Quarterly report pursuant to Section 13 or 15(d)

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows for Operating Activities:
Net (Loss)	$ (2,367,335)	$ (1,322,815)
Adjustments to reconcile net loss to net cash used by operating activities:
Stock and warrants issued for services rendered	34,935	33,584
Finance costs paid in warrants, related party.	0	203,069
Finance costs paid in stock and warrants.	821,340	0
Amortization of deferred finance costs.	12,868	41,383
Amortization of debt discount	477,948	93,892
Amortization of intangibles	726	725
Depreciation expense	50,862	50,192
Fair value adjustment of Derivative Liability.	(709,638)	0
(Decrease) in deferred rent	(84,626)	(22,991)
Changes in assets and liabilities:
(Increase) in inventories	0	(5,156)
(Increase) in prepaid expenses	(8,939)	(5,683)
(Increase) in security deposits	(845)	(635)
Increase in accounts payable	214,067	153,831
Increase in customer deposits	0	2,643
(Decrease) in deferred revenue	0	(11,250)
Increase in accrued liabilities	142,060	18,769
Net Cash (Used) by Operating Activities	(1,416,577)	(770,442)
Cash Flows from Investing Activities:
Capital expenditures	(3,500)	(4,721)
Net Cash (Used) by Investing Activities	(3,500)	(4,721)
Cash Flow from Financing Activities:
Proceeds of loan payable, related party	0	85,105
Proceeds of loan payable, other	123,000	0
Payment of Deferred Finance Costs	(34,958)	0
Repayments of loan payable, related party	0	(14,000)
Proceeds of other borrowings	0	125,169
Payments of other borrowings	(7,682)	(13,582)
Proceeds from issuance of convertible debentures	732,000	134,500
Proceeds from sale of common stock and exercise of warrants	389,308	502,500
Net Cash Provided by Financing Activities	1,201,668	819,692
Increase (Decrease) in Cash	(218,409)	44,529
Cash at Beginning of Period	225,696	15,603
Cash at End of Period	7,287	60,132
Cash paid during the period for:
Interest	0	3,455
Income Taxes	0	50
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
During the quarter ended March 31, 2012 and March 31, 2011 issued convertible debentures in the principal amount	432,000	62,500
During the quarter ended March 31, 2012 and March 31, 2011recorded discounts on debentures	332,000	62,500
During the quarter ended June 30, 2012 and June 30, 2011 issued convertible debentures in the principal amount	300,000	52,000
During the quarter ended June 30, 2012 recorded discounts on debentures	500,000	52,000
During the quarter ended June 30, 2012 and June 30, 2011 several three year 1% convertible notes in the aggregate principal amount	155,100	196,000
During the quarter ended September 30, 2011, the Company issued convertible debentures in the principal amount	0	20,000
During the quarter ended September 30, 2011, the Company recorded a discount on the debentures	$ 0	$ 15,921