Annual report pursuant to Section 13 and 15(d)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

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CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)
 12 Months Ended
Dec. 31, 2013
Dec. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net Loss $ (6,148,350) $ (5,836,369)
Adjustments to reconcile net loss to net cash used in operating activities:    
Gain on fair market valuation of derivatives (673,000)   
Depreciation and amortization 41,309 14,088
Loss on disposal of property and equipment    1,322
Warrants issued with common stock 1,355,990 135,400
Stock issued for interest expense 1,039,081   
Stock issued for services 773,165   
Equity instruments issued with debt greater than debt carrying amount 2,054,000   
Preferred Stock issued for compensation    200,000
Impairment of goodwill    4,799,965
Change in accounts receivable and inventory reserve 359,126 79,534
Changes in operating assets and liabilities:    
Accounts receivable (41,450) (74,629)
Inventory (75,389) 258,300
Prepaid expenses (857)   
Prepaid inventory 51,988 (37,212)
Note receivable (173,754)   
Deposits (3,388,887) 5,000
Accounts payable 973,441 207,176
Due to officers    (500)
Net cash used in operations (3,853,587) (247,925)
CASH FLOWS FROM INVESTING ACTIVITIES:    
Proceeds from sale of property and equipment    6,293
Purchase of property and equipment    (534)
Purchase of intangible assets (11,400)   
Cash assumed in acquisition 100  
Cash assumed in reverse merger    35
Net cash used in investing activities (11,300) 5,794
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from issuance of notes payable 2,403,474 264,306
Proceeds from issuance of notes payable to related parties 17,502 44,190
Payment on notes payable (100,000) (150,000)
Payments on notes payable to related parties (20,000) (89,192)
Proceeds from issuance of common stock and warrants and common stock subscribed 1,574,542 180,000
Net cash provided by financing activities 3,875,518 249,304
NET CHANGE IN CASH AND CASH EQUIVALENTS 10,631 7,173
CASH AND CASH EQUIVALENTS, beginning of period 16,312 9,139
CASH AND CASH EQUIVALENTS, end of period 26,943 16,312
SUPPLEMENTAL DISCLOSURE FOR OPERATING ACTIVITES    
Cash paid for interest 13,500   
SUPPLEMENTAL DISCLOSURE FOR FINANCING ACTIVITIES    
Warrant expense $ 1,355,990 $ 135,400