----

----

| New York                                                              |   | 13-3303290                           |
|-----------------------------------------------------------------------|--------|--------------------------------------|
| (State or Other Jurisdiction of Incorporation or Organization)        |   | (I.R.S. Employer Identification No.) |
|                                                                  |   |                                 |
| One Executive Blvd., Yonkers, NY                                      |   | 10701                                |
| (Address of Principal Executive Offices)                              |   | (Zip Code)                           |
|                                                                  |   |                                 |
| Registrant’s Telephone Number, Including Area Code(914)963-6600 |

----

|       |                                                                                        | Page   |
|------------|---------------------------------------------------------------------------------------------|--------|
|       |                                                                                        |   |
| Part I.    | Financial Information                                                                       | 1      |
|       |                                                                                        |   |
| Item 1.    | Financial Statements                                                                        | 1      |
|       |                                                                                        |   |
|       | Balance Sheets as of September 30, 2010 and December 31, 2009                               | 1      |
|       |                                                                                        |   |
|       | Statements of Operations for the three and nine months ended September 30, 2010 and 2009    | 2      |
|       |                                                                                        |   |
|       | Statements of Cash Flows for the nine months ended September 30, 2010 and 2009              | 3      |
|       |                                                                                        |   |
|       | Notes to Financial Statements                                                               | 4      |
|       |                                                                                        |   |
| Item 2.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16     |
|       |                                                                                        |   |
| Item 3.    | Quantitative and Qualitative Disclosures About Market Risk                                  | 20     |
|       |                                                                                        |   |
| Item 4T.   | Controls and Procedures                                                                     | 20     |
|       |                                                                                        |   |
| Part II.   | Other Information                                                                           | 20     |
|       |                                                                                        |   |
| Item 1.    | Legal Proceedings                                                                           | 20     |
|       |                                                                                        |   |
| Item 2.    | Unregistered Sales of Equity Securities And Use of Proceeds                                 | 20     |
|       |                                                                                        |   |
| Item 6.    |  Exhibits                                                                              | 21     |
|       |                                                                                        |   |
| Signatures |   22                                                                         |

