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 67 Months Ended
Dec. 31, 2012
Dec. 31, 2011
Dec. 31, 2012
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net loss $ (9,449,600) $ (3,470,113) $ (15,844,280)
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation 14,329 9,300 31,641
Amortization and write off of deferred financing costs 196,166 53,377 249,543
Non cash interest, consisting of beneficial conversion feature in connection with convertible debentures 710,000 0 710,000
Non cash interest, consisting of common stock and warrants issued in connection with convertible debentures 426,152 0 426,152
Non-cash financing costs related to January and March 2012 financing 81,337 0 81,337
Stock based compensation 865,158 435,651 1,551,871
Change in fair value of warrant liability 1,177,026 0 1,177,026
Common stock issued in exchange for intellectual property 0 0 383,250
Gain on extinguishment of debt 0 0 (7,908)
Changes in operating assets and liabilities:      
Prepaid expenses (122,229) (79,117) (224,659)
Accounts payable 130,639 377,453 825,837
Accrued interest (32,040) 38,306 6,266
Accrued expenses 293,125 (12,304) 404,065
Deferred rent payable (2,927) 9,909 26,156
Net cash used in operating activities (5,712,864) (2,637,538) (10,203,703)
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchase of furniture and fixtures (35,673) (2,764) (78,535)
Proceeds from security deposit 0 3,156 0
Payment of restricted cash and interest earned on restricted cash (90) (90) (60,267)
Net cash (used in) provided by investing activities (35,763) 302 (138,802)
CASH FLOWS FROM FINANCING ACTIVITIES:      
Proceeds from demand notes 0 0 480,000
Proceeds from other notes payable 320,000 500,000 1,020,000
Proceeds, net of expenses of $24,000 as of December 31, 2011, from Convertible Debentures 390,000 1,501,000 1,891,000
Repayment of Convertible Debentures (150,000) 0 (150,000)
Proceeds, net of expenses of $374,870 from sale of units consisting of common stock and warrants 6,932,894 0 6,932,894
Proceeds from the sale of capital stock 0 612,000 1,954,001
Net cash provided by financing activities 7,492,894 2,613,000 12,127,895
Net increase (decrease) in cash 1,744,267 (24,236) 1,785,390
Cash, beginning of the period 41,123 65,359 0
Cash, end of period 1,785,390 41,123 1,785,390
Supplemental disclosures of cash flow information:      
Interest paid 35,195 0 0
Non cash investing and financing activities:      
Senior convertible notes exchanged for preferred shares 0 0 200,000
Capital contribution of accrued interest 3,111 0 26,836
Demand notes together with accrued interest converted into capital stock 0 0 549,078
Common stock issued for deferred financing costs 0 144,000 144,000
Exchange of Notes Payable for Convertible Debenture 320,000 0 820,000
Warrants Liability reclassified to Stockholders' Equity 3,938,946 0 3,938,946
Exchange of Convertible Debenture for Units consisting of common stock and warrants $ 2,635,000 $ 0 $ 2,635,000