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
Dec. 31, 2011
Dec. 31, 2010
Net loss $ (1,902,239) $ (2,179,017)
Amortization of debt discounts and financing costs 191,357 493,970
Gain on sale of product line (829,296)  
Impairment of goodwill 3,100,000  
Impairment of investment   8,000
(Gain) loss on derivative liability (172,476) 20,476
(Gain) loss on disposal of property and equipment (2,165) 103,763
Provision for lease loss 59,937  
Stock based compensation expense 168,887 291,052
Depreciation 26,896 111,701
Amortization 241,680 241,680
Provision for doubtful accounts (51,070) 196,108
Accounts receivable, trade and other (455,756) (811,271)
Inventories 156,488 307,181
Prepaid expenses 5,662 48,471
Other assets   52,081
Deferred revenue 4,264 (52,891)
Customer deposits (78,406)  
Accounts payable, accrued expenses, net (929,244) (193,947)
Deferred lease liability 35,834 27,717
Net Cash Used In Operating Activities (429,647) (1,334,926)
Purchase of property and equipment   (4,800)
Proceeds from disposal of property and equipment 6,645  
Deposit on restricted cash (91,000)  
Proceeds from sale of product line 1,000,000  
Net Cash Provided By (Used In) Investing Activities 915,645 (4,800)
Repayments on line of credit   (387,000)
Proceeds from issuance of note payable 700,000  
Payments on note payable (84,800) 24,886
Payments on note payable-related party (25,114)  
Repurchase of warrants   (1,000)
Proceeds from the issuance of redeemable preferred stock 1,355,000 1,335,000
Repayment of convertible debentures (1,606,023)  
Net Cash Provided By Financing Activities 339,063 971,886
Net Increase (Decrease) In Cash and Cash Equivalents 825,061 (367,840)
Cash and cash equivalents at the beginning of the year 136,030 503,870
Cash and cash equivalents at the end of the year 961,091 136,030
Cash paid during the year for interest 181,262 313,525
Issuance of note payable in conjunction with warrant cancellation 50,000  
Issuance of common stock as consideration for accounts payable   77,695
Beneficial conversion feature of redeemable convertible preferred stock 427,895 394,350
Value of warrants issued with redeemable convertible preferred stock 427,895 394,350
Accretion of discount on redeemable preferred stock 440,019 135,638
Accretion of dividends on redeemable preferred stock 259,876 129,083
Retirement of derivative liability related to warrant obligation 1,729,299  
Conversion of preferred stock to common stock $ 375,000