----

|                                                                                                       |   | September 30, |          |   | December 31, |   |
|------------------------------------------------------------------------------------------------------------|--------|---------------|---------------|--------|--------------|--------|
|                                                                                                       |   | 2010          |          |   | 2009         |   |
| ASSETS                                                                                                     |   |
| CURRENT ASSETS                                                                                             |   |          |          |   |         |   |
|   Cash and cash equivalents                                                                      |   | $             | 52,007        |   |         | $      | 58,039 |   |
|   Accounts receivable, less allowance for doubtful accounts of $17,000 at September 30, 2010 and |   |          |          |   |         |   |   |   |
|   December 31, 2009                                                                              |   |          | 176,362       |   |         |   | 174,538 |   |
| Total Current Assets                                                                                       |   |          | 228,369       |   |         |   | 232,577 |   |
|                                                                                                       |   |          |          |   |         |   |   |   |
| PROPERTY AND EQUIPMENT, at cost, less accumulated depreciation and amortization of                         |   |          |          |   |         |   |   |   |
| $277,892 at September 30, 2010 and $263,425 at December 31, 2009                                           |   |          | 54,372        |   |         |   | 53,982 |   |
| SOFTWARE DEVELOPMENT, at cost, less accumulated amortization of                                            |   |          |          |   |         |   |   |   |
| $519,162 at September 30, 2010 and $349,862 at December 31, 2009                                           |   |          | 159,539       |   |         |   | 327,338 |   |
| SECURITY DEPOSITS AND OTHER ASSETS                                                                         |   |          | 11,654        |   |         |   | 11,654 |   |
| TOTAL ASSETS                                                                                               |   | $             | 453,934       |   |         | $      | 625,551 |   |
|                                                                                                       |   |          |          |   |         |   |   |   |
| LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                      |
|                                                                                                       |   |          |          |   |         |   |   |   |
| CURRENT LIABILITIES                                                                                        |   |          |          |   |         |   |   |   |
|   8% Convertible Debentures                                                                      |   | $             | 1,430,793     |   |         | $      | 2,604,098 |   |
|   Accrued liquidated damages - registration rights agreement                                     |   |          | 0             |   |         |   | 110,000 |   |
|   Accounts payable and accrued expenses, including deferred unpaid officer/director              |   |          |          |   |         |   |   |   |
|   compensation of $176,949 at September 30, 2010 and $90,565 at December 31, 2009                |   |          | 498,930       |   |         |   | 562,776 |   |
|   Accrued interest                                                                               |   |          | 305,841       |   |         |   | 599,728 |   |
|   Loans from shareholders in contemplation of private placement of common stock                  |   |          | 47,500        |   |         |   | - |   |
|   Deferred revenue                                                                               |   |          | 387,444       |   |         |   | 367,823 |   |
| TOTAL CURRENT LIABILITIES                                                                                  |   |          | 2,670,508     |   |         |   | 4,244,425 |   |
|                                                                                                       |   |          |          |   |         |   |   |   |
| STOCKHOLDERS' DEFICIT                                                                                      |   |          |          |   |         |   |   |   |
|   Preferred Stock, Series A 10% Convertible Preferred Stock, par value $.001 per share,          |   |          |          |   |         |   |   |   |
|     2,090,000 authorized, issued and outstanding (liquidation preference $1,045,000)   |   |          | 2,090         |   |         |   | - |   |
|   Common stock, par value $0.001 per share, 100,000,000 shares authorized;                       |   |          |          |   |         |   |   |   |
|     14,775,365 and 13,766,662 shares issued and outstanding at September 30, 2010      |   |          |          |   |         |   |   |   |
|     and December 31, 2009, respectively                                                |   |          | 14,775        |   |         |   | 13,767 |   |
| Additional paid - in capital                                                                               |   |          | 6,372,998     |   |         |   | 2,892,126 |   |
| Common Stock to be issued                                                                                  |   |          |  140,250 |   |         |   |  - |   |
| Accumulated deficit                                                                                        |   |          | (8,746,687    | )      |         |   | (6,524,767 | ) |
|    Total Stockholders' Deficit                                                              |   |          | (2,216,574    | )      |         |   | (3,618,874 | ) |
|                                                                                                       |   |          |          |   |         |   |   |   |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                |   | $             | 453,934       |   |         | $      | 625,551 |   |

