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, 2012
Dec. 31, 2011
Cash Flows from Operating Activities:    
Net loss $ (8,577,479) $ (5,469,070)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation 227,662 466,354
Amortization of intangible assets 266,034 287,838
Amortization of debt discount and debt issuance costs 68,977 89,343
Amortization of deferred rent (25,882) (80,131)
Loss on sale of businesses   51,647
Impairment charges 3,397,212 407,369
Gain on debt restructuring (1,048,308)  
Interest expense forgiven on debt restructuring 140,667  
Loss on disposal of property and equipment 6,062 3,400
Increase in inventory reserve and inventory write-downs 619,619 624,618
Stock-based compensation 44,983 301,037
Loss due to closure of contract manufacturer   111,126
Changes in operating assets and liabilities, net of the effect of the Seesmart acquisition (Note 2):    
Decrease in trade accounts receivable, net 306,223 80,780
Decrease (increase) in inventories 1,133,301 (99,635)
Increase (decrease) in other assets (169,617) 61,721
Decrease in accounts payable, accrued liabilities and related party payable (1,364,307) (198,988)
Decrease in accrued compensation and benefits (68,892) (6,611)
Decrease in customer deposits (69,014)  
Decrease in deferred revenue (16,732)  
Total adjustments 3,447,988 2,099,868
Net cash used in operating activities (5,129,491) (3,369,202)
Cash Flows from Investing Activities:    
Acquisition of Seesmart, net of cash acquired (7,591,060)  
Patents, trademarks and other intangible assets costs (83,076) (139,391)
Purchase of property and equipment (19,600) (223,883)
Proceeds from sale of property and equipment 7,685 7,500
Proceeds from sale of businesses, net of transaction costs   1,110,982
Net cash (used in) provided by investing activities (7,686,051) 755,208
Cash Flows from Financing Activities:    
Payment to extinguish convertible promissory notes (880,000)  
Costs related to issuance of common stock (10,000)  
Net proceeds from exercise of employee stock options and warrants   319,750
Net cash provided by financing activities 14,235,178 319,750
Net increase (decrease) in cash and cash equivalents 1,419,636 (2,294,244)
Cash and cash equivalents, beginning of period 3,014,656 5,308,900
Cash and cash equivalents, end of period 4,434,292 3,014,656
Supplemental Disclosure of Cash Flow Information:    
Cash paid during period for interest   24,000
Series B Preferred Stock
   
Cash Flows from Financing Activities:    
Proceeds from issuance of convertible preferred stock, net of issuance costs 5,195,225  
Series C Preferred Stock
   
Cash Flows from Financing Activities:    
Proceeds from issuance of convertible preferred stock, net of issuance costs 9,936,326  
Series D Preferred Stock
   
Cash Flows from Financing Activities:    
Proceeds from issuance of convertible preferred stock, net of issuance costs (6,373)  
Non-cash investing and financing activities:    
Issuance of stock 950,045  
Common Stock
   
Non-cash investing and financing activities:    
Issuance of stock 4,294,583  
Convertible Promissory Notes
   
Non-cash investing and financing activities:    
Issuance of stock $ 587,900