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 $)
 3 Months Ended
Mar. 31, 2013
Mar. 31, 2012
Cash flows from operating activities:    
Net income (loss) $ 4,081,000 $ (4,892,000)
Adjustments to reconcile net loss to cash used in operating activities:    
Gain (loss) on change in fair value of derivative - warrants 247,000 (741,000)
Gain (loss) on change in fair value of derivative preferred stock (4,780,000) 2,460,000
Warrant extension expense 0 2,316,000
Depreciation and amortization 1,000 54,000
Stock option compensation expense 77,000 114,000
Stock issued to directors and employees 29,000 302,000
Stock issued for services 10,000 30,000
Change in operating assets and liabilities:    
Receivables (391,000) (601,000)
Inventory 44,000 54,000
Prepaid expenses and other current assets 9,000 (4,000)
Other assets 0 4,000
Accounts payable and accrued expenses 346,000 165,000
Interest payable on dividends 43,000 86,000
Accrued interest payable 0 83,000
Deferred revenue (62,000) (512,000)
Net cash used in operating activities (346,000) (1,082,000)
Cash flows from investing activities:    
Capital expenditures 0 (13,000)
Net cash used in investing activities 0 (13,000)
Net increase (decrease) in cash and cash equivalents (346,000) (1,095,000)
Cash and cash equivalents at beginning of period 396,000 2,460,000
Cash and cash equivalents at end of period 50,000 1,365,000
Supplemental cash flow information:    
Cash paid for interest 0 0
Supplemental disclosure of noncash transactions:    
Shares issued for dividends on preferred stock 0 13,000
Preferred stock dividends in dividends payable $ 727,000 $ 440,000