Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
 12 Months Ended 36 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $ (9,497,116) $ (471,565) $ (9,999,431)
Adjustments to reconcile net loss to net cash used in operating activities:      
Stock based compensation 3,423,800 63,600 3,487,400
Stock issued for services 763,023    763,023
Amortization of license fees 5,883 5,882 17,647
Depreciation expense 16,743 45 16,788
Impairment of goodwill 3,555,304    3,555,304
Change in assets and liabilities      
Increase in accounts receivable (206,545)    (206,545)
Increase in inventory (30,622)    (30,622)
Increase in prepaid expenses and other assets (74,377)    (74,377)
Increase (decrease) in accounts payable and accrued liabilities 730,994 (28,216) 855,994
Decrease in accounts payable attributable to discontinued operations (147,301)    (147,301)
Net cash used in operating activities (1,460,214) (430,254) (1,762,120)
CASH FLOWS USED IN INVESTING ACTIVITIES:      
Purchase of license       (100,000)
Cash assumed in reverse merger 11,150    11,150
Purchase of equipment (1,404,567) (1,791) (1,406,358)
Net cash used in investing activities (1,393,417) (1,791) (1,495,208)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Net proceeds from related party advances 548,645 434,904 951,034
Proceeds from note payable 150,000    150,000
Proceeds from the issuance of preferred stock, net 483,500    483,500
Proceeds from the issuance of common stock, net 1,763,889 4,451 1,772,507
Net cash provided by financing activities 2,946,034 439,355 3,357,041
Net increase in cash and cash equivalents 92,403 7,310 99,713
Cash and cash equivalents - beginning of period 7,310      
Cash and cash equivalents - end of period 99,713 7,310 99,713
SUPPLEMENTAL CASH FLOW INFORMATION:      
Cash paid during the period for:Interest 2,687    2,687
Cash paid during the period for:Taxes         
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS      
Equipment purchases included in accounts payable $ 169,421    $ 169,421