That quote first appeared in the 10-K back in the spring and is repeated in the interum reports to assist with understanding need for the 2011 year. It's in the section Liquidity and Capital Resources and depicts status As of December 31, 2010. The quote you posted is followed by a very important sentence (which you left out).
"Management estimates that it will need $3,000,000 over the next twelve months to fund all of the Company’s current product development and marketing projects, including $1,000,000 to fund marketing programs for the Vera Temp thermometer. The Company expects to procure large purchase orders for its thermometer during 2011 from major retail customers; which, if these orders occur will greatly improve cash flow and lessen the need for outside financing.
So, your depiction of fraud and use of out-of-context quotation is once again, inaccurate (IMO).
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