Equity Incentive Plan Awards: Number of Unearned Shares Units or Other Rights That Have Not Vested (#) |   | Equity Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| Juhani Taskinen |   |                                                                | 30,000 |                                                                  |   | -                                                                                              |   |                      | -      |                   | $      | 1.10                                                        |   |                                                              | 12/31/2012 |                                                                                                   |   | -                                                                                                                      |   |   | -      |   |   | -      |   |   | -      |
| David Brown     |   |                                                                | 30,000 |                                                                  |   | -                                                                                              |   |                      | -      |                   | $      | 1.10                                                        |   |                                                              | 12/31/2012 |                                                                                                   |   | -                                                                                                                      |   |   | -      |   |   | -      |   |   | -      |

----

|            |   |   |                            |   |             |   |              |   |                                       |   |                                             |   |                       |   |      |   |   |   |   |   |    |   |
|-----------------|--------|--------|---------------------------------|--------|------------------|--------|-------------------|--------|--------------------------------------------|--------|--------------------------------------------------|--------|----------------------------|--------|-----------|--------|--------|--------|--------|--------|---------|--------|
| Name            |   |   | Fees Earned or Paid in Cash ($) |   | Stock Awards ($) |   | Option Awards ($) |   | Non-Equity Incentive Plan Compensation ($) |   | Non-Qualified Deferred Compensation Earnings ($) |   | All Other Compensation ($) |   | Total ($) |   |
| Juhani Taskinen |   |   | -                               |   |             | -      |              |   | -                                          |   |                                             | -      |                       |   | -         |   |   | -      |   | $      | 203,000 |   |
| David Brown     |   |   |                            |   | $                | 21,000 |              |   | -                                          |   | $                                                | 20,000 |                       |   | -         |   |   | -      |   | $      | 41,000  |   |

----

|                                                                           |   |                                 |      |                                  |   |   |   |
|--------------------------------------------------------------------------------|--------|--------------------------------------|-----------|---------------------------------------|--------|--------|--------|
| Name and Address of Beneficial Owner                                           |   | Amount and Nature ofBeneficial Owner |      | Percentage of OutstandingCommon stock |   |
| Principal Shareholders                                                         |   |                                 |      |                                  |   |   |   |
| Finn-Partners, Inc./Juhani Taskinen / family                                   |   |                                 | 5,676,000 |                                  |   | 39.18  | %      |
| Third Letter Corporation (David Brown) San Rafael California                   |   |                                 | 1,512,000 |                                  |   | 10.43  | %      |
| Mikko Maijala /OY Chemec Espoo Finland                                         |   |                                 | 3,178,138 |                                  |   | 21.94  | %      |
|                                                                           |   |                                 |      |                                  |   |   |   |
| Officers and Directors                                                         |   |                                 |      |                                  |   |   |   |
| Juhani Taskinen                                                                |   |                                 | 5,676,000 |                                  |   | 39.18  | %      |
| David Brown                                                                    |   |                                 | 1,512,000 |                                  |   | 10.43  | %      |
| All directors and executive officers of the Company as a group (2 individuals) |   |                                 | 7,188,000 |                                  |   | 49.63  | %      |

----

|               |   |   |   |   |   |   |   |
|--------------------|--------|--------|--------|--------|--------|--------|--------|
| Fee category       |   | 2011   |   | 2010   |   |
| Audit fees         |   | $      | 28,500 |   | $      | 21,000 |   |
| Audit-related fees |   | $      | -      |   | $      | -      |   |
| Tax fees           |   | $      | 4,200  |   | $      | 4,000  |   |
| All other fees     |   | $      | -      |   | $      | -      |   |
| Total fees         |   | $      | 32,700 |   | $      | 25,000 |   |

|           |   |                                 |
|----------------|--------|--------------------------------------|
| Exhibit Number |   | Description                          |
| 3.2            |   | Articles of Incorporation            |
|           |   |                                 |
| 3.3            |   | Bylaws                               |
|           |   |                                 |
| 31.1           |   | 302 Certification of Juhani Taskinen |
|           |   |                                 |
| 31.2           |   | 302 Certification of CFO             |
|           |   |                                 |
| 32.1           |   | 906 Certification-CEO                |
|           |   |                                 |
| 32.1           |   | 906 Certification-CFO                |