----

|                                                                                                                                                                                                                                                                                                                           |   | Three Months Ended |       |   | Nine Months Ended |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------|------------|--------|-------------------|--------|
|                                                                                                                                                                                                                                                                                                                           |   | September 30,      |       |   | September 30,     |   |
|                                                                                                                                                                                                                                                                                                                           |   | 2010               |       |   | 2009              |   |   | 2010 |   |   | 2009 |   |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |
| REVENUES                                                                                                                                                                                                                                                                                                                       |   |               |       |   |              |   |   |   |   |   |   |   |
|    Products                                                                                                                                                                                                                                                                                                     |   | $                  | 96,592     |   |              | $      | 105,065 |   |   |   | 550,584 |   |   | $ | 491,207 |   |
|    Services                                                                                                                                                                                                                                                                                                     |   |               | 207,523    |   |              |   | 175,333 |   |   |   | 613,908 |   |   |   | 514,044 |   |
|                TOTAL REVENUES                                                                                                                                                                                                                       |   |               | 304,115    |   |              |   | 280,398 |   |   |   | 1,164,492 |   |   |   | 1,005,251 |   |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| COST OF GOODS SOLD                                                                                                                                                                                                                                                                                                             |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|    Equipment purchases                                                                                                                                                                                                                                                                                          |   |               | 11,419     |   |              |   | 19,486 |   |   |   | 75,732 |   |   |   | 163,985 |   |
|    Royalties and consulting                                                                                                                                                                                                                                                                                     |   |               | 7,500      |   |              |   | 9,374 |   |   |   | 28,619 |   |   |   | 39,576 |   |
|                                                                                                                                                                                                                                                                                                                           |   |               | 18,919     |   |              |   | 28,860 |   |   |   | 104,351 |   |   |   | 203,561 |   |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|                 GROSS PROFIT                                                                                                                                                                                                                   |   |               | 285,196    |   |              |   | 251,538 |   |   |   | 1,060,141 |   |   |   | 801,690 |   |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Research and Development                                                                                                                                                                                                                                                                                                       |   |               | 64,898     |   |              |   | 49,308 |   |   |   | 170,628 |   |   |   | 150,441 |   |
| Selling, General and Administrative                                                                                                                                                                                                                                                                                            |   |               | 481,332    |   |              |   | 342,291 |   |   |   | 1,203,110 |   |   |   | 1,109,434 |   |
|                 TOTAL OPERATING EXPENSES                                                                                                                                                                                                       |   |               | 546,230    |   |              |   | 391,599 |   |   |   | 1,373,738 |   |   |   | 1,259,875 |   |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| LOSS FROM OPERATIONS                                                                                                                                                                                                                                                                                                           |   |               | (261,034   | )      |              |   | (140,061 | ) |   |   | (313,597 | ) |   |   | (458,185 | ) |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                                                                                                                                                                                                                                                                         |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|     Reversal (Loss) on debenture valuation adjustment                                                                                                                                                                                                                                                      |   |               | -          |   |              |   | (5,041 | ) |   |   | 61,316 |   |   |   | (58,493 | ) |
|     Reversal on liquidated damages                                                                                                                                                                                                                                                                         |   |               | 46,165     |   |              |   | - |   |   |   | 110,000 |   |   |   | - |   |
|     Loss on debt restructuring                                                                                                                                                                                                                                                                             |   |               | (530,654   | )      |              |   | - |   |   |   | (1,225,748 | ) |   |   | - |   |
|     Beneficial conversion cost in connection with issuance                                                                                                                                                                                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      of common stock in exchange for interest payable.                                                                                                                                                                                                                                                |   |               | (43,893    | )      |              |   | - |   |   |   | (88,083 | ) |   |   | - |   |
|     Loss in connection with issuance of 10% convertible     preferred  stock valued at $1,665,788 in exchange for 8%     convertible debentures with an outstanding balance of     $1,045,000 at the date of exchange |   |               | (620,788   | )      |              |   | - |   |   |   | (620,788 | ) |   |   | - |   |
|     Interest expense, includes amortization                                                                                                                                                                                                                                                                |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      of deferred finance costs of $113,010 for the                                                                                                                                                                                                                                                    |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
|      nine months ended September 30, 2009                                                                                                                                                                                                                                                             |   |               | (39,682    | )      |              |   | (53,754 | ) |   |   | (145,060 | ) |   |   | (353,944 | ) |
|     Interest income                                                                                                                                                                                                                                                                                        |   |               | 19         |   |              |   | 8 |   |   |   | 39 |   |   |   | 43 |   |
|                                                                                                                                                                                                                                                                                                                           |   |               | (1,188,833 | )      |              |   | (58,787 | ) |   |   | (1,908,324 | ) |   |   | (412,394 | ) |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| NET (LOSS)                                                                                                                                                                                                                                                                                                                     |   | $                  | (1,449,867 | )      |              | $      | (198,848 | ) |   |   | (2,221,921 | ) |   | $ | (870,579 | ) |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| PER SHARE DATA                                                                                                                                                                                                                                                                                                                 |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted net loss per share                                                                                                                                                                                                                                                                                           |   | $                  | (0.10      | )      |              | $      | (0.01 | ) |   |   | (0.16 | ) |   | $ | (0.06 | ) |
|                                                                                                                                                                                                                                                                                                                           |   |               |       |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic and diluted weighted-average shares outstanding                                                                                                                                                                                                                                                                          |   |               | 14,570,428 |   |              |   | 13,277,096 |   |   |   | 14,064,506 |   |   |   | 13,413,768 |   |

