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 $)
 9 Months Ended
Sep. 30, 2014
Sep. 30, 2013
Cash flows from operating activities    
Net loss $ (6,764,363) $ (2,861,602)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock based compensation 3,161,473 729,102
Amortization of license fees 4,412 4,412
Amortization of discount of notes payable 412,951 17,193
Amortization of debt issuance costs 243,821 63,491
Amortization of customer acquisition costs 81,862   
Depreciation expense 239,687 127,884
PIK interest 160,600   
Gain on forgiveness of liabilities    (80,656)
Change in assets and liabilities    
Increase in accounts receivable (484,252) (71,937)
(Increase) decrease in inventory (3,575,656) 37,993
Increase in prepaid expenses and other assets (3,400) (68,473)
Increase in accounts payable and accrued liabilities 1,210,991 1,021,772
Increase in deferred revenue 3,603,840   
Decrease in customer credits (201,000)   
Net cash used in operating activities (1,909,034) (1,080,821)
Cash flows used in investing activities    
Purchase of equipment (124,514)   
Net cash used in investing activities (124,514)   
Cash flows from financing activities    
Payment of debt issuance costs (747,968) (286,703)
Payment of equity issuance costs (45,325)   
Proceeds from notes payable 300,000   
Payment on note payable (600,000) (150,000)
Proceeds from the issuance of convertible promissory notes and related warrants 10,000,000 1,612,545
Proceeds from the issuance of common stock and related warrants 1,050,260   
Proceeds from the issuance of common stock upon warrant exercise 7,813   
Net cash provided by financing activities 9,964,780 1,175,842
Net increase in cash and cash equivalents 7,931,232 95,021
Cash and cash equivalents - beginning of period 509,605 189,367
Cash and cash equivalents - end of period 8,440,837 284,388
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid during the period for - Interest 10,853 9,250
Cash paid during the period for - Taxes 8,037 11,799
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS    
Equipment purchases included in accounts payable 229,500 112,000
Accrued sales credits included in customer acquisition costs 970,500   
Non cash debt issuance costs 1,121,500 252,905
Conversion of advances payable to debt    1,036,195
Conversion of debt and accrued interest to equity 539,525 866,211
Conversion of accounts payable and other liabilities to equity 381,169   
Conversion of accrued interest to debt $ 603,648 $ 305,496