Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
 9 Months Ended
Sep. 30, 2013
Sep. 30, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (2,518,624) $ (2,368,637)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation and amortization 62,955 82,388
Accretion of interest and amortization of debt issue costs 391,625 46,159
Stock-based compensation expense 120,248 116,816
Amortization of third party fees paid in restricted common stock 396,525 137,522
Change in fair value of warrant derivative liability (349,472) (36,322)
Changes in operating assets and liabilities:    
Accounts receivable 15,351 (25,708)
Inventories 71,894 163,360
Accounts payable 1,857 399,071
Accrued employee compensation 46,177 (49,057)
Deferred revenue (30,854)   
Other accrued expenses and liabilities 258,806 126,403
Prepaid expenses and other current assets (27,611) (211,443)
Net cash used in operating activities (1,561,123) (1,619,448)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment (55,052)   
Net cash used in investing activities (55,052)   
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payment of cash dividends (45,736)   
Net proceeds from convertible debt and short term loans 896,503 405,000
Payments on convertible debt (5,968) (93,000)
Payment of dividends (60,000) (67,500)
Net proceeds from the issuance of common stock    377,459
Net proceeds from the issuance of convertible preferred stock 896,595 825,003
Net cash provided by financing activities 1,681,394 1,446,962
Change in cash and cash equivalents 65,219 (172,486)
Cash and cash equivalents, beginning of period 1,461 222,775
Cash and cash equivalents, end of period 66,680 50,289
SUPPLEMENTAL INFORMATION:    
Income taxes paid in cash    1,900
Issuance of common stock dividends on preferred stock    249,907
Convertible debt exchanged for Series J convertible preferred stock 1,018,000   
Issuance of common stock for services 320,000 324,908
Convertible debt exchanged for common stock    387,547
Non-cash payment of related party debt 25,200   
Deemed dividend on Series J convertible preferred stock $ 651,182 $ 190,891