Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED STATEMENT OF CASH FLOWS

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (2,195,495) $ (1,542,936)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation expense 45,133 26,256
Amortization of intangible asset 178,570 178,571
Amortization of discount on notes payable 72,357  
Impairment of goodwill 390,659  
Stock-based compensation and other non-cash expense 163,721 49,693
Changes in operating assets and liabilities    
(Increase) decrease in receivables (79,830) (30,203)
(Increase) decrease in prepaid and other current assets (15,944) 1,408
(Increase) decrease in inventory (61,733) (149,623)
Increase (decrease) in accounts payable 6,194 160,109
Increase (decrease) in accrued liabilities (199,458) (60,182)
Cash used in operating activities (1,695,826) (1,366,907)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment 15,772 7,332
Cash from acquisition of subsidiary 3,355  
Cash used in investing activities (12,417) (7,332)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of unsecured notes payable 1,570,000  
Proceeds from issuance of senior secured notes payable   990,087
Repayment of senior subordinated notes payable 500,000  
Proceeds from issuance of preferred shares, net 509,963  
Repayment of loan payable 18,685 13,519
Cash provided by (used in) financing activities 1,561,278 976,568
Net change in cash and cash equivalents (146,965) (397,671)
Cash and cash equivalents, beginning of period 186,864 1,027,475
Cash and cash equivalents, end of period $ 39,899 $ 629,804