Increase (Decrease) in Cash and Cash Equivalents

2000

2001

2002

Cash flows from operating activities

     Net earnings (loss)

$ 4,076,033

$ 1,620,864

$ (2,216,852)

     Adjustments to reconcile net earnings to net
     cash provided by (used in) operating activities

          Depreciation and amortization

145,307

117,141

186,408

          Provision for doubtful accounts

317,090

- 

1,468,084

          Provision for obsolete inventory

- 

27,478

463,077

          Remeasurement of redeemable ordinary shares

(752,760)

(87,822)

104,241

          Warrants granted for services

60,000

- 

- 

          (Gain) loss on disposal of assets

- 

- 

(11,656)

          Changes in assets and liabilities:

               Receivables

(640,925)

(2,573,150)

1,936,843

               Inventories

(2,137,554)

1,594,224

(5,861,314)

               Prepaid expenses and deposits/other assets

57,236

(180,961)

(622,345)

               Payables

(476,890)

(1,840,538)

1,577,692

               Accrued liabilities

304,081

370,484

(94,368)

                         Net cash provided by (used in) 
                         operating activities

951,618

(952,280)

(3,070,190)

Cash flows from investing activities

     Purchases of property and equipment, net

(242,538)

(297,425)

(349,653)

     Proceeds from sale of fixed assets

        - 

        - 

19,829

               Net cash used in investing activities

(242,538)

(297,425)

(329,824)

Cash flows from financing activities

     Payment on notes payable, net

(1,736,947)

- 

- 

     Borrowings (payments) on lines of credit, net

775,162

1,279,536

1,712,459

     Proceeds from issuance of notes payable

        - 

        - 

1,463,756

          Net cash provided by (used in) financing activities

(961,785)

1,279,536

3,176,215

Net increase (decrease) in cash and cash equivalents

(252,705)

29,831

(223,799)

Cash and cash equivalents at the beginning of period

574,439

321,734

351,565

Cash and cash equivalents at the end of period

$ 321,734

$ 351,565

$ 127,766

Supplemental disclosure of cash flow information:

     Cash paid during the period

          Interest

$ 93,576

$ 84,510

$ 392,988