----

|                 | PRINCETON SECURITY TECHNOLOGIES, INC. |
|----------------------|---------------------------------------|
|                 |                                  |   |
| Date: March 23, 2012 | By                                    | Juhani Taskinen |
|                 |                                  | Juhani Taskinen, CEO, President and |
|                 |                                  | Chairman of the |
|                 |                                  | Board of Directors |
|                 |                                  |   |
| Date: March 23, 2012 | By                                    | Trupti Mehta |
|                 |                                  | Trupti Mehta, Principal Financial |
|                 |                                  | Officer |

|                           |   |                  |
|--------------------------------|--------|-----------------------|
| Date: March 23, 2012 | By     | David Brown           |
|                           |   | David Brown, Director |

----

|  |                         REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To The Board of DirectorsPrinceton Security Technologies, Inc.Princeton, New Jersey   We have audited the accompanying consolidated balance sheets of Princeton Security Technologies, Inc. (the Company) and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.   We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting, as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.   In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Princeton Security Technologies, Inc. and subsidiaries as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.     /s/ Child, Van Wagoner & Bradshaw, PLLCChild, Van Wagoner & Bradshaw, PLLCSalt Lake City, UtahMarch 14, 2012 |
|--|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                                                                                             |   | December 31, 2011 |       | December 31, 2010 |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|-------------------|--------|
| ASSETS                                                                                                                                                                           |   |              |       |              |   |   |   |
| Current Assets                                                                                                                                                                   |   |              |       |              |   |   |   |
| Cash                                                                                                                                                                             |   | $                 | 431,301    |              | $      | 39,567 |   |
| Accounts receivable -net of allowance                                                                                                                                            |   |              | 203,430    |              |   | 225,827 |   |
| Other receivables                                                                                                                                                                |   |              | 6,921      |              |   | 1,030 |   |
| Inventory                                                                                                                                                                        |   |              | 575,310    |              |   | 289,872 |   |
| Prepaid expenses                                                                                                                                                                 |   |              | 36,375     |              |   | 58,729 |   |
| Total Current Assets                                                                                                                                                             |   |              | 1,253,337  |              |   | 615,025 |   |
| Property, plant & equipment (net of accumulated depreciation of $1,406,279 and $1,398,115 respectively)                                                                      |   |              | 34,913     |              |   | 24,596 |   |
| Total Assets                                                                                                                                                                     |   | $                 | 1,288,250  |              | $      | 639,621 |   |
|                                                                                                                                                                             |   |              |       |              |   |   |   |
| LIABILITIES                                                                                                                                                                      |   |              |       |              |   |   |   |
| Accounts payable                                                                                                                                                                 |   | $                 | 166,121    |              | $      | 178,074 |   |
| Accrued expenses                                                                                                                                                                 |   |              | 66,944     |              |   | 48,526 |   |
| Accrued related party expenses                                                                                                                                                   |   |              | -          |              |   | 36,000 |   |
| Accrued vacation expenses                                                                                                                                                        |   |              | 43,950     |              |   | 33,647 |   |
| Credit line advances                                                                                                                                                             |   |              | -          |              |   | 23,684 |   |
| Deferred revenue                                                                                                                                                                 |   |              | 425,631    |              |   | 159,450 |   |
| Total Current Liabilities                                                                                                                                                        |   |              | 702,646    |              |   | 479,381 |   |
| Total Liabilities                                                                                                                                                                |   |              | 702,646    |              |   | 479,381 |   |
|                                                                                                                                                                             |   |              |       |              |   |   |   |
| STOCKHOLDERS' EQUITY                                                                                                                                                             |   |              |       |              |   |   |   |
| Preferred stock; $.001 par value, 10,000,000 shares authorized; no shares issued and outstanding                                                                                 |   |              | -          |              |   | - |   |
| Common stock; $.001 par value, 90,000,000 shares authorized; 14,483,513 and 14,043,513 shares issued and outstanding as of December 31, 2011 and December 31, 2010, respectively |   |              | 14,483     |              |   | 14,043 |   |
| Additional paid-in capital                                                                                                                                                       |   |              | 2,035,735  |              |   | 1,961,575 |   |
| Retained earnings                                                                                                                                                                |   |              | (1,464,614 | )                 |   | (1,815,378 | ) |
| Total Stockholders' Equity                                                                                                                                                       |   |              | 585,604    |              |   | 160,240 |   |
| Total Liabilities and Stockholders' Equity                                                                                                                                       |   | $                 | 1,288,250  |              | $      | 639,621 |   |

