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, 2015
Dec. 31, 2014
Cash flows from operating activities    
Net loss $ (14,261,531) $ (5,007,557)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock based compensation $ 789,087 3,122,259
Stock issued for services 196,500
Amortization of license fees $ 5,882 5,882
Amortization of discount of notes payable 4,030,201 1,052,899
Amortization of debt issuance costs 670,107 413,484
Amortization of customer acquisition costs 259,093 130,979
Depreciation expense 125,853 250,262
Gain (loss) on the change in value of warrant liability 3,194,189 $ (4,204,189)
Debt conversion inducement expense 1,123,380
Noncash settlement charge expense 1,335,394
PIK interest 1,324,463 $ 918,435
Change in assets and liabilities    
Increase in accounts receivable (739,652) (177,091)
Decrease (increase) in inventory 3,068,992 (5,784,905)
Decrease (increase) in prepaid expenses and other assets (11,513) (67,687)
(Decrease) increase in accounts payable and accrued liabilities (125,371) 378,028
(Decrease) increase in deferred revenue (3,526,541) 5,808,301
Net cash used in operating activities (2,737,967) (2,964,400)
Cash flows used in investing activities    
Purchase of property and equipment (956,605) (297,870)
Net cash used in investing activities (956,605) (297,870)
Cash flows from financing activities    
Payment of debt issuance costs $ (22,688) (747,969)
Payment of equity issuance costs (45,325)
Proceeds from notes payable 300,000
Payment on note payable $ (11,574) $ (600,000)
Payments on convertible promissory notes (3,000,000)
Proceeds from the issuance of convertible promissory notes and related warrants $ 600,000 $ 10,000,000
Proceeds from the issuance of common stock and related warrants 1,050,260
Proceeds from the issuance of common stock upon warrant exercise 7,813
Net cash provided by financing activities $ (2,434,262) 9,964,779
Net (decrease) increase in cash and cash equivalents (6,128,834) 6,702,509
Cash and cash equivalents - beginning of period 7,212,114 509,605
Cash and cash equivalents - end of period 1,083,280 7,212,114
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid during the period for - Interest 69,489 12,007
Cash paid during the period for - Taxes $ 41,149 9,273
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS    
Equipment purchases included in accounts payable $ 34,250
Equipment purchases included in note payable $ 113,718
Accrued sales credits included in customer acquisition costs $ 936,500
Non cash debt issuance costs $ 76,200 1,121,500
Non cash discounts on notes payable 168,000 8,550,000
Stock issued for interest on notes payable $ 161,580 256,487
Conversion of advances payable to debt 4,167
Conversion of debt and accrued interest to equity $ 3,331,817 616,504
Conversion of accounts payable and other liabilities to equity 377,002
Conversion of accrued interest to debt $ 1,324,463 $ 918,435