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, 2013
Mar. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (779,369) $ (1,062,907)
Adjustments to reconcile net loss to net cash used in operating activities    
Depreciation and amortization 21,529 29,323
Accretion of interest and amortization of debt issue costs    46,159
Stock-based compensation expense 19,040 8,868
Amortization of third party fees paid in restricted common stock 105,000 31,950
Change in fair value of warrant derivative liability 45,445 42,012
Changes in operating assets and liabilities:    
Accounts receivable (61,755) 65,239
Inventories 32,509 47,718
Accounts payable (140,510) 238,839
Accrued employee compensation 34,640 44,329
Deferred revenue and other accrued expenses 129,775 (588)
Prepaid expenses and other current assets (23,801) (75,679)
Net cash used in operating activities (617,494) (584,737)
Purchases of property and equipment (1,531)   
Net cash used in investing activities (1,531)   
CASH FLOWS FROM FINANCING ACTIVITIES:    
Payment of cash dividends (60,000)   
Repayment of related party debt (31,118)   
Payments on convertible debt 155,000   
Proceeds from issuance of Series J convertible preferred stock 721,595   
Net proceeds from the issuance of common stock    377,454
Net cash provided by financing activities 785,477 377,454
Change in cash and cash equivalents 166,449 (207,283)
Cash and cash equivalents, beginning of period 1,461 222,775
Cash and cash equivalents, end of period 167,910 15,492
SUPPLEMENTAL INFORMATION:    
Income taxes paid    1,900
Accrued dividends on preferred stock 32,173 24,414
Convertible debt exchanged for Series J preferred stock: 1,018,000   
Issuance of Series J convertible preferred stock for interest 16,374   
Issuance of Series J convertible preferred stock for related party debt 25,200   
Issuance of Series J convertible preferred stock for board of director and other fees 54,126   
Issuance of common stock for services    85,950
Deemed dividend on Series J convertible preferred stock 582,548   
Convertible debt exchanged for common stock    $ 387,547