----

|                                     |   | For the Year Ended December 31, |       |
|------------------------------------------|--------|---------------------------------|------------|
|                                     |   | 2011                            |       | 2010 |   |
| Revenues                                 |   |                            |       |   |   |   |   |
| Sales (net of returns)                   |   | $                               | 4,157,675  |   | $ | 2,565,512 |   |
| Costs of goods sold                      |   |                            | 2,167,618  |   |   | 1,319,577 |   |
| Gross Profit                             |   |                            | 1,990,057  |   |   | 1,245,935 |   |
|                                     |   |                            |       |   |   |   |   |
| Expenses                                 |   |                            |       |   |   |   |   |
| Depreciation and amortization            |   |                            | 8,165      |   |   | 22,778 |   |
| Selling and marketing                    |   |                            | 347,002    |   |   | 246,109 |   |
| General and administrative               |   |                            | 758,120    |   |   | 629,885 |   |
| Research and development                 |   |                            | 376,727    |   |   | 304,262 |   |
| Total Expenses                           |   |                            | 1,490,014  |   |   | 1,203,034 |   |
|                                     |   |                            |       |   |   |   |   |
| Profit from operations                   |   |                            | 500,043    |   |   | 42,901 |   |
|                                     |   |                            |       |   |   |   |   |
| Other income/(expenses)                  |   |                            | (4,444     | ) |   | (2,782 | ) |
| Gain on extinguishment of Liabilities    |   |                            | 4,581      |   |   |   |   |
| Provision for income taxes               |   |                            | -          |   |   | - |   |
|                                     |   |                            |       |   |   |   |   |
| Net Profit                               |   |                            | 495,599    |   |   | 44,700 |   |
|                                     |   |                            |       |   |   |   |   |
| Net Profit per share of common stock     |   |                            | 0.04       |   |   | 0.00 |   |
|                                     |   |                            |       |   |   |   |   |
| Weighted average number of common shares |   |                            | 14,144,238 |   |   | 13,771,332 |   |

----

|                                              |   | 2011   |     | 2010   |   |
|---------------------------------------------------|--------|--------|----------|--------|--------|
| Cash flow from operating activities               |   |   |     |   |   |   |   |
| Net income/(loss)                                 |   | $      | 495,599  |   | $      | 44,700 |   |
| Depreciation and amortization                     |   |   | 8,165    |   |   | 22,778 |   |
| Provision for inventory reserves                  |   |   | (17,526  | )      |   |   |   |
| Provision for allowance on accounts receivable    |   |   | (16,426  | )      |   |   |   |
| Stock issued for services and compensation        |   |   | 74,600   |   |   | 23,000 |   |
|                                              |   |   |     |   |   |   |   |
| Change in operating assets and liabilities        |   |   |     |   |   |   |   |
| Accounts receivable                               |   |   | 22,397   |   |   | 55,604 |   |
| Other receivables                                 |   |   | (5,891   | )      |   | (430 | ) |
| Inventory                                         |   |   | (285,438 | )      |   | (72,396 | ) |
| Prepaid expenses                                  |   |   | 22,354   |   |   | (25,837 | ) |
| Accounts payable                                  |   |   | (11,953  | )      |   | (137,627 | ) |
| Accrued expenses                                  |   |   | 28,720   |   |   | 43,545 |   |
| Accrued Related Party Expenses                    |   |   | (36,000  | )      |   | 36,000 |   |
| Deferred revenue                                  |   |   | 266,181  |   |   | 97,043 |   |
| Cash flow provided by operating activities        |   |   | 578,734  |   |   | 52,428 |   |
|                                              |   |   |     |   |   |   |   |
| Cash flow from investing activities               |   |   |     |   |   |   |   |
| Purchase of property and equipment                |   |   | (18,481  | )      |   | (19,000 | ) |
| Cash flow used in investing activities            |   |   | (18,481  | )      |   | (19,000 | ) |
|                                              |   |   |     |   |   |   |   |
| Cash flow from financing activities               |   |   |     |   |   |   |   |
| Lines of Credit                                   |   |   | (23,684  | )      |   | (15,194 | ) |
| Dividend Paid                                     |   |   | (144,835 | )      |   | - |   |
| Cash flow provided by financing activities        |   |   | (168,519 | )      |   | (15,194 | ) |
|                                              |   |   |     |   |   |   |   |
| Increase/(decrease) in cash position              |   |   | 391,734  |   |   | 18,234 |   |
|                                              |   |   |     |   |   |   |   |
| Cash position at beginning of period              |   |   | 39,567   |   |   | 21,333 |   |
|                                              |   |   |     |   |   |   |   |
| Cash position at end of period                    |   | $      | 431,301  |   | $      | 39,567 |   |
|                                              |   |   |     |   |   |   |   |
| Supplemental disclosure of cash flow information: |   |   |     |   |   |   |   |
| Cash paid for:                                    |   |   |     |   |   |   |   |
| Interest expense                                  |   |   | -        |   |   | - |   |
| Stock Issued for retirement of debt               |   |   | -        |   |   | 6,000 |   |
| Income taxes                                      |   |   | -        |   |   | - |   |