----

|                                                                                                                                           |   | Nine Months Ended |            |
|------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------------|
|                                                                                                                                           |   | September 30,     |            |
|                                                                                                                                           |   | 2010              |            |   | 2009 |   |
|                                                                                                                                           |   |              |            |   |   |   |
|                                                                                                                                           |   | (Unaudited)       |            |   | (Unaudited) |   |
| CASH FLOWS FROM OPERATING ACTIVITIES                                                                                                           |   |              |            |   |   |   |
| Net loss                                                                                                                                       |   | $                 | (2,221,921      | ) |   | $ | (870,579 | ) |
|     Adjustments to reconcile net loss to net cash provided by (used in) operating activities                               |   |              |            |   |   |   |   |   |
|     Depreciation and Amortization                                                                                          |   |              | 183,767         |   |   |   | 188,989 |   |
|     Stock based compensation                                                                                               |   |              | -               |   |   |   | 45,000 |   |
|     Loss on debt restructuring                                                                                             |   |              | 1,225,748       |   |   |   | - |   |
|     Beneficial conversion cost in connection with issuance of common stock                                                 |   |              |            |   |   |   |   |   |
|      in exchange for interest payable.                                                                                |   |              | 88,083          |   |   |   | - |   |
|     Loss in connection with issuance of 10% convertible preferred  stock valued at $1,665,788 in exchange        |   |              |            |   |   |   |   |   |
|      for 8% convertible debentures with an outstanding balance of $1,045,000 at the date of exchange                  |   |              | 620,788         |   |   |   | - |   |
|     Interest expense - amortization of debt discount                                                                       |   |              | -               |   |   |   | 139,992 |   |
|     Amortization of deferred finance cost                                                                                  |   |              | -               |   |   |   | 113,010 |   |
|     Loss on debenture valuation adjustment                                                                                 |   |              |  -         |   |   |   | 58,493 |   |
|     Debenture valuation adjustment                                                                                         |   |              | (61,316         | ) |   |   | - |   |
| Consultant compensation to be paid with 275,000 shares of common stock, not yet issued                                                         |   |              |  140,250   |   |   |   |  - |   |
| Changes in operating assets and liabilities                                                                                                    |   |              |            |   |   |   |   |   |
| (Decrease) in accrued liquidated damages                                                                                                       |   |              | (110,000        | ) |   |   | - |   |
| (Increase) decrease in accounts receivable                                                                                                     |   |              | (1,824          | ) |   |   | 178,280 |   |
| Decrease in security deposits and other assets                                                                                                 |   |              | -               |   |   |   | 7,077 |   |
| (Decrease) in accounts payable and accrued expenses                                                                                            |   |              | (63,846         | ) |   |   | (1,064 | ) |
| Increase in accrued interest                                                                                                                   |   |              | 143,475         |   |   |   | 100,943 |   |
| Deferred revenue                                                                                                                               |   |              | 19,621          |   |   |   | 79 |   |
|           Net Cash Used in Operating Activities                                              |   |              | (37,175         | ) |   |   | (39,780 | ) |
|                                                                                                                                           |   |              |            |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES                                                                                                           |   |              |            |   |   |   |   |   |
| Acquisition of property and equipment and increase in software development                                                                     |   |              | (16,357         | ) |   |   | (1,390 | ) |
|         Net Cash Used in Investing Activities                                                          |   |              | (16,357         | ) |   |   | (1,390 | ) |
| CASH FLOWS FROM FINANCING ACTIVITIES                                                                                                           |   |              |            |   |   |   |   |   |
|   Loans from shareholders toward the planned issuance of common stock                                                      |   |              | 47,500          |   |   |   | - |   |
|         Net Cash Provided by Financing Activities                                                      |   |              | 47,500          |   |   |   | - |   |
| (DECREASE)  IN CASH AND CASH EQUIVALENTS                                                                                             |   |              | (6,032          | ) |   |   | (41,170 | ) |
|                                                                                                                                           |   |              |            |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS                                                                                                                      |   |              |            |   |   |   |   |   |
|     Beginning of period                                                                                                    |   |              | 58,039          |   |   |   | 70,591 |   |
|     End of period                                                                                                          |   | $                 | 52,007          |   |   | $ | 29,421 |   |
|                                                                                                                                           |   |              |            |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                                             |   |              |            |   |   |   |   |   |
|     Cash paid during the period for:                                                                                       |   |              |            |   |   |   |   |   |
|           Income Taxes                                                                       |   | $                 | 714             |   |   | $ | 2,194 |   |
|           Interest                                                                           |   | $                 | 1,545           |   |   | $ | - |   |
| NON-CASH FINANCING ACTIVITIES                                                                                                                  |   |              |            |   |   |   |   |   |
|           Issuance of 978,703 shares of common stock in settlement of accrued interest payable to |   |              |            |   |   |   |   |   |
|               holders of 8% convertible debentures                            |   | $                 | 489,351         |   |   | $ |  - |   |
|                                                                                                                                           |   |              |            |   |   |   |   |   |
|  Conversion of 8% Convertible Debentures into 30,000                                                                                      |   |              |            |   |   |   |   |   |
| shares of common stock                                                                                                                         |   | $                 |  15,000    |   |   | $ |  - |   |
|                                                                                                                                           |   |              |            |   |   |   |   |   |
|  Issuance of 2,090,000 shares of Series A Preferred Stock                                                                                 |   |              |            |   |   |   |   |   |
| in exchange for 8% Convertible Debentures                                                                                                      |   | $                 |  1,045,000 |   |   | $ |  - |   |
|                                                                                                                                           |   |              |            |   |   |   |   |   |
|  Reversal of Mandatory Prepayment balance in                                                                                              |   |              |            |   |   |   |   |   |
| connection with Debenture Amendment and Exchange                                                                                               |   |              |            |   |   |   |   |   |
| Agreements                                                                                                                                     |   | $                 |  51,989    |   |   | $ |  - |   |

