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 190 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2013
Cash flows from operating activities        
Net Loss $ (10,657,009) $ (13,092,387) $ (10,856,547) $ (93,038,863)
Adjustments to reconcile net loss to net cash used in operating activities:        
Write off of intangible assets 0 0 0 505,000
Settlement of litigation and debt (346) (239,775) (175,934) (1,578,375)
Settlement of debt due Morale/Matthews 0 0 0 927,903
Stock based compensation expense 4,764,964 2,070,426 2,240,961 13,011,507
Issuance of common stock for services 49,000 1,228,250 862,000 9,312,038
Issuance of common stock as settlement 3,108,347 0 0 3,108,347
Issuance of warrants and options for legal settlement 0 0 0 36,457
Issuance of warrants for financing fees 0 0 0 153,501
Issuance of warrants and options for consulting fees 100,694 641,747 411,888 1,280,329
Increase in convertible notes related to default 0 0 2,795 299,274
Interest on related party loans 0 0 0 22,305
Patent acquisition cost 0 0 0 1,610,066
Amortization of issuance costs and original issue debt discounts including beneficial conversion feature-part of interest expense 0 3,620,092 5,069,446 19,754,169
Fair value of common stock and warrants issued to induce conversion of notes 0 0 0 469,043
Costs of private placement convertible notes 0 0 0 1,640,715
Change in fair value of derivative liability 220,614 4,023,094 (2,021,536) 2,115,507
Gain on extinguishment of derivative liability (3,441,752) (2,445,095) 0 (5,886,847)
Amortization of deferred compensation 0 0 0 3,060,744
Gain on disposition of assets (41,923)     (27,497)
Depreciation and amortization 15,399 36,077 34,717 546,375
Bad debt 0 0 0 1,300
Changes in operating assets and liabilities:        
Accounts receivable 0 0 0 (1,380)
Prepaid expenses and other 10,202 37,775 (48,481) (29,849)
Other assets 4,500 0 (2,310) (5,830)
Accounts payable and accrued expenses (43,408) (192,796) 415,519 4,791,646
Accounts payable - license agreements (130,400) 137,725 (478,297) (465,687)
Accounts payable and accrued expenses - related parties 128,750 (342,718) (178,173) (243,968)
Net cash used in operating activities (5,912,368) (4,517,585) (4,723,952) (38,632,070)
Cash flows from investing activities        
Purchase of equipment (7,573) (16,142) (32,243) (622,578)
Proceeds from sale of equipment 27,000 0 0 44,478
Net cash used in investing activities 19,427 (16,142) (32,243) (578,099)
Cash flows from financing activities        
Net proceeds under equity line of credit 0 0 0 1,262,386
(Decrease) increase in payables to related parties and stockholder 0 0 (86,947) 536,979
Advances from founding executive officer 0 0 0 517,208
Net proceeds from issuance of convertible notes and warrants 0 1,835,840 5,360,070 18,400,888
Repayment of convertible notes 0 0 (14,276) (296,397)
Net proceeds from sale of stock and exercise of warrants and options 8,428,218 3,681,881 13,500 22,926,173
Net cash provided by financing activities 8,428,218 5,517,721 5,272,347 43,347,237
Net increase in cash 2,535,277 983,994 516,152 4,137,068
Cash, beginning of period 1,601,791 617,797 101,645 0
Cash, end of period 4,137,068 1,601,791 617,797 4,137,068
Supplemental disclosures of cash flow information        
Cash paid during the year for: Interest 260 7,640 201 179,280
Cash paid during the year for: Income taxes 0 800 0 8,282
Non-cash investing and financing activities        
Acquisition of intangible asset through advance from related party and issuance of common stock 0 0 0 505,000
Deferred compensation for stock options issued for services 0 0 0 3,202,931
Purchase of property and equipment financed by advance from related party 0 0 0 3,550
Conversion of related party debt to equity 0 0 0 515,000
Conversion of accounts payable and accrued expenses to common stock 0 0 0 860,105
Cancellation of stock 0 0 0 8,047
Conversion of accounts payable and accrued expenses to convertible debentures 0 52,371 33,740 689,846
Conversion of related party debt to convertible debentures 0 0 0 72,500
Conversion of convertible debentures to common stock 0 3,789,634 2,425,711 19,540,985
Issuance of shares for settlement of loans and other payable to Morale/Matthews 0 0 0 2,783,711
Write off of deferred compensation 0 0 0 142,187
Fair value of derivative liability recorded as note discount 0 0 0 2,130,625
Exercise of options applied to accounts payable 49,000 0 0 116,500
Fair value of warrants issued to settle payables 129,622 0 0 129,622
Receivable from sale of equipment 27,000 0 0 27,000
Fair value of warrants and beneficial conversion feature associated with issued convertible notes $ 0 $ 1,888,211 $ 2,305,311 $ 15,800,944