[hedgehog]

I've been in similar situations. As others here have pointed out your time is the most valuable thing on the line here and there's a big danger of wasting a lot of it if you sue. Here's one way you can handle it:

1. The quality of the work is probably middling to poor...

2. ... so figure out how much of your time $2k and the code is worth to you.

3. Hopefully you're friendly with an attorney. Print out all of your documentation for this deal, sort it chronologically, and run it by them to see where they think you stand.

4. Provided #3 turned out okay have your friend send a letter asking for the deliverables or a refund.

5. Be prepared to either walk away or negotiate an agreement both of you are equally dissatisfied with.

6. If you walk away be careful about using the binaries you've got, this guy may have rights to the profits even with everything else that's happened.