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|                                |   |   Common Stock |       |   |   |                       |   |                        |      |
|-------------------------------------|--------|--------------------------|------------|--------|--------|----------------------------|--------|-----------------------------|-----------|
|                                |   | Shares                   |       | Amount |   | Additional Paid-in capital |   | Retained earnings (deficit) |      | Total stockholders' equity (deficit) |   |
| Balance at December 31,2008         |   |                     | 11,781,375 |   | $      | 11,781                     |   | $                           | 1,406,959 |   | $ | (1,439,255 | ) | $ | (20,515 | ) |
| Stock Issued for Services           |   |                     | 344,000    |   |   | 344                        |   |                        | 91,906    |   |   | - |   |   | 92,250 |   |
| Stock Issued for conversion of debt |   |                     | 1,578,138  |   |   | 1,578                      |   |                        | 434,050   |   |   | - |   |   | 435,628 |   |
| Net Loss for the year               |   |                     | -          |   |   | -                          |   |                        | -         |   |   | (420,823 | ) |   | (420,823 | ) |
|                                |   |                     |       |   |   |                       |   |                        |      |   |   |   |   |   |   |   |
| Balance at December 31, 2009        |   |                     | 13,703,513 |   |   | 13,703                     |   |                        | 1,932,915 |   |   | (1,860,078 | ) |   | 86,540 |   |
| Stock Issued for Services           |   |                     | 340,000    |   |   | 340                        |   |                        | 28,660    |   |   | - |   |   | 29,000 |   |
| Net Income for the year             |   |                     | -          |   |   | -                          |   |                        | -         |   |   | 44,700 |   |   | 44,700 |   |
|                                |   |                     |       |   |   |                       |   |                        |      |   |   |   |   |   |   |   |
| Balance at December 31, 2010        |   |                     | 14,043,513 |   | $      | 14,043                     |   | $                           | 1,961,575 |   | $ | (1,815,378 | ) | $ | 160,240 |   |
|                                |   |                     |       |   |   |                       |   |                        |      |   |   |   |   |   |   |   |
| Stock Issued for Services           |   |                     | 440,000    |   |   | 440                        |   |                        | 74,160    |   |   |   |   |   | 74,600 |   |
| Dividend Paid                       |   |                     |       |   |   |                       |   |                        |      |   |   | (144,835 | ) |   | (144,835 | ) |
| Net Income for the year             |   |                     |       |   |   |                       |   |                        |      |   |   | 495,599 |   |   | 495,599 |   |
| Balance at December 31, 2011        |   |                     | 14,483,513 |   | $      | 14,483                     |   | $                           | 2,035,735 |   | $ | (1,464,614 | ) | $ | 585,604 |   |

