At March 31, 2009, our cash balance was $268,000. Our management believes that we have sufficient funds to continue operations until July 31, 2009. Our plan of operations includes:
1. Progress in various clinical trials and amendments to our 510(k) submission:

• In August 2006 the Company started the VITAL Trial, conducted by the Harvard Clinical Research Institute. The purpose of the trial was to gather sufficient data for an application to the FDA for clearance to market a claim of SCD risk stratification. In early 2009 the Company signed a research agreement with the University of Rochester and the Catalan Institute of Cardiovascular Sciences in Barcelona to collaborate on the PD2i analysis of data collected for the Merte Subita en Insufficiencia Cardiaca (MUSIC) trial. The collaboration is entitled "Prognostic Significance of Point Correlation Dimension Algorithm (PD2i) in Chronic Heart Failure." We plan to use the PD2i Cardiac Analyzer to retrospectively predict SCD in the congestive heart failure patients who participated in the MUSIC trial. The Company believes this analysis will be completed in the second half of 2009 and will yield a dataset sufficient to support an immediate amendment to the existing 510(k) submission to include a claim for SCD in the second half of 2009 at a fraction of the cost of the VITAL Trial. Consequently, at a meeting of our Board of Directors on March 19, 2009, we decided to suspend enrollment in the VITAL Trial in order to conserve capital pending the outcome of the collaboration involving data obtained from the MUSIC Trial.

• P2Di-VS - Trauma: We have completed the analysis of 325 civilian trauma files provided under the research and development agreement with the US Army and expect to submit an amendment to our 510(k) submission to the FDA for trauma triage and obtain clearance in the second half of 2009.

• PD2i OR/ICU - Operating Room/Intensive Care Unit Monitoring: The PD2i-OR/ICU is planned to be clinically tested in a collaborative effort with the University of Mississippi Medical Center. The results of this collaborative effort should support a 510(k) amendment to utilize a change in the PD2i value as an early warning to surgeons and anesthesiologists of a sharply deteriorating condition in a patient during surgery and also facilitate the assessment of ICU patients being discharged to a step-down unit. It is anticipated that this trial will be completed and an amendment to our existing 510(k) submission will be filed in the second half of 2009.

• PD2i Analyzer - Diabetic Autonomic Neuropathy: We have commenced a clinical trial at the University of Mississippi Medical Center, expected to be completed by the end of the second half of 2009, to establish the PD2i Analyzer's ability to diagnose diabetic autonomic neuropathy. The trial, Diabetic Autonomic Neuropathy Complexity Evaluation has a primary objective of evaluating the sensitivity and specificity of the PD2i Analyzer in assessing the presence and severity of diabetic autonomic neuropathy Upon completion of the trial, we will prepare and file an amendment to our existing 510(k) submission with the FDA.

2. Raising additional capital with which to fund ongoing operations and successfully commencing revenue-generating activities.

3. Securing CE Mark clearance in Europe for the PD2i Cardiac Analyzer and PD2i-VS.

4. Maintaining the Company's selling, general and administrative expenses at approximately $150,000 to $250,000 per month.

However, we may not be successful in raising additional capital or in generating revenue. Furthermore, even if we raise additional capital and generate revenue, we may never achieve profitability or positive cash flow. If we are not able to timely and successfully raise additional capital and/or achieve profitability or positive cash flow, our operating business, financial condition, cash flows and results of operations may be materially and adversely affected.
Critical Accounting Estimates
The following are deemed to be the most significant accounting estimates affecting us and our results of operations:
Research and Development Costs
Research and development costs include payments to collaborative research partners and costs incurred in performing research and development activities, including wages and associated employee benefits, facilities and overhead costs. These are expensed as incurred.

Intellectual Property
Intellectual property, consisting of patents and other proprietary technology, are stated at cost and amortized on the straight-line basis over their estimated useful economic lives. Costs and expenses incurred in creating intellectual property are expensed as incurred. The cost of purchased intellectual property is capitalized. Software development costs are expensed as incurred.
Revenue Recognition
As a development-stage enterprise, we currently have no significant revenue. We have received FDA clearance for our first product (and will continue to seek CE Mark clearance in Europe); accordingly, we expect to recognize revenue as products are shipped or services are rendered. Accounting for Stock-Based Compensation
We recorded equity-based compensation expense for employees and nonemployees in accordance with the fair-value provisions of SFAS 123R, principally the result of granting stock options and warrants to employees with an exercise price below the fair value of the shares on the date of grant. Accounting for Derivative and Financial Instruments We evaluate financial instruments using the guidance provided by the EITF Issue No. 07-5 and apply the provisions thereof to the accounting of items identified as derivative financial instruments not indexed to our stock. Fair Value of Financial Instruments
The Company follows the provisions of Statement of Financial Accounting Standards No. 157 ("SFAS No. 157") "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value under Generally Accepted Accounting Principles ("GAAP") and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements.
The Company uses fair value measurements for determining the valuation of derivative financial instruments payable in shares of its common stock. This primarily involves option pricing models that incorporate certain assumptions and projections to determine fair value. These require management judgment. Results of Operations
The following table sets forth the amounts and percentages of total expenses represented by certain items reflected in our consolidated statements of operations for the dates shown below.
Three months ended March 31, 2009 compared to the three months ended March 31,

