Annual report pursuant to section 13 and 15(d)

Statements of Cash Flows

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Statements of Cash Flows (USD $)
 12 Months Ended 93 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2013
Cash flows from operating activities:      
Net loss $ (4,361,165) $ (2,543,390) $ (32,897,657)
Adjustments to reconcile net income to net cash used in operating activities:      
Depreciation 5,622 92,596 1,007,176
Amortization 30,609 30,610 168,363
Stock based compensation expense 9,877 23,645 1,599,467
Discount amortization 60,581 363,858 1,648,452
Net loss on sale of assets    1,254 (28,648)
Loss on abandonment of patents 9,340    57,847
Changes in assets and liabilities:      
Deposits and other assets (54,516) 59,572 (94,220)
Prepaid expenses (3,197) (8,088) 505
Inventory       (986,674)
Accrued payroll and payroll related expenses 77,683 671,270 3,650,771
Accounts payable (29,867) (48,173) 682,319
Accrued interest 450,555 363,768 1,124,530
Fees payable to directors (64,455) 63,000 468,546
Patent license payable (15,833) (6,667) 20,000
Other current liabilities 8,189 (1,242) 12,613
Lease settlement payable (251,184) (221,250)   
Employee settlement       50,000
Net cash used in operating activities (4,127,761) (1,159,237) (23,516,610)
Cash flows from investing activities:      
Purchases of property and equipment (30,259)    (729,163)
Proceeds from sale of property and equipment    4,014 112,759
Expenditures on patents (29,696) (35,155) (650,967)
Net cash used in investing activities (59,955) (31,141) (1,267,371)
Cash flows from financing activities:      
Proceeds from the issuance of common stock       1,581,275
Proceeds from the issuance of series A preferred stock       6,714,860
Proceeds from the issuance of series B preferred stock       7,259,402
Proceeds from the exercise of stock options       2,663
Proceeds from the issuances of notes payable 5,550,403 1,180,000 13,716,167
Repayment of principal on notes payable (1,148,076) (49,950) (4,267,976)
Net cash provided by financing activities 4,402,327 1,130,050 25,006,391
NET INCREASE (DECREASE) IN CASH 214,611 (60,328) 222,410
Cash at the beginning of the period 7,799 68,127   
Cash at the end of the period 222,410 7,799 222,410
NON-CASH FINANCING AND INVESTING ACTIVITIES:      
Issuance of stock for property and equipment       388,165
Issuance of stock for deposits and other assets       14,885
Conversion of convertible notes payable to series B preferred stock       743,990
Issuance of Series B Preferred stock warrants    140,592 1,653,044
Conversion of accrued interest into notes payable 467,438      
SUPPLEMENTAL DISCLOSURES:      
Cash paid for interest $ 234,400 $ 4,500 $ 273,786