Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENT OF CASH FLOWS

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
Cash flows from operating activities:    
Net loss $ (858,600) $ (1,689,100)
Adjustments to reconcile net loss to net cash provided by operating activities:    
Provision for doubtful accounts receivable 33,800 115,600
Depreciation and amortization 373,200 [1] 327,900 [1]
Stock-based compensation expense 208,800 592,800
Gains on extinguishment of debt (11,400) (305,800)
Amortization of debt discount 4,900 99,900
Changes in operating assets and liabilities:    
Cash - restricted (30,000) (220,000)
Accounts receivable (30,000) (816,400)
Costs in Excess of billings on uncompleted contracts (43,000) 130,400
Inventory 23,600 (43,800)
Prepaid expenses and other assets (271,800) 300
Accounts payable 191,700 (28,700)
Accrued liabilities and related party notes payable accrued interest 450,300 156,400
Billings in excess of revenue on uncompleted contracts (157,100) 289,400
Deferred revenue 118,000   
Payroll taxes payable (122,500) (54,700)
Net cash used in operating activities (120,100) (1,445,800)
Cash flows from investing activities:    
Purchase of property and equipment (1,155,700) (76,900)
Proceeds the sale of property and equipment (13,900)   
Net cash used in investing activities (1,169,600) (76,900)
Cash flows from financing activities:    
Proceeds from notes payable 50,000 575,000
Payments of notes payments and capital lease obligations (205,300) (308,500)
Payments of related party notes payable and accrued interest (4,300) (69,500)
Proceeds from the sale of common stock and warrants, net of expenses 3,798,000 1,315,000
Net cash provided by financing activities 3,638,400 1,512,000
Net increase (decrease) in cash 2,348,700 (10,700)
Cash at the beginning of year 70,400 81,100
Cash at the end of year 2,419,100 70,400
Supplemental disclosures of cash flow information:    
Cash paid for interest 12,200 74,500
Supplemental disclosure of noncash financing and investing activities:    
Accounts receivable offset against notes payable    5,000
Conversion of accounts payable and accrued expenses to notes payable   66,900
Conversion of delinquent notes payable and accrued interest into shares of common stock   148,500
Conversion of convertible note payable and accrued interest into shares of common stock 61,400 358,000
Discount on note payable   99,900
Purchase of assets under capital leases 110,000 121,300
Transfer of prepaid asset to equipment 33,000   
Fully depreciated assets written off $ 96,400  
[1] Includes depreciation of property, equipment and leasehold improvement and amortization of intangibles.