Quarterly report pursuant to Section 13 or 15(d)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Cash flows from operating activities:    
Net loss $ (11,388,000) $ (4,729,000)
Income from discontinued operations   (53,000)
Gain on sale of discontinued operations, net of taxes   (687,000)
Depreciation and amortization 31,000 3,000
Stock-based compensation expense 433,000 123,000
Change in fair value of warrant liabilities 3,517,000 872,000
Change in fair value of convertible notes 4,218,000 1,840,000
Financing costs associated with convertible notes 80,000 530,000
Non-cash interest expense 215,000 158,000
Deferred income taxes   (492,000)
Change in assets and liabilities:    
Accounts receivable 59,000 (122,000)
Inventory 3,000 108,000
Prepaid expenses and other assets 12,000 (86,000)
Accounts payable 82,000 (298,000)
Deferred revenue 109,000 (98,000)
Accrued liabilities 65,000 (41,000)
Net cash flows used in operating activities (2,564,000) (2,972,000)
Cash flows used for investing activities:    
Purchase of property and equipment (74,000) 4,000
Net cash used for investing activities (74,000) 4,000
Cash flows from financing activities:    
Net proceeds from issuance of convertible notes and warrants 920,000 3,605,000
Net cash provided by financing activities 920,000 3,605,000
Discontinued operations:    
Net cash provided by operating activities   210,000
Net cash provided by investing activities   1,000,000
Net cash provided by discontinued operations   1,210,000
Effect of exchange rate changes on cash and cash equivalents (144,000) 3,000
Net (decrease) increase in cash and cash equivalents (1,862,000) 1,850,000
Cash and cash equivalents at beginning of period 2,585,000 1,324,000
Cash and cash equivalents at end of period 723,000 3,174,000
Supplemental disclosure of cash flow information:    
Cash paid for interest $ 154,000 $ 122,000