----

----

----

----

----

----

----

| Stock Options Outstanding                 |   |   |    |
|-------------------------------------------|--------|--------|---------|
| Outstanding at January 1, 2009            |   |   | 100,000 |   |
| Granted                                   |   |   | 0       |   |
| Exercised                                 |   |   | 0       |   |
| Outstanding at December 31, 2009          |   |   | 100,000 |   |
| Options exercisable at December 31, 2009  |   |   | 100,000 |   |
|                                      |   |   |    |
| Options outstanding at January 1, 2010    |   |   | 100,000 |   |
| Granted                                   |   |   | 0       |   |
| Exercised                                 |   |   | 0       |   |
| Outstanding at September 30, 2010         |   |   | 100,000 |   |
| Options exercisable at September 30, 2010 |   |   | 100,000 |   |

----

|                                                  |   |             |       |   | Avergage Exercise |   |   | Weighted Avg Remaining Contractual Term |   |
|-------------------------------------------------------|--------|------------------|------------|--------|-------------------|--------|--------|-----------------------------------------|--------|
| Class A and B Warrants                                |   | Number of Shares |       |   | Price per Share   |   |   | In Years                                |   |
|                                                  |   |             |       |   |              |   |   |                                    |   |
| Outstanding at December 31, 2009 – Class A      |   |             | 3,523,668  |   |              |   | 1.42   |                                    |   |   | 3.00 |   |
| Outstanding at December 31, 2009 – Class B      |   |             | 7,047,335  |   |              |   | 1.42   |                                    |   |   | 3.00 |   |
| Total Outstanding Warrants – December 31, 2009  |   |             | 10,571,003 |   |              |   | 1.42   |                                    |   |   | 3.00 |   |
| Exercisable at December 31, 2009                      |   |             | 10,571,003 |   |              |   | 1.42   |                                    |   |   | 3.00 |   |
|                                                  |   |             |       |   |              |   |   |                                    |   |   |   |   |
| Exchange of Class B warrants                          |   |             | (2,910,000 | )      |              |   |   |                                    |   |   |   |   |
| Granted-Class B-6/16/10                               |   |             | 3,363,200  |   |              |   | 1.23   |                                    |   |   | 2.75 |   |
| Exchange of Class B warrants                          |   |             | (2,090,000 | )      |              |   |   |                                    |   |   |   |   |
| Granted-Class B-8/3/10                                |   |             | 2,466,200  |   |              |   | 1.00   |                                    |   |   | 3.00 |   |
| Exercised                                             |   |             | -          |   |              |   |   |                                    |   |   |   |   |
| Forfeited                                             |   |             | -          |   |              |   |   |                                    |   |   |   |   |
| Outstanding at September 30, 2010 – Class A     |   |             | 3,523,669  |   |              |   | 0.75   |                                    |   |   | 1.20 |   |
| Outstanding at September 30, 2010 – Class B     |   |             | 7,876,735  |   |              |   | 1.29   |                                    |   |   | 2.71 |   |
| Total Outstanding Warrants – September 30, 2010 |   |             | 11,400,404 |   |              |   | 1.13   |                                    |   |   | 2.24 |   |
| Exercisable at September 30, 2010                     |   |             | 11,400,404 |   |              |   | 1.13   |                                    |   |   | 2.24 |   |

