Quarterly report pursuant to Section 13 or 15(d)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)
 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
OPERATING ACTIVITIES    
Net loss $ (5,660,755) $ (5,641,426)
Adjustments to reconcile net loss to net cash flows used in operating activities:    
Depreciation and amortization 789,742 757,722
Amortization of debt issuance costs 231,131 91,833
Amortization of beneficial conversion feature of convertible debt 300,973 0
Common stock issued for professional services 541,126 366,000
Stock-based compensation 1,357,684 4,098,092
Bad debt expense 59,143 200,000
Interest on note receivable 0 (91,068)
Accrued interest payable 73,779 0
Change in operating assets and liabilities:    
Accounts receivable 67,796 (643,130)
Prepaid inventory 0 (5,329,644)
Inventory 995,944 3,134,749
Prepaid expenses and other current assets (45,713) 125,566
Accounts payable and accrued expenses (140,127) 7,129
Net cash used in operating activities (1,429,277) (2,924,177)
INVESTING ACTIVITIES    
Purchase of equipment (17,207) (89,984)
Note receivable from legal settlement 0 (600,000)
Issuance of note receivable 0 (2,000,000)
Repayment of notes receivable 0 533,092
Net cash flows used in investing activities (17,207) (2,156,892)
FINANCING ACTIVITIES    
Common stock issued for cash 0 2,520,000
Borrowing from issuance of unsecured note payable, net of costs 801,430 0
Borrowing from issuance of secured convertible note payable, net 1,975,000 1,385,496
Payment of contingent consideration (250,000) 0
Repayment of convertible debt (612,000) 0
Repayment of unsecured note payable (138,975) 0
Net cash flows provided by financing activities 1,775,455 3,905,496
Net increase (decrease) in cash 328,971 (1,175,573)
Cash, beginning of period 518,462 2,302,418
Cash, end of period 847,433 1,126,845
Supplemental disclosures of non-cash transactions:    
Conversion of convertible promissory notes to common stock (408,000) 0
Value of warrants issued with unsecured promissory note (266,800) 0
Beneficial conversion feature on secured convertible promissory note (370,000) 0
Inventory returned in satisfaction of note receivable 68,112 0
Supplemental cash flow disclosures:    
Interest paid 311,359 0
Taxes paid $ 21,583 $ 48,773