Quarterly report pursuant to Section 13 or 15(d)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash flows from operating activities    
Net loss $ (4,782,644) $ (2,119,584)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock based compensation 2,693,204 465,983
Amortization of license fees 2,942 2,941
Amortization of discount of notes payable 138,945   
Amortization of debt issuance costs 130,045   
Amortization of customer acquisition costs 32,745  
Depreciation and amortization expense 99,496 85,256
Gain on forgiveness of liabilities    (80,656)
Change in assets and liabilities    
(Increase) decrease in accounts receivable (1,287,808) 12,600
(Increase) decrease in inventory (2,360,616) 37,993
Decrease (increase) in prepaid expenses and other assets 14,961 (103,827)
Increase in accounts payable and accrued liabilities 1,001,970 1,060,016
Increase in deferred revenue 2,760,028 37,060
Net cash used in operating activities (1,556,732) (602,218)
Cash flows used in investing activities    
Purchase of equipment (63,082)   
Net cash used in investing activities (63,082)   
Cash flows from financing activities    
Payment on note payable 300,000   
Proceeds from the issuance of convertible promissory notes and related warrants    510,045
Proceeds from the issuance of common stock and related warrants 1,004,935   
Proceeds from the issuance of common stock upon warrant exercise 7,813   
Net cash provided by financing activities 1,312,748 510,045
Net increase in cash and cash equivalents (307,066) (92,173)
Cash and cash equivalents - beginning of period 509,605 189,367
Cash and cash equivalents - end of period 202,539 97,194
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid during the period for - Interest 7,542 4,525
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS    
Equipment purchases included in accounts payable 112,000 112,000
Accrued sales credits included in customer acquisition costs 970,500   
Conversion of advances payable to debt    1,036,195
Conversion of debt and accrued interest to equity 283,446 134,975
Conversion of accounts payable and other liabilities to equity 381,169   
Conversion of accrued interest to debt $ 220,967