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|                           |   | 2011   |    | 2010   |   |
|--------------------------------|--------|--------|---------|--------|--------|
| Raw Materials                  |   | $      | 375,899 |   | $      | 269,484 |   |
| Work in Progress               |   |   | 33,874  |   |   | 5,047 |   |
| Finished Goods                 |   |   | 165,537 |   |   | 23,815 |   |
| Reserve for Obsolete Inventory |   |   | -       |   |   | (8,474 | ) |
| Total Inventory                |   | $      | 575,310 |   | $      | 289,872 |   |

|                                  |   | 2011   |       | 2010   |   |
|---------------------------------------|--------|--------|------------|--------|--------|
| Computers and Equipment               |   | $      | 1,365,362  |   | $      | 1,346,881 |   |
| Leashold improvements                 |   |   | 75,830     |   |   | 75,830 |   |
| Total                                 |   |   | 1,441,192  |   |   | 1,422,711 |   |
|                                  |   |   |       |   |   |   |   |
| Accumulated Depreciation              |   |   | (1,406,279 | )      |   | (1,398,115 | ) |
| Total Property, Plant & Equipment |   | $      | 34,913     |   | $      | 24,596 |   |

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| Plan Category                                              |   | Number of Securities to be issued upon exercise of outstanding options, warrants and rights (a) |    | Weighted-average exercise price of outstanding options, warrants and rights (b) |   | Number of securities remaining available for future issuance under equity compensation plans excluding securities reflected in column (a)(c) |   |
|------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------|---------|---------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Equity compensation plans approved by security holders     |   |                                                                                            | 0       |                                                                            |   | 0                                                                                                                                            |   |   | 0 |   |
| Equity compensation plans not approved by security holders |   |                                                                                            | 386,000 |                                                                            | $      | 1.02                                                                                                                                         |   |   | 14,869,513 |   |
| Total                                                      |   |                                                                                            | 386,000 |                                                                            | $      | 1.02                                                                                                                                         |   |   |   |   |

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|                              |   | 2011   |      | 2010   |   |
|-----------------------------------|--------|--------|-----------|--------|--------|
| Cumulative NOL                    |   | $      | 1,235,280 |   | $      | 1,702,758 |   |
|                              |   |   |      |   |   |   |   |
| Deferred Tax assets:              |   |   |      |   |   |   |   |
| (35% Federal, 9% New Jersey)      |   |   |      |   |   |   |   |
| Net operating loss carry forwards |   |   | 543,523   |   |   | 749,214 |   |
| Depreciation                      |   |   | 15,454    |   |   | 23,804 |   |
| Research and Development Credit   |   |   | 169,251   |   |   | 126,915 |   |
| Warranty Reserve                  |   |   | 11,831    |   |   | 21,184 |   |
| Vacation Adjustment               |   |   | 19,338    |   |   | 14,805 |   |
| Inventory Adjustment              |   |   | 22,313    |   |   | 24,051 |   |
| Inventory Reserve                 |   |   | 3,729     |   |   | 3,729 |   |
| Valuation allowance               |   |   | (785,439  | )      |   | (963,702 | ) |
|                              |   | $      | -         |   | $      | - |   |

|                                                                   |   | 2011   |     | 2010   |   |
|------------------------------------------------------------------------|--------|--------|----------|--------|--------|
| Reconcilation of tax rate:                                             |   |   |     |   |   |   |   |
| Tax Effect of Book Income (loss)                                       |   |   |     |   |   |   |   |
| Federal (35%)                                                          |   | $      | 173,460  |   | $      | 15,645 |   |
| State (9%)                                                             |   |   | 44,604   |   |   | 4,023 |   |
|                                                                   |   |   |     |   |   |   |   |
| Utilization of NOLS Previously Charged off Against Valuation Allowance |   |   | (205,690 | )      |   | (70,246 | ) |
| Increase in Research Credits                                           |   |   | (42,336  | )      |   | (21,770 | ) |
| Net Increase in Valuation Allowance due to                             |   |   |     |   |   |   |   |
| Increase in Separate Company NOLS                                      |   |   |     |   |   |   |   |
| Research Credits and Other Items                                       |   |   | 27,428   |   |   | 68,533 |   |
|                                                                   |   |   |     |   |   |   |   |
| Non-Deductible Meals and Entertainment and Other Items                 |   |   | 2,534    |   |   | 3,815 |   |
| Net Provision                                                          |   | $      | -        |   | $      | - |   |

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| 2012  |   | $      | 294,791   |   |
|-------|--------|--------|-----------|--------|
| 2013  |   |   | 320,769   |   |
| 2014  |   |   | 346,747   |   |
| 2015  |   |   | 372,725   |   |
| Total |   | $      | 1,335,032 |   |

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