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, 2018
Dec. 31, 2017
Cash flows from operating activities    
Net loss $ (4,816,680) $ (2,903,273)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock based compensation 490,520 1,532,013
Amortization of license fees 1,950
Amortization of patent rights 201,200 134,133
Amortization of discount of notes payable 678,061 745,652
Amortization of debt issuance costs 102,183 153,303
Amortization of customer acquisition costs 137,866 469,870
Depreciation expense 456,914 748,020
Loss on debt exchange 44,036
Gain on sale of equipment 6,303
Deferred tax benefit 500,000
Noncash settlement charge expenses 61,100
Change in assets and liabilities    
Decrease in accounts receivable 1,289,227 621,743
Decrease (Increase) in inventory 150,163 (50,507)
Decrease (Increase) in prepaid expenses and other assets 73,907 (11,040)
Increase (decrease) in accounts payable and accrued liabilities 82,025 (2,568,482)
Increase in deferred compensation 555,877
(Decrease) Increase in deferred revenue (517,060) 517,060
(Decrease) in customer credits (423,206)
Net cash used in operating activities (1,065,458) (471,664)
Cash flows used in investing activities    
Purchase of property and equipment (131,915) (806,460)
Purchase of intellectual property (2,500,000)
Net cash used in investing activities (131,915) (3,306,460)
Cash flows from financing activities    
Payment of equipment notes payable (61,177) (55,006)
Proceeds from issuance of convertible promissory notes and warrants 300,000
Payments on secured promissory note (875,000) (1,500,000)
Net cash used in financing activities (636,177) (1,555,006)
Net decrease in cash (1,833,550) (5,333,130)
Cash - beginning of year 2,418,427 7,751,557
Cash - end of year 584,877 2,418,427
SUPPLEMENTAL CASH FLOW INFORMATION:    
Cash paid during the year for: Interest 1,175,450 1,254,997
Cash paid during the year for: Taxes 22,153 40,422
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS    
Conversion of secured notes payable into unsecured notes payable 560,000
Warrants issued upon debt exchange 89,500
Equipment purchases included in note payable 101,199
Conversion of debt and accrued interest to equity $ 25,618