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 $)
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities:    
Net income (loss) $ 137,000 $ (8,222,000)
Depreciation and amortization 26,000 20,000
Stock-based compensation expense 77,000 299,000
Change in fair value of warrant and liabilities (2,114,000) 2,400,000
Change in fair value of convertible notes (1,865,000) 3,461,000
Loss on extinguishment of convertible notes 1,283,000  
Non-cash interest expense 95,000 132,000
Change in assets and liabilities:    
Restricted cash (500,000)  
Accounts receivable 194,000 138,000
Inventories 21,000 38,000
Prepaid expenses and other current assets (28,000) 44,000
Accounts payable 55,000 268,000
Deferred revenue (266,000) (29,000)
Accrued liabilities 15,000 (13,000)
Net cash flows used in operating activities (2,870,000) (1,464,000)
Cash flows used for investing activities:    
Purchase of property and equipment   (74,000)
Net cash flow used for investing activities   (74,000)
Cash flows from financing activities:    
Net proceeds from sale of common stock and warrants 3,504,000  
Net proceeds from issuance of convertible notes and warrants 250,000  
Net cash provided by financing activities 3,754,000  
Effect of exchange rate changes on cash and cash equivalents (14,000) (50,000)
Net (decrease) increase in cash and cash equivalents 870,000 (1,588,000)
Cash and cash equivalents at beginning of period 258,000 2,585,000
Cash and cash equivalents at end of period 1,128,000 997,000
Supplemental disclosure of cash flow information:    
Cash paid for interest 112,000 100,000
Supplemental disclosure of non-cash financing activities:    
Cashless exercise of warrants 2,003,000  
Cashless conversion of convertible notes $ 450,000