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, 2012
Jun. 30, 2011
Cash flows from operating activities:    
Net loss $ (15,492,000) $ (3,163,000)
Adjustments to reconcile net loss to cash used in operating activities:    
Gain on change in fair value of derivative - warrants (1,172,000) (2,174,000)
Loss on change in fair value of derivative - preferred stock 11,870,000 420,000
Warrant extension expense 2,316,000 0
Depreciation and amortization 73,000 120,000
Stock option compensation expense 222,000 423,000
Stock issued to directors and employees 302,000 0
Stock issued for services 43,000 475,000
Change in operating assets and liabilities:    
Receivables (455,000) 967,000
Inventory (130,000) 0
Prepaid expenses and other current assets (5,000) (5,000)
Other assets 8,000 (24,000)
Accounts payable and accrued expenses 697,000 (37,000)
Dividends payable 172,000 124,000
Accrued interest payable 166,000 399,000
Deferred revenue (472,000) (173,000)
Net cash used in operating activities (1,857,000) (2,648,000)
Cash flows from investing activities:    
Capital expenditures (15,000) (39,000)
Net cash used in investing activities (15,000) (39,000)
Net decrease in cash and cash equivalents (1,872,000) (2,687,000)
Cash and cash equivalents at beginning of period 2,460,000 7,033,000
Cash and cash equivalents at end of period 588,000 4,346,000
Supplemental cash flow information:    
Cash paid for interest 0 0
Supplemental disclosure of noncash transactions:    
Shares issued for dividends on preferred stock 21,000 1,000
Preferred stock dividends in dividends payable $ 879,000 $ 880,000