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 $)
 3 Months Ended
Mar. 31, 2014
Mar. 31, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (1,759,655) $ (779,369)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation and amortization 19,642 21,529
Accretion of interest and amortization of debt issue costs 210,129   
Stock-based compensation expense 18,896 19,040
Amortization of third party fees paid in restricted common stock 17,192 105,000
Change in fair value of warrant derivative liability 732,677 45,445
Changes in operating assets and liabilities:    
Accounts receivable (30,727) (61,755)
Inventories (50,076) 32,509
Accounts payable (89,987) (140,510)
Accrued employee compensation (17,982) 34,640
Deferred revenue and other accrued expenses (95,377) 129,775
Prepaid expenses and other current assets (58,647) (23,801)
Net cash used in operating activities (1,103,915) (617,497)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment (5,097) (1,531)
Net cash used in investing activities (5,097) (1,531)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payment of preferred stock dividends    (60,000)
Repayment of related party debt (19,933) (31,118)
Proceeds from convertible debt 270,000 155,000
Repayment of convertible debt (203,100)   
Repayment of non-convertible debt (109,695)   
Net proceeds from the issuance of convertible preferred stock 1,456,360 721,595
Net proceeds from the issuance of common stock 112,500   
Net cash provided by financing activities 1,506,132 785,477
Change in cash and cash equivalents 397,120 166,449
Cash and cash equivalents, beginning of period 31,417 1,461
Cash and cash equivalents, end of period 428,537 167,910
SUPPLEMENTAL INFORMATION:    
Income taxes paid      
Accrued dividends on preferred stock 44,987 32,173
Convertible debt exchanged for preferred stock 270,000 1,018,000
Issuance of convertible preferred stock for interest 30,000 16,374
Issuance of convertible preferred stock for related party debt    25,200
Issuance of convertible preferred stock for board of director and other fees 92,750 54,126
Deemed dividend on convertible preferred stock 1,280,066 582,548
Convertible debt exchanged for common stock $ 37,500