Annual report pursuant to Section 13 and 15(d)

Statements of Cash Flows

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Statements of Cash Flows (USD $)
 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Cash flows from operating activities:    
Net loss $ (13,090,446) $ (7,678,868)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock retention awards   140,400
Accretion of discount on notes payable to shareholder 483,559  
Non-cash services paid in common stock 5,798,001  
Depreciation and amortization 75,190 79,516
Stock-based compensation expense 1,280,642 1,262,217
Changes in operating assets and liabilities:    
Accounts receivable, net 22,849 30,328
Income tax receivable   362,218
Inventory, net 351,414 (208,964)
Prepaid expenses and other current assets 26,407 153,290
Accounts payable and accrued expenses (57,500) 225,331
Deferred revenue (101,973) 139,774
Net cash used in operating activities (5,211,857) (5,494,758)
Cash flows from investing activities:    
Purchase of property and equipment (11,095)  
Net cash used in investing activities (11,095)  
Cash flows from financing activities:    
Borrowings under note payable to shareholder 750,000  
Borrowings under convertible secured note payable to shareholder 2,500,000 5,500,000
Payments on short term notes payable (140,029) (172,552)
Payment of income taxes associated with stock-based compensation (224,324)  
Net proceeds from issuance of common stock 11,888,336  
Purchase of treasury stock   (3,751)
Restricted cash released 203,197 210,697
Net cash provided by financing activities 14,977,180 5,534,394
Net increase in cash and cash equivalents 9,754,228 39,636
Cash and cash equivalents at beginning of year 171,739 132,103
Cash and cash equivalents at end of year 9,925,967 171,739
Interest paid 3,881 5,928
Non-cash investing and financing activities:    
Borrowings under short term notes payable for prepaid expense 134,914 126,738
Par value of restricted stock granted as stock compensation   140
Conversion of convertible note payable and accrued interest to common stock 11,275,196  
Discount on note payable to shareholder for warrants 483,559  
Par value of forfeited stock $ 5  
Fair market value of the 771,169 warrants issued to Griffin Securities as a reduction of paid-in capital from issuance of common stock 1,939,728  
Griffin Securities Inc
    
Non-cash investing and financing activities:    
Fair market value of the 771,169 warrants issued to Griffin Securities as a reduction of paid-in capital from issuance of common stock $ 1,850,806