|                           |   | September 30, |    |   | December 31, |   |    |  Estimated Useful Life in |   |
|--------------------------------|--------|---------------|---------|--------|--------------|--------|---------|--------------------------------|--------|
|                           |   | 2010          |    |   | 2009         |   |    | Years                          |   |
| Furniture and office equipment |   | $             | 198,787 |   |         | $      | 186,869 |                           |   |   | 5 |   |
| Computer software              |   |          | 112,183 |   |         |   | 109,244 |                           |   |   | 3 |   |
| Leasehold Improvements         |   |          | 21,294  |   |         |   | 21,294  |                           |   |   | Life of Lease |   |
|                           |   |          | 332,264 |   |         |   | 317,407 |                           |   |   |   |   |
|                           |   |          |    |   |         |   |    |                           |   |   |   |   |
| Less: Accumulated Depreciation |   |          | 277,892 |   |         |   | 263,425 |                           |   |   |   |   |
|                           |   |          |    |   |         |   |    |                           |   |   |   |   |
|                           |   | $             | 54,372  |   |         | $      | 53,982  |                           |   |   |   |   |

|                           |   | September 30, |    |   | December 31, |   |    |  Estimated Useful Life in |   |
|--------------------------------|--------|---------------|---------|--------|--------------|--------|---------|--------------------------------|--------|
|                           |   | 2010          |    |   | 2009         |   |    |  Years                    |   |
| Software Development Costs     |   | $             | 678,700 |   |         | $      | 677,200 |                           |   |   | 3 |   |
| Less: Accumulated Amortization |   |          | 519,161 |   |         |   | 349,862 |                           |   |   |   |   |
|                           |   |          |    |   |         |   |    |                           |   |   |   |   |
|                           |   | $             | 159,539 |   |         | $      | 327,338 |                           |   |   |   |   |

----

|                                  |   |  September 30,  |       |   |  December 31, |   |
|---------------------------------------|--------|---------------------------|------------|--------|--------------------|--------|
|                                  |   | 2010                      |       |   | 2009               |   |
| Current assets and liabilities:       |   |                      |       |   |               |   |
| Accounts receivable                   |   | $                         | (71,000    | )      |               | $      | (71,000 | ) |
| Accounts payable and accrued expenses |   |                      | 52,000     |   |               |   | 86,000 |   |
| Deferred revenues                     |   |                      | 157,000    |   |               |   | 149,000 |   |
|                                  |   |                      | 138,000    |   |               |   | 164,000 |   |
| Valuation allowance                   |   |                      | (138,000   | )      |               |   | (164,000 | ) |
| Net current deferred tax asset        |   | $                         | -          |   |               | $      | - |   |
|                                  |   |                      |       |   |               |   |   |   |
| Noncurrent assets and liabilities:    |   |                      |       |   |               |   |   |   |
| Net operating loss carryforwards      |   | $                         | 2,479,000  |   |               | $      | 2,370,000 |   |
| Depreciation                          |   |                      | (7,000     | )      |               |   | (68,000 | ) |
|                                  |   |                      | 2,472,000  |   |               |   | 2,302,000 |   |
| Valuation allowance                   |   |                      | (2,472,000 | )      |               |   | (2,302,000 | ) |
| Net deferred tax asset                |   | $                         | -          |   |               | $      | - |   |

----

| 2011   |   | $      | 77,734  |   |
|--------|--------|--------|---------|--------|
| 2012   |   |   | 82,660  |   |
| 2013   |   |   | 83,308  |   |
| 2014   |   |   | 25,250  |   |
|   |   | $      | 268,952 |   |

----

|                      |   | September 30, 2010 |      |   | December 31, 2009 |   |
|---------------------------|--------|-------------------------|-----------|--------|-------------------|--------|
| 8% Convertible Debentures |   | $                       | 1,430,793 |   |              | $      | 2,604,098 |   |
|                      |   |                    |      |   |              |   |   |   |

