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, 2012
Mar. 31, 2011
Cash flows from operating activities:    
Net loss $ (4,892,000) $ (1,899,000)
Adjustments to reconcile net loss to cash used in operating activities:    
Gain on change in fair value of derivative - warrants (741,000) (1,235,000)
Loss on change in fair value of derivative - preferred stock 2,460,000 823,000
Warrant extension expense 2,316,000 0
Depreciation and amortization 54,000 61,000
Stock option compensation expense 114,000 181,000
Stock issued to directors and employees 302,000 0
Stock issued for services 30,000 246,000
Change in operating assets and liabilities:    
Receivables (601,000) 972,000
Inventory 54,000 0
Prepaid expenses and other current assets (4,000) 21,000
Other assets 4,000 4,000
Accounts payable and accrued expenses 165,000 (92,000)
Dividends payable 86,000 61,000
Accrued interest payable 83,000 106,000
Deferred revenue (512,000) (86,000)
Net cash used in operating activities (1,082,000) (837,000)
Cash flows from investing activities:    
Capital expenditures (13,000) (22,000)
Net cash used in investing activities (13,000) (22,000)
Net increase (decrease) in cash and cash equivalents (1,095,000) (859,000)
Cash and cash equivalents at beginning of period 2,460,000 7,033,000
Cash and cash equivalents at end of period 1,365,000 6,174,000
Supplemental cash flow information:    
Cash paid for interest 0 0
Supplemental disclosure of noncash transactions:    
Shares issued for dividends on preferred stock 13,000 1,000
Preferred stock dividends in dividends payable $ 440,000 $ 438,000