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 $)
 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (1,572,599) $ (1,591,546)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation and amortization 57,168 77,025
Accretion of interest and amortization of debt issue costs 46,159   
Stock-based compensation expense 20,090 81,168
Amortization of third party fees paid in restricted common stock 79,575   
Change in fair value of warrant derivative liability (135,300) (84,021)
Changes in operating assets and liabilities:    
Accounts receivable 27,511 74,879
Inventories 93,116 (29,772)
Accounts payable 304,891 276,450
Accrued employee compensation 2,260 1,946
Deferred revenue and other accrued expenses 50,520 (124,663)
Prepaid expenses and other current assets (157,639) 119,147
Net cash used in operating activities (1,184,248) (1,199,387)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from stock option exercises    43,980
Restricted cash    20,014
Funds held for private placement 295,000   
Payments on convertible debt (43,000)   
Net proceeds from the issuance of equity securities 730,389 816,963
Net cash provided by financing activities 982,389 880,957
Change in cash and cash equivalents (201,859) (318,430)
Cash and cash equivalents, beginning of period 222,775 552,849
Cash and cash equivalents, end of period 20,916 234,419
SUPPLEMENTAL INFORMATION:    
Income taxes paid 1,900 1,900
Issuance of common stock dividend on preferred stock 161,557 76,017
Issuance of common stock warrants to placement agent    94,313
Issuance of common stock for services 155,575   
Convertible debt exchanged for common stock 387,547   
Series B dividends paid in cash    42,037
Beneficial conversion feature on convertible preferred stock    $ 304,823