----

----

----

|                                |   | Three months ended |       |   |   |   |     |          |   |   | Nine months ended |   |   |   |   |   |   |   |
|-------------------------------------|--------|--------------------|------------|--------|--------|--------|----------|---------------|--------|--------|-------------------|--------|--------|--------|--------|--------|--------|--------|
|                                |   | September 30,      |       |   |   |   |     |          |   |   | September 30,     |   |   |   |   |   |   |   |
|                                |   | 2010               |       |   | 2009   |   |     | Change $ |   |   | Change %     |   |   | 2010   |   |   | 2009   |   |   | Change $ |   |   | Change % |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                            |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Products                            |   | $                  | 96,592     |   |   | $      | 105,065  |          |   | $      | (8,473            | )      |   |   | -8     | %      |   | $      | 550,584 |   |   | $ | 491,207 |   |   | $ | 59,377 |   |   |   | 12 | % |
| Services                            |   |               | 207,523    |   |   |   | 175,333  |          |   |   | 32,190            |   |   |   | 18     | %      |   |   | 613,908 |   |   |   | 514,044 |   |   |   | 99,864 |   |   |   | 19 | % |
| Total Revenues                      |   |               | 304,115    |   |   |   | 280,398  |          |   |   | 23,717            |   |   |   | 8      | %      |   |   | 1,164,492 |   |   |   | 1,005,251 |   |   |   | 159,241 |   |   |   | 16 | % |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Direct Costs                        |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Equipment Purchases                 |   | $                  | 11,419     |   |   | $      | 19,486   |          |   | $      | (8,067            | )      |   |   | -41    | %      |   | $      | 75,732 |   |   | $ | 163,985 |   |   | $ | (88,253 | ) |   |   | -54 | % |
| Royalties & Consulting          |   |               | 7,500      |   |   |   | 9,374    |          |   |   | (1,874            | )      |   |   | -20    | %      |   |   | 28,619 |   |   |   | 39,576 |   |   |   | (10,957 | ) |   |   | -28 | % |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total Direct Costs                  |   | $                  | 18,919     |   |   | $      | 28,860   |          |   | $      | (9,941            | )      |   |   | -34    | %      |   | $      | 104,351 |   |   | $ | 203,561 |   |   | $ | (99,210 | ) |   |   | -49 | % |
| % of total revenues                 |   |               | 6          | %      |   |   | 10       | %             |   |   |              |   |   |   |   |   |   |   | 9 | % |   |   | 20 | % |   |   |   |   |   |   |   |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross margin                        |   | $                  | 285,196    |   |   | $      | 251,538  |          |   | $      | 33,658            |   |   |   | 13     | %      |   | $      | 1,060,141 |   |   | $ | 801,690 |   |   | $ | 258,451 |   |   |   | 32 | % |
| % of total revenues                 |   |               | 94         | %      |   |   | 90       | %             |   |   |              |   |   |   |   |   |   |   | 91 | % |   |   | 80 | % |   |   |   |   |   |   |   |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Research and development costs      |   | $                  | 64,898     |   |   | $      | 49,308   |          |   | $      | 15,590            |   |   |   | 32     | %      |   | $      | 170,628 |   |   | $ | 150,441 |   |   | $ | 20,187 |   |   |   | 13 | % |
| % of total revenues                 |   |               | 21         | %      |   |   | 18       | %             |   |   |              |   |   |   |   |   |   |   | 15 | % |   |   | 15 | % |   |   |   |   |   |   |   |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Sales and marketing expenses        |   | $                  | 20,088     |   |   | $      | 26,271   |          |   | $      | (6,183            | )      |   |   | -24    | %      |   | $      | 110,195 |   |   | $ | 101,340 |   |   | $ | 8,855 |   |   |   | 9 | % |
| % of total revenues                 |   |               | 7          | %      |   |   | 9        | %             |   |   |              |   |   |   |   |   |   |   | 9 | % |   |   | 10 | % |   |   |   |   |   |   |   |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| General and administrative expenses |   | $                  | 320,994    |   |   | $      | 316,020  |          |   | $      | 4,974             |   |   |   | 2      | %      |   | $      | 952,665 |   |   | $ | 1,008,094 |   |   | $ | (55,429 | ) |   |   | -5 | % |
| % of total revenues                 |   |               | 106        | %      |   |   | 113      | %             |   |   |              |   |   |   |   |   |   |   | 82 | % |   |   | 100 | % |   |   |   |   |   |   |   |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest expense                    |   | $                  | 39,682     |   |   | $      | 53,754   |          |   | $      | (14,072           | )      |   |   | -26    | %      |   | $      | 145,060 |   |   | $ | 353,944 |   |   | $ | (208,884 | ) |   |   | -59 | % |
| % of total revenues                 |   |               | 13         | %      |   |   | 19       | %             |   |   |              |   |   |   |   |   |   |   | 12 | % |   |   | 35 | % |   |   |   |   |   |   |   |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income (expenses)             |   | $                  | (1,149,151 | )      |   | $      | (5,033   | )             |   | $      | (1,114,118        | )      |   |   | 22732  | %      |   | $      | (1,763,264 | ) |   | $ | (58,450 | ) |   | $ | (1,704,814 | ) |   |   | 2917 | % |
| % of total revenues                 |   |               | -378       | %      |   |   | -2       | %             |   |   |              |   |   |   |   |   |   |   | -151 | % |   |   | -6 | % |   |   |   |   |   |   |   |   |
|                                |   |               |       |   |   |   |     |          |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net income (loss)                   |   | $                  | (1,309,617 | )      |   | $      | (198,848 | )             |   | $      | (1,110,769        | )      |   |   | 559    | %      |   | $      | (2,081,671 | ) |   | $ | (870,579 | ) |   | $ | (1,211,092 | ) |   |   | 139 | % |
| % of total revenues                 |   |               |       |   |   |   | -71      | %             |   |   |              |   |   |   |   |   |   |   |   |   |   |   | -87 | % |   |   |   |   |   |   |   |   |

