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, 2013
Sep. 30, 2012
Cash Flows from Operating Activities:    
Net loss $ (1,513,834) $ (58,430)
Adjustments to reconcile net loss from operations to cash provided by (used in) operating activities:    
Gain on sale of product line (41,902) (15,408)
Stock based compensation expense 87,542 206,928
Depreciation 12,318 16,081
Amortization 181,260 181,260
Provision for doubtful accounts 61,606 (14,525)
Deferred income taxes 292,953 0
Changes in assets and liabilities:    
Accounts receivable 1,195,996 (600,489)
Inventories (206,931) (447,736)
Prepaid expenses 101,389 (24,027)
Accounts payable (288,463) 211,281
Accrued liabilities & expenses (159,940) 84,040
Deferred revenue 89,834 116,006
Customer deposits 347,935 119,994
Deferred lease liability (1,618) 13,290
Net Cash Provided By (Used In) Operating Activities 158,145 (211,735)
Cash Flows From Investing Activities:    
Purchase of property and equipment (18,633) (38,114)
Deposit of restricted cash (382,000) 0
Net Cash Used In Investing Activities (400,633) (38,114)
Cash Flows From Financing Activities:    
Payments on note payable (121,797) (49,035)
Proceeds from exercise of warrants 0 405,000
Net Cash (Used In) Provided By Financing Activities (121,797) 355,965
Net (decrease) increase in cash and cash equivalents (364,285) 106,116
Cash and cash equivalents at the beginning of the period 1,163,758 961,091
Cash and cash equivalents at the end of the period 799,473 1,067,207
Supplemental Disclosures of Cash Flow Information:    
Cash paid during the period for interest expense 20,622 4,889
Non-cash transactions:    
Accretion of discount on redeemable preferred stock 680,643 519,578
Accretion of dividends on redeemable preferred stock 176,594 203,674
Conversion of preferred stock to common stock $ 2,681,878 $ 0