2008

                                                                Three months ended March 31,
                                                          2008                                2009
                                                       UNAUDITED)                         (UNAUDITED)
Revenue                                       $          -             0.0 %      $          -             0.0 %

Operating expenses:
Research and development                           242,000            21.0 %           199,000            26.1 %
Selling, general and administrative
expenses                                           444,000            38.5 %           580,000            76.1 %
Depreciation and amortization                       10,000             0.9 %            10,000             1.3 %
Interest expense                                   458,000            39.7 %            63,000             8.3 %

Total operating expenses                         1,154,000           100.0 %           852,000           111.8 %

Other income                                             -             0.0 %            90,000           -11.8 %

Loss before dividend                            (1,154,000 )        -100.0 %          (762,000 )        -100.0 %
Dividend related to Series A and B
preferred stock                                    (22,000 )          -1.9 %          (101,000 )         -13.2 %
Value of warrants issued in connection
with sales of Series B preferred stock            (718,000 )         -62.2 %          (320,000 )         -42.0 %

Total dividends for the benefit of
preferred stock                                   (740,000 )         -64.1 %          (421,000 )         -55.2 %

Net loss applicable to common stock           $ (1,894,000 )        -164.1 %      $ (1,183,000 )        -151.3 %

Net loss per common share-basic               $      (0.07 )                      $      (0.03 )

Weighted average number of shares of
common shares outstanding                       26,184,754                          35,010,142

Research and Development
Research and development costs decreased by $43,000 to $199,000 for the three months ended March 31, 2009. The principal reason for the decrease in 2009 was the suspension of the VITAL Trial which had costs of $160,000 in 2008 that were only partially offset by the University of Rochester Study with costs of $70,000 in 2009.
Selling, General and Administrative Expenses Selling, general and administrative costs were $580,000 for the three months ended March 31, 2009 compared with $444,000 for the three months ended March 31, 2008. In the first quarter of 2009 we incurred increased legal fees related to our patents in the

amount of $100,000 and had increased equity-based compensation of $90,000 related to our directors and consultants. Payroll and accounting costs decreased a total of $40,000 in the first quarter of 2009. Interest Expense
Interest expense was $63,000, for the quarter ended March 31, 2009 compared with $458,000 for the period ended March 31, 2008, $324,000 of interest expense was recognized in 2008 as a result of amortizing financing costs of notes sold and did not recur in 2009. Outstanding notes payable were significantly reduced in 2008 which contributed to an additional $93,000 decrease in 2009 interest expense as compared to 2008.
Liquidity and Capital Resources
As a development-stage company, we have no revenue and must raise capital to execute our business plan and commercialize our products. At March 31, 2009 we had a working capital deficiency of $2,221,000 and $268,000 in cash. Our working capital is not sufficient to meet our objectives.
Management recognizes that the Company must generate additional resources to successfully commercialize its products. Management plans include the sale of additional equity and debt securities. We have raised approximately $18,500,000 since our inception in 2000 in a series of private placements of our common stock, convertible preferred stock and convertible notes to accredited investors, a number of which are physicians.
However, we may not be successful in raising additional capital. Further, assuming that we raise additional funds, the Company may not achieve profitability or positive cash flow. If we are not able to timely and successfully raise additional capital and/or achieve profitability or positive cash flow, our operating business, financial condition, cash flows and results of operations may be materially and adversely affected. Going Concern
We have prepared our financial statements for the three months ended March 31, 2009 on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We incurred a net loss of $762,000 for the three months ended March 31, 2009 and had an accumulated deficit of $50,659,000 at March 31, 2009. We expect to incur substantial expenditures to further the commercial development of our products, and our working capital at March 31, 2009 will not be sufficient to meet such objectives. Management recognizes that the Company must generate additional cash to successfully commercialize its products. Management plans include the sale of additional equity or debt securities, alliances or other partnerships with entities interested in and resources to support the further development of the Company's products as well as other business transactions to assure continuation of our operations. Off-Balance Sheet Arrangements
We have not entered into any transaction, agreement or other contractual arrangement with an unconsolidated entity under which we have:
• A retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit;

• Liquidity or market risk support to such entity for such assets;

• An obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument; or

• An obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to us, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging, or research and development services with us.