Quarterly report pursuant to sections 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, 2011
Sep. 30, 2010
Cash flows from operating activities:    
Net income $ 2,804,043 $ 343,359
Adjustments to reconcile net income to net cash provided by operating activities    
Depreciation and amortization 74,860 61,656
Amortization of debt discount 56,886  
Gain on extinguishment of debt and derivative liability (2,228,939)  
Other   4,500
Gain on revaluation of derivative liability (362,035) (1,048,840)
Return of shares for services not rendered (65,000)  
Share-based compensation 21,000  
Changes in assets and liabilities:    
Accounts receivable (560,969) 33,427
Inventory   (24,060)
Prepaid expenses and other current assets 55,076 (36,604)
Accounts payable and accrued expenses 146,741 239,958
Accrued interest 34,519 77,557
Deferred revenue 750,648 (16,879)
Due to related parties 49,330 253,089
Net cash provided by (used in) operating activities 776,160 (112,837)
Cash flows from investing activities:    
Purchase of property and equipment (71,748) (43,881)
Net cash used in investing activities (71,748) (43,881)
Cash flows from financing activities:    
Proceeds from convertible promissory note – related party 51,000  
Proceeds from promissory notes 550,000  
Proceeds from note payable to related party   25,000
Repayment of note payable to related party (5,000)  
Repayment of promissory notes (100,000)  
Repayment of related party loans   (75,405)
Repayment of convertible debentures (735,000)  
Principal payments under capital leases obligations 17,668 (21,650)
Net cash used in financing activities (221,332) (72,055)
Net increase in cash and cash equivalents 483,080 (228,773)
Cash and cash equivalents – beginning of period 104,344 300,482
Cash and cash equivalents – end of period 587,424 71,709
Cash paid during period for:    
Interest expense 8,395  
Income taxes $ 0 $ 0