Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENT OF CASH FLOWS

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CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
 12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (3,354,227) $ (4,526,250)
Net loss from discontinued operations (371,307) (840,649)
Net loss from continuing operations (2,982,920) (3,685,601)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation expense 60,251 71,029
Amortization of intangible asset 178,571 357,142
Amortization of debt discount 58,801 153,617
Gain (loss) on extinguishment of debt   (822,205)
Impairment of assets held for sale 186,068  
Impairment of intangible asset 1,517,859  
Gain (loss) on disposal of assets (60,743)  
Bad debt expense 5,148  
Impairment of goodwill 390,659 390,659
Stock-based compensation 96,929 231,524
Non-cash expenses exchanged for services 25,500  
Changes in operating assets and liabilities    
(Increase) decrease in receivables (3,838) 17,890
(Increase) decrease in prepaid and other current assets 105,136 (27,472)
(Increase) decrease in inventory (7,065) (73,085)
Increase (decrease) in income taxes payable 100  
Increase (decrease) in accounts payable 5,318 76,904
Increase (decrease) in accrued liabilities (41,774) (311,025)
Increase (decrease) in deferred revenue (58,165) 58,165
Increase (decrease) in interest payable 153,788 6,009
Cash used in operating activities from continuing operations (639,500) (1,912,039)
Cash used in operating activities from discontinued operations (231,356) (779,599)
Cash used in operating activities (871,906) (2,691,638)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment 1,399 11,007
Proceeds from sale of property and equipment 31,100  
Cash used in investing activities from continuing operations 29,701 (11,007)
Cash used in investing activities from discontinued operations 10,503 (33,937)
Cash used in investing activities 40,204 (44,944)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of unsecured notes payable   2,244,003
Proceeds from issuance of senior secured notes payable 753,000  
Repayment of senior subordinated notes payable   500,000
Proceeds from issuance of common shares with warrants, net 88,000 366,324
Proceeds from issuance of preferred shares, net   509,963
Repayment of loan payable 19,902 45,528
Cash provided by (used in) financing activities 821,098 2,574,762
Net change in cash and cash equivalents (10,604) (161,820)
Cash and cash equivalents, beginning of period, including discontinued operations 25,044 186,864
Cash and cash equivalents, end of period $ 14,440 $ 25,044