Annual report pursuant to Section 13 and 15(d)

Consolidated Statements of Cash Flows (Unaudited)

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Consolidated Statements of Cash Flows (Unaudited) (USD $)
 12 Months Ended
Dec. 31, 2012
Dec. 31, 2011
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (5,171,000) $ (3,700,000)
Adjustments to reconcile net loss to net cash used in operating activities:    
Amortization of intangible assets 3,000 23,000
Stock compensation expense for options and warrants issued to employees and non-employees 929,000 307,000
Issuance of shares for services 1,454,000 2,373,000
Amortization of debt discounts 40,000 284,000
Change in value of warrant and derivative liabilities 1,220,000 (854,000)
Changes in operating assets and liabilities:    
Inventory (47,000) (12,000)
Other assets (20,000) 83,000
Accounts payable and accrued liabilities 605,000 533,000
Net cash used in operating activities (987,000) (963,000)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Acquisition of fixed assets (2,000) 0
Net cash used by investing activities (2,000) 0
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from the exercise of stock options and warrants 0 24,000
Proceeds from notes payable 930,000 977,000
Repayment of note payable 0 0
Net cash provided by financing activities 930,000 1,001,000
Minority Interest 90,000 0
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 31,000 38,000
CASH AND CASH EQUIVALENTS - Beginning of period 92,000 54,000
CASH AND CASH EQUIVALENTS - End of period $ 123,000 $ 92,000