Annual report pursuant to Section 13 and 15(d)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
12 Months Ended
Dec. 31, 2015
Dec. 31, 2014
Cash Flows from Operating Activities    
Net Loss $ (13,427,478) $ (7,868,858)
Non-Cash Adjustments    
Depreciation and Amortization 380,841 279,317
Amortization of Software Development Costs in cost of sales products 286,450 71,613
Impairment of Patents and Trademarks 13,222 104,716
Common Stock Awards Compensation Expense 1,669,700 0
Stock-Based Option Compensation Expense 568,848 260,747
Amortization of Term Debt Discount 751,968 368,223
Amortization of Debt Issuance Costs 46,447 52,121
Gain on Extinguishment of Debt for Note Conversions 0 (29,262)
Common Stock and Warrants Issued for Services 1,057,074 395,205
Loss on Derivative Valuation 1,098,465 2,194,001
(Increase) Decrease in Operating Assets    
Accounts Receivable 57,839 (168,613)
Inventories (2,437,149) 41,679
Vendor Prepayments (213,320) 0
Prepaid Expenses and Other Assets (306,078) (208,367)
Increase (Decrease) in Operating Liabilities    
Accounts Payable (1,276,132) (237,006)
Accrued Expense 143,830 1,216
Customer Deposits (92,703) (10,528)
Unearned Revenue 16,078 13,701
Income and Other Taxes Payable (28,085) (40,693)
Accrued Compensation (70,067) 68,116
Accrued Interest & Long-Term Accrued Interest Converted 92,171 103,622
Net Cash Flows Used in Operating Activities (11,668,079) (4,609,050)
Cash Flows from Investing Activities    
Purchases of Tooling and Equipment (1,892,831) (195,903)
Investments in Software 0 (618,790)
Investments in Patents and Trademarks (191,908) (86,647)
Net Cash Used in Investing Activities (2,084,739) (901,340)
Cash Flows from Financing Activities    
Proceeds from Exercise of Warrants 1,272,627 2,682,669
Repayment of Capital Leases (16,882) (24,670)
Repayment of Long-Term Debt and Notes Payable (197,167) (345,942)
Proceeds from Senior Convertible Debt 0 3,000,000
Issuance Costs on Senior Convertible Debt 0 (139,340)
Proceeds from Preferred Stock Offering 24,813,000 0
Issuance Costs on Preferred Stock Offering (214,169) 0
Net Change in Lines of Credit (112,500) 112,500
Net Cash Flows Provided by Financing Activities 25,544,909 5,285,217
Net Increase (decrease) in Cash and Cash Equivalents 11,792,091 (225,173)
Cash and Cash Equivalents - Beginning of Period 84,967 310,140
Cash and Cash Equivalents - End of Period 11,877,058 84,967
Supplemental Disclosures    
Interest Paid 41,194 88,508
Common Stock and Warrants Issued for Services, Classified as Prepaid Expense 936,937 564,873
Accrued Interest Converted into Common Stock 12,655 0
Conversion of Term Debt into Common Stock 459,845 625,000
Discount on Senior Convertible Debt attributed to embedded Conversion Price Adjustment Option 0 1,938,988
Reclassification of Derivative Liability to Paid-In Capital upon Waiver of Certain Anti-Dilutive Provisions of Warrants and Convertible Debt 11,543,354 2,627,666
Unamortized Discount upon Conversion of Term Debt 0 222,580
Reclassification of Derivative to Additional Paid-In Capital upon Note Conversions and Warrant Exercises $ 2,855,463 $ 0