----

----

|                                      |   | Nine months ended September 30, |       |
|-------------------------------------------|--------|---------------------------------|------------|
|                                      |   | 2010                            |       |   | 2009 |   |   | Change $ |   |   | Change % |   |
|                                      |   |                            |       |   |   |   |   |   |   |   |   |   |
| Cash and cash equivalents                 |   | $                               | 52,008     |   |   | $ | 29,421 |   |   |   | 22,587 |   |   |   | 76 | % |
| Working capital deficit                   |   |                            | (2,442,139 | ) |   |   | (3,949,863 | ) |   |   | (1,507,724 | ) |   |   | (38 | %) |
| Net cash used in operating activities     |   |                            | (37,175    | ) |   |   | (39,780 | ) |   |   | (2,605 | ) |   |   | (6 | %) |
| Net cash used in investing activities     |   |                            | (16,357    | ) |   |   | (1,390 | ) |   |   | (14,967 | ) |   |   | (1076 | %) |
| Net cash provided by financing activities |   |                            | 47,500     |   |   |   | - |   |   |   | 47,500 |   |   |   | 100 | % |

----

| Provider of Services |   | Shares of Common Stock |    | Type of Services |   | Cost Basis         |   | Date of Issuance |
|----------------------|--------|------------------------|---------|------------------|--------|--------------------|--------|------------------|
| Nathan Retek         |   |                   | 150,000 |             |   | Investor Relations |   | $                | 76,500 |   |   | 8/3/2010 |
| Shmilly Gruenstein   |   |                   | 125,000 |             |   | Investor Relations |   | $                | 63,750 |   |   | 8/3/2010 |

----

| 31.1   | Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).                    |
|--------|---------------------------------------------------------------------------------------------------------------|
|   |                                                                                                          |
| 31.2   | Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).                    |
|   |                                                                                                          |
| 32.1   | Certification of the Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. |
|   |                                                                                                          |
| 32.2   | Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350. |

----

| Date: November 18,  2010 | CYBRA Corporation |
|------------------------------------|-------------------|
|                               |              |   |
|                               | By:               | /s/ Harold Brand |
|                               |              | Harold Brand |
|                               |              | Chief Executive Officer and |
|                               |              | Interim Chief Financial Officer |

----