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 $)
 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities:    
Net income (loss) $ 5,681,000 $ (15,492,000)
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:    
Gain (loss) on change in fair value of derivative - warrants 28,000 (1,172,000)
Gain (loss) on change in fair value of derivative preferred stock (8,050,000) 11,870,000
Warrant extension expense 0 2,316,000
Depreciation and amortization 2,000 73,000
Stock option compensation expense 328,000 222,000
Stock issued to directors and employees 66,000 302,000
Stock issued for services 97,000 43,000
Change in operating assets and liabilities:    
Receivables 581,000 (455,000)
Inventory 194,000 (130,000)
Prepaid expenses and other current assets (41,000) (5,000)
Other assets 0 8,000
Accounts payable and accrued expenses (734,000) 697,000
Interest payable on dividends 86,000 172,000
Accrued interest payable 0 166,000
Deferred revenue 3,154,000 (472,000)
Net cash provided by (used in) operating activities 1,391,000 (1,857,000)
Cash flows from investing activities:    
Capital expenditures 0 (15,000)
Net cash used in investing activities 0 (15,000)
Cash flows from financing activities:    
Proceeds from Stock Options Exercised 11,000 0
Net cash provided by financing activities 11,000 0
Net increase (decrease) in cash and cash equivalents 1,402,000 (1,872,000)
Cash and cash equivalents at beginning of period 396,000 2,460,000
Cash and cash equivalents at end of period 1,798,000 588,000
Supplemental cash flow information:    
Cash paid for interest 0 0
Supplemental disclosure of noncash transactions:    
Shares issued for dividends on preferred stock 0 22,000
Preferred stock dividends in dividends payable $ 1,460,000 $ 879,000