Quarterly report pursuant to Section 13 or 15(d)

Consolidated Statements of Cash Flows (Unaudited)

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Consolidated Statements of Cash Flows (Unaudited) (USD $)
 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $ 9,181,000 $ 1,191,000
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 44,000 40,000
Stock-based compensation 34,000 53,000
Changes in assets and liabilities:    
Accounts receivable 24,000 (60,000)
Inventories, net (2,502,000) (183,000)
Other current assets (104,000) 110,000
Other assets (16,000) (1,000)
Accounts payable 1,586,000 242,000
Income taxes payable 86,000 28,000
Accrued distributor commissions 1,268,000 483,000
Other accrued expenses 2,466,000 382,000
Deferred revenue 606,000 297,000
Other current liabilities 152,000 (4,000)
Net cash provided by operating activities 12,825,000 2,578,000
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment, net (97,000) (57,000)
Net cash used in investing activities (97,000) (57,000)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercise of warrants 2,630,000  
Dividends paid (195,000)  
Repurchase of common stock (63,000) (21,000)
Net cash provided by (used in) financing activities 2,372,000 (21,000)
Effect of exchange rates on cash and cash equivalents (28,000) (12,000)
Net increase in cash and cash equivalents 15,072,000 2,488,000
CASH AND CASH EQUIVALENTS, beginning of period 14,550,000 4,207,000
CASH AND CASH EQUIVALENTS, end of period 29,622,000 6,695,000
NON-CASH FINANCING ACTIVITY:    
Conversion of preferred stock 29,000 13,000
Cash dividends declared, but not yet paid $ 25,000